United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT June 9, 2006
______________________
Charles R. Fulbruge III
No. 05-20626 Clerk
______________________
RHEA H. LAWS,
Plaintiff - Counter Claimant - Appellant,
v.
MORGAN STANLEY DEAN WITTER,
Defendant - Counter Defendant - Appellee.
______________________
Appeal from the United States District Court
for the Southern District of Texas
_____________________
Before DEMOSS, BENAVIDES, and PRADO, Circuit Judges.
BENAVIDES, Circuit Judge:
The sole question in this appeal is whether an arbitration
panel committed misconduct when it denied the Appellant’s request
for a continuance. We agree with the district court that Appellant
has not shown misconduct and therefore affirm.
I. BACKGROUND
In October 2000, Appellee Morgan Stanley instituted
arbitration proceedings against Appellant Rhea Laws through the
National Association of Securities Dealers.1 Morgan Stanley sought
1
We draw our account of the basic facts in this case primarily
from the district court’s opinion. See Laws v. Morgan Stanley Dean
Witter, C.A. No. H-04-999, slip op. at 1–2 (S.D. Tex. June 3,
2005).
to recover an alleged deficit of $689,115.19 in Laws’s margin
account. The arbitration hearing was eventually set for February
4, 2003. After the arbitration had been pending for more than
three years, and only two months before the scheduled hearing, Laws
served his first request for documents on Morgan Stanley. Morgan
Stanley timely responded on December 29, 2003, but its response
contained numerous objections. On January 13, 2004, Laws moved to
compel production of the undisclosed documents.
On January 28th, the arbitration panel granted the motion to
compel in part. It directed Morgan Stanley to produce certain
documents by February 2nd, two days before the February 4th
hearing. Apparently, neither side objected to this deadline.
Between January 28th and January 30th, Morgan Stanley responded to
the order by issuing supplemental discovery.2 The day before the
hearing, Laws moved for a continuance. He argued that he needed at
least thirty days to review the materials Morgan Stanley had
produced. Morgan Stanley opposed the motion, and the panel
summarily rejected Laws’s request for further delay.
After the arbitration panel ruled against him, Laws filed suit
in district court. Laws sought vacatur, arguing that the
arbitration panel had committed misconduct in denying him a
2
In his brief, Laws claims that he received some discovery
after the February 2nd deadline. However, Laws fails to cite to
any record reference to support his claim. The district court
found no evidence that any documents were tendered late. See Laws,
C.A. No. H-04-999, at 6 n.1.
2
continuance. The district court ruled in favor of Morgan Stanley,
and this appeal followed.
II. STANDARDS FOR VACATUR
The Federal Arbitration Act allows federal courts to vacate an
arbitration award “where the arbitrators were guilty of misconduct
in refusing to postpone the hearing, upon sufficient cause shown
. . . or of any other misbehavior by which the rights of any party
have been prejudiced.” 9 U.S.C. § 10(a)(3) (2000). “To constitute
misconduct requiring vacation of an award, an error in the
arbitrator’s determination must be one that is not simply an error
of law, but which so affects the rights of a party that it may be
said that he was deprived of a fair hearing.” El Dorado Sch. Dist.
No. 15 v. Cont. Cas. Co., 247 F.3d 843, 848 (8th Cir. 2001)
(internal quotation marks omitted); see also Apex Fountain Sales v.
Kleinfeld, 818 F.2d 1089, 1094 (3d Cir. 1987) (“Under Federal law,
misconduct apart from corruption, fraud, or partiality in the
arbitrators justifies reversal only if it so prejudices the rights
of a party that it denies the party a fundamentally fair
hearing.”). We review the district court’s application of these
principles de novo. See Prestige Ford v. Ford Dealer Computer
Servs., 324 F.3d 391, 394 (5th Cir. 2003).
III. ANALYSIS
For the following reasons, we reject Laws’s claim under
section 10(a)(3). To begin with, Laws has not argued, much less
3
shown, that he suffered prejudice from the panel’s refusal to delay
the proceedings. Cf. United States v. Gourley, 168 F.3d 165, 172
n.11 (5th Cir. 2003) (“Our Court reviews a district court’s denial
of a motion for continuance for abuse of discretion resulting in
serious prejudice.”) (internal quotation marks omitted). His brief
does not indicate that the documents at issue were material to his
case. He has not explained how he would have presented his case
differently at the arbitration hearing had he been given more time
to review the documents. Absent even a representation that the
materials produced on the eve of arbitration were important to his
case or that a continuance might have altered the outcome of the
arbitration, we cannot conclude that Laws was deprived of a fair
hearing.
Even if Laws would have benefitted from a continuance, he
still could not show misconduct. Laws was not denied a fair
hearing because the record supports several bases on which the
panel reasonably could have denied him a continuance. See El
Dorado Sch. Dist., 247 F.3d at 848 (“Courts will not intervene in
an arbitrator’s decision not to postpone a hearing if any
reasonable basis for it exists.”); Scott v. Prudential Sec., 141
F.3d 1007, 1016 (11th Cir. 1998) (“In reviewing an arbitrator’s
refusal to delay a hearing, we must decide whether there was any
reasonable basis for failing to postpone the hearing . . . .”)
4
(internal quotation marks omitted).3 First, the panel reasonably
could have concluded that Laws failed to present good cause for
delay. See In re Arbitration Between: Trans Chem. & China Nat’l
Mach. Imp. & Exp., 978 F. Supp. 266, 307 (S.D. Tex. 1997), adopted
by Trans Chem. v. China Nat’l Mach. Imp. & Exp., 161 F.3d 314, 319
(5th Cir. 1998). Laws’s conclusory motion for continuance
represented that he was currently receiving discovery and argued
that he would need thirty days to “investigate” the production and
assess its “accuracy and application to this suit.” Laws failed to
present the panel with any showing that the documents he had
recently received were complex, voluminous, or important.
Second, the panel also might have reasonably denied the
continuance in light of the fact that the arbitration had been
pending for more than three years. It could have concluded “that
the proceeding had already been protracted so long as to violate
the policy of expeditious handling of such disputes.” Schmidt v.
Finberg, 942 F.2d 1571, 1574 (11th Cir. 1991).
Third, the panel reasonably could have decided that further
delay would be inequitable. Laws waited more than three years
3
See also Floyd County Bd. of Educ. v. EUA Cogenex Corp., 1999
WL 1023704, *2–3 (6th Cir. Nov. 5, 1999) (unpublished) (applying
the “any reasonable basis” test); Fogelman v. Testerman, 1998 WL
795194, *2 (4th Cir. Nov. 17, 1998) (unpublished) (same); Martin v.
Little, 1991 WL 34941, *1 (E.D. La. 1991) (unpublished) (“[T]he
test is whether ‘there exists a reasonable basis for the
arbitrator’s considered decision not to grant a postponement
. . . .’”) (quoting Storey v. Searle Blatt, Ltd., 685 F. Supp. 80,
82 (S.D.N.Y. 1988)).
5
(until only two months before the scheduled hearing) to institute
any discovery.4 Although Laws was ultimately unsatisfied with
Morgan Stanley’s responses, Morgan Stanley did respond to his
request in a timely fashion. Laws, however, neglected moving for
a continuance until the day before the hearing even though he knew
in advance that he would be receiving discovery on the eve of
arbitration. Accordingly, the panel may have concluded that
Laws—having waited for more than three years before initiating
discovery—was responsible for his situation. Further delay may
have been unfair to Morgan Stanley. See El Dorado Sch. Dist., 247
F.3d at 848 (holding that the arbitrator reasonably could have
determined “that postponement was inappropriate because the parties
had expended considerable time, effort and money based on the
hearing dates”). Indeed, Laws’s own motion for continuance
acknowledged that the attorneys in the case would have to cancel
flight plans at the last minute.
In light of these reasonable bases for denying Laws’s
continuance, the panel did not deny him a fair hearing.
IV. CONCLUSION
Laws has not shown misconduct. We will not disturb the
arbitration panel’s judgment.
AFFIRMED.
4
Laws’s brief provides no explanation for this delay in
seeking discovery.
6