Must party-appointed arbitrators disclose family relationships with opposing counsel? Westgate v. CPG Explained

Background and Facts

Westgate Resorts and Consumer Protection Group (CPG) arbitrated claims under the Utah Pattern of Unlawful Activity Act. CPG selected Richard Burbidge as its arbitrator, who along with Westgate’s arbitrator selected a third neutral arbitrator. The arbitration panel awarded CPG $65,500. After the award, Westgate discovered that arbitrator Burbidge was first cousins with an attorney at CPG’s law firm, Christensen & Jensen, P.C. Neither the arbitrator nor the law firm disclosed this relationship, despite the arbitrators having declared themselves “neutral” in an arbitration fee agreement.

Key Legal Issues

The court addressed two primary issues: (1) whether CPG properly filed an interlocutory appeal from the district court’s order vacating the arbitration award and directing a rehearing, and (2) whether the undisclosed first-cousin relationship warranted vacatur under the Utah Uniform Arbitration Act (UUAA). Westgate argued that Burbidge, having declared himself neutral, was subject to the disclosure requirements for neutral arbitrators under Utah Code section 78B-11-124(1)(b)(i).

Court’s Analysis and Holding

The Utah Supreme Court ruled that party-appointed arbitrators who subsequently designate themselves as neutral are not subject to the same standards as arbitrators appointed as neutral from the outset. The court emphasized that the determination of neutrality occurs at the time of appointment, not through subsequent declarations. Therefore, section 78B-11-124(1)(b)(i) did not apply to arbitrator Burbidge. Additionally, the court found no evidence of evident partiality, corruption, or prejudicial misconduct that would justify vacatur under other subsections of the UUAA.

Practice Implications

This decision clarifies the distinction between party-appointed and neutral arbitrators under Utah law. Practitioners should understand that party-appointed arbitrators remain subject to disclosure requirements under section 78B-11-113, but failure to disclose relationships only supports vacatur if it also satisfies the stringent requirements of section 78B-11-124(1)(b). The court’s emphasis on preventing waste of arbitration resources suggests Utah courts will continue to narrowly construe grounds for vacatur of arbitration awards, requiring concrete evidence of prejudice rather than mere technical violations of disclosure requirements.