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In re Sussex

United States Court of Appeals, Ninth Circuit

January 27, 2015

IN RE MARY ANN SUSSEX; MITCHELL PAE; MALCOLM NICHOLL; SANDY SCALISE; ERNESTO VALDEZ, SR.; ERNESTO VALDEZ, JR.; JOHN HANSON; ELIZABETH HANSON, MARY ANN SUSSEX; MITCHELL PAE; MALCOLM NICHOLL; SANDY SCALISE; ERNESTO VALDEZ, SR.; ERNESTO VALDEZ, JR.; JOHN HANSON; ELIZABETH HANSON, Petitioners,
v.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEVADA, LAS VEGAS, Respondent, TURNBERRY/MGM GRAND TOWERS, LLC; MGM GRAND INC., DOING BUSINESS AS MGM MIRAGE; TURNBERRY/HARMON AVE., LLC; MGM GRAND CONDOMINIUMS, LLC; SIGNATURE CONDOMINIUMS, LLC; TURNBERRY WEST REALTY, INC.; MGM RESORTS INTERNATIONAL, Real Parties in Interest

Argued and Submitted, San Francisco, California November 20, 2014

Page 1093

[Copyrighted Material Omitted]

Page 1094

Petition for Writ of Mandamus to the United States District Court for the District of Nevada. D.C. No. 2:08-cv-00773-MMD-PAL.

SUMMARY[**]

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 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.

Norman B. Blumenthal (argued) and Kyle Nordrehaug, Blumenthal, Nordrehaug & Bhowmik, La Jolla, California; Robert Gerard, Gerard & Associates, Las Vegas, Nevada, for Petitioners.

Steve Morris (argued), Akke Levin, and Jean-Paul Hendricks, Morris Law Group, Las Vegas, Nevada; Alex Fugazzi and Justin Carley, Snell & Wilmer LLP, Las Vegas, Nevada, for Real Party in Interest Turnberry/MGM Grand Towers, LLC.

Yvette Ostolaza, Yolanda C. Garcia, and Robert Velevis, Sidley Austin LLP, Dallas, Texas, for Real Party in Interest MGM Resorts International.

No appearance for Respondent.

Before: Ferdinand F. Fernandez and Sandra S. Ikuta, Circuit Judges, and William H. Albritton III, Senior District Judge.[*] Opinion by Judge Ikuta.

OPINION

Page 1095

IKUTA, Circuit Judge:

Sussex and other petitioners (collectively, " Sussex" ) seek a writ of mandamus directing a 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). We have jurisdiction pursuant to the All Writs Act, 28 U.S.C. § 1651, and hold that mandamus is warranted under the circumstances of this case. Se ...


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