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Based on the doctrine of fraudulent joinder, a federal court in Florida retained diversity jurisdiction over an action challenging the propriety of an arbitration award because the party challenging the award could not prove irreparable harm and thus had no viable claim for injunctive relief against the arbitrator (i.e., the non-diverse defendant).\
In Tucker v. Citigroup Global Markets Inc., No. 2:06-cv-585-FtM-34DNF, 2007 WL 2071502 (M.D. Fla. July 17, 2007), Tucker and Citigroup submitted a dispute to arbitration. The arbitration panel issued an award in favor of Citigroup, and Tucker challenged the award by suing Citigroup and one of the arbitrators, Architetto, in a Florida court.
Citigroup removed the matter to federal court based on diversity of citizenship. In response, Tucker filed a motion to remand the matter to state court, arguing that there was no diversity of citizenship because both Tucker and Architetto were Florida citizens, thus precluding complete diversity.
In opposing the motion to remand, Citigroup argued that Architetto, the non-diverse defendant, was fraudulently joined because the doctrine of arbitral immunity precluded any cause of action against him. On this issue, Tucker argued that the doctrine of arbitral immunity did not necessarily preclude Tucker from seeking injunctive relief against the arbitrator – specifically, an order enjoining Architetto from resuming his service as arbitrator in the event of an order vacating the arbitration award.
The Court briefly touched on the question of whether Eleventh Circuit precedent extends the doctrine of arbitral immunity to claims for injunctive relief before explaining that Florida law governed the issue since it arose on a motion to remand. The Court thus examined Florida law for controlling authority on whether arbitral immunity extends to claims for injunctive relief.
As the Court noted, there is a Florida decision holding that parties cannot challenge the arbitrability of a dispute by seeking injunctive relief against the arbitrator, but there is no Florida precedent on whether a party can seek injunctive relief against an arbitrator as a means of challenging the arbitrator's alleged misconduct.
Given the absence of controlling authority directly on point, the Court found that arbitral immunity was not a basis for applying the doctrine of fraudulent joinder because there remained a possibility, however remote, that Florida courts would permit a claim for injunctive relief against an arbitrator.
Despite finding that arbitral immunity was not a basis for applying the doctrine of fraudulent joinder, the Court still applied the doctrine and thus denied the motion to remand. The Court applied the doctrine of fraudulent joinder on the ground that Tucker's claim for injunctive relief, even if viable in the abstract, was untenable under the facts of the case because Tucker would be unable to show that he would suffer irreparable harm in the absence of injunctive relief. Accordingly, the Court dismissed the claim against Architetto and retained jurisdiction.
The Court found that Tucker would be unable to prove irreparable harm because his claim for injunctive relief was premised on the "remote" possibility that if the arbitration award were vacated, Architetto would again serve on the arbitration panel resolving the dispute.
Under Florida law, the possibility of Architetto resuming his service as arbitrator was arguably nil because when an award is vacated for "evident partiality," the Florida Arbitration Code only permits the court to order a rehearing before "new arbitrators." See Fla. Stat. Ann. § 682.13(3).
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