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An action brought against an arbitration organization and an arbitrator seeking damages and injunctive relief, and purporting to be brought under the Declaratory Judgment Act (DJA), is an impermissible collateral attack on an arbitration award and does not constitute an actual case or controversy, a federal court in Ohio held.
In Prim Securities, Inc. v. NASD Dispute Resolution, No. 1:06 CV 323, 2006 WL 2612897 (N.D. Ohio Sept. 8, 2006), Prim brought an action against NASD and Edward Siegel, a NASD arbitrator, seeking damages as a result of an arbitration award issued by Siegel and injunctive relief prohibiting Siegel from serving as an arbitrator in any future arbitrations involving Prim.
Siegel had served as an arbitrator in a dispute over a year prior and awarded damages against Prim, who argued that Siegel was “at the minimum, subject to the appearance of bias,” if not actually biased. Prim claimed that it brought the action under the DJA. NASD and Siegel brought a motion to dismiss, which this Court granted due to lack of subject matter jurisdiction.
First, the Court noted that the FAA is “the exclusive remedy for challenging acts that taint an arbitration award.” Corey v. N.Y. Stock Exchange, 691 F.2d 1205, 1211-12 (6th Cir. 1982). Therefore, the Court held that Prim’s claim, although claiming to be brought under the DJA, was an impermissible collateral attack on an arbitration award. The Court also pointed out that Prim’s proper remedy would be a motion to vacate the award; however, the three month statute of limitations for such an action had run.
Second, the Court declined to exercise jurisdiction because “[f]ederal jurisdiction is limited to actual cases and controversies.” Sankyo Corp. v. Nakamura Trading Corp., 139 Fed.Appx. 648, 650 (6th Cir. 2005). Since Prim was not a party to an arbitration and not awaiting the selection of arbitrators, Prim’s request for injunctive relief was “nothing more than a request for an advisory opinion,” which the Court does not have authority to issue.
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