IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

ARNOLD WEBER, et al., §

 §

Plaintiffs, §

 § Civil Action No. 3:06-CV-0267-D

VS. §

 §

MERRILL LYNCH PIERCE FENNER §

& SMITH, INC., §

 §

Defendant. §

MEMORANDUM OPINION

 AND ORDER 

Plaintiffs move to vacate an arbitration award based on

allegations of evident partiality and arbitrator misconduct. For

the reasons that follow, the court denies the motion.

I

Plaintiffs Arnold and Maureen Weber, The Weber Family Trust,

Adam Joseph Weber Trust, Nicholas Arman Weber Trust, and Zachary M.

Weber Trust (collectively, “the Webers”) filed an arbitration

complaint with the New York Stock Exchange (“NYSE”) against

defendant Merrill Lynch, Pierce, Fenner & Smith, Inc. (“Merrill

Lynch”). They alleged that Merrill Lynch had made unsuitable

investment recommendations over a period of several years. Under

the terms of the Webers’s account agreement, their claims were

subject to mandatory, binding arbitration.

NYSE appointed the initial arbitration panel. When one of the

original arbitrators removed himself, NYSE appointed Dean P. Guerin

(“Arbitrator Guerin”) as a replacement. NYSE notified the parties

 

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1

In support of the reply brief that the court by June 14, 2006

order permitted them to file, plaintiffs submitted an appendix

organized according to exhibits. They did not, as N.D. Tex. Civ.

R. 7.1(i)(4) requires, number each page in the lower, right-hand

corner, with the first page numbered as “1” and the succeeding

pages numbered sequentially through the last page of the entire

appendix. The court therefore cites the appendix according to its

exhibit designation rather than by its specific page number.

2

The Webers do not cite evidence that permits the finding that

Arbitrator Guerin and the Cecils in fact had a long time

friendship. 

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of this change and enclosed in the notice Arbitrator Guerin’s

profile, disclosing that his “[s]ocial memberships include the

Dallas Country Club.” Ps. Reply App. Ex. C.1

Immediately following Arbitrator Guerin’s appointment, and at

later times, the Webers objected to his acting as an arbitrator,

based on his membership in the Dallas Country Club. Robert Cecil

(“R. Cecil”) and his son Blake Cecil (“B. Cecil”), who were

potential witnesses in the case and were among the Merrill Lynch

brokers who managed the Webers’s accounts, also belonged to the

Dallas Country Club, as did their wives. The Webers’s counsel

asserted in a letter that Arbitrator Guerin’s “long time friendship

with the Cecil family should be grounds for him to recuse himself.”

Ps. Mot. to Vacate Arbitration Award Ex. D.2 In response, Merrill

Lynch acknowledged that R. Cecil knew who Arbitrator Guerin was,

based on his reputation in the Dallas investment community, and

that he had met him several years before at a non-Dallas Country

Club function. But it contended that, although they were both

 

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members of the Dallas Country Club, R. Cecil did not know

Arbitrator Guerin personally. The Arbitration Panel denied the

Webers’s cause-based challenge to Arbitrator Guerin.

The Webers later sought permission from the Panel to amend

their complaint to add as parties individual Merrill Lynch

employees (including R. Cecil and B. Cecil) and a financial advisor

(and his employer) who had advised Merrill Lynch concerning half of

the Webers’s investments. They also requested that the hearing be

transferred from Dallas to New York City. The Panel declined to

allow the proposed amendment. The Webers also made several

requests that Merrill Lynch produce its compliance manual, but the

Panel refused to order it to do so. The Webers contend that when,

in violation of NYSE Rules of Arbitration, Merrill Lynch produced

for the first time at the arbitration hearing the handwritten notes

of B. Cecil, the Panel permitted the notes to be admitted into

evidence while refusing to admit “significant portions of [the

Webers’s] evidence” that similarly violated NYSE Rules. Ps. Mot.

to Vacate Arbitration Award 6-7. Following a five-day arbitration

hearing, the Panel denied the Webers’s claims in all respects.

The Webers move the court to vacate the arbitration award

under 9 U.S.C. § 10(a). They contend, first, that Arbitrator

Guerin was a member of the same country club as were the Cecils

(and their spouses), resulting in evident partiality, and, under

NYSE Rules, he should have disclosed having met them, any social

 

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3

The Webers also assert that it does not appear they were

given a peremptory challenge to which they were entitled by NYSE

rule. They do not, however, clearly rely on this as a ground for

obtaining vacatur of the award. And Merrill Lynch has demonstrated

that, under the Random List Selection Method that the NYSE used in

this case, a party does not have a peremptory strike against a

replacement arbitrator.

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relationship that might reasonably create an appearance of

partiality or bias, any personal relationship with someone who he

had been told would be a witness, and any such relationship with a

family member; he failed to make these disclosures related to the

Cecils (and their spouses); and he should have been disqualified as

an arbitrator.3 Second, they urge the Arbitration Panel’s refusal

to grant their motion to amend to add as parties four individual

stock brokers employed by Merrill Lynch, and the financial advisors

on whom Merrill Lynch relied, was an abuse of discretion and

another example of evident partiality and misconduct. Third, they

maintain that the Arbitration Panel engaged in misconduct by

unfairly refusing to hear pertinent and material evidence. They

complain that the Panel refused to require Merrill Lynch to produce

a full and complete copy of its compliance manual, and that, in

violation of NYSE Rule 619(c), it permitted Merrill Lynch to

introduce handwritten notes that B. Cecil took at the time of the

initial interview, but, based on alleged violations of the same

Rule, excluded significant portions of the Webers’s evidence, thus

evidencing obvious partiality and prejudicing their ability to

obtain a fair hearing.

 

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The Webers filed a combined brief and reply brief. In its

June 14, 2006 order, however, the court directed them to file a

reply brief.

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In their reply brief,4 which the court directed them to file

after Merrill Lynch had responded to their motion to vacate, the

Webers raise for the first time the claim that the award should be

vacated under § 10(a)(4) because Arbitrator Guerin did not disclose

his wife’s social memberships in six civic and social organizations

to which R. Cecil’s wife also belongs, thus rendering him

unqualified under NYSE Rules to sit as an arbitrator.

II

Review of an arbitration award is “exceedingly deferential.”

Brabham v. A.G. Edwards & Sons Inc., 376 F.3d 377, 380 (5th Cir.

2004) (citing Glover v. IBP, Inc., 334 F.3d 471, 473 (5th Cir.

2003)). The court can vacate an award “only on very narrow

grounds.” Id. (citing Glover, 334 F.3d at 473-74). The standard

“has been described as ‘among the narrowest known to the law.’”

Mantle v. Upper Deck Co., 956 F. Supp. 719, 726 (N.D. Tex. 1997)

(Fitzwater, J.) (quoting ARW Exploration Corp. v. Aguirre, 45 F.3d

1455, 1462 (10th Cir. 1995)). “The court may not vacate the

[arbitrator’s] award based on mere errors in interpretation or

application of the law, or mistakes in factfinding.” Id. (citing

United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38

(1987)). “Factual or legal errors by arbitrators——even clear or

gross errors——do not authorize courts to annul awards.” Id.

 

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(quoting Gingiss Int'l, Inc. v. Bormet, 58 F.3d 328, 333 (7th Cir.

1995)). “An arbitrator’s erroneous interpretations or applications

of law are not reversible.” Id. (quoting ARW Exploration Corp., 45

F.3d at 1463). “By consenting to arbitration, parties exchange

‘the procedures and opportunity for review of the courtroom for the

simplicity, informality, and expedition of arbitration.’” Id.

(quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,

473 U.S. 614, 628 (1985)). The question the court asks is “whether

the arbitration proceedings were fundamentally unfair.” Forsythe

Int’l, S.A. v. Gibbs Oil Co. of Tex., 915 F.2d 1017, 1020 (5th Cir.

1990) (citing Teamsters, Local Union 657 v. Stanley Structures,

Inc., 735 F.2d 903, 906 (5th Cir. 1984)).

Section 10(a) of the FAA sets forth the grounds for vacatur of

an arbitration award. Under § 10(a), the court may vacate an award

in these circumstances:

(1) where the award was procured by

corruption, fraud, or undue means;

(2) where there was evident partiality or

corruption in the arbitrators, or either of

them;

(3) where the arbitrators were guilty of

misconduct in refusing to postpone the

hearing, upon sufficient cause shown, or in

refusing to hear evidence pertinent and

material to the controversy; or of any other

misbehavior by which the rights of any party

have been prejudiced; or

(4) where the arbitrators exceeded their

powers, or so imperfectly executed them that a

mutual, final, and definite award upon the

subject matter submitted was not made. 

9 U.S.C. § 10(a). The party moving to vacate an arbitration award

 

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has the burden of proof. Lummus Global Amazonas, S.A. v. Aguaytia

Energy Del Peru, S.R. Ltda., 256 F.Supp.2d 594, 604 (S.D. Tex.

2002) (citing Spector v. Torenberg, 852 F. Supp. 201, 206 (S.D.N.Y.

1994)). The court must resolve any doubts or uncertainties in

favor of upholding the award. Brabham, 376 F.3d at 385 n.9 (citing

Action Indus., Inc. v. U.S. Fid. & Guar. Co., 358 F.3d 337, 343

(5th Cir. 2004)).

III

The court first considers the Webers’s contention that the

award must be vacated under § 10(a)(2) based on the evident

partiality of Arbitrator Guerin. 

A

The Webers can establish evident partiality by demonstrating

either that he failed to disclose relevant facts or that he

displayed actual bias at the arbitration proceeding. See Scott v.

Prudential Secs., Inc., 141 F.3d 1007, 1016 (11th Cir. 1998); Woods

v. Saturn Distrib. Corp., 78 F.3d 424, 427 (9th Cir. 1996). In a

failure to disclose case, the integrity of the process by which

arbitrators are chosen is at issue; in an actual bias case, the

integrity of the arbitrators’ decision is at issue. See Woods, 78

F.3d at 427. Thus the standard a court uses to evaluate a claim of

evident partiality varies depending on whether the party seeking to

vacate the award argues nondisclosure or actual bias.

B

 

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In their motion, the Webers attempt to demonstrate evident

partiality on the grounds that Arbitrator Guerin was a member of

the same country club as were the Cecils and their spouses, and

that, under NYSE Rules, he should disclosed having once met R.

Cecil.

Because Arbitrator Guerin disclosed his membership in the

Dallas Country Club and Merrill Lynch disclosed in advance of the

hearing that R. Cecil had once met Arbitrator Guerin at a nonDallas Country Club function, the Webers were aware of these facts

before the hearing and moved to disqualify him on these grounds.

Accordingly, they cannot establish evident partiality based on the

alleged nondisclosure of these facts.

C

The Webers are therefore limited to arguing that Arbitrator

Guerin displayed actual bias at the arbitration proceeding. The

court decides this question using an objective standard to

determine whether they have shown actual bias. See Mantle, 956 F.

Supp. at 729; see id. at 728 (rejecting “‘appearance of bias’ as

the relevant standard where nondisclosure is not alleged” (citing

Schmitz v. Zilveti, 20 F.3d 1043, 1047 (9th Cir. 1994))). 

Under this standard, “[t]he part[ies] asserting evident

partiality ha[ve] the burden of proof.” Id. at 729 (citing Peoples

Sec. Life Ins. Co. v. Monumental Life Ins. Co., 991 F.2d 141, 146

(4th Cir. 1993)). They must establish that “‘a reasonable person

 

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would have to conclude that the arbitrator was partial to one

party,’” id. (quoting Morelite Constr. Corp. v. N.Y. City Dist.

Council Carpenters Benefit Funds, 748 F.2d 79, 84 (2d Cir. 1984)),

and they must do so by “produc[ing] specific facts,” id. “[T]he

alleged partiality must be ‘direct, definite, and capable of

demonstration rather than remote, uncertain or speculative.’” Id.

(citing Peoples Sec. Life, 991 F.2d at 146). Thus “there is an

onerous burden on a party urging vacatur based on evident

partiality.” Id. (citing Peoples Sec. Life, 991 F.2d at 146). 

The Webers have not met their onerous burden. The court will

assume arguendo that they have presented adequate record evidence

of the Panel’s rulings and have not relied on a selective

presentation of but a few rulings made over the course of lengthy

pre-hearing proceedings and during a multi-day hearing. They rely

on the Panel’s decisions concerning their motion to amend, their

request for production of the Merrill Lynch compliance manual, and

the admissibility of evidence to contend that the Panel as a whole,

and Arbitrator Guerin in particular, showed evident partiality. At

most, the Webers have shown that the Panel ruled against them in

these respects. They have not demonstrated under the demanding

standard that a reasonable person would have to conclude that the

Panel and/or Arbitrator Guerin was partial to Merrill Lynch. “Even

repeated rulings against one party to the arbitration will not

establish bias absent some evidence of improper motivation.” Sheet

 

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Metal Workers Int’l Ass’n Local Union #420 v. Kinney Air

Conditioning Co., 756 F.2d 742, 746 (9th Cir. 1985) (citing Bell

Aerospace Co. v. Local 516, Int’l Union, UAW, 500 F.2d 921, 923 (2d

Cir. 1974)).

D

In an argument raised for the first time in their reply brief,

the Webers maintain that Arbitrator Guerin did not disclose his

wife’s memberships in six civic and social organizations to which

R. Cecil’s wife also belongs, thus rendering him unqualified under

NYSE Rules to sit as an arbitrator. They contend that this

relationship and Arbitrator Guerin’s failure to disclose it

establish evident partiality and require that the court vacate the

arbitration award. The Webers also posit that, because Arbitrator

Guerin failed to disclose material information about his and his

family’s social relationships with the Cecils, he was not qualified

under the NYSE Rules to sit as an arbitrator and he exceeded his

powers by making an award, in turn violating § 5 of the FAA and

justifying vacatur under § 10(a)(4).

1

Merrill Lynch moves to strike the Webers’s argument and

supporting evidence on the ground that they were presented for the

first time in their combined brief and reply brief. The court

grants the motion. 

The Webers did not properly raise this basis for vacatur in

 

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their motion to vacate arbitration award. It is well established

that “a movant should not be permitted to cure by way of reply what

is in fact a defective motion.” Springs Indus., Inc. v. Am.

Motorists Ins. Co., 137 F.R.D. 238, 240 (N.D. Tex. 1991)

(Fitzwater, J.). Moreover, the court can decline to consider an

argument raised for first time in a reply brief. See, e.g., Senior

Unsecured Creditors’ Comm. of First RepublicBank Corp. v. FDIC, 749

F. Supp. 758, 772 (N.D. Tex. 1990) (Fitzwater, J.). The court

directed the Webers to file a reply brief; it did not grant them

leave to raise new grounds for vacatur or to introduce new

evidence. Because the Webers have in effect used their reply brief

to supplement their motion and to add a new basis for vacatur, the

court concludes that the new argument and supporting evidence

should be stricken.

2

Even if the court were to consider this argument and the

supporting evidence, however, it would hold that the Webers have

failed to demonstrate that the arbitration award should be vacated

under § 10(a)(4). This is because they provide no controlling

authority for the proposition that an arbitrator’s nondisclosure

requires vacatur on this basis. The Webers rely principally on the

district court’s decision in Bulko v. Morgan Stanley DW, Inc., 2004

WL 2973760 (N.D. Tex. Dec. 20, 2004) (Sanders, J.), rev’d, Bulko v.

Morgan Stanley DW Inc., 450 F.3d 622 (5th Cir. 2006). In Bulko the

 

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district court vacated an arbitration award under § 10(a)(4) on the

basis that the industry arbitrator in a National Association of

Securities Dealers Inc. (“NASD”) arbitration had failed to disclose

information showing she was not qualified to be an industry

arbitrator under NASD rules. Id. at *2. The Fifth Circuit

reversed and rendered, concluding that the NASD was the appropriate

body to determine the eligibility of its arbitrators and that any

alleged departure from the NASD rules was trivial. Bulko, 450 F.3d

at 626 (“In the absence of a specific agreement to the contrary,

determining [the arbitrator’s] qualifications and eligibility is a

matter left to the NASD.”) (quoting Howsam v. Dean Witter Reynolds,

Inc., 537 U.S. 79, 85 (2002)). Therefore, the Webers’s reliance on

§ 10(a)(4) would lack force even had they properly raised it.

Additionally, when an arbitrator fails to disclose some fact

tending to show bias, the court must decide whether this failure

warrants vacatur of the arbitration decision under § 10(a). Courts

require the party challenging the arbitration award to establish

that the undisclosed facts create a “reasonable impression of

partiality.” See Schmitz, 20 F.3d at 1046 (finding that “‘evident

partiality’ is present when undisclosed facts show ‘a reasonable

impression of partiality.’” (quoting Middlesex Mut. Ins. Co. v.

Levine, 675 F.2d 1197, 1201 (11th Cir. 1982) (per curiam))). The

Webers have not alleged sufficient facts to establish that the

various social memberships of Mmes. Guerin and Cecil create a

 

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reasonable impression of partiality. 

Courts have found that a reasonable impression of partiality

is established when the arbitrator has had a direct business or

professional relationship with one of the parties to the

arbitration. For example, in Schmitz the Ninth Circuit found that

a reasonable impression of partiality was established when an

arbitrator failed to disclose that his law firm had previously

represented the parent company of one of the parties to the

arbitration. Schmitz, 20 F.3d at 1049. Similarly, in Middlesex

Mutual Insurance Co. the Eleventh Circuit affirmed vacatur of an

arbitration award based on a reasonable impression of partiality

when the arbitrator had a family-owned insurance company that had

been entangled in a “direct and substantial financial relationship”

with two of the three defendant insurance companies in the

arbitration proceedings. Middlesex Mut. Ins. Co., 675 F.2d at

1202; see also Olson v. Merrill Lynch, Pierce, Fenner, & Smith,

Inc., 51 F.3d 157, 159 (8th Cir. 1995) (finding reasonable

impression of partiality where arbitrator failed to disclose that

his employer did “substantial amount of business with” party to

arbitration proceedings). Courts have also found that a reasonable

impression of partiality arises when arbitrators fail to disclose

the professional positions of their family members when the

positions were closely related to a party to the arbitration. See,

e.g., Morelite, 748 F.2d at 84-85 (vacating arbitration award under

 

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“reasonable person” standard when arbitrator did not disclose the

fact that his son was an officer of one party to the arbitration).

The alleged relationship with which the Webers take issue is

between the spouse of the arbitrator and the spouse of a Merrill

Lynch broker involved in the management of the Webers’s accounts.

The Webers cite no record evidence that Mmes. Guerin and Cecil even

knew each other, much less that they had a personal relationship

before or during the arbitration proceeding. Their membership in

the same six civic and social organizations does not of itself rise

to the level of a reasonable impression of partiality, and courts

have not vacated arbitration award based on such attenuated

relationships. See, e.g. Apusento Garden (Guam), Inc. v. Superior

Court of Guam, 94 F.3d 1346, 1353 (9th Cir. 1996) (holding that

arbitrator’s failure to disclose that he and one of the parties’

expert witnesses were limited partners in partnership that owned

apartment complex did not create objectively reasonable impression

of bias); Consolidation Coal Co. v. Local 1643, United Mine Workers

of Am., 48 F.3d 125, 129 (4th Cir. 1995) (finding per se bias not

established when arbitrator did not disclose that his brother was

employed by international union whose district was involved in

arbitration); United States Wrestling Fed. v. Wrestling Div. of the

AAU, 605 F.2d 313, 320 (7th Cir. 1979) (finding that connections

that chairman of arbitration panel and his law firm had with

university that, in turn, had connections with party to arbitration

 

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proceeding was too “remote, uncertain, and speculative” to require

vacatur of arbitration decision).

Accordingly, even had the Webers properly raised the mutual

social memberships of Mmes. Guerin and Cecil as a basis for

demonstrating evident partiality, the court would conclude that

they have failed to establish it.

IV

The court now considers the Webers’s contention that the award

should be vacated because the Panel committed misconduct in

refusing to grant their motion to amend the complaint to add as

parties four individual stock brokers employed by Merrill Lynch and

the financial advisors on whom Merrill Lynch relied. They maintain

that the Panel abused its discretion and engaged in evident

partiality and misconduct.

A

“Arbitration proceedings are not constrained by formal rules

of procedure or evidence.” Mantle, 956 F. Supp. at 730 (citing

Robbins v. Day, 954 F.2d 679, 685 (11th Cir. 1992)). “By agreeing

to arbitration, a party trades the procedures and opportunities for

review of the courtroom for the simplicity, informality, and

expedition of arbitration.” Id. (citing Mitsubishi Motors, 473

U.S. at 628). “Arbitrators should be expected to act affirmatively

to simplify and expedite the proceedings before them.” Id. (citing

Forsythe Int’l, 915 F.2d at 1022). “Courts reviewing arbitral

 

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awards may not superimpose rigorous procedural limitations upon the

conduct of the arbitrators.” Id. at 730-31 (citing Forsythe Int’l,

915 F.2d at 1022). Arbitrators “need provide only a fundamentally

fair hearing.” Id. at 730 (citing Totem Marine Tug & Barge Inc. v.

N. Am. Towing, Inc., 607 F.2d 649, 651 (5th Cir. 1979)).

B 

The Webers allege that the Panel’s denial of their motion to

amend their complaint is misconduct that justifies vacating the

arbitration award. They contend the decision was an abuse of

discretion and another example of evident partiality, considering

the timing of the request and the fact that no prejudice would

arise from adding the new parties. When the Webers filed their

motion to amend, however, the case had twice been set for final

hearing and was almost two years old. The Webers attempted to add

six additional respondents, and the Panel could reasonably have

concluded that none of the six was a necessary party for the Webers

to obtain complete relief. They also sought to amend over six

months after the motion deadline. And the only connection between

New York City and the case was the location of the Webers’s new

counsel. The Webers have not shown an abuse of discretion or

evident partiality.

Moreover, as Merrill Lynch correctly argues, “[c]ourts will

not vacate an arbitration award based upon an evidentiary or

procedural ruling when the party challenging the decision does not

 

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specifically describe the resulting prejudice or produce evidence

of the resulting prejudice.” D. Br. 17; see Schmidt v. Finberg,

942 F.2d 1571, 1574 (11th Cir. 1991) (rejecting argument that

arbitrators committed misconduct in denying continuance when party

“did not express a single word to indicate what testimony [the

absent party] would give that would be material to the issues

raised in the claim”); Young v. Alagna, 2000 WL 472863, at *5 (N.D.

Tex. Apr. 24, 2000) (Fish, J.) (finding that claim of arbitrator

misconduct by depriving plaintiff of opportunity to be heard

“[rang] hollow” because plaintiff “never indicated what his

response on the merits would have been.”). The Webers assess the

Panel’s ruling from the perspective of whether Merrill Lynch would

have been prejudiced had leave to amend been granted. They have

failed, however, to describe specifically the resulting prejudice

or to produce evidence of the resulting prejudice inflicted upon

them by the denial of their motion to amend. Thus they have not

met their burden of showing that the Panel decision resulted in

prejudice and to warrant vacating the award based on the Panel’s

denial of the motion for leave to amend.

V 

Finally, the Webers seek vacatur under § 10(a)(3) based on the

Panel’s evidentiary rulings. They maintain that the Arbitration

Panel engaged in misconduct and evidenced obvious partiality by

unfairly refusing to require Merrill Lynch to produce a full and

 

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complete copy of its compliance manual and by applying Rule 619(c)

inconsistently by permitting Merrill Lynch to introduce handwritten

notes of B. Cecil while excluding significant portions of the

Webers’s evidence.

A

“Submission of disputes to arbitration always risks procedural

and evidentiary shortcuts.” Mantle, 956 F. Supp. at 731 (citing

Forsythe Int’l, 915 F.2d at 1022). To warrant vacatur, however,

plaintiffs must make an adequate showing of prejudice. Id.

“Absent exceptional circumstances . . . a reviewing court may not

overturn an arbitration award based on the arbitrator’s

determination of the relevancy or persuasiveness of the evidence

submitted by the parties.” Pac. Breakwater W., Inc. v. Wellness

Int’l Network, Ltd., 2000 WL 276812, at *3 (N.D. Tex. Mar. 9, 2000)

(Fitzwater, J.) (quoting Hoteles Condado Beach, La Concha &

Convention Ctr. v. Union de Tronquistas Local 901, 763 F.2d 34, 39-

40 (1st Cir. 1985)). “Arbitration awards will not be set aside due

to the arbitrator’s refusal to hear evidence unless the exclusion

of the contested evidence prevented the parties from receiving a

fundamentally fair hearing.” Id. (quoting Castleman v. AFC Enters.,

Inc, 995 F. Supp 649, 653 (N.D. Tex. 1997) (Sanders, J.)). 

B

The court will assume arguendo that the Webers preserved this

claim by objecting during the arbitration hearing. Even so, they

 

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have not demonstrated the relevance of the Merrill Lynch compliance

manual or of the excluded evidence. Nor have they shown that the

exclusion prejudiced them or prevented them from obtaining a fair

hearing. They rely on the fact that the Panel’s ruling resulted in

excluding the entire testimony of their expert witness, Alan

Goldfarb, but they do not attempt to explain how the ruling

prejudiced them or deprived them of the opportunity to present

their case in a meaningful manner. See Mantle, 956 F. Supp. at

732. Nor have the Webers demonstrated why the admission of B.

Cecil’s handwritten notes prejudiced them. See id. at 731.

Consequently, they are not entitled to vacate the award on this

basis. Nor have they shown evident partiality based on the Panel’s

rulings. Accordingly, they have not demonstrated that the award

should be vacated on this ground.

* * *

Because the Webers have not met their burden of demonstrating

evident partiality or of misconduct by the Panel, their motion to

vacate arbitration award is denied.

SO ORDERED.

August 31, 2006.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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