there was evident partiality or corruption in the arbitrators; 3) the arbitrators were
guilty of misconduct in refusing to postpone the hearing, or in refusing to hear
evidence material to the controversy, or of any other misbehavior, or 4) the
arbitrators exceeded their powers. The grounds for challenging an arbitration
award are narrowly limited, and factual or legal errors—even clear or gross
errors—are not grounds for vacating an award. Major League Baseball Players
Ass'n v. Garvey, 532 U.S. 504, 509, 121 S.Ct. 1724, 149 L.Ed. 740 (2001); United
Paperworkers Int’l Union v, Misco, Inc., 484 U.S, 29, 38, 108 S.Ct. 364, 98 L.Ed.2d
286 (1987); IDS Life Ins. Co, v. Royal Alliance Assoc., Inc., 266 F.3d 645, 650 (7th
Cir, 2001); Gingiss Int'l, Inc. v, Bormet, 58 F.3d 328, 333 (7th Cir. 1995). A
restrictive standard of review is essential to protect the purpose of arbitration as
a less expensive and more streamlined method of dispute resolution. Eljer Mfg.,
Inc. v. Kowin Dev. Co., 14 F.3d 1250, 1254 (7th Cir, 1994).
Ii. Analysis

Plank first argues that the NFA panel’s award should be vacated because
it was procured by fraud. According to Plank, the respondents committed perjury
when they testified that they had made no trades in Plank’s account without his
authorization and that they did not manage his account. In support he submits
largely the same evidentiary material that he presented to the arbitration panel,
claiming that it contradicts the respondents’ testimony and therefore proves that

the testimony was perjurous and the award procured by fraud.


a signatory to the arbitration agreement}. Had the panel, perhaps, found that the
Respondents had violated a provision of the CEA that had not been submitted to
the panel, the Respondents (not Plank) might have a beef with the panel, Plank,
on the other hand, has none.
IV. Conclusion
For the foregoing reasons, Plank’s motion to vacate the award of the NFA
panel is DENIED.

IT 1S SO ORDERED. |

7, 2002. :

af ( e Hoporable John W. Darrah
j tates District Court



substitution of pages in exhibit books after they had been admitted into evidence
did not rise to the level of fraud where arbitrator considered objection and rejected
it), In short, Plank argues that the arbitrator’s committed error in believing the
respondents instead of believing him, But disagreements over an arbitrator’s
assessment of credibility do not establish that the award was procured by fraud.
As noted above, error is not a valid grounds for disturbing an arbitrator’s award.
Misco, Inc., 484 U.S. at 38; IDS Life Ins. Ca,, 266 F.3d at 650; Gingiss Int'l, Inc., 58
F.3d at 333.

Plank next argues that the arbitration panel exceeded its authority by
rendering the decision more than 30 days after the record had closed, in violation
of the rules of the NFA. The rules of the NFA require the panel to “render its
award, in writing, dated and signed by the Panel members,” within 30 days after
the record closed. In this instance, the record closed on February 11, 2002. The
award was dated March 8, 2002 (25 days after the record closed), but not
transmitted to Plank until March 25, 2002 (42 days after the record closed). The
date on the award is questionable, for the Respondents submitted an affidavit
from the NFA’s manager of arbitration and mediation who avers that she sent the
award to the panel for signature on March 11, three days after it was allegedly
signed,

But whether the panel’s award was rendered on March 8, March 11, or

March 25 is much ado about nothing. Unless the NFA’s rules make the deadline


A vacatur of an arbitrator’s award under § 10(a)(1) requires the movant to
show that the basis for the fraud was: 1) not discoverable upon the exercise of due
diligence prior to the arbitration; 2) materially related to an issue in the
arbitration; and 3) established by clear and convincing evidence. Gingiss Int’, Inc.,
58 F.3d at 333. The FAA thus does not allow vacatur in the event of any
fraudulent activity, but instead requires a nexus between the alleged fraud and
the basis for the arbitration award. Williams v. Katten, Muchin, & Zavis, 1996 WL
717447, *3 (N.D. lll. Dec. 9, 1996) (citing Dean Foods Co. v. United Steel Workers
of America, 911 F.Supp. 1116, 1124 (N.D. Ind. 1995)). In other words, the fraud
must prevent the panel from considering a significant issue to which it does not
otherwise enjoy access. Id. Here, the evidence relied upon by Plank to establish
the respondents’ fraud is not only evidence that was discoverable prior to the
arbitration, but evidence that, for the most part, he actually presented to the
panel.’ The panel had the opportunity to consider Plank’s argument that the
respondents had committed perjury and rejected it. Cf’ Waddle v. LT Lawrence &

Co., Inc., 1998 WL 901687, *4 (N.D. Ill. Dec. 17, 1998) (holding that petitioners’

' In support of his motion, Plank also submitted five additional documents purporting to
show that Chang and Barney managed futures accounts, contrary to their testimony before the
NFA panel. Although Plank admits that he had these documents at the time of the hearing, he
points to nothing to suggest that he attempted to introduce them into evidence before the NFA
panel and that the panel declined to consider them. Even had Plank submitted evidence that the
panel refused to admit his exhibits, not every failure to hear relevant evidence constitutes
misconduct requiring vacatur of an award, Forum Ins. Co. v. First Horizon Ins. Co., 1989 WL
65041, *6 (N.D. I. Jun 8, 1989).


section of the Commodity Exchange Act (CEA), when they were only asked to
decide whether they violated §§ 4, 6b, 6c(b), 13c(a).

It is true that parties to arbitration may stipulate the issues they want
determined. See First Options of Chicago, Inc., 514 U.S, at 945, 115 3,.Ct. 1920;
American Postal Workers Union, AFL-CIO, Milwaukee Local v. Runyon, 185 F.3d
832, 934 (7th Cir. 1999). Plank, however, splits the finest of hairs when he
quibbles with the wording of the panel. The panel merely used general wording,
not specific, in describing the issues before it, and the panel’s choice of words is
insufficient to demonstrate that it exceeded its authority. See United Steelworkers
of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598, 80 S.Ct. 1358, 4
L.Ed.2d 1424 (1960) (“[a] mere ambiguity in the opinion accompanying an award,
which permits the inference that the arbitrator may have exceeded his authority,
is not a reason for refusing to enforce the award”). Plank’s claim that the NFA
panel exceeded its authority by referring to the CEA generally bears little
resemblance to successful claims that arbitrators exceeded their authority. Cf
Lindland v. United States of America Wrestling Assoc., Inc., 227 F.3d 1000, 1003
(arbitrator exceeded his authority in reviewing the propriety of another arbitrator's
decision); Geneva Sec., Inc. v. Johnson, 138 F.3d 688, 692 (7th Cir. 1998) (holding
that panel exceeded its powers in issuing an award that relied on investment not
eligible for arbitration); Eljer Mfg., Inc., 14 F.3d 1250 (7th Cir. 1994) (holding that

arbitrator exceeded his power by arbitrating a dispute involving a third party not


Be

J3~G

Minh Oeder Pom (96/77)

United States District Court, Northern District of Dlinois

Name of Assigned Judge Mig Sitting Judge if Other
or Magistrate Judge William J. Hibbler than Assigned Audge John W. Darrah
CASE NUMBER 02 C 4453 DATE 1/7/2003 |
4
CASE JOHN M. PLANK vs. VISION LIMITED PARTNERSHIP, et al.
TITLE
[tm the following box (a) indicate the parly filing the motion, ¢.g., plaintiff, defendant, aru party plaintiff, and (b) state bricfly the nature
MOTION: ‘of the motion being presented,]
Amended Motion to Vacate Arbitrators’ Award (Doc. #3)
DOCKET ENTRY:
qd) a Filed motion of [ usc listing in “Motion” box above.
(2) QO Brief in support of motion due
(3) a Answer brief to motion due____. Reply to answer brief due
(4) Q Raling/Hlearing on setfor_ at.
(5) 0 Stats hearing] held/continued to) [set for/re-set for} on _ _setfor__ at.
(6) QO Pretrial conference|held/continued to} [set for/re-set or}on_____setfor___ at
(7) qa Trialfset for/re-set for}on at.
(8) im (Bench/Jury trial} [Hearing] held/continued to at_
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4@m) OC Cocal Rule 41.1 CUFRCP41(ay1) O FRCP41(a)(2).

ao {Other docket entry] Enter Memorandum Opinion and Order. Movant’s motion to vacate

arbitrators’ award (Doc. #3) is DENIED and the case terminated. All pending dates and motions are

terminated as moot.
q)) [For further detai) sec order attached to the origina} minute order.]

No notices reyuired, advised in open court.

No notices required.

Notices muiled by judge's statt.
en eee
Notified counsel by telephone,

Docketing to mail notices.

Mail AO 450 farm,

v
¥

Copy to jndge/magistrate judge,

courtroom
deputy’s
initiats

SUG:

EADS JOR SID sg

LET LD” Date/tinefeceived in
central Clayk's Ofive

railing deputy initial



jurisdictional, “a party’s failure to complain about delay before the award is made
forfeits his right to challenge the timeliness of the award.” Hill v, Norfolk and
Western Ry, Co., 814 F.2d 1192, 1199 (7th Cir. 1987); see also National Wrecking
Co. v. InternationalBhd, of Teamsters, Local 731, 990 F.2d 957, 960 (7th Cir. 1993)
(“Parties .. . cannot stand by during arbitration, withholding certain arguments,
then, upon losing the arbitration, raise such arguments in federal court. We will
not tolerate such sandbagging.”); Dean Foods Co,, 911 F.Supp. at 1128. Perhaps
the panel did violate the NFA’s procedural rules by rendering its award more than
30 days after the record closed, but nothing in the NFA’s rules suggests that the
arbitration panel lost jurisdiction to render an award if it did not do so within the
time allotted. Plank did nothing once the 30-day deadline had lapsed and no
award had been rendered, and he cannot now complain that the NFA panel
exceeded its authority in rendering the award after the deadline.

Lastly, Plank argues that the arbitration pane] exceeded its authority by
deciding issues not submitted to it. Plank’s final argument is frivolous. Plank
rests his argument upon the panel’s description of the issues that were submitted
to it, in which the panel notes that Plank alleged a “violation of the Commodities
[sic] Exchange Act.” Plank contends that “the only issue presented to the panel
was whether or not Respondents had violated one of the four Commodity
Exchange Act sections specifically identified in Plank’s demand for arbitration.”

In short, Plank argues that the arbitrators decided that Respondent’s violated no


false and deceptive statements and; 2) 7 U.S.C. § 6b by making unauthorized
transactions on his behalf. Plank also alleged that Chesapeake and Vision had
violated 7 U.S.C, § 4 for failing to supervise Chang and Barney and that
Chesapeake, Vision and Change had violated 7 U.S.C. § 13c(a) by aiding and
abetting the previously-listed violations. The NFA arbitration panel heard four
days of testimony in early January 2002 and rebuttal and closing arguments on
February 11, 2002. Two areas of contention before the arbitration panel were
whether Plank had authorized each individual transaction conducted on his
behalf and whether the individual respondents managed futures accounts or acted
under a limited power of attorney. In support of his position that Chang and
Barney had conducted unauthorized transactions and individually managed his
accounts, Plank submitted extensive documents (such as phone logs, his passport
records demonstrating dates in which he was out of the country, and promotional
materials from Chesapeake). The NFA panel chose to believe the respondents
rather than Plank for it awarded him no monetary damages, but did not set forth
any reasoning for its award. Although the award was dated March 8, 2002, the
NFA did not send it via facsimile to Plank until March 25, 2002, Plank now moves
to vacate the award.
Il, Standard of Review
Under 9 U.S.C. § 10(a), a court may vacate an award of an arbitration panel

only where: 1) the award was procured by corruption, fraud, or undue means; 2)


Il, Factual Background

Plank met with Chang and Barney in April 2000 to discuss the opening of
a futures account. According to Plank, he expressed to Chang and Barney that
he was concerned about the safety of his investment and made it clear that he
wanted less risk in his investments because he would be returning to school for
a planned career change. In light of those concerns, Plank claims that he relied
on representations by Chang and Barney as to the safety of the funds before he
opened the accounts, claiming that Chang and Barney informed him that they
would employ a strategy of “straddling futures” that would allow to minimize the
risk of loss yet also allow the investment to grow.

Based on these representations, Plank opened a futures account with
Chesapeake Investment Services, Inc., which served as his broker and introduced
Plank to Vision Limited Partnership. As the futures commission merchant, Vision
served as the clearing broker for Plank’s account with Chesapeake. Plank’s initial
investment was $500,000. By early September, the value of the account had risen
to a peak of $860,000 (in part because Plank had deposited an additional
$100,000). Shortly after reaching this peak, however, the value of Plank’s account
sharply declined, dropping to $386,000 in October 2000 and reaching a final
balance of $112,000 in January 2001.

Plank filed his demand for arbitration in March, 2001. In that demand,

Plank alleged that Chang and Barney had violated: 1) 7 U.S.C. § 6c(b) by making


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JOHN M. PLANK

Movant, YA .
v.
Judge William J. Hibbler
VISION LIMITED PARTNERSHIP,
CHESAPEAKE INVESTMENT
SERVICES, INC., YU-DEE CHANG,
AND RICHARD BARNEY

Respondents.
MEMORANDUM OPINION AND ORDER
1. Introduction

John M. Plank moves this Court to vacate an arbitrator’s award. After the
value of his accounts with the respondents plummeted in late 2000, Plank filed
for arbitration against the respondents with both the National Futures Association
(NFA) and the National Association of Securities Dealers (NASD), asserting that
Chang and Barney misrepresented the risks involved in his investments,
mismanaged his investment accounts, and traded his accounts without authority.
The NFA arbitration panel ruled against Plank and did not award him any
monetary damages, The NASD panel awarded him $81,000 in rescission
damages. Plank now moves to vacate only the NFA award, arguing that the award
was procured by fraud and that the arbitrators exceeded their authority. For the
following reasons, Plank’s motion to vacate the arbitrator’s award is DENIED.

1

Poey (377)

No. 02 C 4453 7 2003

Up