Opinion ID: 3001335
Heading Depth: 2
Heading Rank: 2

Heading: Confirmation of the Arbitration Award

Text: Next, Halim argues that the district court erred by confirming the arbitration award because the arbitrator “manifestly disregarded the law” by declining to formally rule on a discovery dispute and by failing to issue an award containing “findings of fact and conclusions of law.” Halim claims that both of these errors were in excess of the arbitrator’s powers and therefore violated the Federal Arbitration Act (“FAA”), 9 U.S.C. § 10(a)(4). The grounds for overturning an arbitration award are extremely limited. See Wise v. Wachovia Sec., LLC, 450 F.3d 265, 268-69 (7th Cir. 2006); IDS Life Ins. Co. v. Royal Alliance Associates, Inc., 266 F.3d 645, 649 (7th Cir. 2001). This Court has limited the “manifest disregard of the law” standard for purposes of 9 U.S.C. § 10(a)(4) to encompass only two scenarios: (1) an order requiring the parties to violate the law; or (2) an order that does not adhere to the legal principles specified by the contract. George Watts & Son, Inc. v. Tiffany and Co., 248 F.3d 577, 581 (7th Cir. 2001). Factual or legal error, no matter how gross, is insufficient to support overturning an arbitration award. IDS Life Ins. Co., 266 F.3d at 650. Halim first contends that the arbitrator’s refusal to formally rule on a discovery dispute concerning the production of copies of all invoices for the auction warrants vacatur of the arbitrator’s award. We disagree. Keeping in mind the goal of resolving disputes in an expeditious and cost-effective manner, the arbitrator directed the parties’ attention to his January 23, 2006 No. 07-1615 9 order instructing the parties to complete discovery in good faith and without micromanagement. This instruction was in compliance with the AAA rules governing discovery. Rule L-4 of the AAA permits the arbitrator to “take such steps as [he] may deem necessary or desirable to avoid delay and to achieve a just, speedy and cost effective resolution.” Accord George Watts & Son, Inc., 248 F.3d at 580 (“[J]udges may not deprive arbitrators of authority to reach compromise outcomes that legal norms leave within the discretion of the parties to the arbitration agreement.”); see also Ganton Techs., Inc. v. Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., U.A.W., Local 627, 358 F.3d 459, 462 (7th Cir. 2004) (reiterating the need for arbitration to be efficient and cost-effective resolution of disputes); Major League Umpires Ass’n v. Am. League of Prof ’l Baseball Clubs, 357 F.3d 272, 289 (3d Cir. 2004) (noting that limited judicial review of arbitrator’s decisions is necessary to uphold the federal policy in favor of arbitration and to avoid long and expensive litigation proceedings). The arbitrator’s decision not to rule on the additional discovery disputes and instead to remind the parties of their mutual contractual obligations to cooperate in discovery was an attempt by the arbitrator to give the parties what they had contracted for: a cost-effective and efficient resolution of their dispute. See George Watts & Son, Inc., 248 F.3d at 578. The arbitrator’s failure to formally rule on that particular discovery dispute was a far cry from a “manifest disregard of the law.” Halim also argues that the arbitrator manifestly disregarded the law by failing to issue an award containing “findings of fact and conclusions of law,” as agreed upon by the parties. Halim cites dicta (a hypothetical, no less) from George Watts & Son, Inc. for the proposition that an arbitrator’s lack of sufficient reasoning in his award is comparable to an arbitrator’s decision to apply the law of 10 No. 07-1615 a state other than the state law applicable under the arbitration agreement. See 248 F.3d at 579 (hypothesizing that if an arbitration agreement specifies that a dispute is to be resolved under Wisconsin law, and the arbitrator declares that he prefers New York law, or no law at all, vacatur of the award under § 10(a)(4) would be warranted). Halim’s comparison is absurd. An arbitral order that does not adhere to the legal principles specified by the arbitration agreement is one of two scenarios that warrants vacutur of the arbitral award pursuant to § 10(a)(4). George Watts & Son, Inc., 248 F.3d at 581. Ignoring a choice of law provision in an arbitration agreement exceeds the arbitrator’s power since the arbitrator’s power is borne from that arbitration agreement. In this case, the arbitrator did not exceed his power by not explaining his award in greater detail. In other words, the arbitrator did not exceed his power by not doing enough. As the excerpts from the award illustrate, the arbitrator did indeed provide an award containing findings of fact and conclusions of law; unfortunately for Halim, they were not the findings of fact or conclusions of law he desired. We have been clear that a party may not “use issues of the arbitrator’s authority as a ruse to obtain judicial review on the merits of an arbitral award.” Flender Corp. v. Techna-Quip Co., 953 F.2d 273, 278 (7th Cir. 1992) (quotation omitted). In our opinion, Halim sought review of the arbitrator’s authority without a meritorious ground to do so. The district court properly confirmed the arbitrator’s award.