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# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

____________ N o. 06

- 3910 E NVIR ONM ENTAL B ARRIER C O ., LLC , P la intif f-A pp ellee, v. S LURRY S Y S T E MS, I NC ., D ef endant-Appellant.

____________ Appeal from the United States District Court fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 06 C0212

—Rebec ca R. Pal lmey er , Judg e.

____________ A RG UE D S EP TE MBE R 17, 2007

— D ECIDED A UGUS T 29, 2008

____________
Befo re F LA UM, R IPPLE, a nd W OO D , C ircu it Judges. W OO D , C ircu it Judge. A fteran a rbi tr ation h ear i ng to r es o l ve a c o ns tr uct i o n c o nt r ac t di spu te b etwee n Env i r o nm entalBarr i erCom pany (“EBC ”) and Sl urr y Sys tem s, I nc. (“S SI” ), A rb itr at or Fra n klin I. K ra l is s u e d an aw ar d in fa v o r o fE B C in t h e a m ou n t o f $3 88 ,91 9.8 8. W h en SSI d id no t pay, EBC fi led su iti n I l l i no i s co ur t to c o nfi r m the awar d, a nd S S Ir es po nde d b y r emovi ng th e ca se t o the U
. S. District C ou rt forth e N orthe rn D istri ct of Il linois. SSI2 N o. 06

- 3910 urge d the di str i ct c ourtto vac ate the arbitra l award, o r in th e alte rn at ive , to m od ify it. T h e d ist ric t cou rt d id nei ther : i nstea d, i t co nfi rm ed the awa r d e nter ed by A rbi tr at o r Kr a l

. I n the c o ur s e o fdo i ngso , th e co ur th e l d tha tEB C ha d “ s t a n d i n g ” t o e n f o r c e th e a rb i t r a t i o n c l a u s e i n t he c on tr ac t a n d th at th e a rb itr at or h a d n otex c ee d ed h is po we r s . Ona pp e a l, S S Ii s now u rg i ngu s t o fi nd tha tEB C nevero btained the r i ght to e nfo rce the contr act’ s a rbi tr ati o n cl au se . S S I ’ s appe l l at e br i ef s pr es en t th i s argum en t as a ch all en ge to arbitrabil ity, based on th e f a c t t ha t SSI agr eed to a rb itr at e o n ly w ith E B C ’s p re d ec es so r-in- inter est, not w i th EBC i tse lf. Thi s i s a m aj orshi ft fro m the w ay SS Ipre sente d i ts cas e firs t to the a rbi tr ato r and l ate r to the di str ict c ourt, wh er e i t fra m ed the i ssue i n ter m s o f EB C’s sta nd i ng to pursue th is arbi tr ati on. The di ffer ence i s cr uci al

— i nd eed, o n thes e f acts , f atal

— t o S S I ’ s c l a i m.

I O n Feb rua ry 2 9, 2000 , the U

. S. A rm y C orp s of E ng ineers enter ed i nto a co ntra ct with SS Iforwork on a proj ect to re d u c e floo d in g d u ring heavyr ains. Th e M c C oo k R es er vo ir Pr oj ec t, as i t was ca l l ed, i nv o l ve d th e co ns tr uct i o n of a m u ltib illio n -ga llon res er vo ir; SSI w on th e rig h t t o b u ild th e overbu rd en cut offw all

. SSIi n tu rn su bcon tracte d pa rt of i ts w o r k to an en tity call ed Ge o-Con , I nc . , using a f orm contr act that the parti es si gned i n A pri l 20 00. The part i es’ briefs recou nt i n d etail th e progre ss of SS I ’s and Ge o-Con ’s wor kfr o m 2 00 0 to 2 00 3; we i nc l ude o nl y the f ac ts pe r tine nt to th is a p p ea l.N o. 06

- 3910 3 A tta chm ent A to the S SI/G e o - Co n subcont ra ct e l abor ate d o n Ar ti cl e 8. 1 o f th e t ex t, s pec i fy i ngtha t “Co nt r ac to r a nd Subco ntra cto r shal l j oi ntl y w or k tog etherto per f or m al l o f th e w ork togeth er [ si c ] t o min i m i ze the overallc o sto fthe w or k. ” Attac h m en t A al so i ncl ud ed a l onge r ver si on o f A rt icle 1 0 .1 , w h ich d es c rib ed h ow th e p ar tie s w ou ld a l l o c a t e r e v e nu e s, costs , p r o fi t s , a nd l o s s a nd g a v e g ui dance f ora fi nal set tl i ng- up ba sed on the actualdi str ibuti on ofco sts
. The subco n tr act al so conta i ned an excl usi vi ty cl au se , Art i cl e 1. 3; a b ro ad arbi tr at i o n c l au se c o ve r i ng “[ a] ny c l ai m a r i singouto fo r r el at ed to thi s S ubc o ntr act, ”A rt i cl e 6
. 2; and a cl ause re str i cti ng as si gnm ent o r sub- subcontr acting, A rt i cl e 7
. 4. 2. The pr oj ec t’ s sc o pe an d m etho do l o g y c ha ng ed as the w or k pr oce eded, r equi ring the Cor ps at one poi n t t o suspend operations w hi l e i t fi gure d out a n al ternati ve way t o fi ni shthe pr oj ect. Once the modi fi ca ti o ns t o the Pri m e Contrac t w er e i n pla ce, SS I and Geo -C on resum ed th e i r j o i n t e ff o r t t o c o mp l e t e th e i r p o r t i o n o f th e wo r k

. By A pri l 20 03, theywere fi ni shed w i th the i r const ructi on wor k

. W ha t rem ained t o b e do ne was the fi na l r ec k o ni ng of w h o ow ed w hom how m uc h; this prove d to be m ore diffi cul t. There were, f ori nstance , se ver al pend i ng change or d er s, an d it w as u n c lea r h ow co st s a n d p ro fits w ou ld be s hi fted am ong the par ti es. To the exten t th at these fi na nc ialde tails are relevant, w e return to them l ater. EB C e nter ed the picture i n Se ptem ber 2003 , w hen G eoCon, f orr eas ons unrel ate d to the M cCook p roj ect, fi l ed f o r b an k r upt cyi n th e U. S
. Ba nk r upt cyCo ur t f o r the So uthern Dist ri ct o fN ew Yor k. Duri ng G eo- Con’s re or ga-4 N o. 06

- 3910 ni zati on , E B C (th ro u gh tw o in te rm ed iar y e n tit ies ) ac quir ed substa nt ially al l o fGeo- Con’s ass ets f ora pu rchas e pr i ce of$2

. 1 m i l l i on. The bankr up tcy cour t f ound that EBC was the o nl y qual i fi ed purchasero f G eo- Con’s ass ets
. I n an or d er d at ed A p ril 16 , 200 4, th e c ou rtap p ro ve d th e sa le i n acco rdance w ith t h e ter m s s et f or th i n a l ett erfro m th e i nt er m edi ar i es . Pa r t I Io fthe o fferl et te r a ddr es se d the Geo- Con acqui si ti on a nd se t forth a l i st of“e xcl ud ed ass ets
. ” The e xcl usi ons i ncl ud e d “ [ a ] l lc o nt r a c t s f orse rv i ces to be p er for m ed by G eo -C on , exc ept
. . . P900 99 M cCook, I L” ( em phasi s a dd ed). I n o the rwo r ds, the M cCook contr act was a cqui r ed bythe int er m edi ary, a nd the n pa ss ed al o ng to EB C. There w as a S chedule A to the offe r let terthat list ed eq u ip m en t loan s a n d lea se s. T h is w as th e “ Sc h ed u le A ” t o w h ich th e b an kr u p tc y c ou rtrefe rre d w h en it sa id i n i t s o r d e r th a t th e c o n t r a c t s l i s t e d i n S c h e d u l e s A a nd C w er e e xecutor y. Th e sale o fthe M cCook contr act w as l ate r re fl ecte d on Schedul e D to the A pri l 29, 2004, bi l l o fsa l e be tw een Geo

C on an d EB C that carried ou t t he ban krup tcy cou rt’s o r d e r . T h e b i l l o fs a l e p r o v i d e d th a tG e o - C o n wa s s e l l i ng “a l l o fS el l er ’ s ac co unt s r ec ei vabl e ( i ncl udi ngwi th o ut lim ita tio n th e a c c ou n ts se t fo rt hon Sc h ed u le A h er et o),” an d “c on tr ac ts ” s p ec i fi e d a s th e “ A s s u m e d C o n t r a c t s .” T h is w as a di ffer ent “ Schedul e A” than the o ne atta ched to th e offer l etter m en tioned i n th e ban krup tcy cou rt’s A pri l 16 o rder

. Schedul e A to the b i l l o fsa l e l i sts acc ounts re c eiv ab le a n d co n tr ac ts th at E B C w as ac q u ir i n g , a n d it i nc l ude s th e M cCo o kpr oj ec t. Thu s, the f ac t th atthe b an kr u p tc y c ou rth ad d es c rib ed th e c on t r a c t s list ed in Sc h ed u les A an d C as ex ec u to ry h a s little be ar in g on th is case .N o. 06

- 3910 5 SS Ias ser ts that i t was n ot aw ar e o fGeo- Con’s bankruptcy proce edi ngs a s they were ta ki ng pl ace. I t l earn ed about them , h ow ev er, no l ate r than J une 17, 20 04, wh en EB C noti fi ed SS Iby let terthat EBC had succee ded to GeoCo n’ s r i g ht s u nd e r the s ub c o nt r a c t
. T he l e t t e r c o nt a i ne d a dem and that S SIpay EB C th e b al ance due t o Geo- Con f o r the wor ktha t Geo

- Co n ha d pe r f o r m ed unde r the subcontr act. A t the ti m e, EBC bel i eve d tha t th is bal ance wa s $ 7 1 1 , 0 0 0
. ( I tl a t e r f o u n d o u tth a tS S Ih a d r e c e i v e d t wo add i ti onalpaym ents f ro m the Corps that it h ad not d i s c l o s e d , t o t a l i n g$ 4 2 5 , 9 5 1
. 3 8 ; th e d i s c r e p a n c y i s i mm at er ial for ou r p u rp os es .) EB C’s J une 200 4 l ett eral so noted t h at the “ subcontr act between Geo- Con and Sl urr y S yst em s ca l l s f orm edi ati on and arbi tr ati on o fdi sputes, ” but i t a dd ed that E B C ’s preferen ce is to r esolve its cl aim against Slurry System s am icably, i f p ossible, w ithou t the exp en d iture o fm edi at i o n f ee s a nd expe ns es w hi ch, purs ua ntto the contr act, ar e t o be sh ared equal l y b y the par ti es. A ccor dingl y, we re quest a n opportunity t o m ee t w i th you w i thi n the next two wee ks t o discuss and hopefull y r eso l ve EB C’s cl ai m . Ifyo u ar e unw i l l i ng to m eet w i th us withi n that ti m e, EBC wil l co m m ence m edi ati on a nd arbi tr ati on pro ceedi ngs. SS Idi d not r espond posi ti vel y t o EB C’s l ett er . On July7, 2004, S SI ’ s a tto rney s s ent a let terto EBC ’ s co unsel, expre ssi ngthe o pi ni o n that “a l l di spu te s be twe enGe o - Cona nd Slurry System s hav e been resolved , ” an d ad d ing tha t, “[a]s a m at te r o ff ac t, Geo

- Conactua l l y owes S l ur r y S y st ems, b ut b ec au se of G eo -C on ’s liq u id at ion , th er e is n o p oin t in6 N o. 06

- 3910 Slurry pu rsu ing the m at t er. ” SSI ’s l etter n oted EB C ’s st at ement th atthe s ubc o nt r ac t be twe enGe o - Cona nd SS I “c alls for t h e m e d i a t ion an d arb itr at ion of d isp u te s,” an d r eque st ed th atEBC pr o vi de S S I “wi tha c o py o fthe su bcon tract if you stil l p lan to p urs ue this m atter[.] ” EB C d i d pu rs ue the m att er . A fterm edi ati on e ff or ts f a i l e d, EB C’ s c o un s e l c a l l e d S S I ’ s c o un s e l t o di s c us s arbi tr ati on. The f ol l owing w eek, in a l ett erdated M ar ch 16, 2005 , cou ns e l fo r SSI w rote the f oll ow ing note to EB C ’s at to rn ey : A s Ist ate d on the phone, w hi l e I am p l eas ed to re sol ve potenti alpro cedurali ssues by ag re em ent, the fi rs t or der o fbusi ness i s t o deter m i ne wh etheryo ur cl i ent, [ EB C,] has any s tandi ng to a rb itrate i ts cl ai m ag ai nst ou r c lien t, [SS I]. You have agr eed thati nvoking the arbi tr ati on c l a us e i n [ Ge o - Co n’ s ] s ub c o nt r a c t wi th S S I g o e s h a nd

i n-hand w i th EBC full y a ssum i ng tha t s ubcontr act. Tha t r equi r es EBC to p er f o r m ful l y a l l o bl i g at i o ns im p os ed u p on G eo -C on by th e s u b c on tr ac t, w h ich it has no t y et d on e. A dd i ti onal l y, S SIhas not eve n co ns en te d t o EBC ’ s as su m pti o n o fthe s ubc o nt r ac t, a nd i s unaw ar e o fEBC ’ s technicalexper ti se orl eve l o f capi tal i zati on, o r i ts abi l i ty to perf or m work und er the s ubcontr act. U nd er t h ese ci rcum sta nces, S SIm ay b e e xc us e d fr o m a c c e pt i ng pe r f o r man c e s fr o m EBC und er11 U
. S. C. § 3 65( c) and other appli cabl e l aw s. The l ett erwent on t o sta te that i t was “there f or e e sse nti al th at E B C p ro vid e SS I w ith ad eq u at e a ss u ra n c es th at it can perform i ts obligati ons un d er the su bcon tract b eforeN o. 06

- 3910 7 EB C can ass um e the subco n tr act. ” S peci fi cal l y, i t dem anded ( 1 ) tha tEB C c o nfi r m t ha ti t“ i s i n the c o ns tr ucti on business an d c an handle any re m edi alwork necessary u nd er the su bcon tract” ; ( 2) th at E B C “p rovide SSI w i th the i nsurance and perf or m an ce b ond re quir ed by th e su b c ontract ”; and ( 3) thatEBC gi ve SS Ii ts “fi nanci al d a t a a n d bio gr ap h ica l info rm at ion ,” so th at SSI co u ld “m ake an i nfo rm ed deci si on r ega rdi ng wh ethero r not to w ith h old SSI’s c on se n t from th e p ro p os ed as su m p tio n .” I t a d d e d th a t“ [ t ] h e s e i s s u e s n e e d t o b e r e s o l v e d n o w, and not in the conte xt o fan a rbi tr ati on. ” The l ett ercl ose d by w arn ing th at if it sh ou ld tu rn out t h a t Ge o-Con ’s w or k was “defecti ve i n any w ay, S SI wil l hol d EB C acc ou n ta b le.” The i ssues were n ot r eso l ved, and i nstea d EB C fi l ed i ts dem an d fo r arbi tr ati on a m onth l ate r, o n A pri l 20 , 20 05. The demand br i efl y ex pl aine d th e ba ck g r o und of the p ar tie s ’ d isp u te an d th e b as is for E B C ’s c laim ag ain st SSI. EBC ar g ue d tha t S S Io wed EBC “ atl ea st$ 65 7, 27 3. 50 ” an d that SS Ihad “br eached the S ubcontr act by f ai l i ng to pay th at am ou n t.” A t t h at cr itic al jun c tu re , SSI sa id n ot h in g ab ou t t h e b as ic arbi tr ab i l i tyo fth e d i spu te
. I ns te ad, i t fi l ed anAnswer i ng S ta te m en t o n May 9 , 2 00 5. In the b o x o n the Answer i ng S ta te m en t f o r m l ab el ed “R ES POND EN T AN S W ERS CLAI M ANT DE M AND F ORARB I TR ATI ON AS F OLLO W S, ” SS I w ro te: “EB C s eek s add i ti onal m oneys un der a su bcont r ac t whi chha s be enpa i d i n ful l ; Re spo nde nt [ SS I ] deni es any m oneyis due and see ks re turn o f o v e r p a y me n t s a n d d e c l a r a t o r y r e l i e f

. ” T h e “ DO L L AR8 N o. 06

- 3910 A M O U N T O F C L A IM ” w as list ed as “T o b e d et er m in ed ,” an d i n th e box l a b e led “O T H E RRE L I E F SOU G H T , ” SSI st at ed i ts c lai m for “ A dec l ar at i o n tha t EBC as su m ed th e subcontr act and i s in br each ofi ts non- m onet ar y t er m s; ana cc o unt i ngo fmone y t o b e paid un d erthe s ubc o ntr ac t a n d a re tu rn of an y ove r p ay m en ts .” N ot ab ly, SSI d id n o tme r e l y a n s we r EB C ’ s c l a i m; i ta l s o fi l e d a c o u n t e r c l a i m. SS Iel abor ate d on it s p osi ti on in a s up ple m entar y l ett erto Arb i tr at o r Kra l o n J une 20 , 20 05
. The l et te r, whi chS S Is en t “[i ]n ord er to f acili tate ou r J u n e 21, 2005 prelim inary he ar i ng, ” fi r st ex pl aine d tha t th e di spu te s “c en te r a r o und a co nstr ucti on s ubcontr act” betw een SS I a nd Geo- Con to b u ild a slu rry w all for th e C or p s. It th en lau n c h ed d ire c tly i nto the di spute o verpaym en t, prov i ding A rbi tr ato r K ra l w i th SS I ’ s ver si on of how the parti es had a gree d to al l oca te the c ost s a nd p ro fits

. N ext, the l ett erst ate d that “Ge o - Conaba ndo ne d the Pr oj ec t be f o r e i t was o ve r, ” an d so w hi l e “ EB C now seeks an add i ti onal$6 57, 274
. . . , st ri ct ap p li catio n o f th e pa ym en t term s d oes not requ ire SSI to p ay the unearned w i nd f al l EBC se eks

. I nstea d, i t r equ ires EB C t o p ay SSIseveral hu nd red thou san d dollars i n o ve r pay m en ts
. ” The r emai ni ngthr ee pa r ag r aph s expand ed o n w hy EBC o w ed m oneyto S SI
. There i s no t eve n a pass i ng r efer ence to a defense ofl ack of arbi tr abi l i ty. Three day s afte r the pr el i m i naryhear i ng, o n J une 24, 2 0 0 5 , S S Iw r o t e a n o th e r l e t t e r t o A rb i t r a t o r K r a l, th i s t i me to “fo llow u p on th e s u b j ec t o f ‘n on -m on et ar y b re ac h es .’ ” SSIreiterated i ts p ositi on th at “G eo-C on left the j ob before i t was finished” and noted thatbyvi rtue o fthe A pri l 16 ,N o. 06

- 3910 9 2004, bank ruptcy or der, “EB C was al l owed to as sum e GeoCon ’ s S ubc o nt r ac t wi thS S I
. ” S S Ithe n a r g ue d tha t th e bankr up tcy c ou rt di re cted EBC , as the pu rchas ero fGeoCon’s ass er ts, “t o m ake such cur e paym en ts a s are r equ i r e d b y S e c t i o n 3 6 5 o f th e [ B a n k r u p t c y ] C o de an d ag r ee d t o a m o ngthe Debtors a nd r es pec ti ve c o nt r ac ting pa rt i es. ” S SIand Geo- Con had not a gr eed to EBC ’ s a ssum pti on o f the contr act, SS I continued , nor had G eo- Con ev en info r m ed S S Io fi ts b an k r upt cy . “ N ev er th el es s, ” th e l ett erco ntended, “se cti on 3 65 re quir ed Geo- Con/EBC to do th e f o l l o wi ng i n o r der to as su m e th e co nt r ac t” ( r efer r i ng to the l i st ofthr ee i tem s in SS I ’ s l ett ero fM ar c h 1 6, 20 05, to EBC)
. Unti l EBC s at i sfi ed th o se c ond iti o ns , S S Ic o ncl ude d , “ EBC ca nno t ha ve a ss um ed th e co nt r ac t, a nd lac ks st an d in g t o p u rs u e t h is a rb itr at ion ca se .” A t th e en d of th e lett er , SS I n ot ed its co n c er n th at sh ou ld the Cor ps ra i se a fut ure cl ai m i nvol vi ng Geo- Con’s w or k, EBC m i g htt r y t o e va de i ts r es po ns ibi li ty by “c o nt en di ng i t is n ot Geo- Con. Par t o fS SI ’ s r el i efso ught i n thi s a rbi tr ati on i s a decl ar ati on that EBC has in fa c t assum ed al l o f G eo -C on ’s o b liga tio n s u n d er th e Su b c on tr ac t.” T h u s, in th e sam e l ett er, S SIbo th ar gued that EB C had not pr oper l y a ssum ed the subcontr act ( thro ugh i ts re fer ence t o a l l e g e d o ut s t a nd i ngdu t i e s u nd e r Ba nk r up t c y Co de § 3 6 5 th a t p r e v e n t e d a s s u mp t i o n ) a n d a r g u e d th a tEB C ha d a ss um ed th e co nt r ac t. Pe r ha ps uns ur e o fthe latter point, SSIasked i n i t s A ns w ering Statem en t for a d e c l a r a t i o n th a tE B C h a d a s s u me d th e c o n t r a c t
. I ts e e ms th atwhatS S Iw as look i ngf o r was a r ul i ngfr o m the arbi tr ato r that b efore EB C shoul d be per m i tte d to enf or ce G eo-C on’s rights u nd er the su bcon tr a c t, i t had to assu re10 N o. 06

- 3910 that i t a l so w oul d ful fi l l Geo- Con’s re m ai ni ng co ntra ctual obl i g a t i o ns . On c e a g a i n, thi s wa s no t a c ha l l e ng e t o arbi tr abi l i ty; it w as a pos i ti on pre m i sed o n a pr oce du ra l questi on o fst anding and on the m er i ts ofthe dispute. Each partyto the arbi tr ati on fi l ed a pos i ti on p aper on J u ly 18 , 20 05. I n re sponse to SS I ’ s a rgum ent that i t had ne v e r c o ns e nt e d t o the a s s i g nme nto fGe o - Co n’ s r i g ht s to EB C, EB C argued th at t he subco ntra ct di d not re q u ire SSI’s co n se n t u n d er th es e c irc u m st an c es . A rt i c le 7. 4. 2 o fthe subcontr act provi des: [1] T h e Su b c on tr ac to r sh all n ot as sig n th e W or k of t h is S ubc o nt r ac t wi th o utthe wri tten con se nto fthe Co ntr acto r, nor[ 2] subco ntra ct the wh ol e o fthi s S ubcon tract w ithou t the w ritten con sen t of th e C ont ractor, no r [ 3] fur th ers ubc o nt r ac t po r ti o ns o fthi s S ubc o ntr act w i thout w ri tte n noti fi cati on to the C on tracto r w he n such notifi cation i s requ ested by the Con tracto r. Onl y the fi r stc l au se re st r i ct s as si g nm en t; the s ec o nd a nd th i r d re st r i ctfur th ers ubc o nt r ac ting . M or eov er, the re str i cti on o n ass i gnm ent o nl y r equire s the subco ntra cto r to o bt ain the c o nt r ac to r ’ s w ri tt enc o ns en t be f o r e as si g ni ng “the W or k” ofthe subco ntra ct. The work w as com ple ted by A p ril2003, a full year before th e ban krup t cy cou rt issued i ts ord er ap p roving E B C ’s assu m p tion of G eo-C on’s ass ets
. The arbi tr ato r too k no te ofthat ti m i ng i n an ex press fi nd i ng tha t “ the W or k” ofthe subcontr act w as c o mpl e t e b e f o r e Ge o - Co n a s s i g ne d the c o nt r a c tt o EB C. I n i ts posi ti on paper, S SI r eit er ate d i ts bel i efthatGeoC on h ad “re p u d iat ed ” t h e p ar tie s’ a gr ee m en t, an d th at it “h ad c onti nuing obl i gat i ons to SS Ito m ai ntai n i nsuranceN o. 06

- 3910 11

c o v e r a g e , p r o v i de a wa r r anty f o r i t s wo r k, a nd p r o v i de SS I with a per f or m ance b ond to cove r thos e obl i gat i on s.” SS Im ai ntai ne d its posi ti on that EBC m ust “ com plywith i ts outst anding obl i gat i ons und erthe Contrac t, ” a nd that S S Ithe r efo r e “ se ek s: ( 1) decl ar at o r y j udg m en t co nfi r m i ng th at E B C has as su m ed the con tract; ( 2) a dec la r atory j u d g me n tth a tE B C i s i n b r e a c h o n n o n - mo n e t a r y t e r ms of the S ubc o nt r ac t ( e. g . , i ns ur an ce ) , a nd tha t EBC cu re thos e def aul ts as previ ousl y o rder ed by th e c ou rt s; ( 3) an acco unti ng o fthe m oney s t o be pai d between the parti es on the S ubcontr act; and ( 4) an o rderr equ iring EBC to re turn t o SS Ithe ove rpaym ents m ade to Geo- Con, bel i eve d to be in exc ess of $500,000” (footnot e s o m itted ). SSI ’s ar gu m en t fu rt h er st at ed th atac c or d in g t o t h e b i l l o f sa le att ached t o th e ba nkruptcy or der, “EBC di d, i n f act, ass um e the S ubcontr act. ” S SIadded that “ [ w ] hat Geo- Con coul d not do, and the re f or e what EB C cannot do, i s t o se lec tiv ely ac c ep t t h e b en efit s o f th e Su b c o n tr ac t w h ile rej ecting the obl i gat i ons. ” U nti l E BC fulfi l l ed thos e obl i gat i o ns ( a s r e qu i r e d b y § 3 6 5 ) , the a r g ume ntc o nc l ud e d, “ EBC l ac k s st an di ng t o i nv o k e th e Arb i tr at i o n Cl au se i n the S ubc o nt r ac t. ” The r es t o fthe a rgum en t ex pl aine d why an d to w ha t ext en t G eo-C on w as overp aid for i ts w ork an d c o nc l ude d b y s ta ti ng tha t “EBC mustc ur e al l no nm o ne ta r y de f au l ts b efo r e g et tinga ny th i ngfr om S S I
. But ap p l y in g t h e Su b c on tr ac t, G eo -C on /E B C w as va st ly ov er p aid , an d th at m on ey m u st be ret u rn ed .” Disc ove ry ensued, f ol l owed by a tw o- day arbitr ati on he ar i ng on A ug us t 23

- 24, 2 00 5. The t r an sc r i pts fr o m the he ar i ngr ev ea l tha t th e o nl y i ss ue s ad d r es se d wer e who owed wh at and to w hom

. There was no d i scussi on o f12 N o. 06

- 3910 st an di ngo r o fa rbi tr ab i l i ty
. Ev enso , in a po st
- he ar i ng bri effiled by EB C on Octobe r 19, 20 05 ( SS Idi d not fi l e a post- hear i ng bri ef ) , EB C add re sse d the “s tandi ng” defense p resen ted i n SSI’ s p ositi on p ap er: SS Icl ai m s that EBC l acks st an d in g to com pel S SIto arbi tr at e EBC’ s cl ai m b ecau se S S Idi d no t ag r ee t o the ass i g nme nto fthe S ub c o nt r a c tt o EB C, a nd b e c a use cer tai n al l ege d “cure” paym ents w er e n ot m ade. Gen er al l y s pea k i ng, i ss ue s o f standi nga r e f o r the arbi tr ato r to deci de i n the fi rs t instance
. A rbi tr ato r K ra l ’ s aw ar d w as i ssued o n N ove m ber21 , 2005
. H e r eco gni zed that“a thr es h old i ssue w as ra i sed by SS Ias to the sta n d ing o fEBC to arbi tr ate thi s di spute un de r S ub c o nt r a c tAr t i c l e 6
. 2 [ the a rb i t r a t i o n c l a us e ]
. EB C agr eed that i t had as sum ed the Subco ntra ct a s e vi denced by the Bankr up tcy Court fi l i ng s.” H e a l so note d that SS I ’ s s tandi ng d efe n se w as prem i sed o n i ts posi ti on that E B C had not ass um ed the s u b con tract p rop erly. EB C ’s re spo ns e wa s tha t“ GEO ’ s p e r f o r man c e o fi t s wo r ko n th e Pr oj ec t en ded i n De ce m ber, 2 00 2 an d the r eb y the co ns en t o fS S It o the a ss um pti o n i s no t r equi r ed. ” The arb itr ator re sol ved the sta nd i ng quest i on byst ati ng tha t he “ a g r e e [ d] wi th EBC ’ s p o s i t i o n. ” He we nto n t o r ej ect the e nti re ty of SS I ’ s co unterc l ai m and awarded a to tal r eco ver y, i ncl ud i ng co ntra ct inter est, o f$3 88, 919. 86 to EBC
.
II On Januar y 6 , 20 06, EBC fi l ed an a c tio n to co nfi rm i ts aw ar d in t h e C irc u it C ou rtof C oo k C ou n ty ; SS I pr om p tlyN o. 06

- 3910 13

rem oved the ca se to federa l cou rt. A s th e d istri ct cou rt described SS I ’ s p osi ti on, SSIar gued “fi rs t, thatthe arbi tr atorexce eded his p ow er s byente ring an aw ar d i n f avo r ofEBC , wh o w as not a par ty to the or i gi nal A gr eem ent. Fu rthe r, S S Ic o nt en ds, e ve n i fEBC wer e a par tyt o the A gr eem ent, i t l acks stan d in g t o i nvoke the arbi tr ati on c l a u s e b e c a u s e i tw a s i n d e f a u l to fth e c o n t r a c t
. ” We com m en t fi rst on th e stan d ing argu m en t, an d then turn to the m or e t ro ubl eso m e a rbi tr abi l i ty poi nt. W e begin w ith a w ord abou t term ino lo gy. W e are r emi nde d o fJ us ti ce S ca l i a’ s o bs ervati o n in Ste e l Co. v. C it iz en s fo r a B et te r E nvironm ent, 52 3 U.S
. 83 ( 1998 ) , that “[j ] ur i sdi ct ion . . . i s a wor d o fmany, t o o many, mean i ngs[
. ] ” Id. a t 90 ( i nt erna l quo ta ti o n mar k s om itt ed)

. The sam e, unfo rtunatel y, c an b e s ai d fo r “st anding. ” Ever ythi ng fro m the fu nd am entalr equi re m ent i m posed by A rt i cl e I I I that ther e m ust be a “cas e or co ntro ver sy” between the parti es seekin g r el i efi n federa l co urt, to var i ou s p rudenti aldoctr i nes s uch as the r est ri cti ons on invoking the rights of third pa rties, to the inq uiry whethe r a s ta tu te i s d esig ne d t o pr o te ctthe r i g ht s o fthe p erson before the cou rt, has b ee n sw ep t into the w ord “sta nd ing.” T he re is no reason to sup p ose th at arbitrators ar e bo und to the case - or -contr ove rs y r equi re m ent that ci rcum scr ibes the j ud i ci al pow er of the U ni ted States. I nd eed , som e state c ou rts are au th orized to give ad visory op in ion s. Se e, e.g., M ASS . C O N ST . pt . I I, c h . 3, art . 2; R.I. C O NST . ar t. 10 , § 3. S ee gener al l y J onathan D. Pers ky, “G ho sts Th a t S la y” : A C o ntem po rary Lo o kat Sta te A dv iso ry O pi ni ons , 37C ONN . L. R EV . 1 155 ( 2005 )
. I n the conte xt o f arbi tr ati on, the ter m “s tandi ng” a dd re sse s the ent i tl e-14 N o. 06

- 3910

m ent o fthe partyto r ai se a gi ven p oi nt bef or e the arbi tr ator
. T hi s i s mo r e l i k e the c o nc e pto fs t a nd i ngde s c ribed bythe S upr eme Co urti n Ass oc i at e d Ge ne r al Cont r ac t ors of C a lifo rnia , Inc. v. C a lifo rnia Sta te C o un ci l o f C a rpen ters, 45 9 U
. S
. 5 19 ( 19 83 ) , i n whi chthe Co ur t co ns i der ed th e questi on wh ethera unio n w as a p ro per partyto sue f or tr ebl e dam age s under the a nti tr ust l aw s w hen i t was nei ther a consum er nor a com peti tor i n the m arke t in whi cht r ade was r es tr aine d. I n the c o ur se o frej ec tingthe un io n ’s right to sue, the C ou rt com m en ted that “[h]arm to the a nt i tr us t pl aint i ffi s su ffi ci en t to s at i sfy the c o nst i tu ti o na l stan d ing r equi r emento fi nj ur y i n f ac t, b utthe co ur t m us t m ak e a fur th er det er m i na ti o n whethe r the pla i nti ffi s a pro per partyto br i ng a pri vate anti tr ust acti on. ” Id. at53 5 n. 31. T h at is th e s en se in w h ich st an d in g t o a r b i t r a te sh ou ld be unders too d: i s the peti tio ner a pro per partyto r ai se a par ti cu lar cl ai m i n the a rbi tr at i o n? Thi s ex pl ains why cour ts have not hesi tat ed to hol d that sta nd i ng i s a m att er f o r the a rbi tr at o r t o r es o l ve , e ve n tho ug h ( as we no te i n a m om en t) arb itr ab ility is u su ally a n is su e for t h e c ou rt
. John Wi l ey & Sons, Inc . v. Li vi ngs t on , 3 76 U
. S. 543, 557-58 (1964 ); C hi. Ty pog raphical U nion No. 16 v. C hi. Sun-Tim es, Inc. , 86 0 F
. 2d 14 20 , 1 42 4 ( 7th Ci r . 1 98 8) ( “P r o ce d ural i ss ue s, i nclud ing the stan d ing o f a p arty to the arbitration,

. . . are f o r the a rbi tr at o r, so l o nga s th e su bj ec t m at te r o fthe dispute i s withi n the arbi tr ati on cl ause. ”) ( em ph as is om itt ed ); U ni t e d S t e e l worke rs of Am ., AFL- CIO-CLC v. Sm oke

- Craf

t, Inc . , 65 2 F
. 2d 1356 , 1360 ( 9th Ci r. 19 81) ( “W hetherthe Stee l w or ker s had st anding as a par ty to the a rbitr ati on t o proce ed w i th thatarbi tr ati on, wh i chN o. 06

- 3910 15 had been pro perl y c om m en ced, was a pr oce du ra l m att er for t h e dete rm i nati on o fthe arbi tr ato r. ”)
. S SIsubm i tte d th e s t a n d i n gqu e s t i o n t o th e a rb i t r a to r on i t s o wn i ni ti ati ve, and i t w as proper f orthe arbi tr ato r to deci de i t. Foc usi ng par ti cul ar l y o n sta nd i ng, the dist ri ct cour t no ted th at “SS I ’ s . . . o bj ec ti o n t o EBC’ s st an di ngt o e nf o r ce the arbi tr ati on cla use r el ate s t o EB C’s al l ege d bre ach o fo ther co nt r ac t pr o vi si o ns . ” Re i te r at i ngth at th i s k i nd o fi ss ue is for th e a rbitrator, the cou rt found that “[t] he arbitrator’s c o n c l u s i o n . . . i s th u s s u b j e c tt o def er e n t i a l r e v i e w, w h ich it ea sily su rv ive s.” The harderquestion i s whether an ag re em ent t o a r b i t r a t e e x i s t e d b e t w e e n th e p a r t i e s . I ti s d i ffi c u l t, h o wev er, notfo r the r ea so ns the di st r i ctc o ur t i den ti fi ed, b ut i ns te ad f o r a mor e funda m en ta l r ea so n. The r e i s no t a hi nt i n the re cor d that S SIev ercal l ed thi s i ssue to the a rbi tr ato r ’ s at te nt i o n o r s ou gh t t o e nj o i n the a rbi tr at i o n o n the gr ound that there was no a gr eem ent t o arbi tr ate
. Thus, eve n though the or dinar y r ule i s that the questi on wh ether an ag re em ent t o arbi tr ate exi sts i s o ne f orthe cour t, se e A T &T Te c h s . , In c . v . C o mmc ’ n s Wo rk e rs o f A m. , 475 U
. S. 64 3, 6 4 9 (19 86 ); Flen der C o rp. v. Tech na -Q uip C o ., 9 5 3 F
. 2 d 2 73, 277 ( 7th Cir
. 1992 ) , the ri ght to a j ud i ci ald eterm i nati on o fa rb i t r a b i l i t y i s , l i k e ma nyr i g ht s , o ne th a tca n b e wa i v e d. A s o urde t a i l e d e xp l a na t i o n a b o v e o fthe a rb i t r a t i on pr o ce eding s in thi s ca se de m o ns tr at es , S S Ine ve r t o l d the arbi tr ato r that i t thought thi s d isp ute was nonarbi tr abl e. To the c o nt r ar y, i t vo l unt ar i ly su bmi tt ed to the arbi t r a t o r ’ s a utho r i t y, fi l e d a c o un t e r c l a i m, a nd c o nfi ne d i ts obj ecti on s to EB C’s sta nd i ng to arbi tr ate
. Onlyafter16 N o. 06

- 3910 th e arbi tr at o r i ss ue d a n a war d unf av o r ab l e to SSI a nd the case wo un d up i n c o ur t di d S S I r a i s e a n o b j e c t i on t o the a rbi tr ato r’ s au th ori ty to deci de the dispute. S SIhas stresse d before this court th at “ [f]rom the ou tset, SSI co nt en ded th atno a g r ee m en t to a rbi tr at e ex i st ed (and no c o n t r a c to fa ny ki n d e x i s t e d ) u n l e s s a n d u n t i l E B C c o mpli ed w i th the r equi re m ents i m posed by 11 U
. S. C. § 3 65 for as sig n m e n t a n d as su m p tio n of ex ec u to ry co n tr ac ts .” T he prob lem i s t h at SSInev er said an yth ing of th e sort to the arbitrator. N ot un tili t reach ed the d istri ct cou rt d id it re c a st its p rior arg u m en t a b ou t s ta n d in g a s a ch all enge to arbi tr abi l i ty. This i s no t a tact i c we can ac cept, f orso und pol i cy r ea so ns . I t i s te r r ibl y was te fulo fthe a rbitrato r ’ s ti m e, the parti es’ ti m e, and the c ou rt’ s t i m e. A nyone w ho wants to obj ect to arbi tr abi l i ty i s e nti tl ed to m ake herposi ti on known to the arbi tr ato r and the otherparty; the othe r partym ay t hen, i fi t wis hes, r espond w i th a peti ti on for an o rderto co m pel arbi tr ati on under the Fe deralA rbi tr ation A ct (“FA A ”), 9 U
. S. C
. § 4 , a nd ob tain a j ud ici al dete rm in at ion on a r b i tr ab ility . See , e.g., M os e s H
. ConeHos p. v. M ercury C o nstr. C o rp., 46 0 U. S
. 1 (198 3)
. I n a ddi ti o n, ke ep in g t h e a rb itr ab ility ca rd clo se to th e c h es t w ou ld a l l ow a p ar ty like SS I to ta ke a w ait -an d -se e a p p ro ac h : i f i t had l i ked Arbi tr ato r K ra l ’ s deci si on, i t w oul d have r e ma i n e d s i l e n t, bu t s i n c e i td i d n o t, i ti s n o w c o mpla i ni ng ab out arbi tr abi l i ty. This cour t has al re ady di sapprove d thi s m ethod of pr o ce eding . I n A G C O C orp. v. A nglin , 2 16 F.3d 58 9 (7th C ir. 2 0 0 0 ) , f o r e xa mpl e , we s t a t e d:N o. 06

- 3910 17 W e fi r s t c o n s i d e r wh e th e r th e An g l i n s wa i v ed an y o bj ec ti o n t o the a rbi tr ab i l i tyo fthe Re ta i l Ob l i g ati o ns w hen theyco nsented t o arbi tr ati on a nd ag re ed to p ar tic ip at e in th e a rb itr at ion h ea rin g. If a p ar ty w illi ng l y a nd wi tho ut r e s e r v a t i o n a l l o ws a n i s s ue to be subm i tte d to arbi tr ati on, he c annot aw ai t the o utcom e a nd then l ate r ar gue tha t th e a rbi tr ato r l acke d au th o r i ty to d ec id e t h e m at te r. See Jo nes D a iry F a rm v. Lo ca l N o . P -12 36 , U nited Fo o d & C o m m ercia l Wo rkers Int’ l U n io n , AFL-C IO , 760 F.2d 173 , 175-76 (7th C ir. 1985 )
. I f, however, a partycl ea rly and expl i ci tl y r eser ves the r i ght to obj ect to arbi tr abi l i ty, hi s par ti ci patio n in the arbi tr ati on does notpre cl ud e hi m fro m c h alle n gin g th e arb itr at or ’s au th or ity in co u rt
. Int’ l Ass ’ n o f M ac hi ni s t s & Ae r os pac eWorke rs , Lo dgeNo. 17 77 v. Fa ns t e e l, Inc . , 90 0 F
. 2d 10 05 , 1 00 9 ( 7th Ci r . 1 99 0)
. The r ec o r d s ug g es ts tha t the A ng l i ns ha ve f o l l o wed the l att erco urse . 21 6 F
. 3d at5 93
. I t was “ undi spu te d tha t co uns elf o r the A n glin s o b j ec te d to arb itr at ion ” of th e p ar tie s’ d isp u te , i d. , o n th e g r o u n d th a t“ th e A ng l i n s c o u l d n o th a v e c o n t e mp lat ed th at th eir arb itr at ion cla u se w it h A G C O w ou ld encom pass a d i spute w i th a nonsi gnato ryparty, ” i d. at59 6. W e a ccor dingl y r eve rs ed the dist rict court’ s co nfi rm at i o n o fAGCO ’ s a wa r d. Unl i k e th e Angl i ns , S S If ai l ed ata ny t i m e dur i ngthe arbi tr ati on pro ceedi ngs t o ra i se orr ese rv e a n obj ecti on to arbitrabil ity. I ns tead , i t freel y acce p ted the arb it r a t or’s author i ty to deci de the disp u te and, i nd eed, subm i tte d i ts own countercl ai m forr eso l uti on. Onlyafterthe arbi tr ati on o utcom e di spl eas ed SS Idi d i t r estyl e i ts “st anding”18 N o. 06

- 3910

an d “ ex ec ut o r y c o nt r ac t” a r g um en ts a s en co m pas sing a c h alle nge t o the e xi ste nce o fan a gr eem ent t o arbi tr ate betwe e n S S Ia nd the n o ns i g na t o r y EB C. As we n o t ed i n Jo nes D a iry F a rm : J ones Dai ryFa rm did not m ake [ arbi tr abi l i ty] an i ssue. I t di d not, wh i l e a gr eeing to parti ci pate i n the arbi tr ati on, chal l enge the a rbi tr ato r’ s jur i sdic ti on, and m ake cl e a r tha ti twa s p r e s e r v i ngi t s c ha l l e ng e f o r e v e nt ual pr es en ta ti o n t o a c o ur t i fthe a rbi tratorr ul ed i n the unio n’s f av or . . . . The co m pany neve r questi oned the a rbi tr ato r’ s a uthor i ty. 76 0 F .2d at17 5. “If a p a r t y v olu n ta rily a n d u n re se rv ed ly subm its an i ssue to arbi tr ati on, he c annot l ate r ar gue that the a rbi tr ato r ha d n o au thor i ty to re sol ve i t. ” Id. ( ci ting case s fro m the N i nth, Fi fth, and Se cond Cir cu its); se e a l s o C UNA M ut. Ins. So c’y v. O ffice a nd P rof

’l E m plo yees Int ’ l U ni on, Lo ca l 39 , 44 3 F
. 3d 556, 56 3 ( 2006 ) ( “[ T]her e was no ta tru e que s t i o n o fa rb i t r a b i l i t y i n thi s c a s e . I ns t e a d, CU N A dre sse s up i ts a r g um en ts abo utthe s co pe o fthe arb i t r a t o r ’ s a utho r i t y i n a rb i t r a b i l i t y c l o thing . ” ( i nt e r nal q u ot at ion m ar ks om itt ed )); cf. Flend er, 9 5 3 F
. 2 d a t2 7 8 ( “ We re i ter ate ‘ thi s ci rcui t’ s ca ut ion a gai nst a l l owing a par ty to use i ssues of the arbi tr ato r’ s a uthor i ty as a r use t o obt ai n j ud i ci al re vi ew of the m er i ts of an arb i tr al aw ar d .’ ” ( quoti ng Burkar tRandal l v. Lo dgeNo. 10 76 , 64 8 F. 2d 462, 46 7 ( 7th Ci r. 198 1))) . S SI ’ s pro fess ed chal l enge to arbi tr abi l i ty com es too l at e. By fre el y s ubm i tting to th e a rb itr at ion of its cla im s w ith ou t p re se rv in g a ch all enge to t h e a rbi tr ato r’ s a uthor i ty, S SIm i sse d the chance to com e back l ate r, befo re a cour t, and d eny that an ag re emen tt o a rb i t r a t e e xi s t e d.N o. 06

- 3910 19 III W i th S SI ’ s chal l enge to arbi tr abi l i ty off the t abl e, we have n o t ro u b le re je c t i n g its rem ain in g a rg u m en ts . First, i t is cl ea r tha t Arb i tr at o r Kr alb ased hi s awar d o n the c o ntr act and that he di d not e xceed hi s powe rs in any othe r resp ect w he n fash ioning his aw ard

. Th e d istri ct cou rt’s opi ni on co nt ain s a tho ro ugh anal ysi s o fthes e points, se e N o. 06 C 212, 2006 W L 28538 3 0 ( N
. D
. I ll

. Sept
. 29, 2006 ). W e se e no ne ed to r epe ate ve r y th in gi t sa i d he r e, pa r ti cul ar l y g i ven the l eve l o fdefer ence that w e a pp l y to an arbi tr ato r’ s a w ar d. Se e ID S Life Ins
. C o. v. R oya l A ll ia n ce A ss ocs. , Inc. , 26 6 F. 3d 645, 65 0- 51 ( 7th Ci r. 20 01) ( “[ N ] ei ther er ro r norcl earer ro r norev en g ro ss er ro r i s a gr ound fo r vacat i ng an a w ar d[; ] i fthe dist ri ct j ud ge i s s ati sfi ed that th e arbi tr at o r s r es o l ve d the e nt i r e di spu te a nd c anfi g ure ou t w ha t tha t resolution is, h e m us t con fi rm the aw ard

. ”); B a ra vati v. Josephthal, Lyon & Ro ss, Inc. , 28 F. 3d 704, 70 6 (7t h C ir. 19 94 ) (“Ju d icia l rev iew of arb itr at ion aw ar d s is t i g h tl y l i m i t e d ; p e r h a p s i to u gh tn o tb e c a l l e d ‘ r e v i e w’ at all

. ”). N o r di d th e di st r i ct co ur t ab us e i ts di sc r et i o n in de ny i ng SS I ’ s m oti on f orr eco nsi de ra tio n under F ED . R. C IV . P. 59. Se e Z ivi tz v. G reenberg, 27 9 F
. 3d 53 6, 5 39 ( 7th Ci r . 2 00 2)
. The m oti on a rgued that EBC had conce al ed an affi davi t that co nt r adi ct ed th e te st i m o ny o fEBC’ s so l e witn ess atthe arbi tr ati on hea ring, and that t h i s “ new l y di sco ver ed evi dence” tended to show that EB C’s aw ar d h ad bee n “pro cured b y fraud , co rr up ti on o r othe r m eans, ” which i s o ne gr ound fo r vacat i ng o r am en d ing a n award und er th e FA A
. See 9 U
. S. C
. § 10(a)( 1).20 N o. 06

- 3910 To succe ed on a m oti on under R u le 59 , a partym ust show that: ( 1) i t has ev i dence thatwas dis cove re d posttr i al ; ( 2) i t had e xe r ci se d due di l i g en ce t o di sc o ve r the new ev i dence; ( 3) the evi dence i s no t m er el y c um ula ti ve o r i m pea ch i ng ; ( 4) the e vi den ce i s m at er i al ; a nd (5) the evi dence i s s uch that a new tr i alwould prob abl y pr oduce a new re sul t. S ee M atte r of Chi., M il w auk ee, St. Pa ul & Pa c. R. R. Co. , 78 F. 3d 285, 293- 94 ( 7th Ci r. 19 96)
. S SIar gues that i n thi s ca se, however, the cour t s houl d not have r el i ed on th e no r m alc r i te r i a f o r a Rul e 59 mot i o n, b ec au se the FA A “pro vi des the excl u siv e gr ounds f orchal l engi ng an arbi tr ati on a w ar d w i thi n its purvi ew , ” LaFa rgeCo nse il s e tE t ude s , S. A. v. Kai s e rCe m e nt& Gyps um Corp. , 79 1 F
. 2d 13 34 , 133 8 (9 th C ir. 19 86 ). Se c tio n 10 (a)( 1) o f th e F A A ca lls f o r the c o ur t to c o ns i derwhethe r EB C ’s al l eg ed f r au d was ( 1) no t di sc o verab l e upo n the e xe r ci se o fdue dil i gence pri orto the arbi tr ation ; ( 2) m ate ri al l y r el ate d to an i ssue i n the arbi tr at i on; and ( 3) es tabl i shed by cl ear an d co n vin c in g e vid en c e. G ing iss Int’l, Inc. v. B o rm et, 58 F.3d 328 , 333 (7th C ir. 1995). W e nee d not deci de w hi ch w as the pr operst andard to apply i n thi s ca se, bec ause w e do not thi nk the di str i ct cour t abused it s d i scr eti on under e i thero fthem

. U nd er bo thRul e 59 a nd 9 U. S
. C. § 1 0( a) ( 1) , the mater i al i tyo fthe ev i den ce i s cr i ti ca l

. At th e he ar i ngo n S S I ’ s Rul e 59 mot i o n, the di str i ct c ourtco ncl ud ed that “nothi ng i n the s o- cal l ed new l y di sco ver ed docum ent .
. . bea rs a n y r el ati onshi p to th e aw ard , and i t’s si m p ly not m aterial or outc om e d e t e rm i na ti ve . ” S S Ia r g ue s th at underthe F AA s ta nda r d, the evi dence m ust be m ate ri alnotn ec es sari l y t o t h eo u t c o me ofthe arbi tr ati on, but si m plyto som e issue i n the ar b i tr a-N o. 06

- 3910 21 ti on. S SIci tes o nl y G ingis s Inte rna ti ona l, sup ra , i n su p p ort ofthi s di sti ncti on, but G ing iss d r e w n o s u c h l i n e . The questi on there was w hether a d istr i ct c ourter re d by r e fus i ngt o s e ta s i de a n a rb i t r a t i ona wa r d u nd e r 9 U. S
. C. § 1 0( a) ( 1) ; it h ad nothi ng to do with the sta nd ar d of re vi ew thatappli es t o a pos t- tr i alm oti on i n a c ase to c on firm a n arb itr al a w ar d . M or eo ve r, G ing iss does not sta nd f orthe odd p ro posi ti on th at so m ethi ng m i ght b e mat e r i a l t o a n i s s ue i n a n a rb i t r a t i o n, b ut i mm a t e r i a l to th e outco m e. W i th o uts tr o ng ers uppo r t f o r thi s no ti o n, w e d ecl i ne to adopt i t. Final l y, as EBC poi nts o ut, § 10( a) ( 1) p rovide s for vac at uro nl y i fth e aw ar d i tse l fwas procur ed by “co rr up ti on, fraud , o r und ue m eans. ” In other wor ds, e ve n i fS S Ii s co r r ec t an d we sh ou ld be r ely i ng excl usi vel y o n the FA A , we m ust fi nd a nexus bet w een th e pur po r te d fr aud a nd the a rbi tr at o r ’ s fi na l de ci si o n. The dis tr i ct c ourtf ound no such nexus, nordo we. W e m enti on br i efl y s eve ra l o therr eas ons w hy S SIcannot m eetev en t h e FA A st andard. I t i s debat abl e a t be st whethe r the a ffi dav i t i n que st i o n was c o nc ea l ed f r au dul en tly ; i nd eed, EBC de ni ed th ati t wi thhe l d the do cum en t i nt en ti o na l l y, a nd S S Io ffer s no e vi den ce t o the co nt r ar y. The F AA a l so r equi r es tha t th e co m pl aini ng par tya ctwi thdue di l i g en ce , y etthe d is tr i ctc o ur t ex press ed do ub ttha tS S Ih a d d o ne s o , s i nc e i th a d b een awar e o fthe issu e f o r a t l ea sta month b efo r e th e di st r i ctc o ur t’ s i ni ti alde ci si o n. Fin al l y, e ve n a ss um i ng th at SS I had a cted w i th du e dil i gence and that the e viden ce o ffr a u d u l e n twi th h o l d i n gwa s c l e a r a n d c o nvinc i ng, the f ac t r emai ns that t he di st r i ctc o ur t f o und the “so

- cal l ed new l y di sco ver ed evi dence” t o be b oth cum ula

-22 N o. 06

- 3910 ti ve and i m m ate ri al

. Both the di str i ct j ud ge and the arbi tr ato r wer e al r ea dy awar e o fe ve r y th i ngc o nt aine d in the su p p os ed ly c on c ea led d oc u m en t w h en th e y m ad e t h eir re sp ec tiv e d ec isio n s. U n d er eit h er R u le 5 9 or §1 0(a )(1) , th is fi ndi ngs uppo r ts a de ni alo fS S I ’ s m o ti o n.

I V T he d istri ct cou rt’s j ud gm en t con fi rm ing the arbitrator’s aw ar d i s A FFI RMED .

8- 29- 08