Ploetz v. Morgan Stanley Smith Barney, LLC

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The trustee for the Laudine L. Ploetz, 1985 Trust filed suit against Morgan Stanley, alleging that it had transferred funds from the account without authorization. The trustee later moved the district court to vacate the arbitration award under the Federal Arbitration Act (FAA) after she learned that the chairperson of the arbitration panel had undisclosed service in a case years earlier involving Morgan Stanley. The Eighth Circuit affirmed the district court's denial of the trustee's motion to vacate the arbitration, holding that the trustee did not warrant relief from the award under any of the court's evident-partiality standards since she did not explain how the chairperson's undisclosed mediation of the previous case created even an impression of possible bias. The court held that the mere fact that non-disclosure of the past service violated FINRA rules governing arbitration did not provide the district court with any basis to conclude he was evidently partial. Furthermore, arbitrator misbehavior that results only in the violation of a party's rights under FINRA rules was not significant enough to merit relief under 9 U.S.C. Sec. 10(a)(3) unless the party was deprived of a fair hearing. View "Ploetz v. Morgan Stanley Smith Barney, LLC" on Justia Law