Sussex v. U.S. Dist. Court for the District of Nevada, No. 14-70158 (9th Cir. 2015)
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Petitioners, purchasers of luxury condominium units, seek a writ of mandamus directing the district court to vacate its grant of a motion, while arbitration was pending, to disqualify an arbitrator for evident partiality under 9 U.S.C. 10(a)(2). The court determined that it had jurisdiction under the All Writs Act, 28 U.S.C. 1651. In determining whether a petitioner has carried the burden of establishing a "clear and indisputable" right to issuance of the writ, the court examined the five factors set out in Bauman v. U.S. Dist. Court: (1) the party seeking the writ has no other adequate means, such as a direct appeal, to attain the relief he or she desires; (2) the petitioner will be damaged or prejudiced in a way not correctable on appeal; (3) the district court’s order is clearly erroneous as a matter of law; (4) the district court’s order is an oft-repeated error, or manifests a persistent disregard of the federal rules; and (5) the district court’s order raises new and important problems, or issues of law of
first impression.The court concluded that the third and fifth Bauman factors, along with the first and second Bauman factors to a lesser extent, weigh in favor of granting the petition for mandamus. In this case, the district court's ruling was clearly erroneous as to the legal standard for "evident partiality" and the nature of the equitable concerns sufficient to justify a mid-arbitration intervention. Accordingly, the court granted the petition.
Court Description: Writ of Mandamus / Arbitration. The panel granted a writ of mandamus, and directed the district court to vacate its grant of a motion, while arbitration was pending, to disqualify an arbitrator for evident partiality under 9 U.S.C. § 10(a)(2). Purchasers of condominium units in a luxury condominium project brought civil actions against the developer and seller of the project, and the parties agreed to submit the disputes to arbitration. The district court concluded that it had the authority to intervene in an ongoing arbitration under Aerojet-General Corp. v. Am. Arbitration Ass’n, 478 F.2d 248 (9th Cir. 1973), and granted the developer’s motion to disqualify the arbitrator. Bauman v. U.S. Dist. Court, 557 F.2d 650 (9th Cir. 1977), sets forth five factors for determining whether a petitioner has carried the burden of establishing a “clear and indisputable” right to issuance of a writ of mandamus, including factor three – whether the district court’s order was clear error. The panel determined that the district court clearly erred in holding that its decision to intervene mid-arbitration was justified under Aerojet-General. Specifically, the panel held that the district court erred in predicting that an award issued by the arbitrator would likely be vacated because of his “evident partiality” under 9 U.S.C. § 10(a)(2). The panel also 4 IN RE SUSSEX held that even if the arbitrator’s activities created a reasonable impression of partiality, the district court’s equitable concern that delays and expenses would result if an arbitration award were vacated was manifestly inadequate to justify a mid-arbitration intervention, regardless of the size and early stage of the arbitration. The panel applied the remaining factors set forth in Bauman, and concluded that they weighed in favor of granting the extraordinary remedy of mandamus relief.
The court issued a subsequent related opinion or order on March 27, 2015.
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