RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 08a0010p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

DONNA UHL, Individually and as Personal

Representative of the Estate of Lynn Uhl,

Plaintiff - Appellee,

PACIFIC EMPLOYER’S INSURANCE COMPANY,

Intervenor-Plaintiff-Appellee,

v.

KOMATSU FORKLIFT COMPANY, LTD.; KOMATSU

FORKLIFT, U.S.A., INC.,

Defendants - Appellants.

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No. 07-1044

Appeal from the United States District Court

for the Eastern District of Michigan at Detroit.

No. 04-10148—David M. Lawson, District Judge.

Argued: November 2, 2007

Decided and Filed: January 9, 2008 

Before: SILER, MOORE, and GILMAN, Circuit Judges.

_________________

COUNSEL

ARGUED: Fred J. Fresard, BOWMAN & BROOKE, Troy, Michigan, for Appellants. David R.

Skinner, SKINNER PROFESSIONAL LAW CORP., Bay City, Michigan, for Appellee.

ON BRIEF: Fred J. Fresard, BOWMAN & BROOKE, Troy, Michigan, for Appellants. David R.

Skinner, SKINNER PROFESSIONAL LAW CORP., Bay City, Michigan, for Appellee.

_________________

OPINION _________________

KAREN NELSON MOORE, Circuit Judge. In this case, the appellants challenge the

validity of an arbitration award where one of the party-selected arbitrators had previously and

occasionally served as co-counsel with the attorney representing the intervening plaintiff in the

instant case. Because we conclude that this relationship did not violate the arbitration agreement

or rise to the level of evident partiality, we AFFIRM the district court’s judgment.

1
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 2

1

Komatsu Forklift Company, a Japanese company, and Komatsu Forklift U.S.A., collectively the appellants,

are both wholly-owned subsidiaries of Komatsu, Ltd. As such, we will treat them as one party.

2

When Pacific first intervened, it was listed as “Liberty Mutual Insurance.” However, for reasons unstated, it

was subsequently listed as “Pacific Employer’s Insurance Co.” At all times Johnson was the intervening plaintiff’s

counsel.

I. BACKGROUND

On December 17, 2001, Lynn Uhl was using a forklift manufactured by the Komatsu Forklift

Company1

 (“Komatsu”) when the forklift allegedly “malfunctioned and failed resulting in severe

injuries . . . which ultimately resulted in his death.” Joint Appendix (“J.A.”) at 16 (Compl. ¶ 4).

This case is largely one of procedure and not substance; thus, the circumstances of, and Komatsu’s

influence on, the events that caused Lynn Uhl’s death are not at issue in this appeal. Instead, this

appeal concerns the fairness and equity of the legal wrangling that followed.

On June 21, 2004, Donna Uhl (“Uhl”), individually and as personal representative of the

estate of Lynn Uhl, filed a tort action against Komatsu in the U.S. District Court for the Eastern

District of Michigan. Shortly thereafter, the parties stipulated to Pacific Employer’s Insurance

Company’s (“Pacific”) intervention as a plaintiff. Attorney Roy Johnson (“Johnson”) represented

Pacific.2

After nearly a year of discovery, on November 8, 2005, the parties agreed to binding

arbitration. As part of the parties’ stipulation, they set a deadline of January 31, 2006, for the

conclusion of the arbitration. Concurrent with the stipulation to use binding arbitration, the district

court dismissed the case, although the district court retained jurisdiction until February 28, 2006,

“to review and enforce or vacate any arbitral award.” J.A. at 57-58 (Nov. 14, 2005, Order of

Dismissal).

The parties, however, were unable to agree on an arbitration agreement that would govern

the proposed arbitration, and each side blames the other for the failure. Regardless of the causes,

by March 30, 2006, well after the deadline for arbitration, there was still no arbitration agreement

among the parties, and Uhl and Pacific filed a motion to compel arbitration. In response, Komatsu

argued that the district court no longer had jurisdiction over the case because the district court

retained jurisdiction over the arbitration for only a limited (and expired) time frame, and for only

a limited set of issues. The district court denied Uhl and Pacific’s motion to compel arbitration, but

reinstated the case to the active docket. On appeal the parties do not contest this ruling.

Discovery continued during the course of this protracted debate. On December 16, 2005,

the parties deposed Peter Barroso (“Barroso”). Barroso later testified that, during his deposition,

Fred Fresard (“Fresard”), counsel for Komatsu, noted to Johnson that he was aware that the plaintiffs

were going to nominate Martin Stein (“Stein”) as their party-selected arbitrator. Barroso also claims

that Fresard indicated his awareness that Stein and Johnson had worked together on prior cases.

Fresard does not dispute Barroso’s statement but claims that Johnson told him only “that he had

represented the intervening plaintiff in one or two cases in which Martin Stein represented the

plaintiff.” J.A. at 237 (Fresard Aff. ¶ 6). Fresard claims that Johnson never told him that Johnson

and Stein had ever acted as co-counsel. J.A. at 238 (Fresard ¶ 7).

Only ten days after the district court reinstated the case to the active docket, the parties

signed an arbitration agreement. The agreement provided for three arbitrators; each party would

nominate one and the party-selected arbitrators would pick a third, neutral arbitrator. The agreement

required that the party-selected arbitrators be “practicing attorney[s] possessing experience in
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 3

judicial litigation, a substantial portion of which experience shall involve product liability matters.”

J.A. at 110 (Agreement ¶ 1). The agreement also imposed ethical constraints on the arbitrators:

2. Ethical Requirements. The Arbitrators shall have no financial or personal

interest in the result of this Arbitration. Prior to selecting the neutral arbitrator,

the party-selected arbitrators shall disclose to all parties any referral agreements,

financial dealings, or other relationships with any of the parties or parties’

attorneys that could in any way be construed as a possible conflict of interest.

After such disclosure, either party may demand that the conflicted arbitrator

recuse him/herself, and a new arbitrator will be selected by the party who

originally selected the recused arbitrator.

J.A. at 110 (Agreement ¶ 2).

The arbitration agreement also imposed limits on the parties’ post-award rights. The

agreement stated that “[t]here can be no appeal from any decision made by the arbitrators except a

claim of fraud or that the arbitrators, parties or their attorneys violated one of the provisions of this

Agreement.” J.A. at 111 (Agreement ¶ 7). Similarly, the agreement stated that “[t]he award shall

be exclusive, final, and binding to all issues and claims that were raised or could have been raised

in Plaintiff’s and Defendants’ respective pleadings,” J.A. at 113 (Agreement ¶ 28), and that “the

Arbitrators’ award will be exclusive, final, and binding,” J.A. at 114 (Agreement ¶ 33).

In mid-August 2006, the arbitration hearing began. Komatsu subsequently alleged that there

were several incidents during the hearing that indicated bias on the part of Stein. First, Komatsu

claims that a paralegal at the hearing overheard Stein tell the other arbitrators “[t]hat Fresard is a

prick.” J.A. at 252-53 (Dec. 7, 2007, Mot. to Enf. Award Hr’g Tr. at 12:23-13:5). Second, Komatsu

claims that Stein closed his eyes during Komatsu’s arguments and did not pay attention to its

attorneys. Third, Komatsu claimed that Stein did not inspect the forklift with the other arbitrators

until Komatsu’s attorneys found him in the hotel. Fourth, Komatsu claimed that several evidentiary

decisions by the panel of arbitrators were suspect and that Stein “always argued for the Plaintiffs’

motion.” J.A. at 256 (Hr’g at 16:2-23). Komatsu, however, did not object to any of these alleged

events during the arbitration hearing.

After the hearing, while the parties waited for the arbitrators’ decision, the parties stipulated

to dismiss the tort-action lawsuit. In response, the district court dismissed the case with prejudice

but once again retained jurisdiction “to review and enforce or vacate the arbitral award.” J.A. at

121-22 (Aug. 30, 2006, Order of Dismissal).

On September 12, 2006, the arbitrators announced an award of $1.9 million for Uhl and

Pacific. Komatsu claims that the size of the award provoked its suspicions, and it soon discovered

that Stein and Johnson had a professional relationship that included at least two occasions when

Stein and Johnson served together as co-counsel. On September 27, 2006, Komatsu filed a motion

to vacate the arbitration award. Komatsu claimed, as it does here, that Stein’s decision not to

disclose his prior relationship with Johnson entitled Komatsu to rescission of the arbitration

agreement. Komatsu also argued, as it does here, that Stein’s decision not to disclose his prior

relationship with Johnson was a violation of the Federal Arbitration Act (“FAA”), requiring the

district court to vacate the award.

At a hearing to evaluate the motion to vacate, the district court questioned Johnson about the

extent of his relationship with Stein. Johnson told the court that he never had a financial relationship

with Stein, a referral fee with Stein, or used Stein as an arbitrator before the instant case. J.A. at 270

(Hr’g at 30:7-24).
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 4

On December 8, 2006, the district court confirmed the arbitration award and denied

Komatsu’s motion to vacate. The district court evaluated Stein’s obligations under the FAA and

concluded that Stein did not violate the FAA’s provisions. In evaluating Stein’s actions under the

FAA, the district court applied a reasonable-person standard to conclude that there was no conflict

of interest between Stein and Johnson. The district court further believed that Komatsu waived this

argument by waiting until after the arbitration award was announced to object to Stein’s alleged bias.

The district court also evaluated the FAA provisions regarding fraud, procedural fairness, and the

scope of the arbitrator’s authority. The district court concluded that Komatsu failed to establish a

violation under any of the FAA’s provisions. On the same day, Komatsu appealed to this court.

Uhl and Pacific asked a motions panel of this court to dismiss Komatsu’s appeal on the

grounds that this court lacks jurisdiction. According to Uhl and Pacific, the arbitration agreement

did not provide for review by the Sixth Circuit, and therefore, there is no jurisdiction to hear this

appeal. The motions panel referred the matter to the hearing panel because “[t]he arguments raised

in the motion to dismiss and the response in opposition go to the heart of the appeal.” Uhl v.

Komatsu Forklift Co., No. 07-1044 (6th Cir. Mar. 12, 2007) (Order).

II. JURISDICTION

It is incumbent upon us first to address the issue of whether we have jurisdiction to rule on

this matter. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 95 (1998). Uhl and Pacific

contend that the arbitration agreement makes this case nonappealable beyond the district court. In

particular, they point to the sections of the arbitration agreement that state that “[t]he award shall

be exclusive, final, and binding to all issues and claims,” J.A. at 113 (Agreement ¶ 28), and that

“[t]he parties shall be deemed to have consented to the Arbitrators’ judgment upon the receipt of the

arbitration decision,” J.A. at 114 (Agreement ¶ 30).

The question is whether that language is enough to strip this court of jurisdiction. Uhl and

Pacific claim that MACTEC, Inc. v. Gorelick, 427 F.3d 821 (10th Cir. 2005), cert. denied, 547 U.S.

1040 (2006), interprets similar language as a waiver of appealability. MACTEC says nothing of the

sort. In MACTEC, the Tenth Circuit demanded that any waiver of judicial review be “clear and

unequivocal.” Id. at 828 (internal quotation marks omitted). The MACTEC court specifically held

that the “use of the term ‘final’ would not, by itself, be enough to convey an intent to eliminate

appellate rights, [but] inclusion of the term ‘nonappealable’ serves this purpose.” Id. at 830 (citation

omitted).

Despite what Uhl and Pacific suggest, MACTEC supports our conclusion that we properly

have jurisdiction. Nowhere in the arbitration agreement do the parties express the intent that the

award will be nonappealable. Instead, the parties state that the award will be “final,” and just as that

was not enough for the Tenth Circuit, “final” without express language of nonappealability is not

enough for this court either. We have previously found jurisdiction to hear an appeal of a district

court’s review of an arbitrator’s decision when the arbitration agreement used very similar language

that stated that “[t]he award of the arbitrator shall be considered final and binding.” Green v.

Ameritech Corp., 200 F.3d 967, 970-974 (6th Cir. 2000). Furthermore, we have previously held in

the context of a federal labor dispute that language that a decision was “final and binding on the

parties, and further rights of appeal are hereby waived except that all articles must be in

conformance with law and Executive Order” did not deprive us of jurisdiction because it preserved

some appealability. Dep’t of the Air Force v. Fed. Labor Relations Auth., 775 F.2d 727, 733 (6th

Cir. 1985). Our precedent, therefore, sets a high bar for the waiver of appealability.

We conclude that the arbitration agreement in the case at hand did not waive appealability.

Not only does the arbitration agreement say nothing that expresses a desire to waive appealability,

but even the language that made the award “final” was tempered by a commitment to future judicial
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 5

intervention. The agreement stated that the district court “shall retain jurisdiction of this matter for

the purpose of . . . enforcing any award entered by the Arbitrators.” J.A. at 114 (Agreement ¶ 36).

Uhl and Pacific’s brief concedes that this language provides a basis for judicial review for “a claim

of fraud or a violation of the arbitration agreement.” Appellees Br. at 5. Furthermore, the parties’

own actions suggest that they accepted a greater judicial role than Uhl and Pacific now admit; after

the arbitration was complete, the parties filed a stipulation for dismissal that directed the district

court to “retain jurisdiction to settle any dispute between the parties regarding the enforcement of

the Arbitration Award.” J.A. 119-20 (Stip. to Dismiss) (emphasis added). In response to the

stipulation, the district court retained jurisdiction “to review and enforce or vacate the arbitral

award.” J.A. at 121-22 (Dismissal). Thus, the language of finality is tempered by an active role for

the district court and, in the absence of language that would limit appeals to no higher than the

district court, we cannot say that this was a clear waiver of appealability.

Given that there was no waiver of appealability, we apply the usual rule that arbitration

agreements are generally appealable. See 9 U.S.C. § 16; MICH. CT. RULE 3.602(N) (“Appeals may

be taken as from order[s] or judgments in other civil actions.”). Accordingly, we conclude that we

have jurisdiction to hear the appeal under 28 U.S.C. § 1291 as a standard appeal from the final

decision of a district court.

III. GOVERNING LAW

Before addressing the merits of this case, we must determine the law that governs our review.

On appeal, Komatsu presents two different types of arguments: (1) a Michigan contract-law

argument and (2) an argument based on the FAA. These two arguments are governed by two

different sets of law.

When considering Komatsu’s contract-law argument, “[b]ecause we are sitting in diversity,

we apply the law, including the choice of law rules, of the forum state.” Himmel v. Ford Motor Co., 342 F.3d 593, 598 (6th Cir. 2003) (footnote and citation omitted). In this case, the forum state is

Michigan, so we must apply the law that Michigan would apply when interpreting the arbitration

agreement.

“The predominant view in Michigan has been that a contract is to be construed according

to the law of the place where the contract was entered into.” Chrysler Corp. v. Skyline Indus. Servs.,

Inc., 528 N.W.2d 698, 702 (Mich. 1995) (footnote omitted). However, that rule changed when the

Michigan Supreme Court noted that “[t]he trend in this Court has been to move away from

traditional choice-of-law conceptions toward a more policy-centered approach.” Id. (footnote

omitted). In Chrysler, the Michigan Supreme Court endorsed the approach found in the Restatement

(Second) of Conflict of Laws; therefore, Michigan courts “balance the expectations of the parties

to a contract with the interests of the states involved to determine which state’s law to apply.” Mill’s

Pride, Inc. v. Cont’l Ins. Co., 300 F.3d 701, 705 (6th Cir. 2002) (quotation marks omitted) (quoting

Equitable Life Assurance Soc’y of the U.S. v. Poe, 143 F.3d 1013, 1016 (6th Cir.1998)). According

to the Restatement approach:

In the absence of an effective choice of law by the parties . . . , the contacts to be

taken into account . . . to determine the law applicable to an issue include:

(a) the place of contracting,

(b) the place of negotiation of the contract,

(c) the place of performance,

(d) the location of the subject matter of the contract, and

(e) the domicil, residence, nationality, place of incorporation and place of

business of the parties.
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 6

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188(2) (1971).

In the case at hand, the arbitration agreement does not contain a choice-of-law provision to

select the law that governs interpretation of the arbitration agreement. Thus, we apply the

Restatement approach and we conclude that all five of the Restatement elements point toward

Michigan law, so we will apply Michigan contract law when interpreting the arbitration agreement.

Although the agreement does not contain a choice-of-law provision, the agreement does

contain a provision that establishes the default rules governing the arbitration itself: “The

proceeding under this Agreement shall be deemed an arbitration proceeding subject to the Michigan

Arbitration Act, MCL 600.5001 et seq., the Federal Arbitration Act, 9 USC 1 et seq., and MCR

3.602.” J.A. at 114 (Agreement ¶ 29). Typically, the FAA would not apply to this arbitration

agreement. “While the FAA applies to a broad scope of cases in federal courts, it does not apply to

all. The FAA applies only to written arbitration provisions in ‘contract[s] evidencing a transaction

involving commerce’ and ‘maritime transactions.’” Brown v. Hyatt Corp., 128 F. Supp. 2d 697, 700

(D. Haw. 2000) (quoting 9 U.S.C. § 2) (holding that an arbitration agreement entered into after a tort

occurred is not governed by the FAA). However, because the parties invoked the FAA in the

arbitration agreement and rely heavily upon cases applying the FAA, we also will construe the

parties’ obligations with respect to the FAA. In addition, although the clause in the arbitration

agreement also mentions Michigan law, Michigan’s arbitration law is almost identical to the FAA

in all relevant respects. Compare MICH.CT.RULE 3.602(J)(1)(b), with 9 U.S.C. § 10. Thus, we will

consider Komatsu’s FAA claims and the parties’ default obligations with respect to our caselaw

interpreting the FAA.

IV. ARBITRATOR STEIN’S OBLIGATIONS

A. Contract-Law Argument

1. Standard of Review

“When reviewing a district court’s decision to confirm or vacate an arbitration award, we

review factual findings for clear error and questions of law de novo.” Green, 200 F.3d at 974; see

also Nationwide Mut. Ins. Co. v. Home Ins. Co., 429 F.3d 640, 643 (6th Cir. 2005) (“Nationwide

IV”); Int’l Bhd. of Teamsters, Local 519 v. United Parcel Serv., Inc., 335 F.3d 497, 503 (6th Cir.

2003).

2. Overview

The first of Komatsu’s arguments is that the arbitration agreement itself was violated when

Stein failed to disclose his prior relationship with Johnson. The exact provision of the agreement

in question reads:

2. Ethical Requirements. The Arbitrators shall have no financial or personal

interest in the result of this Arbitration. Prior to selecting the neutral arbitrator,

the party-selected arbitrators shall disclose to all parties any referral agreements,

financial dealings, or other relationships with any of the parties or parties’

attorneys that could in any way be construed as a possible conflict of interest.

After such disclosure, either party may demand that the conflicted arbitrator

recuse him/herself, and a new arbitrator will be selected by the party who

originally selected the recused arbitrator.

J.A. at 110 (Agreement ¶ 2) (emphases added). According to Komatsu, this provision gives the

arbitrator no choice as to whether to disclose past relationships; the arbitrator must disclose anything

that could be construed as a conflict of interest. In contrast, Uhl and Pacific appear to believe that
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 7

the first sentence of the paragraph serves to limit the scope of rest of the paragraph, thus requiring

disclosures only of those things that would suggest a financial or personal interest in the result of

the arbitration.

According to Komatsu, when Stein failed to disclose his relationship with Johnson, Komatsu

was entitled to rescission of the entire arbitration agreement on the basis of fraud in the inducement.

Komatsu made this same argument to the district court in Komatsu’s motion to vacate, but the

district court did not explicitly address it. In the course of addressing Komatsu’s FAA argument,

however, the district court stated that “there was no obligation on Stein’s part to make the

disclosures suggested by the defendants under the plain language of the arbitration agreement.” J.A.

at 37 (Op. at 13). It is therefore apparent that the district court sided with Uhl and Pacific in

interpreting this provision of the arbitration agreement.

A party must typically request vacation under the FAA, rather than try to attack an arbitration

agreement through breach-of-contract claims. Decker v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 205 F.3d 906, 908 (6th Cir. 2000) (calling a breach-of-contract claim an impermissible

collateral attack and stating that “the FAA provides the exclusive remedy for challenging acts that

taint an arbitration award”); Corey v. New York Stock Exch., 691 F.2d 1205, 1211-12 (6th Cir. 1982).

However, a litigant can attack the contract itself if “there was any defect in the underlying agreement

to arbitrate the dispute.” Corey, 691 F.2d at 1212. Komatsu alleges that Stein’s failure to disclose

his relationship with Johnson was such a defect and that Komtasu is therefore entitled to challenge

the validity of the arbitration agreement. Although we agree that Komatsu can challenge the

arbitration agreement, we conclude that Komatsu’s challenge falls short.

3. Rescission and Fraud in the Inducement

We need not resolve the parties’ dispute regarding the correct interpretation of Paragraph 2

of the arbitration agreement because we conclude that Komatsu is requesting a form of relief to

which it is not entitled even if its interpretation is correct. According to Michigan law, an arbitration

agreement “shall be valid, enforceable and irrevocable save upon such grounds as exist at law or in

equity for the rescission or revocation of any contract.” MICH. COMP. LAWS § 600.5001(2).

Komatsu claims that it is entitled to rescission on the ground of fraud in the inducement. Parties are

entitled to bring a fraud-in-the-inducement action when they are induced into entering an agreement

on the basis of false representations. See Rood v. Midwest Matrix Mart, Inc., 87 N.W.2d 186, 190

(Mich. 1957) (distinguishing between fraud in the inducement and fraud in the execution). To

establish successfully a claim for fraud in the inducement, Komatsu would need to establish six

things:

(1) the defendant made a material representation; (2) the representation was false; (3)

when the defendant made the representation, the defendant knew that it was false, or

made it recklessly, without knowledge of its truth and as a positive assertion; (4) the

defendant made the representation with the intention that the plaintiff would act upon

it; (5) the plaintiff acted in reliance upon it; and (6) the plaintiff suffered damage.

Custom Data Solutions, Inc. v. Preferred Capital, Inc., 733 N.W.2d 102, 105 (Mich. Ct. App. 2006)

(internal quotation marks omitted).

We conclude that Komatsu cannot establish fraud in the inducement. The Michigan Court

of Appeals has emphasized that fraud in the inducement is not available for a breach of a contract’s

terms, lest fraud in the inducement claims swallow all breach-of-contract claims: “[A] claim of

fraud in the inducement, by definition, redresses misrepresentations that induce the buyer to enter

into a contract but that do not in themselves constitute contract or warranty terms subsequently

breached by the seller.” Huron Tool and Eng’g Co. v. Precision Consulting Servs., Inc., 532
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 8

3

We are skeptical that Komatsu could prevail even in a breach-of-contract action given that it is uncontroverted

that Komatsu knew before it signed the agreement that Uhl and Pacific were going to choose Stein and that Johnson and

Stein had previously worked together. Furthermore, at any point Komatsu could have requested that the arbitrators

disclose conflicts in accordance with the agreement. Thus, Komatsu was aware of the basic facts of the potential conflict

and had it within its power to avoid any harm from a breach of contract. See Carter v. State Farm Mut. Auto. Ins. Co.,

87 N.W.2d 105, 109 (Mich. 1957) (noting Michigan’s requirement that a party take action to mitigate potential losses

from a breach of contract).

N.W.2d 541, 546 (Mich. Ct. App. 1995) (emphasis added). Komatsu claims that the arbitration

agreement required a disclosure that Stein did not make, and Komatsu is, therefore, asking us to find

fraud in the inducement where a party simply failed to uphold its side of the bargain. We cannot

hold that this constitutes fraud in the inducement without turning every breach-of-contract claim into

a claim for fraud in the inducement, because every party enters into an agreement with the

expectation that all parties will abide by the agreement’s terms. This is, therefore, a compelling

reason to deny Komatsu eligibility for rescission.

Furthermore, even if Komatsu’s argument did not swallow all breach-of-contract claims in

contravention of Michigan precedent, it would still be hard to see how the agreement was a

misrepresentation that could trigger rescission. As Custom Data Solutions states, a valid fraud-inthe-inducement claim requires a “representation.” 733 N.W. 2d at 105. While the arbitration

agreement states that the arbitrators will disclose conflicts of interest, it does not warrant or represent

that any one arbitrator is free of conflicts. While perhaps Komatsu might have been able to sustain

a breach-of-contract claim,3 it most certainly cannot now claim that it was induced by the simple

fact that an agreement existed.

B. FAA Argument

1. Standard of Review

As before, “[w]hen reviewing a district court’s decision to confirm or vacate an arbitration

award, we review factual findings for clear error and questions of law de novo.” Green, 200 F.3d

at 974. In addition, in the context of the FAA, our ability to reverse judgments is restricted even

further: “The Federal Arbitration Act (“FAA”) expresses a presumption that arbitration awards will

be confirmed.” Nationwide IV, 429 F.3d at 643. “‘When courts are called on to review an

arbitrator’s decision, the review is very narrow; [it is] one of the narrowest standards of judicial

review in all of American jurisprudence.’” Id. (quoting Lattimer-Stevens Co. v. United

Steelworkers, 913 F.2d 1166, 1169 (6th Cir.1990)).

2. Evident Partiality

In addition to its contract-law claim, Komatsu argues that we should vacate the arbitration

award because Stein’s relationship with Johnson was “evident partiality” in violation of the FAA.

“A federal court may set aside an arbitration award under the FAA only upon a finding that certain

statutory or judicial grounds are present.” The Andersons, Inc. v. Horton Farms, Inc., 166 F.3d 308,

328 (6th Cir. 1998). Those statutory grounds are:

(a) In any of the following cases the United States court in and for the district

wherein the award was made may make an order vacating the award upon the

application of any party to the arbitration—

(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;
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 9

(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. Although there are four statutory grounds for vacating an award, and although the

district court addressed all four, Komatsu now raises claims only with respect to evident partiality.

See Appellants Br. at 31 (“[T]he arbitration award should have been vacated pursuant to 9 U.S.C.

§ 10(a)(2).”); id. at 26-28 (criticizing the district court for applying § 10(a)(4) when Komatsu had

never raised § 10(a)(4) as grounds for vacating). We therefore consider only whether Stein’s

relationship with Johnson constituted evident partiality in violation of the FAA, and we do not

consider any other statutory factors.

Komatsu, in arguing that Stein’s relationship with Johnson constituted evident partiality,

relies heavily upon Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145

(1968), wherein Justice Black wrote that arbitrators “must avoid even the appearance of bias.” Id.

at 150. Komatsu’s reliance on this case, however, is misplaced. Although Justice Black’s meaning

can hardly be questioned, that was not the standard that prevailed in this circuit. Instead, it was

Justice White’s narrower concurring opinion that gained traction. Justice White did not consider

all conflicts created equal; he separated those disclosures that were important from those that were

insignificant. Justice White wrote that “arbitrators are not automatically disqualified by a business

relationship with the parties before them if both parties are informed of the relationship in advance,

or if they are unaware of the facts but the relationship is trivial.” Id. (White, J., concurring)

(agreeing with the majority that the neutral arbitrator’s relationship should have been disclosed).

As the Fifth Circuit recently described, Justice White’s “opinion fully envisions upholding awards

when arbitrators fail to disclose insubstantial relationships.” Positive Software Solutions, Inc. v.

New Century Mortgage Corp., 476 F.3d 278, 281-82 (5th Cir.), cert. denied, ___ U.S. ___, 127 S.

Ct. 2943 (2007).

We have adopted Justice White’s more nuanced view that not every nondisclosure violates

the FAA. We have held that “the challenging party must show that ‘a reasonable person would have

to conclude that an arbitrator was partial’ to the other party to the arbitration.” Apperson v. Fleet

Carrier Corp., 879 F.2d 1344, 1358 (6th Cir. 1989) (quoting Morelite Const. Corp. v. New York City

Dist. Council Carpenters Benefit Fund, 748 F.2d 79, 84 (2d Cir.1984)), cert. denied, 495 U.S. 947

(1990); see also Nationwide IV, 429 F.3d at 645; Nationwide Mut. Ins. Co. v. Home Ins. Co., 278

F.3d 621, 626 (6th Cir. 2002) (“Nationwide II”). In order to sustain that burden, “the party asserting

evident partiality must establish specific facts that indicate improper motives on the part of the

arbitrator.” Andersons, 166 F.3d at 329 (internal quotation marks omitted) (quoting Consolidation

Coal Co. v. Local 1643, United Mine Workers, 48 F.3d 125, 129 (4th Cir.1995)). It is not enough

to demonstrate “an amorphous institutional predisposition toward the other side,” because that

would simply be the appearance-of-bias standard that we have previously rejected. Id.

Thus, the question is whether Komatsu has sustained its burden to establish “specific facts

that indicate improper motives on the part of the arbitrator.” Id. We conclude that it has not. What

Komatsu has established is that several years earlier Stein and Johnson were co-counsel on two

cases and that on six other cases Stein represented the plaintiff while Johnson represented the

intervening plaintiff. While we cannot say that such a relationship would never give rise to evident

partiality, the facts in the record before us indicate that a reasonable person would not be forced to

conclude that Stein was partial toward Uhl and Pacific.
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 10

There are several reasons why Komatsu has failed to establish evident partiality. First,

despite Komatsu’s repeated assertions that there must have been a financial arrangement between

Johnson and Stein, Johnson denied that in court and Komatsu has provided no evidence of a

financial agreement. Second, despite Komatsu’s repeated assertions that there is an ongoing

relationship between Johnson and Stein, Komatsu has adduced no probative evidence. Lastly, this

court and others have declined to vacate under similar circumstances. For instance, when an

arbitrator adjudicated a case that involved his former law partners (whose practice he had left twoand-a-half years earlier), we declined to vacate in the absence of evidence of a personal interest in

the arbitration or prior knowledge of the substance of the arbitration. See Apperson, 879 F.2d at

1360. More recently, we held that a reasonable person would not be required to conclude that the

arbitrator was partial when the arbitrator disclosed that he had served as an arbitrator for one

defendant six times and as an arbitrator for another defendant over twenty times. See Nationwide

IV, 429 F.3d at 647-48. Most analogous to the instant case, the Fifth Circuit called it a “trivial

former business relationship” when an arbitrator had previously acted as co-counsel in another

matter with one of the attorneys representing a party to the arbitration. Positive Software Solutions, 476 F.3d at 283-84.

Of course, Komatsu alleged more than simply the relationship itself; Komatsu also claims

to have evidence of Stein’s antagonistic behavior during the hearing. Komatsu, however, did not

object during the hearing to the alleged behavior, so it is difficult to accord any weight to Komatsu’s

uncorroborated claims. Thus, we conclude on the basis of the facts before us that the relationship

between Stein and Johnson was not significant enough to rise to the level of evident partiality.

In its briefs, Komatsu attempts to distinguish Nationwide IV from the instant case, but these

arguments are unavailing. Komatsu claims that two important facts distinguish Nationwide IV: first,

in Nationwide IV, the arbitrator disclosed his relationships; and second, Nationwide IV did not

involve a contractual disclosure provision. The fact that Nationwide IV involved disclosure, whereas

this case involved nondisclosure, is not a significant difference; according to Justice White and our

own precedent, there is no duty to disclose if the relationship is trivial. The above discussion

establishes that the relationship between Stein and Johnson was insignificant; therefore, whether

Stein disclosed the relationship or not, he was under no obligation to do so. Similarly, the fact that

the case at hand involves a contractual provision is equally unimportant. The contractual provision

provides separate and independent obligations that we have already addressed, while the FAA

regulates disclosure on its own terms. Thus, the contractual provision does not alter the parties’

rights and obligations as they are dictated by the FAA.

We will not rush to conclude that an arbitrator is evidently partial. Arbitrators are often

chosen for their expertise and community involvement, Nationwide IV, 429 F.3d at 646, so “[t]o

disqualify any arbitrator who had professional dealings with one of the parties (to say nothing of a

social acquaintanceship) would make it impossible, in some circumstances, to find a qualified

arbitrator at all.” Id. at 647 (internal quotation marks omitted) (quoting Morelite Const. Corp., 748

F.2d at 83). In this case, the parties specifically contracted for arbitrators with experience in

products liability actions, J.A. at 110 (Agreement ¶ 1), and while we cannot say how large that pool

of arbitrators would be, if a relationship as insignificant as the one in this case were enough to

trigger evident partiality, it would make it much harder to find arbitrators with the relevant and

necessary expertise. For these reasons, we conclude that Komatsu has not established evident

partiality.

V. DISCOVERY AND SANCTIONS

A. Additional Discovery

Komatsu asks us to reverse the district court’s denial of Komatsu’s request for additional
No. 07-1044 Uhl v. Komatsu Forklift Co., et al. Page 11

discovery if we deny its other claims. In Nationwide II, the defendant requested additional discovery

in order to depose two of the arbitrators so that the defendant could uncover evidence of arbitral

bias. We reviewed the district court’s denial under an abuse-of-discretion standard. Nationwide II, 278 F.3d at 628. In Nationwide II, we were ambiguous as to whether the party seeking additional

discovery must offer clear evidence of improper conduct or simply establish that a reasonable person

would have to conclude that an arbitrator was partial, but we concluded that under either standard

no additional discovery was warranted. Id.

Here too, Komatsu does not merit additional time for discovery under either standard.

Komatsu has provided no evidence either of improper conduct or that a reasonable person would

have to conclude that Stein was partial. Furthermore, it would be excessive to grant additional

discovery when Komatsu first identified the relationship between Stein and Johnson at the end of

August 2006, and now, more than a year later, has still not provided any additional information that

would establish an improper relationship. We therefore deny any additional time for discovery.

B. Sanctions

Uhl and Pacific have requested sanctions for a frivolous appeal under Federal Rule of

Appellate Procedure 38. Their request was properly made in a separately filed motion. See FED. R. APP. P. 38; Appellees Mot. for Dismissal at 19. We have held that an appeal may be frivolous

where “it is obviously without merit and is prosecuted for delay, harassment, or other improper

purposes.” Barney v. Holzer Clinic, Ltd., 110 F.3d 1207, 1212 (6th Cir. 1997) (internal quotation

marks omitted) (quoting NLRB v. Cincinnati Bronze, Inc., 829 F.2d 585, 591 (6th Cir. 1987)).

In Barney, we denied sanctions because there was no evidence of “some improper purpose,

such as harassment or delay, behind the appeal.” Id. Similarly, we decline to impose sanctions here.

While Komatsu’s case may indeed be quite weak, neither Uhl nor Pacific have presented any

evidence that there was some improper purpose. Given the lack of any evidence establishing an

improper purpose and in light of the arbitration agreement’s possible ambiguities, we decline to

impose sanctions in this case.

VI. CONCLUSION

For the foregoing reasons, we DENY Uhl and Pacific’s motion to dismiss, DENY Uhl and

Pacific’s motion for sanctions, AFFIRM the district court’s confirmation of the arbitration award,

and AFFIRM the district court’s denial of Komatsu’s motion to vacate the arbitration award.