## Facts

- Bowles Financial Group, Inc. and Stifel, Nicolaus & Company, Inc. disputed whether Stifel owed Bowles compensation.
- The parties arbitrated under rules giving arbitrators sole authority over materiality and relevance and not binding them to formal evidence rules.
- During arbitration, Bowles’s counsel deliberately and repeatedly disclosed Stifel’s prior settlement offer to the arbitrators, arguing it showed liability, nonpayment, and a deceptive scheme.
- The arbitrators stated they would not consider the settlement offer and would not base their decision on it.
- The arbitrators awarded Bowles an amount exceeding the settlement offer.
- Stifel sought vacatur in federal district court, arguing the repeated disclosure made the proceeding fundamentally unfair; the district court confirmed the award.
- On appeal, Bowles’s counsel acknowledged intentionally presenting the settlement offer and stated he routinely did so in arbitration based on the governing rules.

## Issues

1. Whether an arbitration award must be vacated under the Federal Arbitration Act when the prevailing party’s attorney intentionally and repeatedly discloses the opponent’s settlement offer to the arbitrators, absent evidence the arbitrators were influenced by it.

## Decision

- The Tenth Circuit affirmed the district court’s confirmation of the arbitration award.
- The court held that, without evidence the arbitrators were influenced by the settlement offer or that Stifel was denied a fundamentally fair hearing, vacatur was not warranted.
- The court declined to second-guess the arbitrators’ handling of the evidentiary incident given the narrow scope of judicial review under the FAA and the arbitration rules’ grant of evidentiary discretion.

## Legal Principles

- Judicial review of arbitration awards under the FAA is narrowly limited; vacatur is available only on specified grounds (e.g., corruption, fraud, evident partiality, misconduct, or arbitrators exceeding their powers).
- A “fundamentally fair” arbitration hearing requires notice and an opportunity to be heard and to present relevant and material evidence.
- An award will not be vacated based on allegedly improper evidentiary submissions absent a showing of prejudice—i.e., evidence that the arbitrators relied on the improper material or that the conduct undermined the fairness of the proceeding.
- Where arbitration rules vest arbitrators with authority to assess relevance and materiality and relax formal evidence rules, courts generally will not vacate an award merely because the tribunal was exposed to disputed material.

## Conclusion

Because the record contained no evidence that the arbitrators relied on Stifel’s settlement offer or that Stifel was deprived of a fundamentally fair hearing, the FAA did not permit vacatur, and the award in Bowles’s favor was confirmed.


Bowles Fin. Grp., Inc. v. Stifel, Nicolaus & Co., 22 F.3d 1010 (10th Cir. 1994)