FI L ED U.S. COURT OF A P P E A LS E LE V E N T H C IR C U IT AUG 9, 2007 THOMAS K. KAH

N CL ERK

* Honora ble J ohn R. Gibson, United States Circuit J udg e for the Eig hth Circuit, sit ting by desig nation. [PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ ____ ____ ____ _ N o. 05- 1532 5

____ ____ ____ ____ ____ ____ _ D. C. Docket N o. 04-20240 -CV -SH PHIL ROSENSWEIG, Pla intiff-Appellee, ve rs us MOR GA N S TA NL EY& CO ., IN C. f.k.a . MORGAN STANLEY DEAN W ITTER, INCORPORATED, D ef en dant- Appe llant.

____ ____ ____ ____ ____ ____ _ Appe al f ro m the U nit ed

S ta te s D istri ct

Co urt f or the So uth er n D istri ct of F lor ida

____ ____ ____ ____ ____ ____ _ (A ug us t 9, 200 7) Be fo re E D MO N D SO N , Ch ie f Judg e, T JO FL A T , a nd J O HN R. G IB SO N , Ci rc uit * Judg es .2

JOHN R . G IBSO N, Circuit Judge: Morgan Stanley

appeals from

an order of the district court which confirm ed the award of an ar

bitration panel in favor of one of Mor gan Stanley ’ s form er emp l o yees , P h i l i p E. R o s en s we i g , a n do rd er ed t h e e x p u n g emen to f R o s en s we i g ’s re gul at or y r ec or d. R ose nsw ei g ha d in sti tut ed the a rb itr at ionpr oc ee din gs t o recover dam ages flowing from his term ination as a sec urities broker at Morgan St an le y a nd M or gan S tanle y ’ s a lle ge d r et en tio n of c lie nt r ec or ds tha t R ose nsw ei g claim ed belonged to him . Morgan Stanley contends th at the arbitrators c omm itted m iscondu ct by

ref using to hear evidence a

bout certain com

puter disks that co nta ine d th e cl ie nt d at a an d th at the e xpun ge m en t or de r is c ontrary to publ ic pol ic y . W e af

fi rm the or de r of

the dis tr ic t c ourt. R o s e n s w e i g j o i n e dD e a n Wi t t e r , w h i c h l a t e r me r g e dw i t h a n db e c a me known as Morgan Stanley , a s a reta il broker in Miam i, F lorida, in 1992. At that tim e, he ha d be en

ali ce nse d se curi tie s br oke r fo r te n y ears , a nd h e br ough t w ith him asig nif ic an t bo ok o f busi ne ss. R ose nsw ei g ke pt h is c lie nt i nf orm at ion , includi ng nam es, a ddresses, phone num bers, portfolio in form ation, and personal notes, in a com

puter program

called Br oker’ s Ally , which he had purchased before joi ni ng Mo rg an Sta nl ey

an d c on ti nu edto us e dur in g h is sev en y ears th ere.3

Rosensweig wa s known as a “ top prod ucer” at Morgan Stanley , w ith annu al co m m iss ion s and f

ee s r ea ch ing a s hi gh a s $9 00, 000. On May 28, 1999, Morgan Stanley term inated Rosensweig. W hen a firm te rm inate s ar eg ist er ed

se curi tie s br oke r, the f

irm m ust sub m it a fo rm

c al le d a

“ Form U- 5” setting forth the reasons for the term ination to the “ Central Reg is tra ti on Depo si to ry ,” whe re re gu la to ry au th or it ie s ca n a cces s t he in fo rm at io n. The F orm U- 5 Morgan Stanley

subm itted after R osensweig’ s term ination stated that he w as te rm inate d f

or “ fa ilure to fo llo wins tr

uc tio ns w ithr es pe ct

to one ac co unt not pr om pte d by ac ust om er

c om pla int , adif

fe re nc e in i nve stm en t philo soph y

from the firm [, ] and two custom er c om plaints.” T he term s of Morgan St an le y ’ s st oc k op tio ns, bonus, a nd d ef er re d c om pe nsa tio n pl an s a llo w ed

it to de cl are R os en swe ig ’s ben efi ts for fei te d b ecau se hi s t erm in at io n was forcau se . Whe n ase curi tie s br oke r is t er m inate d f or c au se in the S ta te of

F lor ida , the State investigates the m atters set forth on th at broker’ s Form U- 5. I n Rosensweig’ s case, the State held up the transfer of his securities license to a new fi rm unt il the inv es tig at ionw as c om ple te , w hic h to ok o ve r ei ght m onths. O nc e his license finally

clear ed, R osensweig was e arning about $50,000 p er y ear as an in de pe nd en t co nt ract orwit h a sm al l fi rm .4

In Oc tober 2001 , R osensweig filed a com plaint against Morgan Stanley w iththe A rb itr at ionD ivi sio n of the N at ion al A sso ci at ionof S ec ur iti es D ea le rs , In c. H is s ta te m en t of

c la im a lle ge d th at

Mo rg anS tanle y

f al se ly r ep orte d to regulators that he was te rm inated for cause, which prevented him from working as a br oke r dur ing the S ta te ’ s e igh t- m onth in ve sti ga tio n; i m pr ope rl y tr eate d hi s de fe rr ed c om pe nsa tio n, sto ck

opt ion s, a nd b onus es a s f or fe ite d ba se d onthe pur porte d te rm inatio n f

or c au se ; f ai le d to r et

ur n hi s pe rs ona l pr ope rty ; f ai le d to r e tu rn h i s c l i e n ti n f

o rma t i o n c o n t a i n e di n t h e B r o k e r ’s A l l y c o mp u t e r p r o g r a m; an d st ole his c lie nts . R ose nsw ei g a sse rt ed c la im s a ga ins t M or gan S tanle y f or breach of e m

ploym ent agreem ent, bre ach of equitable and j ust princip les of trade, to rti ou s i nt erfe ren ce, v io la ti on of t he Flo rid a Trad e Sec ret s Act , and co nv ers io n. H e soug ht d am ag es f

or los s of f uture inc om e be tw ee n $1 m ill iona nd $ 3 m ill ion an d f or los s of $50 0, 000 in the de fe rr ed c om pe nsa tio n, bonuse s, a nd s toc k op tio ns that M or gan S tanle y

c la im ed w er e fo rf ei te d, a s w el l a s punit ive da m ag es a nd attor ne y ’ s f ee s. D ur ing dis co ve ry , Mo rg anS tanle y r ep eate dly

r eque ste d m at er ia l r eg ar din g Rosensweig’ s Broker’ s Ally files. Rosensweig indicated that Morgan Stanley had giv enhim

ba ck -u p di sks of his Br oke r’ s A lly

da tasom e tim e af

te r his te rm inatio n but th at the disks h ad viruses and that he could not find th em . Morgan Stanley5

m ove d to str ike Ro se nsw ei g’ s c la im f or da m ag es , a rg uin g th at

he sho uld

not be pe rm itt ed to cl ai m da m ag es f

or los t c ust om er

r el at ion shi ps whe n he ha d f ai le d to pr oduc e dis ks i n hi s po sse ssi on tha t c ont ai ne d a ll his c ust om er da ta . T he arbitrators denied the m otion . On the Fr iday evening before the arbitration wa s scheduled to begin the following Mo nday , R osensweig notified Morgan Stanley that he ha d f

ound the dis ks and d el ive re d th em to Mor gan S tanle y

w ithaw ar

nin g th atth ey m ig ht co nt ai n v iru se s an d s ho ul d b e o pe ne d a t M or ga n S ta nl ey ’s own ris k. A rb itr at ionbe gan onMo nday , S ep te m be r 15, 200 3, a nd w as sc he dul ed to la st thr ee day s. Mo rg anS tanle y ind ic at ed that i t pl an ne d to pr es en t e vid en ce a nd te sti m ony about the dis ks b ut f

ir st n ee de d ac om

put er e xpe rt to ex am ine the m

f or vir use s. T he pane l st at ed

that the e vid en ce w oul d have to be pr es en te d w ith in the th ree d ay s al lo tt edforarb it rat io n, an d M or ga n S ta nl ey acq ui es ced . Rosensweig wa s the prim ary witness at the ar

bitration, and he offer ed ex te ns iv e te st im on y

ab ou t h is care er as a br ok er an d h is workat M or ga n S ta nl ey . Ro se nsw ei g te sti fi ed

that hi s te rm inatio n c am e as asho ck , a nd h e ca st d oubt on each of Mor gan Stanley ’ s asserted re asons for the term ination . He explained that the a lle ge d “ fa ilure to fo llo wins tr uc tio ns” w as ba se d onhis r ef usa l t o il le ga lly re str ic t the tr ad es of

ac lie nt. H e te sti fi ed

that he ha d no t do ne a ny thi ng wro ng t o6

pr ovok e the pur

porte d “ cu sto m er

c om pla int s, ” w he re one c onc er ne d hi s r ef

usa l t o ex ec ute ac lie nt’ s tr

ust ee ’ s su spe ct

tr ad ing plans and the oth er w as ale tte r fr om one of Ro se nsw ei g’ s f

orm er in- law s e xpr es sin g c onc er n a bout the pe rf orm an ce of his inv es tm en ts. T hir d, he e lic ite d te sti m ony that the state m en t tha t he ha d a

“ differe nce in investm ent philo soph y ” fr om the firm wa s not m eant to im

ply that he ha d do ne a nythi ng wro ng and thus co uld not pr ovi de j ust

c au se f or his te rm inatio n. R ose nsw ei g in tim at ed that hi s br an chm an ag er

did not und er stand the ind ustry , part ic ularl y

Ro se nsw ei g’ s 40 1( k) bus ine ss, a nd f eare d th at Ro se nsw ei g wou ldde fect to an ot he r fi rm an d t ak e o th er s uc ces sf

ul bro ke rs wit h h im . Ro se nsw ei g te sti fi ed

that this m an ag er

onc e ha d c om

m en te d th at , if

Ro se nsw ei g w er e ev er te rm inate d f

ro m Mo rg anS tanle y , he w oul d ne ve r w ork a t anothe r m aj or fi rm be ca use the S ta te inv es tig at ionint o th e re as ons fo r his dis ch ar ge w oul d ho ld up t h e t ra n s fe r o f h i s l i ce n s e t o an o t h erfi rm. Th e i n v es t i g at i o n i n t o Ro s en s we i g ’s term ination from

Morgan Stanley

indeed lasted over eight m onth s. D uring that tim e, the na tio na l f

irm P ai ne W eb be r re fu se d to hir e him be ca use he w oul d be effe ctively

unlicensed du ring the pendency of the investigatio n, and a r egional fi rm that hi re d hi m

le t hi m go b ec au se it

w as takin g to o lo ng f

or his li ce nse to tr an sf er . U lti m at el y , Ro se nsw ei g to ok a pos iti on a s an in de pe nde nt c ontra ct or wit h a sm al l s ecu rit ie s fi rm .7

Ro se nsw ei g f

urthe r te sti fi ed

that, in the m onths a ft er

his te rm inatio n, he rece ived telephon e calls inform ing hi m that other brokers at Morgan Stanley we re solicitin g busi ness from

his clients. A ccording to Rosens we ig, Morgan Stanley re fu se d to le t hi m

take his pe rs ona l pr ope rty hom e on the day he w as te rm inate d, givin g Morgan Stanley

the oppo rtunity

to print his client list from his com puter and distrib ute copies of the list to it s brokers. A lthou gh Morgan Stanley ev en tua lly

ga ve him his c om put er , Ro se nsw ei g te sti fi ed that the Br oke r’ s A lly pr ogr am w itha ll his c lie nt d at a ha d be ende le te d f ro m it . H e furthe r te sti fi ed

that, uponhis r eque st, Mo rg anS tanle y ga ve him adis k and a

CD -R om w ithac opy

of the Br oke r’ s A lly

pr ogr am a nd the c lie nt d at a, but

the dis k ha d avir

us and, w hil e the CD -R om

c ont ai ne d hi s c lie nt c ont ac t i nf orm at ion , his se ve nte eny ears ’ w orth of c lie nt n ote s w er e m iss ing . A cc or din g to Ro se nsw ei g, he ha d an e m plo ym en t co ntr ac t w ithMo rg anS tanle y that pr ovi de d th at

the c lie nt l ist

he br ough t w ithhim whe n h e joi ne d t he fir m

was h is pro pe rty. Mor gan S tanle y

c ro ss- ex am ine d R ose nsw ei g onthe se iss ue s, inc lud ing his use of Broker’ s Ally

after his term ination . Rosensweig adm itted that he had ac ce ss t o m an y

of his c lie nts ’ c ont ac t i nf

orm at ionf

ro m c om m iss ionstate m en ts af te r the te rm inatio n, but

e xpl ai ne d th at

he w as una

ble to co nduc t bu sin es s f or the m be ca use the S ta te ha d e ff

ec tiv el y sus pe nde d hi s li ce nse dur ing it s8

inv es tig at ionof

the r ea sons f

or te rm inatio n th at

Mo rg anS tanle y

ha d st at ed

on the Form U- 5. Rosenswe ig acknowledged that his regulatory file contained several

“ Form U- 4” custom er c om

plaints and an adverse arbitration awar d, but Morgan Stanley had not cited these as reasons for his term ination . Moreover, there w as evidence that Morgan Stanley disagreed with som e of the com plaints b ut settled the m be ca use it w as m ost

e co nom ic al , a nd at l ea st o ne w as e xpun ge d by the co m pla inant. Mo rg anS tanle y did not pr oduc e oth er

e vid en ce of

it s r ea sons f

or term inating Rosensweig and did no t call Rosensweig’ s form er branch or regional m an ag er s to te sti fy . N ei the r sid e w as able to pr oduc e a co py of a n e m plo ym en t a g r e e men tb e t w e e n R o s e n s w e i g a n dM o r g an S t a n l e y. O n S ep te m

be r 17, 200 3, the a rb itr at ionw as a dj our ne d un til D ec em

be r to allow Morgan Stanley

tim e to verify

that certa in personn el rec ords had been de str oy ed . D ur ing the a dj our nm en t, Mo rg anS tanle y

e xa m ine d th e ba ck -u

p di sks Ro se nsw ei g ha d pr oduc ed a nd f ile d am oti on t o r eo pe n th e fi na l he ar ing to al lowit to p re se nt e vid en ce about the dis ks. Mo rg anS tanle y ha d di sc ove re d th at

the dis ks h a dn o v i r

u s e s , c o n t a i n e ds ub s t a n t i a l c u s t o meri n f o rmat i o n f

r o m Br o k e r ’s Al l y, and had been used sh ortly after Rosensweig’ s term ination , and it argued, as it had in its earlier m otion to strike, that the se f ac ts d isc re dit ed

Ro se nsw ei g’ s c la im s by showing he had access to his client d ata af ter his term ination . Morgan Stanley9

soug ht t o c ro ss- ex am ine Ro se nsw ei g a bout why he f ai le d to pr oduc e the dis ks until the eve of arbitration and why he had claim ed that Morgan Stanley had eras edall hi s cl ie nt da ta when th e d is ks co nt ai ne d s ig ni fic an t cl ie nt in fo rm at io n. T he pane l a llo w ed

Mo rg anS tanle y

to adm it 21 b ind er s c ont ai nin g ahard c opy of the inf orm at ione xtr ac te d f

ro m the dis ks b ut d id n ot p er

m it Mor gan S tanle y

to elicit testim ony

about the dis ks. A t the close of the proceedings, Morgan Stanley state d th at

it did not f ee l tha t the pr oc ee din gs h ad be enf ai r be ca use it w as not al low ed to co nduc t a ddi tio na l c ro ss- ex am inatio n onthe dis ks. T he a rb itr at ionpane l f

ound Mo rg an S tanle y li ab le to Ro se nsw ei g onthe cl ai m s f or br ea chof

e m plo ym en t a gr ee m en t, tor

tio us i nte rf

er en ce , a nd c onve rs ion , an d aw ar de d hi m

c om pe nsa tor y da m ag es of

$1, 649, 860. 00. T he pane l a lso recom m ended that the Form

U- 5 be changed to state “ broker wa s discharged w ith out c au se , ” an d th at

oth er a dve rs e doc um en ta tio n inthe Ce ntr al Re gis tr at ion D ep osi tor y r el at ed to Ro se nsw ei g’ s di sc harg e fr om Mo rg anS tanle y

be ne utr al iz ed . I t de nie d R ose nsw ei g’ s othe r cl ai m s, inc lud ing his r eque st f or puni tiv e da m ag es , a tto rn ey ’ s f ee s, a nd r el ie f unde r the F lor ida T ra de S ec re ts A ct . T he dis tr ic t c ourt c onf

irm ed the a w ar d and o rd er ed

the e xpun ge m en t of Ro se nsw ei g’ s r ec or d. I n it s m oti on t o va cate , Mo rg anS tanle y ha d arg ue d th at

the pane l w as bia se d inf

av or of Ro se nsw ei g, that the a w ar d w as a rb itr ar y a nd10

ca pr ic iou s be ca

use it gr an te d R ose nsw ei g dam ag es e ve n th oughhe ha d po sse ssi on of his client inform ation in th e back-up disks, and that the arbitrators com m itted m isc ondu ct

by r ef usi ng t o a llo wMo rg anS tanle y to intro duc e te sti m ony

about the dis ks. T he c ourt r ej ec te d a ll the se a rg um en ts, statin g th at anum be r of gr ound s supp orte d th e pane l’ s de ci sio n and tha t the pane l ha d th e dis cr et ionto lim it the ev id en ce t ha t wo ul d b e ta ke n o n t he di sk s. O n a ppe al , Mo rg anS tanle y

ha s narr ow ed

it s c om pla int s to tw o arg um en ts: 1) the a rb itr at or s c om

m itt ed m isc ondu ct

by r ef usi ng t o a llo wit

to pr es en t pe rt ine nt an dm at er i al ev i d en ce ab o u tt h e d i s k s , a n d2 ) t h e e x p u n g emen to f R o s en s we i g ’s r e g u l a t o ry re c o r di s c o n t r a ry t o p ub l i c p o l i c y. I . On ap pe al of a di st ric t co ur t’s co nf irmatio n o f an arb it rat io n a ward , we re vie wit s f

ac tua l f ind ing s f or c le ar e rr or a nd i ts l eg al c onc lus ion s de nov o. R int in Corp., S. A. v. D om ar, Ltd. , 476 F. 3d 12 54, 1258 (11t h Cir. 2007 ). T he F ed er al A rb itr at ionA ct pr es um es that arb itr at iona w ar ds w ill be co nf irmed, an d ju di ci al rev ie w of a n a rb it rat io n a wardis na rro wly li m it ed . B.L. Harbert I nt’ l, L LC v. H ercules Ste el Co., 441 F.3d 905, 909 (11t h Cir. 2006 ); see also Davis v. P rudential Sec. , I nc., 59 F.3d 1186, 1190 (11th Cir. 1995). The Ac t se ts f or th f our ba se s f or va catin g an aw ar d; M or gan S tanle y c ha lle nge s th e11

arbitration panel’ s decision o n the third statu tory ground: “ Where the arbitrators we re guilty

of m iscondu ct in refusing . . . to hear evidence pertinent and m aterial to the c ontro ve rs y . ” 9 U . S. C. § 10 (a )( 3) . I n m ak ing e vid en tiary de te rm inatio ns, arbitrators ar e not required to “ follow all the niceties observed by the feder al co urts, ” but

the y m ust giv e the part ie s af

undam en ta lly

f ai r he ar ing . S ee T em

po Sh ai n C or p. v. Be rt ek , I nc . , 120 F . 3d 1 6, 20 ( 2d C ir . 199 7) ( int er na l qu otatio n m ar ks and c itatio n om itt ed ). Mo rg anS tanle y a rg ue s th at

it w as de pr ive d of

af ai r he ar ing w he n th e ar

bitrator s r ef

use d it s r eque st t o in tr oduc e te sti m ony about the Br oke r’ s A lly

dis ks. R ose nsw ei g c ont en ds tha t the a rb itr at or s a ct ed w ith in the ir discretion because any

further e vidence about th e disks would h ave been cu m ul at iv e an d i m

m at eri al . A rb itr at or s “ en

j oy w ide la tit

ude in co nduc tin g an arb itr at ionhe ar ing , ” an d the y “ ar e not c onstra ine d by

f orm al r ule s of pr oc ed ur e or e vid en ce . ” Ro bbi ns v . D ay , 954 F . 2d 6 79, 685 ( 11th C ir . 199 2) , ove rr ule d onoth er

gr ound s, F ir st Options of Chicago, Inc. v. K aplan, 514 U. S. 938, 948 (199 5). “ An ar bitrator need not cons ider all the evidence the parties see k to int roduce but m ay rej ect evidence that i s c um

ulativ e or ir re le vant. ” S co tt v. P ru de nti al S ec . , I nc . , 141 F . 3d 1 007, 1 0 1 7 (1 1 t h Ci r. 1 9 9 8 ). In ad d i t i o n , “ [a ] fe d er al co u rt m ay v ac at e a n ar b i t ra t o r’s aw ard only

if the ar bitrator’ s refusal to hear pertinent and m aterial e vidence12

prej udices the rights of the parties to the arbitration proceedings.” H oteles Condado Beach, L a Concha & C onvent ion Ctr. v. Union De Tr onqu istas Local 901, 763 F.2d 34, 40 (1st Cir. 1985). Inthi s c as e, the pane l di d no t e xpl ai n it s re as ons fo r lim iti ng M or gan S tanle y ’ s a bil ity to intro duc e te sti m ony

a nd c ro ssexam ine Rosensweig about the back-up di sks, so we inquire w hether there w as an y r ea sona ble ba sis f

or it s de ci sio n. S ee S ch m idt v. F inb er g, 942 F . 2d 1 571, 1574 (11th Cir. 1991). W e conclude that the arbitrators com m itted no m iscondu ct because they had several r easonable bases for lim iting evidence about the disk s, none of w hich prej udiced Morgan Stanley . First, the arbitrators re asonablycould have conclud ed that a ddi tio na l t es tim ony w oul d have be enc um

ulativ e. Mo rg anS tanle y ’ s m oti on to r eo pe n so ught

to intro duc e te sti m ony

that the dis ks c ont ai ne d si gni fi cant am ount s of

Ro se nsw ei g’ s c lie nt i nf

orm at ion , ha d no vir

use s ( co ntr ar

y to Rosensweig’ s representations during discovery ), and wer e used shortlyafter Rosensweig’ s term ination . The panel granted the m otion insofar as Morgan Stanley sough t to introd uce a har d copy of the contents of the disk s, so addition al te sti m ony w as not ne ce ssary

to es ta bli sh tha t the dis ks c ont ai ne d m ost of Rosensweig’ s client data. Moreover, the rec ord shows that Morgan Stanley had al re ady dis cr ed ite d R ose nsw ei g’ s c la im that i t de pr ive d hi m

of a ll his c lie nt d at a13

dur ing it s c ro ss- ex am inatio n of Ro se nsw ei g a t the ini tia l he ar ing . R ose nsw ei g adm itt ed that he ha d a cc es s to c ont ac t i nf orm at ionf

or m an y of his c lie nts soo n af te r his te rm inatio n, that he e ve ntu al ly w as able to re tr ie ve a ll the da tae xc ep t f or h i s c l i e n tn o t e s f

r o m th e d i s k s , a n dt h a ts o me c l i e n t s f o l l o w e dh i m t o h i s n e wf i rm. T he iss ue of

w hy Ro se nsw ei g f

ai le d to pr oduc e the ba ck -u p di sks unt il the e ve of arbitration was not covered during Rosensweig’ s testim ony , but Morgan Stanley ha s no t e xpl ai ne d ho wthi s di sc ove ry iss ue is subs tanti ve ly

r el ev an t t o Ro se nsw ei g’ s c la im s. W e do n ot s ee w ha t a se co nd c ro ss- ex aminatio n of Ro se nsw ei g w oul d have a dde d to the r ec or d. Mor gan S tanle y

ins ist s th at

the te sti m ony

it sou ght to intro duc e w oul d have de fe at ed Ro se nsw ei g’ s c la im s and d em onstrate d th at he suf fe re d no da m ag es by show ing that M or gan S tanle y pr ovi de d hi m

w itha ll his c lie nt d at a shor tly a ft er his term ination . W e re

j ect this argum ent. E ven apart fr om the fac t that the evidence w as c um ulativ e, Ro se nsw ei g’ s po sse ssi on o f w orkin g di sks w as not ne ce ssari ly inc onsi ste nt w ithhis r igh t t o r ec ove r fo r br ea chof e m plo ym en t a gr ee m en t, to rti ou s i nt erfe ren ce, an d c on ve rs io n. Mor gan S tanle y ’ s im

pr ope r re te nti on o f Ro se nsw ei g’ s B ro ke r’ s A lly da ta wa s one theory

advanced in supp ort of eac h of his claim s, and thus testim ony that Ro se nsw ei g ha d a cc es s to that datasoo n a ft er his te rm inatio n arg uably w oul d have14

be enr el ev an t. N one the le ss, the pane l’ s r ef usa l t o he ar

te sti m ony

about the dis ks did no t deprive Morgan Stanley of a f air hear ing in this case. See Hoteles Co nda do B ea ch , 763 F . 2d at 40 ( not e ve ry f ai lur e of a n arb itr at or

to re ce ive re le vant e vid en ce a m ount s to m isc ondu ct r equir ing va catur

of the a w ar d) . T he evidence Morgan Stanley sough t to introd uce w ouldhave shown that it provid ed Ro se nsw ei g w ithdis ks c ont ai nin g m ost of his Br oke r’ s A lly

da tasoo n a ft er

his te rm inatio n, dis cr ed iti ng h is a lle ga tio ns tha t i t de pr ive d hi m of his c lie nt r ec or ds an d pr ev en te d hi m

f ro m c ont ac tin g hi s c lie nts . R ose nsw ei g’ s own te sti m ony a lso ha d th is e ff

ec t. T he e vid en ce c onc er nin g th e ba ck -u

p di sks doe s no t a ddr es s, however, a cr

ucial part of Rosenswe ig’ s client data-re lated claim s--that Morgan Stanley im properly copied his client lis ts and dis tributed them to Morgan Stanley br oke rs , w ho the n so lic ite d hi s c lie nts . T hus, the pane l r ea sona bly c oul d have co nc lud ed

that, e ve n if

Mo rg anS tanle y

pr om ptl y pr ovi de d R ose nsw ei g w ith co pie s of his Br oke r’ s A lly

da taa ft er

his te rm inatio n, Mo rg anS tanle y ne ve rthe le ss wa s l i ab l e f

o r b re ac h o f e m

p l o ym en tag re emen to n t h e b as i s o f R o s en s we i g ’s testim ony that his em

ploym ent agreem ent providedthat his client inform ation was his prop erty , and he received m any calls inform ing hi m

that Morgan Stanley br oke rs w er e ca lli ng i ndi vid ua ls o n hi s c lie nt l ist s a ft er his te rm inatio n, usi ng co pie s m ad e by

Mo rg anS tanle y . R ose nsw ei g’ s to rt iou s in te rf er en ce a nd15

conversion claim s wer e supported bythe sam e testim ony . The arbitrators reasonably

could have conclud ed that tortious interfer ence lay , not in Morgan St an le y de pr ivi ng R ose nsw ei g of his c lie nt d at a, but

in Mor gan S tanle y

br oke rs ’ use of Ro se nsw ei g’ s c lie nt l ist s to sol ic it his c ust om er s. S im ilarl y , the y c oul d ha ve c onc lud ed

that c onve rs iondid

not li e in M or gan S tanle y

de le tin g a ll of Rosensweig’ s client data, but in its retaining copi es of his client lists, as we ll as fa ili ng t o r et

ur n th e cl ie nt n ote s c om

pone nt o f his Br oke r’ s A lly da ta . T hus, to the ex te nt tha t e vid en ce that M or gan S tanle y pr ovi de d R ose nsw ei g w ithba ck -u p di sks of his Br oke r’ s A lly

dataw as r el ev an t t o on e of Ro se nsw ei g’ s th eo ri es f

or re co ve ry , the a rb itr at or s c om m itt ed no m isc ondu ct

by dis al low ing it

in lig ht o f Rosensweig’ s unrefuted testim ony that Morgan Stanley

retained and used copies of his c lie nt l ist s and f

ai le d to r et

ur n hi s c lie nt n ote s. Mor eo ve r, Ro se nsw ei g’ s th eo ry of w ro ngf ul t er m inatio n pr ovi de s aw hol ly independ ent basis from

which the panel re asonablycould have conclud ed that Ro se nsw ei g ha d e sta

bli she d hi s c la im s, e ve n if Ro se nsw ei g ha d c om

ple te a cc es s to h is B ro ke r’ s A lly

da taa ft er

his te rm inatio n. O n hi s br ea chof e m plo ym en t agreem ent claim , R osensweig’ s evidence indicated that Morgan StanleyBe fore the ar bitration hear ing beg an, Morga n Stanley filed a motion to dismiss arguing that 1 Rosensweigwas a

n at-will employ ee a

nd thus no just cause for termination was re quired. The panel denied this motion, and Morga n Stanley has not appea led. Thus, we assume that Morg an Stanley could not terminate Rosenswe ig w ithout jus t cause . 16 term inated him

without just cause in violation of the term s of his em ploym ent, an

1 iss ue to w hic h th e dis ks are im m at er ia l. R ose nsw ei g’ s to rt iou s in te rf er en ce c la im is s uppo rt ed

by e vid en ce that M or gan S tanle y r ep orte d f

al se r ea sons f

or his term ination on the Form

U- 5, knowing this would prom pt an investi gation th at w oul d e ff ec tiv el y sus pe nd h is b ro ke r’ s li ce nse a nd thus pr ec lud e him f ro m j oin ing a n ew fi rm

an d c on du ct in g s ecu rit ie s t ran sa ct io ns forhi s cl ie nt s fo r m on th s. Fi na lly , the dis ks are a lso im m at er ia l t o R ose nsw ei g’ s a lte rn at e the or y of co nve rs ion , on whic h th e ev ide nc e show ed that M or gan S tanle y

im pr ope rl y tr eate d hi s de fe rr ed

c om pe nsa tio n, sto ck

opt ion s, a nd b onus es a s f or fe ite d by cl ai m in g t ha t h is ter m in at io n was forcau se . Mor gan S tanle y

dis ag re es that w ro ngf

ul t er m inatio n is apr ope r the or y f or su st ai ni ng Ro se ns weig ’s cla im s. Ci tin g af ootnot e in the state m en t of c la im in w hic h R ose nsw ei g st at ed , “ T he r el ie f that R ose nsw ei g se ek s inthi s c as e doe s no t depend on whether

his term ination wa s for ca use or not for cause, ” Morgan Stanley argued before the arbitration panel and now argues on appeal that Rosensweig never asserted a claim for wrongful term ination . It contends, rather ,17

that the e sse nc e of

Ro se nsw ei g’ s c om

pla int w as that M or gan S tanle y sto le his co m put er iz ed c lie nt r ec or ds, a nd tha t R ose nsw ei g un fa ir ly ha s a tte m

pte d to r ec as t hi s cl ai m s t o fi t t he ev id en ce as th e arb it rat io n p ro gr es se d. Af t era t h o ro u g h re v i ew o f t h e r ec o rd , we co n cl u d e t h at Mo rg an St an l ey’s re ad ing of

the state m en t of

c la im a nd the arb itr at ionpr oc ee din gs i s no t an a cc ur at e one . I t i s tr

ue that R ose nsw ei g di d no t a sse rt ac la im e nti tle d w ro ngf

ul te rm inatio n, but

thi s is c onsi ste nt w ithF lor ida laww hic h pr ovi de s no a ct ionf or the c om m on l awtor

t of w ro ngf ul t er m inatio n. S ee Ba ss v . Me tr o D ad e Co unty D ep ’ t of Co rr . & Re hab. , 798 S o. 2d 8 35, 836 ( Fl a. D ist . Ct . App. 200 1) . T he re co rd a s aw hol e is c le ar

that R ose nsw ei g a dvanc ed the le ga l the or

y of w ro ngf ul te rm inatio n to sup port hi s c la im s, w ithMo rg anS tanle y ’ s us e an d r et en tio n of his cl i en td at a f

ro m Br o k er ’s Al l y an al t ern at i v e t h eo ry fo r r el i ef . M o rg an St an l ey’s own pleadings b elie its present intim ation that it d id not rec eive fair notice that Ro se nsw ei g w as a dvanc ing the the or y of w ro ngf ul t er m inatio n. I n it s answ er

to his state m en t of

c la im , it a rg ue d f or the dis m iss al of

“ Ro se nsw ei g’ s c la im

f or

‘ wr ongful term ination ’ or ‘ breach of e m ploym ent agreem ent’ ” on the ground s that he w as a n a t- w ill e m

plo y ee . T hus, w e re

j ec t M or gan S tanle y ’ s c hara ct er iz at ionof t h e c a s e a s tu rn i n g o n i t s h a n d l i n g o f R o s e n s w e i g ’s c l i e n tr e c o r d s ; t o t h e c o n t r a ry,18

w ro ngf ul t er m inatio n w as asig nif

ic an t, ind ep en de nt i ssu e, a nd o ne to w hic h th e ba ck -up d is ks were i m

m at eri al . Insum , the dis tr ic t c ourt c or re ct ly de nie d M or gan S tanle y ’ s m oti on t o va cate the a rb itr at iona w ar d be ca use the a rb itr at or s r ea sona bly c oul d have co nc lud ed

that the te sti m ony

Mo rg anS tanle y

sou ght to intro duc e w as c um

ulativ e an d no t de te rm inativ e of

the c la im s onwhic h R ose nsw ei g pr ev ai le d, a nd thus Mor gan S tanle y

w as not de pr ive d of

af ai r he ar ing . S ee L es sinv. Me rr ill L ync h, Pi er ce , F en ne r & S m ith , I nc . , 481 F . 3d 8 13, 818 -1 9 ( D . C. Ci r. 200 7) ( ar bitrator s’ refusal to hear

cum ulative or im

m aterial te stim ony

does not d eprive parties of a fair hearing). II. Mor gan S tanle y

a lso a rg ue s th at

the dis tr ic t c ourt e rr ed

by or de ri ng the ex pung em en t of

Ro se nsw ei g’ s r eg ulator

y r ec or d a s r ec om

m en de d by

the ar bitratio n aw ar d, c ont en din g th e ex pung em en t i s a ga ins t pu bli c pol ic y . S ee D el ta Air Li ne s, In c. v. Ai r Lin e Pi lo ts Ass ’n, Int ’l, 86 1 F .2d66 5, 6 70 (11 th Cir . 19 88 ). A cc or din g to Mo rg anS tanle y ’ s r ea din g of the a rb itr at iona w ar d, the e xpun ge m en t re m ove s no t on ly

the f al se r ea sons f

or Ro se nsw ei g’ s te rm inatio n bu t a lso a ll co m pla int s th at

w er e fi le d a ga ins t R ose nsw ei g be fo re his te rm inatio n, sw ee pin g his regulatory

rec ord clean in a w ay

that will m islead the pub lic.19

T he r el ev an t po rt ionof

the a w ar d r ea ds: [T ] he Panel r ecom

m ends that all docu m entation in [N ational As s o ci at i o n o f S ec u ri t i es De al er s Ce n t ra l Re g i s t ra t i o n De p o s i t o ry] refe rencing the Morgan Stanley , D W , I nc. discharge be changed such that 1) any

“ Ye s” answer s to Questions 1 4J1 and/ or 22N1 subm itted on s ubse que nt F orm

U -4 f ili ngs be c hange d to “N o” , 2) a ny Disclosure Reporting Pages be expunged and 3) any other do cu m en ta ti on be ex pu ng ed . T he e xpun ge m en t or de r ba se d onthi s r ec om m en da tio n a ff

ec ts o nly tho se item s in Rosensweig’ s regulatory rec ord that refe r to his term ination from Morgan Stanley and thus is com

pletely consistent with public pol icy . Morgan Stanley contends that the language “ any other docum entation” in th e third enum erate d ite m e nc om pa sse s a ll cu sto m er

c om pla int s inRo se nsw ei g’ s r ec or d, inc lud ing tho se F orm

U -4 s f ile d be fo re his te rm inatio n, but Mo rg anS tanle y

r ea ds the recom m endation to o broadly . The thre e enum erate d item s for expungem ent all are qua lif ie d by the intro duc tor

y phr as e “ al l do cu m en ta tio n in[ N at ion al A sso ci at ion of Sec urities Dea lers Centra l Registration Depository ] ref erencing the Morgan St an le y , D W , I nc . dis ch ar ge . ” T he or de r is p ro pe rl y w ri tte n to e lim inate a ll adve rs e re ports b as ed

on R ose nsw ei g’ s di sc harg e fr om Mo rg anS tanle y , but noth ing else. W e A FF IRM the dis tr ic t’ s or de r co nf ir m ing the a rb itr at iona w ar d and or de ri ng a

li m ite d e xpun ge m en t of

Ro se nsw ei g’ s r eg ulator

y r ec or d.