Party Can Possibly To Exposed For Sanctions, But Not Attorneys Under AAA Rules and CCP § 128.7.
Well, here is a case which might bring some solace to attorneys representing clients in AAA arbitrations.
Optimal Markets, Inc. v. Salant, Case No. H038571 (6th Dist. Nov. 26, 2013) (published) denied CCP § 128.7 sanctions against attorneys representing parties in a AAA arbitration (even though the parties were sanctioned) because they substituted out after filing of the complaint and never endorsed a position in court while the judicial proceeding was stayed during the arbitration.
The appellate court affirmed the sanctions denial.
Because the purpose of section 128.7 was to deter abusive judicial filings, the lower court did not err in not assessing sanctions against attorneys for advocacy in an arbitration proceeding. The arbitration advocacy was not the equivalent of court advocacy. Even though the arbitrator sanctioned parties under section 128.7 (or F.R.Civl P. 11) in the AAA proceeding, AAA rules did not allow sanctioning attorneys such that the sanctions denial was fully justified.
Justice Marquez authored the opinion on behalf of a 3-0 panel.
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