Source: https://law.justia.com/cases/federal/appellate-courts/F2/619/1196/200796/
Timestamp: 2019-12-11 02:55:33
Document Index: 605669962

Matched Legal Cases: ['§ 10', '§ 10', '§ 10', '§ 10', '§ 10', '§ 10']

Abdallah W. Tamari, Ludwig W. Tamari and Farah W. Tamari,co-partners Doing Business As Wahbe Tamari & Sonsco., Plaintiff-appellants, v. Bache Halsey Stuart Inc. (formerly Bache & Co.incorporated), a Delaware Corporation, Defendant-appellee, 619 F.2d 1196 (7th Cir. 1980) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Seventh Circuit › 1980 › Abdallah W. Tamari, Ludwig W. Tamari and Farah W. Tamari,co-partners Doing Business As Wahbe Tamari...
Abdallah W. Tamari, Ludwig W. Tamari and Farah W. Tamari,co-partners Doing Business As Wahbe Tamari & Sonsco., Plaintiff-appellants, v. Bache Halsey Stuart Inc. (formerly Bache & Co.incorporated), a Delaware Corporation, Defendant-appellee, 619 F.2d 1196 (7th Cir. 1980)
US Court of Appeals for the Seventh Circuit - 619 F.2d 1196 (7th Cir. 1980) Argued Feb. 19, 1980. Decided April 25, 1980
The Tamaris first contend that the award should be set aside because, during the course of the arbitration hearings, the employer of arbitrator Ralph Klopfenstein hired Robert Fivian, a Bache vice president who testified in several of the arbitration hearings. The Tamaris argue that these circumstances demonstrate "evident partiality or corruption in the arbitrators" within the meaning of § 10(b) of the Federal Arbitration Act, 9 U.S.C. § 10(b) (1976),2 or that they present at least the appearance of partiality and therefore void the award under the principles laid down in Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 89 S. Ct. 337, 21 L. Ed. 2d 301 (1968).3
393 U.S. at 150, 89 S. Ct. at 340. Here the possibility of bias was highly speculative, the facts were disclosed before decisions were made on the merits, and the arbitrator disqualified himself before substantive decisions were made. The Tamaris have failed to state a claim of either bias or the appearance of bias in the Fivian-Klopfenstein relationship, and the district court correctly so found.
In the first place, when the panel was selected Triggs had not been hired by Bache. In addition, CBOT rules do not give the Secretary the authority to select the arbitration panel; rather, they make plain that the Secretary's task with respect to arbitration is purely ministerial.8 The full committee on arbitration is composed of ten members. Of these ten, eight apparently were assigned to hear the Tamaris' case, but for some reason only seven participated in the hearings, and the number was reduced to six by Klopfenstein's withdrawal. The record does not demonstrate the method by which fewer than all the members of the full committee were chosen to sit on the case, but even if we were to assume the Secretary was somehow responsible, that fact would not enable the Tamaris to state a claim. The award is vulnerable for bias only if the Tamaris can demonstrate "evident partiality or corruption in the arbitrators," 9 U.S.C. § 10(b), or the reasonable appearance of such partiality, Commonwealth Coatings Corp. v. Continental Casualty Co., supra, 393 U.S. at 150, 89 S. Ct. at 340. The Tamaris' argument turns on the tenuous speculation that a biased Secretary could have selected arbitrators who favored Bache. As we have already noted, the arbitration hearing transcripts do not show bias on the part of the arbitrators. Moreover, the decision of the arbitration panel was unanimous. Simple mathematics indicates that the particular composition of the panel should not have mattered under these circumstances.9 Given all this, we do not think that the speculation that the Secretary might have been biased, that the Secretary might have picked the panel, that the panel might therefore have been biased, and that the result might thus have been infected by prejudice or tainted by an appearance of bias is in any sense sufficient to make out a claim. United States Wrestling Federation v. Wrestling Division of the AAU, Inc., supra, 605 F.2d at 318.
This court held in Tamari II, 565 F.2d 1194, 1201-02 (7th Cir. 1977), cert. denied, 435 U.S. 905, 98 S. Ct. 1450, 55 L. Ed. 2d 495 (1978), that the question of whether the Tamaris had voluntarily submitted the dispute to arbitration was to be decided by the arbitrators. The CBOT arbitration panel determined that it had jurisdiction to hear the dispute because the Tamaris had voluntarily submitted it to them. That decision is subject to review here only under the provisions of 9 U.S.C. § 10. National Railroad Passenger Corp. v. Chesapeake & Ohio Railway, 551 F.2d 136, 141-42 (7th Cir. 1977). The Tamaris contend that the jurisdictional decision is tainted by "evident partiality or corruption in the arbitrators" within the meaning of § 10(b).10
The first three actions are as follows: Tamari v. Bache & Co., No. 75 C 4189 (N.D. Ill., May 19, 1976), appeal dismissed, No. 76-1729 (7th Cir., Sept. 23, 1976) (Tamari I) ; Tamari v. Bache & Co., No. 76 C 21 (N.D. Ill., May 1976), aff'd, 565 F.2d 1194 (7th Cir. 1977), cert. denied, 435 U.S. 905, 98 S. Ct. 1450, 55 L. Ed. 2d 495 (1978) (Tamari II) ; Tamari v. Conrad, No. 76 C 2071 (N.D. Ill., Nov. 15, 1976), aff'd, 552 F.2d 778 (7th Cir. 1977) (Tamari III)
Commonwealth Coatings held that § 10(b) implicitly allowed the setting aside of arbitration awards where one or more arbitrators "might reasonably be thought biased against one litigant and favorable to another." 393 U.S. at 150, 89 S. Ct. at 340. Thus, even if actual bias or corruption is not found, the appearance of bias will void the award
Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 146, 89 S. Ct. 337, 338, 21 L. Ed. 2d 301 (1968); Sanko S.S. Co. v. Cook Indus., Inc., 495 F.2d 1260, 1262 (2d Cir. 1973); Rogers v. Shering Corp., 165 F. Supp. 295, 297 (D.N.J. 1958); Johnston v. Security Ins. Co., 6 Cal. App. 3d 839, 842, 86 Cal. Rptr. 133, 135 (1970); In re Merrolla, 231 N.Y.S.2d 760, 761 (Sup.Ct., Special Term, Kings Cty. 1962)
To conclude otherwise would deal a serious blow to arbitration as a method of dispute settlement. Often one of the major benefits of arbitration is the expertise of arbitrators who are familiar with the subject in question. Commonwealth Coatings Corp. v. Continental Casualty Co., supra, 393 U.S. at 150, 89 S. Ct. at 340 (White, J., concurring)