Advantage Medical Services, LLC v. Hoffman

In Advantage Medical Services, LLC v. Hoffman (2008) 160 Cal.App.4th 806, (AMS), the American Arbitration Association (AAA) designated William J. Tucker, from the law firm Kaye, Rose & Partners, LLP (Kaye Rose), as arbitrator in a binding arbitration proceeding between plaintiff Advantage Medical Services, LLC (AMS), and two defendants. (Id. at pp. 810-811.) Tucker granted AMS's request to have a representative of its insurer present at the arbitration without requiring AMS to first provide identifying information requested by the defendants' attorney. The representative, Cynthia Mitchell, introduced herself at the arbitration as " ' "coverage counsel for Lloyd's of London." ' " Tucker never inquired into the identity of the Lloyd's syndicates Mitchell represented, and made no disclosures regarding any past or present ties he or Kaye Rose had with Mitchell's law firm or with Lloyd's. At the close of the arbitration, Tucker issued an interim award in favor of AMS. (Id. at pp. 811-812.) A bankruptcy attorney who was then associated in as counsel for the defendants, learned that Tucker and Kaye Rose represented " ' "major marine insurers," ' " and that " 'Tucker himself is extremely involved in the maritime/insurance defense aspects of his law firm's practice by acting as "correspondent counsel" for P&I protection and indemnity Clubs that serve as the vehicle for providing insurance and other services to various types of shipowners.' The P&I Clubs are directly tied to Lloyd's through maritime syndicates that provide the bulk of the insurance and reinsurance for shipowners around the world." (AMS, supra, 160 Cal.App.4th at p. 812.) Tucker refused to disqualify himself, stating that his law firm " 'has represented some maritime clients who may have been insured by one or more syndicates who occupy space within the Lloyd's of London Building, who underwrite maritime risks' " and 'no syndicate at Lloyd's has ever been a client of Kaye Rose or of any firm with which I have ever been associated.' " (Ibid.) After the AAA confirmed Tucker as the arbitrator, the trial court granted Hoffman's petition for an order disqualifying the arbitrator and vacating the award. (AMS, supra, 160 Cal.App.4th at pp. 812-813, 815-816.) The Court of Appeal affirmed, pointing out that there was substantial evidence of Tucker's and Kaye Rose's involvement with Lloyd's, including that two syndicates of Lloyd's that were represented by Mitchell underwrote 75 percent of the AMS employment practices liability insurance policy; eight of the 13 P&I Clubs that comprise Lloyd's International Group had a relationship with Tucker and Kaye Rose; Kaye Rose advertises that it is the approved correspondent counsel for several P&I Clubs and Tucker is the contact person for matters in the San Diego area; participants in the maritime industry " 'are all very much aware of each other, of their respective ties to marine insurers and the predominant role Lloyds and its syndicates play with respect to loss prevention and indemnification' "; and " 'it would be incompatible for anyone approved as a "correspondent" for a P&I Club to take actions contrary to other participants; to do so would most certainly put at risk their status as approved "correspondent" counsel or otherwise.' " (AMS, at p. 819.) The AMS court found that the foregoing information " 'could cause a person aware of the facts to reasonably entertain a doubt that Tucker would be able to be impartial,' " and that Tucker failed to disclose it despite his duty to do so under section 1281.9. (160 Cal.App.4th at p. 819.)