Court Opinion

ID: 3002138
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:25:19.845668+00
Date Added: 2024-06-11T11:45:48.064583
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 06-3910

E NVIRONMENTAL B ARRIER C O ., LLC,

                                                    Plaintiff-Appellee,
                                  v.

S LURRY S YSTEMS, INC.,
                                               Defendant-Appellant.
                          ____________
             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
            No. 06 C 0212—Rebecca R. Pallmeyer, Judge.
                          ____________

   A RGUED S EPTEMBER 17, 2007—D ECIDED A UGUST 29, 2008
                          ____________

  Before F LAUM, R IPPLE, and W OOD , Circuit Judges.
  W OOD , Circuit Judge. After an arbitration hearing to
resolve a construction contract dispute between Environ-
mental Barrier Company (“EBC”) and Slurry Systems, Inc.
(“SSI”), Arbitrator Franklin I. Kral issued an award in
favor of EBC in the amount of $388,919.88. When SSI did
not pay, EBC filed suit in Illinois court to confirm the
award, and SSI responded by removing the case to the
U.S. District Court for the Northern District of Illinois. SSI
2                                               No. 06-3910

urged the district court to vacate the arbitral award, or
in the alternative, to modify it. The district court did
neither: instead, it confirmed the award entered by Arbitra-
tor Kral. In the course of doing so, the court held that EBC
had “standing” to enforce the arbitration clause in the
contract and that the arbitrator had not exceeded his
powers. On appeal, SSI is now urging us to find that EBC
never obtained the right to enforce the contract’s arbitra-
tion clause. SSI’s appellate briefs present this argument
as a challenge to arbitrability, based on the fact that SSI
agreed to arbitrate only with EBC’s predecessor-in-interest,
not with EBC itself. This is a major shift from the way
SSI presented its case first to the arbitrator and later to
the district court, where it framed the issue in terms of
EBC’s standing to pursue this arbitration. The difference
is crucial—indeed, on these facts, fatal—to SSI’s claim.

                             I
  On February 29, 2000, the U.S. Army Corps of Engineers
entered into a contract with SSI for work on a project to
reduce flooding during heavy rains. The McCook Reservoir
Project, as it was called, involved the construction of a
multibillion-gallon reservoir; SSI won the right to build
the overburden cutoff wall. SSI in turn subcontracted part
of its work to an entity called Geo-Con, Inc., using a form
contract that the parties signed in April 2000. The parties’
briefs recount in detail the progress of SSI’s and Geo-Con’s
work from 2000 to 2003; we include only the facts pertinent
to this appeal.
No. 06-3910                                                3

  Attachment A to the SSI/Geo-Con subcontract elaborated
on Article 8.1 of the text, specifying that “Contractor and
Subcontractor shall jointly work together to perform all of
the work together [sic] to minimize the overall cost of the
work.” Attachment A also included a longer version of
Article 10.1, which described how the parties would
allocate revenues, costs, profits, and loss and gave guid-
ance for a final settling-up based on the actual distribution
of costs. The subcontract also contained an exclusivity
clause, Article 1.3; a broad arbitration clause covering
“[a]ny claim arising out of or related to this Subcon-
tract,”Article 6.2; and a clause restricting assignment or
sub-subcontracting, Article 7.4.2.
  The project’s scope and methodology changed as the
work proceeded, requiring the Corps at one point to
suspend operations while it figured out an alternative
way to finish the project. Once the modifications to the
Prime Contract were in place, SSI and Geo-Con resumed
their joint effort to complete their portion of the work. By
April 2003, they were finished with their construction
work. What remained to be done was the final reckoning
of who owed whom how much; this proved to be more
difficult. There were, for instance, several pending change
orders, and it was unclear how costs and profits would
be shifted among the parties. To the extent that these
financial details are relevant, we return to them later.
  EBC entered the picture in September 2003, when Geo-
Con, for reasons unrelated to the McCook project, filed
for bankruptcy in the U.S. Bankruptcy Court for the
Southern District of New York. During Geo-Con’s reorga-
4                                                No. 06-3910

nization, EBC (through two intermediary entities) acquired
substantially all of Geo-Con’s assets for a purchase price
of $2.1 million. The bankruptcy court found that EBC was
the only qualified purchaser of Geo-Con’s assets. In an
order dated April 16, 2004, the court approved the sale
in accordance with the terms set forth in a letter from
the intermediaries. Part II of the offer letter addressed the
Geo-Con acquisition and set forth a list of “excluded
assets.” The exclusions included “[a]ll contracts for services
to be performed by Geo-Con, except . . . P90099 McCook,
IL” (emphasis added). In other words, the McCook contract
was acquired by the intermediary, and then passed along
to EBC. There was a Schedule A to the offer letter that
listed equipment loans and leases. This was the “Schedule
A” to which the bankruptcy court referred when it said
in its order that the contracts listed in Schedules A and C
were executory.
  The sale of the McCook contract was later reflected on
Schedule D to the April 29, 2004, bill of sale between Geo-
Con and EBC that carried out the bankruptcy court’s
order. The bill of sale provided that Geo-Con was selling
“all of Seller’s accounts receivable (including without
limitation the accounts set forth on Schedule A hereto),”
and “contracts” specified as the “Assumed Contracts.” This
was a different “Schedule A” than the one attached to
the offer letter mentioned in the bankruptcy court’s
April 16 order. Schedule A to the bill of sale lists accounts
receivable and contracts that EBC was acquiring, and it
includes the McCook project. Thus, the fact that the
bankruptcy court had described the contracts listed in
Schedules A and C as executory has little bearing on this
case.
No. 06-3910                                                 5

  SSI asserts that it was not aware of Geo-Con’s bank-
ruptcy proceedings as they were taking place. It learned
about them, however, no later than June 17, 2004, when
EBC notified SSI by letter that EBC had succeeded to Geo-
Con’s rights under the subcontract. The letter contained a
demand that SSI pay EBC the balance due to Geo-Con
for the work that Geo-Con had performed under the
subcontract. At the time, EBC believed that this balance
was $711,000. (It later found out that SSI had received two
additional payments from the Corps that it had not
disclosed, totaling $425,951.38; the discrepancy is im-
material for our purposes.)
  EBC’s June 2004 letter also noted that the “subcontract
between Geo-Con and Slurry Systems calls for mediation
and arbitration of disputes,” but it added that
    EBC’s preference is to resolve its claim against Slurry
    Systems amicably, if possible, without the expenditure
    of mediation fees and expenses which, pursuant to the
    contract, are to be shared equally by the parties.
    Accordingly, we request an opportunity to meet with
    you within the next two weeks to discuss and hope-
    fully resolve EBC’s claim. If you are unwilling to meet
    with us within that time, EBC will commence media-
    tion and arbitration proceedings.
SSI did not respond positively to EBC’s letter. On July 7,
2004, SSI’s attorneys sent a letter to EBC’s counsel, express-
ing the opinion that “all disputes between Geo-Con and
Slurry Systems have been resolved,” and adding that, “[a]s
a matter of fact, Geo-Con actually owes Slurry Systems, but
because of Geo-Con’s liquidation, there is no point in
6                                               No. 06-3910

Slurry pursuing the matter.” SSI’s letter noted EBC’s
statement that the subcontract between Geo-Con and
SSI “calls for the mediation and arbitration of disputes,”
and requested that EBC provide SSI “with a copy of the
subcontract if you still plan to pursue this matter[.]”
  EBC did pursue the matter. After mediation efforts
failed, EBC’s counsel called SSI’s counsel to discuss
arbitration. The following week, in a letter dated March 16,
2005, counsel for SSI wrote the following note to EBC’s
attorney:
    As I stated on the phone, while I am pleased to resolve
    potential procedural issues by agreement, the first
    order of business is to determine whether your client,
    [EBC,] has any standing to arbitrate its claim against
    our client, [SSI].
      You have agreed that invoking the arbitration
    clause in [Geo-Con’s] subcontract with SSI goes hand-
    in-hand with EBC fully assuming that subcontract.
    That requires EBC to perform fully all obligations
    imposed upon Geo-Con by the subcontract, which it
    has not yet done. Additionally, SSI has not even
    consented to EBC’s assumption of the subcontract, and
    is unaware of EBC’s technical expertise or level of
    capitalization, or its ability to perform work under
    the subcontract. Under these circumstances, SSI may
    be excused from accepting performances from EBC
    under 11 U.S.C. § 365(c) and other applicable laws.
The letter went on to state that it was “therefore essential
that EBC provide SSI with adequate assurances that it
can perform its obligations under the subcontract before
No. 06-3910                                                7

EBC can assume the subcontract.” Specifically, it de-
manded (1) that EBC confirm that it “is in the construc-
tion business and can handle any remedial work neces-
sary under the subcontract”; (2) that EBC “provide SSI
with the insurance and performance bond required by
the subcontract”; and (3) that EBC give SSI its “financial
data and biographical information,” so that SSI could
“make an informed decision regarding whether or not
to withhold SSI’s consent from the proposed assumption.”
It added that “[t]hese issues need to be resolved now,
and not in the context of an arbitration.” The letter closed
by warning that if it should turn out that Geo-Con’s
work was “defective in any way, SSI will hold EBC ac-
countable.”
  The issues were not resolved, and instead EBC filed its
demand for arbitration a month later, on April 20, 2005.
The demand briefly explained the background of the
parties’ dispute and the basis for EBC’s claim against SSI.
EBC argued that SSI owed EBC “at least $657,273.50” and
that SSI had “breached the Subcontract by failing to pay
that amount.”
  At that critical juncture, SSI said nothing about the basic
arbitrability of the dispute. Instead, it filed an Answering
Statement on May 9, 2005. In the box on the Answering
Statement form labeled “RESPONDENT ANSWERS
CLAIMANT DEMAND FOR ARBITRATION AS FOL-
LOWS,” SSI wrote: “EBC seeks additional moneys under
a subcontract which has been paid in full; Respondent
[SSI] denies any money is due and seeks return of
overpayments and declaratory relief.” The “DOLLAR
8                                               No. 06-3910

AMOUNT OF CLAIM” was listed as “To be determined,”
and in the box labeled “OTHER RELIEF SOUGHT,” SSI
stated its claim for “A declaration that EBC assumed the
subcontract and is in breach of its non-monetary terms;
an accounting of money to be paid under the subcon-
tract and a return of any over payments.” Notably, SSI did
not merely answer EBC’s claim; it also filed a counterclaim.
  SSI elaborated on its position in a supplementary letter to
Arbitrator Kral on June 20, 2005. The letter, which SSI sent
“[i]n order to facilitate our June 21, 2005 preliminary
hearing,” first explained that the disputes “center around
a construction subcontract” between SSI and Geo-Con to
build a slurry wall for the Corps. It then launched directly
into the dispute over payment, providing Arbitrator Kral
with SSI’s version of how the parties had agreed to
allocate the costs and profits. Next, the letter stated that
“Geo-Con abandoned the Project before it was over,” and
so while “EBC now seeks an additional $657,274 . . ., strict
application of the payment terms does not require SSI
to pay the unearned windfall EBC seeks. Instead, it re-
quires EBC to pay SSI several hundred thousand dollars
in overpayments.” The remaining three paragraphs
expanded on why EBC owed money to SSI. There is not
even a passing reference to a defense of lack of
arbitrability.
   Three days after the preliminary hearing, on June 24,
2005, SSI wrote another letter to Arbitrator Kral, this time
to “follow up on the subject of ‘non-monetary breaches.’ ”
SSI reiterated its position that “Geo-Con left the job before
it was finished” and noted that by virtue of the April 16,
No. 06-3910                                                  9

2004, bankruptcy order, “EBC was allowed to assume Geo-
Con’s Subcontract with SSI.” SSI then argued that the
bankruptcy court directed EBC, as the purchaser of Geo-
Con’s asserts, “to make such cure payments as are re-
quired by Section 365 of the [Bankruptcy] Code and
agreed to among the Debtors and respective contracting
parties.” SSI and Geo-Con had not agreed to EBC’s as-
sumption of the contract, SSI continued, nor had Geo-Con
even informed SSI of its bankruptcy. “Nevertheless,” the
letter contended, “section 365 required Geo-Con/EBC to
do the following in order to assume the contract” (referring
to the list of three items in SSI’s letter of March 16, 2005,
to EBC). Until EBC satisfied those conditions, SSI con-
cluded, “EBC cannot have assumed the contract, and
lacks standing to pursue this arbitration case.”
   At the end of the letter, SSI noted its concern that should
the Corps raise a future claim involving Geo-Con’s work,
EBC might try to evade its responsibility by “contending
it is not Geo-Con. Part of SSI’s relief sought in this arbitra-
tion is a declaration that EBC has in fact assumed all of
Geo-Con’s obligations under the Subcontract.” Thus, in
the same letter, SSI both argued that EBC had not
properly assumed the subcontract (through its reference
to alleged outstanding duties under Bankruptcy Code
§ 365 that prevented assumption) and argued that EBC
had assumed the contract. Perhaps unsure of the
latter point, SSI asked in its Answering Statement for a
declaration that EBC had assumed the contract. It seems
that what SSI was looking for was a ruling from the
arbitrator that before EBC should be permitted to enforce
Geo-Con’s rights under the subcontract, it had to assure
10                                              No. 06-3910

that it also would fulfill Geo-Con’s remaining contractual
obligations. Once again, this was not a challenge to
arbitrability; it was a position premised on a procedural
question of standing and on the merits of the dispute.
  Each party to the arbitration filed a position paper on
July 18, 2005. In response to SSI’s argument that it had
never consented to the assignment of Geo-Con’s rights
to EBC, EBC argued that the subcontract did not
require SSI’s consent under these circumstances. Article
7.4.2 of the subcontract provides:
     [1] The Subcontractor shall not assign the Work of this
     Subcontract without the written consent of the Con-
     tractor, nor [2] subcontract the whole of this Sub-
     contract without the written consent of the Contractor,
     nor [3] further subcontract portions of this Subcon-
     tract without written notification to the Contractor
     when such notification is requested by the Contractor.
Only the first clause restricts assignment; the second and
third restrict further subcontracting. Moreover, the restric-
tion on assignment only requires the subcontractor to
obtain the contractor’s written consent before assigning
“the Work” of the subcontract. The work was completed
by April 2003, a full year before the bankruptcy court
issued its order approving EBC’s assumption of Geo-Con’s
assets. The arbitrator took note of that timing in an
express finding that “the Work” of the subcontract was
complete before Geo-Con assigned the contract to EBC.
  In its position paper, SSI reiterated its belief that Geo-
Con had “repudiated” the parties’ agreement, and that it
“had continuing obligations to SSI to maintain insurance
No. 06-3910                                               11

coverage, provide a warranty for its work, and provide
SSI with a performance bond to cover those obligations.”
SSI maintained its position that EBC must “comply with
its outstanding obligations under the Contract,” and that
SSI therefore “seeks: (1) declaratory judgment confirming
that EBC has assumed the contract; (2) a declaratory
judgment that EBC is in breach on non-monetary terms
of the Subcontract (e.g., insurance), and that EBC cure
those defaults as previously ordered by the courts; (3) an
accounting of the moneys to be paid between the parties
on the Subcontract; and (4) an order requiring EBC to
return to SSI the overpayments made to Geo-Con, believed
to be in excess of $500,000” (footnotes omitted). SSI’s
argument further stated that according to the bill of sale
attached to the bankruptcy order, “EBC did, in fact,
assume the Subcontract.” SSI added that “[w]hat Geo-Con
could not do, and therefore what EBC cannot do, is to
selectively accept the benefits of the Subcontract while
rejecting the obligations.” Until EBC fulfilled those obliga-
tions (as required by § 365), the argument concluded, “EBC
lacks standing to invoke the Arbitration Clause in the
Subcontract.” The rest of the argument explained why
and to what extent Geo-Con was overpaid for its work
and concluded by stating that “EBC must cure all non-
monetary defaults before getting anything from SSI. But
applying the Subcontract, Geo-Con/EBC was vastly
overpaid, and that money must be returned.”
  Discovery ensued, followed by a two-day arbitration
hearing on August 23-24, 2005. The transcripts from the
hearing reveal that the only issues addressed were who
owed what and to whom. There was no discussion of
12                                              No. 06-3910

standing or of arbitrability. Even so, in a post-hearing
brief filed by EBC on October 19, 2005 (SSI did not file a
post-hearing brief), EBC addressed the “standing” defense
presented in SSI’s position paper:
     SSI claims that EBC lacks standing to compel SSI to
     arbitrate EBC’s claim because SSI did not agree to the
     assignment of the Subcontract to EBC, and because
     certain alleged “cure” payments were not made.
     Generally speaking, issues of standing are for the
     arbitrator to decide in the first instance.
  Arbitrator Kral’s award was issued on November 21,
2005. He recognized that “a threshold issue was raised
by SSI as to the standing of EBC to arbitrate this dispute
under Subcontract Article 6.2 [the arbitration clause]. EBC
agreed that it had assumed the Subcontract as evidenced
by the Bankruptcy Court filings.” He also noted that
SSI’s standing defense was premised on its position that
EBC had not assumed the subcontract properly. EBC’s
response was that “GEO’s performance of its work on
the Project ended in December, 2002 and thereby the
consent of SSI to the assumption is not required.” The
arbitrator resolved the standing question by stating that
he “agree[d] with EBC’s position.” He went on to reject
the entirety of SSI’s counterclaim and awarded a total
recovery, including contract interest, of $388,919.86 to EBC.

                             II
 On January 6, 2006, EBC filed an action to confirm its
award in the Circuit Court of Cook County; SSI promptly
No. 06-3910                                                 13

removed the case to federal court. As the district court
described SSI’s position, SSI argued “first, that the arbitra-
tor exceeded his powers by entering an award in favor
of EBC, who was not a party to the original Agreement.
Further, SSI contends, even if EBC were a party to the
Agreement, it lacks standing to invoke the arbitration
clause because it was in default of the contract.” We
comment first on the standing argument, and then turn
to the more troublesome arbitrability point.
  We begin with a word about terminology. We are
reminded of Justice Scalia’s observation in Steel Co. v.
Citizens for a Better Environment, 523 U.S. 83 (1998), that
“[j]urisdiction . . . is a word of many, too many, mean-
ings[.]” Id. at 90 (internal quotation marks omitted). The
same, unfortunately, can be said for “standing.” Every-
thing from the fundamental requirement imposed by
Article III that there must be a “case or controversy”
between the parties seeking relief in federal court, to
various prudential doctrines such as the restrictions on
invoking the rights of third parties, to the inquiry
whether a statute is designed to protect the rights of the
person before the court, has been swept into the word
“standing.” There is no reason to suppose that arbitrators
are bound to the case-or-controversy requirement that
circumscribes the judicial power of the United States.
Indeed, some state courts are authorized to give advisory
opinions. See, e.g., M ASS. C ONST. pt. II, ch. 3, art. 2; R.I.
C ONST . art. 10, § 3. See generally Jonathan D. Persky,
“Ghosts That Slay”: A Contemporary Look at State Advisory
Opinions, 37 C ONN. L. R EV. 1155 (2005). In the context of
arbitration, the term “standing” addresses the entitle-
14                                               No. 06-3910

ment of the party to raise a given point before the arbitra-
tor. This is more like the concept of standing described
by the Supreme Court in Associated General Contractors of
California, Inc. v. California State Council of Carpenters,
459 U.S. 519 (1983), in which the Court considered the
question whether a union was a proper party to sue for
treble damages under the antitrust laws when it was
neither a consumer nor a competitor in the market in
which trade was restrained. In the course of rejecting the
union’s right to sue, the Court commented that “[h]arm
to the antitrust plaintiff is sufficient to satisfy the con-
stitutional standing requirement of injury in fact, but the
court must make a further determination whether the
plaintiff is a proper party to bring a private antitrust
action.” Id. at 535 n.31.
  That is the sense in which standing to arbitrate should
be understood: is the petitioner a proper party to raise a
particular claim in the arbitration? This explains why
courts have not hesitated to hold that standing is a matter
for the arbitrator to resolve, even though (as we note in a
moment) arbitrability is usually an issue for the court. John
Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557-58 (1964);
Chi. Typographical Union No. 16 v. Chi. Sun-Times, Inc., 860
F.2d 1420, 1424 (7th Cir. 1988) (“Procedural issues, in-
cluding the standing of a party to the arbitration, . . . are
for the arbitrator, so long as the subject matter of the
dispute is within the arbitration clause.”) (emphasis
omitted); United Steelworkers of Am., AFL-CIO-CLC v.
Smoke-Craft, Inc., 652 F.2d 1356, 1360 (9th Cir. 1981)
(“Whether the Steelworkers had standing as a party to
the arbitration to proceed with that arbitration, which
No. 06-3910                                                 15

had been properly commenced, was a procedural matter
for the determination of the arbitrator.”). SSI submitted
the standing question to the arbitrator on its own
initiative, and it was proper for the arbitrator to decide it.
Focusing particularly on standing, the district court noted
that “SSI’s . . . objection to EBC’s standing to enforce the
arbitration clause relates to EBC’s alleged breach of other
contract provisions.” Reiterating that this kind of issue
is for the arbitrator, the court found that “[t]he arbitrator’s
conclusion . . . is thus subject to deferential review,
which it easily survives.”
  The harder question is whether an agreement to
arbitrate existed between the parties. It is difficult, how-
ever, not for the reasons the district court identified, but
instead for a more fundamental reason. There is not a hint
in the record that SSI ever called this issue to the arbitra-
tor’s attention or sought to enjoin the arbitration on the
ground that there was no agreement to arbitrate. Thus,
even though the ordinary rule is that the question whether
an agreement to arbitrate exists is one for the court, see
AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643,
649 (1986); Flender Corp. v. Techna-Quip Co., 953 F.2d 273,
277 (7th Cir. 1992), the right to a judicial determination
of arbitrability is, like many rights, one that can be waived.
   As our detailed explanation above of the arbitration
proceedings in this case demonstrates, SSI never told the
arbitrator that it thought this dispute was nonarbitrable.
To the contrary, it voluntarily submitted to the
arbitrator’s authority, filed a counterclaim, and confined
its objections to EBC’s standing to arbitrate. Only after
16                                               No. 06-3910

the arbitrator issued an award unfavorable to SSI and the
case wound up in court did SSI raise an objection to
the arbitrator’s authority to decide the dispute. SSI has
stressed before this court that “[f]rom the outset, SSI
contended that no agreement to arbitrate existed (and no
contract of any kind existed) unless and until EBC com-
plied with the requirements imposed by 11 U.S.C. § 365
for assignment and assumption of executory contracts.”
The problem is that SSI never said anything of the sort
to the arbitrator. Not until it reached the district court
did it recast its prior argument about standing as a chal-
lenge to arbitrability.
  This is not a tactic we can accept, for sound policy
reasons. It is terribly wasteful of the arbitrator’s time, the
parties’ time, and the court’s time. Anyone who wants
to object to arbitrability is entitled to make her position
known to the arbitrator and the other party; the other
party may then, if it wishes, respond with a petition for
an order to compel arbitration under the Federal Arbitra-
tion Act (“FAA”), 9 U.S.C. § 4, and obtain a judicial deter-
mination on arbitrability. See, e.g., Moses H. Cone Hosp. v.
Mercury Constr. Corp., 460 U.S. 1 (1983). In addition,
keeping the arbitrability card close to the chest would
allow a party like SSI to take a wait-and-see approach: if
it had liked Arbitrator Kral’s decision, it would have
remained silent, but since it did not, it is now com-
plaining about arbitrability.
  This court has already disapproved this method of
proceeding. In AGCO Corp. v. Anglin, 216 F.3d 589 (7th Cir.
2000), for example, we stated:
No. 06-3910                                                 17

      We first consider whether the Anglins waived any
    objection to the arbitrability of the Retail Obligations
    when they consented to arbitration and agreed to
    participate in the arbitration hearing. If a party will-
    ingly and without reservation allows an issue to be
    submitted to arbitration, he cannot await the out-
    come and then later argue that the arbitrator lacked
    authority to decide the matter. See Jones Dairy Farm
    v. Local No. P-1236, United Food & Commercial Workers
    Int’l Union, AFL-CIO, 760 F.2d 173, 175-76 (7th Cir.
    1985). If, however, a party clearly and explicitly re-
    serves the right to object to arbitrability, his participa-
    tion in the arbitration does not preclude him from
    challenging the arbitrator’s authority in court. Int’l
    Ass’n of Machinists & Aerospace Workers, Lodge No. 1777
    v. Fansteel, Inc., 900 F.2d 1005, 1009 (7th Cir. 1990). The
    record suggests that the Anglins have followed the
    latter course.
216 F.3d at 593. It was “undisputed that counsel for the
Anglins objected to arbitration” of the parties’ dispute, id.,
on the ground that “the Anglins could not have contem-
plated that their arbitration clause with AGCO would
encompass a dispute with a nonsignatory party,” id. at 596.
We accordingly reversed the district court’s confirma-
tion of AGCO’s award.
   Unlike the Anglins, SSI failed at any time during the
arbitration proceedings to raise or reserve an objection
to arbitrability. Instead, it freely accepted the arbitrator’s
authority to decide the dispute and, indeed, submitted
its own counterclaim for resolution. Only after the arbitra-
tion outcome displeased SSI did it restyle its “standing”
18                                               No. 06-3910

and “executory contract” arguments as encompassing
a challenge to the existence of an agreement to arbitrate
between SSI and the nonsignatory EBC. As we noted
in Jones Dairy Farm:
     Jones Dairy Farm did not make [arbitrability] an issue.
     It did not, while agreeing to participate in the arbitra-
     tion, challenge the arbitrator’s jurisdiction, and make
     clear that it was preserving its challenge for eventual
     presentation to a court if the arbitrator ruled in the
     union’s favor . . . . The company never questioned
     the arbitrator’s authority.
760 F.2d at 175. “If a party voluntarily and unreservedly
submits an issue to arbitration, he cannot later argue that
the arbitrator had no authority to resolve it.” Id. (citing
cases from the Ninth, Fifth, and Second Circuits); see
also CUNA Mut. Ins. Soc’y v. Office and Prof’l Employees
Int’l Union, Local 39, 443 F.3d 556, 563 (2006) (“[T]here was
not a true question of arbitrability in this case. Instead,
CUNA dresses up its arguments about the scope of the
arbitrator’s authority in arbitrability clothing.” (internal
quotation marks omitted)); cf. Flender, 953 F.2d at 278 (“We
reiterate ‘this circuit’s caution against allowing a party
to use issues of the arbitrator’s authority as a ruse to
obtain judicial review of the merits of an arbitral
award.’ ” (quoting Burkart Randall v. Lodge No. 1076, 648
F.2d 462, 467 (7th Cir. 1981))). SSI’s professed challenge
to arbitrability comes too late. By freely submitting to
the arbitration of its claims without preserving a chal-
lenge to the arbitrator’s authority, SSI missed the chance
to come back later, before a court, and deny that an agree-
ment to arbitrate existed.
No. 06-3910                                                 19

                              III
  With SSI’s challenge to arbitrability off the table, we have
no trouble rejecting its remaining arguments. First, it is
clear that Arbitrator Kral based his award on the con-
tract and that he did not exceed his powers in any other
respect when fashioning his award. The district court’s
opinion contains a thorough analysis of these points, see
No. 06 C 212, 2006 WL 2853830 (N.D. Ill. Sept. 29, 2006).
We see no need to repeat everything it said here, particu-
larly given the level of deference that we apply to an
arbitrator’s award. See IDS Life Ins. Co. v. Royal Alliance
Assocs., Inc., 266 F.3d 645, 650-51 (7th Cir. 2001) (“[N]either
error nor clear error nor even gross error is a ground for
vacating an award[;] if the district judge is satisfied that
the arbitrators resolved the entire dispute and can figure
out what that resolution is, he must confirm the award.”);
Baravati v. Josephthal, Lyon & Ross, Inc., 28 F.3d 704, 706
(7th Cir. 1994) (“Judicial review of arbitration awards is
tightly limited; perhaps it ought not be called ‘review’
at all.”).
  Nor did the district court abuse its discretion in denying
SSI’s motion for reconsideration under F ED. R. C IV. P. 59.
See Zivitz v. Greenberg, 279 F.3d 536, 539 (7th Cir. 2002). The
motion argued that EBC had concealed an affidavit that
contradicted the testimony of EBC’s sole witness at the
arbitration hearing, and that this “newly discovered
evidence” tended to show that EBC’s award had been
“procured by fraud, corruption or other means,” which
is one ground for vacating or amending an award under
the FAA. See 9 U.S.C. § 10(a)(1).
20                                               No. 06-3910

  To succeed on a motion under Rule 59, a party must
show that: (1) it has evidence that was discovered post-
trial; (2) it had exercised due diligence to discover the
new evidence; (3) the evidence is not merely cumulative
or impeaching; (4) the evidence is material; and (5) the
evidence is such that a new trial would probably produce
a new result. See Matter of Chi., Milwaukee, St. Paul & Pac.
R.R. Co., 78 F.3d 285, 293-94 (7th Cir. 1996). SSI argues that
in this case, however, the court should not have relied on
the normal criteria for a Rule 59 motion, because the
FAA “provides the exclusive grounds for challenging an
arbitration award within its purview,” LaFarge Conseils
et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d
1334, 1338 (9th Cir. 1986). Section 10(a)(1) of the FAA calls
for the court to consider whether EBC’s alleged 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’l, Inc. v. Bormet, 58
F.3d 328, 333 (7th Cir. 1995).
  We need not decide which was the proper standard to
apply in this case, because we do not think the district
court abused its discretion under either of them. Under
both Rule 59 and 9 U.S.C. § 10(a)(1), the materiality of the
evidence is critical. At the hearing on SSI’s Rule 59 motion,
the district court concluded that “nothing in the so-called
newly discovered document . . . bears any relationship to
the award, and it’s simply not material or outcome deter-
minative.” SSI argues that under the FAA standard, the
evidence must be material not necessarily to the outcome
of the arbitration, but simply to some issue in the arbitra-
No. 06-3910                                                21

tion. SSI cites only Gingiss International, supra, in support
of this distinction, but Gingiss drew no such line. The
question there was whether a district court erred by
refusing to set aside an arbitration award under 9 U.S.C.
§ 10(a)(1); it had nothing to do with the standard of
review that applies to a post-trial motion in a case to
confirm an arbitral award. Moreover, Gingiss does not
stand for the odd proposition that something might be
material to an issue in an arbitration, but immaterial to
the outcome. Without stronger support for this notion,
we decline to adopt it. Finally, as EBC points out, § 10(a)(1)
provides for vacatur only if the award itself was procured
by “corruption, fraud, or undue means.” In other
words, even if SSI is correct and we should be relying
exclusively on the FAA, we must find a nexus between
the purported fraud and the arbitrator’s final decision.
The district court found no such nexus, nor do we.
  We mention briefly several other reasons why SSI cannot
meet even the FAA standard. It is debatable at best
whether the affidavit in question was concealed fraudu-
lently; indeed, EBC denied that it withheld the docu-
ment intentionally, and SSI offers no evidence to the
contrary. The FAA also requires that the complaining
party act with due diligence, yet the district court ex-
pressed doubt that SSI had done so, since it had been
aware of the issue for at least a month before the
district court’s initial decision. Finally, even assuming
that SSI had acted with due diligence and that the evi-
dence of fraudulent withholding was clear and con-
vincing, the fact remains that the district court found the
“so-called newly discovered evidence” to be both cumula-
22                                              No. 06-3910

tive and immaterial. Both the district judge and the arbitra-
tor were already aware of everything contained in the
supposedly concealed document when they made their
respective decisions. Under either Rule 59 or §10(a)(1), this
finding supports a denial of SSI’s motion.

                            IV
 The district court’s judgment confirming the arbitrator’s
award is A FFIRMED.

                           8-29-08