Court Opinion

ID: 4191809
Source: CourtListenerOpinion
Date Created: 2017-08-02 15:01:29.057756+00
Date Added: 2024-06-11T07:47:25.903599
License: Public Domain

Case: 16-17587     Date Filed: 08/02/2017   Page: 1 of 6

                                                             [DO NOT PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT
                           ________________________

                                 No. 16-17587
                             Non-Argument Calendar
                           ________________________

                       D.C. Docket No. 2:13-cv-01630-AKK

JAKE MENDEL,
in his capacity as personal representative
of the estate of Thelma A. Mendel,
and in his capacity as trustee of the
Thelma A. Mendel Lifetime Trust,

                                                                 Plaintiff-Appellant,

                                       versus

MORGAN KEEGAN & COMPANY INC.,

                                                               Defendant-Appellee.

                           ________________________

                   Appeal from the United States District Court
                      for the Northern District of Alabama
                          ________________________

                                  (August 2, 2017)

Before ED CARNES, Chief Judge, JULIE CARNES, and JILL PRYOR, Circuit
Judges.
              Case: 16-17587     Date Filed: 08/02/2017    Page: 2 of 6

PER CURIAM:

      The Estate of Thelma A. Mendel and the Thelma A. Mendel Lifetime Trust

suffered significant losses in connection with funds managed and sold by Morgan

Keegan & Co. An arbitration panel found that Morgan Keegan was at fault, but

awarded the Estate and the Trust far less than they asked for. Jake Mendel, as

personal representative of the Estate and trustee of the Trust, is seeking to vacate

that arbitration award.

                                          I.

      This case has a lengthy procedural history, so we refer to our earlier decision

in this case, Mendel v. Morgan Keegan & Co., 654 F. App’x 1001 (11th Cir.

2016), for a more detailed discussion of the background facts. Relevant to this

appeal, Mendel’s claims against Morgan Keegan were arbitrated by the Financial

Industry Regulatory Authority. Before the arbitration began, one of the arbitrators,

John Allgood, disclosed that he was “of counsel” to the law firm Ford & Harrison,

LLP. He answered “no” to the question whether he “had any professional or social

relationships with any party in this proceeding or the firm for which they work.”

      After the allegedly too-low arbitration award was announced, Mendel

discovered that Allgood’s firm had represented Morgan Keegan in unrelated

matters. Based on that information, Mendel brought a lawsuit in Alabama state

court. He contended that the award should be vacated under section 10(a)(2) of the

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Federal Arbitration Act, 9 U.S.C. § 10(a)(2), which provides for vacatur “where

there was evident partiality” on the part of an arbitrator. 1

       Morgan Keegan removed the case to federal court based on diversity

jurisdiction. See 28 U.S.C. § 1332(a). Once the case was before it, the federal

district court established a discovery period running from October 28, 2013, to

January 28, 2014. About a month into that discovery period, the district court

issued an order explaining that this Court’s decision in Gianelli Money Purchase

Plan & Trust v. ADM Investor Services, Inc., 146 F.3d 1309, 1312–13 (11th Cir.

1998), holds that a plaintiff in a nondisclosure case must “provide evidence,

whether direct or circumstantial, that the arbitrator had actual knowledge of the

undisclosed fact.” The court concluded that Mendel’s claim necessitated an

evidentiary hearing, which it set for February 2014.

       But based on representations by Mendel that he was “now entitled to

summary judgment on the materials already before the court, and that there [was]

no need to supplement those materials,” the district court canceled the scheduled

evidentiary hearing and permitted the parties to file motions for summary

judgment. Both parties did so. While considering those motions, the district court

       1
          Mendel also initially cited section 6-6-14 of the Alabama Code as a basis for vacatur.
But he did not press any argument based on that section in his earlier appeal to this Court, and
his briefs in the current appeal make only passing references to the statute. As a result, he has
abandoned any argument related to section 6-6-14. See Sapuppo v. Allstate Floridian Ins. Co.,
739 F.3d 678, 681–82 (11th Cir. 2014) (holding that a party abandons a claim when it fails to
“plainly and prominently” raise it and an issue can be abandoned where only “passing references
appear in the argument section of an opening brief”).

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decided to hold the case until the Supreme Court of Alabama issued its decision in

Municipal Workers Compensation Fund, Inc. v. Morgan Keegan & Co. The court

explained that the Municipal Workers decision would be helpful “[b]ecause of the

significant similarities between that case and this case, and because the law of

Alabama is extremely important to the outcome of this case.”

      The Supreme Court of Alabama issued that decision on April 3, 2015. See

Mun. Workers Comp. Fund, Inc. v. Morgan Keegan & Co., 190 So. 3d 895 (Ala.

2015). The court held that a plaintiff may prevail on a claim of “evident partiality”

under § 10(a)(2), “even though an arbitrator lack[ed] actual knowledge of the facts

giving rise to the conflict of interest,” if “the arbitrator was under a duty to

investigate in order to discover possible conflicts and failed to do so.” Id. at 923.

      Based on that holding, the district court in this case determined that Alabama

law required vacating the arbitration award. Morgan Keegan appealed and this

Court held that the district court erred in deferring to the Municipal

Workers holding because federal courts “are not bound by a state court’s

interpretation of federal law,” including § 10(a)(2). Mendel, 654 F. App’x at

1003–04. We explained that the district court should have applied the rule

announced in our Gianelli decision that “[t]he arbitrator must actually know of the

potential conflict — failure to investigate for potential conflicts is insufficient to

show evident partiality.” Id. at 1003 (citing Gianelli, 146 F.3d at 1312).

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      On remand Mendel argued that he was entitled to conduct discovery so that

he could obtain evidence that would satisfy the Gianelli rule. The district court

disagreed and instead granted Morgan Keegan’s motion for summary judgment.

                                          II.

      Mendel contends that the district court erred in not allowing him to conduct

discovery before entering summary judgment in favor of Morgan Keegan. “We

review district court decisions concerning discovery only for an abuse of

discretion.” Artistic Entm’t, Inc. v. City of Warner Robins, 331 F.3d 1196, 1202

(11th Cir. 2003) (reviewing the denial of a motion to reopen discovery for abuse of

discretion). “District judges are accorded wide discretion in ruling upon discovery

motions, and appellate review is accordingly deferential.” Harris v. Chapman, 97
F.3d 499, 506 (11th Cir. 1996).

      As we have noted, the district court provided Mendel with a three month

discovery period from October 2013 to January 2014. Mendel did not use that

time to seek evidence that Allgood actually knew of the potential conflict. Nor did

he ask the district court to extend the period so that he could continue gathering

evidence. He argues now that he failed to do so because he had assumed that the

Municipal Workers holding controlled his case, so he did not need to prove

“knowing non-disclosure, an actual conflict or actual bias.”

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       That argument falls flat. The district court explained in an order in the

middle of the discovery period that Mendel was going to need to “provide evidence

. . . that the arbitrator had actual knowledge of the undisclosed fact.” It derived

that requirement from Gianelli, the same decision that this Court later held

governed this case. Mendel may not have agreed that this case was controlled by

the Gianelli decision, but it was unreasonable for him not to conduct discovery

based on the law that the district court had told him applied.

       The district court did (erroneously) conclude that the Municipal Workers

standard controlled, but it came to that conclusion long after the discovery period

had ended. And Mendel could not have relied on the Municipal Workers holding

during discovery because that decision was not issued until more than a year after

discovery closed. Events after the discovery period ended cannot excuse Mendel’s

inaction during the discovery period. Mendel does not get a chance to do now

what he should have done during the discovery period. The district court’s refusal

to reopen discovery was not an abuse of discretion.2

       AFFIRMED.

       2
          Mendel also contends that the Municipal Workers holding should control this case and
that this Court’s “evident partiality” standard is inconsistent with Supreme Court caselaw. Those
contentions are foreclosed by law of the case doctrine and prior panel precedent, so he requests
en banc review of them “at the outset.” Mendel’s request for en banc review, which is
incorporated into his opening panel brief, does not comply with Federal Rule of Appellate
Procedure 35 or Eleventh Circuit Rules 35-1 and 35-5. As a result, we will not consider it. In
any event, a panel does not have the authority to grant hearing en banc. Nothing prevents
Mendel from filing a petition for rehearing en banc that complies with the rules.

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