Disclosure of ADR Affiliation

Los Angeles litigator William Ginsburg apparently thought it wouldn't be a problem to join an alternative dispute resolution (ADR) provider while it was conducting an arbitration for one of his medical malpractice clients. But California's Second District Court of Appeal saw it differently, establishing a bright-line rule on Jan. 22 when it held that a lawyer's membership in the ADR provider deciding his case must be disclosed to the other side. The decision appears to be the first to construe Standard 8 of the 2002 California Ethics Standards of Neutral Arbitrators in Contractual Arbitrations.

Because arbitrator Alan Haber failed to disclose Ginsburg's membership in his provider, ADR Services, a nine-day arbitration resulting in a favorable award for Ginsburg's client had to be vacated. “While that rule seems harsh, it is necessary to preserve the integrity of the arbitration process,” Justice Steven Perren wrote for a unanimous Second District panel in Gray v. Chiu, 2013 Cal. App. LEXIS 40 (2013).

New Professional Relationship Established Midstream

Standard 8 states that neutrals must disclose relationships between the ADR provider and any party or attorney in an arbitration. Judge Perren read it strictly, turning aside claims that Ginsburg's role at ADR Services was common knowledge and that he worked only as an independent contractor. Ginsburg is a veteran litigator who gained notoriety during the 1990s for his brief representation of White House intern Monica Lewinsky.

In 2009, a long-time client of Ginsburg's, physician John Chiu, was sued for malpractice following a spinal disc surgery. Chiu moved to compel arbitration and the case was assigned to a three-arbitrator panel, with Haber, a former Los Angeles County Superior Court judge with ADR Services, chosen as the neutral.

Around the same time Ginsburg was wrapping up his practice at Peterson & Bradford, and by October 2009 he was working for ADR Services himself. In 2010, Haber made his disclosure statements, stating he had no professional or personal affiliation with any of the parties or their counsel. By then Ginsburg's law partner, George Peterson, had taken over as lead counsel for Chiu, but Ginsburg continued to participate in the case, attending all sessions of the nine-day arbitration in 2011.

A Hard and Fast Rule

After Haber ruled for Chiu, the plaintiffs and their counsel, Eugene Locken of Lompoc, CA, moved to vacate the decision, saying they hadn't known about Ginsburg's affiliation with ADR Services and that Haber was conflicted. Chiu protested that Ginsburg's photo appeared in the ADR Services hallways and its brochures. It “stared [Locken] in the face on a daily basis,” Peterson wrote, also arguing that Ginsburg was an independent contractor with no financial interest in ADR Services.

Perren concluded that all that was immaterial because the California Arbitration Act and its ethics standards compel the vacating of an award whenever a lawyer in an arbitration is a member of the ADR provider organization. Even if it didn't, Perren added in a footnote, “A reasonable person could doubt the ability of Judge Haber to be impartial” under the circumstances. Justice Kenneth Yegan and L.A. County Superior Court Judge Brian Hoffstadt, sitting by designation, concurred.

Scott Graham is a reporter with The Recorder, an ALM sister publication of this newsletter in which this article also appeared.

Los Angeles litigator William Ginsburg apparently thought it wouldn't be a problem to join an alternative dispute resolution (ADR) provider while it was conducting an arbitration for one of his medical malpractice clients. But California's Second District Court of Appeal saw it differently, establishing a bright-line rule on Jan. 22 when it held that a lawyer's membership in the ADR provider deciding his case must be disclosed to the other side. The decision appears to be the first to construe Standard 8 of the 2002 California Ethics Standards of Neutral Arbitrators in Contractual Arbitrations.

Because arbitrator Alan Haber failed to disclose Ginsburg's membership in his provider, ADR Services, a nine-day arbitration resulting in a favorable award for Ginsburg's client had to be vacated. “While that rule seems harsh, it is necessary to preserve the integrity of the arbitration process,” Justice Steven Perren wrote for a unanimous Second District panel in Gray v. Chiu, 2013 Cal. App. LEXIS 40 (2013).

New Professional Relationship Established Midstream

Standard 8 states that neutrals must disclose relationships between the ADR provider and any party or attorney in an arbitration. Judge Perren read it strictly, turning aside claims that Ginsburg's role at ADR Services was common knowledge and that he worked only as an independent contractor. Ginsburg is a veteran litigator who gained notoriety during the 1990s for his brief representation of White House intern Monica Lewinsky.

In 2009, a long-time client of Ginsburg's, physician John Chiu, was sued for malpractice following a spinal disc surgery. Chiu moved to compel arbitration and the case was assigned to a three-arbitrator panel, with Haber, a former Los Angeles County Superior Court judge with ADR Services, chosen as the neutral.

Around the same time Ginsburg was wrapping up his practice at Peterson & Bradford, and by October 2009 he was working for ADR Services himself. In 2010, Haber made his disclosure statements, stating he had no professional or personal affiliation with any of the parties or their counsel. By then Ginsburg's law partner, George Peterson, had taken over as lead counsel for Chiu, but Ginsburg continued to participate in the case, attending all sessions of the nine-day arbitration in 2011.

A Hard and Fast Rule

After Haber ruled for Chiu, the plaintiffs and their counsel, Eugene Locken of Lompoc, CA, moved to vacate the decision, saying they hadn't known about Ginsburg's affiliation with ADR Services and that Haber was conflicted. Chiu protested that Ginsburg's photo appeared in the ADR Services hallways and its brochures. It “stared [Locken] in the face on a daily basis,” Peterson wrote, also arguing that Ginsburg was an independent contractor with no financial interest in ADR Services.

Perren concluded that all that was immaterial because the California Arbitration Act and its ethics standards compel the vacating of an award whenever a lawyer in an arbitration is a member of the ADR provider organization. Even if it didn't, Perren added in a footnote, “A reasonable person could doubt the ability of Judge Haber to be impartial” under the circumstances. Justice Kenneth Yegan and L.A. County Superior Court Judge Brian Hoffstadt, sitting by designation, concurred.

Scott Graham is a reporter with The Recorder, an ALM sister publication of this newsletter in which this article also appeared.