Summary
holding that state law contract and negligence claims were subject to arbitral immunity
Summary of this case from Tex. Brine Co. v. Am. Arbitration Ass'n, Inc.Opinion
NO. 02-474
May 23, 2002
Before the Court is a Motion to Dismiss for Failure to State a Claim filed on behalf of the defendant, American Arbitration Association, Inc. ("AAA"). Having considered the motion, and there being no opposition aside from the plaintiffs' Motion to Vacate Arbitration Award, the Court is of the opinion that the Motion to Dismiss should be GRANTED. Plaintiffs' motion to vacate arbitration awards in favor of Halliburton is declared MOOT.
I. BACKGROUND
This action arises out of AAA's administration of an arbitration between plaintiffs and Halliburton, their employer at the Alliance Refinery site in Plaquemines Parish, Louisiana. Plaintiffs, Andrew Jason, Irvin Ross, Sr., Armand Dinet, II and Rudolph Williams, filed the instant lawsuit in the Civil District Court for the Parish of Orleans against AAA (and its insurer ABC Insurance Company) for damages, alleging negligence and breach of contract in failing to properly and equitably administer their arbitration proceeding against Halliburton. More specifically, plaintiffs' claim that the AAA arbitrator, who issued the arbitration awards in their case in favor of Halliburton, was biased in its favor, and the AAA failure to remove the arbitrator from their case considering their motion to recuse, inter alia, constitutes fault and/or breach of contract. The arbitration proceeding was initiated by the instant plaintiffs, along with twenty-seven other complainants, contracting with AAA pursuant to Halliburton's Dispute Resolution Plan under an employee benefits package, and charging that their employer Halliburton violated their civil rights under Title VII of the Civil Rights Act, 42 U.S.C. § 2000(e) st seq. On January 25, 2002, prior to the issuance of any arbitration award, plaintiffs filed the instant lawsuit in Civil District Court for the Parish of Orleans. The arbitration award subsequently issued on February 25, 2002. In the interim on February 21, 2002, AAA timely removed the state court suit, and now seeks a ruling dismissing the plaintiffs' lawsuit pursuant to Fed.R.Civ.P. 12(b)(6).
II. DISCUSSION A. Standard of Dismissal Under Fed.R.Civ.P. 12(b)(6)
A motion under Rule 12(b)(6) tests the legal sufficiency of the claims stated in the complaint and must be evaluated solely on the basis of the pleadings. Fifth Circuit precedent has established the analytical framework applicable to the consideration of a Rule 12(b)(6) motion. The district court must: (1) construe the complaint in the light most favorable to the plaintiffs; (2) accept well-pleaded factual allegations as true; and (3) determine whether the plaintiffs can prove any set of facts to support a claim that would merit relief. Suffice it to say, Rule 12(b) authorizes dismissal based upon a dispositive issue of law, such as judicial or arbitral immunity?
See Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000); and Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).
See Hawkins v. National Ass'n of Securities Dealers, Inc., 149 F.3d 330, 332 (5th Cir. 1998) (dismissing claims against the NASD pursuant to 12(b)(6) as it enjoyed arbitral immunity from civil liability for acts of arbitrators in the course of conducting contractually agreed-upon arbitration proceedings); and Spivey v. Robertson, 197 F.3d at 776 (reversing and rendering ruling, dismissing plaintiffs' lawsuit on grounds of absolute prosecutorial immunity).
The ultimate question in a Rule 12(b)(6) is whether the complaint states a valid cause of action when it is viewed in the light most favorable to the plaintiff and with every doubt resolved in favor of the plaintiff. However, to avoid dismissal, a plaintiff must plead specific facts, and not mere conclusory allegations.
See Lowrey v. Texas A M University System, 117 F.3d 242, 247 (5th Cir. 1997).
See Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5Th Cir. 1992).
All of the claims set forth in the plaintiffs' complaint (and they are all against AAA), are actions at law for damages. Plaintiffs' claims are an attempt to enforce civil liability for conduct of the arbitrator and/or the arbitration association AAA during the course and scope of the contractually agreed-upon arbitration proceedings. AAA contends that plaintiffs' claims for relief are barred because arbitral immunity shields the arbitrators and the association administering the arbitration as well, from any liability for misconduct coming within the scope of the dispute resolution process. The Court agrees.
The doctrine of judicial immunity is applicable to the arbitration process and extends to associations such as the AAA. All of the federal courts of appeals that have considered the question have found that arbitrators enjoy strict arbitral immunity. Courts have also recognized that public policy strongly favors arbitration, analogizing to the principle of judicial immunity to mold the contours of the corresponding arbitral immunity to suit. The case law is clearly to the effect that no cause of action can be asserted against an arbitrator based on the issuance of an unfavorable decision.
See New England Cleaning Servs., Inc. v. AAA, 199 F.3d 542, 545 (1st Cir. 1999) (finding that immunity protects all acts within the scope of the arbitral process, held that AAA's decision and administrative acts including selecting an arbitrator, billing or its services and scheduling a hearing were sufficiently related to the judicial process to be protected by arbitral immunity); Honn v. National Ass'n of Securities Dealers, 182 F.3d 1014, 1018 (8th Cir. 1999) (holding that defendant was protected by arbitral immunity even if it carried out its administrative functions improperly); Hawkins v. National Ass'n of Securities Dealers, Inc., 149 F.3d 330, 332 (5th Cir. 1998) (per curiam); Olson v. National Ass'n of Secs. Dealers, 85 F.3d 381, 382 (8th Cir. 1996) (stating that because the role of arbitrator is functionally equivalent to the role of judge, federal courts have uniformly extended judicial and quasi-judicial immunity to arbitrators); Austern v. Chicago Bd. Options Exchange, Inc., 898 F.2d 882, 886 (2nd Cir. 1990) (defective notice and improper selection of arbitration panel were sufficiently associated with adjudicative phase of arbitration to justify immunity); and Tamari v. Conrad, 552 F.2d 778, 780 (7th Cir. 1977) (concluding that "arbitral immunity should be extended to cases where the authority of an arbitrator to resolve a dispute is challenged").
See Hawkins, 149 F.3d at 332 (5Th Cir. 1998); Olson, 85 F.3d at 382 (8th Cir. 1996); Austern, 898 F.2d at 885-86 (2nd Cir. 1990); and Corey v. N.Y. Stock Exchange, 691 F.2d 1205, 1208-11 (6th Cir. 1982).
[J]udicial immunity extended not only to public officials but also to private citizens (in particular jurors and arbitrators); the touchstone for its applicability was performance of the function of resolving disputes between the parties, or of authoritatively adjudicating private fights.Burns v. Reed, 500 U.S. 478, at 499-500 (1991) (Scalia, J., concurring in part and dissenting in part). Judicial immunity is readily adapted to protect the arbiter in the dispute resolution process. The Seventh Circuit observed:
The doctrine of arbitral immunity is rooted in the doctrine of judicial immunity — because an arbitrator's role is considered the "functional equivalent" of a judge's role, courts have uniformly extended quasi-judicial immunity to individual arbitrators. The policies underlying arbitral immunity parallel those underlying judicial immunity — to protect decision makers from undue influence and to protect the integrity of the decision making process.
* * *
Moreover, arbitral immunity attaches to "all acts within the scope of the arbitral process."Gluska v. New York Stock Exchange, 210 F.3d 374, 2000 WL 347851 (7th Cir. 2000) (citations omitted).
As to abuse of process, it is clear from plaintiffs' petition that AAA did not undertake any "process" that can or could be construed as abused or misused. The "process" which serves as the predicate for the plaintiffs' petition consists of the arbitration which they initiated, and in which they participated. AAA's role in the process has been described such that it parallels that of a court clerk.
The Federal Arbitration Act ("FAA") provides the exclusive remedy for challenging misconduct in the administration of an arbitration award. See Corey v. N.Y.S.E., 691 F.2d 1205, 1212 (6th Cir. 1982) (dismissing plaintiffs' claims against the New York Stock Exchange for the acts of arbitrators because the FAA provided the exclusive remedy). In Corey, the court held that plaintiffs' claims constituted an impermissible collateral attack against the award even though he sued parties who were not respondents in the arbitration proceeding and requested damages for acts of wrongdoing rather than vacation, modification, or correction of the arbitration award. See id. at 1213. In the case at bar, the sole purpose of the plaintiffs' petition for damages against AAA is to challenge the alleged wrongs that affect arbitration awards that presently stand in favor of Halliburton.
See also Hawkins, 149 F.3d at 332 (citing the Sixth Circuit's decision in Corey, supra, with approval).
CONCLUSION
For the foregoing reasons, AAA's Motion to Dismiss for Failure to State a Claim is GRANTED on grounds of arbitral immunity, and thus the plaintiffs' lawsuit is dismissed in its entirety. The dismissal is without leave to amend because an amendment would be futile in view of the Court's finding of arbitral immunity of the solo defendant AAA.
This order fully adjudicates AAA's motion [Rec. Doc. No. 10], and closes the case, terminating any pending motions.
IT IS SO ORDERED.