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United States Wrestling Federation v. Wrestling Division of Aau Inc.

decided: August 17, 1979.

UNITED STATES WRESTLING FEDERATION, PLAINTIFF-APPELLEE,
v.
THE WRESTLING DIVISION OF THE AAU, INC., AND AMATEUR ATHLETIC UNION OF THE UNITED STATES, INC., DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 78-C-4307 -- Alfred Y. Kirkland, Judge.

Before Fairchild, Chief Judge, and Swygert and Pell, Circuit Judges.

Author: Pell

This case involves a controversy between two would-be United States sponsors of amateur wrestling matches, and in the process of settling their dispute they have gone to the mat successively before an arbitration panel and the district court, and now resume their grappling in this court.

The district court judgment from which the present appeal is taken confirms the arbitration award unanimously rendered by a three-person arbitration panel. The panel was not of the type sometimes found in which each party appoints an arbitrator and by one method or another a neutral chairman is appointed. In the present case, the American Arbitration Association (AAA) submitted the names of prospective panelists and from this list the parties selected the three who heard the case. All three were practicing Chicago lawyers. The principal issue raised on this appeal is whether the chairman's failure to disclose on his own motion various connections that he and his law firm had with Northwestern University (Northwestern) is sufficient cause to vitiate the confirmed decision of the panel. A secondary issue rests upon a claim of "evident impartiality" on the part of the chairman within the meaning of 9 U.S.C. ยง 10(b), although it would appear that this issue is presented more for the purpose of buttressing the primary issue than as an independent ground for relief.

The present lawsuit is apparently but the tip of a much more widespread and ongoing fight between two bodies and various affiliated or associated organizations of each for the privilege of being the national governing board in various fields of amateur athletic endeavor. The particular case which we have before us arose out of the decision of the United States Olympic Committee (USOC), acting through its executive board, denying the application of the United States Wrestling Federation (USWF) to be designated as the "Group A member," I. e., the national governing body of the USOC insofar as the wrestling at the Olympic Games was concerned. The effect of this ruling was to continue as the Group A member of the USOC in wrestling the defendant, The Wrestling Division of the AAU, Inc. (WD/AAU). At the time of the litigation the full name of the organization of which The Division was a defendant was the Amateur Athletic Union of the United States, Inc.

Pursuant to a provision of the USOC constitution USWF submitted its claim for the Group A membership to the AAA for binding arbitration by a panel of three arbitrators under the AAA's commercial rules. The gist of the claim to be presented to the arbitration panel was that USWF was better qualified to act as the Group A member for amateur wrestling of the USOC and should replace therefore the WD/AAU. The three arbitrators jointly selected by the party were Frank F. Fowle, Samuel F. Lawton, Jr., and H. Blair White. The arbitrators themselves selected White to serve as chairman of the panel and to preside at the hearings.

In October 1977, Lawton disclosed to the AAA that he had represented one of the attorneys for WD/AAU in obtaining certain zoning variations under the Chicago ordinance. The matter had previously been concluded. Both parties waived any real or presumed disqualification to his service based on said disclosure.

In December 1977, counsel for the parties met with the arbitrators and there was extended discussion of matters that would become involved in the hearing with particular reference to discovery matters. Counsel for WD/AAU made it clear to the arbitrators that in his opinion the real disputants in the battle going on was between the AAU on the one hand and the National Collegiate Athletic Association (NCAA) on the other hand which dispute had been going on for a good many years.*fn1 He also mentioned that the style of wrestling had been one of the subjects of dispute "between these two organizations, that the NCAA, which does have control or certainly very strong influence over the wrestling programs in many colleges," had persisted in its view that a certain style of wrestling should be encouraged. It is the position of the WD/AAU in this litigation that references such as these at the time of the December meeting should have triggered an alertness to the connection of Northwestern with the NCAA and further that that should have caused arbitrator White, because of his connections, direct and indirect with Northwestern, to have disclosed this information to the parties.

The actual arbitration hearings commenced on May 22, 1978, consumed seventeen days during which thirty-one witnesses were examined and cross-examined, and resulted in over 4000 pages of transcript. By award, dated September 7, 1978, the three arbitrators unanimously found in favor of the USWF. This decision was confirmed by the district court and this appeal followed.

In its brief here WD/AAU states that a principal issue in the arbitration from the outset was the extent of NCAA control over the USWF because the USOC constitution required that the Group A member be autonomous in the administration of its sport. The correctness of the decision of the arbitrators is not involved in this appeal. The only issue before us is whether the decision was tainted because of White's nondisclosure or because of his asserted bias toward one of the parties. Nevertheless, returning to the December 1977 session, we note from the facts developed there that there appeared to be considerable possibility of diffusion of authority reflecting on autonomy as to WD/AAU itself. This organization is composed of some 58 local associations, each of whom elects two representatives to the national committee, and of certain allied members such as the National Association of Intercollegiate Athletics, being smaller colleges, and three military services each having a representation on the AAU wrestling committee. The National Jewish Welfare Board and the YMCA are also each represented on the national committee. We mention this factor merely as showing the infinite possibilities for potential disclosure of connections beyond the parties directly involved.

Turning now to the facts on which WD/AAU claims that a duty of disclosure arose on the part of White, these are as follows: NCAA's relationship with USWF included its role as the principal founder of USWF, its financing and directing the arbitration proceeding against WD/AAU, and its substantial contribution financially to USWF's activities. Northwestern is a member of the NCAA as are more than 860 other institutions, conferences, and organizations devoted to intercollegiate athletics in all of its phases. Northwestern has paid some $25,000 to NCAA since 1975, and has received more than $1,000,000 since 1976 from the NCAA's television football program as do, of course, many other institutions. Since 1958 Northwestern has employed one Ken Kraft as its head wrestling coach. Kraft is one of the three original incorporators of USWF, is a former president of it, and currently serves as a voting member-at-large of USWF's governing council. He also was a principal witness for USWF at the arbitration. Since the creation of the USWF in 1968, Northwestern has hosted some wrestling matches for which Kraft was instrumental in securing Northwestern as a site.

The crux of the claim that disclosure was required lies in the relationship of chairman White and his law firm, Sidley & Austin, with Northwestern, but not to USWF or NCAA. The law firm itself has over 200 attorneys, partners and associates. It has represented Northwestern on a regular, but not exclusive, basis for the last 25 to 30 years. During the last 2 years preceding the pertinent time here involved somewhere between 15 and 25 Sidley & Austin attorneys have worked on Northwestern University matters. Northwestern over the years has paid Sidley & Austin "very substantial fees." One of chairman White's partners has served as Northwestern's general counsel since 1971. In such capacity he maintains an office at Northwestern and is directly compensated by Northwestern. At the time of the hearing there were two of White's partners who were trustees of Northwestern with full voting rights on the board of trustees. Other partners had previously served as trustees from time to time although there were times when no partner was a member of the Board of Trustees. White himself was a member of Northwestern University Associates which was described as a "long-range fundraising organization." This was an organization formed in the late 1920's to promote a close relationship between the University and top corporate and professional leadership in the Chicago area. It has about 400 members who meet several times a year to hear a University official or faculty member speak on some topic related to the University.

There is no evidence in the record that either White or his law firm had ever had any relationship whatsoever with (1) the NCAA, (2) Kraft, the wrestling coach, (3) USWF, or (4) WD/AAU. There is also no evidence in the record that White had any knowledge of, or interest in, wrestling (other than his participation in the arbitration proceeding) either before or after the arbitration.

WD/AAU takes the position on this appeal that it was undisputed and conceded that the facts related above with regard to White and his law firm's relationship with Northwestern were unknown to WD/AAU officials or members or their counsel at the time of the arbitration. The USWF disagrees both as to the lack of disputation and the concession. We are inclined to agree with the analysis of USWF as to the record although this, of course, is not to say that any of the WD/AAU parties did in fact have knowledge of the challenged connections. The testimony of Newt Copple*fn2 was that he had no knowledge of the connections and did not include other persons in the WD camp. There is no evidence in the record as to whether WD/AAU officials or members (other than Copple) or its attorneys did or did not have knowledge of Sidley & Austin's representation of Northwestern prior to the award. At oral argument counsel for WD/AAU stated that when a panel of arbitrators had been submitted to them, they had an opportunity for a background check, and they ultimately, with opposing counsel, had selected the ones they regarded as the three most eminent lawyers on the panel submitted. Counsel was asked about local counsel which was a large Chicago firm, that of Sonnenschein, Carlin, Nath & Rosenthal. This firm, while engaged as local counsel, did not participate in the arbitration hearing itself. The record does not indicate whether the background of the arbitrators was checked with the local counsel by the New York counsel who were to conduct the arbitration proceedings.*fn3

We note one other preliminary matter. The decision of the arbitration board presumably represented the independent thinking of two Chicago lawyers characterized by WD/AAU counsel as "eminent." We have no reason for thinking that the decision did not represent their studied opinion as to the proper result. We do not, of course, discount the possibility that two members of a panel might very well give serious thought to a strongly held contrary view by the third member although dissents in three judge panels at the court of appeals level do not indicate any rule of certainty in this respect. In any event, in view of Mr. Justice Fortas' dissent in Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 152, 89 S. Ct. 337, 21 L. Ed. 2d 301 (1968), we will assume that an arbitration award may be set aside despite the fact that the award is unanimous by all three arbitrators if it is tainted by a duty of disclosure on the part of one.

White's duty to disclose, if such existed, must rest primarily upon Rule 18 of the AAA's Commercial Rules governing disclosure ...


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