Case of the Day: Rebmann v. Rohde

In Jivraj v. Hashwani, the UK Supreme Court held that an arbitration agreement that required the arbitrators to be chosen from a religious minority group was valid over an objection that the arbitrators are employees of the parties and that discrimination on the basis of religion is barred by the UK’s anti-discrimination legislation. The case of the day, Rebmann v. Rohde (Cal. Ct. App. 2011), is an evil twin of Jivraj. Like Jivraj, it poses a question that has such an obvious answer that one wonders how the case made it to an appellate court: can an arbitrator be disqualified for bias merely on account of his membership in a religious minority group, where there is no additional evidence of actual bias?

Rodhe was the principal of Science & Ingredients, Inc., which was created for the purpose of creating a joint venture, Lipoid USA, LLC, with a German firm, R&R Beteilgungsgesellschaft. R&R was owned by Herbert Rebmann. Lipoid was in the business of distributing nutritional supplements in North America.

The Lipoid operating agreement had an arbitration clause, and Rodhe initiated an arbitration, claiming that Rebmann had defrauded him. The parties could not agree on an arbitrator, so JAMS, which was administering the arbitration, appointed Stephen E. Haberfeld, a retired magistrate judge. The arbitrator found in favor of Rebmann, dismissing Rodhe’s claim and awarding Rebmann nominal damages on its counterclaim as well as attorney’s fees and costs in the amount of $1,136,000.

Rodhe claimed to be “stunned by the astronomical attorney’s fees.” His counsel claimed that “something did not smell right,” so he “began an Internet investigation” and discovered—gasp!—that Haberfeld was Jewish, and that his parents had fled Germany before World War II, had lost property in the Holocaust, and were members of a club dedicated to ensuring to avoiding future Holocausts. Rodhe claimed that he was born in Germany and that his father had served in the German Army during WWII. His wife (who was not a witness or, apparently, involved in the case) asserted that her father had served in the SS during the war. “Had I [Rodhe] known about [Haberfeld’s] religious affiliation, his cultural affiliation, and his dedication to keeping the memory of the Holocaust alive, I never would have allowed him to be the arbitrator in my case.” Or in other words, my father was a German soldier and my father-in-law was a Nazi, and so no Jew could impartially judge my case, even though there was no evidence that Haberfeld knew of Rodhe’s unfortunate family history. Yikes! And it gets worse. When challenged to explain why his client had not done her “Googling” before the arbitration, Rodhe argued that “If Arbitrator Haberfeld were an Orthodox Jew with outward characteristics that would have disclosed who he was, my clients’ right to inquire would have been triggered. … Well, an Orthodox  Jew or a Hasidic Jew would have the hairstyle, the beard, the  … yarmulke, those kinds of things that would communicate his Jewishness and trigger the duty to inquire as to his history.” What’s particularly shocking about this is that Rodhe was not acting pro se—he somehow found a lawyer, Dean E. Smart, to assert this position for him before an appellate court.

Of course, the court rejected Rohde’s arguments. First, on an objective standard, there was no reason to think that Haberfeld was biased against Germans or people of German ancestry. The case before him had nothing to do with World War II or the Holocaust. No evidence suggested that Haberfeld was not impartial. And in any event, there was no evidence that Haberfeld knew Rodhe’s background (though it wouldn’t have mattered if he had). Second, the court rejected Rodhe’s “tacit assumption” that “a judge who is a member of a minority cannot be fair when a case somehow related to that minority status—no matter how remote or tenuous that relationship might be—comes before that judge. A judge or arbitrator’s impartiality should never be questioned simply because of who they are.”

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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