Jevne v. Superior Court

Summary

The California Supreme Court held that Code of Civil Procedure section 1281.85 authorized the Judicial Council to adopt ethics standards for neutral arbitrators appointed by third-party arbitration providers. It further held that the Securities Exchange Act preempted those California standards as applied to arbitrations administered by NASD Dispute Resolution, but concluded that the delay in arbitrator selection did not relieve the plaintiffs of their duty to arbitrate.

Holdings

1. Code of Civil Procedure section 1281.85 authorized the Judicial Council to adopt ethical standards for neutral arbitrators in private contractual arbitration, including arbitrators appointed by third-party dispute-resolution providers such as NASD Dispute Resolution.
2. The Securities Exchange Act, through the SEC's approval of the NASD Code and related rules, preempted California Standards 7, 8, and 10 concerning arbitrator disclosure and disqualification in NASD-administered securities arbitrations.
3. The California Standards as a whole were preempted in SRO-administered securities arbitrations because Standards 7, 8, and 10, and potentially Standard 9, were not functionally or volitionally severable from the remaining standards.
4. The delay in arbitrator selection and appointment did not relieve plaintiffs of their contractual duty to arbitrate.

Questions Presented

1. Whether Code of Civil Procedure section 1281.85 authorized the Judicial Council to adopt ethics standards for arbitrators appointed by arbitration providers such as NASD Dispute Resolution.
2. Whether the Securities Exchange Act preempted the California Standards as applied to NASD-administered arbitration.
3. Whether delay caused by uncertainty concerning the California Standards relieved the parties of their contractual duty to arbitrate.
4. Whether the parties could waive application of the California Standards.
5. Whether the Federal Arbitration Act preempted the California Standards.

Disposition

affirmed