{"id":904,"date":"2022-01-13T17:09:08","date_gmt":"2022-01-13T22:09:08","guid":{"rendered":"http:\/\/abfifer.com\/blog\/?p=904"},"modified":"2022-01-13T17:09:08","modified_gmt":"2022-01-13T22:09:08","slug":"disclose-does-not-mean-disqualified","status":"publish","type":"post","link":"https:\/\/abfifer.com\/blog\/2022\/01\/disclose-does-not-mean-disqualified\/","title":{"rendered":"Disclose Does Not Mean “Disqualified”"},"content":{"rendered":"

Mediators and arbitrators are required to disclose to potential parties any facts that might make them appear impartial. The arbitration statute in Michigan requires potential arbitrators to disclose \u201cany known facts that a reasonable person would consider likely to affect the impartiality of the arbitrator\u2026\u201d including a financial or personal interest in the outcome of the arbitration, or an existing or past relationship with any party, their counsel, a witness, or another arbitrator. MCL 691.1692. Mediators are required, pursuant to the Michigan Standards of Conduct for Mediators,<\/a> to disclose conflicts of interest and grounds of bias or partiality reasonably known to the mediator. Standard III.C. A conflict of interest is defined as \u201ca dealing or relationship that could reasonably be viewed as creating an impression of possible bias or as raising a question about the impartiality or self-interest on the part of the mediator.\u201d Standard III.A. Michigan\u2019s Standards of Conduct for Mediators are very similar to the Model Standards.<\/p>\n

The paradigm is that the potential neutral discloses sources of possible bias, then the parties decide whether the connection disclosed is so tenuous as to be irrelevant, or so serious as to disqualify the person from serving as their neutral. In sum, the neutral\u2019s job is to disclose; the parties\u2019 job is to decide whether to appoint (or to remove, if the disclosure occurs when the process is already underway).<\/p>\n

The Court of Appeals seems to have gotten this confused in an arbitration case, Wilson v Builders<\/em>,<\/a> unpublished per curiam opinion of the Michigan Court of Appeals, issued November 19, 2020 (Docket No. 351560). <\/em>The case involved a construction dispute; each side was represented by counsel, and each side selected an arbitrator, then the local judge appointed the \u201cneutral\u201d arbitrator. The neutral arbitrator, Mr. Darbee, had a long-standing friendship with defendant builder\u2019s attorney, Mr. Sheppard, which Mr. Darbee apparently failed to disclose. Over the previous ten years, they had frequently engaged in group lunches and occasional social events through the local bar association. They had gone together with a local orthodontist to a couple of college basketball games. Their paths had crossed when Darbee was on the municipal zoning board of appeals and Shepherd was city attorney. When Darbee had a dispute with his water bill, his attorney selected Shepherd as their neutral case evaluator. The two were rumored to have lunch together in local restaurants, and indeed, they lunched together during the arbitration proceedings.<\/p>\n

The plaintiff evidently did not learn of any of this until after the award (he won, but he received less than a quarter what he had demanded). Plaintiff asked the trial court to vacate the award due to the arbitrator\u2019s bias. He said he never would have agreed to Mr. Darbee had he known all this. The trial court refused, noting that Bay City was \u201ca small community\u201d where \u201clawyers rub shoulders and change sides on a daily basis,\u201d concluding that Darbee was impartial. (Recall that the trial judge is the one who appointed Mr. Darbee to this panel.) The plaintiff appealed.<\/p>\n

The Court of Appeals affirmed. The Court agreed that Arbitrator Darbee had a \u201crelationship\u201d with Attorney Sheppard, but determined that the \u201cthe type of relationship contemplated by the statute is one implicating a personal or financial interest, rather than the loose professional association between Darbee and Sheppard.\u201d The court opined that interpreting the statute broadly to include professional relationships \u201cwould prohibit most attorneys from acting as arbitrators and would discourage attorneys from participating in bar events.\u201d<\/p>\n

No, it wouldn\u2019t. All the statute requires is disclosure, not disqualification. Neutral discloses, parties decide. The plaintiff here might well have determined that, all things being equal, Mr. Darbee was still the best candidate for the job. But the plaintiff was deprived of the opportunity to make that decision.<\/p>\n

In a twist of logic, the Court of Appeals says that the fact that the arbitrator had lunch with defense counsel during the proceedings is evidence that their association did not affect the arbitrator\u2019s impartiality, because neither party objected. Impartiality is not proven by whether a party objected. If plaintiff\u2019s counsel knew at the time the extent of their friendship, perhaps he would have objected. Lacking context, he may have decided to overlook this one incident to avoid jettisoning the arbitration. Far from being evidence of impartiality, it\u2019s further evidence that there was a friendship here that should have been disclosed at the outset.<\/p>\n

The Court of Appeals\u2019 comments about how a broad interpretation of \u201crelationship\u201d would mean that no one in the bar could serve as a neutral are similar to the concerns expressed by the Attorney Discipline Board (ADB) in a case regarding a mediator\u2019s failure to disclose a close friendship with one side\u2019s attorney. The ADB worried that, \u201cIn the legal profession, an \u2018appearance of conflict of interest\u2019 can be found wherever anybody looks,\u201d so requiring neutrals to disclose every connection would discourage the collegial relationships that enable attorneys to resolve their differences amiably.<\/p>\n

The ADB, like the Court of Appeals, confuses disclosure with disqualification. In fact, following this logic, if all attorneys disclosed their relationships, they would all have the same \u201cdisadvantage\u201d and the playing field would be leveled. The Court of Appeals almost sounds patronizing when it quotes the trial judge\u2019s observation that \u201clawyers are able to separate themselves and act professionally and make professional decisions without being affected by personal relationships.\u201d Both courts sound like they\u2019re saying that attorneys don\u2019t need to disclose friendships because they can be trusted to do the right thing.<\/p>\n

No, they can\u2019t, and that\u2019s why we have rules compelling disclosure. Neutral discloses, parties decide.<\/p>\n","protected":false},"excerpt":{"rendered":"

Mediators and arbitrators are required to disclose to potential parties any facts that might make them appear impartial. The arbitration statute in Michigan requires potential arbitrators to disclose \u201cany known facts that a reasonable person would consider likely to affect the impartiality of the arbitrator\u2026\u201d including a financial or personal interest in the outcome of […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-904","post","type-post","status-publish","format-standard","hentry","category-arbitration"],"_links":{"self":[{"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/posts\/904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/comments?post=904"}],"version-history":[{"count":2,"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/posts\/904\/revisions"}],"predecessor-version":[{"id":906,"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/posts\/904\/revisions\/906"}],"wp:attachment":[{"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/media?parent=904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/categories?post=904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/abfifer.com\/blog\/wp-json\/wp\/v2\/tags?post=904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}