Spaulding LLC v. Miller (12/22/2020)
Arizona Court of Appeals Division One holds that the concept of subject matter jurisdiction does not apply in private arbitration.
A plaintiff sued several defendants over a business deal gone wrong. The parties stipulated to stay the case to participate in arbitration pursuant to an arbitration clause in their agreement. The arbitrator ruled for the plaintiff and the plaintiff applied to the superior court to confirm the award. The defendants moved the superior court to vacate and dismiss the award, arguing, in part, that the arbitrator lacked subject matter jurisdiction because the plaintiff’s claims were derivative and the plaintiff failed to follow the statutory procedure for bringing a derivative action. The superior court denied the defendants’ motions and confirmed the award. The Court of Appeals affirmed.
The Court of Appeals held that the concept of subject matter jurisdiction—a court’s constitutional or statutory power to determine particular types of cases—does not apply in the context of private arbitration. A private arbitrator is contractually empowered to determine the types of disputes specified in an arbitration agreement—the arbitrator’s authority comes from the parties, not other law. Regardless of whether the plaintiff’s claims were derivative, the defendants agreed to arbitrate the dispute.
Justice Weinzweig authored the opinion of the court in which Judge Thumma and Judge Williams joined.