Filed 6/26/26 Chelico v. American Arbitration Assn. CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
BASSAM SAMIH CHELICO, B343950
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. 24STCV04771)
v.
AMERICAN ARBITRATION
ASSOCIATION, INC., et al.,
Defendants and Respondents.
APPEAL from the judgment of the Superior Court of
Los Angeles County, Alison M. Mackenzie, Judge. Affirmed.
Law Office of Nabil E. Chelico and Nabil E. Chelico for
Plaintiff and Appellant.
Law Office of Stephen L. Backus and Stephen L. Backus for
Defendants and Respondents.
________________________________
Bassam Samih Chelico was party to an arbitration before
the American Arbitration Association, Inc. (AAA). He later filed a
lawsuit against AAA and its employees Denise Crow and Patrick
Tatum, alleging defendants were biased and conducted proceedings
improperly, and AAA made misstatements on its website regarding
its processes and the neutrality of its arbitrators. The trial court
sustained defendants’ demurrers without leave to amend. We
affirm.
BACKGROUND
We assume the truth of all material facts properly pleaded
in the complaint but not the complaint’s contentions, deductions,
or conclusions of fact or law. (Association for Los Angeles Deputy
Sheriffs v. County of Los Angeles (2023) 94 Cal.App.5th 764, 802.)
Chelico worked for TJB Gearys, LLC (Gearys) as a sales
consultant until Gearys terminated his employment for allegedly
discriminatory reasons. Chelico filed a lawsuit against Gearys
for ethnicity and age-based discrimination, and the superior court
ordered the matter to arbitration, which ended in Gearys’s favor
(the Gearys arbitration). The court confirmed the resulting award
and entered judgment accordingly, which our colleagues in Division
Seven affirmed. (Chelico v. TJB Gearys, LLC (Dec. 15, 2025,
B331570) [nonpub. opn.].)
In the instant lawsuit, Chelico sued AAA for violation
of the False Advertising Law, Business and Professions Code
section 17500 et seq. (FAL), and the negligent hiring of Crow,
the AAA case manager tasked to oversee the Gearys arbitration,
Tatum, the AAA vice president who oversaw Crow, and Sara
Adler, the arbitrator. He also asserted against AAA, Crow and
Tatum causes of action for conspiracy, gross negligence, and
violation of the Tom Bane Civil Rights Act (the Bane Act), Civil
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Code section 52.1 et seq. Chelico alleged that AAA held itself out to
the public as a neutral arbitrator but, in the course of the Gearys
arbitration, flouted its own procedures and exhibited pervasive bias
in favor of Gearys. He alleged all defendants mismanaged the
Gearys arbitration and intimidated and coerced him in an effort to
interfere with his claims against Gearys.
Defendants demurred to the complaint and requested
judicial notice of court records in the Gearys litigation, which
the trial court granted. The court sustained the demurrer to
the complaint with leave to amend as to the FAL cause of action
only, which Chelico had asserted only against AAA.
In his first amended complaint, Chelico alleged that to
induce aggrieved employees to select AAA over its competitors for
alternative dispute resolution, AAA advertised on its website and
in printed material that: (1) AAA strives to “ensure fairness and
equity in resolving workplace disputes”; (2) AAA’s “employment due
process protocol” (AAA’s protocol) provides that employee claimants
“should have access to all information reasonably relevant to their
claims,” and shall have a right to an independent, impartial and
disinterested arbitrator who discloses any potential conflict of
interest or prior contact with a party; (3) AAA’s “employment
arbitration rules and mediation procedures” (AAA’s rules) prohibit
ex parte communications and require that AAA be guided by its
“obligation to act in an impartial manner”; (4) if AAA determines
that an employer’s dispute resolution program “substantially and
materially deviates from the minimum due process standards” of
AAA’s protocol and rules, AAA “may decline to administer cases
under” that program; and (5) AAA has created an administrative
review council to resolve certain administrative issues that arise
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in AAA’s “large, complex domestic cases.”1 (Boldface, capitalization
& italics omitted.)
Chelico alleged that contrary to these representations:
(1) AAA receives frequent complaints about the bias and corruption
of certain arbitrators, which it conceals from the public; (2) AAA
case managers do not investigate complaints about arbitrators
or forward them to the administrative review council, but
instead summarily dismiss the complaints; (3) case managers
often have secret working relationships with employer parties;
(4) case managers frequently organize ex parte communications
that exclude employee claimants; and (5) AAA withholds material
information from employee claimants.2
Chelico alleged that prior to submitting his demand for
arbitration, he reviewed and relied upon AAA’s representations,
and based thereon chose AAA over, for example, Judicial
Arbitration and Mediation Services (JAMS), to conduct the
Gearys arbitration. Chelico paid AAA to conduct the arbitration.
AAA deceived Chelico, however, in that (1) neither it nor its
arbitrators implemented AAA’s protocol or rules, (2) AAA
arbitrators were biased, (3) AAA case managers and arbitrators
frequently withheld information from employee claimants and
engaged in ex parte communications with employer respondents,
and (4) the administrative review council was “bogus.” Chelico
alleged he was “railroaded” in the Gearys arbitration by AAA,
1 Chelico did not allege that the Gearys arbitration involved a
large, complex domestic case.
2 Chelico also alleged that AAA misrepresented that its
arbitrators are employees rather than independent contractors, but
he ascribed no particular import to this fact and does not mention
the theory on appeal. We deem the theory abandoned.
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whose case managers turned out to be “covert advocates” for Gearys
and whose arbitrator was “far removed from the protocol and rules.”
(Capitalization omitted.)
Chelico alleged his damages included not only the money he
paid AAA to administer the Gearys arbitration but also money he
lost due to his lack of success in it. He sought return of the money
he paid AAA, economic damages to compensate for his lost claims
against Gearys, and an injunction against AAA’s false advertising.
AAA demurred to the first amended complaint, arguing
Chelico failed to identify statements that were false or misleading,
he lacked standing to assert any claim against AAA independent of
the Gearys arbitration, and AAA enjoyed arbitral immunity for any
misconduct during the course of arbitration.
The court found that AAA enjoyed arbitral immunity for
any misconduct occurring during the Gearys arbitration. The
court further found that Chelico failed to allege with reasonable
particularity what specific representations AAA made to the public
that were false or misleading, and he had no standing to assert any
claim unrelated to the manner in which AAA conducted the Gearys
arbitration. The court sustained AAA’s demurrer without leave to
amend and entered a judgment of dismissal.
Chelico appealed.
DISCUSSION
Chelico preliminarily argues that AAA forfeited its right
to challenge the first amended complaint on immunity grounds
by failing to raise the argument below. We disagree. AAA fairly
raised the issue of arbitral immunity in both its demurrer and reply
briefs below.
Chelico contends he adequately alleged that defendants’
mis- and malfeasance in conducting the Gearys arbitration subjects
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them to civil liability, and in any event his false advertising claim is
independent of the arbitration and therefore not barred by arbitral
immunity. We disagree with both contentions.
A. Standard of Review
We review an order sustaining a demurrer de novo. (McCall
v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) “We give the
complaint a reasonable interpretation, reading it as a whole and its
parts in their context. [Citation.] Further, we treat the demurrer
as admitting all material facts properly pleaded, but do not
assume the truth of contentions, deductions or conclusions of law.
[Citations.] When a demurrer is sustained, we determine whether
the complaint states facts sufficient to constitute a cause of action.
[Citation.] And when it is sustained without leave to amend, we
decide whether there is a reasonable possibility that the defect
can be cured by amendment: if it can be, the trial court has abused
its discretion and we reverse.” (City of Dinuba v. County of Tulare
(2007) 41 Cal.4th 859, 865.) In addition, to the complaint, “we may
consider matters that are properly the subject of judicial notice, and
were considered by the trial court.” (La Serena Properties, LLC v.
Weisbach (2010) 186 Cal.App.4th 893, 897 (La Serena).)
B. Arbitral Immunity
Arbitral immunity derives from judicial immunity. “The
concept of judicial immunity is long-standing and absolute, with
its roots in English common law. It bars civil actions against judges
for acts performed in the exercise of their judicial functions and it
applies to all judicial determinations, including those rendered in
excess of the judge’s jurisdiction, no matter how erroneous or even
malicious or corrupt they may be.” (Howard v. Drapkin (1990) 222
Cal.App.3d 843, 851, fn. omitted.)
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“Arbitrators have been extended the protection of judicial
immunity, because they perform ‘ “the function of resolving disputes
between parties, or of authoritatively adjudicating private rights.” ’
[Citations.]” (In re Marriage of Assemi (1994) 7 Cal.4th 896, 909;
see also Thiele v. RML Realty Partners (1993) 14 Cal.App.4th 1526,
1531 [quasi-judicial immunity extends to arbitrators so they may
issue “independent judgments which are free from fear of legal
action”].)
Arbitral immunity shields arbitrators from “ ‘ “actions for
their activities in arriving at their award.” ’ ” (Stasz v. Schwab
(2004) 121 Cal.App.4th 420, 430 (Stasz).) “The application of
arbitral immunity does not turn on whether the act at issue is
discretionary instead of ministerial or administrative,” but shields
all functions that are integrally related to the arbitral process, even
where arbitrators fail to exercise proper care, skill, or impartiality
in their performance of arbitral functions. (Id. at pp. 431, 438.)
Arbitral immunity also extends “to organizations that sponsor
arbitrations, like the AAA.” (Id. at p. 433.)
“The remedy for arbitrator bias or misconduct is a civil
action seeking to vacate the arbitration award.” (Stasz, supra, 121
Cal.App.4th at p. 438; see also La Serena, supra, 186 Cal.App.4th
at p. 907.)
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C. Chelico’s Claims for Negligence, Violation of the
Bane Act, and False Advertising Are Barred by
Arbitral Immunity
1. Negligence and Violation of the Bane Act
The original complaint alleged causes of action for negligence,
conspiracy, and violation of the Bane Act3 premised on allegations
that AAA, Crow and Tatum mismanaged the Gearys arbitration
and coerced and intimidated Chelico in an effort to interfere
with his claims against Gearys. Both types of conduct are
subject to arbitral immunity because defendants’ alleged mis-
and malfeasance was integrally connected with the arbitration.
Chelico’s remedy for the misconduct was not civil liability for
AAA and its employees but to seek vacating the arbitration award.
(Stasz, supra, 121 Cal.App.4th at p. 438.)
Chelico attempts to distinguish Stasz on the ground that it
did not address application of immunity to an alleged violation of
the Bane Act. The point is immaterial. The question is not the
cause of action asserted but whether the alleged misconduct was
integrally connected to an arbitration. “Even corrupt or biased
acts are subject to immunity.” (Stasz, supra, 121 Cal.App.4th
at p. 432; see also La Serena, supra, 186 Cal.App.4th at p. 907
3 The Bane Act provides that a person may bring legal
action against anyone, whether or not acting under color of law,
who by “threat, intimidation, or coercion,” interferes with or
attempts to interfere with a plaintiff ’s exercise or enjoyment of
rights that are enshrined under the Constitution of the United
States or the Constitution or laws of this state. (Civ. Code, § 52.1,
subd. (b); Venegas v. County of Los Angeles (2004) 32 Cal.4th 820,
841 [the Bane Act prohibits interference or attempted interference
with the plaintiff ’s legal rights through threats, intimidation or
coercion].)
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[“arbitral immunity applies even where the acts alleged are
malicious or corrupt”].)
2. False Advertising
Chelico’s first amended complaint alleged that AAA engaged
in false advertising to induce consumers to choose it over another
alternative dispute resolution service.
“California’s false advertising law bars ‘any advertising
device . . . which is untrue or misleading.’ ” (Shaeffer v. Califia
Farms, LLC (2020) 44 Cal.App.5th 1125, 1136, quoting Bus. & Prof.
Code, § 17500.) To prevail on a false advertising claim, a plaintiff
must show that as adjudged through the eyes of a reasonable
consumer, members of the public are likely to be deceived. (Ibid.)
Chelico contends that his lawsuit is not based simply on
defendants’ lapses related to the Gearys arbitration but also on
misrepresentations AAA made while soliciting arbitration business.
He argues that because making representations for commercial
purposes is not a judicial function, arbitral immunity does not
apply to a claim for false advertising. We disagree.
La Serena is materially indistinguishable from the instant
case on this point. There, parties to an AAA arbitration sued
AAA for false advertising arising from the alleged failure of the
arbitrator to disclose a conflict of interest during the appointment
process. (La Serena, supra, 186 Cal.App.4th at p. 900.) AAA
demurred, contending that the suit was barred by arbitral
immunity for quasi-judicial acts. The superior court agreed
and sustained AAA’s demurrer without leave to amend. (Ibid.)
The appellate court affirmed. It reasoned there was “no doubt
that the alleged failure to make adequate disclosures of potential
conflicts of interest falls within the scope of the absolute immunity
for quasi-judicial acts.” (La Serena, supra, 186 Cal.App.4th at
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p. 903.) The court rejected the plaintiffs’ contention that arbitral
immunity did not reach their claims for conspiracy to commit fraud
while soliciting arbitration business. (Id. at pp. 905–906.) It held
that “the gravamen of [plaintiffs’] claims against . . . AAA relates
to the failure to disclose a proposed arbitrator’s relationship with
a party that was required to be disclosed,” and “creative pleading”
could not circumvent the doctrine of arbitral immunity. (Id.
at p. 906.) The court held that the plaintiffs’ false advertising
allegations, “no matter how pleaded, all arise out of the conflict
of interest disclosure procedure that is integrally part of the
arbitration process.” (Id. at p. 896.)
Here, Chelico alleged that AAA misrepresented that it and
its arbitrators were impartial, that AAA arbitrators would perform
their duties diligently and in good faith, and that AAA arbitrations
would be fair and equitable.4 These allegations echo those rejected
in La Serena that AAA engaged in false advertising by representing
that its arbitrators were “ ‘qualified and neutral.’ ” (La Serena,
supra, 186 Cal.App.4th at p. 900.)
Assuming AAA falsely represented that its arbitrators were
impartial and that an AAA arbitration would be fair and equitable,
Chelico alleged these representations were false only because the
Gearys arbitration itself was unfair and biased. For example, he
alleged that AAA’s case managers advocated for Gearys, and Adler,
the arbitrator, failed to follow AAA’s protocol and rules. Chelico’s
4 Chelico contends that he also alleged AAA misrepresented
that disputes about an arbitration would be reviewed by AAA’s
administrative review council. But the allegation was that
AAA created an administrative review council to resolve certain
administrative issues that arise in the AAA’s “large, complex
domestic cases.” Chelico did not allege that the Gearys arbitration
involved a large, complex domestic case.
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claims thus arose out of procedures that were integrally part of the
arbitration process; he alleged no example of misconduct outside
the Gearys arbitration. Because the gravamen of Chelico’s claims
integrally relate to AAA’s failure to conduct the Gearys arbitration
fairly, he cannot circumvent arbitral immunity by framing the
claims as a derivative cause of action for false advertising.
Chelico relies on four cases for the proposition that a false
advertising claim is not subject to arbitral immunity because
advertising is not integrally related to the judicial process. Each
is inapposite.
In JAMS, Inc. v. Superior Court (2016) 1 Cal.App.5th
984 (JAMS), an anti-SLAPP case, the plaintiff alleged that
JAMS violated the false advertising law by misrepresenting an
arbitrator’s biography and falsely stating that its neutrals acted
with “ ‘highest ethical standards’ ” and that JAMS itself acted
with “ ‘integrity, honesty, accountability, and mutual respect in
all [its] interactions.’ ” (Id. at p. 990.) The court held that the
false advertising claim was not a strategic lawsuit against public
participation because JAMS’s advertising constituted commercial
speech for purposes of Code of Civil Procedure section 425.17,
subdivision (c), which exempts from the anti-SLAPP law a cause
of action arising from commercial speech. (JAMS, supra, at
p. 992.) The court stated that its holding pertained only to the
kind of claims the Legislature intended to exempt from the scope
of the anti-SLAPP statute, “separate and distinct from . . . the
applicability of any defenses such as judicial immunity.” (Id. at
p. 997.)
JAMS does not assist Chelico because it expressly disclaimed
any holding about the applicability of judicial immunity to a
false advertising claim against an organization that sponsors
arbitrations.
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In Morgan Phillips v. JAMS/Endispute, LLC (2006)
140 Cal.App.4th 795, an arbitrator allegedly withdrew from the
arbitration and refused to render an award. In an action for breach
of contract, the court noted that pursuant to a “narrow exception”
under California common law, arbitral immunity “does not apply
to the arbitrator’s breach of contract by failing to make any decision
at all.” (Id. at p. 801.) Similarly, in Baar v. Tigerman (1983) 140
Cal.App.3d 979, the court held that arbitral immunity does not
apply when the arbitrator simply fails to issue an award. (Id. at
p. 983.)
Here, Chelico does not allege that Adler withdrew from the
Gearys arbitration or failed to issue an award. On the contrary,
Chelico admits she issued a timely award.
Chelico relies on Hopper v. American Arbitration Assn.
(9th Cir. 2017) 708 Fed.Appx. 373, an unpublished memorandum
opinion, which held that AAA advertising about its services and
arbitrators that is designed to sway individuals to choose AAA
over its competitors is not subject to arbitral immunity because
“adjudication of claims, like false advertising, that arise before
a formal arbitration relationship between parties to arbitration,
arbitrators, and arbitration companies like AAA will not lead to
‘undue influence’ over the arbitration process, nor will it expose
arbitrators’ decisions to ‘reprisals by dissatisfied litigants.’ ” (Ibid.)
Hopper is not binding authority (see Hall v. Goodwill Industries
of Southern California (2011) 193 Cal.App.4th 718, 727), and we
decline to follow it.
The trial court properly concluded that Chelico’s claims were
barred by arbitral immunity.
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D. Leave To Amend Was Properly Denied
Chelico argues he should be granted leave to amend, but he
identifies no facts he could allege to do so successfully.
Although it is an abuse of discretion to sustain a demurrer
without leave to amend if there is a reasonable possibility that
the plaintiff can amend the complaint to cure its defects, it is
the plaintiff ’s burden to make such a showing. (Careau & Co. v.
Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371,
1386.) This showing may be made for the first time to a reviewing
court. (Ibid.)
Here, Chelico offers no additional facts which might take
this case outside the scope of arbitral immunity. The trial court
therefore properly denied leave to amend.
E. Conclusion
“[B]ias in the arbitration process should be remedied
by challenging the arbitration award, not by seeking to impose
liability on the arbitrator or the sponsoring organization.” (Stasz,
supra, 121 Cal.App.4th at p. 440; see also La Serena, supra, 186
Cal.App.4th at p. 907 [“vacation of the arbitration award . . .
constitutes the sole remedy for arbitrator misconduct”].) We hold
that because the gravamen of Chelico’s claims integrally relates to
defendants’ failure to conduct the Gearys arbitration fairly, arbitral
immunity bars the claims, including those framed as a derivative
cause of action against AAA for false advertising. Defendants’
demurrers were therefore properly sustained. Because Chelico
offers no facts he could allege to support a cause of action
independent of the Gearys arbitration, leave to amend was properly
denied. (We do not reach Chelico’s objection to judicial notice
of court records of the underlying Geary litigation because those
records are immaterial to our holding.)
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DISPOSITION
The judgment is affirmed. Respondents are awarded their
costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J.
We concur:
BENDIX, J.
M. KIM, J.
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