Condominium owners in Nevada brought three separate, similar actions against the declarant (developer) of their condominium related to the development of the condominium project. A single arbitrator was selected to hear all three actions.
While serving as the arbitrator in the three matters, the arbitrator founded a company designed to invest in “high-probability” legal claims, but did not disclose this investment activity to the condominium owners or declarant.
The developer (after discovery of the investment) moved the American Arbitration Association (AAA) to disqualify the arbitrator from the matter – AAA denied the request and the developer moved the federal district court to disqualify the arbitrator – the federal district court agreed, disqualifying the arbitrator.
Sussex v. U.S. Dist. Ct. for D. Nevada, __ F.3d __, 2015 WL 327558 (9th Cir. Jan. 27, 2015) reverses the federal district court’s findings, vacating the federal district court’s order disqualifying the arbitrator. The United States Court of Appeals for the Ninth Circuit did not find a “direct financial connection” between the arbitrator and either of the parties.