OPINION & ORDER This decision resolves two pending motions to dismiss. Plaintiff Marcia Schorr sues the American Arbitration Association (“AAA”), the International Centre for Dispute Resolution (“ICDR”) (collectively, the “AAA-ICDR”), and the respondent in an underlying arbitration dispute, Sebastian Doggart. The heart of Schorr’s grievance is that the AAA-ICDR wrongly terminated the arbitration of her dispute with Doggart before a decision on the merits could be reached, and in the course of which she had incurred fees and expenses. In her Second Amended Complaint, Schorr seeks damages equivalent to the fees she paid the AAA-ICDR, and injunctive relief in the form of an order vacating the AAA-ICDR’s decision to terminate the arbitration, appointing a new, non-AAA-IDCR arbitrator, and directing that new arbitrator to hold an arbitral inquest under the Organizing Agreement’s “inquest clause.” Dkts. 27, Dkt. 31 (as amended) (“SAC”). The AAA-IDCR now moves to dismiss this case in its entirety for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Schorr opposes that motion. Pro se defendant Doggart also moves to dismiss the SAC under Rule 12(b)(6), to sanction Schorr’s attorney under Rule 11, and for an order directing Schorr to present herself via video to confirm her assent to the instant litigation. For the reasons below, the Court grants the motions to dismiss but denies Doggart’s motion for other relief. I. Background1 A. Factual Background 1. The Operating Agreement and Its Arbitral Provisions In September 2018, Schorr entered into a written “Operating Agreement” with Doggart. SAC 5. Doggart is a New York resident and national of the United States, United Kingdom, and Cuba. Id. 4. The Operating Agreement aimed to establish a joint venture concerning real property in Cuba. Id. 5. Under the Operating Agreement, a New York limited liability company (the “LLC”) was to be established as the beneficial owner of title and access rights to approximately 85 acres of rural land located on or near a UNESCO World Heritage Site in Cuba. Id. Schorr paid $45,000, along with additional payments totaling $3,696.10, for a one-half membership interest in the LLC. Id.
5-7. Schorr alleges that this one-half interest is, in fact, worth much more than $45,000 due to the substantial difficulties in obtaining property rights in Cuba. Id. 5. Pursuant to the Operating Agreement, Doggart held the other one-half membership interest in the LLC. Id. 6. Although the Operating Agreement listed Doggart as having contributed $45,000, he never paid any amount for his interest. Id. 6 n.5. Doggart was to hold the property rights in his name on behalf of the LLC. Id. 5. The Operating Agreement provided that all disputes thereunder be settled by arbitration in New York County, and administered by the AAA in accordance with its Commercial Arbitration Rules. Id. 10. Article 11.5(b) of the Operating Agreement stated that the arbitrator may “determine how the costs and expenses of the arbitration shall be allocated between the parties.” Id. 16. The Operating Agreement also included an “Inquest Clause.” It provides: The parties agree that failure or refusal of a party to pay his/her required share of the deposits for arbitrator compensation or administrative charges shall constitute a waiver by that party to present evidence or cross-examine witness [sic]. In such event, the other party shall be required to present evidence and legal argument as the arbitrator(s) may require for the making of an award. Such waiver shall not allow for a default judgment against the non-paying party in the absence of evidence presented as provided for above. Id. 17. Schorr alleges that the AAA-ICDR encourages parties whose agreements provide for AAA arbitration to include such an Inquest Clause, to incent parties to pay arbitral expenses: The Commercial Rules provide parties with certain remedies if arbitrator compensation or administrative charges have not been paid in full by either side. However, parties can agree to certain consequences (i.e.: waiver) if either party fails to pay its share of required deposits for arbitrator compensation or administrative charges by including the following option [re: the Inquest Clause]. Id.
