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Supreme Court
No. 2005-32-Appeal.
(PM 02-1910)
Dissent begins on page 9
Dennis H. McGinity                                                                                :
v.                                                                                                :
Pawtucket Mutual Insurance Co.                                                                    :
Present:  Williams, C.J., Goldberg, Flaherty, Suttell, and Robinson, JJ.
O P I N I O N
Chief Justice Williams, for the Court.                                                            Pawtucket Mutual Insurance Co.
(defendant) appeals a judgment entered in the Superior Court vacating an arbitration
award to Dennis H. McGinity (plaintiff) on the ground that the defendant’s non-neutral
arbitrator (Pawtucket arbitrator) did not disclose that he was, at the time of the arbitration,
employed as an attorney for the defendant, which created a relationship constituting
“evident partiality” under G.L. 1956 § 10-3-12(2).   This case came before the Supreme
Court for oral argument on March 28, 2006, pursuant to an order directing the parties to
appear and show cause why the issues raised in this appeal should not summarily be
decided.    After hearing the arguments of counsel and examining the record and the
memoranda filed by the parties, we are of the opinion that this appeal may be decided at
this time, without further briefing or argument.   For the reasons set forth below, we
affirm the decision of the motion justice.
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I
Facts and Travel
The facts leading up to the arbitration are not in dispute.   The precursor to the
arbitration proceedings was a 1990 automobile accident that injured plaintiff, who settled
with the tortfeasor’s insurer for the limits of his coverage.  The plaintiff also filed a claim
against defendant, plaintiff’s insurance provider, claiming that his damages exceeded the
amount paid to him by his tortfeasor’s carrier.   In 2001, defendant initiated arbitration
proceedings based on the insurance policy that had been issued to plaintiff.   Each party
selected one arbitrator.   The defendant selected the Pawtucket arbitrator as its party-
appointed arbitrator; the third member of the panel was a neutral arbitrator selected by the
other two arbitrators.   After hearing the matter, the three-arbitrator panel convened to
deliberate on April 2, 2002.
Sometime  after  April                                                                            2,  plaintiff  learned  that  the  Pawtucket  arbitrator  was
engaged in continuing legal representation of defendant in other unrelated matters.   On
April                                                                                             11,                                                             2002,  plaintiff served a notice of demand, requesting that the Pawtucket
arbitrator withdraw and a new panel be convened.   The Pawtucket arbitrator did not
withdraw.   Instead, on April 12, 2002, the Pawtucket arbitrator and the neutral arbitrator
both signed a majority decision assessing plaintiff’s damages at $45,000.   The plaintiff’s
party-appointed  arbitrator  dissented  and,  in  a  minority  opinion,  assessed  plaintiff’s
damages at $636,000.
At an evidentiary hearing before the motion justice in the Superior Court, the
Pawtucket arbitrator testified that he had an attorney-client relationship with Pawtucket
Mutual, and was serving as its attorney in ongoing, unrelated cases during the time of the
arbitration.   The parties then filed cross-motions for judgment on the pleadings and,
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alternatively, summary judgment.    The motion justice, with the parties’ agreement,
treated the matter as a motion for summary judgment.
The motion justice issued a bench decision vacating the award, in which she
discussed the obligations of a party-appointed arbitrator under Aetna Casualty & Surety
Co. v. Grabbert, 590 A.2d 88 (R.I. 1991), and noted the likelihood that this Court would
clarify our stance on the pertinent legal issue.  We do so below.
II
Analysis
On appeal, defendant asks this Court to reverse the decision of the motion justice
and reinstate the arbitration award.  The plaintiff, in turn, contends that the motion justice
was  correct  in  determining  that  the  Pawtucket  arbitrator’s  position  as  attorney  for
defendant constituted a situation of evident partiality that required the arbitration award
to be vacated.   Both parties look to Grabbert as the definitive Rhode Island case on
evident partiality and the vacating of arbitration awards.  The Rhode Island Trial Lawyers
Association (RITLA) submitted an amicus curiae brief in support of plaintiff, suggesting
that this Court review this case in light of recent amendments to the Code of Ethics for
Arbitrators in Commercial Disputes (Code of Ethics).
“This Court reviews the granting of summary judgment de novo and applies the
same standards as the motion justice.”   DeCamp v. Dollar Tree Stores, Inc., 875 A.2d 13,
20 (R.I. 2005).   Rule 56(c) of the Superior Court Rules of Civil Procedure dictates that
summary judgment
“shall be rendered forthwith if the pleadings, depositions,
answers  to  interrogatories,  and  admissions  on  file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.”
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A
The Grabbert Standard
There is a “‘strong public policy in favor of the finality of arbitration awards.’”
Pierce v. Rhode Island Hospital, 875 A.2d 424, 426 (R.I. 2005).   However, the judicial
vacating of an arbitration award is appropriate in certain situations, specified by statute.
Section  10-3-12.    In relevant part, the statute requires that a court vacate an award
“[w]here there was evident partiality or corruption on the part of the arbitrators, or either
of them.”  Section 10-3-12(2).
In her decision, the motion justice tracked in part our opinion in Grabbert, in
which we said that evident partiality will be found “‘where a reasonable person would
have to conclude that an arbitrator was partial to one party to the arbitration.’”   Grabbert,
590 A.2d at 96.   As in the instant case, Grabbert stemmed from an automobile accident
and the resulting arbitration between one of the drivers  (Grabbert) and his insurance
company (Aetna).   Id. at 89.   Aetna, among other claims, maintained that Grabbert’s
party-appointed arbitrator’s contingency fee in the arbitration award constituted evident
partiality such that the award should be vacated pursuant to § 10-3-12(2).   Grabbert, 590
A.2d at 91.  We reversed the decision of the trial justice, who had vacated the award.  We
reinstated the award, determining that
“despite  our  belief  that  the  party-appointed  arbitrator’s
contingent fee gave him a direct financial interest in the
award  that  was  absolutely  improper,  we  nevertheless
believe that Aetna has failed to demonstrate the required
causal  nexus  between  the  party-appointed  arbitrator’s
improper  conduct  and  the  award  that  was  ultimately
decided upon.”  Id. at 92.
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After Grabbert, a plaintiff arguing for the vacating of an arbitration award due to
evident partiality must demonstrate not only an improper interest, but also a  “causal
nexus between the [party-appointed arbitrator’s conduct] and the arbitration award.”   See
V.S. Haseotes & Sons, L.P. v. Haseotes, 819 A.2d 1281, 1285 (R.I. 2003) (applying the
Grabbert test of impropriety coupled with causal nexus).   We undertake this two-step
analysis below.
1
Improper Interest and the Disclosure Thereof
A party-appointed arbitrator is not a judge; as such, we have held that “it would
be inappropriate to require the party-appointed arbitrator to adhere to the same standards
of neutrality as a judge.   That standard ignores the practical realities of arbitration panels
composed of party-appointed arbitrators.”  Grabbert, 590 A.2d at 92.
In Grabbert, we  “recognize[d] that evident partiality is an elusive concept for
which no one has been able to articulate a precise legal standard.”   Id. at 96.    However,
“[m]ost courts that have addressed the issue have decided that a finding of evident
partiality requires a showing of more than an appearance of bias but less than actual
bias.”   Id.   We then articulated a standard, stating that evident partiality is established
where “‘a reasonable person would have to conclude that an arbitrator was partial to one
party to the arbitration.’”  Id.; see also V.S. Haseotes & Sons, L.P., 819 A.2d at 1285.
When deciding Grabbert, we took into consideration the Code of Ethics as it stood
at the time.   Grabbert, 590 A.2d at 93.   The Code of Ethics was updated most recently in
2004, and makes the following provisions for party-appointed arbitrators:
“[Party-appointed arbitrators] should disclose to all parties,
and to the other arbitrators, all interests and relationships
which  Canon  II  requires  be  disclosed.    Disclosure  as
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required by Canon II is for the benefit not only of the party
who appointed the arbitrator, but also for the benefit of the
other parties and arbitrators so that they may know of any
partiality which may exist or appear to exist.”   Code of
Ethics for Arbitrators in Commercial Disputes, Canon X
(B)(1).
Taking into account both the revised Code of Ethics and the sensitive nature of the
attorney-client relationship, the Pawtucket arbitrator should have disclosed his position to
the opposing party and the other two arbitrators.   However, under Grabbert, the analysis
does not end here; therefore, we continue to the next step of determining whether the
subject relationship has a causal link to the amount of the arbitration award.  Only if such
a link is found will we vacate the arbitration award pursuant to § 10-3-12.
2
Causal Nexus
In Grabbert, we declined to find a causal nexus where Aetna “failed to present
any evidence beyond speculation” to demonstrate a causal link between the subject
relationship and any partiality producing the arbitration award.   Grabbert, 590 A.2d at 96
n.4.  We also relied on the existence of “factors * * * that would lead a reasonable person
to believe that the party-appointed arbitrator was not improperly partial to Grabbert.”   Id.
at 96.   Crucially, in Grabbert, the arbitration award was supported by all three of the
members of the arbitration panel.  Id.
In the instant dispute, however, plaintiff’s party-appointed arbitrator not only
declined to agree with the other two arbitrators, but also arrived at a drastically different
amount as evidenced by his minority opinion.   The fact that the neutral arbitrator voted
for the arbitration award does not disprove a causal nexus between the Pawtucket
arbitrator’s relationship to defendant and the arbitration award that two of the panel
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members  reached.     We  believe  that  the  particular  nature  of  the  attorney-client
relationship, in which the attorney is duty-bound to serve as zealous advocate for his
client, may fulfill the causal nexus requirement:   An arbitrator who also serves as an
attorney to one of the parties arrives at the arbitration table imbued with a uniquely
privileged  role  that  may  often  have  an  especially  potent  influence  on  the  neutral
arbitrator.   It is our own judgment that the nondisclosure of the existence of such an
attorney-client relationship should give rise to a rebuttable presumption that Grabbert’s
causal  nexus  requirement  has  been  met.    We  perceive  nothing  in  the  record  that
convinces us that said presumption was rebutted in this case.1
B
The Code of Ethics and Mandatory Disclosure
In its amicus curiae brief in support of plaintiff, RITLA invites this Court to make
an  explicit  holding  within  the  confines  of  a  Grabbert analysis that party-appointed
arbitrators be required to disclose any conflicts, and that a failure to disclose should result
in an automatic vacating of the award.2    RITLA bases this argument on the  2004
revisions to the Code of Ethics, asserting that the amendments to the Code of Ethics lead
1
The plaintiff argues in the alternative for a more lenient standard than the causal nexus
requirement, citing the United States Supreme Court’s analysis of evident partiality in
Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968).   The
arbitrator whose business relationship with one of the parties resulted in a finding of
evident partiality in Commonwealth Coatings was a neutral arbitrator—not, as in this
case, one of the two party-appointed arbitrators selected by the parties.   Id. at 146-47.
The obligations of a neutral arbitrator are distinct from those of a party-appointed
arbitrator, and we fail to see how a case demanding neutrality from a neutral arbitrator
applies to the instant dispute over the particulars of a relationship enjoyed by a party-
appointed arbitrator and the party who selected him.   That difference noted, however, we
do think that although the specialized nature of the attorney-client relationship does not
remove the need to prove a causal nexus, it does provide “evidence beyond speculation”
that a causal nexus may exist.  Aetna Casualty & Surety Co. v. Grabbert, 590 A.2d 88, 96
n.4 (R.I. 1991).
2
We thank the amicus for the preparation of a well-reasoned and helpful brief.
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logically to a more explicit rule from this Court regarding disclosure requirements.
RITLA suggests that party-appointed arbitrators still may retain a role in the arbitration
process as long as all conflicts, especially direct conflicts, are fully disclosed.
We hesitate to adopt the implication of RITLA’s argument:   That the revised
Code of Ethics weakens the important causal nexus provision in certain cases.   The
nature of party-appointed arbitrators makes clear that some kind of relationship exists
between the party-appointed arbitrator and the party who appointed him or her.  We agree
that disclosure of the nature of the relationship lends further transparency to an important
proceeding; however, RITLA’s argument would be precariously close to the idea that any
relationship between a party-appointed arbitrator and the party who appointed him or her
is  automatically  indicative  of  evident  partiality  as  a  matter  of  law—and  we  are
disinclined to go that far.
We acknowledged in Grabbert that the Code of Ethics offers guidance to this
Court in undertaking analyses of the arbitration requirements.   We have not wavered
from that belief, but the guidance offered by the Code of Ethics is not sufficient to dilute
the causal nexus requirement set out in the Grabbert test.   Considering the nature of the
party-appointed arbitrator and the principles of our arbitration system, such a rule would
be inefficient and counterproductive.    We decline to alter the Grabbert analysis by
adopting the Code of Ethics requirement as law.
Although we decline to explicitly adopt the holding requested by RITLA, we do
not call into question the increased disclosure requirements under the revised Code of
Ethics.  We encourage full disclosure from arbitrators, while acknowledging that the very
nature of the tripartite arbitrator system indicates to all that some relationship exists
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between each party and his or her appointed arbitrator.   The parties to an arbitration have
agreed  to  settle  their  dispute  without  a  judge;  judicial  economy  dictates  that  our
interference be limited to instances that we deem appropriate.3   That said, we remind and
encourage all party-appointed arbitrators:  When in doubt, disclose.
Conclusion
For the reasons discussed above, we affirm the judgment of the motion justice.
The record shall be returned to the Superior Court, and the parties shall embark on
another arbitration not inconsistent with this opinion.
Justice Flaherty, dissenting.   I respectfully dissent from the majority’s holding
in this case.   Tripartite arbitration is a unique, anomalous and somewhat murky world.
As has been set forth in many cases, non-neutral  (or party-appointed) arbitrators are
expected to advocate on behalf of the party who appointed them and to do their best to
present the facts to the neutral arbitrator in the light most favorable to that party.   See,
e.g., Local 472, International Brotherhood of Police Officers v. Town of East Greenwich,
635 A.2d 269 (R.I. 1993); Aetna Casualty & Surety Co. v. Grabbert, 590 A.2d 88 (R.I.
1991).   Undoubtedly, that happened here with respect to both sides in this arbitration.   In
the hearing that occurred in the Superior Court, McGinity’s party-appointed arbitrator
testified that he had used documents prepared by McGinity’s counsel detailing the
chronology  of  events.    At  oral  argument  before  this  Court,  counsel  for  McGinity
conceded that he was in regular contact with his party-appointed arbitrator over the
3 Although we are of the opinion that the Pawtucket arbitrator should have disclosed his
attorney-client relationship with the insurer, we also are satisfied that he performed his
duties professionally and competently, and is a well-respected member of the bar.
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course of the arbitration proceedings, and that they consulted on strategy to advance
McGinity’s cause.
Despite  that,  I  can  accept  the  majority’s  rationale  that  there  was  a  special
relationship between Pawtucket Mutual and its non-neutral arbitrator by virtue of the fact
that the arbitrator, an attorney, had represented the company on other matters, and that
this relationship should have been disclosed to the neutral arbitrator.4   Parenthetically, it
appears that McGinity’s party-appointed arbitrator, also a member of the bar, knew of the
relationship  between  Pawtucket  Mutual  and  its  party-appointed  arbitrator.    In  the
Superior  Court,  he  testified  that  even  though  he  was  unaware  of  any  ongoing
representation of Pawtucket Mutual by its party-appointed arbitrator, he thought that
“Pawtucket Mutual has been a client of [that party-appointed arbitrator] for a long time.  I
know that he * * * represents Pawtucket Mutual as an entity and does work for them as a
party arbitrator.  I think he has a pretty good relationship with that entity.”
Where I depart from the majority’s reasoning, however, is its holding that a
failure to disclose the attorney-client relationship warrants modification to the second
prong of the Grabbert analysis.  To me, the situation presented in this case is not nearly as
fraught with difficulties as that in Grabbert, in which a non-neutral arbitrator had a direct
financial interest in the outcome of the case.      While it is true that Grabbert was a
unanimous award and here the panel was divided (indeed there was a dissenting opinion
4 Indeed, I would go farther, because in my opinion, all continuing relationships
between parties and non-neutral arbitrators should be disclosed, not merely those of
attorney-client.   Many arbitration panels consist of non-lawyers who are involved in
frequent and consistent relationships with the parties that retain them for arbitration
panels.   Such disclosure would maintain the integrity of the process and certainly would
assist the neutral arbitrator in weighing the arguments made on behalf of each party.
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with a strikingly higher damage award), that should not be the end of our analysis with
respect to the principles set forth in Grabbert.
According to the majority, the failure to disclose the attorney-client relationship in
this case  “should give rise to a rebuttable presumption that Grabbert’s causal nexus
requirement has been met.   We perceive nothing in the record that convinces us that said
presumption  was  rebutted  in  this  case.”    I  appreciate  and  respect  the  difficulties
encountered by the majority as this Court again struggles with the slippery issue of what
constitutes evident partiality in a process that has, by agreement, inherently partial
aspects.  As the majority recognizes, a party-appointed arbitrator is not a judge, and he or
she is not held to the same strict standard as the neutral arbitrator.   But even a party-
appointed arbitrator has an obligation to “‘conduct the proceedings in an evenhanded
manner and treat all parties with equality and fairness at all stages of the proceedings.’”
Grabbert, 590 A.2d at 94 (quoting Barcon Associates, Inc. v. Tri-County Asphalt Corp.,
430 A.2d 214, 220 (N.J. 1981)).   For sure, this standard should apply to party-appointed
and neutral arbitrators alike.
However, even if one accepts the majority’s deviation from the principles set
forth in Grabbert by its holding that the relationship between Pawtucket Mutual and its
party-appointed arbitrator gave rise to a rebuttable presumption of causality supporting a
conclusion of evident partiality, I believe that any such presumption has been overcome
based on the record in this case.   To me, the critical testimony in the hearing below was
that of Dennis McCarten, the neutral arbitrator.   McCarten, an experienced civil litigator
who is well versed in the arbitration process, testified that he was well aware that the
non-neutral arbitrators have an “ax to grind.”   He further said that although he did not
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know of the relationship between Pawtucket Mutual and its party-appointed arbitrator, he
was not surprised by it.   Most significantly, however, McCarten testified that “without
any doubt that I had quite honestly made up my mind consistently with the decision we
rendered before I went into the meeting,” and that Pawtucket Mutual’s party-appointed
arbitrator                                                                                 “had no influence in my thinking about this case.”    That testimony was
uncontradicted and it was not shaken on cross-examination.
Therefore, even if I accept the majority’s rationale of a rebuttable presumption of
evident partiality because of the relationship between Pawtucket Mutual and its party-
appointed arbitrator, the presumption has been overcome, and McGinity’s challenge to
the arbitration award should fail because the second prong of the Grabbert test has not
been surmounted.   For these reasons, I dissent from the majority’s holding and would
reverse the judgment of the Superior Court.
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Supreme Court
No. 2005-32-Appeal.
(PM 02-1910)
Dissent begins on page 9
Dennis H. McGinity                                                      :
v.                                                                      :
Pawtucket Mutual Insurance Co.                                          :
NOTICE:    This  opinion  is  subject  to  formal  revision  before
publication in the Rhode Island Reporter.  Readers are requested to
notify the Opinion Analyst, Supreme Court of Rhode Island, 250
Benefit Street, Providence, Rhode Island, 02903 at Tel. 222-3258
of any typographical or other formal errors in order that corrections
may be made before the opinion is published.
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COVER SHEET
TITLE OF CASE:   Dennis H. McGinity v. Pawtucket Mutual Insurance Company
DOCKET SHEET NO.:                                                           2005-32-A
COURT:                                                                      Supreme
DATE OPINION FILED:   June 13, 2006
Appeal from
SOURCE OF APPEAL:    Superior                                               County:  Providence
JUDGE FROM OTHER COURT:      Judge Susan E. McGuirl
JUSTICES:                                                                   Williams, CJ., Goldberg, Flaherty, Suttell, and Robinson, JJ.
Dissent-  Flaherty, J.
WRITTEN BY:      Chief Justice Frank J. Williams, for the Court
ATTORNEYS:
For Plaintiff:                                                              Thomas J. Grady, Esq.
ATTORNEYS:
For Defendant:                                                              Paul J. Bogosian, Esq.
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