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Arbitral immunity? Not for refusing to issue award
June 21, 2006 by Ross Runkel at LawMemo

"If an arbitrator withdraws from an arbitration proceeding for no stated ethical reason following evidence and argument, and offers to continue mediation efforts but refuses to render an arbitration award, does the doctrine of arbitral immunity protect the arbitrator from suit?"

That's how the court phrased the issue in Morgan Phillips v. JAMS/ENDISPUTE (California Ct App 06/20/2006).

The answer, of course, is "No." No immunity from suit.

The claim against the arbitrator was this: An arbitrator provided by JAMS/ENDISPUTE held a hearing as an arbitrator, and then tried to mediate the case. The arbitrator refused to issue an arbitration award, and instead said he was willing to mediate, and tried to coerce one of the parties into an unfavorable settlement.

The claim against JAMS/ENDISPUTE was this: JAMS advertises that it "employs" arbitrators who make timely and cost-effective decisions, and JAMS failed to disclose that its arbitrators "secretly retain the right" to abandon the arbitration "for no lawful reason" without rendering an award.

Please be clear that these are claims made in Morgan Phillips' court complaint, and these claims have not been proved.

California common law provides arbitrators with immunity from suit as to conduct in their "quasi-judicial" capacity. However, there is no immunity for a claim of breach of contract by failing to make a decision at all. Therefore, the arbitral immunity doctrine does not protect the arbitrator from suit.

As for the claim against JAMS, it boiled down to a simple claim of a violation of a statute regulating unfair competition and misleading advertising. Therefore, the claim against JAMS/ENDISPUTE is not barred.

Thanks to Workplace Prof Blog for finding this case - Arbitrator’s Early Withdrawal Leaves Parties Unsatisfied.

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