Court Opinion

ID: 4099909
Source: CourtListenerOpinion
Date Created: 2016-11-18 16:01:12.715834+00
Date Added: 2024-06-11T09:19:44.795388
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 16-1055
                        ___________________________

                                  Timothy Owens

                       lllllllllllllllllllll Plaintiff - Appellant

                                           v.

                     American Arbitration Association, Inc.

                      lllllllllllllllllllll Defendant - Appellee
                                     ____________

                    Appeal from United States District Court
                   for the District of Minnesota - Minneapolis
                                  ____________

                           Submitted: October 20, 2016
                            Filed: November 18, 2016
                                  [Unpublished]
                                 ____________

Before MURPHY, GRUENDER, and SHEPHERD, Circuit Judges.
                         ____________

PER CURIAM.

      Plaintiff Timothy Owens sued the American Arbitration Association (AAA)
for removing an arbitrator from an arbitration panel that had issued him an award.
The district court1 dismissed Owens' claims based on arbitral immunity. Owens
appeals, and we affirm.

                                          I.

       Timothy Owens was the president and CEO of Voyager Bank. After Voyager
terminated him, Owens filed for arbitration against Voyager before the AAA. The
law firm of Anthony Ostlund Baer & Louwagie represented Owens, and the firm of
Lindquist & Vennum represented Voyager. AAA chose a three member arbitration
panel that included Allen Saeks. After the three arbitrators disclosed possible
conflicts of interest, Saeks filed a supplemental disclosure in which he said that he
had been "briefly consulted" by an attorney at his firm about an already resolved
matter in which both Anthony Ostlund and Lindquist & Vennum had been involved.
No party to the arbitration sought more information about Saeks' disclosures or
objected to the arbitration panel.

       The arbitration panel issued an initial award of more than $3 million to Owens.
Voyager then claimed that Saeks had been more involved in the earlier matter than
he had disclosed. AAA did not have a published procedure governing removal of an
arbitrator. It ordered Owens to respond to Voyager's claims and not contact any of
the arbitrators. AAA did not hold a hearing, consult Saeks, or inform Owens about
the procedure for deciding Voyager's claim before it removed Saeks from the
arbitration panel without explanation. The two remaining arbitrators then issued a
final award in Owens' favor.

      Next, Owens and Voyager filed cross motions in Hennepin County District
Court, one to confirm the award and one to vacate it. The district court decided to

      1
      The Honorable Paul A. Magnuson, United States District Judge for the District
of Minnesota.

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vacate the arbitration award, and then Owens sued AAA in state court for breach of
contract, unjust enrichment, tortious interference with contract, and tortious
interference with prospective economic advantage. AAA removed the case to federal
court, where the district court determined that Owens' claims were barred by arbitral
immunity. AAA's motion to dismiss was granted, and Owens now appeals.

                                           II.

       We review the district court's grant of a motion to dismiss de novo, assuming
the facts alleged in the complaint are true. Badrawi v. Wells Fargo Home Mortg.,
Inc., 718 F.3d 756, 758 (8th Cir. 2013). To survive a motion to dismiss, a complaint
must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). Arbitrators can be entitled to immunity because their role
in deciding disputes is "functionally equivalent" to the role of judges. Olson v. Nat'l
Ass'n of Sec. Dealers, 85 F.3d 381, 382 (8th Cir. 1996). Courts extend immunity to
arbitrators to protect them from "undue influence" and the arbitration process "from
attack by dissatisfied litigants." Id. Arbitral immunity may extend "to organizations
that sponsor arbitrations" and "all acts within the scope of the arbitral process" are
protected. Id. at 382-83.

       In Olson, the plaintiff sued an arbitration sponsoring organization for allegedly
appointing a biased arbitrator. 85 F.3d at 382. We affirmed the dismissal of the
plaintiff's claims and concluded that arbitral immunity bars claims against a
sponsoring organization based on the appointment of a biased arbitrator. Id. at 383.
We also concluded that a sponsoring organization is entitled to immunity even if a
claim arises from the organization's failure to follow its own rules when selecting an
arbitration panel. Id. Such immunity is broad and protects sponsoring organizations
from civil liability at all stages of the arbitration process. Id.; see also Honn v. Nat'l
Ass'n of Sec. Dealers, Inc., 182 F.3d 1014, 1017-18 (8th Cir. 1999). The appointment

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of arbitrators is protected because it is an important part of the arbitral process.
Olson, 85 F.3d at 383.

       We conclude that the removal of arbitrators is similarly protected by arbitral
immunity because it is just as much a part of the arbitration process as the
appointment of arbitrators. Because Owens' claims are barred by arbitral immunity,
the district court did not err in dismissing his action. For these reasons we affirm the
judgment of the district court.
                         ______________________________

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