Timothy Owens v. American Arbitration Assoc.
670 F. App'x 441
| 8th Cir. | 2016Background
- Timothy Owens, former CEO of Voyager Bank, prevailed in an AAA arbitration that awarded him over $3 million.
- The three-member panel included arbitrator Allen Saeks, who had disclosed a prior brief consultation involving counsel for both parties; no party objected or sought more information at that time.
- After the initial award, Voyager alleged Saeks had understated his involvement in the prior matter; AAA ordered Owens to respond and forbade contact with arbitrators.
- Without a published removal procedure, AAA removed Saeks from the panel without a hearing, without consulting Saeks, and without explaining the decision to Owens; the remaining arbitrators issued a final award in Owens' favor.
- The Hennepin County District Court vacated the arbitration award; Owens sued AAA for breach of contract, unjust enrichment, and tortious interference. AAA removed the case to federal court and moved to dismiss based on arbitral immunity.
- The district court granted dismissal; Owens appealed, and the Eighth Circuit affirmed on the basis that arbitral immunity bars his claims against the sponsoring organization.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a sponsoring arbitration organization is immune from suit for removing an arbitrator | Owens argued AAA’s removal of Saeks (and failure to follow procedures) gave rise to contract and tort claims | AAA argued arbitral immunity shields sponsoring organizations for acts within the arbitral process, including removal | Court held arbitral immunity bars Owens’ claims; removal is protected as part of the arbitral process |
| Whether failure to follow an AAA procedure defeats immunity | Owens argued procedural irregularities (no hearing, no consultation, no explanation) negate immunity | AAA contended immunity applies even if the sponsor deviates from its own rules | Court held immunity covers sponsors even if they fail to follow their own rules during arbitration |
| Whether appointment vs. removal of arbitrators differs for immunity purposes | Owens suggested removal is a discrete, actionable post-appointment act | AAA relied on precedent treating appointment decisions as immune and argued removal is similarly integral | Court found removal is functionally equivalent to appointment and thus protected |
| Whether Owens pleaded plausible claims to survive dismissal | Owens asserted facts showing harm from AAA’s actions sufficient to state claims | AAA maintained that even well-pleaded facts are barred by immunity | Court applied Twombly plausibility standard but held immunity defeats the claims regardless |
Key Cases Cited
- Olson v. Nat'l Ass'n of Sec. Dealers, 85 F.3d 381 (8th Cir. 1996) (extending arbitral immunity to sponsoring organizations and shielding appointment decisions)
- Honn v. Nat'l Ass'n of Sec. Dealers, Inc., 182 F.3d 1014 (8th Cir. 1999) (describing broad scope of immunity for arbitration sponsors)
- Badrawi v. Wells Fargo Home Mortg., Inc., 718 F.3d 756 (8th Cir. 2013) (standard of review on motion to dismiss)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)