United States District Court, D. Minnesota
Ann Eleanor Ploetz, as Trustee For the Laudine L. Ploetz, 1985 Trust, Petitioner,
Morgan Stanley Smith Barney, LLC, Respondent.
MEMORANDUM AND ORDER
A. Magnuson United States District Court Judge.
matter is before the Court on a Petition to Vacate
Arbitration Award. For the following reasons, the Petition is
Ann E. Ploetz, in her capacity as Trustee of the Laudine L.
Ploetz, 1985 Trust, sought to arbitrate tort and contract
claims against Respondent Morgan Stanley Smith Barney
(“MSSB”), accusing MSSB of making unauthorized
transfers from the Trust's account. (Pet. (Docket No. 1)
Ex. A at 1; MacDonald Aff. (Docket No. 3) ¶ 2.) Under
the arbitration rules of the Financial Industry Regulatory
Authority (“FINRA”), the arbitration panel was
comprised of three arbitrators. (Pet. Ex. A at 4.) After more
than a year of discovery, and less than a week before the
January 2017 arbitration was to begin, the chairperson of the
panel resigned due to a scheduling conflict. (Kendrick Aff.
(Docket No. 11) ¶ 3-4.) The parties agreed to truncated
procedures for selecting another arbitrator, and ultimately
selected Barry Goldman as the new chair of the panel.
(MacDonald Aff. ¶ 4.)
requires that arbitrators disclose any potential conflicts,
including past service as an arbitrator or mediator. FINRA
Rule 12405. Goldman disclosed that he had served as an
arbitrator in proceedings involving MSSB on four occasions
and was currently serving as an arbitrator in two pending
MSSB arbitrations. (MacDonald Aff. Ex. 5.) Neither party
sought to disqualify him on the basis of these contacts with
MSSB. After a two-day hearing, the panel unanimously
determined that Ploetz's claims were without merit. (Pet.
February, Ploetz's attorney learned that Goldman had
served as a mediator in a 2012 proceeding in Michigan
involving MSSB. (MacDonald Aff. ¶ 9.) Mediation under
FINRA is voluntary and private, akin to settlement
discussions, and thus there was no record of this proceeding
and it was handled by attorneys not involved in the instant
arbitration. The 2012 mediation was unsuccessful and that
case eventually proceeded to arbitration, with the
arbitration panel finding for the claimant and against MSSB.
(Kendrick Aff. ¶ 7.) There is no indication that Goldman
was involved in the case after the unsuccessful mediation.
contends that Goldman's failure to disclose his service
as a mediator on the prior MSSB case warrants vacating the
arbitration award and requiring the parties to arbitrate the
Service of Petition
argues that it was not served with the Petition in the manner
the statute requires and that any attempted service now would
be untimely. A motion to vacate must be served within three
months of the award. 9 U.S.C. § 12. MSSB contends that
the statute requires service by marshal because MSSB is not a
resident of Minnesota. The statute provides that nonresident
parties must be served “by the marshal of any district
within which the adverse party may be found in like manner as
any other process of the court.” Id. But the
statute provides that residents may be served “as
prescribed by law for service of notice of motion in an
action in the same court.” Id. Ploetz mailed
the Petition to MSSB's main office in New York and to
MSSB's attorney in the underlying arbitration, which
complies with Fed.R.Civ.P. 5's requirements for service
of notice of motion.
has seven offices in Minnesota. Thus, under both federal and
Minnesota law, it is a “resident” of Minnesota.
As an LLC, federal law deems MSSB to reside “in any
judicial district in which such defendant is subject to the
court's personal jurisdiction with respect to the civil
action in question.” 28 U.S.C. § 1391(c)(2). MSSB
makes no argument that it is not subject to this Court's
personal jurisdiction for this proceeding. And under
Minnesota law, a corporation or other such entity
“shall be considered as residing in any county wherein
it has an office, resident agent, or business place.”
Minn. Stat. § 542.09. Again, MSSB has multiple offices
in Minnesota. Service was proper.
Motion to Vacate
the [Federal Arbitration Act, ] courts may vacate an
arbitrator's decision ‘only in very unusual
circumstances.'” Oxford Health Plans LLC v.
Sutter, 569 U.S. C, 133 S.Ct. 2064, 2068 (2013) (quoting
First Options of Chicago, Inc. v. Kaplan, 514 U.S.
938, 942 (1995)). The FAA lists the only circumstances under
which a court may vacate an ...