## Facts

- An investor, Joseph Daniel Card, opened a brokerage account with Stratton Oakmont after a solicitation and representations about the firm’s securities business.
- Card later alleged misconduct in the handling of his account, asserting claims including fraud, securities violations, RICO, negligence, and breach of fiduciary duty.
- The parties executed a Uniform Submission Agreement submitting the dispute to arbitration under the NASD Code of Arbitration Procedure and consenting to court entry of judgment on any award.
- Card initiated NASD arbitration in September 1994 against Stratton Oakmont and individual representatives.
- In November 1995, an NASD arbitration panel awarded Card $1,552,200.86 in compensatory damages.
- Respondents sought correction of alleged errors from the panel; the panel denied the request in January 1996.
- Card petitioned federal court to confirm the award and to obtain interest from the award date; respondents moved to vacate under the Federal Arbitration Act (FAA) and for “manifest disregard of the law.”

## Issues

1. Whether the NASD arbitration award should be confirmed under FAA § 9 and applicable Minnesota arbitration statutes, including whether interest should run from the date of the award.
2. Whether the award should be vacated under FAA § 10(a) for alleged misconduct (including refusal to postpone hearings), evident partiality, improper evidentiary rulings, or exceeding arbitral powers.
3. Whether vacatur was warranted on the extra-statutory ground that the arbitrators acted in “manifest disregard of the law.”

## Decision

- The court granted Card’s motion to confirm the arbitration award.
- The court denied respondents’ motion to vacate in full.
- The court awarded interest from the date of the arbitration award.

## Legal Principles

- Judicial review of arbitration awards under the FAA is narrowly limited; courts do not reweigh evidence or revisit the merits.
- FAA § 10(a)(3) vacatur for “misconduct” requires a showing that the panel’s conduct denied a fundamentally fair hearing; reasonable scheduling decisions and lack of substantial prejudice defeat such claims.
- FAA § 10(a)(2) “evident partiality” requires substantial proof that a reasonable person would have to conclude an arbitrator was biased; adverse rulings alone are insufficient.
- Under NASD arbitration rules incorporated by agreement, arbitrators determine materiality and relevance of evidence and are not bound by the Federal Rules of Evidence; a court will not vacate an award merely because the panel admitted evidence a court might exclude.
- “Manifest disregard of the law” is an exceptionally limited basis for vacatur and requires proof that arbitrators understood controlling law and intentionally ignored it; disagreement with legal or factual determinations does not satisfy the standard.
- Upon confirmation of an arbitration award, a court may award interest running from the award date where authorized by governing law, to preserve the award’s compensatory effect.

## Conclusion

The court confirmed the investor’s NASD arbitration award, rejected challenges based on continuances, alleged bias, and evidentiary objections, found no showing of manifest disregard, and granted interest from the date the award was issued to ensure full compensation and enforceability.


Card v. Stratton Oakmont, Inc., 933 F. Supp. 806 (D. Minn. 1996)