Some parties to a Mandatory Fee Arbitration fail to treat the proceedings with the proper amount of seriousness. A stern reminder to treat these proceedings with respect comes from California’s Second Appellate District in the form of the case Hooman Automotive Group, et al. v. Glaser Weil Fink Howard Avchen & Shapiro, LLP (“Hooman”). The outcome of Hooman demonstrates that a failure to respect the arbitrators’ time and authority can have devastating consequences for the parties to an arbitration. While this case is not published and is therefore not precedential, it is of note because it underscores the importance of adhering to all the policies and procedures of arbitration. This is particularly important when considering the policies of the arbitrators themselves.

The Arbitrator Sets the Rules

The case stems from the appeal by Hooman Nissani and his corporate entities — HK Automotive Group, Inc., RHC Automotive, Inc., and RHH Automotive — from a judgment that favored their former legal firm, Glaser Weil Fink Howard Avchen & Shapiro, under the Mandatory Fee Arbitration Act (“MFAA”). Their primary argument against the judgment was the perceived unfairness of arbitration being conducted in their absence. The clients also asserted it was improper to enter judgments against corporate entities and Nissani individually, given they were (according to the plaintiffs) either not notified of the proceedings or absent from the proceedings due to illness.

In advance of the hearing, Susan Keenberg, the chair of the three-person arbitration panel, issued a notice stating the date, time, and venue for the fee arbitration. The notice also warned:

If either the client or the responding attorney does NOT appear at the hearing, the arbitrator may hear and determine the controversy upon the evidence produced, notwithstanding such failure to appear.

The notice continued, in bold-face font, that

[a]ny party who willfully fails to appear at the hearing, as provided for under the rules of procedure governing this proceeding, may not be entitled to a trial in the civil court after a non-binding arbitration. The arbitrator may include findings in the arbitration award as to the willfulness of any party’s non-appearance at the hearing.

Despite these unsubtle warnings and indications of the arbitrators’ thoughts about attendance of hearings, the plaintiff contacted Keenberg less than 24 hours before the hearing to explain he would not be attending. Via his assistant, Nissani told Keenberg he was ill and that “we need to cancel due to health reasons.”

The arbitrator replied that the “arbitration will go forward as scheduled tomorrow unless Mr. Nissani provides us with a doctor’s note TODAY.” Keenberg also stated the doctor must state in the note that “Mr. Nissani is unable to attend a video meeting.” Although Nissani transmitted a doctor’s note, it was vague about the limitations of Mr. Nissani’s ability to participate in arbitration and only stated that “complete bed rest advised until stabilized.”

Keenberg responded, noting the doctor’s note was insufficient and that the arbitration would go forward. Nissani objected, claiming that Nissani was not able to be on video if he was on bed rest. However, Keenberg was adamant that her instructions for the doctor’s note were explicit in their demands. The last part of the exchange between the arbitrator and Nissani took place via Nissani’s personal email account, which Keenberg took to suggest that even if Nissani were in bed, he would still be able to participate in the arbitration hearing (via a cell phone or tablet). Nevertheless, Nissani failed to appear at the arbitration hearing.

The arbitrators rejected the plaintiffs’ excuses for being absent. Instead, the absence was determined to be a willful non-attendance—a ruling later upheld by the trial and appellate court. Keenberg reiterated that the doctor’s note submitted had been inadequate, and Nissani’s multiple attempts to prevent the scheduling of the arbitration suggested this was part of a larger effort to delay the proceedings. Under the spotlight of Business and Professions Code Section 6204, a client’s deliberate decision to skip a mandatory fee arbitration hearing can lead to the forfeiture of the right to challenge the arbitration award in a trial de novo, a right the arbitrators ruled was waived by Nissani and his businesses by their failure to appear.

In this case, the presiding arbitrator was convinced the initiating party was using absence as a delay tactic and that their absence was willful. Though the trial court has the ultimate authority on determining willfulness, this is the one area in which the trial court may take the arbitrators’ opinions into account. Though arbitrators might vary on what they consider to be willful non-attendance, is that the arbitrator’s decision can influence the trial court’s ultimate decision. The plaintiffs in Hooman failed to adhere to Keenberg’s rules, and the trial and appellate courts agreed with her assessment that the plaintiffs had waived their right to a trial de novo.

Key Takeaways

The Hooman case serves as a reminder of the peril of disrespecting the role and directives of arbitrators in mandatory fee arbitration. Initiating arbitration and then failing to appear — without valid, substantiated reasoning and a doctor’s note — casts a shadow on the initiating party’s commitment to the process. This case clearly demonstrates that the arbitrator’s criteria of what constitutes “willful” absence can be determinative, and the burden to prove otherwise is a steep uphill climb for the absent party.

Additionally, this case is a poignant admonition for all participants within the landscape of fee arbitration: disrespecting the process or underestimating the dedication required for participation can lead to being barred from future legal recourse. Trying to delay proceedings, waiting until the day before the hearing to report illness, the artifice of communicating through an assistant, a vague doctor’s note, and the admonishment of the chief arbitrator for adhering to the rules of ex parte communication betrayed an arrogance and unseriousness which likely undermined the plaintiff’s case. While the arbitrator is obligated to remain neutral in determining proceedings, this disrespect could not possibly have gone unnoticed by the panel. As evidenced by Hooman, trivializing the arbitration process is a misstep with potentially grave ramifications.

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