Opinion ID: 2510533
Heading Depth: 1
Heading Rank: 13

Heading: Evident partiality standard

Text: This court has never interpreted NRS 38.145(1)(b)'s evident partiality grounds for vacating an arbitration award. NRS 38.145(1)(b) (repealed 2001) states that the court shall vacate an award where: ... (b) There was evident partiality by an arbitrator appointed as a neutral. The threshold determination is the standard of evident partiality that applies. The City and amicus urge us to adopt the reasonable impression of partiality standard set forth by the Supreme Court in Commonwealth Corp. v. Casualty Co. [31] and adopted by the United Stated Court of Appeals for the Ninth Circuit in Schmitz v. Zilveti. [32] Thomas and Armstrong also urge this court to adopt the Commonwealth Corp. and Schmitz standard, but they argue that the standard under these cases is an appearance of impropriety standard instead of a reasonable impression of partiality standard. We agree with the City and amicus and adopt the reasonable impression of partiality standard for determining when an arbitrator has a duty to disclose a relationship under NRS 38.145(1)(b). Claims of evident partiality fall into two categories: (1) actual bias and (2) nondisclosure of information. [33] Here, we are presented with the second category, nondisclosure of information. [34] In nondisclosure cases, evident partiality is established from the nondisclosure itself, regardless of whether the [un]disclosed information [actually] establishes [evident] partiality or bias. [35] The burden of proving evident partiality is on the party challenging the arbitration award. [36] The seminal case on nondisclosure claims and evident partiality is Commonwealth Corp. [37] In Commonwealth Corp., the United States Supreme Court determined that the proper standard for nondisclosure claims of evident partiality is that an arbitrator not only must be unbiased but also must avoid even the appearance of bias. [38] However, Justice White's concurring opinion stated that arbitrators are men of affairs, not apart from but of the marketplace, [39] and intimated that a more lenient standard of disclosure might be appropriate. He stated that although the judiciary must not overlook outright chicanery in the arbitrator's awards, arbitrators are not automatically disqualified by a business relationship with the parties before them if the arbitrator informs the parties of the relationship or if that relationship is trivial. [40] Justice White observed that an arbitrator cannot be expected to provide the parties with his complete and unexpurgated business biography, but in instances where the arbitrator has a substantial interest in an entity doing more than trivial business with a party, the arbitrator must disclose that fact. [41] Since Commonwealth Corp., courts have struggled with the evident partiality standard. [42] The United States Court of Appeals for the Ninth Circuit first addressed this issue in Schmitz v. Zilveti. [43] It concluded that although Justice White's concurring opinion did not render Commonwealth Corp. a plurality, the majority opinion did not articulate a succinct standard. Other courts adopting Commonwealth Corp. applied a reasonable impression of partiality standard, and the Ninth Circuit held that this standard was the best expression of the Commonwealth [Corp.] court's holding. [44] We agree and hold that the proper standard for determining whether a party has demonstrated evident partiality by the arbitrator's nondisclosure of a relationship, is whether the undisclosed relationship gives rise to a reasonable impression of partiality. [45] Next, we must determine whether Goldberg's Metro/PPA/PMSA panel membership is a relationship that gives rise to a reasonable impression of partiality, thereby giving Goldberg a duty to disclose his Metro/PPA/PMSA panel membership. The City and amicus argue that Goldberg's duty to disclose must be interpreted under the parties' chosen method of dispute resolution, here the FMCS. The City and amicus argue that Goldberg's service on the Metro/PPA/PMSA panel is not a relationship requiring disclosure. Thomas and Armstrong do not dispute that FMCS disclosure requirements apply but argue that the duty to disclose must be interpreted under NRS 38.145(1)(b). They argue that regardless of whether FMCS guidelines or NRS 38.145(1)(b) applies, Goldberg had a duty to disclose his panel membership and his failure to do so demonstrated evident partiality. The arbitration in this case arose under Thomas's and Armstrong's right to arbitrate under the CBA. Under the CBA, arbitration of grievances must be conducted according to FMCS guidelines. Therefore, the parties have bound themselves to FMCS guidelines. As such, we do not interpret Goldberg's duty to disclose under NRS 38.145(1)(b), but instead, we analyze his duty under FMCS guidelines.