Morgan Stanley DW Inc., and Shane Khubehandani, a Morgan Stanley stockbroker (together, Morgan Stanley), appeal the summary judgment awarded Simon A. Buiko, vacating an arbitration award to Morgan Stanley. The district court held: one of the arbitrаtors was not properly qualified; and, therefore, the arbitration panel acted outside the scope of its authority. It ordered the dispute to be considered by a new arbitration panel. REVERSED AND RENDERED.
I.
In March 2002, pursuant to a customer agreement, Buiko initiated a National Association of Securities Dealers (NASD) arbitration against Morgan Stanley, stemming from Buiko’s stock-market loss of approximately $16 million within a 14-month period. As part of the NASD process, the arbitration was pursuant to NASD rules.
For matters in which the amount in controversy exceeds $50,000, those rules require a three-member panel consisting of two public, and one non-public, arbitrators. A non-public arbitrator “is an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional work, in the last two years, to clients who are engaged” in the securities industry. NASD Code of Arbitration Procedure § 10308(a)(4)(C) (amended 1984) (NASD Code) (emphasis added).
By a 14 October 2003 letter, the NASD advised the parties: the designated nonpublic arbitrator had withdrawn and was being replaced by Mary Beth Marshall; and the parties had the option of agreeing to proceed with only the two public arbitrators. No party objected to Marshall.
In 1994, Marshall statеd in her initial application to become a NASD arbitrator: she was a shareholder with Munch Hardt Kopf Harr Dinan, P.C. (Munch); and her practice was commercial litigation, with an emphasis on securities law. The 1994 disclosure form stated half оf her practice consisted of securities work. That form imposed a duty on Marshall to inform the NASD of any changes to her answers to the form’s questions. In 2000, Marshall *624 informed the NASD she was no longer practicing law full time; this was disclosed to the pаrties in the NASD’s 14 October 2003 letter.
Following the panel’s deciding in Morgan Stanley’s favor, Buiko discovered Marshall had not practiced law since 1999, because she took inactive status that year with the Texas State Bar. As a result, this action сontests the award, claiming the panel acted outside the scope of its authority because it was not properly constituted. Concluding Marshall was not qualified to serve as a non-public arbitrator, the district court granted Buiko summаry judgment and directed the dispute to be heard by a new panel.
II.
The merits of the arbitration panel’s decision are not at issue. Instead, the sole issue is whether the district court erred in vacating the award by determining the panel actеd outside the scope of its authority. (Morgan Stanley claims that, even if the award was properly vacated, the court abused its discretion by requiring the dispute to be heard by a new panel, instead of by the two non-challenged arbitrаtors and a new non-public one. Because the court erred in vacating the award, we do not reach this contention.)
A summary judgment is reviewed
de novo,
applying the same standard as the district court.
Wyatt v. Hunt Plywood Co.,
Buiko claims, and the district court held, that FAA § 10(a)(4) permits vacating the award: “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter was not made”. 9 U.S.C. § 10(a)(4). Buiko maintains the panel acted outside the scope of its authority because Marshall was not qualified to serve as a non-public arbitrator.
A.
After graduating from law school in 1988, Marshall started working at Munch. She became a shareholdеr and remained there until 31 December 1997, when she became of counsel, continuing in that capacity until the end of 2003 (the record does not describe any activities she undertook in that position). She was not treated as a Munch emрloyee after 31 December 1997 and performed no work for Munch after mid-1999. That year, Marshall took inactive status with the Texas State Bar.
It is undisputed that Marshall’s practice with Munch emphasized securities law. In June 2000, she notified the NASD she was nоt practicing law full time but still had an office at Munch. As noted, that updated disclosure was reflected in the 14 October 2003 NASD letter to the parties, which included a disclosure report detailing Marshall’s qualifications: she stated she was of cоunsel to Munch, “although [she was] not currently practicing full time”. (Arguably: this suggests she was practicing law to some extent, other than full time; and conflicts with the above-described evidence in the summary-judgment record, including taking inactive status in 1999 with the Texas State Bar.)
In May 2004, in connection with an unrelated arbitration for which Marshall was serving as the non-public arbitrator, she *625 submitted an updated disclosure report stating: her Munch of-counsel position ended 31 December 2003; and she had taken inaсtive status with the Texas State Bar. Nevertheless, the NASD continued classifying Marshall as a non-public arbitrator due to her employment history.
1.
An arbitration agreement is a contract; accordingly, arbitrators must be selected pursuant to the method provided in it.
Brook,
For example, in
Brook,
the contract required the American Arbitration Association (AAA) to submit а list of nine names as potential arbitrators and instructed the parties “alternately to strike names from the list until only one remained”.
Id.
Instead, the AAA provided a list of 15 arbitrators and told the parties to strike the unacceptable names and then rank by preference the “remaining candidates”.
Id.
(but holding failure to object constituted waiver);
see Cargill Rice, Inc. v. Empresa Nicaraguense Dealimentos Basicos,
The above cases, however, are distinguishable from the situation at hand. They involve deviations from contract provisions prescribing the method for selecting arbitrators. Here, however, the customer agreement (contract) was not included by Buiko in the record on appeal. Nevertheless, it is undisputed that, in the customer agreement, the parties agreed to submit disputes to arbitration. The parties’ subsequent Uniform Submission Agreement (submitting thе matter to arbitration), provides “the arbitration will be conducted in accordance with ... [NASD] Rules ... and/or NASD Code of Arbitration Procedure .... ” Therefore, in the light of this record, we cannot say Marshall’s selection violated a specific method of selection in the customer agreement (contract). Restated, based on this record, we cannot say the customer agreement incorporated NASD Rules. In any event, the rules’ method for selection was followed. At issue is whether Marshall qualified to serve pursuant to that method. As discussed below, she did.
Concerning the NASD rules, when summary judgment was granted, the NASD continued classifying Marshall as a nonpublic arbitrator in the light of her employment history, although she had not practiced lаw since 1999. Although it is unclear whether the NASD had full disclosure from Marshall, this action was public information when the NASD continued to classify Marshall as a non-public arbitrator. Thus, it is reasonable to infer the NASD had available to it all relevant information regarding her. In addition, the NASD director of arbitration has discretion, when appointing arbitrators, to “make any decision ... consistent with the purposes of [the NASD arbitration code] to facilitate the appointment of arbitration рanels and the resolution of arbitration disputes”. NASD Code § 10308(e).
Again, a non-public arbitrator is “an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional work, in the last two years, to clients who are engaged” in the securities industry. Id. § 10308(a)(4)(C) (emphasis added). Contrary to Buiko’s *626 contention, and as reflected in the foregoing provision, the NASD Code does not limit non-public arbitrator еligibility to practicing attorneys-at-law. Rather, § 10308(a)(4)(C) provides that attorneys, among others, who have devoted a certain amount of their professional activity to securities related matters qualify as nonpublic arbitrators. “Attorney”, of course, encompasses more than practicing law. An attorney is “one ... designated to transact business for another; a legal agent”. BlaoK’s Law DictionaRY 138 (8th ed.2004). Thus, it is not clear Marshall’s inactive-member-of-the-bar status precludes her satisfying § 10308(a)(4)(C)’s plain language, even absent the NASD arbitration director’s discretion to facilitаte arbitration to further the Code’s purposes. In fact, as discussed, Marshall’s 2004 updated disclosure was in connection with another arbitration panel for which she was serving as a non-public arbitrator.
In the absence of a specific agreement to the contrary, determining Marshall's qualifications and eligibility is a matter left to the NASD.
See Howsam v. Dean Witter Reynolds, Inc.,
2.
Assuming,
arguendo,
that Marshall’s selection contradicted the parties’ agreement, it was, at most, a trivial departure not warranting vacatur.
See Brook,
B.
Because the district court erred in vacating the award, we need not decide whether, by failing to raise the issue pre-award, Buiko waived objecting to Marshall’s serving as a non-public arbitrator. It is worth noting, however, that the parties were aware, pre-arbitration, that Marshall was not practicing law full time. Yet, no party asked for any further information; nor, apparently, did any party independently investigate until post-award. Marshall’s disclosure should have put the parties on notice of any potential issue with her qualifications. Likewise, the parties werе aware her position with Munch was of counsel, a loosely-defined term that describes a wide variety of arrangements. Blaok’s Law DictionaRY 375 (8th ed.2004). Marshall’s of-counsel title did not guarantee she was performing any work. Despite Buiko’s cоntention that Marshall could not have been practicing as an attorney after 1999, nothing in the record disputes her serving as of counsel until the end of 2003. In sum, pre-arbitration, the parties were on notice of any potential *627 claims regarding Marshall’s qualifications as a non-public arbitrator.
III.
For the foregoing reasons, the arbitration award was improperly vacated by the district court; accordingly, the summary judgment is REVERSED and judgment reinstating the award is RENDERED for Morgan Stanley DW Inc., and Shane Khubchandani.
REVERSED AND RENDERED.