NASD Dispute Resolution, Inc. v. Judicial Council of California

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

I. INTRODUCTION

In September 2001, the California legislature enacted SB 475, a bill imposing new regulations upon arbitration. The new law directed the California Judicial Council to draft ethical standards for arbitrators and provided that failure to ¡ abide by those standards could be grounds for vacating an arbitration award. By its terms, SB 475 is applicable to all arbitrations in California. NASD Dispute Resolution, Inc. and the New York Stock Exchange, Inc. (“Plaintiffs”) have sued the Judicial Council, however, seeking a declaratory judgment that, as applied to them, the ethical standards set by the Judicial Council are preempted by federal law. The Judicial Council has moved for dismissal, arguing that this court lacks subject matter jurisdiction, that the case fails to present a justiciable controversy, that the suit is barred by the Eleventh Amendment, and that this court should abstain from deciding the case. For the following reasons, this Court finds that it has subject matter jurisdiction and that Plaintiffs have presented a justiciable claim, but concludes that the claim is barred by the Eleventh Amendment.…