Opinion
00 C 3876
January 25, 2001
MEMORANDUM OPINION
This case comes before the Court on the motion of Respondents Nancy Balcer and Citicorp Investment Services to dismiss Daisy Simas' petition to vacate the arbitration award. For the reasons set forth below, we grant Respondents' motion.
BACKGROUND
Pro se Petitioner Daisy Simas opened a brokerage account with Respondent Citicorp Investment Services ("Citicorp") on December 28, 1998. Respondent Nancy Balcer, a Citicorp Investment Consultant, helped Simas to execute the forms required to open the account. According to Simas' arbitration complaint, Simas made various limit order trades during the month of January 1999. Then on February 4, 1999, Simas sought to purchase shares of Perot Systems but was unable to access her account. She called Balcer and informed her that she wanted to buy 1000 shares of Perot Systems at a price between $68 and $69. Simas allegedly asked Balcer for a price quote but Balcer was unable to provide one because her computer system was not functioning. Simas claims that Balcer then asked Simas if she wanted to place a market order, and Simas responded that she did not.
Nevertheless Simas claims, Baker proceeded to place a market order from Simas' account for 1000 shares of Perot Systems. The order was filled at $85. Upon learning of the market order purchase, Simas allegedly sought to re-sell the stock at the purchase price of $85 per share. By the time Simas' stock was sold on February 10, 1999, however, the stock price had fallen to $44.
Pursuant to an agreement between the parties, Simas initiated arbitration against Citicorp before the National Association of Securities Dealers ("NASD"). Her claim alleged, inter alia, causes of action for negligence, breach of contract, and breach of fiduciary duty and sought damages for monies lost due to Simas' inability to access her brokerage account on February 4, 1999 and Citicorp's alleged unauthorized and untimely purchase of the Perot Systems stock. Simas sought $56,000.00 in compensatory damages and $44,000.00 in punitive damages, plus interest, costs and fees.
Hearings were held before a panel of NASD arbitrators in May 2000. On May 26, 2000, the panel issued a decision finding Citicorp liable and ordering it to pay Simas the sum of $17,039.90 in compensatory damages. "On June 23, 2000, Simas filed with this Court a motion to vacate the arbitration award pursuant to Procedural Rule 9310 of the NASD Code of Procedure "on the grounds of `imperfections, ambiguities, or mistakes' on the face of the award." Citicorp and Balcer, both of whom were named as Respondents in Simas' petition, have moved to dismiss the petition to vacate the award.
LEGAL STANDARD
"Litigants attempting to overturn an arbitrator's award face a daunting challenge." ANR Advance Transportation Co. v. Int'l Brotherhood of Teamsters, Local 710, 153 F.3d 774, 777 (7th Cir. 1998). "[A]rbitrators' errors — even clear or gross errors — do not authorize courts to annul awards." Widell v. Wolf et al., 43 F.3d 1150, 1151 (7th Cir. 1994) (citation omitted). This limited standard of review is necessary to preserve the "benefits of reduced delay and expense" sought to be achieved by arbitration. Eljer Mfg., Inc. v. Kowin Dev. Corp., 14 F.3d 1250, 1254 (7th Cir. 1994).
Pursuant to Section 10(a) of the Federal Arbitration Act, 9 U.S.C. § 10 (a), the Court may order an arbitration award vacated where: (1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption in one or more of the arbitrators; (3) the arbitrators were guilty of misconduct by which the rights of any party have been prejudiced; or (4) the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award on the subject matter submitted was not made. 9 U.S.C. § 10 (a)(1)-(4). Furthermore, while federal courts will not vacate an arbitration award merely because the arbitrator misinterpreted applicable law, Nat'1 Wreckin Co. v. International Bhd. Of Teamsters Local 731, 990 F.2d 957, 961 (7th Cir. 1993), an arbitrator's "manifest disregard for the applicable law" may be grounds for vacating an arbitration award. Id; First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942, 131 L.Ed.2d 985, 115 S.Ct. 1920 (1995). The petitioner has the burden of demonstrating the existence of a valid ground for vacating the award. Wilson v. Sterling Foster Co., No. 98 C 2733, 1998 WL 7490065, at *2 (N.D. Ill. Oct. 15, 1998).
With these principles in mind, we turn to the motion before us.
DISCUSSION
I. Proper parties
The parties agree that Nancy Balcer was never a party to the challenged NASD arbitration and that Simas' petition to vacate was never served upon her. Indeed, Simas admits in her response to the motion to dismiss that Balcer is not a proper respondent in the action. The petition to vacate is therefore dismissed as to Respondent Balcer.
II. NASD Rule 9310
Simas' petition is ostensibly brought pursuant to Rule 9310 of the NASD Regulation, Inc. Code of Procedure. Rule 9310, a self-regulatory rule applicable only to disciplinary actions brought by the NASD National Business Conduct Committee against NASD members, has no application in this Court. Simas' "appeal" under Rule 9310 is therefore not properly filed in this Court. Nevertheless, because Simas is pro Se, we construe her petition as one brought pursuant to Section 10 of the Federal Arbirtration Act and proceed to address her arguments on the merits. See Henderson v. Sheahan, 196 F.3d 839, 845 (7th Cir. 1999) (pro se complaint held to "less stringent standards than formal pleadings drafted by lawyers").
III. Petition to vacate the arbitration award
Simas' petition alleges that the May 26, 2000 arbitration award ordering Citicorp to pay her compensatory damages in the amount of $17,039.90 (the "Award") should be vacated "on the grounds of `imperfections, ambiguities, or mistakes' on the face of the award." In particular, Simas asserts that the Award was minimal in light of the alleged damages of $76,000.00; that she was unable to access her account for 4 days; and that Citicorp bought the stock at issue at its highest price of $85, which Simas could not afford, while Simas originally sought to buy it at $33.75.
These allegations are insufficient to support the petition under § 10 of the FAA.
There is no allegation of fraud, partiality, or misconduct, and no allegation that the arbitrators exceeded their powers or executed them so as to undermine the legitimacy of the award. Nor does Simas allege that the arbitrators "deliberately disregarded what [they] knew to be the law." Flexible Mfg. Sys. v. Super Products Corp., 86 F.3d 96, 100 (7th Cir. 1996). Instead, Simas merely asks the Court to evaluate the merits of the Award. This we are not authorized to do under the Federal Arbitration Act or relevant case law.
Although Simas is disappointed with the amount of the Award, a discrepancy between the damages awarded and the damages alleged is not a basis to vacate the Award. See Dawahare v. Spencer, 210 F.3d 666, 669 (6th Cir. 2000). We therefore hold that Simas has failed allege sufficient grounds support her petition to vacate the Award, and grant Respondents' motion to dismiss the petition.
CONCLUSION
For the foregoing reasons, Respondent Citicorp's motion to dismiss is granted in its entirety.