Before LUMBARD, Chief Judge, and MOORE and HAYS, Circuit Judges.
Capital Distributing Company appeals from a judgment of the District Court for the Southern District of New York which confirmed the award of three arbitrators in favor of Ballantine Books, Inc. for $151,343.84. The proceeding to confirm was brought in the district court by Ballantine, a New York corporation with its principal place of business in New York City, against Capital, a Connecticut corporation with its business headquarters in Derby, Connecticut, pursuant to the United States Arbitration Act, 9 U.S.C. § 1 et seq.
Capital's appeal claims that the federal court was without jurisdiction as the New York courts had previously taken jurisdiction by reason of Capital's motion there to disqualify the chairman of the arbitration board. It also alleges that the district court should have vacated the award because of the evident partiality of the chairman, and because the award was incomplete and went beyond the powers of the arbitrators. We affirm the district court as it had jurisdiction to pass upon the award, and we find no merit in Capital's claims of improper conduct by the chairman and imperfections in the award itself.
In 1954 Ballantine, a publisher of paperbacks contracted with Capital to distribute its publications. Capital was to pay Ballantine 15% of the invoice value of Ballantine's shipments to Capital's wholesalers' inventory twenty days after the end of the month in which shipments were made, and an additional 40% thirty days later. Because the wholesalers had the right to return books, the remainder (less a further 3% "settlement account") was not payable until six months after a specific title had been called in from the wholesalers. As Capital was paid by the wholesalers, it therefore acquired sums of money as reserves against returns from wholesalers for which it was required to account to Ballantine from time to time.
All went well until May and June 1958, when Capital refused to pay Ballantine approximately $175,000 claimed to be due, stating that this was in accordance with its right to maintain additional reserves against future returns. In June, 1958, Ballantine served a demand for arbitration pursuant to the terms of the contract. Arbitration hearings finally commenced on April 29, 1959, and continued with adjournments and frequent delays until January 11, 1961; on May 29, 1961 the award in favor of Ballantine was filed.
On the ninth day of the hearing, October 8, 1959, Chester B. McLaughlin, Jr., the chairman of the arbitration panel, asked the attorneys for the parties, off the record, whether there was any possibility of settlement. After being advised that there had been unfruitful talks, the chairman said that on the basis of the record as it then stood it was his tentative view that there should be an award for Ballantine. This session continued, and what was expected to be the final session was arranged for November 5.
On November 4, Capital moved before the arbitrators for disqualification of the chairman, on account of his off-the-record comments on October 8. The arbitrators denied the motion on November 5, and a special Committee on Challenge of the American Arbitration Association also passed on the matter with the same result on December 17, 1959. The Association scheduled the resumption of the arbitration for January 11, 1960.
On January 8, 1960, Capital moved in the New York Supreme Court to disqualify the chairman. Mr. Justice Steuer denied the motion on January 13, 1960, having first refused to stay the arbitration. The judge held that the chairman's conduct did not transcend any rule of the Association. He said that, while it would have been better if the chairman had not suggested a settlement and had not indicated his views, his actions did not indicate such prejudice as to require disqualification. An appeal to the Appellate Division, First Department, resulted in an affirmance on September 27, 1960, on the ground that the application was premature. 11 A.D.2d 933, 207 N.Y.S.2d 425.
Meanwhile the final arbitration hearing had been held on January 11, briefs filed and an award made on May 29. On June 13, the day after the last arbitrator had filed acknowledgment of the award, Ballantine filed its application to confirm in the federal court.
1. Capital argues first that the district court erred in denying its motion for an order "remanding all pending proceedings to confirm * * * to the Supreme Court, New York County, on the grounds that said Court has assumed jurisdiction of such arbitration proceeding * * *". The New York court is alleged to have taken jurisdiction over the entire arbitration proceeding upon the filing of Capital's motion to disqualify the chairman, and it is argued that this jurisdiction precluded the federal court from entertaining any motion pertaining to the arbitration.
There is no question that the district court would have had jurisdiction under the United States Arbitration Act, 9 U.S.C. §§ 1-14, to entertain Ballantine's motion to confirm in the absence of the prior state court proceedings. The arbitration clause was unquestionably part of a "contract evidencing a transaction involving commerce" 9 U.S.C. § 2, and the diversity of citizenship of the parties gave the independent federal jurisdiction which we have held is required under the Act, Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402 (2 Cir., 1959), cert. granted, 362 U.S. 909, 80 S. Ct. 682, 4 L. Ed. 2d 618, dismissed per stipulation, 364 U.S. 801, 81 S. Ct. 27, 5 L. Ed. 2d 37 (1960).
Since this is an independent federal court proceeding, not the product of a petition for removal, the "remand" sought by Capital would be an inappropriate remedy. We shall, however, treat the motion as one to dismiss the federal proceeding or stay it pending further state proceedings. The form of the remedy sought is irrelevant since we hold that Capital is not entitled to any relief.
Capital attempts to analogize this case to those cases holding or implying that the twenty-day period for the removal of the supervision of an arbitration proceeding from the state to the federal courts begins to run from the date of the first court action relating to the arbitration. Marchant v. Mead-Morrison Mfg. Co., 29 F.2d 40 (2 Cir., 1928), cert. denied, 278 U.S. 655, 49 S. Ct. 179, 73 L. Ed. 565 (1929); Minkoff v. Scranton Frocks, Inc., 172 F.Supp. 870 (S.D.N.Y.1959). Without expressing any opinion on the merits of that doctrine, we find no difficulty in distinguishing that question of interpretation of the relevant removal statute, now 28 U.S.C. § 1446, from the question now ...