in a motion to vacate, nor have they been substantiated
with evidence. It is plain from the face of Respondent's
"Counter-Petition" that they cannot make out a claim for vacatur of the
Award. As discussed supra, the Court is severely limited in its ability
to review an arbitration award for vacatur. In fact, we "may vacate only
for conduct that has prejudiced the rights of the parties." Florasynth,
750 F.2d at 176. This is because "the purpose of the motion to vacate is
to prevent an award from being enforced when some injustice in the
proceedings taints its validity." Id.
Respondents allege that the Arbitration Panel "manifestly disregarded
the evidence presented during the hearing, and went beyond its authority
by ordering and relying upon legal issues that were never in the case."
(Resp. Counter-Pet. to Vacate ¶ 9). The only possible claim under
9 U.S.C. § 10 that this allegation could be construed to make out is
that the arbitrators exceeded their authority. Case law dealing with
arbitrator misconduct in the consideration of evidence has focused
exclusively on the arbitrators' refusal to hear evidence, not their
affirmative consideration of evidence. See, e.g. Gulf Coast Indus.
Workers Union v. Exxon Co., (5th Cir. 1995), 70 F.3d 847 (award may be
arbitrator is guilty of misconduct in refusing to hear evidence.
However, even a refusal to hear evidence does not necessarily require
vacatur. See Hoteles Condado Beach, La Conch and Convention Center v.
Union De Tronquistas Local 901, (1st Cir. 1985), 763 F.2d 34 (arbitration
award must not be set aside for arbitrator's refusal to hear evidence
that is cumulative or irrelevant; vacatur is appropriate only when
exclusion of relevant evidence so affects rights of party that it may be
said that he was deprived of fair hearing). Accord Fine v. Bear, Stearns
& Co., Inc., (S.D.N.Y. 1991), 765 F. Supp. 824 (Arbitrator's alleged
refusal to hear evidence pertinent and material to arbitrage account
controversy did not amount to misconduct where the arbitration hearing
gave the parties a fundamentally fair hearing).
These results can be explained by the great deference given to
arbitrator's decision to control order, procedure and presentation of
evidence by federal courts. See Nitram, Inc. v. Industrial Risk
Insurers, (M.D. Fla. 1994), 848 F. Supp. 162. affirmed 141 F.3d 1434. The
NASD rules provide that "the arbitrators shall determine the materiality
and relevance of any evidence proffered and shall not be bound by rules
governing the admissibility of evidence." NASD Manual Rule 10323.
Here, Respondents' only claim is that the issue upon which the
arbitrators asked the parties to submit five-page briefs was not
initially in issue. They do not argue that the hearing was fundamentally
unfair, nor do they suggest that their right to be heard was violated.
Such a claim is not enough to cause us to refuse Petitioner's request
that we issue an order to confirm the Award. Cobec Brazilian Trading and
Warehousing Corp. of U.S. v. Isbrandtsten, (S.D.N.Y. 1980), 524 F. Supp. 7
(arbitration award would not be vacated on theory that there had been a
neglectful disregard of evidence by arbitrators, in light of fact that
party's right to be heard had not been grossly and totally blocked).
Accordingly, we CONFIRM Kruse's award against Sands and Pak, jointly and
Kruse has also petitioned the Court to order Sands and Pak to pay
post-award interest. The NASD provides that "an award shall bear interest
from the date of the award (I) if not paid within thirty (30) days of
receipt." NASD Manual Rule 10330(h)(1). The arbitration award is silent
on the matter of post-award interest, so we will apply the legal rate
prevailing in New York, the state where the award was rendered. NASD
10330(h)(3). This rate is 9%. N.Y.C.P.L.R. § 5004.
Kruse's Petition to Confirm Arbitration Award is GRANTED in favor of
Kruse and against Sands and Pak, jointly and severally. Kruse is awarded
the amount of the Award. $300,960.08, against Sands and Pak, jointly and
severally, and post-award interest at the rate of 9% from July 18. 2002