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Malik v. Ruttenberg

398 N.J. Super. 489, 942 A.2d 136 (App. Div. 2008)

ARBITRATION; IMMUNITY — An arbitrator or an arbitration association, acting in a judicial capacity, as contrasted to acting in an administrative capacity, is immune from liability under the New Jersey Arbitration Act.

A dispute arose between a contractor and a homeowner. It was submitted to arbitration in accordance with the terms of their contract. The proceedings became increasingly contentious. During one arbitration hearing, the arbitrator refused a request by the contractor’s attorney to have one of the homeowner’s attorneys removed from the proceedings due to his conduct. Following the arbitrator’s refusal, a recess was called. According to the contractor’s allegations, the homeowner’s attorney assaulted him in a lobby outside of the hearing room. The alleged assault was not observed by the arbitrator. The contractor sued the homeowner’s attorney, that attorney’s law firm, the arbitrator, and the national arbitration association. In his claims against the arbitrator and the association, the contractor asserted that each knew of the homeowner’s attorney’s tendencies but failed to exercise reasonable care to keep the proceedings under control. The arbitrator and the association moved to dismiss the complaint. They argued that they had immunity under the New Jersey Arbitration Act. The lower court denied their motion and they appealed.

The Appellate Division reversed, noting that the New Jersey Arbitration Act affords an arbitrator and an arbitration association with immunity from civil liability to the same extent as a judge acting in a judicial capacity. The Court then analyzed the circumstances under which judges were immune from lawsuits. It found that judges are immune from liability for “judicial” acts, even if there are allegations of bad faith or malice. However, judges are not immune from liability for their “administrative” acts, such as a judge’s decision to fire a court employee. In determining whether or not a judge’s actions are “judicial” or “administrative,” a court must scrutinize the nature of the action taken and the expectation of the parties, and decide if that action is one normally performed by a judge in his or her capacity as a judge. If the action is “judicial” in nature, then a judge would be immune from civil liability for that action. Similarly, an arbitrator or an arbitration association, acting in a judicial capacity, would also be immune from liability under the New Jersey Arbitration Act. Here, the Court analyzed the actions of the arbitrator and the arbitration association. The contractor complained that the arbitrator failed to control the proceedings and failed to remove the homeowner’s attorney from the proceedings. The Court found that the management of arbitration proceedings was a judicial function. Judges have wide authority to manage their proceedings, so arbitrators have that same authority within the context of an arbitration proceeding. Therefore, the arbitrator and the arbitration association had immunity under the New Jersey Arbitration Act, and the action should have been dismissed by the lower court.

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