Schmidt v. Finberg, 90-3788

• Decision Date: 30 September 1991
• Docket Number: No. 90-3788,90-3788
• Citation: 942 F.2d 1571
• Parties: Darwin L. SCHMIDT, Plaintiff-Appellee, v. Ian Lee FINBERG, Richard B. Bartlett, Painewebber, f/k/a Paine, Webber, Jackson & Curtis, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1571

942 F.2d 1571

20 Fed.R.Serv.3d 1112

Darwin L. SCHMIDT, Plaintiff-Appellee, v. Ian Lee FINBERG, Richard B. Bartlett, Painewebber, f/k/a Paine, Webber, Jackson & Curtis, Inc. Defendants-Appellants.

No. 90-3788.

United States Court of Appeals Eleventh Circuit.

Sept. 30, 1991.

Steven M. Greenbaum, Miami, Fla., for defendants-appellants.

William L. Lyman, Clearwater, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before BIRCH, Circuit Judge, TUTTLE, Senior Circuit Judge, and FULLAM ^*, Senior District Judge.

TUTTLE, Senior Circuit Judge:

This is an appeal from an order of the trial court denying a motion by Painewebber, et al. to vacate an award in favor of Schmidt by an arbitration panel of the New York Stock Exchange (NYSE).

I. STATEMENT OF THE CASE

In October 1986, appellee Darwin L. Schmidt filed a complaint against appellants, Painewebber, Finberg and Bartlett (Painewebber) in Orange County, Florida Circuit Court to recover losses sustained in his commodities account which had been handled by appellants. Appellants caused the case to be removed to the Federal Court then had the Federal Court stay the proceedings pending arbitration as provided in the agreement between Schmidt and Painewebber. In November 1987, Schmidt submitted a controversy to the three-member panel of the NYSE for decision. In August 1989, Schmidt filed his amended statement of claim after Painewebber filed its answer. The dispute was set for final arbitration hearing for February 9, 1989. Approximately one month before the scheduled hearing, the parties mutually agreed to an adjournment. The hearing was then rescheduled for June 1, 1989. After the hearing was set for June 1, counsel for Schmidt and counsel for the appellants again stipulated to an adjournment as both attorneys were scheduled to participate in another NYSE arbitration proceeding which had previously been set for June 1. The panel granted the requested adjournment and rescheduled the hearing for January 16, 1990 through January 18, 1990. On December 12, 1989, Schmidt requested a continuance citing as grounds discovery disputes which had arisen between the parties. He also stated that his expert witness would be unavailable on that date. The parties met, however, on January 16 in a pre-hearing conference. The panel solved several issues at the pre-hearing conference and then told the parties that they should let the panel know as soon as possible when they would be available for the final hearing in May 1990.

Shortly thereafter, appellants' counsel wrote the chairman of the panel:

At the pre-hearing conference which took place on January 16, 1990, the parties and the arbitration panel discussed possible dates for scheduling a final hearing in the above-referenced matter. Everyone agreed to look at their schedules for the first three weeks of May and report back to you. My witnesses and I can be available for hearing during the first week of May, however, we would not be available during the second and third weeks of May.

The panel set the hearing for May 8, 9 and 10. Appellants protested to the panel, contending that the setting was during the second week of May and stating that Finberg, a principal witness and a party to the litigation, had been previously committed to participate in an investment seminar in Las Vegas, Nevada on May 9 and 10. The panel refused to change the date of the hearing and it proceeded to a conclusion. The panel awarded substantial damages to Schmidt.

Painewebber then filed a motion in the district court to vacate the award and Schmidt filed a motion to confirm the award. The trial court granted Schmidt's motion and this appeal followed.

II. STATEMENT OF THE FACTS

In addition to the facts just recited, it is important to know what objection appellants made to the panel's proceeding with the hearing in the absence of Finberg who decided to attend the seminar on May 9 and 10 and not appear at the arbitration hearing. Appellants notified the panel that: "Cancelling the engagement would cause immediate and irreparable damage to his (Finberg's) credibility and reputation in the commodities industry."

Appellants do not challenge the decision of the arbitration panel on the merits. They challenge only its refusal to postpone the hearing or to extend it in order to receive Finberg's testimony.

III. STANDARD OF REVIEW

The standard of review from a trial court's denial of a motion to vacate an arbitration award under the Federal Arbitration Statute is an abuse of discretion standard. See Raiford v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 1410, 1412, n. 2 (11th Cir.1990). We must bear in mind that the burden on the appellant here is to convince this Court that it was an abuse of discretion by the district court not to find "misconduct" by the arbitration panel when it denied appellants' request for a postponement and its request to continue the hearing for additional time to receive Finberg's testimony.

In applying that standard, federal courts are guided by the statute itself which provides in relevant part:

In either of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration award--

(c) 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.

IV. DISCUSSION

(A) The Merits

Appellants contend that the trial court abused its discretion in not vacating the arbitration award on two grounds:

(1) That the arbitrator set the final hearing on a date on which it had been notified by appellants that Finberg, a respondent and witness, had already committed himself to participate in an investment seminar on the day following the first day set for the hearing. They claim that this was particularly inexcusable because the panel had requested both parties to notify the panel as to when they would be available for the final hearing during the month of May and they had notified the panel that they would not be available the second and third weeks of May but would be available the first week.

(2) For not continuing the hearing after it was concluded following three days of testimony, for a period long enough to permit Finberg to give his testimony.

In applying the statutory grounds for the granting of a motion to vacate an award, we must always bear in mind that the basic policy of conducting arbitration proceedings is to offer a means of deciding disputes expeditiously and with lower costs than in ordinary litigation. See, O.R. Securities, Inc. v. Professional Planning Associates, Inc., 857 F.2d 742 (11th Cir.1988); and Raiford v. Merrill Lynch, 903 F.2d 1410 (11th Cir.1990).

As is frequently the case, the arbitrators here gave no reason for denying appellants' request for postponement of the hearing. However, Painewebber immediately wrote and requested a reconsideration, stating:

As stated in my April 5, 1990 correspondence, Mr. Finberg is scheduled to speak at a seminar on May 9 and 10, 1990. What I failed to make clear in my last letter was the importance of this seminar to Mr. Finberg's livelihood. A prime component of Mr. Finberg's business is speaking to people at various investment related seminars. This particular seminar is so important that Mr. Finberg agreed to speak at it over eight months ago. Brochures have been prepared identifying Mr. Finberg as a speaker. It is vitally important that Mr. Finberg honor his prior commitments to speak at the investment seminar. If he fails to speak, he runs the risk of impairing business relationships and good will which he has spent years to establish. Unfortunately, Mr. Finberg's partner, Richard Bartlett cannot replace him at the seminar since he, too, is a named respondent in this proceeding. Mr. Finberg wants to have his voice heard in this arbitration and Respondents believe his attendance for the entire hearing is critical. (Emphasis supplied.)

The panel response was as follows: "The arbitrators have denied Respondents' adjournment request."

The issue then comes down to the question whether there was any reasonable basis for the arbitrators to refuse to postpone the hearing or to continue it in order to receive Finberg's testimony. We are of the view that there were several good and sufficient reasons to support the panel's action.

First, the panel may have been confused as to what was meant by Painewebber's statement that it would be available the "first" week in May. The panel set the hearing for three days, May 8, 9 and 10. This was the first full week in May as the month began on the previous Tuesday. Although this is not discussed by appellants in their brief, appellee suggests that this may have been the reason why the panel selected May 8 thinking it was in conformity with Painewebber's request.

Second, and more important, is the fact that in its request for postponement because of the absence of Finberg, Painewebber did not express a single...