FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

NEW REGENCY PRODUCTIONS, INC., a 

California Corporation, No. 05-55224 Petitioner-Appellant,

D.C. No.

v.  CV-04-09951-AHM

NIPPON HERALD FILMS, INC., a OPINION Japanese Corporation,

Respondent-Appellee. 

Appeal from the United States District Court

for the Central District of California

A. Howard Matz, District Judge, Presiding

Argued and Submitted

February 13, 2007—Pasadena, California

Filed September 4, 2007

Before: Harry Pregerson, William A. Fletcher, and

Marsha S. Berzon, Circuit Judges.

Opinion by Judge William A. Fletcher

11357
COUNSEL

Howard L. Horwitz, Eric G. Stockel, Kibre & Horwitz, Beverly Hills, California, for the appellant.

Charles N. Shephard, Greenberg, Glusker, Fields, Claman &

Machtinger, Los Angeles, California, for the appellee.

OPINION

W. FLETCHER, Circuit Judge: 

This case arises from the arbitration of a contract dispute

between a film production company and a film distribution

11360 NEW REGENCY v. NIPPON HERALD
company. The district court vacated the arbitration award

based on the neutral arbitrator’s failure to disclose that during

the arbitration, he began work as a senior executive with a

company that was negotiating with a production executive of

one of the parties to the arbitration to finance and co-produce

an important motion picture. 

We hold that vacatur by the district court for “evident partiality” of the arbitrator was proper under the Federal Arbitration Act. We conclude that the lack of evidence of the

arbitrator’s actual knowledge of the ongoing negotiation does

not prevent a finding of evident partiality because, under the

circumstances of this case, the arbitrator had a duty to investigate possible conflicts resulting from his new employment

and to disclose that employment to the parties. We therefore

affirm the decision of the district court.

I. Background

In May 1995, Appellant New Regency and Appellee Nippon Herald entered into an agreement for Nippon Herald to

distribute in Japan five films produced by New Regency. In

June 2003, Nippon Herald sued New Regency in a Japanese

court, alleging that New Regency had violated the distribution

agreement by failing to deliver one of the five films,

“Crowded Room,” and by refusing to pay Nippon Herald

money it claimed it was owed under a cross-collateralization

provision. Several months later, the parties agreed that Nippon Herald would withdraw its Japanese suit and instead arbitrate its claims through the American Film Marketing

Association (“AFMA”), now the International Film and Television Alliance, a motion picture trade organization with its

own arbitration rules and panel of arbitrators. 

In November 2003, Nippon Herald and New Regency

jointly selected William J. Immerman, then a Los Angeles

attorney and executive for Crusader Entertainment, from a list

of three potential arbitrators provided by the AFMA. During

NEW REGENCY v. NIPPON HERALD 11361
the selection process, Immerman disclosed that he had previously arbitrated a case where counsel for Nippon Herald,

Charles Shephard, represented a party, and had also negotiated deals “with various executives of New Regency prior to

their becoming executives at New Regency.” On February 23,

2004, after his selection, Immerman further disclosed that an

attorney at Shephard’s firm had brought suit against Crusader

Entertainment and that, although he was not representing Crusader, he would likely be called as a percipient witness.

The arbitration hearing took place on April 27, 28, and 29,

and June 1, 2, and 3, 2004. In an order dated July 19, 2004,

Immerman decided that Nippon Herald was entitled to return

of the $440,000.00 fee it had paid for the undelivered film —

a point not disputed by New Regency — plus interest. In

addition, Immerman adopted New Regency’s interpretation of

the cross-collateralization provision and awarded to New

Regency a portion of the proceeds of a recoupment pool plus

interest, subsequently determined to amount to $2,341,257.00.

Immerman’s July 19 order was supplemented twice, on October 4, 2004, and November 30, 2004. Immerman’s final order

was served on the parties on December 3, 2004.

On December 7, 2004, New Regency moved in federal district court to confirm the final arbitration award and enter

judgment pursuant to 9 U.S.C. § 9. Nippon Herald crossmoved to vacate the arbitration award on three grounds: (1)

Immerman had erroneously applied California rather than

Netherlands contract law, thus exceeding his authority as an

arbitrator; (2) Immerman had failed to disclose a prior work

relationship with New Regency General Counsel and arbitration witness Bill Weiner; and (3) Immerman had failed to disclose that in mid-July 2004, before entry of the July 19 Order,

he began his new employment as Senior Vice President and

Chief Administrative Officer of the Yari Film Group. When

Immerman began work, Yari Film Group was negotiating to

finance and co-produce “The Night Watchman,” a motion

picture developed by New Regency and produced by Alexan11362 NEW REGENCY v. NIPPON HERALD
dra Milchan (“Milchan”). Milchan is a production executive

at New Regency. She is the daughter of New Regency’s principal owner and Chief Executive Officer, Arnon Milchan. 

The district court granted Nippon Herald’s motion to vacate

the arbitration award on January 14, 2005. It concluded that

vacatur was proper because Immerman’s failure to disclose

his dealings with Yari Film Group created a reasonable

impression of partiality. The district court concluded that

Immerman’s past relation with Weiner did not support vacatur. It declined to reach the question of whether Immerman

had exceeded his authority. New Regency timely appealed.

We have jurisdiction pursuant to 28 U.S.C. § 1291 and we

affirm.

II. Choice of Law

Before proceeding to the merits of the vacatur question, we

must first decide whether to apply California law or the Federal Arbitration Act (“FAA”). The district court applied California law without discussion, although it indicated that it

would reach the same result under the FAA. In their initial

briefing to this court, both New Regency and Nippon Herald

argued that California law should apply, citing a single District of Hawaii case, Brown v. Hyatt Corp., 128 F. Supp. 2d

697, 700-01 (D. Haw. 2000), for the proposition that the FAA

does not apply to postdispute arbitration agreements. However, in supplemental briefing we ordered on this issue the

parties now agree that we should apply the FAA. 

[1] For three reasons, we agree with the parties that the

FAA, not California law, governs this postdispute arbitration

agreement. First, the plain language of the coverage provision

of the FAA, 9 U.S.C. § 2, unambiguously encompasses both

predispute and postdispute arbitration agreements. According

to that provision, the FAA covers:

A written provision in any maritime transaction or a

contract evidencing a transaction involving comNEW REGENCY v. NIPPON HERALD 11363
merce to settle by arbitration a controversy thereafter

arising out of such contract or transaction, or the

refusal to perform the whole or any part thereof, or

an agreement in writing to submit to arbitration an

existing controversy arising out of such a contract,

transaction, or refusal . . . . 

9 U.S.C. § 2 (emphasis added). Second, we are aware of no

appellate or Supreme Court authority holding that postdispute

arbitration agreements fall outside the scope of the FAA.

Numerous courts have applied the act to such agreements.

See, e.g., Asia Pac. Indus. Corp. v. Rainforest Caf), Inc., 380

F.3d 383, 385 (8th Cir. 2004); Al-Harbi v. Citibank, N.A., 85

F.3d 680, 681-82 (D.C. Cir. 1996); Sverdrup Corp. v. WHC

Constructors, Inc., 989 F.2d 148, 149-51 (4th Cir. 1993).

Third, we have previously recognized that “there is a strong

default presumption that the Federal Arbitration Act, not state

law, supplies the rules for arbitration.” Fidelity Fed. Bank,

FSB v. Durga Ma Corp., 386 F.3d 1306, 1311 (9th Cir. 2004)

(internal quotation marks and alterations omitted); see also

Sovak v. Chugai Pharm. Co., 280 F.3d 1266, 1269 (9th Cir.

2002). No circumstance exists here that would overcome this

presumption. 

We therefore review the district court’s vacatur decision

under the FAA.

III. Merits

The FAA provides that a district court “may make an order

vacating [an] [arbitration] award upon the application of any

party to the arbitration”:

(1) where the award was procured by corruption,

fraud, or undue means; (2) where there was evident

partiality or corruption in the arbitrators, or either

of them; 

11364 NEW REGENCY v. NIPPON HERALD
(3) where the arbitrators were guilty of misconduct

in refusing to postpone the hearing, upon sufficient

cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other

misbehavior by which the rights of any party have

been prejudiced; or 

(4) where the arbitrators exceeded their powers, or

so imperfectly executed them that a mutual, final,

and definite award upon the subject matter submitted

was not made. 

9 U.S.C. § 10(a) (emphasis added).

We review a district court’s “decision to vacate or confirm

an arbitration award” de novo. Poweragent Inc. v. Elec. Data

Sys. Corp., 358 F.3d 1187, 1193 (9th Cir. 2004). We review

its findings of fact for clear error. Coutee v. Barington Capital

Group, L.P., 336 F.3d 1128, 1132 (9th Cir. 2003). 

A. Failure to Disclose Employment

Nippon Herald contends that vacatur was proper because

Immerman’s failure to disclose the facts of his employment

by Yari Film Group and its negotiations with Milchan to

finance and co-produce “The Night Watchman” is sufficient

to establish “evident partiality . . . in the arbitrator[ ].” 9

U.S.C. § 10(a)(2). New Regency argues that vacatur was

improper because (1) these facts are insufficient to establish

evident partiality, and (2) there is no evidence that Immerman

had actual knowledge of Yari Film Group’s dealings with

Milchan.

1. Legal Standard

“Evident partiality” is distinct from actual bias. In Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S.

145 (1968), the Supreme Court held that a party seeking to

NEW REGENCY v. NIPPON HERALD 11365
vacate an arbitration award for evident partiality need not

show that the arbitrator “was actually guilty of fraud or bias

in deciding th[e] case.” Id. at 147. Rather, the arbitrator’s failure to “disclose to the parties any dealings that might create

an impression of possible bias” is sufficient to support vacatur. Id. at 149. The Court found this standard was satisfied

where a neutral arbitrator in a dispute between a contractor

and subcontractor failed to disclose that he had previously

performed consulting work worth about $12,000 for the contractor. Although “there had been no dealings between them

for about a year immediately preceding the arbitration,” the

arbitrator’s past relationship with the contractor had included

irregular contacts “over a period of four of five years”and had

gone “so far as to include the rendering of services on the

very projects involved in th[e] lawsuit.” Id. at 146. While the

Court recognized “that arbitrators cannot sever all their ties

with the business world,” it emphasized that because arbitrators “have completely free rein to decide the law as well as

the facts and are not subject to appellate review,” courts must

“scrupulous[ly]” “safeguard the[ir] impartiality.” Id. at 148-

49. 

[2] In Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir. 1994), we

vacated an arbitration award for evident partiality where the

arbitrator’s law firm had represented the parent company of

a party “in at least nineteen cases during a period of 35

years[,] the most recent representation end[ing] approximately

21 months before [the] arbitration was submitted.” Id. at

1044. We disagreed with the district court’s conclusion that

evident partiality could not be shown because the arbitrator

“was unaware of his law firm’s conflict” during the arbitration. Id. Based on Commonwealth Coatings, we concluded

that the legal standard for evident partiality is whether there

are “facts showing a ‘reasonable impression of partiality.’ ”

Id. at 1048. We explained that this legal standard can be satisfied even where an arbitrator is unaware of the facts showing

a reasonable impression of partiality because the arbitrator

11366 NEW REGENCY v. NIPPON HERALD
“may have a duty to investigate independent of [his] . . . duty

to disclose.” Id.

For two reasons, we concluded in Schmitz that there was a

duty to investigate. First, “parties can expect a lawyer/

arbitrator to investigate and disclose conflicts he has with

actual parties to the arbitration.” Id. Second, the code of the

arbitral body, the National Association of Securities Dealers

(“NASD”), “require[d] arbitrators to ‘make a reasonable

effort to inform themselves of any’ ‘existing or past financial,

business, [or] professional . . . . relationships [that they or

their employer, partners, or business associates may have] that

are likely to affect impartiality or might reasonably create an

appearance of partiality or bias.’ ” Id. at 1049 (alterations in

original).

We concluded that the lawyer/arbitrator in Schmitz failed to

discharge his duty to investigate because, although he had run

a conflict check on the actual parties to the arbitration, he had

failed to run a conflict check on one party’s parent company.

That check would have revealed the parent company engaged

in substantial business with the arbitrator’s law firm. Id. at

1044, 1049. Given the lawyer/arbitrator’s “constructive

knowledge and the presence of the conflict,” we concluded

that his “failure to inform the parties to the arbitration resulted

in a reasonable impression of partiality under Commonwealth

Coatings.” Id. at 1049. 

2. Facts Supporting Vacatur

The key facts are largely undisputed. During the arbitrator

selection process in November 2003, the AFMA distributed

Immerman’s resume to the parties. It stated that he was

employed as a private attorney “specializing in representing

sales agents, independent producers, financiers and distributors and negotiating complex financing deals and acting as

production and distribution counsel for his clients and [a]s

Executive Vice President of Crusader Entertainment, LLC.”

NEW REGENCY v. NIPPON HERALD 11367
During the selection process, Immerman disclosed that he had

previously “negotiated deals in [his] capacity as an attorney

with various executives of New Regency prior to their becoming executives at New Regency.” After he was selected,

Immerman disclosed, on February 23, 2004, that an attorney

at the law firm representing Nippon Herald had filed a lawsuit

against Crusader Entertainment, a company he had “represented as an attorney” and where he “also serve[d] as an officer of the company.” Immerman stated that he was “not

representing Crusader Entertainment in the action but in all

probability, should the action proceed further, . . . [would] be

a percipient witness since [he] did represent Crusader with

respect to the negotiation of the agreement that is the basis of

the action.” 

In October 2004, after the conclusion of the arbitration,

Immerman testified under oath in an unrelated proceeding that

he had been employed by Yari Film Group “[s]ince the middle of July.” Immerman described his position at the Yari

Film Group as “Senior executive vice president and chief

administrative officer.” He listed as among his “responsibilities” “oversee[ing] the business affairs and legal department

and assist[ing] the production department and also assist[ing]

in the general administration of the company.” The district

court found that Immerman was “employ[ed] with Yari during the pendency of the arbitration, shortly before the issuance

of the first decision,” and adverted to the possibility that

Immerman had “entered into negotiations at a much earlier

time.” 

Yari Film Group is an independent film company that, during the relevant period, financed and distributed about 10 to

15 films per year, a number of these in partnership with other

film companies. In late July 2004, industry press reported that

Yari Film Group was in negotiations to finance a film, “The

Night Watchman,” based on a screenplay by the popular

crime novelist James Ellroy, and that Spike Lee was in talks

to be the director. The film had been developed by New

11368 NEW REGENCY v. NIPPON HERALD
Regency and would be produced by Alexandra Milchan, a

production executive at New Regency. The press release

stated that Milchan would produce the film “outside of her

deal with Regency Enterprises.” In September, “The Night

Watchman” was one of sixteen films, in various stages of

development, being financed by Yari Film Group. In November, the actor Keanu Reeves was signed to star in “The Night

Watchman.” Immerman’s final arbitration order was served

on the parties in early December.

3. Discussion

[3] If the facts of Yari Film Group’s negotiations for “The

Night Watchman” had been known to Immerman prior to the

completion of the arbitration, we would have no trouble concluding that his failure to disclose them to the parties would

support vacatur of the arbitration award on the ground of evident partiality. Even if Milchan was not directly representing

New Regency in negotiations with Yari Film Group, she was

an executive for New Regency and the daughter of its principal owner and chief executive officer. Indeed, Immerman

himself had considered past negotiations of deals “with various executives of New Regency prior to their becoming executives at New Regency” significant enough to disclose them

in November 2003, during the arbitrator selection process.

(Emphasis added.) “The Night Watchman” was a significant

project. Beginning in mid-July, Immerman was a high-level

executive at Yari Film Group, responsible, by his own

account, for overseeing its business affairs and legal department and assisting its production department. These facts

show that Immerman “ha[d] a substantial interest in a firm

which [was doing] more than trivial business” closely connected to a party to the arbitration. See Commonwealth Coatings, 393 U.S. at 151-52 (White, J., concurring). 

[4] New Regency argues on appeal that evident partiality

cannot be established because the evidence does not establish

that Immerman had actual knowledge of the facts he failed to

NEW REGENCY v. NIPPON HERALD 11369
disclose. This argument is contrary to Schmitz, where we held

that an arbitrator’s lack of actual knowledge of the presence

of a conflict does not excuse non-disclosure where the arbitrator had a duty to investigate, and thus had constructive knowledge of, the conflict. 20 F.3d at 1048. While we did not hold

in Schmitz that arbitrators have a duty to investigate potential

conflicts in all cases, we concluded that such a duty did exist

where an arbitrator’s firm represented the parent corporation

of one of the parties and the procedures of the arbitral body

required arbitrators to make a reasonable effort to inform

themselves of potential conflicts. Id. at 1048-49; cf. Al-Harbi,

85 F.3d at 682-83 (finding no evident partiality based on fact

that, unbeknownst to arbitrator, his “former law firm” represented a party to the arbitration on unrelated matters and distinguishing Schmitz on the ground that in the present case “the

alleged evident partiality arises not from a representation by

any firm with which the arbitrator was connected at the time

of the arbitration” (emphasis in original)).

[5] Other courts of appeals have agreed with our holding in

Schmitz that evidence of an arbitrator’s actual knowledge of

undisclosed facts is not always necessary to establish evident

partiality. In Applied Indus. Materials Corp. v. Ovalar Makine

Ticaret Ve Sanayi, A.S., ___ F.3d ___, No. 06-3297-CV, 2007

WL 1964955 (2d Cir. July 9, 2007), the Second Circuit held

that an arbitration award could be vacated for evident partiality where one of three arbitrators, the chairperson, president,

and CEO of a “multi-billion dollar company with 50 offices

in 30 countries,” “fail[ed] to either investigate what he knew

to be a potential business relationship between his corporation” and a parent company of a party “or inform them that

he had walled himself off from learning more.” Id. at *1. The

court began with the proposition that where “[a]n arbitrator

. . . knows of a material relationship with a party and fails to

disclose it,” “[a] reasonable person would have to conclude”

that the arbitrator was evidently partial. Id. at *4. But because

the record did not show “the nature and timing of the arbitrator’s knowledge” of the relationship between his company

11370 NEW REGENCY v. NIPPON HERALD
and the parent company of the party, the court’s analysis did

not end there. Id. It noted that Justice White had stated in concurrence in Commonwealth Coatings that “ ‘arbitrators are not

automatically disqualified by a business relationship with the

parties before them if both parties are informed of the relationship in advance, or if they are unaware of the facts but the

relationship is trivial.’ ” Id. (quoting Commonwealth Coatings, 393 U.S. at 150 (White, J., concurring)) (emphasis in

original). While declining to impose on arbitrators a “freestanding duty to investigate,” the court read Justice White’s

statement to require that “where an arbitrator has reason to

believe that a nontrivial conflict of interest might exist,” the

arbitrator must either investigate the circumstance or disclose

his or her intention not to investigate. Id. at *4-5. Otherwise,

parties might be “misled into believing that no nontrivial conflict exists.” Id. at *4.

The Second Circuit in Applied Industrial Materials cited

the Fourth Circuit’s opinion in ANR Coal Co., v. Cogentrix of

North Carolina, Inc., 173 F.3d 493 (4th Cir. 1999). There the

court stated that “if an arbitrator fails to investigate facts that

come to light after the award, and those facts are not trivial,

the aggrieved party may use this information to demonstrate

evident partiality under 9 U.S.C. § 10(a)(2).” Id. at 499 n.4.

The court declined to recognize that an arbitrator has a general duty to investigate, but suggested that should the arbitrator fail to perform due diligence in identifying conflicts, an

undiscovered, “not trivial” conflict may result in vacatur. Id.

In Olson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 51

F.3d 157 (8th Cir. 1995), the Eighth Circuit reversed the district court’s order confirming an arbitration award because the

arbitrator had failed to disclose his job title and that his

employer had “ongoing business relationships” with one of

the parties. Id. at 158. Although the arbitrator “was not personally involved in” those relationships, the court wrote that

“as a high ranking officer,” he had “a substantial interest” in

his firm, which “did more than trivial business” with the

NEW REGENCY v. NIPPON HERALD 11371
party. Id. at 159. The court did not discuss whether the arbitrator had any actual knowledge of his firm’s dealings with

the party.

We are aware of only one court of appeals that has adopted

a per se rule that a finding of evident partiality is precluded

by an arbitrator’s lack of “actual knowledge of the information upon which [an] alleged ‘conflict’ was founded.” Gianelli Money Purchase Plan & Trust v. ADM Investor Servs.,

Inc., 146 F.3d 1309, 1313 (11th Cir. 1998). In Gianelli, the

Eleventh Circuit disapproved of our decision in Schmitz. But

even if we were persuaded that Schmitz was wrongly decided,

we would be bound to follow it as the law of our circuit.

[6] For a number of reasons we conclude, in the circumstances of this case, that Immerman had a duty to investigate

potential conflicts when he accepted a high-level executive

position at Yari Film Group while the arbitration was ongoing. First, the parties could reasonably have expected Immerman to investigate potential conflicts when, during the

pendency of the arbitration, he took a job, the duties of which

included overseeing the legal department of another film company. Schmitz, 20 F.3d at 1048. We believe that his decision

to accept a new high-level executive job at a company in the

same industry as the parties during the arbitration is precisely

the type of situation “where an arbitrator has reason to believe

that a nontrivial conflict of interest might exist” and should

investigate to determine the existence of potential conflicts.

See Applied Indus. Materials Corp., ___ F.3d at ___, 2007

WL 1964955 at *4. 

[7] Second, the disclosure provisions of the AFMA’s arbitral rules impose on Immerman a duty to investigate and disclose conflicts. See Schmitz, 20 F.3d at 1049. Section 6.5 of

the AFMA Rules for International Arbitration (2002) provides

that “[a] prospective arbitrator shall disclose to the Arbitral

Agent and the parties in connection with such arbitrator’s possible appointment as arbitrator any circumstances likely to

11372 NEW REGENCY v. NIPPON HERALD
give rise to justifiable doubt as to the arbitrator’s impartiality

or independence as to the parties or the matter in dispute in

accordance with the procedural law of the jurisdiction of the

place of the arbitration, or, if none is specified, then the laws

of the State of California.” California Code of Civil Procedure

§ 1297.121 requires arbitrators in international arbitrations,

see id. §§ 1297.11, 1297.13, to “make a disclosure to the parties of any information which might cause their impartiality

to be questioned.” This obligation is ongoing “[f]rom the time

of appointment and throughout the arbitral proceedings.” Id.

§ 1297.123. While this language does not “expressly provide[ ] that the arbitrator must ‘investigate’ whether he has

any of the questionable relationships and/or interests, . . . [it]

necessarily implicates a duty to investigate whether instances

of potential conflict exist.” HSMV Corp. v. ADI Ltd., 72 F.

Supp. 2d 1122, 1129 (C.D. Cal. 1999), disapproved on other

grounds in Fidelity Fed. Bank, 386 F.3d at 1313.

We also note that Canon I(C) of the American Arbitration

Association and American Bar Association Code of Ethics for

Arbitrators in Commercial Disputes (2004) states that “[a]fter

accepting appointment and while serving as an arbitrator, a

person should avoid entering into any business, professional,

or personal relationship, or acquiring any financial or personal

interest, which is likely to affect impartiality or which might

reasonably create the appearance of partiality.” Canon II(B)

of the code also provides that arbitrators have an ongoing duty

to “make a reasonable effort to inform themselves of any

interests or relationships” subject to disclosure. General Standard 7(c) of the International Bar Association Guidelines on

Conflicts of Interest in International Arbitration (2004) states

that “[a]n arbitrator is under a duty to make reasonable

enquiries to investigate any potential conflict of interest, as

well as any facts or circumstances that may cause his or her

impartiality or independence to be questioned.” The standard

continues: “Failure to disclose a potential conflict is not

excused by lack of knowledge if the arbitrator makes no reasonable attempt to investigate.” 

NEW REGENCY v. NIPPON HERALD 11373
Although these sources are not binding authority and do not

have the force of law, when considered along with an attorney’s traditional duty to avoid conflicts of interest, they reinforce our holding in Schmitz that “a reasonable impression of

partiality can form when an actual conflict of interest exists

and the lawyer has constructive knowledge of it. That the lawyer forgot to run a conflict check . . . is not an excuse.” 20

F.3d at 1048 (citations omitted); see also Commonwealth

Coatings, 393 U.S. at 149 (treating the AAA rules as persuasive authority). 

[8] Third, the parties could have reasonably expected

Immerman to disclose his new employment at Yari Film

Group based on his prior pattern of conduct in the arbitration.

As New Regency itself noted in its response to Nippon Herald’s petition to vacate the award at the district court, in addition to disclosing that he had negotiated deals with executives

of New Regency prior to their becoming executives there,

“[t]he Arbitrator also provided a detailed biography with a

comprehensive employment history.” New Regency used

these disclosures to argue that vacatur was improper because

the arbitrator’s disclosure of his past employment history and

business dealings placed the onus on Nippon Herald to make

further inquiries. Yet it is not reasonable to expect Nippon

Herald to investigate potential conflicts with Yari Film Group

when Immerman never revealed he had taken a high-level

executive job at that company. In fact, it is precisely against

the background of previously disclosed information that

Immerman’s failure to disclose his new position might have

“misled” Nippon Herald “into believing that no nontrivial

conflict exist[ed].” Applied Indus. Materials Corp., ___ F.3d

at ___, 2007 WL 1964955, at *4. 

[9] Under these circumstances, Immerman had a duty when

he accepted the new job at Yari Film Group to investigate the

possible conflicts that might arise from his new employment.

However, even though Immerman breached his duty to investigate, vacatur is only appropriate if the conflict left undis11374 NEW REGENCY v. NIPPON HERALD
closed was real, see Schmitz, 20 F.3d at 1049, and “not

trivial.” ANR Coal Co., Inc., 173 F.3d at 499 n.4. Understandably, courts have rejected claims of evident partiality based on

long past, attenuated, or insubstantial connections between a

party and an arbitrator. See, e.g., Positive Software Solutions,

Inc. v. New Century Mortgage Corp., 476 F.3d 278, 284 (5th

Cir. 2007) (en banc) (collecting cases). As Justice White

explained in his concurrence in Commonwealth Coatings, it

would be unrealistic to expect an arbitrator to “provide the

parties with his complete and unexpurgated business biography.” Commonwealth Coatings, 393 U.S. at 151 (White, J.,

concurring). 

[10] The conflict alleged by Nippon Herald is real and nontrivial. “The Night Watchman” negotiation was not distant in

time, but rather ongoing during the arbitration. Nor was the

connection between Yari Film Group and New Regency

attenuated. Even if Milchan was not directly representing

New Regency in the negotiations, she had substantial ties to

the company as an executive of the company and the daughter

of its principal owner and chief executive officer. Although

the record does not allow us to place a dollar value on “The

Night Watchman,” taking into account the high-profile nature

of the film project itself, and the size of Yari Film Group’s

business, we cannot conclude that the negotiation was unimportant to Yari Film Group. 

[11] Under these circumstances, we hold that Immerman

had a duty, when he accepted the new job at Yari Film Group

during the arbitration, to investigate the possible conflicts that

might arise from his new employment. We hold further, in

light of that duty, that Immerman’s failure to disclose facts

that show a reasonable impression of partiality is sufficient to

support vacatur, notwithstanding the lack of evidence of his

actual knowledge of those facts.

While we are cognizant of the public interest in efficient

and final arbitration, we believe that a rule encouraging “arbiNEW REGENCY v. NIPPON HERALD 11375
trators [to] err on the side of disclosure” is consistent with that

interest. Id. at 152. As Justice White explained in Commonwealth Coatings, the “arbitration process functions best”

where early and full arbitrator disclosure fosters “an amicable

and trusting atmosphere” conducive to “voluntary compliance

with the decree.” Id. at 151.

Conclusion

For the foregoing reasons, we hold that the district court

did not err in vacating the arbitration award on the ground of

evident partiality. 

AFFIRMED. 

11376 NEW REGENCY v. NIPPON HERALD