Court Opinion

ID: 1087415
Source: CourtListenerOpinion
Date Created: 2013-10-30 00:00:14.936131+00
Date Added: 2024-06-11T12:26:55.057332
License: Public Domain

NOT PRECEDENTIAL

                     UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT
                               _____________

                                    No. 12-2827
                                   _____________

                                LAURENCE STONE,
                                                        Appellant

                                          v.

         BEAR, STEARNS & CO., INC.; J.P. MORGAN SECURITIES LLC;
                   BEAR, STEARNS SECURITIES CORP.;
                BEAR STEARNS ASSET MANAGEMENT INC.

                   On Appeals from the United States District Court
                       for the Eastern District of Pennsylvania
                        (District Court No.: 2-11-cv-05118)
                    District Judge: Honorable Legrome D. Davis

                     Submitted under Third Circuit LAR 34.1(a)
                                on October 17, 2013

                          (Opinion filed: October 29, 2013)

            BEFORE: RENDELL, JORDAN and LIPEZ*, Circuit Judges

      *Honorable Kermit V. Lipez, Senior United States Circuit Judge for the Court of
Appeals for the First Circuit, sitting by designation.
                                       OPINION

RENDELL, Circuit Judge:

       Laurence Stone appeals from the District Court’s denial of his Amended Petition

to Vacate an Arbitration Award, and its grant of the Cross-Petition to Confirm that award.

We will affirm.

       Stone lost millions of dollars investing with Bear Stearns and filed a $7.6 million

FINRA arbitration claim seeking to have Bearn Stearns held liable for his losses. The

three arbitrators sanctioned Stone for discovery violations and ultimately unanimously

rejected all of his claims. After the award was handed down, Stone researched the

background of each of the arbitrators, Jerrilyn Marston, whose previously disclosed

biography indicated that she had a “Family Member” associated with the University

of Pennsylvania. Marston had disclosed to FINRA that her husband was a well-known

professor of finance at the Wharton School and that he regularly lectured to brokerage

firms, financial consultants, banks, and investors. FINRA never included this

information in Marston’s biography.

       Stone brought this action in the District Court contending that the award should be

vacated because Marston had demonstrated “evident partiality” against him by virtue of

her purported failure to disclose, 9 U.S.C. § 10(a)(2); the failure to disclose constituted

“misbehavior” under 9 U.S.C. § 10(a)(3); and, Marston “exceeded [her] powers” as an

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arbitrator as provided in 9 U.S.C. § 10(a)(4) because FINRA improperly designated her

as a “public arbitrator.”

       The District Court, in a thoughtful and thorough opinion rejected Stone’s

arguments. The Court noted that arbitration awards are entitled to extreme deference,

Dluhos v. Strasberg, 321 F.3d 365, 370 (3d Cir. 2003), and the statutory grounds for

vacatur focus on “egregious departures from the parties’ agreed-upon arbitration.” Hall

St. Assocs. v. Mattel, Inc., 552 U.S. 576, 586 (2008).

       The Court not only took issue with Stone’s contention that there was “evident

partially” on the part of Marston, but also decided that Stone’s belated raising of the issue

constituted a waiver of any challenge he might have leveled against her.

       While the parties note that the concepts of “evident partiality” and “waiver” could

be further explored by our Court, we believe that this case does not provide the factual

setting in which to do so. First, the facts here do not present a close case as to either

issue. Second, there is nothing egregious about the award that was unanimously agreed

upon by the arbitrators. Lastly, the District Court’s reasoning as to all of the arguments

raised – as set forth in its 35 page opinion – is in no need of amplification

or improvement.

       Accordingly, for the reasons set forth by the District Court, we will affirm.

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