LAWRENCE W. OLSON, Individually and as Trustee of the Lawrence W. Olson Charitable Remainder Trust Dated 11/01/92, Plaintiff-Appellant, v. WEXFORD CLEARING SERVICES CORP., Defendant-Appellee.
No. 03-1223
United States Court of Appeals For the Seventh Circuit
ARGUED APRIL 12, 2004—DECIDED FEBRUARY 3, 2005
Before WOOD, EVANS, and WILLIAMS, Circuit Judges. WOOD, Circuit Judge.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 02 C 7644—Suzanne B. Conlon, Judge.
I
In July 1997, Olson transferred certain financial accounts to the brokerage firm of R.D. Kushnir & Co. Kushnir in turn had a clearinghouse agreement with Wexford, under which Wexford performed the ministerial tasks of processing, clearing, and reporting trades placed by Kushnir. Suspecting fraud or other unauthorized activity in his accounts, Olson filed a demand for arbitration before the NASD on July 29, 1998, naming Kushnir and Wexford, among others, in his Statement of Claim. On February 11, 1999, Wexford moved to dismiss Olson’s claim against it on the ground that it was not involved in any of the alleged wrongdoing. More than a year later, the NASD informed the parties that a three-member panel had been appointed to hear the arbitration. Olson promptly petitioned the panel for permission to submit an Amended Statement of Claim. It granted his request, and on July 14, 2000, Olson filed the amended statement. Before that occurred, however, Kushnir was placed in receivership, which had the effect of terminating the arbitration with respect to it. On July 24, 2000, Wexford renewed its motion to dismiss the Amended Statement of Claim. Seven months later, on February 18, 2001, the chair of the arbitration panel granted that motion in a two-page decision announcing that Olson’s claim against Wexford was dismissed in its entirety.
Unhappy with this result, Olson asked the panel to reconsider its decision. His reason was largely technical: the panel’s disposition was rendered by the chair alone, and not the full three-member panel required by the NASD rules. Wexford did not oppose Olson’s request, and the panel
Olson then turned to the federal court. On October 24, 2002, Olson filed this action to vacate the arbitral decision dismissing Wexford from the case. The district court properly invoked its diversity jurisdiction to consider the motion because Olson is a citizen of Illinois and Wexford is incorporated in Delaware with its principal place of business in New York. The amount in controversy exceeded $75,000. Olson urged the district court to grant him relief under the FAA,
Wexford countered that the relevant date for purposes of the limitations analysis was April 15, 2002, when the panel dismissed it as a party to the arbitration proceedings.
II
In considering a motion for judgment on the pleadings under
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
(4) where 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.
Any motion to vacate an award under
The question, however, is whether the statute began running on April 15, or whether it was triggered only when the panel denied Olson’s request to file a second amended complaint on July 29. Our starting point in answering this question is NASD Rule 10330, which requires that an arbitration award include “a summary of the issues, . . . the damages and other relief requested, the damages and other relief awarded, [and] a statement of any other issues resolved. . . .” Rule 10330(e). The award is to be in writing and “signed by a majority of the arbitrators or in such manner as is required by applicable law.” Rule 10330(a). Such awards may be entered as a judgment in any court of competent jurisdiction. Id. All awards issued by arbitrators “shall be deemed final and not subject to review or appeal.” Rule 10330(b).
Olson argues that the April 15 dismissal of Wexford did not meet the NASD criteria for finality, because the following sentence appeared at the bottom of the Prehearing Conference Order: “This Order shall remain in effect unless amended by the Panel.” This language, he asserts, supports the inference that the arbitrators did not consider the dismissal of Wexford to be their final award. The sentence on which Olson is relying, however, must be viewed in context. It is preceded by a section entitled “other rulings,” which was addressed to the other parties remaining in the
In our view, the April 15 dismissal of Wexford complied with the basic requirements of an “award” under NASD Rule 10330(e). The arbitration panel stated that oral arguments were heard on Wexford’s “fully briefed motion,” that the panel found “in favor of Respondent Wexford,” and that it was dismissing Wexford from the proceeding. It is worth recalling that April 15 was the second time Wexford’s motion to dismiss had been set for argument. When the panel chair dismissed Wexford from the arbitration proceeding for the first time on February 18, 2001, he issued a comprehensive and reasoned decision explaining why Olson could not show that Wexford had engaged in any of the alleged wrongdoing. Prior to hearing arguments for the second time, the panel indicated to Olson that the problems identified in the February 18 decision had not adequately been addressed, and it invited him to withdraw his opposition to Wexford’s motion. Olson declined to do so and proceeded with oral argument. Under the circumstances, it is not surprising that the panel did not issue a second opinion to accompany its April 15 decision.
In determining the finality of an arbitration award, we consider whether “the award itself, in the sense of judgment, order, bottom line, is incomplete in the sense of
But, Olson argues, even if the April 15 award was sufficiently final to end the case, it had another flaw serious enough to affect the limitations period. NASD Rule 10330(a) requires all awards to be “signed by a majority of the arbitrators.” Thus, according to Olson, the April 15 award could not have been a proper award under NASD rules because it was signed by the chair on behalf of the panel. While conceding that “ ‘superficial technicalities’ should not control whether a decision in arbitration is final or not,” Olson nonetheless urges us to find in his favor on this basis because he believes that the signature requirement is substantively important. In Publicis Communication v. True North Communications, Inc., 206 F.3d 725 (7th Cir. 2000), the parties to an arbitration disagreed over the interpretation of a rule requiring the chairman’s signature on procedural matters. Noting that either party’s interpretation was plausible, we focused on the more relevant issue: that the finality of an arbitration agreement “should be judged by substance and effect, not by superficial technicalities.” Id. at 730. Following that general approach, we are unper-
Finally, we reject Olson’s argument that the June 29 denial of his motion to amend started the three-month limitations clock for purposes of the
A party who is uncertain about the finality or appealability of an arbitration award should err on the side of compliance with the
Olson’s decision to proceed under
For these reasons, we AFFIRM the judgment of the district court.
A true Copy:
Teste:
Clerk of the United States Court of Appeals for the Seventh Circuit
USCA-02-C-0072—2-3-05