Doscher v. Sea Port Group Securities, LLC et al
OPINION AND ORDER: Significantly, the issue for this Court is not whether it would have handled the arbitration proceedings in the same way as the Panel or reached the same result that the Panel reached. Instead, the issue is a more limited one: whe ther, in light of the substantial deference owed to an arbitrator in handling procedural matters and rendering a decision on the merits, Doscher has established any of the limited grounds for vacating or modifying the Award. For the reasons explained above, the Court concludes that he has not. Accordingly, his petition to vacate or modify the Award is DENIED, and the Award is confirmed. The Clerk of Court is directed to close the case. (Signed by Judge Jesse M. Furman on 12/6/2017) (mml)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SEA PORT GROUP SECURITIES, LLC, et al.,
OPINION AND ORDER
JESSE M. FURMAN, United States District Judge:
Petitioner Drew Doscher brings this case against his former employers and colleagues,
Respondents Sea Port Group Securities, LLC, Stephen Smith, Michael Meagher, Michael Meyer,
The Seaport Group, LLC, Armory Advisers, LLC, Armory Fund, LP, and Seaport V, LLC,
seeking to vacate in part and modify in part an arbitration decision by the Financial Industry
Regulatory Authority (“FINRA”). Although the arbitrators awarded Doscher $2,289,774, he
principally contends that a portion of the decision should be vacated based on their failure to
enforce certain discovery-related orders. Secondarily, he asserts that another portion of the
decision should be modified. For the reasons that follow, the Petition is denied in its entirety.
From 2009 to 2013, Doscher worked for the Seaport Group, LLC and its broker-dealer,
Sea Port Group Securities, LLC (together, “Seaport”), both of which are members of FINRA.
(Docket No. 17 (“First Merolla Decl.”), Ex. 27 at 12, 16; see id., Ex. 2 (“Statement of Claim”)
¶¶ 1-2). Doscher rose quickly to become co-head of sales and trading before he and Seaport
severed ties in January 2013. (First Merolla Decl., Ex. 27, at 12, 16, 53; Ex. 30, at 825). About
five months later, Doscher commenced a FINRA arbitration against Seaport and the individual
Respondents, who owned or worked at Seaport. (Docket No. 39 (“Resp’ts’ 56.1 Statement”) ¶ 1;
Statement of Claim). 1 In his initial statement of claim, Doscher alleged, among other things,
breach of contract, retaliatory discharge, and unjust enrichment. (Statement of Claim ¶¶ 40-51,
70-75). Thereafter, he filed an amended statement adding a claim for securities fraud under
Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., and Securities and
Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5. (Resp’ts’ 56.1 Statement ¶ 4; First
Merolla Decl., Ex. 5 ¶¶ 63-70). Doscher sought damages in excess of $15 million. (First
Merolla Decl., Ex. 1 at 2). A panel (the “Panel”) of three arbitrators — Chairperson Michele S.
Riley (the “Panel Chair”), David J. Pine, and Robert Francis Littlejohn — was appointed, and
proceedings began in November 2013. (First Merolla Decl., Ex. 23, at Ex. D).
In the course of the arbitration, Doscher sought extensive discovery, including
Respondents’ tax returns for multiple years, account ledgers and financial statements, Seaport
Group operating agreements, and additional third-party documents. (Docket No. 34 (“Pet’r’s
56.1 Statement”) ¶ 6). Dissatisfied with Seaport’s productions, Doscher filed various motions to
compel and requests for depositions, non-party subpoenas, and other materials. (Docket No. 32
(“Pet’r’s Mem.”) 16-18). The Panel granted some of Doscher’s requests and denied others. (Id.
at 18-19). For example, in March 2014, following briefing and oral argument, the Panel issued
an order that, among other things, denied without prejudice Doscher’s requests for various
Doscher and Seaport qualify as “Associated Persons”— that is, “person[s] . . . engaged in
the investment banking or securities business who [are] directly or indirectly controlled by a
FINRA member,” see FINRA, Dispute Resolution Glossary, https://www.finra.org/arbitrationand-mediation/dispute-resolution-glossary — and disputes between them are thus subject to
mandatory arbitration under FINRA’s rules, see FINRA Rule 13200, available at http://
depositions and non-party subpoenas. (First Merolla Decl., Ex. 15). Next, in late April 2014,
Doscher filed a motion seeking the production of documents and depositions. (First Merolla
Decl., Ex. 17). Doscher also asked the Panel to issue non-party subpoenas to Povol and
Feldman, CPA, P.C., Global Relay USA, Inc., Bloomberg, Inc., Morrison Cohen, LLP, and
Silverpoint Capital, LLC. (Id. at 3). Doscher’s applications yielded an order requiring
production of certain additional documents, but denying Doscher’s request for depositions and
non-party subpoenas. (First Merolla Decl., Ex. 21). And in May 2014, convinced that
Respondents had impeded discovery through “obfuscat[ing] the exchange of information and
ma[king] outright misrepresentations,” (Pet’r’s Mem. 1), Doscher again petitioned the Panel,
this time to ask for a postponement of the arbitration hearing and to seek sanctions against
Respondents for noncompliance in discovery. (First Merolla Decl., Ex. 22). Once again,
Doscher sought a subpoena for non-party Povol & Feldman, CPA, P.C. (Id. at 6-7). Ultimately,
the Panel granted Doscher’s request to postpone the hearing, declined to impose sanctions or
issue the third-party subpoena, and ordered further productions. (First Merolla Decl., Ex. 25).
Doscher also took steps outside of the arbitration proceedings to obtain certain materials.
Most relevant for present purposes are materials that Doscher sought from an accounting firm,
Sobel & Co., LLC (“Sobel”), that he and Respondent Meyer had retained in 2012 to examine
Seaport’s reporting and compliance. (First Merolla Decl., Ex. 208). After initiating the
arbitration proceedings, Doscher’s counsel, A. Todd Merolla, sought documents from Sobel by
contacting McMillan, Constabile, Maker and Perone, LLP (“McMillan Constabile”) — the
counsel through whom Doscher and Meyer had retained Sobel — for its direction and consent.
(Docket No. 36 (“Topper Decl.”), Ex. 1, at 2). In response, McMillan Constabile informed
Merolla that, should he want to obtain documents from Sobel, he should seek production through
the arbitral process; a Sobel representative added that “Sobel would turn over the requested
documents under two conditions, a written release from the counsel who retained us or a lawful
subpoena.” (Id. at 1 (emphasis added)). Counsel for Seaport followed up with a letter to Sobel,
also sent to Doscher’s counsel, reiterating that Doscher should avail himself of FINRA’s
“process for non-party discovery.” (Topper Decl., Ex. 2). Doscher, however, never asked the
Panel to subpoena Sobel — at that point or any time thereafter.
In September 2014, the Panel held a nine-day hearing, during which eleven witnesses
testified and over 200 exhibits were admitted. (Docket No. 72 (“Resp’ts’ Supp. Mem.”) 6; First
Merolla Decl., Ex. 1; see also Docket No. 35 (“Resp’ts’ Opp’n”) 7). Just before summations,
Doscher’s counsel again broached the subject of sanctions, claiming that Respondents had
violated the Panel’s discovery orders by failing to produce, among other things, certain materials
that had been disclosed to Sobel and the final versions of some tax returns. (First Merolla Decl.,
Ex. 35, at 2073-81). Among other things, he asked the Panel to “direct Mr. Meyer to . . . give his
consent to Sobel” to release the documents that he sought. (Id. at 2092). Respondents once
again raised the possibility of a subpoena to Sobel as an alternative path of obtaining the
documents. (Id. at 2092-93). After an extended colloquy involving the Panel Chair and counsel
for both sides regarding how to proceed and the prospects for delay if the proceedings were
halted to pursue the materials from Sobel, Doscher’s counsel requested a break to confer with
Doscher himself. (Id. at 2092-121). A few minutes later, Doscher’s counsel returned and
expressly consented to proceeding with summations, noting that the Panel had “discretion” to
address the issue of sanctions when ruling on the merits. (Id. at 2122-28). Counsel then
proceeded to give their summations on the merits. (Id. at 2130-82).
Immediately after summations, the Panel Chair indicated that the arbitrators would
deliberate and “issue an award” after receiving post-hearing briefs. (Id. at 2183). The following
colloquy then took place:
. . . I just want to ask to make sure that we
have done our job as an arbitration panel. I
would like you to state for the record
whether or not you feel that you have had a
full and fair opportunity to be heard, you
and your client?
I do. We do. Yes. We thank you for that.
So do we, yes, on behalf of all the
respondents. Thank you.
(Id. at 2183-84).
On October 22, 2014, the Panel issued its ruling (the “Award”). The Panel ruled in
Doscher’s favor, but granted him only $2,289,774, as well as a commission on a potential trade
should that trade eventually settle. (First Merolla Decl., Ex. 1, at 3). At the same time, the Panel
denied Respondents’ counterclaim in its entirety. (Id.). Doscher subsequently commenced this
case, seeking to vacate in part and modify in part the Award. (Docket No. 1 (“Petition”)). In a
Memorandum Opinion and Order entered on August 5, 2015, the Court followed then-binding
Second Circuit precedent (while expressing doubt about the soundness of that precedent) to
dismiss the Petition for lack of subject-matter jurisdiction. See Doscher v. Sea Port Grp. Sec.,
LLC, No. 15-CV-384 (JMF), 2015 WL 4643159 (S.D.N.Y. Aug. 5, 2015). On appeal, the
Second Circuit overruled its prior precedent and held, on the basis of Vaden v. Discover Bank,
556 U.S. 49 (2009), that subject-matter jurisdiction over the case was proper. See Doscher v.
Sea Port Grp. Sec., LLC, 832 F.3d 372, 389 (2d Cir. 2016). On remand, the parties submitted
supplemental briefing on the merits. (See Resp’ts’ Supp. Mem.; Docket No. 73 (“Pet’r’s Supp.
It is well established that “[a]rbitration awards are subject to very limited review in order
to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and
avoiding long and expensive litigation.” Rich v. Spartis, 516 F.3d 75, 81 (2d Cir. 2008) (quoting
Willemijn Houdstermaatschappij, BV v. Standard Microsys. Corp., 103 F.3d 9, 12 (2d Cir.
1997)) (alteration in original). Among other things, the “party moving to vacate an arbitration
award has the burden of proof, and the showing required to avoid confirmation is very high.”
STMicroelectronics, N.V. v. Credit Suisse Sec. (USA) LLC, 648 F.3d 68, 74 (2d Cir. 2011)
(quoting D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006)). Moreover, “[t]he
arbitrator’s rationale for an award need not be explained, and the award should be confirmed if a
ground for the arbitrator’s decision can be inferred from the facts of the case.” D.H. Blair & Co.,
462 F.3d at 110 (internal quotation marks omitted); see also Jock v. Sterling Jewelers Inc., 646
F.3d 113, 125 (2d Cir. 2011) (noting the “substantial deference . . . accorded to an arbitrator’s
decision that is rendered within the authority given her by the parties and under law” (internal
quotation marks omitted)); Southerndown, Inc. v. HSS LLC, No. 11-CV-8619 (TPG), 2012 WL
265987, at *1 (S.D.N.Y. Jan. 27, 2012) (“[T]he court should defer to the arbitrator’s decision so
long as there is a barely colorable justification for it.” (internal quotation marks omitted)).
In his Petition, Doscher asks the Court to vacate one portion of the Award (pertaining to
his putative equity interest in Seaport) and to modify another (pertaining to his share of the
commission for a particular trade). The Court will address request each in turn.
Under Section 9 of the Federal Arbitration Act (the “FAA”), 9 U.S.C. § 1 et seq., a
reviewing court must confirm an arbitration award unless one of the statutory grounds for
vacatur or modification is satisfied. See 9 U.S.C. § 9; see also STMicroelectronics, 648 F.3d at
74. Section 10(a) of the FAA, in turn, provides four instances in which a court may vacate an
award. See 9 U.S.C. § 10(a). Significantly, Doscher here relies only on one provision of Section
10(a) — subsection (3) — which calls for vacatur “where the arbitrators were guilty of
misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; or of any other misbehavior by which
the rights of any party have been prejudiced.” 9 U.S.C. § 10(a)(3). Section 10(a)(3) is an
extension of the proposition that an arbitrator “must give each of the parties to the dispute an
adequate opportunity to present its evidence and argument.” Tempo Shain Corp. v. Bertek, Inc.,
120 F.3d 16, 20 (2d Cir. 1997). Notably, it “has been narrowly construed so as not to impinge on
the broad discretion afforded arbitrators to decide what evidence should be presented.” Ripa v.
Cathy Parker Mgmt., Inc., No. 98-CV-0577 (SAS), 1998 WL 241621, at *3 (S.D.N.Y. May 13,
1998). Among other things, for example, an arbitrator “need not follow all the niceties observed
by the federal courts.” Id. Ultimately, to warrant vacatur under Section 10(a)(3), any
“misconduct must amount to a denial of fundamental fairness of the arbitration proceeding.”
Fellus v. Sterne, Agee & Leach, Inc., 783 F. Supp. 2d 612, 618 (S.D.N.Y. 2011).
Applying those standards here, Doscher’s arguments for vacatur under Section 10(a)(3)
ring hollow. Doscher does not, and could not, argue that the Panel “refus[ed] to postpone the
hearing” — because it did postpone the hearing, upon his request. 9 U.S.C. § 10(a)(3). Nor does
he, or could he, contend that the Panel “refus[ed] to hear evidence pertinent and material to the
controversy” — because the Panel heard from all the witnesses that Doscher called and accepted
all 130 exhibits that he offered. (See First Merolla Decl. 5-12; id., Exs. 26-35, 37-201; see also
Resp’ts’ Mem. 7). Instead, he appears to rest his argument on the claim that the Panel engaged
in “misbehavior by which” his right were “prejudiced” because it failed to mandate that
Respondents produce certain documents, most notably final tax returns (as filed with the Internal
Revenue Service) and materials in Sobel’s possession. (Pet’r’s Mem. 16-22, 24-25). But the
arbitrators had “great latitude to determine the procedures governing their proceedings and to
restrict or control evidentiary proceedings.” Supreme Oil Co. v. Abondolo, 568 F. Supp. 2d 401,
408 (S.D.N.Y. 2008); see, e.g., Fairchild Corp. v. Alcoa, Inc., 510 F. Supp. 2d 280, 289
(S.D.N.Y. 2007) (“[A]n arbitrator has discretion to admit or reject evidence and determine what
materials may be cumulative or irrelevant.”). And considering the record as a whole, the Court
cannot say that the Panel abused its “broad discretion” to manage discovery, Finkelstein v. UBS
Glob. Asset Mgmt. (US) Inc., No. 11-CV-0356 (GBD), 2011 WL 3586437, at *9 (S.D.N.Y. Aug.
9, 2011), let alone that it did so to a degree that was fundamentally unfair.
First, Doscher received ample discovery — including a single batch of more than 77,800
pages of documents. (Pet’r’s 56.1 Statement ¶ 8). Notably, the exhibits introduced during the
nine-day arbitration hearing alone included: twelve years of audits of Sea Port Group Securities,
LLC; five years of tax returns and K-1 statements for the Seaport Group, LLC; a consolidated
financial statement for the Seaport Group, LLC and subsidiaries; and other financial
documentation. (See First Merolla Decl., Exs. 40-53, 169-80, 199). Second, the Panel
entertained a slew of discovery motions filed by Doscher, granting some and denying others in a
manner that suggests careful consideration. (See Pet’r’s Mem. 16-19; First Merolla Decl., Exs.
15, 21, 25). Third, Doscher was given multiple opportunities to subpoena Sobel for the materials
he claims he needed, but he elected not to do so. (See, e.g., First Merolla Decl., Exs. 17, 22
(requesting nonparty subpoenas for firms other than Sobel); id., Ex. 35, at 2092-128). 2 And,
finally, in an extended oral argument at the close of the case, Doscher’s counsel presented to the
Panel the very arguments Doscher raises now and — after consulting with Doscher himself —
expressly advised the Panel that it had the discretion to proceed to a final decision and to issue
whatever rulings it thought appropriate as to discovery and sanctions. (First Merolla Decl., Ex.
35, at 2073-2129). Given that record, it could be argued that Doscher waived the arguments that
he presses here. Cf. Roy v. Buffalo Philharmonic Orchestra Soc’y, Inc., 161 F. Supp. 3d 187,
195 (W.D.N.Y. 2016) (declining to vacate an award under Section 10(a)(3) where the petitioner
“opted, as a matter of strategy,” not to offer the testimony he alleged had been improperly
excluded); Kerr v. John Thomas Fin., No. 14-CV-9168 (KBF), 2015 WL 4393191, at *6
(S.D.N.Y. July 16, 2015) (stating that parties to an arbitration had “effectively waiv[ed]” any
argument that they were denied the right call certain witnesses where they had the opportunity to
call the witnesses “and explicitly chose not to”). At a minimum, however, it cannot be said that
the Panel engaged in anything that could remotely be called a “denial of fundamental fairness.”
Fellus, 783 F. Supp. 2d at 618.
In the final analysis, Doscher’s complaints smack more of litigator’s remorse — the
regret that comes when strategic decisions and arguments fail to produce the desired result —
Notably, Doscher does not dispute that he was given multiple opportunities to subpoena
Sobel for the materials and declined to do so. Instead, he contends that the law does not
“require the doing of a futile act,” citing Life Receivables Trust v. Syndicate 102 at Lloyd’s of
London, 549 F.3d 210, 216-17 (2d Cir. 2008), to suggest that a subpoena to Sobel would have
been futile. (Docket No. 41 (“Pet’r’s Reply”), at 3-4). But Life Receivables held only that “the
FAA does not authorize arbitrators to compel pre-hearing document discovery from entities not
party to the arbitration proceedings.” 549 F.3d at 216-17 (emphasis added). The case confirms
that arbitrators can compel document discovery from non-parties during a hearing. Accordingly,
it would not have been futile for Doscher to subpoena Sobel for the materials during the hearing.
than legitimate gripes with the Panel’s handling of the proceedings. On that score, it is
particularly noteworthy that, when the case was submitted to the Panel, Doscher’s counsel
expressly conceded that he and his client felt they had “had a full and fair opportunity to be
heard” and “thank[ed]” the Panel “for that.” (First Merolla Decl., Ex. 35 at 2183-84). Doscher
seeks to downplay the significance of that concession by asserting that “having an ‘opportunity
to be heard’ on an issue or issues ex ante is not the equivalent of an admission that the end result
ex post was without error.” (Pet’r’s Supp. Mem. 6). That may be so, but it merely underscores
the point that Doscher seeks to second guess the substance of the Panel’s decision on the merits
rather than its handling of the process leading to that decision, which is the essence of a Section
10(a)(3) claim. That is, to the extent that the Panel committed the process fouls that Doscher
now decries, those fouls would have been as apparent at the conclusion of the hearing as they are
now. Thus, Doscher’s concession from behind the proverbial veil of ignorance — that is, before
he knew the outcome of the proceedings — that he was given “a full and fair opportunity to be
heard” speaks volumes. See, e.g., Busch v. Sw. Sec., Inc., No. 09-CV-661-C, 2009 WL 3853208,
at *2 (W.D. Okla. Nov. 17, 2009) (relying in part on the plaintiff’s concession “at the end of the
arbitration proceeding that he had a full and fair opportunity to be heard” in rejecting his
arguments under Section 10(a)(3)); Martin v. Scott & Stringfellow, Inc., No. 06-CV-207 (HEH),
2008 WL 706507, at *4 (E.D. Va. Mar. 14, 2008) (similar); cf. Inficon, Inc. v. Veronix, Inc., No.
15-CV-8044, 2016 WL 1611379, at *6-7 (S.D.N.Y. Apr. 19, 2016) (denying a motion to vacate
brought on the ground that the petitioner had been denied a fair redirect examination, where the
panel asked whether the attorneys had “anything to take up,” counsel “offered nothing further,”
and the petitioner closed redirect with “I have no further questions”). 3
In any event, Doscher’s Section 10(a)(3) argument falls short for another reason: He fails
to establish the prejudice that Section 10(a)(3) requires. See NYKCool A.B. v. Pac. Fruit, Inc.,
507 F. App’x 83, 85 (2d Cir. 2013) (summary order); Tempo Shain, 120 F.3d at 19-20.
Doscher’s only specific claim of prejudice is that, as a result of Respondents’ confusing and
incomplete productions, he lacked suitable evidence to evaluate Seaport’s profits or losses.
(Pet’r’s Mem. 22). But Doscher had a significant view into Seaport’s financial situation given
the exhibits admitted at the hearing and testimony concerning the materials that he alleges were
withheld. And, in the colloquy that preceded closing arguments at the hearing, his counsel had a
hard time articulating precisely why he needed the allegedly missing materials. (First Merolla
Decl., Ex. 35, at 2092-129). Notably, Doscher all but gives up the game when he states in a
supplemental brief that vacatur might not have been proper “had the arbitrators not ordered the
production of the Sobel documents” from Respondent in the first place. (Pet’r’s Supp. Mem. 3).
If Doscher could not have argued prejudice had the Panel rejected his request from the get go, it
is hard to see how he could argue prejudice from the Panel’s alleged failure to follow through on
Even here, the primary target of Doscher’s vitriol is not the Panel, but Respondents —
whom Doscher repeatedly accuses of “fraud” and “deceit.” (See, e.g., Pet’r’s Mem. 1; see also
Resp’ts’ Mem. 21; Petition ¶¶ 26-40 (alleging abuse of the discovery process and
misrepresentations to the Panel)). Section 10(a)(3), however, is focused on the conduct of
arbitrators, not the conduct of the parties. Section 10(a)(1) allows a court to vacate an arbitration
award on the ground that it was “procured by corruption, fraud, or undue means,” 9 U.S.C.
§ 10(a)(1), but Doscher does not invoke that provision. Nor could he have, substantially for the
reasons set forth in Respondents’ memorandum of law. (Resp’ts’ Mem. 21).
In short, in light of the broad discretion arbitrators enjoy to address discovery and other
matters of procedure, Doscher fails to carry his heavy burden of showing that the Panel engaged
in misconduct that denied him “fundamental fairness.” Fellus, 783 F. Supp. 2d at 618. On that
score, the primary cases upon which Doscher relies to argue otherwise — Home Indemnity Co. v.
Affiliated Food Distributors, Inc., No. 96-CV-9707 (RO), 1997 WL 773712 (S.D.N.Y. Dec. 12,
1997), Cofinco, Inc. v. Bakrie & Bros., 395 F. Supp. 613, 615 (S.D.N.Y. 1975), and Attia v.
Audionamix, Inc., No. 14-CV-706 (RMB), 2015 WL 5580501 (S.D.N.Y. Sept. 21, 2015) (see
Pet’r’s Mem. 21-23; Pet’r’s Supp. Mem. 1-2) — are easily distinguished. In each of those cases,
the arbitrator either changed the rules midstream or erected seemingly arbitrary procedural
barriers and the complaining party was prevented from presenting evidence that went to the heart
of its case. See Home Indem., 1997 WL 773712, at *3, 5 (concluding that the petitioner was
denied a “fundamentally fair hearing” where the arbitrator “condition[ed]” discovery on the
posting of security and thus prevented “discovery of files central and dispositive to the dispute”
(alteration in original)); Cofinco, 395 F. Supp. at 614-15 (holding that “[t]he fundamental right to
be heard was grossly and totally blocked” where the arbitrator ruled after adjourning the merits
portion of the arbitration, depriving the petitioner of the opportunity to present any evidence);
Attia, 2015 WL 5580501, at 7-9 (vacating a $9 million award where the arbitrator, without a
hearing, granted a sanctions motion and struck the petitioner’s affidavit, even though it “directly
refuted” the spoliation claims). Here, the evidence at issue was not “central and dispositive to
the dispute.” Home Indem., 1997 WL 773712, at *5. And the record reveals a Panel that strove
to give both sides a full and fair hearing rather than a Panel that deprived one side of the right to
fundamental unfairness. Accordingly, Doscher’s Section 10(a)(3) arguments fail. 4
As something of a fallback, Doscher relies on case law holding that a court may vacate an
award if the arbitrator “has acted in manifest disregard of the law.” Porzig v. Dresdner,
Kleinwort, Benson, N.A. LLC, 497 F.3d 133, 139 (2d Cir. 2007); see also Doscher, 832 F.3d at
375 n.3 (noting that “manifest disregard of the law is a judicial gloss on § 10 that permits
vacatur” (internal quotation marks omitted)). (Pet’r’s Mem. 23). A party “seeking to vacate an
award on the basis of the arbitrator’s alleged ‘manifest disregard’ of the law bears a ‘heavy
burden.’” Stolt-Nielsen SA v. AnimalFeeds Int’l Corp., 548 F.3d 85, 91, 93-95 (2d Cir. 2008)
(quoting GMS Grp., LLC v. Benderson, 326 F.3d 75, 81 (2d Cir. 2003)), rev’d on other grounds
Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010). Among other things, the
party must “prov[e] that the arbitrator [was] fully aware of the existence of a clearly defined
governing legal principle, but refused to apply it.” Duferco Int’l Steel Trading v. T Klaveness
Shipping A/S, 333 F.3d 383, 389 (2d Cir. 2003). Doscher does not come close to meeting that
stringent standard. Indeed, his “manifest disregard” argument is little more than a rehash of his
Doscher renews his request, rejected several times by the Court earlier in the litigation
(Docket Nos. 28, 79), for limited discovery in aid of his Section 10(a)(3) claim. (See Pet’r’s
Mem. 24; Docket No. 76). It is well established, however, that “discovery in a post-arbitration
judicial proceeding to confirm or vacate . . . is available only in limited circumstances, where
relevant and necessary to the determination of an issue raised by such an application.” Frere v.
Orthofix, Inc., No. 99-CV-4049 (RMB) (MHD), 2000 WL 1789641, at *4 (S.D.N.Y. Dec. 6,
2000). Indeed, “in view of the narrowness of the grounds on which an arbitral award may be
challenged, the need for discovery is typically not nearly as acute as in other civil lawsuits.
Necessarily, then, the liberality that normally attends discovery in civil litigation is not
appropriate in this context.” Id. (citation omitted); Lyeth v. Chrysler Corp., 929 F.2d 891, 898
(2d Cir. 1991) (“The district court has discretion to deny discovery in a proceeding to confirm an
arbitral award.”). Here, Doscher fails to establish that the discovery he seeks — most, if not all,
of which he was given the opportunity to obtain during the arbitration proceedings — would be
“relevant and necessary” to evaluate his claims of procedural error. Accordingly, the request is
Section 10(a)(3) argument, with one additional gloss: the allegation that the Panel violated
FINRA Rule 13505, which requires parties to “cooperate to the fullest extent practicable in the
exchange of documents and information to expedite the arbitration.” (Pet’r’s Mem. at 6; see also
id. at 23). By its terms, however, Rule 13505 imposes obligations on the parties to an
arbitration; it is nonsensical, therefore, to assert that the arbitrator acted in manifest disregard of
the Rule. More fundamentally, FINRA Rules “are not ‘law.’ [Doscher] must point to a statutory
violation to warrant vacatur of an arbitral award, not a violation of the code of arbitration
procedure.” Max Marx Color & Chem. Co. Emps.’ Profit Sharing Plan v. Barnes, 37 F. Supp.
2d 248, 253 (S.D.N.Y. 1999) (footnote omitted); see also Pochat v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., No. 12-CV-22397, 2013 WL 4496548, at *11 (S.D. Fla. Aug. 22, 2013)
(“[T]he few courts to have considered such an argument have held that violations of FINRA
procedural rules are not a valid basis for vacating an award.” (citing cases)).
Doscher’s final argument — that the Award with respect to a particular trade (“the
Silverpoint portion of the Fairfield Sentry trade”) should be modified, (Pet’r’s Mem. 24) — can
be swiftly rejected. Under Section 11(a) of the FAA, a court may modify an arbitration award
upon “an evident material miscalculation of figures or an evident material mistake in the
description of any person, thing, or property referred to in the award.” 9 U.S.C. § 11(a).
Modification, however, “is generally limited to patently obvious mistakes on the face of the
award, such as where the award would provide for double recovery.” Fellus, 783 F. Supp. 2d at
619. When an award is “not the result of some careless or obvious mathematical mistake, but
rather the disposition of a substantive dispute that lay at the heart of the arbitration,”
modification pursuant to Section 11(a) is unavailable. Companhia de Navegacao Maritima
Netumar v. Armada Parcel Serv., Ltd., No. 96-CV-6441 (PKL), 2000 WL 60200, at *6
(S.D.N.Y. Jan. 25, 2000); see also, e.g., Josephthal & Co. v. Cruttenden Roth Inc., 177 F. Supp.
2d 232, 238-39 (S.D.N.Y. 2001) (“The grounds to modify an award . . . are extremely limited.”).
Here, Doscher does not argue that there was mathematical error in the Panel’s calculation of the
Award; instead, he challenges the “eviden[tiary]” basis for one aspect of the Panel’s decision.
(Pet’r’s Mem. 24; see First Merolla Decl., Ex. 28 at 470-75). That argument goes to the merits,
and is not a proper basis for modification pursuant to Section 11(a). See, e.g., Aferiat v.
Grossman, No. 96-CV-1774 (JFK), 1998 WL 99797, at *10 (S.D.N.Y. Mar. 4, 1998).
Significantly, the issue for this Court is not whether it would have handled the arbitration
proceedings in the same way as the Panel or reached the same result that the Panel reached.
Instead, the issue is a more limited one: whether, in light of the substantial deference owed to an
arbitrator in handling procedural matters and rendering a decision on the merits, Doscher has
established any of the limited grounds for vacating or modifying the Award. For the reasons
explained above, the Court concludes that he has not. Accordingly, his petition to vacate or
modify the Award is DENIED, and the Award is confirmed.
The Clerk of Court is directed to close the case.
Date: December 6, 2017
New York, New York
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?