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Arbitrators enjoy wide latitude in conducting arbitration proceedings, and evidence that is irrelevant or cumulative may be rejected so long as it does not prejudice the rights of the parties, says the Eleventh Circuit Court of Appeals.
In Rosensweig v. Morgan Stanley & Co., No. 05-15325, 2007 WL 2265515 (11th Cir. Aug. 9, 2007), Rosensweig was employed by Morgan Stanley. As an experienced securities broker, Rosensweig brought client information with him, which was organized in a computer program called Broker's Ally.
After seven years, Morgan Stanley terminated Rosensweig. Thereafter, Morgan Stanley gave Rosensweig back-up disks of his client data.
Rosensweig filed an arbitration claim against Morgan Stanley under several legal theories. During discovery, Morgan Stanley asked Rosensweig for information from the Broker's Ally back-up disks, which was produced a few days prior to arbitration. Morgan Stanley wanted to present information from the back-up disks, but needed more time to process them. Therefore, it requested a continuance from the arbitration panel.
The arbitration panel did not allow Morgan Stanley additional time to introduce information from the back-up disks. At the close of arbitration, Morgan Stanley claimed the proceedings were unfair because they were not allowed to present evidence from the disks. The panel found Morgan Stanley liable and awarded Rosensweig compensatory damages. The district court confirmed the award and rejected Morgan Stanley's arguments that the arbitration panel was biased in favor of Rosensweig.
On appeal, Morgan Stanley complained it was deprived of a fair hearing due to arbitrator misconduct because the panel refused to allow Morgan Stanley to present material evidence from the disks. In affirming the lower court's decision, the Court noted that arbitrators are given wide latitude in conducting arbitration hearings.
Further, there were several reasonable bases for limiting Morgan Stanley's ability to introduce further information about the disks, none of which indicated prejudice against Morgan Stanley. The Court determined it was reasonable for the arbitrators to reject additional testimony about the disks because it was immaterial to the claims on which Rosensweig prevailed. Additionally, the testimony would have been cumulative because Morgan Stanley had already introduced hard copies of the disk contents.
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