Court Opinion

ID: 9735753
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:29:29.927878+00
Date Added: 2024-06-11T18:27:01.263228
License: Public Domain

YETKA, Justice
(concurring in part and dissenting in part).
I respectfully dissent. Although I concur with part 1 of the majority opinion, I would affirm the trial court’s decision in its entirety because the egregious acts of the defendants cut to the heart of the integrity of the entire judicial process. Moreover, it is my belief that the majority decision will weaken the ethical rules that govern our profession at a time when, if anything, the requirements of high ethical standards should be strengthened.
According to the majority, arbitrators may now conceal impermissible social or business contacts free of the prospect of personal liability to the parties in the arbitration. This result is wrong because (1) the arbitrator’s duty to disclose relationships with parties to the arbitration is not a discretionary decision entitled to arbitral immunity and (2) this disclosure is part of the preliminary administrative function of selecting an arbitrator and is, therefore, not entitled to arbitral immunity.
This court has granted arbitral immunity where:
some contractual provision [has] called for the exercise of independent judgment or discretion by a person acting as an arbitrator and which made his determination binding upon the parties selecting him. But in the absence of such contractual provisions, or where the agreement does not call for the exercise of judicial authority, ordinarily the person selected to perform skilled or professional services is not immune from charges of negligence * * *. •
Gammel v. Ernst & Ernst, 245 Minn. 249, 255, 72 N.W.2d 364, 368 (1955).
The AAA Commercial Arbitration Rules do not allow neutral arbitrators discretion as to what relationships the arbitrator should disclose; they mandate disclosure. Rule 19 provides:
A person appointed as neutral Arbitrator shall disclose to the AAA any circumstances likely to effect [sic] impartiality, including * * * any past or present relationship with the parties or their counsel. * * * Thereafter, the AAA shall determine whether the Arbitrator should be disqualified * * *.
AAA Commercial Arbitration Rule 19 (effective April 1, 1982) (emphasis added).
AAA correspondence clearly informs arbitrators of this requirement. For example, the July 9, 1982 letter inviting Mi-chaud’s acceptance stated:
If you * * * have had no association with either of the parties or their representatives which would disqualify you from serving, please execute * * * the enclosed Notice of Appointment * * *.
Moreover, the Notice of Appointment enclosed with the July 9, 1982 letter contained the following admonition:
It is most important that the parties have complete confidence in the Arbitrator’s impartiality. Therefore, please disclose any past or present relationship with the parties or their counsel, direct or indirect, whether financial, professional, social or other kind. Any doubt should be resolved in favor of disclosure. If you are aware of such a relationship, please describe it on the back of this form. The AAA will call the facts to the attention of the parties’ counsel.
Continued appointment as an arbitrator pursuant to the Commercial Rules of Arbitration is contingent upon disclosure of relationships with the parties. It is not within the arbitrator’s discretion to conceal, rather than disclose, relationships with parties or counsel. Thus, under Minnesota *382law, arbitral immunity does not shield an arbitrator from liability for neglecting this duty to disclose.
The standard for arbitral immunity is related to the scope of judicial immunity. Judicial immunity is defined by the functions it protects; that is, immunity insulates a judge from liability for judicial acts rather than administrative, legislative, or executive functions. Forrester v. White, 484 U.S. 219, 108 S.Ct. 538, 544, 98 L.Ed.2d 555 (1988). Requiring an arbitrator to disclose associations with parties to the arbitration before undertaking an assignment has nothing to do with immunity once deliberations begin. See Grane v. Grane, 143 Ill.App.3d 979, 98 Ill.Dec. 91, 493 N.E.2d 1112 (App.Ct.1986) (arbitrator who fraudulently induces another to enter into an arbitration agreement is not protected by arbi-tral immunity). This information is needed to decide whether the arbitrator should act at all. This preliminary disclosure requirement is a component of the administrative function of selecting an arbitrator. See Baar v. Tigerman, 140 Cal.App.3d 979, 987, 211 Cal.Rptr. 426, 431 (Ct.App.1983) (liability for negligent selection of arbitrator not protected by arbitral immunity because selection is administrative function). Thus, arbitral immunity does not shield an arbitrator from liability for neglecting this essential administrative function.
Holding the arbitrator personally responsible for disclosure would not defeat the policy of encouraging arbitration as the majority fears. Indeed, as the United States Supreme Court notes:
[W]e should, if anything, be even more scrupulous to safeguard the impartiality of arbitrators than judges, since the former have completely free reign to decide the law as well as the facts and are not subject to appellate review. We can perceive no way in which the effectiveness of the arbitration process will be hampered by the simple requirement that arbitrators disclose to the parties any dealings that might create an impression of possible bias.
Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 149, 89 S.Ct. 337, 339, 21 L.Ed.2d 301 (1968).
I would affirm the decision of the district court denying Michaud’s motion for summary judgment and answer the first certified question in the negative. As to the conduct of Attorney Eidsness, I adopt the views expressed in the dissent of Justice Coyne.