## Facts

- Iconix Brand Group, Inc. and Icon DE Holdings, LLC (collectively, Iconix) had a licensing agreement with Shawn C. Carter (JAY-Z) and related entities concerning Carter’s brand and business interests.
- The licensing agreement contained an arbitration clause requiring disputes to be arbitrated under American Arbitration Association (AAA) rules in New York.
- Iconix commenced an AAA arbitration against Carter and his entities (AAA Case No. 01-18-0003-6487).
- Under the AAA’s procedures for large, complex commercial cases, if the parties did not agree on a single arbitrator, each side would submit names drawn from the AAA’s New York-area “large and complex” roster of experienced commercial arbitrators.
- Carter asserted that, after reviewing roughly 200 names on that roster, he could not identify a single African American arbitrator.
- Carter pointed to AAA website statements describing a commitment to diversity and inclusion, and argued that the roster available for the New York large-complex process did not match those statements.
- Carter’s counsel asked AAA to provide “neutrals of color.” AAA supplied six additional names; Carter alleged only three were African American, and that one was a partner at a firm representing Iconix, creating an apparent conflict.
- Carter objected to proceeding with selection from the roster and the supplemental list. AAA responded that the parties must either proceed from the available lists or allow AAA to appoint the arbitrator(s).
- AAA proceeded with appointment from its list after the parties did not agree, and Carter and the other petitioners filed an Article 75 special proceeding in New York Supreme Court, New York County (Commercial Division), seeking to stay the arbitration and enjoin arbitrator selection as administered by AAA.
- Petitioners sought a temporary restraining order (TRO) and preliminary injunction. A TRO was entered (reported in filings as granted by Justice Scarpulla) to pause the arbitrator-selection process while the court considered the request for further relief.
- Shortly after the filing, petitioners advised the court that AAA had committed to work with them to identify and make available African American arbitrators for consideration, and petitioners withdrew their request for TRO/preliminary injunction to allow discussions about a revised selection process.
- The proceeding was later resolved by stipulation of voluntary discontinuance, so-ordered by the court (with the matter assigned to Justice Barry R. Ostrager), and the case was marked dismissed without a published merits ruling.

## Issues

1. Whether, under New York law and public policy, a court may stay or enjoin an AAA arbitration where the administrator’s large-complex arbitrator roster and selection steps allegedly provide no meaningful access to African American arbitrators for a New York commercial arbitration.
2. Whether AAA’s ability to appoint an arbitrator from its own roster, after a party objects that the roster lacks African American candidates, supports temporary injunctive relief under CPLR Article 75.
3. Whether alleged race-based exclusion (or practical unavailability) in arbitrator selection can render an arbitration clause unenforceable “as applied” in a particular dispute.

## Decision

- The court entered a TRO temporarily preventing the parties from proceeding with the arbitrator-selection process while the court addressed the request for further relief.
- After the petition was filed, AAA agreed to work with petitioners to identify and make available African American arbitrators for consideration.
- Petitioners withdrew their motion for a TRO and preliminary injunction to permit discussions with AAA and respondents regarding an arbitrator-selection approach consistent with New York public policy.
- The parties stipulated to discontinue the Article 75 proceeding; the stipulation was so-ordered and the case was dismissed, leaving no reported decision resolving the merits of the public-policy challenge.

## Legal Principles

- In an Article 75 proceeding, New York courts may grant temporary injunctive relief to preserve the status quo while considering whether arbitration should be stayed.
- A TRO issued to pause arbitrator selection is interim relief and, by itself, does not amount to a final judicial determination that an arbitration clause is void or that an arbitral administrator’s roster violates law.
- Parties may frame a stay application as an “as applied” challenge to enforcement of an arbitration agreement, based on how the agreed arbitration rules are administered in the particular case.
- When the dispute is resolved by withdrawal of injunctive requests and voluntary discontinuance, the court generally does not reach or decide the underlying public-policy questions.

## Conclusion

This unreported New York Supreme Court Article 75 proceeding arose from Carter’s challenge to AAA arbitrator-selection procedures in a large, complex commercial arbitration initiated by Iconix, alleging the available New York roster effectively lacked African American arbitrators and that AAA’s appointment power would force selection from a non-diverse list. The court entered temporary relief pausing arbitrator selection, but the matter ended without a merits ruling after AAA agreed to work with petitioners to make African American arbitrators available for consideration and the parties discontinued the proceeding by stipulation.


Shawn C. Carter, et al. v. Iconix Brand Group, Inc., et al., Index No. 655894/2018 (2018)