Cort v. American Arbitration Ass'n

795 F. Supp. 970, 92 Daily Journal DAR 11072, 1992 U.S. Dist. LEXIS 3311, 1992 WL 189231
CourtDistrict Court, N.D. California
DecidedMarch 10, 1992
DocketC 91-4316 BAC
StatusPublished
Cited by8 cases

This text of 795 F. Supp. 970 (Cort v. American Arbitration Ass'n) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cort v. American Arbitration Ass'n, 795 F. Supp. 970, 92 Daily Journal DAR 11072, 1992 U.S. Dist. LEXIS 3311, 1992 WL 189231 (N.D. Cal. 1992).

Opinion

OPINION AND ORDER

CAULFIELD, District Judge.

Plaintiff Robert Cort sued the American Arbitration Association (“AAA”) for damages arising out of AAA’s handling of his case arbitration. AAA moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). For reasons discussed fully below, defendant’s motion is GRANTED.

FACTS

For purposes of this motion, the allegations contained in plaintiff’s complaint are accepted as true. Plaintiff’s complaint asserts causes of action for spoliation of evidence, breach of contract, and negligence. In December, 1987, plaintiff and his wife entered into a contract with Angotti & Reilly, Inc. which required that all disputes between the parties arising out of or relating to the contract were to be arbitrated pursuant to the Construction Industry Arbitration Rules of the AAA.

In April, 1990, Angotti & Reilly filed a demand for arbitration. The arbitration hearings were conducted between April 16 and December, 1990. Plaintiff subsequently appealed the arbitration award in San Francisco Superior Court. After receiving an unfavorable judgment in that court, plaintiff appealed the matter to the California Court of Appeals. During the course of the appeal, plaintiff demanded that defendant AAA return to him exhibits filed in connection with the arbitration. In this action, plaintiff contends that defendant refused to turn over the exhibits. Plaintiff also contends that the basis for defendant’s refusal was the fact that the original documents produced at the arbitration had been lost or altered by the arbitrators. Said refusal forced plaintiff to settle his appeal. As a result of being forced to settle, plaintiff allegedly incurred substantial damages in the form of debts, expenses and other monetary, emotional and physical damages.

DISCUSSION

Ninth Circuit and California courts have generally recognized that the doctrine of judicial immunity is applicable to the arbitration process. 1 The arbitral immunity is not limited to the individual arbitrators. It has been uniformly accepted that such immunity extends to arbitration associations such as the AAA as well. Corey v. N.Y.S.E., 691 F.2d 1205, 1211 (6th Cir.1982). 2

It has been recognized that the threat of civil liability can have a chilling effect on govemniental officials in the proper performance of their duties. Forrester v. White, 484 U.S. 219, 223, 108 S.Ct. 538, 542, 98 L.Ed.2d 555, (1988). Accordingly, various forms of official immunity have been recognized to insure the independence necessary to protect the decision maker *972 from bias or intimidation arising out of the exercise of judicial functions. Butz v. Economou, 438 U.S. 478, 508-511, 98 S.Ct. 2894, 2911-13, 57 L.Ed.2d 895 (1978).

The same independence is deemed necessary with respect to arbitrators. The parties choose to submit to the arbitration process. Therefore, “[b]y agreement, the parties invoked the arbitrators’ independent judgment and discretion.” Corey v. N.Y.S.E., 691 F.2d 1205, 1209 (6th Cir.1982). In order to encourage independent judgment, the arbitration process is granted immunity because “[t]he functional comparability of the arbitrator’s decision mak ing process and judgments to those of judges ... generates the same need for independent judgment free from the threat of lawsuits. Immunity furthers this need.” Id. at 1211, as cited in Austern v. The Chicago Board Options Exchange Inc., 716 F.Supp. 121, 124 (S.D.N.Y.1989), aff'd, 898 F.2d 882 (2nd Cir.1990).

Generally, judicial immunity is immunity from suit, which can only be overcome in one of two circumstances: first, where the judge (or arbitrator) is engaged in nonjudicial actions; and second, where the judge’s actions are taken in the absence of any jurisdiction. Mireles v. Waco, — U.S. -, -, 112 S.Ct. 286, 288, 116 L.Ed.2d 9 (1991).

Plaintiff argues that the arbitral immunity is not available to AAA because the acts complained of — spoliation of evidence, breach of contract and negligence — are all non-judicial acts which fall outside of the scope of the arbitral immunity. However, it is clear from an examination of some of the allegations contained in plaintiff’s complaint that his action is an attempt to escape the arbitral immunity bar. 3

Plaintiff attempts to couch defendant’s activities in choosing arbitrators as an administrative decision which does not warrant immunity. Plaintiff’s arguments ignore both the rationale behind such immunity and the distinction between judicial and nonjudicial acts. The Corey court has already rejected such a distinction. In Corey, appellants challenged, among other things, the arbitration board’s selection of arbitrators in violation of its own rules, an allegation strikingly similar to that advanced by plaintiff here. In rejecting this argument, the Corey court stated:

Extension of arbitral immunity to encompass boards which sponsor arbitration is a natural and necessary product of the policies underlying arbitral immunity; otherwise the immunity extended to arbitrators is illusory. It would be of little value to the whole arbitral procedure to merely shift the liability to the sponsoring organization.

691 F.2d at 1211.

In Austern v. Chicago Bd. of Options Exchange, Inc., 898 F.2d 882 (2nd Cir.1990) appellants argued that their cause of action against the arbitration board for improper notice and scheduling of the arbitration proceedings and improper selection of arbitrators did not fall under the doctrine of judicial immunity. Appellants attempted to distinguish judicial or discretionary duties and “ministerial” or administrative activities. In rejecting appellant’s arguments, the court held that “semantically categoriz *973 ing the challenged acts as ‘ministerial’ or administrative, as opposed to ‘discretionary,’ in large part misses the mark, since the scope of arbitral immunity is ‘defined by the functions it protects and serves’ ”. Id. at 886.

It is the view of this court that the acts complained of fit precisely in the category of acts which have traditionally enjoyed absolute judicial immunity. Plaintiff complains of defendant AAA’s actions in handling his arbitration proceeding. As the Supreme Court noted in

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795 F. Supp. 970, 92 Daily Journal DAR 11072, 1992 U.S. Dist. LEXIS 3311, 1992 WL 189231, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cort-v-american-arbitration-assn-cand-1992.