## Facts

- Lowell and Doretta Harter, Illinois farmers, entered into multiple hedge-to-arrive (HTA) corn contracts with The Andersons (grain-elevator entities).
- The HTA contracts used a futures-market reference price and allowed rolling delivery dates; The Andersons hedged its exposure in the futures markets.
- As prices moved, performance became unfavorable to Harter; The Andersons demanded delivery or cash settlement, and Harter refused, asserting he was told the contracts involved no meaningful risk or loss.
- Each HTA contract contained an arbitration clause requiring disputes “arising out of” the contract to be resolved by National Grain & Feed Association (NGFA) arbitration.
- Harter sued in federal court asserting civil RICO, Commodity Exchange Act (CEA), fraud, and related claims; The Andersons moved to compel arbitration under the Federal Arbitration Act (FAA).
- The district court compelled NGFA arbitration; an NGFA panel awarded relief to The Andersons and held Harter liable under the contracts.
- Harter sought to vacate the award, alleging NGFA arbitration was structurally biased toward grain elevators; The Andersons sought confirmation.
- The district court confirmed the award and entered judgment for The Andersons; it also ruled for Iowa Grain Company (a futures commission merchant) on Harter’s separate claims tied to his futures-trading account.

## Issues

1. Whether the NGFA award had to be vacated under the FAA for “evident partiality” based on alleged structural bias in an industry arbitration forum.
2. Whether the HTA arbitration clauses required arbitration of Harter’s fraud, RICO, and CEA claims.
3. Whether Iowa Grain could be held liable under Harter’s theories arising from its role as a futures commission merchant executing and carrying hedge trades.

## Decision

- The Seventh Circuit affirmed confirmation of the NGFA arbitration award in favor of The Andersons.
- The court held Harter did not carry the burden of showing “evident partiality,” a compromising connection, or systemic unfairness sufficient for FAA vacatur.
- The court upheld enforcement of the broad arbitration clauses and held that Harter’s fraud, RICO, and CEA claims were within their scope.
- The court affirmed judgment for Iowa Grain, finding the record did not support liability based on its limited role in executing and carrying futures trades.

## Legal Principles

- FAA vacatur is limited; courts do not reconsider the merits of an arbitration decision and may not vacate merely due to disagreement with the arbitrators’ view of the evidence or law.
- Allegations of arbitral bias require more than speculation or an “appearance” of bias; the challenger must show “evident partiality” or a significant compromising relationship affecting the arbitration.
- Use of an industry arbitration forum and arbitrators with industry experience, without more, does not establish disqualifying partiality.
- Broad clauses covering disputes “arising out of” a contract generally encompass fraud and related statutory claims tied to the contractual relationship.
- Federal statutory claims (including RICO and CEA) are generally arbitrable absent a clear congressional command to preclude arbitration; challenges to the contract as a whole are ordinarily for the arbitrator rather than the court.

## Conclusion

The Seventh Circuit held that industry-based NGFA arbitration was not shown to be structurally biased under the FAA, enforced the HTA contracts’ broad arbitration clauses to cover fraud and federal statutory claims, and affirmed judgment rejecting Harter’s separate liability theories against Iowa Grain.


Harter v. Iowa Grain Co., 220 F.3d 544 (7th Cir. 2000)