1 The Honorable Charles A. Shaw, United St ates District Judge for the Eastern District of Missouri. 

## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 07-3454

___________ Crawford Group, Inc., *
* Appellant, * * Appeal from the United States v. * District Court for the * Eastern District of Missouri. William F. Holekamp, * an individual, *
* Appellee. *

___________ Submitted: May 15, 2008 Filed: October 6, 2008 (corrected 10/15/08)

___________ Before WOLLMAN, MURPHY, and SMITH, Circuit Judges.

___________ WOLLMAN, Circuit Judge. The Crawford Group, the parent compa ny of Enterprise Rent-A-Car, appeals from the district court’s 1 order confirming an arbitration award of some $20.7 million in favor of William F. Holekamp in a dis pute over the value of Holekamp’s stock in the company. We affirm.2 The parties also entered into what was called the “BV Agreement,” which is not at issue in this appeal.
-2- Holekamp began his employment with Cr awford in St. Louis in 1976, having earlier worked for Enterprise Car Rental. In 1980, Holekamp was transferred to California for the purpose of acquiring on Craw ford’s behalf a rental car company that was experiencing financial difficultie s. As Holekamp described it,

[t]he company that we acquired was in a lot of trouble. They had a bunch of Pintos sitting on the lot. We were pushing Pintos up and down the lot, jump starting them b ecause the batteries were gone, they had been sitting there for about six months, but we had to put them out on rent.
Holekamp was successful in his effort s to revive the ne wly acquired moribund company, and he was rewardedaccordingly by way of salary and a percentage of the profits. He returned to St. Louis in 1992 as executive vice pres ident of Enterprise. He retired at the end of 2000, becoming a consultant for an initial term of five years.

In 1999, Crawford began consideri ng pursuing public fi nancing for the company, either through debt or equity. It was advised that to make such a public offering attractive it should replace its method of compensating its senior executives through large cash bonuses with a plan of compensation by way of awards of stock.

Crawford’s decision to follow this advi ce resulted in the 24-page February 2, 2000, Stock Award and Shareholder Agreement (Agreement) at issue in this appeal. 2 The Agreement provided that for the purpose of the initial grant, the value of the stock was to be determined by Arthur Andersen LLP.-3- Paragraph 6(a) of the Agreement provides as follows:

The purchase price for Shares sha ll be the value of such Shares as determined by the Administrator in good faith, disregarding the option available to Shareholder under paragraph 4(a), as of the date of the Trigger Event [ i.e. , July 31, 2004] or, if the Administrator in good faith determines that the use of su ch exact date would produce an inappropriate valuation, that date, as determined by the Administrator in good faith, which is prior to and closes t to the date of the Trigger Event and which would not produce an in appropriate valuation (“Purchase Price”). In determining th e Purchase Price, the Administrator shall apply valuation principles substantially the same as those which applied to valuing the Award on the Award Date (which disregarded the option available to Shareholde r under paragraph 4(a)), unless the Administrator in good faith determines that the use of such valuation principles would produce an inappropriate valuation. The Administrator’s determination of the Purchase Price shall be final and binding on all parties.
Paragraph 15 provides in part:

[A]ny controversy or claim that arises out of or in any way relates to this Agreement, . . . shall be resolved solely by binding arbitration . . . . Company shall be entitled to appoint onearbitrator, and all other parties to the dispute . . . shall be entitled to appoint one arbitrator. . . . The two arbitrators so appointed shall choose the third arbitrator. . . . Each arbitrator shall have experience inarbitrating matters substantially similar to the matter being arbitrated pursuant to this paragraph 15. The arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the AAA or such other rules as determined by a majority of the arbitrators serving. The arbitration award may grant damages and/or any other relief deemed by the arbitr ators to be just, . . . provided, however, the arbitrators ha ll have no authority to amend this Agreement. The arbitration awar d shall be final and binding on the parties to the arbitration.-4- In June 2004, Crawford informed Hole kamp that it intended to repurchase Holekamp’s stock in accordance with the terms of the Agreement. It tendered payment in the amount of $11.4 million, ba sed on the Administrator’s determination of a price of $25.32 per share, which in tu rn was derived from an appraisal conducted by Deloitte & Touche. In response, Holekamp filed a demand for arbitration, alleging, in pertinent part, that Crawford’s call and proposed valuation of the stock breached the Agreement. Crawford responded by fili ng suit in Missouri state court requesting specific performance of the repurchase pr ovisions of the Agreement. Holekamp countered with the same claims that he had brought in his arbitration demand and further alleged that the Agreement require d Crawford to arbitrate its claims. On summary judgment, the court granted Crawford specific performance of the repurchase provisions. Finding that there was an issue with respect to the price under the Agreement, the court concluded that “[ i]n accordance with the parties’ agreements, such dispute over value is to be determin ed by arbitration.” The Missouri Court of Appeals summarily affirmed.

Holekamp designated Harry V. Ruffalo as an arbitrator, attaching a copy of his vitae, which showed that Ruffalo held a law degree and that he had retired in 2000 after a 33-year partnership with Arthur A ndersen & Co. The vitae did not indicate that Ruffalo had any arbitration experience, and so Crawford requested confirmation from the American Arbitration Association (AAA) that Ruffalo had experience as an arbitrator and that he possessed the e xperience required by the Agreement. In response, the AAA informed the parties thatit had appointed Ruffalo to serve as an arbitrator and enclosed a disclosure from Ruffalo in which he stated, among other things, that “as a worldwide managing part ner of tax, legal and business advisory services from 1989 to 1997, I arbitrated from 200 to 400 matters.” Among the matters described were a dispute over executive co mpensation and Ruffalo’s participation as a member of the legal team representing Arthur Andersen in a large arbitration matter. After concluding that the additional information provided by the AAA did not establish that Ruffalo had the necessary e xperience, Crawford again expressed to the-5- AAA its objection that Ruffalo did not meet the requirements set forth in Paragraph 15. Its letter detailing its perceptions of Ru ffalo’s lack of experience in arbitration matters concluded by saying: “Under Rule 17(b) of the AAA’s Commercial Arbitration Rules, the AAA is responsible for making the determination of whether Mr. Ruffalo possesses the qualifications to se rve as an arbitrator in this particular matter. We believe it is particularly important in this case that the AAA make this determination.” In response to Crawfo rd’s renewed objection, the AAA sent the parties a letter that stated in part: “A fter careful consideration of the parties’ contentions, the Association has determinedthat Harry V. Ruffalo will be reaffirmed as an arbitrator in the above matter.”

Following a three-day hearing, the arb itrators entered an interim award, in which Arbitrators Ruffalo and Best set th e purchase price of Holekamp’s stock at $45.90 a share. Arbitrator Dietrich filed a dissent.

Crawford then commenced the present diversity acti on, which seeks to vacate the arbitration award under the provisions of the Federal Arbitration Act (FAA), 9 U.S.C. § 10(a). Holekamp filed an alternativ e motion to confirm the award. It is from the district court’s confirmation of the award that Crawford appeals.

On appeal from a district court’s orde r confirming, modifying, or vacating an arbitration award, we review findings of fact for clear error and questions of law de

novo . Stark v. Sandberg, P hoenix & von Gontard, P.C. , 381 F.3d 793, 798 (8th Cir. 2004) (citing First Options of Chi., Inc. v. Kaplan , 514 U.S. 938, 947-48 (1995)). The district court affords the arbitrator’s deci sions “an extraordinary level of deference” and confirms “so long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority.” Id. (internal quotations omitted); seeFirst Options , 514 U.S. at 943 (“[T]he court should give considerable leeway to the arbitrator, setting aside hi s or her decision only in certain narrow circumstances.” (citing 9 U.S.C. § 10)). Anarbitral award may be vacated only for-6- the reasons enumerated in the FAA. Hall Street Assoc., L.L.C. v. Mattel, Inc. , 128 S. Ct. 1396, 1403 (2008); Stark , 381 F.3d at 799; see 9 U.S.C. § 10(a).

Crawford’s primary argument on appeal is that the selection and appointment of arbitrator Ruffalo was not in accordance with the Agreement, with the result that the arbitration panel exceeded its power to i ssue the award. As an initial matter, and contrary to Holekamp’s contention, we conc lude that Crawford did not forfeit judicial review of the AAA’s decision to confirm Ruffa lo as an arbitrator by failing to bring the issue before the state court at the time of the AAA’s decision. See Cox v. Piper, Jaffray & Hopwood, Inc. , 848 F.2d 842, 843-44 (8th Cir. 1988) (“Appellants cannot obtain judicial review of the [AAA’s] decisi ons about the qualifications of arbitrators or other matters prior to the making of an award.”); see also Aviall, Inc. v. Ryder Sys., Inc. , 110 F.3d 892, 895 (2d Cir. 1997) (under the FAA, courts may not hear a preaward challenge to an arbitrator unless it forms the basis for the revocation of the contract) (interpreting 9 U.S.C. § 2).

Because the Agreement explicitly states that arbitration would be conducted in accordance with the Commercial Arbitrati on Rules of the American Arbitration Association (AAA Rules), the parties agreed to the method provided by the rules for the resolution of disputes concerning the dis qualification of arbitrators. Pursuant to Rule 17(b) of the AAA Rules, the parties designated the AAA to decide the issue in the first instance. Rule 17(b) provides that: “Upon objection of a party to the continued service of an arbitrator, or on its own initiative, the AAA shall determine whether the arbitrator should be disqualifie d . . . which decision shall be conclusive.” The district court thus reviewed the AAA’ s decision under the de ferential standards for vacatur of the ensuing arbitration award, and we do the same.

We may vacate an arbitration award pur suant to 9 U.S.C. § 10(a)(4) if the arbitrators have exceeded their powers under the arbitration agreement. Arbitrators exceed their powers if, inter alia , the method of their appointment provided in the-7- agreement has not been followed. Hugs & Kisses, Inc. v. Aguirre , 220 F.3d 890, 893 (8th Cir. 2000); see 9 U.S.C. § 5 (“If in the agreemen t provision be made for a method of naming or appointing an arbitrator or arbitrators or an umpire, such method shall be followed . . . .”). Crawford does not argue that the procedures outlined in the Agreement for the appointment of arbitrat ors were not followed. Instead, it argues that Ruffalo did not possess the qualificati ons required by the Agreement. Assuming, without deciding, that the term “method” in section 5 of the FAA includes the parties’ agreed-upon qualifications as well as procedur es, we conclude that the parties’ method of appointment was arguably followed, as wa s their chosen method of resolving the issue. Crawford challenged Ruffalo’s appointment under AAA Rule 17, the parties submitted their arguments and supporti ng documentation to the AAA, and the AAA made the determination that Ruffalo was qualified to serve as an arbitrator. See Reeve Bros. v. Capital-Mercury Shirt Corp. , 962 F. Supp. 408, 411 (S.D.N.Y. 1997).

AAA Rule 17(a)(iii) permits the AAA to disqualify an arbitrator for “any grounds for disqualification provided by applicable law.” The applicable law is section 5 of the FAA, which provides that “[i]f in the agreement provision be made for a method of naming or appointing an arbitrator or arbitrators or an umpire, such method shall be followed . . . .” 9 U.S.C. § 5. Based on the above-described information provided to the AAA with re spect to Ruffalo’s qualifications, we conclude that the AAA’s decision that hewas qualified to serve is an arguable interpretation of the provision that “Each arb itrator shall have experience in arbitrating matters substantially similar to the matter be ing arbitrated . . . .” Accordingly, we conclude that the AAA’s resolution of Craw ford’s challenge to Ruffalo’s appointment does not present a basis for vacatur of the arbitration award.

Crawford argues that Paragraph 6(a) of the Agreement depriv ed the arbitrators of any authority to determine the purchase pr ice of Holekamp’s shares. As set forth above, however, Paragraph 15 of the Agr eement provides that “any controversy or claim that arises out of or in any way relates to this Agreement, including any dispute-8- about whether any particular c ontroversy is arbitrable . . ., shall be resolved solely by binding arbitration . . . .” The arbitrators arguably applie d the terms of the Agreement when they determined that the issue was arbitrable. Although Paragraph 6(a) states that “the Administrator’s determination of the Purchase Price shall be final and binding on all parties,” it also provides thatthe Administrator’s determination must be in good faith and must follow a certain procedure. The Administrator’s determination is thus reviewable under the terms of the Agreement. Paragraph 15 submits nearly all issues to arbitration and may be interpreted to permit the arbitrators to review the Administrator’s determinati on and fashion a remedy if the Administrator has exceeded his limitations with respect to the purchase price. Thus, the case upon which Crawford relies, Katz v. Feinberg , 290 F.3d 95 (2d Cir. 2002), is inapposite, for in that case the agreement explicitly prohib ited arbitration or review of any nature whatsoever of the accountants’ price determin ation. We therefore conclude that the arbitrators’ resolution of this issue does not present a basis for vacatur of the arbitration award.

Crawford argues that because Holekamp requested the “fair market price” for the stock in his demand for arbitration, the arbitrators’ award of mo re than fair market price for the stock exceeded the scope of th e submission to arbitration. The demand also called for “such other reli ef as [the arbitrators] d eem[ed] just and appropriate,” however, and we agree with the district c ourt that the award did not exceed the scope of the submission.

Crawford also argues that the arbitrators’ determina tion of the purchase price was irrational and failed to draw its esse nce from the Agreemen t because it greatly exceeded the Administrator’s determination of the stock’s market value and was not based upon the entirety of any single expert’s valuation.

Judicial review of an arbitration aw ard is extremely narrow. We may set an award aside only if the contract is not “sus ceptible of the arbitrator’s interpretation.”-9- Hoffman v. Cargill, Inc. , 236 F.3d 458, 462 (8th Cir. 2001) (internal quotation omitted). In the absence of a good faith reason to the contrary, the Agreement required the Administrator to “apply valuation principles substantially the same as those which applied to valuing the Awardon the Award Date” (which was February 2, 2000). Holekamp submitted evidence thatsupported his claim that the valuation principles applied by Deloitte & Touchein 2004 differed from those applied by Arthur Andersen in February 2000. Cr awford submitted evidence in support of its contention that the principles applied in both instances were essentially the same. In their statement of reasons, Arbitrators Ru ffalo and Best found that the Administrator had failed to apply valuation principles s ubstantially the same as those that were applied in valuing Holekamp’s shares in February 2000 and that that failure constituted a breach of the Administrator’s obligations under Paragraph 6(a) that precluded any determination that the Administrator had acted in good faith.

The conflicting testimony submitted by the parties set forth persuasive arguments in support of their respective positi ons. It was for the arbitrators to accept those portions of the testimony which they found more persuasive. Whether we as judges would have found that te stimony equally as persuasive is beside the point, for we may not set aside an award simply because we might have interpreted the Agreement differently or disagreed with the arbitrators’ factual determinations. Id.

In sum, then, we conclude that the arb itrators acted within the scope of their authority in reaching their conclusion and in setting the price of the stock.

The judgment is affirmed.

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