Stone v. Bear, Stearns & Co., Inc. - How Appealing

authority of the panel under 9 U.S.C. § 10(a)(4). This argument has some logical appeal but fails for
several reasons. 11
Case 2:11-cv-05118-LDD Document 22 Filed 05/29/12 Page 24 of 35
First, the Third Circuit has recently delineated the categories of conduct that may suffice for a
court to vacate an award as in excess of the arbitrators’ powers, namely “when [an arbitrator] [1]
decides an issue not submitted to him, [2] grants relief in a form that cannot be rationally derived
from the parties’ agreement and submissions, or [3] issues an award that is so completely irrational
that it lacks support altogether.” Sutter, 675 F.3d at 219-20. Stone has not argued that the
arbitrators’ conduct here falls within any of these three categories, and plainly it does not. The three
arbitrators in this case decided the issues submitted to them and unanimously denied Stone’s claims,
an outcome the parties’ must have envisioned when agreeing to arbitrate the dispute (given that Bear
Stearns sought this form of relief; that is, no relief at all for Stone).
Second, in this circuit, so long as an arbitrator makes a “good faith attempt” to comply with
his or her mandate, “even serious errors of law or fact will not subject [the arbitrator’s] award to
vacatur.” Id. at 220 (citation omitted). On this record, we conclude that Marston in particular, and
the three-person arbitration panel in general, made just such a good faith attempt. Even assuming
that FINRA’s rules constitute a contract between the parties to a FINRA arbitration, Marston tried to
comply with FINRA’s conflict disclosure rules by, e.g., disclosing her husband’s business dealings to
FINRA (twice) and asking her husband if he had previously worked for Respondents in this case.
Further, the panel undoubtedly acted in good faith with respect to FINRA’s rule on panel composition
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Respondents hotly dispute Stone’s contention that Marston was not qualified to sit as a
public arbitrator. (See Doc. No. 20-3, at 30-32). We have reviewed the parties’ respective arguments
and conclude that the issue turns on such interpretive nuances as whether we should quantify the
closeness of Dr. Marston’s relationship to the securities industry in terms of time spent or money
earned. We need not resolve this particular disagreement because we hold that the circumstances do
not warrant vacatur under Section 10(a)(4) even if FINRA improperly designated Marston as a public
arbitrator.
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