WILLIAM D. QUARLES, JR., District Judge.
UBS Financial Services, Inc. ("UBSFS") petitioned the Court to vacate an arbitration award issued in connection with an arbitration brought pursuant to the Financial Industry Regulatory Authority, Inc. ("FINRA") Dispute Resolution Program. ECF Nos. 1, 12. Treating UBSFS's petition as a motion to vacate the arbitration award,
UBSFS is a financial services firm and member of the Financial Industry Regulatory Authority ("FINRA"). ECF No. 12 ¶ 6. Padussis is a financial advisor licensed in several jurisdictions to buy and sell securities, and is a registered FINRA representative. Id. ¶ 7. Certain disputes between Padussis and FINRA members are resolved pursuant to arbitration under FINRA's Code of Arbitration Procedures for Industry Disputes (the "Code" or the "FINRA Code"). Id.
At some time,
For disputes involving more than $100,000, the arbitration panel will consist of three arbitrators; one non-public arbitrator and two public arbitrators. FINRA Rules 13401(c), 13402(d) (hereinafter "Rule(s)"). In 2013, FINRA defined a "non-public arbitrator" as "a person who is otherwise qualified to serve as an arbitrator" and "is or, within the past five years, was ... associated with, including registered through, a broker or a dealer (including a government securities broker or dealer or a municipal securities dealer)." Rule 13100(p)(1)(A).
For the selection of a panel of three arbitrators, FINRA will send lists of potential arbitrators to the parties "within approximately 30 days after the last answer is due." Rule 13403(c)(1). The parties may strike up to four arbitrators and rank the remaining six arbitrators. Rule 13404(a), (c). "The ranked lists must be returned to [FINRA] no more than 20 days after the date upon which [FINRA] sent the lists to the parties." Rule 13404(d).
The "[a]ppointment of arbitrators occurs when [FINRA] sends notice to the parties of the names of the arbitrators on the panel." Rule 13406(d). If an arbitrator is unable to serve, FINRA "will appoint as a replacement arbitrator the arbitrator who is the most highly ranked available arbitrator of the required classification remaining on the [parties'] combined list." Rule 13411(a)-(b). If there are no available arbitrators on the combined list, FINRA "will appoint an arbitrator of the required classification to complete the panel." Rule 13411(c). However, FINRA may not appoint a non-public arbitrator
FINRA — through its Director — "may exercise discretionary authority and make any decision that is consistent with the purposes of the Code to facilitate the appointment of arbitrators and the resolution of arbitrations." Rule 13412. Additionally, "[t]he panel has the authority to interpret and determine the applicability of all provisions under the Code. Such interpretations are final and binding upon the parties." Rule 13413. After the first hearing begins, arbitrators may be removed by FINRA's Director or President "based only on information required to be disclosed under Rule 13408 that was not previously known by the parties." Rule 13410 (emphasis added).
On September 11, 2013, UBSFS received by regular mail a September 3, 2013 letter from FINRA referring to a September 10, 2013 deadline for submitting its ranked list of arbitrators. ECF No. 12 ¶ 24; Pl. Ex. G at 3. At the time, "UBSFS had not received any proposed list of arbitrators from FINRA ... or other notice that the arbitrator selection process had begun." ECF No. 12 ¶ 24. On September 12, 2013, UBSFS contacted FINRA and learned that the September 10, 2013 deadline had been stated in an August 21, 2013 letter to the parties. Pl. Ex. G at 3; see also Def. Ex. 22 (August 21, 2013 letter received by Padussis's counsel).
On September 18, 2013, UBSFS filed an emergency motion for an extension of time to file arbitrator rankings. Pl. Ex. G at 1.
On October 21, 2013, FINRA informed the parties about its selection of the following arbitrators: Maurice Dunie as public Chair; J. Snowden Stanley as public arbitrator; and Timothy J. Moore as non-public arbitrator. Def. Ex. 21. On July 16, 2014, shortly before arbitration hearings began, FINRA replaced Moore with Ezio Borchini. ECF No. 12 ¶ 29.
On August 10, 2014, Padussis asked FINRA whether Borchini remained qualified to serve as non-public arbitrator. Pl. Ex. H. On September 11, 2014, FINRA issued a letter opinion clarifying that the relevant date for determining an arbitrator's qualifications is the date on which the list of potential arbitrators is generated — in this case, August 21, 2013 — and not the date on which hearings began. Pl. Ex. I at 1. According to FINRA, on August 21, 2013, "Borchini[] was properly classified as a non-public arbitrator." Id. FINRA further stated that because Borchini had been "ranked by both parties in this matter," FINRA appointed him as Moore's replacement. Id. at 2.
On October 14, 2014, UBSFS submitted for the panel's consideration its certification of attorneys' fees and expenses. Def. Ex. 26. UBSFS's counsel explained that because Padussis had raised several counterclaims, "all claims in this case [including UBSFS's breach of promissory note claim] are intertwined." Id. at 3. Therefore, UBSFS's counsel had been unable to separate the time and expenses incurred in connection with its efforts to enforce the Note from its efforts to defend against the counterclaims. Id. "In the exercise of billing discretion," UBSFS requested $200,000 in attorneys' fees, which was "a substantial reduction of the actual fees incurred" from the arbitration. Id.
On October 27, 2014, the panel issued its award. Pl. Ex. 1.
On November 26, 2014, UBSFS moved to vacate the arbitration award, and to seal its exhibits. ECF Nos. 1, 3.
On January 6, 2015, Padussis opposed UBSFS's motion to vacate and cross-moved to confirm the award. ECF No. 22.
"Judicial review of an arbitration award ... is `substantially circumscribed.'" Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 527 (4th Cir.2007) (quoting Patten v. Signator Ins. Agency, Inc., 441 F.3d 230, 234 (4th Cir.2006)). The scope of a federal court's review "is among the narrowest known at law because to allow full scrutiny of such awards would frustrate the purpose of having arbitration at all — the quick resolution of disputes and the avoidance of the expense and delay associated with litigation." DataQuick, 492 F.3d at 527 (quoting Apex Plumbing Supply v. U.S. Supply Co., 142 F.3d 188, 193 (4th Cir.1998)).
The FAA states the statutory grounds on which a court may vacate,
Preliminarily, the Court must determine what body of law controls this diversity action.
However, the FAA — applicable to employment contracts
As stated above, the Note contained a choice-of-law provision requiring disputes to be governed by New Jersey arbitration law. Pl. Ex. A, # A at 3. However, the Team Agreement, under which Padussis counterclaimed, did not provide for the application of state arbitration law. Def. Ex. 7 ¶ 17. Ostensibly, therefore, New Jersey arbitration law applies to issues arising out of the Note, and the FAA applies to issues arising out of the Team Agreement. However, the statutory challenges raised by UBSFS are not neatly severable: UBSFS contests the manner in which FINRA appointed the arbitrators who decided issues under both agreements, not the merits of their decisions as to liability.
UBSFS argues that the award should be vacated under the FAA and because it evidences manifest disregard of the law. UBSFS further argues that equity demands that the parties' respective awards be set off; each will be discussed.
Under the FAA, a court may vacate an arbitration award when "the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made." 9 U.S.C. § 10(a)(4).
UBSFS argues that the arbitrators exceeded their authority (1) because they were not selected in accordance with the parties' agreement to arbitrate, and (2) because UBSFS was deprived of a non-public arbitrator when the panel rendered its award.
Section 5 of the FAA requires that, when an agreement provides "for a method of naming or appointing an arbitrator or arbitrators or an umpire, such method shall be followed." 9 U.S.C. § 5; see also Cargill Rice, Inc. v. Empresa Nicaraguense Dealimentos Basicos, 25 F.3d 223, 225 (4th Cir.1994) ("Because arbitration is a matter of contract, parties may determine by contract the method under which arbitrators for their disputes will be appointed.") (internal quotation marks and citation omitted). "Arbitration awards made by arbitrators not appointed under the method provided in the parties' contract must be vacated." Cargill Rice, Inc., 25 F.3d at 226.
Here, the parties agreed to arbitrate under the FINRA Code. See, e.g., Pl. Ex. E at 1. Relevant rules provide that FINRA will send lists of potential arbitrators to the parties "within approximately 30 days after the last answer is due," and "[t]he ranked lists must be returned to [FINRA] no more than 20 days after the date upon which [FINRA] sent the lists to the parties." Rules 13403(c)(1), 13404(d).
UBSFS repeatedly asserts there is no evidence that FINRA mailed it the list of arbitrators. See ECF Nos. 12 at 8, 19; 28 at 9 n. 9. Further, because it never received the list, FINRA rules providing for an opportunity to rank and strike arbitrators were not followed; thus, the arbitrators were not appointed in the manner prescribed by the parties' agreement. See ECF No. 12 at 15-17. Padussis argues that UBSFS has not shown that FINRA never mailed it the list, and Rule 13404(d) requires parties to return the lists within 20 days of mailing, not receipt. ECF No. 22-1 at 14.
FINRA has asserted that it sent UBSFS the list and the reminder. Pl. Ex. G, # B (October 15, 2013 letter decision from FINRA to the parties, at 4). In any case, UBSFS bears the burden of proving that FINRA's rules were not followed, not Padussis or FINRA. DataQuick, 492 F.3d at 527. Speculation that FINRA never sent the list is insufficient to vacate an award. Consol. Coal Co., 48 F.3d at 129. Under the narrow standard of judicial review
Additionally, FINRA twice denied UBSFS's emergency motion for an extension of time to return the ranked list. See Pl. Ex. G, # B; see also Rule 13207(a),(c) (parties may agree to extend the deadline for returning arbitrator lists, or, for good cause, FINRA may extend any deadline in the Code). FINRA reasoned that UBSFS had not demonstrated good cause because FINRA had mailed the list and the reminder to UBSFS, and had not received any returned mail. Pl. Ex. G, # B (October 15, 2013 letter decision from FINRA to the parties, at 4). Although this Court may have reached a different result,
Because UBSFS has not shown that FINRA failed to follow its rules in the selection process, it has not shown that the arbitrators were not selected in accordance with the parties' agreement. Cf. Cargill, 25 F.3d at 226. Accordingly, vacatur is not merited on that basis.
When — as here — the dispute involves more than $100,000, the arbitration panel will include one non-public arbitrator and two public arbitrators. FINRA Rules 13401(c), 13402(d). UBSFS argues that Borchini had not been properly selected because it had been denied the opportunity to participate in the panel's selection, and because Borchini was not qualified as a nonpublic arbitrator when the panel rendered its award. ECF No. 12 at 18. Padussis contends that Borchini had been properly appointed. ECF No. 22-1 at 15-18, 21.
When parties do not return the list of stricken and ranked arbitrators, FINRA, in developing its combined ranked list of arbitrators for each classification, will "proceed as though the party did not want to strike any arbitrator or have any preferences." Rules 13404(d), 13405. In other words, the opposing party's preferences become the "combined" list. When a replacement is needed, FINRA may appoint the most highly-ranked available arbitrator of the required classification available from the parties' (or, in this case, Padussis's) combined ranked list. Rule 13411(a)-(b).
That is what happened here. When Moore became unavailable, FINRA appointed Borchini from the combined list. ECF No. 12 ¶ 29; Pl. Ex. I at 2.
As to whether Borchini had been properly qualified as a non-public arbitrator, UBSFS asserts that Borchini must have worked in the industry within five years of the date the panel rendered its decision. See ECF No. 12 at 18; see also Rule 13100(p)(1)(A) (defining non-public arbitrator as a person who has been associated with a securities broker or dealer within the past five years). Although Rule 13100 is silent about the relevant date for determining the five-year period, FINRA relies on the date on which it generates the list of potential arbitrators. See Pl. Ex. I at 1. As noted above, FINRA has authority to interpret its rules "and make any decision that is consistent with the purposes of the Code to facilitate the appointment of arbitrators and the resolution of arbitrations." Rule 13412; see Stone v. Bear, Stearns & Co., 872 F.Supp.2d 435, 451 (E.D.Pa.2012) judgment entered, No. 2:11-CV-5118, 2012 WL 1946970 (E.D.Pa. May 29, 2012) and aff'd, 538 Fed.Appx. 169 (3d Cir.2013) (deferring to FINRA's determination about an arbitrator's qualifications).
FINRA's interpretation of Rule 13100(p)(1)(A) is consistent with its role in appointing arbitrators and resolving arbitrations. Further, UBSFS's interpretation of Rule 13100 is unworkable: the date on which a panel would render its decision is likely unknown when appointments are made; thus, it would be impossible for FINRA to rely on that date when deciding who is qualified. Even the date on which appointments are made — which, under Rule 13406(d), occurs when FINRA informs the parties who will serve on the panel — is unsuitable because there are waiting periods associated with the parties' return of the ranked lists and FINRA's development of the combined list. Therefore, it is entirely reasonable for FINRA to determine arbitrators' qualifications at the start of the selection process.
Additionally, the cases relied on by UBSFS are distinguishable (and non-binding on this Court). Unlike Cia De Navegacion Omsil, S.A. v. Hugo Neu Corp., 359 F.Supp. 898, 899 (S.D.N.Y.1973), where an arbitrator died after the conclusion of hearings and the award was rendered by the remaining two panelists, here, all three arbitrators participated in the matter from start to finish. In El Vocero De Puerto Rico v. Union De Periodistas, 532 F.Supp. 13, 15 (D.P.R.1981), the parties agreed that one of three arbitrators would be selected from candidates designated by the Secretary of Labor of Puerto Rico. The Court found that the parties had intended for that arbitrator to be employed by the Department of Labor's Conciliation and Arbitration Bureau; because the arbitrator resigned from his position during the arbitration, the parties' intent had not been honored and the award was invalid. Id. at 16. Here, however, the parties merely agreed to arbitrate under FINRA rules; they did not bargain for a more-specific method of selection.
FINRA properly exercised its discretion in determining Borchini's qualifications, and there is no evidence that Borchini "dispense[d] his own brand of industrial justice." Stolt-Nielsen S.A., 559 U.S. at 671, 130 S.Ct. 1758; ECF No. 28 at 15 (UBSFS makes no claim of bias, corruption, or misconduct by the arbitrators). Vacatur under 9 U.S.C. § 10(a)(4) is not merited on the basis of Borchini's appointment or qualifications. See Bulko, 450 F.3d at 626; Stone v. Bear, Stearns & Co., 872 F.Supp.2d at 451.
UBSFS argues that the panelists manifestly disregarded the terms of the Note when it failed to award attorneys' fees. ECF No. 12 at 22. Padussis argues that UBSFS was not entitled to attorneys' fees because it failed to sufficiently identify the fees that it had incurred. ECF Nos. 22-1 at 22-23; 29 at 3-4.
The Fourth Circuit has interpreted recent U.S. Supreme Court decisions "to mean that manifest disregard continues to exist `either as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10.'" Wachovia Sec., LLC v. Brand, 671 F.3d 472, 483 (4th Cir.2012) (quoting Stolt-Nielsen S.A., 559 U.S. at 672 n. 3, 130 S.Ct. 1758). Regardless of which understanding is correct, the Court has stated a two-part test for determining whether a party has shown manifest disregard: whether (1) "the applicable legal principle is clearly defined and not subject to reasonable debate," and (2) "the arbitrator[] refused to heed that legal principle." Wachovia Sec., 671 F.3d at 483; see also Jones v. Dancel, 792 F.3d 395, 402-04 (4th Cir.2015); Trademark Remodeling, Inc., 2012 WL 3239916, at *8. Assuming, arguendo, that UBSFS has established the existence of a clear legal principle — that under the applicable state substantive law,
Here, the Note provided for UBSFS's recovery of attorneys' fees "[i]n the event that any arbitration ... is brought against [Padussis] to collect" on the Note. Pl. Ex. A, # A at 2. However, UBSFS's fee petition failed to separately allocate its fees under the Note and the Team Agreement that formed the basis of Padussis's counterclaim or state the number of hours each attorney had worked on the matter. See Def. Ex. 26. UBSFS simply stated that it had incurred $297,809.90 in total fees, and "[i]n the exercise of billing discretion," requested $200,000 in attorneys' fees in connection with the Note. Id. at 3. UBSFS did not explain how it arrived at the $200,000 figure. Id.
Because neither party requested an "explained decision,"
It is entirely possible that the panel concluded that UBSFS's undifferentiated fee request was unreasonable or insufficiently supported. See Success Sys., Inc. v. Maddy Petroleum Equip., Inc., 316 F.Supp.2d 93, 103 (D.Conn.2004) (manifest disregard not shown when party presented arbitration panel with an undifferentiated attorneys' fee request). Cf. Central W. Va. Energy, Inc. v. Bayer Cropscience LP, 645 F.3d 267, 276 (4th Cir.2011) (statutory vacatur inappropriate when arbitrator's decision is "rationally inferable" from the parties' submissions). Based on the current record, UBSFS has
Generally relying on principles of equity, UBSFS alternatively requests that the Court setoff the $932,887 UBSFS is required to pay Padussis against the $1,683,262.69 he owes it. ECF Nos. 12 at 23-25; 28 at 17. Padussis contends that the award does not permit offset, equity is not a basis for vacatur or modification of the award, and UBSFS's failure to seek setoff during arbitration bars this Court's consideration of the request. ECF Nos. 22-1 at 19, 23; 29 at 6.
UBSFS principally relies on STMicroe-lectronics, N.V. v. Credit Suisse Sec. (USA) LLC, 648 F.3d 68 (2d Cir.2011) to support its argument that this Court may award a setoff. In Credit Suisse, arbitrators — ruling in favor of STMicroelectronics ("ST") — required ST to return certain
Credit Suisse is distinguishable. This is not a case where an award has been partially satisfied by a third party, thus reducing the amount owed to the sole prevailing party. Here, the panel awarded UBSFS and Padussis damages under different contracts. Pl. Ex. 1 at 6. Further, the panel denied any relief "not specifically addressed" in the award. Id. at 7. UBSFS has not provided — nor has the Court found — a case where arbitrators awarded damages to each party under different contracts, and a reviewing court effectively nullified one party's liability by awarding a setoff. Although UBSFS asserts that it is not seeking modification of the award, see ECF No. 28 at 17, by asking the Court to setoff the awards, UBSFS's request is properly construed as a request to modify the award.
Under the FAA, courts may modify or correct an award when (1) "there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award," (2) "the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted," and (3) "the award is imperfect in matter of form not affecting the merits of the controversy." 9 U.S.C. § 11. "An award that is `imperfect in matter of form,' ... is one that suffers from a scrivener's error or that otherwise does not deliver on the arbitrator's stated purpose in granting relief." Grain v. Trinity Health, Mercy Health Servs. Inc., 551 F.3d 374, 379 (6th Cir.2008).
UBSFS argues that the panel could not have intended for it to pay Padussis in light of Padussis's potential inability to pay UBSFS. ECF No. 12 at 24. However, arbitrators have the authority to award a setoff when finding the parties mutually liable. See, e.g., Qorvis Commc'ns, LLC v. Wilson, 549 F.3d 303, 307 (4th Cir.2008). An "arbitrator's failure to mention offsets in his ruling means that no offset was granted." Int'l Union of Operating Eng'rs, Local 841 v. Murphy Co., 82 F.3d 185, 190 (7th Cir.1996), quoted in Burlington Ins. Co. v. TryggHansa Ins. Co. AB, 261 Fed.Appx. 631, 633 (4th Cir. 2008). Under the severely circumscribed standard of review afforded to arbitral decisions, UBSFS's speculation about the arbitrators' intent is insufficient to merit modification. See Remmey, 32 F.3d at 146 ("Opening up arbitral awards to myriad legal challenges would eventually reduce arbitral proceedings to the status of preliminary hearings. Parties would cease to utilize a process that no longer had finality. To avoid this result, courts have resisted temptations to redo arbitral decisions."). Further, awarding a setoff would exceed this Court's authority to correct a mere "scrivener's error." Grain, 551 F.3d at 379. Because UBSFS has not shown that the award should be vacated or modified, the Court will deny its motion to vacate and grant Padussis's cross-motion to confirm. See Colonna v. Hanners, No. 08:10-CV-1899-AW, 2011 WL 2175248, at *4 (D.Md. June 1, 2011) aff'd, 455 Fed.
UBSFS moves to seal a certification by Francis Dee, Esq. and attached exhibits (Pl. Ex's A-K) because they contain confidential information, and asks the Court to order Padussis to "remedy [his] improper filing of certain identified confidential documents in clear violation of the parties' agreements." ECF Nos. 3-1 at 1-2; 27 at 1-2.
Under Local Rule 105.11, a motion to seal must provide factual representations justifying sealing, and explain why alternatives will not sufficiently protect the information. The Court weighs the public's right of access against the parties' rights to protect confidential information. Minter v. Wells Fargo Bank, N.A., 258 F.R.D. 118, 121-22 (D.Md.2009); Local Rule 105.11 (D.Md.2014).
Here, the parties executed stipulations protecting the confidentiality of documents disclosed during arbitration. ECF No. 16-1. UBSFS's exhibits contain arbitral pleadings, which include personal financial information, confidential business information, loan terms, non-competition and non-disclosure obligations, and information not generally publicly available. ECF No. 3-1 at 1-2. Further, although FINRA permits parties to disclose details
For the reasons stated above, UBSFS's motion to vacate will be denied, Padussis's motion to confirm will be granted, and UBSFS's motion to seal will be granted.
Under FINRA's guidelines, as of January 2015, only parties could request copies of pleadings, exhibits, or a digital or stenographic record of arbitral proceedings. ECF No. 27-1 at 2 (FINRA Administrative Frequently Asked Questions ("FAQs")). In February 2015, FINRA amended its FAQs to permit parties or their counsel to "disclose details of their own proceeding as they see fit," but retained provisions barring public disclosure of documents and digital or stenographic records. ECF No. 30-2 (revised FINRA Administrative FAQs).
UBSFS attached to the motion affidavits by its attorney, James L. Komie, Esq., and Komie's assistant, Darlene A. Petschauer, stating that they had not received the August 21, 2013 letter. Pl. Ex. G, # A-B. Padussis opposed UBSFS's motion, and noted that as of August 16, 2013, Komie was no longer handling the case and had turned it over to Francis Dee, Esq., at a different law firm. Pl. Ex. G, # B (Padussis's "Reply to Emergency Motion" and attached Exhibit A [email from Komie to Padussis's counsel confirming transfer of the case]). In reply, UBSFS asserted that the list should have been sent to Komie until new counsel entered his appearance on September 24, 2013. Pl. Ex. G, # B (UBSFS's Reply, at 1). Relying on Rule 13403(c), which states that FINRA will mail the list after "the last answer is due," UBSFS further asserted that it had not expected FINRA to mail the list until it answered Padussis's counterclaim, which was due on September 19, 2013. Id. at 2.
That UBSFS seeks vacatur under the FAA does not create federal question jurisdiction under 28 U.S.C. § 1331. See Hall St. Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 581-82, 128 S.Ct. 1396, 1402, 170 L.Ed.2d 254 (2008) ("As for jurisdiction over controversies touching arbitration, the [FAA] does nothing, being "something of an anomaly in the field of federal-court jurisdiction" in bestowing no federal jurisdiction but rather requiring an independent jurisdictional basis.") (quoting Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 25, n. 32, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)); Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir.1991) ("Although it is an anomaly for a statute that creates federal substantive rights not to form the basis of federal question jurisdiction, subject matter jurisdiction for an FAA claim in federal court must rest on some basis independent of the FAA."). But see Crews v. S & S Serv. Ctr. Inc., 848 F.Supp.2d 595, 598 (E.D.Va.) aff'd sub nom. Crews v. S & S Serv. Ctr. Inc., 474 Fed.Appx. 370 (4th Cir.2012) (noting the U.S. Supreme Court's more recent holding in Mims v. Arrow Fin. Servs., LLC, ___ U.S. ___, 132 S.Ct. 740, 749, 181 L.Ed.2d 881 (2012), that "when federal law creates a private right of action and furnishes the substantive rules of decision, the claim arises under federal law, and district courts possess federal-question jurisdiction under § 1331," but deciding "to follow the Supreme Court's more specific finding that the FAA does not create federal question jurisdiction").
However, venue is appropriate because the arbitration award was issued in Baltimore, Maryland. See 9 U.S.C. § 9 (federal courts in the district within which the award was made may enter an order confirming the award, unless the award is vacated, modified, or corrected).
Padussis states that the Maryland Uniform Arbitration Act ("MUAA"), Md. Ann.Code, Cts & Jud. Proc. §§ 3-201 et seq., applies "to the extent that the issues arbitrated flow from" the Team Agreement because the Team Agreement was executed in Maryland. ECF No. 29 at 3. However, because the MUAA is the state analogue to the FAA, Padussis relies on "the FAA and its controlling law." Id. Padussis further states that "[d]isposition of this pending matter does not require any delving into state statutes under the narrow standard of review of the FAA; however it is important that the record accurately reflect the hybrid nature of this arbitration action under" New Jersey and Maryland law and the FAA. ECF No. 29 at 3.
Cargill noted, in dicta, that an arbitration panel's determination of how its members should have been selected "would not be entitled to deference because it would have involved a determination of their own jurisdiction." 25 F.3d at 226 (citing AT & T Technologies, Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986); Int'l Ass'n of Machinists, 865 F.2d at 904). However, the cases on which the Fourth Circuit relied in support of the above-mentioned proposition involved determinations whether the parties had agreed to arbitrate the disputes at issue, not whether panelists had been properly appointed. See AT & T Technologies, 475 U.S. at 649, 106 S.Ct. at 1418-19 ("Under our decisions, whether or not the company was bound to arbitrate, as well as what issues it must arbitrate, is a matter to be determined by the Court on the basis of the contract entered into by the parties."); Int'l Ass'n of Machinists, 865 F.2d at 904 (whether an issue is within the scope of the arbitration clause "is an issue to be decided by the court asked to enforce the clause by ordering arbitration, rather than by the arbitrator").
Unlike the "narrow" question of arbitrability, "`procedural questions which grow out of [a] dispute and bear on its final disposition ... presumptively are for the arbitrator to decide.'" Fantastic Sams Franchise Corp. v. FSRO Ass'n Ltd., 683 F.3d 18, 25 (1st Cir. 2012) (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 591, 154 L.Ed.2d 491 (2002)). Procedural questions include whether "conditions precedent to arbitrability have been fulfilled." Id. Here, UBSFS argued to the panel that FINRA Rules had not been complied with because it had not received the list, Pl. Ex. J at 16-17; in essence, UBSFS argued that a condition precedent — its receipt of the list — had not happened. The panel denied UBSFS's motion, apparently deciding that it had been properly constituted notwithstanding UBSFS's failure to receive the list. "The panel has the authority to interpret and determine the applicability of all provisions under the Code," and "[s]uch interpretations are final and binding upon the parties." Rule 13413 (emphasis added); Alliance Bernstein Inv. Research & Mgmt., Inc. v. Schaffran, 445 F.3d 121, 127 (2d Cir.2006) (Rule 13413 "clearly and unmistakably evinces an intent to submit any disputes over the interpretation of the Code rules to arbitration"). The panel's decision provides an alternate basis on which the Court may conclude — as it has — that UBSFS is not entitled to vacatur on the basis that it never received the list.
