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CORT v. AMERICAN ARBITRATION ASSN.

March 9, 1992

ROBERT CORT, Plaintiff,
v.
AMERICAN ARBITRATION ASSOCIATION and DOES 1 through 12, Defendants.



The opinion of the court was delivered by: BARBARA A. CAULFIELD

 Plaintiff Robert Cort sues 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 spoilation of evidence, breach of contract, and negligence. In Dec. 1987 plaintiff and his wife entered into a contract with Angotti & Reilly, Inc. The contract entered into 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 Dec., 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. *fn1" 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). *fn2"

 It has been recognized that the threat of civil liability can have a chilling effect on governmental 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 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, "by 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 "the functional comparability of the arbitrator's decision making 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; spoilation 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. *fn3"

 Plaintiff attempts to couch defendant's activities in choosing arbitrators as an administrative decision which does not warrant immunity. Plaintiff's arguments ignores 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 ...


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