Pursuant to 5 T H C IR . R. 47.5, the court has determin ed that thi s opinio n should not * be publishe d an d is not precede nt except und er the limit ed circu mstance s set forth in 5 T H C IR . R. 47.5 .4. 

### INTHE U NI TED S TATESCOU RT OFAPPEALS

FORTHE FIFTH CIRCU IT

N o. 09- 50073

UN I TE D FORMI NG, I NC; CONTI NENTAL CAS UALT Y C OM PA NY P l ai n t i f fs - A pp el l ees v. FAU LKN ERU SA, LP D efen d a n t - A p p ell a n t

A p p ea lf

rom the U n i ted S tates D i stri ct C ou rt f or t h e W est ern D i st ri ctof T exas U SD C N o. 5: 08- C V

- 520

B ef ore B A R K S D A L E , SO U T H W IC K , an d H AY N E S , C i rcui t Ju dg es . P E R C U R I A M: * Thi s c as e a r i s e s o ut o f a co ns t r uc t i o n pr oj e c t w he r e Appe l l ant F au l kn erU S A , L P ( “ F au l kn er” ) w as t h e gen eralcontr ac t o r , U ni t e d Fo r m i n g, I n c.
w as t he s ubc o nt r ac t o r and Cont i ne nt al Cas ual t y Com pa ny w as t he s u ret y on t he i r a gr e e m e nt
. Af

t e r di s put e s a bo ut U ni t e d Fo r m i ng’ s w o r k, t he pa r t i e s w e nt t o a r bi t r at i o n b efore a n Am e r i c an Arb i t r at i o n As s o c i at i o n ( “AA A” ) pa ne l

. The United States Court of A pp eals

Fifth Circuit 

### F I L E D October 27, 2009 Cha rl es R. F ulb ru g e II I ClerkN o. 09- 50073

Bec auseth e inter ests of Unit ed Formin g and Contine ntal C asualtyalign on this 1 app eal, we w ill here inaf terrefe r only to Unit ed For mi ng. Faulkn er also complains that th e di strict court i mproperly restric ted his di scovery 2 of Yu ngblut’s alle ge d co nflicts. We concludeth at the distric t co urt did not abuseit s discre tion in find in g t ha tF aulkner fail ed tosho w that th e re que sted di scoverywoul d yiel d re lev ant evidence. 2 AAA pan elrul ed i n favor of U n i t ed Form i n g an d C on t i n en t al C asu al t y. U n i t ed 1 F orm i n g fi l ed an action to con fi rm the aw a rd , w h i l e F a u l k n er m ov ed to va ca te i t
. T h e d i s t r i c t c o u r t r u l e d i n Un i t e d F o r mi n g ’ s fa v o r . F a u l k n e r a p p e a l s , a n d we A F F I R M. O n a m ot i on t o vacate an aw ard brou gh t un der t h e F ederal A rbi t rat i on A ct (“F AA ”), th e F AA s e ts fo r th th e e x c lu s iv e g r o u n d s fo r v a c a tu r . HallS t ree t A ssoc s. , L .L .C . v . Matt el, I n c. , 128 S. C t
. 139 6, 140 2–0 3 ( 200 8)

. I n t h i s c ase, F au l kn er att acks t h e arbi t rat ors w i t h t h e f ol l ow i n g argu m en t s: ( 1 ) A rb it rat or Yungb l ut fai l e d t o m ak e pr o pe r pr e - ar bi t r at i o n di s c l o s ur e s o f c o nf l i c t s ; ( 2) t he

2
ar bi t r at o r s ’c o m m en t s a t t he a r bi t r at i o n de m o ns t r at e d b i as ; a nd ( 3) t he
a rb i trators ’ ru l i n gs a s to th e lega li ssu es p rese n ted w ere so g ross l y w ron g a s to be “m i scondu ct ” or “ m i sbeh avior ” un der t h e F AA

. W e add ress each contenti on b r ie fly in tu r n . A s part of

hi s pre- arbi t rat i on di scl osures, A rbitra to r Y u n gblut di scl osed t h at hi s f

orm er p art n er, S t even N el son, ha d represented F au l kn er’ s predecessor
com pa n y. H ow ever, F au l kn er al l eges t h at Yu n gblut shou l d h ave d i scl osed N el so n’ s st at us as an of f i c erof t hat ent i t y, as w el las N els on’ s al l ege d “ bad feel i n gs” abou t t h e sal e of t h e enti t y t o w h at i s now F au lk n e r. It a lso al l eges t hatYungb l ut sho ul d hav e di s c l o s e d hi s f r i e nds hi p wi t h t he v i c e pr e s i de nt a nd g e n e r a l c o u n s e l o f a c o m p e t it o r o f F a u lk n e r . T h e s e c la i m s a b o u t Y u n g b lu t ’s
no ndi s c l o s ur e a r e f

o r e c l o s e d b y o ur de c i s i o n i n Posi t i ve S of t w are S ol u t i on s, I

n c. v . Ne w Ce nt ur

y Mo r tgage Cor

p. , 476 F

. 3d 278 , 2 81– 85 ( 5th C i r. 2 007 ) (en ban c) ( di s c us s i ng c i r c um s t anc e s i n whi c h no ndi s c l o s ur e s upp o r t s a f i ndi ng o f

“ e vi de ntN o. 09- 50073

Secti on 10 of th e FAA allows v acatur “where ther e was evident partialityor 3 co rru ptio ni nth e arb itrato rs .” 9U .S .C

. § 1 0 (a)( 2 ).

We also noteth at the info rmatio n abo ut Nelson’s positionwas known t o F aulkner’s 4 preside nt and, ther efore , sho uld have b eenraised at the time of Yu ngblut’s sel ectio n.

Anoth er grou nd for vacatur un der the FA A is “whe re the arb itrators wer e guilty of 5 misconduct in refusing t o p os t poneth e h earing , upo n suffici ent cau se sho wn, orinrefu sing to h ear evidence p ertinen ta nd materi al to the controversy ; or of anyoth er mi sbeh avior by whichth e ri ghtso f a nyp artyh av e b ee np re j u dice d. ” 9U .S .C

. § 1 0 (a)( 3 ). 3 pa rt i al i t y” un der t h e F AA )

. A t m ost , t h e un di s c l o s e d i n f orm ati on w ou l d su pp ort 3
o nl y a “ s pe c ul at i ve i m pr e s s i o n o f b i as ” a nd n o t a “ s i gni f i c antc o m pr o m i s i ng relati on sh i p . ” S e e id

. at 285–86
. 4 F au l kn er acc u ses A rbi t rat ors Y u n gblut an d S n yd er of “act u al b i as” based
u p o n s ta te m e n ts th e y m a d e d u r in g t h e a r b itr a tio n p r o c e e d in ga lle g e d ly sugge st i ng def

ens es and c ause s of ac t i on t o U ni t ed For m i ng, as w el las an a lle g e d fa ilu r e to a llo w re s p o n s e t o a m o tio n a n d s u p p o s e d m is ta k e s o f la w . Cf. Posi t i ve Soft w are , 4 76 F

. 3d a t 2 81 ( “ e vi de nt pa r t i al i t y” und e r t he FAA m e ans

“ b i a s ” t ha t i s “ c l e a r l y e v i d e nt i n t he d e c i s i o nm a ke r s ” )

. W e c o nc l ude t hat F au l kn er has fai l ed to m eet i t s “ on erous bu rden ” of d em on st rat i n g act u al bi as. Web er v . Merr i l lLyn ch P i erc e Fen n er & S m i t h , I n c. , 4 5 5 F. Su p p . 2 d 5 4 5 , 550 (N .D

. T e x . 2 0 0 6 ). F i n a l l y, F a u l k n er arg u es t h a t th e AAA pa n el’ s aw a rd w a s so co n trary to l a w tha t i t con sti tu tes “m i scon d u ct” or “m i sb eh a vior” u n d er t h e F AA

. W e n ote 5 t h a t F a u l k n e r wa s c a r e f u ln o t t o u s e t h e p h r a s e “ ma n i fe s t d i s r e g a r d o f t h e l a w” i n th i s cou rt (as i t d i d in th e d i stri ct co u rt) , m i n d ful t h a t w e h a ve h eld th a t Ha ll S t ree t ha s o ve r r ul e d t he us e o f t hat s t and ar d t o va c at e an awar d i n a pr o c e e di ng
u n d er t h e F A A

. C i t igroup G l oba lMkts

. , I n c. v. B acon , 56 2 F

. 3 d 34 9 , 35 8 ( 5 th C i r. 20 0 9 ). W e n ee d n ot r ea ch th e q u estion of w h eth er a n i n ten ti on a lcom p l eteN o. 09- 50073

“Mi sc on du ct” do esno t se emto fit F a u lk n er’sall egati on . See gene ra ll y Roehrs v. FSI 6 Holdings, I

nc. , 2 4 6 S. W. 3 d 7 9 6 , 8 1 1 (T ex . App . – Dall a s 2 0 0 8 , pe t. d enie d) (“Th e [FA A] se em s to limit ‘miscon duct’ to cases in which anarbitr atordenies a po stpone ment of th e h earingor re fu se s t o h ear mate ri al evid ence. . . . ”)

. 4 d i s r e g a r d o f

t h e a p p l i c a b l e l a w c o u l d c o n s t i t u t e “ m i s b e h a v i o r ” un d e r t h e F AA 6 be c aus e w e c o nc l ude t hats uc h a s i t uat i o n i s no t pr e s e nt ed h ere. Eve n i f t he AAA panel ’ s dec i si on w as er r oneo us – a ques t i on w e do notr eac h – i t w as at l east deb atabl e. Acc o r di ngl y, w e AFF I RM t he di s t r i c t c o ur t ’ s c o nf i r m at i o n o f

t he arbi t rat i on aw ard an d d en i al of F au l kn er’ s m ot i on t o vacate.