Opinion
No. C7-96-2259.
Filed April 22, 1997.
Appeal from the District Court, Hennepin County, File No. 95-18204.
Dale C. Nathan, Nathan Associates, (for appellant).
Edward F. Fox, J. Aron Allen, Doherty, Rumble, Butler, P.A., (for respondent).
Considered and decided by Randall, Presiding Judge, Toussaint, Chief Judge, and Klaphake, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. sec. 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Appellant challenges the trial court's order confirming the arbitrator's award and denying his motion to vacate on the ground of evident partiality of the arbitrator. We affirm.
FACTS
Appellant Thomas Unstad was employed by respondent Lynx Golf, Inc., as an independent sales representative. In December 1994, Unstad was discharged by Lynx. Unstad commenced an arbitration proceeding by filing a Demand with the American Arbitration Association (AAA), asserting claims against Lynx pursuant to Minn. Stat. § 325E.37 (1996) for commissions and other monetary relief.
Because the parties could not decide on a mutually acceptable arbitrator, the AAA selected AnnDrea M. Benson to be the arbitrator. Benson is employed by Piper Jaffray, Inc., as Deputy General Counsel. Prior to her being appointed as arbitrator, the AAA asked Benson to "disclose any past or present relationship with parties or their counsel, direct or indirect, whether financial, professional, social, or of any other kind." Benson answered that she had nothing to disclose.
Following a one day arbitration hearing, Benson issued her award, finding for Unstad in part and Lynx in part. Benson credited Unstad with certain commissions in the amount of $417.75 and awarded Lynx $10,309.45, representing the net value of certain inventory held by Unstad. Unstad filed an application to vacate the award arguing evident partiality pursuant to Minn. Stat. § 572.19 (1986), after learning that Doherty, Rumble, Butler (DRB), the law firm representing Lynx, had provided legal services to Piper Jaffray during the pendency of the arbitration. Unstad named arbitrator Benson, Lynx's attorney from DRB, and DRB as parties in his application to vacate.
A preliminary hearing was held in Hennepin County District Court in which Benson, Lynx's attorney, and DRB were dismissed as parties. Benson, however, was directed to appear for her deposition and DRB was directed to submit a complete disclosure statement detailing all legal services provided by DRB to Piper Jaffray in the past three years.
According to the disclosure statement, DRB worked with Piper Jaffray on seven special projects. These projects primarily involved the issuance of revenue bonds for local governments or public offerings of stock by private corporations and were unrelated to the arbitration between Unstad and Lynx.
Benson testified during her deposition that she had no direct or indirect involvement with these projects or any contact, including business or social, with any attorneys from DRB. She testified further that she did not know most of the Piper Jaffray employees who worked on these projects and that of the few she did know, she was confident that she did not work with them on any of the special projects or issues involving DRB. She also stated that she had no involvement in retaining, approving, or reviewing the work of outside counsel, including that of DRB. Finally, she testified there was no formal conflicts mechanism in place at Piper Jaffray to check for possible conflicts of interest.
The district court confirmed the arbitration award, finding that Unstad had "failed to provide any evidence, other than mere allegations" that Benson either knew of the business relationship between DRB and Piper Jaffray, or knew any person involved in such a relationship at the time of the arbitration. The district court concluded that Unstad failed to provide sufficient evidence of "either evident bias or the appearance of bias."
DECISION
A party attacking an arbitration award has the burden of demonstrating the grounds relied on to vacate the award. Franke v. Farm Bureau Mut. Ins. Co. , 421 N.W.2d 406, 408 (Minn.App. 1988), review denied (Minn. May 25, 1988). "The standard of review to be applied on appeal is derived from the ground asserted for vacation of the award." Pirsig v. Pleasant Mound Mut. Fire Ins. Co. , 512 N.W.2d 342, 343 (Minn.App. 1994).
Initially, in the statement of the case in his brief and his reply brief, appellant argues that the arbitration award should be vacated because the arbitrator's decision was not made consistently with Minn. Stat. § 325E.37 (1996). However, appellant failed to address the issue in the main body of his brief. An assignment of error based on mere assertion and not supported by any argument or authorities in appellant's brief is waived and will not be considered on appeal unless prejudicial error is obvious on mere inspection. Schoepke v. Alexander Smith Sons Carpet Co. , 290 Minn. 518, 519-20, 187 N.W.2d 133, 135 (Minn. 1971). Because appellant failed to develop this issue in his brief beyond the assertions contained in the statement of the case, appellant has waived this issue on appeal.
Similarly, Minn.R.Civ.App.P. 128.02, subd. 3 (1996), provides that "[t]he reply brief must be confined to new matter raised in the brief of the respondent." In this case, respondent does not address the issue of whether the arbitrator's decision was made consistently with the provisions of Minn. Stat. § 325E.37. Therefore, appellant may not address the issue in his reply brief.
In Minnesota, an arbitration award may be vacated only upon proof of one or more grounds set forth in Minn. Stat. § 572.19 (1996). Pirsig , 512 N.W.2d at 343. The Minnesota Arbitration Act provides, in part, that upon application of a party, "the court shall vacate an award where: * * * (2) [t]here was evident partiality by an arbitrator appointed as a neutral * * *." Minn. Stat. § 572.19, subd. 1(2). Here, appellant sought to vacate the arbitration award, alleging that evident partiality existed because DRB performed legal services for arbitrator Benson's employer, Piper Jaffray.
Evident partiality involves the right of a party to have an arbitration hearing free of the appearance of impropriety. Pirsig , 512 N.W.2d at 343. It is not the same as actual bias. Id. at 344. Whether the conduct challenged constitutes "evident partiality" is a legal question reviewed de novo. Id. at 343. The party challenging the arbitration award must establish facts that create a reasonable impression of partiality. Id.
In the present case, the contacts between DRB and Piper Jaffray were limited in scope and unrelated to the arbitration between Unstad and Lynx. Of the seven projects performed by DRB for Piper Jaffray over the last three years, only three took place during the same time period as the arbitration. One involved the issuance of revenue bonds for the City of Lenexa, Kansas, another involved a public offering of common stock, and the last entailed the representation of two individuals subpoenaed to testify before the Securities and Exchange Commission in Chicago. Benson also testified that she did not work on or assist any Piper Jaffray personnel with any of these projects. Likewise, Benson stated that she does not know, either professionally or socially, any attorney from DRB. Therefore, DRB's contacts with Piper Jaffray were not so substantial as to require disclosure and a finding of evident partiality. Cf. Egan Sons Co. v. Mears Park Development Co. , 414 N.W.2d 785, 786 (Minn.App. 1987) (finding evident partiality existed, requiring disclosure, where arbitrator and arbitrator's law firm had substantial contacts with party to the arbitration), review denied (Minn. Jan. 20, 1988).
The record supports the finding that Benson had no knowledge of any contacts between DRB and Piper Jaffray. The record discloses no evidence of the arbitration process or Benson's decision-making process being compromised during the arbitration between Unstad and Lynx.
A remote and unrelated attorney-client relationship between the neutral arbitrator and counsel for one of the parties is not a basis to vacate an arbitration award for undue means or evident partiality.
Safeco Ins. Co. v. Stariha , 346 N.W.2d 663, 666 (Minn.App. 1984).
We conclude, as did the trial court, that Unstad failed to establish facts that create a reasonable impression of evident partiality, requiring vacatur of the arbitration award.