Source: http://ca.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20021112_0000037.NCA.htm/qx
Timestamp: 2019-04-23 20:01:20+00:00

Document:
The opinion of the court was delivered by: Samuel Conti, United States District Judge.
it is the judgment of this Court that this case is dismissed.
In 2001, the California Legislature passed and Governor Gray Davis signed SB 475, which required the Judicial Council to "adopt ethical standards for all neutral arbitrators effective July 1, 2002." Cal. Code Civ. Proc. § 1281.85. In accordance with this new law, the Judicial Council adopted ethics standards applicable to all arbitrators in California. Those standards include extensive requirements for disclosure by the arbitrator of information possibly relating to potential biases or conflicts of interest. An arbitrator may be disqualified on the basis of this information, and failure to comply with the ethics standards can be grounds for vacating an arbitration award. Cal. Code Civ. Proc. §§ 1281.91, 1286.2. SB 475 did not give the Judicial Council any authority to enforce the ethical standards, however, and no such authority exists elsewhere in California law.
Plaintiffs are national securities exchanges. Each provides arbitration services to its members. Those arbitrations are conducted in accordance with detailed guidelines prepared by the arbitration services but approved, in accordance with federal law, by the United States Securities and Exchange Commission (SEC). Shearson/American Express v. McMahon, 482 U.S. 220, 234 (1987). Defendants now argue that their obligations under the California standards differ from and conflict with their obligations under their own rules. They also argue that ensuring that their members' arbitrations comply with the California rules would force them to incur substantial recordkeeping expenses and might cost them the services of many of their arbitrators. They have sued the California Judical Council and, in their official capacity, its members, seeking a declaratory judgment from this court that federal law preempts the California standards.
Defendants argue that the California standards are not preempted. In addition, they assert that this court lacks subject matter jurisdiction over the claims, that the claims raise no justiciable controversy, that the claims are barred by the Eleventh Amendment, and that this court should abstain from hearing the case.
Federal courts have limited jurisdiction, and Plaintiffs must establish that their claims fall within that limited jurisdiction. Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 377 (1994). In responding to a motion to dismiss, however, a plaintiff need not offer detailed proof; "general factual allegations of injury resulting from the defendant's conduct may suffice." Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). Plaintiffs assert that this court has diversity and federal question jurisdiction, and either must show that a federal question arises out of Plaintiffs' complaint or must establish the existence of complete diversity of citizenship between all defendants and all plaintiffs. 28 U.S.C. § 1331; 28 U.S.C. § 1332.
Article III of the U.S. Constitution limits federal courts to resolving cases or controversies. In accordance with Article III, the federal courts may hear only present disputes between parties with concrete, adverse interests. Flast v. Cohen, 392 U.S. 83, 96-97 (1968). The federal courts may not issue advisory opinions, hear unripe or moot cases, or decide cases brought by plaintiffs without standing. Id.; Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49 (1967).
In order to have standing, a plaintiff must have suffered "injury-in-fact." Defenders of Wildlife, 504 U.S. at 560. Such injury must be "concrete and particularized," and "actual or imminent," not "conjectural or hypothetical." Id. (citations omitted). The injury must be "fairly traceable" to the defendants' conduct and must be redressable through the relief sought from the court. Id. at 560-61.

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