Ethics

From an unpublished California Court of Appeal opinion, Robbins v. Taylor:

It is a rare case in which the person who allegedly engaged in complicated machinations to disguise his true ownership of a corporation ? purportedly in an effort to deceive those who had business dealings with his prior company and might wish to assert claims against the new entity ? comes out looking like the honorable one. This is that case, and respondent Rodney Robbins is that guy ? if only because the other players, including his coconspirator in the machinations, appellant Kathryn Taylor, and the attorney who represented them both, Marc S. Hines, look significantly worse by comparison.

Robbins and Taylor agreed to have all disputes arising out of their involvement in the new corporation, Sterling Plumbing, Inc., decided by Attorney Hines, who just happened to have represented both of them in negotiating the terms under which they formed the corporation ? including several agreements which each named him as "arbitrator" of any dispute between the parties. And when a dispute did arise about the parties' respective legal rights established in the formation of their business ? after Taylor, the nominal (and by her own description "illusory") owner of corporation, unilaterally granted herself an employment contract entitling her to a $400,000 payout in the event of her departure from the company, and then promptly departed ? Hines assumed the role of "impartial" arbitrator to resolve the dispute, and refused to relinquish that role unless both parties agreed. And after Robbins uncovered evidence during the course of the arbitration that Hines had also secretly formed a competing plumbing corporation for Taylor, prior to her departure from Sterling, Hines denied any knowledge of the transaction.

After Hines ruled in Taylor's favor in the arbitration, Robbins petitioned the court to vacate the award on the grounds that Hines was "corrupt," that he had improperly refused to disqualify himself, and that he had failed to adequately disclose the extent of his continuing relationship with Taylor and the new corporation she formed.

We conclude the trial court properly concluded that the arbitration award Hines issued in favor of Taylor could not be enforced. While it is tempting to dismiss Robbins' complaints as simply the grousing of someone who is reaping the benefits of his poor judgment in selecting an arbitrator with such a demonstrably fluid sense of loyalty, the law simply will not allow courts to confer their imprimatur on arbitration awards tainted by corruption or other indicia of arbitrator wrongdoing. The order vacating the arbitration award is affirmed.