Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 79 C 2241 -- Joel M. Flaum, Judge .
Before Swygert,*fn* Circuit Judge, Kunzig, Judge,*fn** and Bauer, Circuit Judge.
The district court refused to set aside an arbitrator's award of $50,000 to defendant-appellee Paul Liang. Shearson Hayden Stone, Inc. v. Liang, 493 F. Supp. 104 (N.D.Ill.1980). Plaintiff-appellant Shearson Hayden Stone, Inc. asserts that no evidence supports the award and that the award was obtained by fraud. We affirm.
Defendant-appellee Paul Liang was a registered securities broker with plaintiff-appellant Shearson Hayden Stone, Inc. ("Shearson") until May 3, 1978. When he was hired in January 1976, Liang filled out a questionnaire stating that he was employed also as a part-time movie projectionist at the Festival Theatre. The New York Stock Exchange approved this outside employment pursuant to its Rule 346.*fn1 Not indicated on the form was that the Festival Theatre showed only X-rated movies.
In late April 1978, Liang's supervisor, William Cohen, learned that Liang intended to acquire a fifty percent interest in the theatre. Liang sought approval for this outside activity, as required by the Exchange Rules.
Soon thereafter, Cohen informed Liang that Shearson's Compliance Department had rejected his application for approval. Liang asked Cohen to seek reconsideration of the rejection. In a meeting on May 1, Cohen again told Liang that the application had been rejected. On May 3rd, Liang met with Cohen and Donald Law, a Shearson Compliance Officer. Liang was told that he had to disaffiliate himself from either the Festival Theatre or Shearson. Liang responded that he would not give up his outside activity. When he refused to resign, he was fired.
Immediately after Liang's termination, Shearson sent a letter to each of Liang's customers saying that Liang was no longer employed by Shearson. Liang, meanwhile, sought employment at Bache Halsey & Stuart and Dean Witter, two brokerage firms with reputations and facilities comparable to Shearson. Each firm was told by Liang the reason for his separation from Shearson. Each firm, after contacting Cohen at Shearson, declined to employ Liang.
Liang sought arbitration of his termination pursuant to his employment contract.*fn2 Liang submitted an earnings history from his securities business and claimed about $84,000 in damages. After a hearing, a panel of five arbitrators awarded Liang $50,000, without opinion.
After the arbitration, Shearson discovered that Liang had incorporated Liang Insurance Agency and Investments, Inc., an Illinois corporation, in October 1977. Liang had not disclosed this other outside affiliation to Shearson, although there was no evidence that the corporation was active.
Shearson filed this complaint to vacate the arbitrators' award. The district court granted Liang's motion for summary judgment, and Shearson appeals.
Shearson urges first, that there was no evidence to support the arbitrators' award; second, that Liang's nondisclosure of his other company is fraud sufficient to vacate the award; and third, that the district court erred in treating Liang's motion to dismiss as one for summary judgment because Shearson's exhibits created a genuine issue of material fact.
We can set aside an arbitration award only on the grounds set forth in section 10 of the Federal Arbitration Act, 9 U.S.C. § 10. Tamari v. Bache Halsey Stuart Inc., 619 F.2d 1196, 1198 n.2 (7th Cir.), cert. denied, 449 U.S. 873, 101 S. Ct. 213, 66 L. Ed. 2d 93 (1980). Lack of evidence to support the award is not among those grounds,*fn3 although some courts have suggested that an arbitral award may be set aside if it is "completely irrational." See, e. g., Storer Broadcasting Co. v. American Federation of Television and Radio Artists, 600 F.2d 45, 47 (6th Cir. 1979); Swift Industries, Inc. v. Botany Industries, Inc., 466 F.2d 1125 (3d Cir. 1972). This Circuit has not decided the issue, see National ...