August 18, 2014 Practice Points

Third Circuit Distinguishes Arbitrator Error from Misconduct

By John Haarlow, Jr.

In Bellantuono v. ICAP Securities USA, LLC, 557 Fed. Appx. 168 (3rd Cir. 2014), the Third Circuit affirmed an arbitration award even though it disagreed with the arbitration panel’s rulings on discovery. The opinion distinguishes arbitrator error from the arbitrator misconduct required for an award to be overturned.

Defendant ICAP Securities USA, LLC, terminated plaintiff Joseph Bellantuono from its mortgage-backed securities desk for violations of its trading policies. Bellantuono commenced a Financial Industry Regulatory Authority (FINRA) arbitration, alleging that ICAP terminated him as a sacrificial lamb for the Securities and Exchange Commission (SEC), which had begun an investigation of ICAP. The FINRA panel awarded Bellantuono only partial relief and the district court denied Bellantuono’s petition to vacate the award and instead confirmed it. On appeal, Bellantuono argued that the panel manifestly disregarded the law and engaged in misconduct in refusing to hear relevant evidence.

Keywords: litigation, alternative dispute resolution, ADR, circuit split, discovery, sanctions, manifest disregard, misconduct

John Haarlow, Jr. is with Novack and Macey LLP in Chicago, Illinois.

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