Jake Mendel v. Morgan Keegan & Company Inc.

Filing

Opinion issued by court as to Appellant Jake Mendel. Decision: Affirmed. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

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[DO NOT PUBLISH]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
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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.

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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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