Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-00024/USCOURTS-caed-2_14-cv-00024-1/pdf.json

Parties Involved:
American Arbitration Association
Defendant
Robert Brown
Defendant
Geoffrey Richards
Defendant
Joel B. Shamitoff
Plaintiff
Shamitoff Industries, Inc.
Plaintiff
Shamitoy Interactive
Plaintiff
Universal Interactive, LLC
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOEL B. SHAMITOFF; SHAMITOFF 

INDUSTRIES, INC., individual and 

doing business as SHAMITOY 

INTERACTIVE; UNIVERSAL 

INTERACTIVE LLC,

Plaintiffs,

v.

GEOFFREY RICHARDS, Chapter 7 

Trustee, ROBERT BROWN, Arbitrator 

for the American Arbitration 

Association, and THE AMERICAN 

ARBITRATION ASSOCIATION,

Defendants.

No. 2:14-cv-00024-MCE-CKD

MEMORANDUM AND ORDER

On January 3, 2014, Plaintiffs Joel B. Shamitoff, Shamitoff Industries, Inc., 

Shamitoy Interactive and Universal Interactive, LLC1 (collectively referred to as

“Plaintiffs” or “Shamitoff” unless otherwise indicated) filed the instant action against

Defendants Geoffrey Richards, Chapter 7 Trustee; Robert Brown, Arbitrator for the 

American Arbitration Association (“AAA”); and the AAA itself. Plaintiffs sought, through 

///

 1 According to the Complaint, Joel Shamitoff is the principal for all three business entities named 

as Plaintiffs.

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their Complaint, to enjoin the continuation arbitration proceedings conducted under the 

auspices of the AAA with Defendant Robert Brown presiding as arbitrator. 

Plaintiffs initially moved for a temporary restraining order (“TRO”) concurrently 

with the submission of their complaint. That TRO request was denied by Memorandum 

and Order filed January 17, 2014. Defendants AAA and Brown (collectively referred to 

as the “AAA” unless otherwise indicated) now move to dismiss the claims against them 

pursuant to Federal Rule of Civil Procedure 12(b), arguing both that the action against 

them is barred under principles of arbitral immunity and, further, is moot in any event 

since the arbitration has now been concluded and the award confirmed in state court. 

For the reasons set forth below, the AAA’s Motion is granted.

2

BACKGROUND

In February of 2005, Jacquelynn Namle Bird, together with her then financial 

advisor, John Lucero, entered into a number of so-called Retail Development 

Agreements (“RDAs”) with Joel Shamitoff. Under the terms of those RDAs, Bird and 

Lucero acquired the opportunity to operate shopping mall kiosks that would sell toys, 

known as Snapables, that had allegedly been developed by Shamitoff.

3

 Bird and Lucero 

jointly signed a total of fourteen RDAs at a cost of some $14,000.00 per kiosk. Despite 

numerous promises that the toys were coming from China, no product ever arrived. 

Shamitoff refused to return Bird’s approximate $390,000.00 investment in the kiosks.

Ms. Bird filed a lawsuit in state court against Shamitoff in 2008, seeking damages, 

inter alia, for fraud and breach of contract. On May 8, 2009, at Shamitoff’s request, the 

Sacramento Superior Court ordered that matter into arbitration pursuant to provisions 

 2 Because oral argument was not of material assistance, this matter was submitted on the briefs. 

E.D. Cal. Local R. 230(g).

3 According to documentation submitted in connection with Defendants’ filings in opposition to the 

TRO, Snapables are plush toy dolls or animals with removable heads and body parts that permit them to 

be interchanged with other similar toys in creating dolls or animals with varying appearances.

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contained in the RDA agreements which specified that any disputes be resolved through 

arbitration. On November 10, 2010, the day before the arbitration hearing was scheduled 

to commence, Lucero and the business he and Bird formed to manage the RDAs, the LB 

partnership, filed for bankruptcy protection under Chapter 7. Given those pending 

bankruptcy proceedings, the arbitration was stayed pursuant to 11 U.S.C. § 362. 

Thereafter, on or about May 24, 2011, Bird and her husband filed their own Chapter 13 

bankruptcy proceeding in the Eastern District of California.4 

Once Bird’s bankruptcy proceeding was converted to a Chapter 7 proceeding on 

or about May 16, 2012, Shamitoff sought to remove the stayed state court action to 

bankruptcy court. The court-appointed Chapter 7 trustee, Geoffrey Richards, 

immediately moved to remand the case on grounds that the removal was untimely, and 

the case was subsequently remanded. Shamitoff argued that the removal had 

terminated any assignment of the case to arbitration, but the Superior Court disagreed. 

In the meantime, on or about April 18, 2012, the Chapter 7 Trustee for the LB 

Partnership, John Roberts, petitioned the court to sell the assets held by the partnership; 

namely, the 14 RDAs. Universal Interactive, one of the businesses operated by Joel 

Shamitoff, purchased the RDAs from the LB Partnership’s bankruptcy estate for a total 

sum of $7,500.00. That sale was approved by United States Bankruptcy Judge 

Christopher M. Klein by order dated June 5, 2012.

Bird’s Chapter 7 bankruptcy trustee ultimately decided to resume efforts to collect 

from Shamitoff pursuant to her previously filed state court lawsuit that had become an 

asset of her bankruptcy estate. After the AAA determined that the arbitration could 

resume, Shamitoff filed a motion for preliminary injunction to stay the arbitration, which 

the Sacramento County Superior Court denied by Minute Order dated April 4, 2012. 

That court pointed out that it had no jurisdiction to enjoin the arbitrator in a pending 

arbitration from resuming the arbitration proceedings. See Ex. D to Decl. of William L.

 4 John Lucero had already sought bankruptcy protection on November 2010, at the same time the 

business entity formed by Lucero and Bird to hold the RDAS, the LB Partnership, also filed for bankruptcy 

under Chapter 7.

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Dunbar in Support of Opp’n to TRO, ECF No. 2-1. Then, on October 5, 2012, Shamitoff 

moved to dismiss Bird’s fraud lawsuit and remove it from arbitration on grounds that his 

purchase of the RDAs extinguished any cause of action in Bird’s favor. The Sacramento 

Superior Court again found it had no jurisdiction to stop the arbitration. Id. at Ex. E. 

Shamitoff moved to reconsider that ruling which the court denied as improper, stating it 

would “not entertain further motions in this case except a motion to confirm, vacate, or 

correct the arbitration award” under California Code of Civil Procedure § 1285. Id. at Ex. 

F. 

Apparently undaunted by the above admonition, Shamitoff filed yet another 

motion for preliminary injunction with the Sacramento Superior Court, which the court 

summarily denied on grounds it had “already made it abundantly clear in prior rulings 

that it [had] no jurisdiction to interfere in the AAA proceeding and . . . would entertain no 

other motion other than one to confirm, vacate or correct the arbitration award.” Id. at 

Ex. G. While the Sacramento Superior Court noted that Shamitoff had obtained a 

declaratory judgment in a Los Angeles County action that he and his entities owned the 

RDAs following their bankruptcy sale, and while Shamitoff argued, as he does here, that 

said judgment removes any basis for the arbitration, the Sacramento Superior Court

found it was up to the arbitrator, and not the court, to weigh the effect, if any, of the 

Los Angeles judgment. Finally, on July 10, 2013, the same day the court denied 

Shamitoff’s second preliminary injunction request as discussed above, the Sacramento 

Superior Court further denied Shamitoff’s request to transfer venue of the matter to 

Orange County.

Perhaps due to a lack of success in Sacramento, Plaintiffs and Lucero filed a total 

of three different actions in Orange County, all in an apparent effort to keep the AAA 

arbitration from moving forward. In the first 2010 proceeding, filed by Lucero, the 

Orange County court denied Lucero’s preliminary injunction request, reasoning that any 

stay issued on its part “would be a direct interference with the jurisdiction of the 

///

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Sacramento County Superior Court.” Id. at Ex. I. Shamitoff himself nonetheless filed 

two additional lawsuits in Orange County, both requesting similar injunctive relief.

Despite this plethora of attempts to thwart the arbitration from moving forward, the 

AAA arbitrator, Robert Brown, scheduled the arbitration hearing to begin on August 12, 

2013. After five days of testimony and evidence, the arbitrator rescheduled the 

remainder of the hearing at Shamitoff’s request. After continuing the hearing twice, 

Brown denied Shamitoff’s third continuance request on December 27, 2013. Plaintiffs 

instituted the present lawsuit, on January 3, 2014, five days before the AAA arbitration 

was set to reconvene on January 8, 2014.

According to Plaintiffs, the ongoing arbitration proceedings violate their 

constitutional right to due process, as guaranteed by the Fifth and Fourteenth 

Amendments to the United States Constitution, because they seek to improperly seize 

the RDAs in contravention of the bankruptcy court’s approval of their sale. According to 

Plaintiffs, given that sale, there is nothing to arbitrate and the arbitration proceedings are

nothing more than an ill-conceived attempt to recover property Plaintiffs validly 

purchased, and to saddle Plaintiffs with improper and unnecessary arbitration fees and 

costs in the process. In addition to seeking preliminary and permanent injunctive relief 

that would prevent the AAA and Brown from further “mismanaging” the arbitration 

proceedings or “failing to follow their own rules,” Plaintiffs also request a declaration that 

Arbitrator Brown has no jurisdiction over Plaintiffs, as well as a declaration that Plaintiffs 

are the legal owners of the subject RDAs.

While Plaintiffs applied for a temporary restraining order at the same time they 

filed their Complaint, that request was denied on January 17, 2014, on grounds that the 

so called Anti-Injunction Act, 28 U.S.C. § 2283, prohibits a court, absent special 

circumstances not applicable here, from enjoining or staying proceedings in a state 

court. See Younger v. Harris, 401 U.S. 37, 43-45 (1971). Given those strictures, the 

Court found that Plaintiffs lacked any likelihood of success on the merits, a showing they 

had to make to qualify for preliminary injunctive relief. Moreover, this Court further 

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rejected, at least for purposes of determining the merits of the matter for purposes of a 

TRO, Plaintiffs’ substantive argument that because they subsequently purchased the 

RDAs once owned by Jacquelynn Bird, any lawsuit for fraud was necessarily moot. The 

Court pointed to the fact that neither possession nor title of the RDAs was being sought 

by the Bankruptcy Trustee in pursuing Bird’s lawsuit. Instead, the remedy sought was 

money damages in connection with those contracts, an inference strengthened by the 

fact that the RDAs themselves were virtually worthless, having been bought by Plaintiffs 

for some $7,500.00 despite Bird’s initial investment of nearly $400,000.00.

Events subsequent to the Court’s initial denial of the TRO are also significant. In 

the wake of that denial, Arbitrator Brown completed the arbitration and, on February 10, 

2014, issued an award against Plaintiffs, jointly and severally, in the amount of 

$380,000.00, plus prejudgment interest totaling $164,280.00 (based on 7.0 percent

interest per annum for the period between December 1, 2007 and January 31, 2014). 

Plaintiffs were further ordered to pay administrative fees and expenses of both the AAA 

and Arbitrator Brown $22,375.00. That award was subsequently confirmed by the 

Sacramento Superior Court on the basis of Judge David I. Brown’s Order Confirming 

Arbitration Award dated May 12, 2014.5

STANDARD

In addition to the six specific defenses set forth in Rule 12(b) that can be asserted 

by a pretrial motion to dismiss, case law permits certain other “unenumerated” defenses 

to be raised through a 12(b) motion. Immunity is one of the defenses that can be made 

by such an unenumerated motion. See Rutter Group, Federal Civil Procedure 

///

 5 By Supplemental Request for Judicial Notice filed May 19, 2014 (ECF No. 25), Defendants bring 

the Sacramento Superior Court’s Order to this Court’s attention as Exhibit R, and that Order attaches a 

copy of Arbitrator Brown’s February 10, 2014 award. As set forth below, the February 10, 2014 Order is 

properly subject to judicial notice under Federal Rule of Evidence 201, and Defendants’ request in that 

regard has not been opposed.

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Before Trial, 9:239.10 (2014) (citing Thomas v. Nakatani, 309 F.3d 1203, 1205 (9th Cir. 

2003)).

When permitted, an unenumerated motion to dismiss is governed by the rules 

applicable to motions generally, as opposed to those limited just to those applicable to 

Rule 12(b). This allows the court to consider facts outside the complaint based on 

affidavits submitted by the parties. Fed. R. Civ. P. 43; Ritza v. Int’l Longshoremen’s & 

Warehousemen’s Union, 837 F.2d. 365, 369 (9th Cir. 1988), overruled on other grounds 

in Albino v. Baca, 747 F.3d 11162 (9th Cir. 2014). Both parties here have submitted 

declarations attaching various documents for the Court’s consideration. Those matters 

may consequently be properly considered in adjudicating this matter. Moreover, counsel 

for Defendants has also requested that Exhibits A through R also be judicially noticed 

under Federal Rule of Evidence 201. Plaintiffs further have requested that certain 

documents also be judicially noticed in connection with their opposition. Neither party 

has filed any opposition to those various requests and they are granted.

ANALYSIS

A. Arbitral Immunity

In recognizing the doctrine of arbitral immunity, the Ninth Circuit describes 

applicable case law as dictating that “arbitrators are immune from civil liability for acts 

within their jurisdiction arising out of their arbitral functions in contractually agreed upon 

arbitration proceedings.” Wasyl, Inc. v First Boston Corp., 813 F.2d 1579, 1582 (9th Cir. 

1987). As the Wasyl court goes on to explain, “[t]he functional comparability of the 

arbitrator’s decision-making process to those of judges and agency hearing examiners, 

to whom immunity is extended, generates the same need for independent judgment free 

from the threat of lawsuits. Id. Arbitral immunity therefore “protects all acts within the 

scope of the arbitral process.” Olson v. Nat’l Ass’n of Security Dealers, 85 F.3d 381, 

383. (8th Cir. 1996); see also Austern v. Chicago Bd. Options Exch., Inc., 898 F.2d 882, 

886 (2d Cir. 1999). Like judicial immunity, the only exception to arbitral immunity’s broad 

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scope is where there is a clear absence of jurisdiction (Intern. Medical Group, Inc. v. 

American Arbitration, 312 F.3d 833, 843 (7th Cir. 2002), or where the arbitrator engages 

in acts that clearly fall outside his or her arbitral capacity. See Cort v. American 

Arbitration Ass’n, 795 F. Supp. 970, 972-73 (N.D. Cal. 1992).

Arbitral immunity applies not just to an individual arbitrator, but also to 

organizations that sponsor arbitrations, like the AAA here. In reaching this conclusion, 

one California court notes that “a refusal to extend immunity to the sponsoring 

organization would make the arbitrator’s immunity illusory.” American Arbitration Ass’n 

v. Superior Court, 8 Cal. App. 4th 1131, 1133 (1992). Consequently, “[a]s a practical 

matter a grant of immunity to the arbitrator must be accompanied by a grant of the same 

immunity to the AAA, an entity as indispensable to the arbitrator’s job of arbitrating as 

are the courts to the judge’s job of judging.” Id. Significantly too, federal courts have 

found likewise: “[A]rbitral 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. Cort, 795 F. Supp.at 971. The immunity extended to the AAA as a 

sponsoring organization includes not only situations where the arbitrator is or would be 

immune, but also instances “where the organization has engaged in tasks such as 

selecting an arbitrator, scheduling a hearing, giving notice of a hearing, and billing for 

services.” Stasz v. Schwab, 121 Cal. App. 4th 420,433-34 (2004), citing Corey v. New 

York Stock Exchange, 691 F.2d 1205, 1211 (6th Cir. 1982), New England Cleaning v. 

American Arbitration Ass’n, 199 F.3d 542, 545 (1st Cir. 1999). The scope of immunity is 

so wide that this remains true even if the sponsoring organization has violated its own 

internal rules. See Olson v. Nat’l Ass’n of Security Dealers, 85 F.3d 381, 383 (8th Cir. 

1996).

Applying these principles to the present case, immunity clearly applies. 

Arbitration was contractually mandated by provisions contained within the RDA 

agreements at issue, and as stated above, it was Shamitoff himself that initially 

requested the matter be referred to arbitration. Although Plaintiffs appear to argue that 

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there was no ongoing controversy because they had repurchased the RDAs, thereby 

leaving nothing to arbitrate (and no jurisdiction to do so), that argument lacks merit. As 

set forth above, the gravamen of Jacquelynn Bird’s complaint against Plaintiffs, as now 

pursued by the Bankruptcy Trustee, rests not with title or possession to the allegedly 

worthless RDAs, but rather to money damages in connection with those contracts. That 

controversy remains ongoing and Arbitrator Brown had jurisdiction to consider it. 

Additionally, in setting up and billing for the arbitration, established precedent makes it 

clear that the AAA enjoys immunity as well, despite Plaintiffs’ claims that billing methods 

were improper and that Defendants “failed to follow their own rules in proceeding forward 

with the arbitration. See id.; Corey v. New York Stock Exchange, 691 F.2d at 1211.

B. Mootness

In addition to arguing arbitral immunity, Defendants also argue that while 

arbitration proceedings remained pending when they instituted the instant motion on 

February 5, 2014, by the time reply papers were filed and the motion was submitted,

arbitration had in fact been concluded. Then, as the attachment (Exhibit R) to

Defendants’ supplemental request for judicial notice attests, the arbitrator’s award was 

confirmed by Order of the Sacramento Superior Court, dated May 12, 2014. According 

to Defendants, completion of the arbitration proceedings means there is nothing left to 

enjoin pursuant to Defendants’ Complaint, which seeks preliminary and permanent 

injunctive relief to prevent the arbitration from continuing. 

The Court agrees. Generally, a court’s power to grant injunctive relief survives 

the cessation of the allegedly illegal activity only where there is “some cognizable danger 

of recurrent violation.” United States v. W.T. Grant Co., 345 U.S. 629, 633 (1953).

Here, the arbitration has been both completed and the award confirmed. The arbitration 

process is therefore complete and Defendants make no argument to the contrary. 

Plaintiffs’ request for injunctive relief is consequently moot.

Other than the mooted injunctive relief, the only other relief requested by Plaintiff’s 

prayer as against Defendants AAA or Brown sounds in declaratory relief. Plaintiffs 

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request a “declaration that arbitrator Brown has no jurisdiction over Plaintiff[s].” Pl s.’ 

Compl., 18: 12-13. In addition to being substantively flawed in the context of the AAA’s 

ability to proceed with the arbitration, that request for declaratory relief has no 

independent viability outside the confines of Plaintiffs’ request for an injunction. 

Declaratory relief is a procedural device for granting a remedy. It does not in itself create 

any substantive right or cause of action. DTND Sierra Investments LLC v. Bank of New 

York Mellon Trust Co., N.A., 958 F. Supp. 2d 738, 753 (W.D. Tex. 2013) (citing Aetna 

Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240 (1937)). Additionally, 

even if Plaintiffs did have a surviving claim for declaratory relief, which the Court does 

not believe they do, the Anti-Injunction Act, 29, U.S.C. § 2283, applies to requests for 

declaratory judgment if those requests have the same effect as injunctive relief. 

California v. Randtron, 284 F.3d 969, 975 (9th Cir. 2002). Here, as discussed above, 

the gravamen of the Complaint sounds solely in injunctive relief. Consequently, 

Plaintiffs’ request for declaratory relief is insufficient, in the absence of any other viable 

relief, to create a legally cognizable claim against Defendants AAA and Brown.

CONCLUSION

For all of the foregoing reasons, Defendants AAA and Brown’s Motion to Dismiss

(ECF No. 9) is GRANTED. Because the Court does not believe that the deficiencies of 

Plaintiffs’ claims against Defendants AAA and Robert Brown can be rectified through 

amendment, no leave to amend will be permitted. 

IT IS SO ORDERED.

Dated: August 11, 2014

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