### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 14

- 1730

P AUL J. R ENARD , P etitioner

- Appellant
,

v.

A MERIP RISE F INANCIAL S ERVICES , I NC

. , Respondent

- Appellee

.

____________________ Appeal from the United States District Court for the Eastern District of Wisconsin

. No. 13

- CV

- 555

- JPS

— J.P. Stadtmueller
, Judge

.

____________________
A RGUED S EPTEMBER 22 , 2014

— D ECIDED J ANUARY 30, 2015

____________________

Before W OOD , Chief Judge
, and E ASTERBROOK and S YKES , Circuit Judges

. W OOD , Chief Judge

. A t the time Ame riprise Financial Se rvices fir ed Paul J. Renard, one of its financial advis er s, Ameriprise took the position that Renard owed it money. Renard did not agree, and so Ameriprise initiated arbitration
to resolve the issue. At the arbitration, Renard denied that he had any debts to Ameriprise and filed several counterclaims2 No. 14

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against the firm

. The arbitra tors reject ed Renard’s counte rclaims and awarde d Ameriprise most of what it sought.
Renard did not accept the panel’s decision; instead, he filed suit in state court to va cate the award. Ameriprise r emoved the action to the federal district court and asked the
court to con firm the award. The court obli ged, and added an order requiring Renard to pay additional in terest. Renard has now appealed, arguing that Ameriprise’s counsel pr ocured the arbitral award through fraud and that the arbitr at ors acted in manifest disregard of both the Wisconsin Fair Dealer ship Law (WF D L) and Minnesota tort law

. His sho wing, however, falls far short of the high standard needed to upset the outcome of an arbitral proceeding, and so we a ffirm the district court’s judgment.
I Ameriprise is a member of the Financial Industry Regul atory Authority (FINRA), a self

- regulatory or gan ization that

oversees broke rage firms and exchange markets

. On August 6, 2009, Ameriprise and Renard entered into a franchise agree ment under which Renard became a financial adviser affiliated with Ameri prise

. Minnesota law governs the agreement , with the exception of “all issues relating to arb itrability,” which are “governed by the terms set forth in [the] agreement , and to the extent not inconsistent with this agreement, by the rules of arbitration of FINRA .” Franchise Agr. § 26.A . The agreement to arbitrate states that it “is go verned by and enforceable under the terms o f the Federal A rbitration Act.” Id. at § 27.H.
On May 11, 2011, after receiving a customer complaint that Renard had solicited exchange

- traded fund (ETF) tran s-No. 14

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actions in contravention of Ameriprise policy
, Ameriprise placed Renard under spe cial regulatory supervision. On June 22, 2011 , Ameriprise issued a Notice of Termi nation to Renard . The N otice detailed several reasons for his dismi ssal : Renard allegedly solicited in verse and leveraged ETF transactions, marked solicited orders as unsolicited, use d unapproved sales literature and an external email sys tem, and failed to update cer tain forms. The Notice assert ed that Renard had br eached the franchise agree ment by engaging in these actions and that Ameriprise was thus entitled to terminate the agreement.
While Renard was affiliated with Ameriprise, Ameriprise had loaned him money to build his practice . In exchange for the loans, Renard had executed four promisso ry notes, which required Re nard t o pay the full amount immediately if Renard ’s affiliation with Ameriprise ever end ed

. Ameriprise’s termination of its relationship with Renard thus cause d the unpaid balances on the promisso ry notes , totaling approximately $530,000, to become due. After R enard failed to make immediate payments on the note s , Ameriprise initiated arbitra tion under the auspices of FINRA , as specified by the franchise agreement’s arbitration clause . See Franchise Agr. § 27.A.
A panel of three arbitrators held an evidentiary hearing in Milwaukee, Wisconsin

. Renard argued that he did not have to pay the notes because Ameriprise had breach ed the franchise agreement and violated the WFDL , Wis. Stat. Ann. § 135.01 et seq

. Renard also counterclaimed for viol a tions of the WFDL, interference with contractual relations, interfe rence with prospective advantage, conversion, mi s represent ation, and breach of contract. T he panel dismissed Renard’s4 No. 14

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counterclaims and awarded $448 ,200 in compens a tory da mages to Ameriprise . This amount was approximat e ly $100,000 less than Ameriprise had sought

. The panel did not explain its decision

. Unhappy with that outcome, Renard filed a petition in Wisconsin state court to vacate the arbitra l a ward under Wis. Stat. Ann

. § 788.10 and for j udgment notwithstanding the award under Wis. Stat. Ann

. § 805.14(5)(b)

. Ameriprise

r e moved the case to federal court based on diversity jurisdi ction, as Ameriprise is a Delaware corporation with its pri ncipal place of business in Minnesota
, Renard is a Wisconsin citizen , and the amount in controversy exceeds $75,000 . See 28 U.S.C. § 1332. Ameriprise filed a motion to confirm the award in the district court. Renard petitioned to vacate or modify the award , alleg ing 1) that the arbitrators exceeded their powers by manifestly disregarding the WFDL and Minnesota law
, 2) that the award was procured by fraud, and 3) that the arbitration panel should have kept the record open longer

. (Renard has dropped this last conte ntion on appeal.) The district court denied Renard’s peti tion, co nfirmed the award
, and ordered Renard to pay post

- judgment interest in the amount of $16,909.56 . Renard now appeals.
II In examining a district court’s confirmation of an arbitr al award , we review questions of law de novo and the district court’s findings of fact for clear error. Publicis Commc'n v. True N. Commc'ns, Inc ., 206 F.3d 725, 728 (7th Cir. 2000)

. R enard alleges two principal bases for vacat ur : that the award was procured by fr aud and that the arbitrators manifestly disregarded the law. Neither argument can carry the day for him.No. 14

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T he district court was correct to review the award under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. , rather than under the Wisconsin Arbi tration Act (WAA)
, Wis. Stat. Ann

. § 788. 0 1 et seq

. As we noted, the franchise a greement generally is governed by Minnesota law, but it specifically removes arbitration from this blanket statement. See Fra nchise Agr. § 26

. A. I n a section entitled “Arbitration,” the agreement states that the arbitration clause “ is governed by and enforceable under the terms of the Federal Arbitra tion Act.” Id. at § 27

. H

. As we will see, Renard has no way around this language.
Renard first argu es that applying the FAA instead of the WAA would circumvent the WFDL (and Wisconsin’s public policy as expressed by that law) because the FAA has a more stringent standard for what constitutes “manifest disregard of the law

. ” The WFDL governs re lations be tween dealers and dealership grantors in Wisconsin , providing, among other things, limitations on grantors’ ability to terminate or modify dealership agreements. T he WFDL does not , howe ver, prescribe the details of any possible arbitration agre ements bet ween dealers and grantors ; in fact, it does not me ntion the WAA at all. Moreover, there is no reason to think that review under the FAA will systematically circum vent the WFDL more than review under the WAA

. Finally, even if there were reason to think that (and there is not) , a long line of cases shows that the FAA preempts inconsistent state law. See, e.g. , AT&T Mobility LLC v. Concepcion , 131 S. Ct. 1740, 1753 (2011) (FAA preempts California common law rule regarding the unconscionability of class arbitra tion waivers in consumer contracts); Preston v. Ferrer , 552 U.S. 346, 359 (2008) (“When parties agree to arbitrate all que stions arising under a contract, the FAA supersedes state laws6 No. 14

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lodging primary jurisdiction in another forum.” ); Oblix, Inc. v. Winiec ki , 374 F.3d 488, 492 (7th Cir. 2004) (“ If a state treats arbitration differently, and imposes on form arbitration clauses more or different requirements from those imposed on other clauses, then its approach is preempted by § 2 of the Federal Arbitration Act. ”).
Renard alleges in the alternative t hat the parties chose Wisconsin law to govern the arbitration , despite the plain language identifying the FAA as the governing law. He su ggests t hat the parties’ choice to arbitrate in Wisconsin demonstrates that they also selected the WAA. But the place of arbitration has no necessary connection to the rules that will govern the proceeding . This is especially true if the pa rties have expressly elected an arbitral regime, as these pa rties did in adopting the FAA. If we were to accept Renard’s argument, the FAA would never govern an arbitration held in a state that had its own arbitration statute , even if the pa rties expressly selected the FAA in their agreement to arb itrate

. Renard also points t o an addendum to the franchise agreement that states that “the W isconsin F air D ealership L aw , to the extent applicable, supersedes any provisions in the Franchise Agreement that are inconsistent with that L aw.” But again, the WFDL does not requir e a particul ar l egal framework for arbi tral proceedings between dealers and grantors

. The WFDL thus does not “supersede” the agre ement’s provision selecting the FAA

. Finally, Renard claims that Erie R. R. Co. v. Tompkins , 304 U.S. 64 (1938)
, re quired the dis trict court to apply state law (the WAA) rather than federal law ( the FAA ) to this agre ement

. Unfortunately for him, t he Supreme Court has firmly rejected this argument

. See Prima Paint Corp. v. Flood &No. 14

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Conklin Mfg. Co. , 388 U.S. 395, 405 (1967); see also Southland C orp. v. Keating , 465 U.S. 1, 23 (1984) (noting that Prima Paint “held that the FAA may constitutionally be applied to pr oceedings in a federal diversity court”). The district court was therefore correct to analyze the award under the FAA. We
now move on to Renard’s substantive arguments.
Manifest Disregard of the Law
Fed eral court review of arbitral awards is limited

. See Nat'l Wrecking Co. v. Local 731, In t'l Bhd. of Teamsters , 990 F.2d 957, 960 (7th Cir. 1993) (“ Arbitrators do not act as junior varsity tr ial courts where subsequent appellate review is readily available to the losing party .” )

. An arbitral award cannot be vacated pursuant to the FAA merely because the petitioner “show [s] that the panel committed an error

— or even a serious error

. ” Stolt

- Nielsen S.A. v. AnimalFeeds Int'l Corp. , 559 U.S. 662, 671 (2010) . It may be set aside only if one of the criteria specified in 9 U.S.C. § 10 is present

— as rel evant here, only if “the arbitrator deliberately disregard s what he knows to be the law.” E ljer Mfg., Inc. v. Kowin Dev. Corp ., 14 F.3d 1250, 1254 (7th Cir. 1994) ; see George Watts & Son, Inc. v. Tiffany and Co., 248 F.3d 577, 579

– 81 (7th Cir. 2001) (explaining that “manifest disregard of the law” exists only if the arbitrator directs the partie s to violate the law). Simple mistake of law is not enough. Thus, even if these a rbitrators e rred in their application of Minnesota law or the WFDL , such an error falls short of a manifest disregard of the la w

. Renard’s argument before the arbitrators was simple. As

we noted above, an addendum to the franchise a greement states that the WFDL, “to the extent applicable, supersedes8 No. 14

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any provisions in the Franchise Agreement that are inco nsistent with that Law.” T he WFDL requires the grantor, Ameriprise, to give the dealer, Renard, written notice 90 days prior to the termination of a franchise agreement and 60 days to cure the deficiency at the root of the termination. See W IS

. S TAT

. A NN . § 135.04. It is undisputed that Ameriprise did not comply with this provisi on; Ameriprise fir ed Renard with no notice or chance to cure. Renard mai ntained that Ameriprise’s actions thus violated the WFD L and , therefore, the franchise agreement. He also accused Ameriprise of tortious interference with business relations and conversion because Ameriprise notified Renard ’s clients that it was placing them with a different financial advisor
, and it forced Renard to transfer in com ing calls to that adv isor. These claims stem direct ly from the alleged WFDL viol ations ; Renard concedes that these allegations necessarily fail if Ameriprise did not wrongfully termi nate his contract

. Ameriprise argued in response that federal securities laws preempt the WFDL’s notice and cure provisions. It co ntend ed that Renard had violated Securities and Exchange Commis sion Rule 17a

- 3, which requires accurate bookkee ping, and Rule 10b

- 5 , which prohibits fraud in connection with the purchase or sale of securi ties. See 17 C.F.R. § 240.17a

- 3; 17 C.F.R. § 240.10b

- 5. Ameriprise then asserted that it was exposed to liability for these violations because Renard was formally associated with the company. See 15 U.S.C. § 78u

- 1(a)(3), (b)(1)(B)

. Since giving Renard 90 days’ notice and a chance to cure
, instead of immediately dismis sing him
, would leave Ameriprise vulnerable to federal liabi lity, Ameriprise claimed
, these federal laws and regulations preempt ed the relevant WFDL provisions and al lowed it to fire Renard immediately

.No. 14

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Renard brushes these concerns aside and contends that the arbitrators exceeded their power by failing to apply the WFDL to these facts. Given the clear noncompliance with the WFDL’s notice and cure pro visions, Renard assumes that the panel must have agreed with Ameriprise that federal secur ities laws preempt his WFDL claims. Perhaps this is the best reading of the tea leaves. And perhaps Renard is right that this was an incorrect applica tion of the law. But even he co ncedes that the arbitrators analyzed the WFDL , and that is enough to doom h is claim in federal court . It is not manifest disregard of a law to con sider that law and its relation to other laws and then conclude that the law does not apply in the specific factual si tuation at issue

. This conclusion is straightforward here, given th e fact that Ameriprise presen ted its preemption argument to the arbitrators. They did what the parties contracted for: they resolved the issue on the basis of the laws and arguments presented to them

. Renard’s assertion that the panel manifestly disregarded Minnesota law with respect to his intentional tort claims fails for essen tially the same reason. If the panel could have found that the WFDL was preempted (and thus that Ameriprise’s termination of Renard wa s legal), then it also could have concluded that Ameriprise did not commit these
torts. Under Minnesota law, b oth tortious interference with business relations and conversion require the defendant to act without justification. See, e.g. , Christensen v. Milbank Ins. Co ., 658 N.W.2d 580, 585 (Minn. 2003) (conversion); Harbor Broad., Inc. v. Boundary Waters Broadcasters, Inc. , 636 N.W.2d 560, 569 (Minn. Ct. App. 2001) (tortious interference with business relations). The actions of which Renard co mplains

— inc luding transferring clients and forwarding calls

— were taken in connection with his departure. I f Ameriprise10 No. 14

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was justified in terminating its relationship with Renard
, the intentional tort claims fall away

. As we noted, Ameriprise presented the panel with a basis for finding that the termin ation was justi fied. It is possible , or maybe likely, that the panel determined that f ederal securities laws preempt the WFDL such that Ameriprise’s dismissal of Renard was just ified. This finding would compel a conclusion that the actions Ameriprise took were legal. Because the panel did not issue a written opin ion, we do
not kn ow how it reached its conclusions. But nothing su ggests that it strayed so f ar that the “manifest disregard” standard has been triggered. Ameriprise suggests alternative interpretative paths to explain the panel’s decision aside from its preemption argument: perhaps the panel found that Ameriprise did violate the WFDL but that Renard did not prove damages
, or maybe Re nard failed to state a c onversion claim because client lists are not “property” for purposes of this tort. All this goes to show that we should not sec ond

guess the arbitrators’ decision based on speculation when it is possible for the panel to h ave reached the decision it did ba sed on the evidence presented to it. We therefore find that the panel did not act in manifest disregard of either the WFDL or Minnesota tort law.
Fraud
Renard also accuses Ameriprise of procuring the arbitra l award by fraud. See 9 U.S.C. § 10(a)(1) (permit t ing courts to vacate arbitral awards that were procured through fraud). For a court to vacate , t he fraud must be “ (1) not discoverable upon the exercise of due diligence prior to the arbitration; (2) materially related to an issue in the arbitration; and (3) esta blished by clear and convincing evidence. ” Gingiss Int'l, Inc. v.No. 14

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Bormet , 58 F.3d 328, 333 (7th Cir. 1995) ( citing A.G. Edwards & Sons, Inc. v. McCollough, 967 F.2d 1401, 1404 (9th Cir. 1992) )

. Renard cannot prevail, however, because Ameriprise’s co nduct did not constitute fraud in any sense of that term.
Renard first complains about certain remarks of Ameriprise’s counsel in closing arguments . Counsel stated that Renard had committed fraud and violated federal sec urities laws, even though Renard had not been convicted of any such violations. But closing arguments are not evidence, and attorneys are permitted to make arguments based on reasonable inferences from evidence that was presented. S ee United States v. Vargas , 583 F.2d 380, 385 (7th Cir. 1 978) . Al

though Renard had not been convicted of fraud or related legal infractions
, he responded “Correct” when asked if he lied on forms regarding the solicitation of ETFs and “Co rrect” when later questioned as to whether he “broke the rules” in doing so

. That Renard had broken the law was a reasonabl e inference from this and similar testimony heard throughout the evidentiary hearing

. Counsel’s remarks thus did not misrepresent the record, much less amount to fraud

. Renard next points to Ameriprise’s counsel’s use

— again in closing arguments

— of two cases to support the conte ntion that federal securities laws preempt the WFDL. When counsel brought up Moody v. Amoco Oil Co. , 734 F.2d 1200 (7th Cir. 1984) , he stated that the case was “specifically on point ” and that “ [ a ] ny right to cure to prevent termination provided by the Wisconsin Fair Dealership Law has been p reempted by this federal law

— and it ’ s a different issue
, but it’s saying that the Wisconsin Fair Dealership Act was abs olu tely preempted by feder al law.” In discussing Bantum v. Am. Stock Exch., LLC , 7 A.D.3d 551 (N.Y. App. Div. 2004)12 No. 14

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(Second Dep’t ) , counsel said that the case stood for the proposition that Congress, when it enacted federal securities law s , “intended to preempt state interference w ith self

regulatory organiza tions ” such as the American Stock E xchange and FINRA. Renard argues that counsel should not have used these

cases

— or at least should have been more cle ar about their specific holdings

— because they did not actually hold that fed eral securities law s preempt th e WFDL. I nstead, Moody held that a different federal law preempts the WFDL
, and Bantum found that federal securities law s preempt a diffe rent state statute. A ttorneys are not prohibited from analogi zing cases to the facts before them , however, nor from dra wing inferences from existi ng case law. I n fact, doing so is an essential component of an attorney’s job. Ameriprise ’s cou nsel did not misrepresent Moody or Bantum

. Although he did
not spell out the differences between tho se cases and the present situa tion, he was making an argument from analogy and thus was not engaging in fraud. Renard also points to Lucarelli v. New York Mercantile Ex ch. , 24 A.D.3d 117 (N.Y. App. Div. 2005) (First Dep’t ) , a later New York case that found that federal law did not preempt the New York H uman Right s Laws, as Bantum had held. But the fact that a di fferent New York appellate court came to a contradictory conclusion does not make Bantum bad law

. In short, the closing arguments made by counsel for Ameriprise were well within the bounds of permissible a ctions before an arbitra l panel. This is not what the FAA means when it lists “fraud” as a ground for setting aside an award. Remaining ArgumentsNo. 14

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Re nard’s other arguments have even less merit. He a ssert s that the panel lacked an evidentiary basis from which to find that Ameriprise fir ed him because he violated federal securi ties laws. He points to the Form U

- 5 that Ameriprise filed averring that Renar d had not been under internal i nvestigation for violation s of securities laws and regulations at the time of his termi nation. T his form , however, is not in the record. And even if we could consider it , Renard’ s a rgument is unavailing
, because Ameriprise i n dicated in the same form that Renard had been discharged after allegations that he had violated the securities laws. More over, Renard admitted during the evidentiary hearing that he lied about soliciting ETFs

. Even if the evidence was thin, it was pr esented to the arbitral panel and could have form ed the basis of the panel’s decision. Finally, Renard claims that the panel’s decision is in co nsistent with § 17

. B of the franchise agreement, which states:
Immediate Termination with Cause ... In the
event Ameriprise Financial believes any law may prohibit the immediate termination of this Agreement, Ameriprise Financial may imm ediately suspend Independent Advisor, who shall remain suspended until such time as Ameriprise Financial either terminates this Agre ement or ends the suspension. Renard’s argument makes little sense

. This section merely provides that Ameriprise may suspend

— rather than fire

— Renard if it believes any law prohibits immediate dismissal

. Ameriprise did not believe that a law prohibited imm ediate action , and so it did not suspend Renard. This is consistent with the panel ’s apparent conclusion that federal se curities14 No. 14

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laws preempt the WFDL and Ameriprise was thus within its rights immediately to discharge Renard

. III

T he district court was correct to confirm the award. We
cannot substitute our interpretation of the law for that of the arbitrators , and we are satisfied that t he panel reached a r esult on the basis of the law and evidence presented to it. Moreover, Ameripr ise’s counsel did not act fraudulent ly when he stated that Renard violated federal securities laws and made ref erences to cases suggesting that those laws could preempt the WFDL. We therefore A FFIRM the jud gment of the district court.