United States District Court, E.D. North Carolina, Western Division
BONNIE L. SHEPHERD, et al., Plaintiffs,
LPL FINANCIAL LLC, Defendant.
C. DEVER III, UNITED STATES DISTRICT JUDGE
February 28, 2017, plaintiffs filed a petition in Wake County
Superior Court to vacate an arbitration award of $107, 677
entered in their favor on December 2, 2016. See [D.E. 1-2]
12-18. On March 30, 2017, LPL Financial LLC ("LPL"
or "defendant") removed the action to this court
[D.E. 1]. On September 11, 2018, plaintiffs moved for
permission to file a memorandum in opposition to
defendant's motion for a protective order precluding
further discovery [D.E. 58]. On September 26, 2018,
plaintiffs withdrew the motion as moot [D.E. 67]. On
September 21, 2018, plaintiffs moved for summary judgment
[D.E. 63], filed a memorandum in support [D.E. 64], and moved
for a hearing [D.E. 65]. On October 18, 2018, LPL responded
in opposition and asked the court to confirm the award [D.E.
70]. On November 1, 2018, plaintiffs replied [D.E. 71]. On
August 22, 2018, plaintiffs moved to compel discovery [D.E.
55] and filed a memorandum in support [D.E. 56]. On September
5, 2018, LPL responded in opposition [D.E. 57]. On September
12, 2018, the court referred the motion to Magistrate Judge
Swank [D.E. 60]. On March 18, 2019, Magistrate Judge Swank
comprehensively analyzed the discovery dispute and denied
plaintiffs' motion to compel discovery [D.E. 76]. On
March 20, 2019, the court held a hearing concerning
plaintiffs' pending motions. As explained at the hearing,
the court denies plaintiffs' motion for summary judgment
and confirms the arbitration award of $107, 677 entered in
September 21, 2018, plaintiffs moved for summary judgment
concerning their claim to vacate the arbitration award of
$107, 677 entered in their favor [D.E.63]. Plaintiffs contend
that the, award should be set aside for two reasons. First,
plaintiffs allege that one of the arbitrators previously
served on an arbitration panel in a case in which counsel for
defendant had appeared as counsel and that the panel had
ruled in favor of defendant's counsel's client. See
[D.E. 1-2] 15-16. Second, plaintiffs allege that defendant
failed to produce relevant documents during the arbitration.
See id. 16; [D.E.64] 6-9.
Federal Arbitration Act ("FAA"), 9 U.S.C. § 1
et seq., provides for "expedited judicial review to
confirm, vacate, or modify arbitration awards." Hall
St. Assocs.. LLC v. Mattel. Inc.. 552 U.S. 576, 578
(2008). "The scope of judicial review of an arbitration
award is among the narrowest known at law." UBS Fin.
Servs.. Inc. v. Padussis. 842 F.3d 336, 339 (4th Cir.
2016) (quotation omitted); see Wachovia Sees.. LLC v.
Brand. 671 F.3d 472, 478 n.5 (4th Cir. 2012); MCI
Constructors. LLC v. City of Greensboro. 610 F.3d 849,
857 (4th Cir. 2010); Williamson Farm v Diversified Crop
Ins. Servs.. No. 5:17-CV-513-D, 2018 WL 1474068, at *3
(E.D. N.C. Mar. 26, 2018) (unpublished), aff'd, No.
18-1463, 2019 WL 939004 (4th Cir. Feb. 27, 2019). In seeking
vacatur, plaintiffs must show "one of the grounds
specified in the [FAA] or one of certain limited common law
grounds." MCI Constructors. LLC. 610 F.3d at
857; see 9 U.S.C. § 10(a); Padussis. 842 F.3d
at 339; Patten v Signator Ins. Agency. Inc., 441
F.3d 230, 234 (4th Cir. 2006).
rely on 9 U.S.C. § 10(a)(1) and (2). Plaintiffs must
show either that "the award was procured by corruption,
fraud, or undue means" or that "there was evident
partiality or corruption in the arbitrators." 9 U.S.C.
§ 10(a)(1)-(2); see Williamson Farm, 2018 WL 1474068, at
*3-4. "The term 'undue means' has generally been
interpreted to mean something like fraud or corruption."
MCI Constructors. 610 F.3d at 858; Three S Del.,
Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 529
(4th Cir. 2007). To prove that an award was procured by undue
means, the party seeking vacatur "must show that the
fraud or corruption was (1) not discoverable upon the
exercise of due diligence prior to the arbitration, (2)
materially related to an issue in the arbitration, and (3)
established by clear and convincing evidence." MCI
Constructors. 610 F.3d at 858 (alteration omitted).
arbitrator partiality, "the party seeking vacation has
the burden of proving that a reasonable person would have to
conclude that an arbitrator was partial to the other party to
the arbitration." Consol. Coal Co. v. Local 1643.
United Mine Workers. 48 F.3d 125, 129 (4th Cir. 1995)
(quotations omitted). This standard requires showing
something more than "the appearance of bias."
Id. (quotation omitted); see Peoples Sec Life
Ins. Co. v. Monumental Life Ins. fin., 991 F.2d 141, 146
(4th Cir. 1993) (collecting cases). The alleged partiality
"must be direct, definite, and capable of demonstration
rather than remote, uncertain or speculative."
Peoples Sec. Life Ins. Co., 991 F.2d at 146
(quotation omitted); Am. Ins. Managers. Inc. v. Guarantee
Ins. Inc., No. 1:07-CV-1615-MBS, 2011 WL 1162374, at *11
(D.S.C. Mar. 29, 2011) (unpublished) (quotation omitted). A
party asserting partiality faces a "heavy" burden.
Peoples Sec. Life Ins., Co., 991 F.2d at 146.
have not met their burden of proof under 9 U.S.C. §
10(a)(1) concerning the withheld documents. See MCI
Constructors. LLC. 610 F.3d at 858; Bauer v. Carty
& Co.. 246 Fed.Appx. 375, 378-80 (6th Cir. 2007)
(unpublished); Forsvthe Int'l. S A. v. Gibbs Oil
Co.. 915 F.2d 1017, 1022-23 (5th Cir. 1990); Wells
Fargo Advisors. LLC v. Watts. 858 F.Supp.2d 591, 598
(W.D. N.C. Mar. 12, 2012), aff'd in part and
rev'd in part, 540 Fed.Appx. 229 (4th Cir. 2013)
(per curiam) (unpublished); Weirton Med. Ctr.. Inc. v.
OHR Intensive Res.. LLC. No. 5:15CV131, 2016 WL 2766650,
at *9 (N.D. W.Va. May 12, 2016) (unpublished), aff'd 682
Fed.Appx. 227 (4th Cir. 2017) (per curiam) (unpublished).
Similarly, plaintiffs have not shown that "there was
evident partiality or corruption in the arbitrators." 9
U.S.C. § 10(a)(2); see Consol. Coal Co., 48
F.3d at 129; Am. Ins. Managers, Inc., 2011 WL
1162374, at * 11. Accordingly, the court denies
plaintiffs' motion for summary judgment and confirms the
the court DENIES plaintiffs' motion for summary judgment
[D.E. 63] and CONFIRMS the arbitration award of $107, 677
entered in plaintiffs' favor. The court GRANTS
plaintiffs' motion to withdraw [D.E. 67] and GRANTS
plaintiffs' motion for hearing [D.E. 65]. ...