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March 8, 2004.


The opinion of the court was delivered by: REBECCA PALLMEYER, District Judge


Plaintiff Sphere Drake Insurance Limited ("Sphere Drake") seeks to confirm an arbitration award that invalidated six reinsurance contracts between Sphere Drake and Defendant All American Life Insurance Company ("All American").*fn1 In response to Sphere Drake's motion for summary judgment, All American filed a cross motion to vacate the arbitration decision on several grounds, including the evident partiality of one of the panel members. This court granted All American's motion on that basis, see Sphere Drake Ins. Ltd. v. AH American Life Ins. Co., No. 01 C 5226, 2002 WL 1008464 (N.D. III. May 17, 2002), but the Seventh Circuit reversed. Sphere Drake Ins. Ltd. v. All American Life ins. Co., 307 F.3d 617 (7th Cir. 2002), cert. denied, 123 S.Ct. 1754 (2003). All American has now renewed its motion to vacate on three other grounds: (1) All American did not receive a fundamentally fair hearing; (2) the panel members exceeded their authority in issuing the decision; and (3) the panel exhibited a manifest disregard of the law. Sphere Drake opposes the motion and also seeks to strike certain new evidence submitted by All American in support of that motion. For the reasons set forth here, both motions are denied. BACKGROUND

The facts of this case have been presented in this court's May 17, 2002 Memorandum Opinion and Order, see Sphere Drake Ins., 2002 WL 1008464, at *1-5, and in the Seventh Circuit's decision in Sphere Drake Ins., 319 F.3d at 619-20. This opinion assumes the reader's familiarity with these earlier decisions.

  All American is an insurance company that has underwritten reinsurance for insurers issuing personal accident and occupational coverage directly to individuals and employers.*fn2 (Affidavit of Andrew S. Amer ("Amer Aff.") ¶ 2.) As part of those reinsurance underwriting activities, All American purchased its own reinsurance protection, called retrocessional coverage, to further spread the risk.*fn3 (Id.) In 1997, All American purchased, through its underwriting agent WEB Management LLP ("WEB"), retrocessional protection from Euro International Underwriting Ltd. ("EIU"), which was Sphere Drake's underwriting agent. (Id.) The retrocessional protection consists of seven reinsurance contracts. Stirling Cooke Brown Reinsurance Brokers Limited ("Stirling Cooke"), which purported to act on behalf of All American, is the reinsurance broker that placed the majority of the business EIU had accepted on behalf of Sphere Drake. (PI. Response, at 2.)*fn4 All American paid Sphere Drake premiums under the reinsurance contracts until March 1999, when Sphere Drake sought to rescind the contracts and return the premiums. (Amer Aff. ¶ 3; Ex. C15 to PI. 56.1, at 5-7.)*fn5 Sphere Drake claims it discovered that Stirling Cooke had "induced and colluded with EIU to breach the fiduciary duties EIU owed to Sphere Drake, and induced EIU to operate its agency for the benefit of Stirling Cooke and its affiliates rather than for the benefit of Sphere Drake." (PI. Response, at 2.) One of those Stirling Cooke affiliates was WEB, All American's managing general agent. (Ex. C15 to PI. 56.1, at 1.) As a result of ElU's and Stirling Cooke's collusive activities, Sphere Drake alleges, there were "multiple accumulations by Sphere Drake on the same losses, concentrating and often spiraling rather than transferring or dissipating the risk." (Ex. E to Amer Aff., at 4.) In addition, "the vast majority of this business was written on terms that were obviously and profoundly uneconomical to Sphere Drake."*fn6 (Id.)

  Sometime after March 1999, Sphere Drake initiated court proceedings against EIU and Stirling Cooke in England.*fn7 (Ex. N to PI. 56.1, at 27; PI. Response, at 2.) On June 11, 1999, All American commenced arbitration proceedings against Sphere Drake in the United States. The parties ultimately agreed to submit six of the seven contracts to an arbitration panel consisting of two party-appointed arbitrators, Robert Mangino for All American and Ronald A. Jacks for Sphere Drake, and a third arbitrator, Robert M. Huggins, who was selected jointly by both parties. (PI. 56.1 ¶¶ 7-10.) The seventh contract is the subject of pending litigation before Judge William T. Hart of this court, Sphere Drake Ins. Ltd. v. All American Life Ins. Co., No. 99 C 4573.

  After the parties had appointed the arbitration panel on the six contracts, they agreed to submit position statements to the panel members setting forth the issues and defenses. (PI. Response, at 3; Def. Mem., at 7.) The parties agreed that Sphere Drake would submit its position statement first, followed by All American. In its position statement, Sphere Drake argued, in part, that the six contracts were void ab initio because All American's agent, Stirling Cooke, knew that Sphere Drake's agent, EIU, was acting outside the scope of its authority in accepting the business brokered by Stirling Cooke. (PI. 56.1 ¶ 17; Ex. E to Amer Aff., at 1.) All American responded that EIU had proper authority to enter into the contracts with Sphere Drake and that they were all valid and enforceable. In an apparent attempt to avoid any risk that All American would be held responsible if Stirling Cooke were found to know about ElU's allegedly limited authority, All American also stated:
Simply put, there was no agency relationship between Stirling Cooke and All American or between Stirling Cooke and WEB; Stirling Cooke had no authority to bind either AH American or WEB and neither All American nor WEB entered into any form of agency agreement with Stirling Cooke.
(Ex. F to Amer Aff., at 4.) See also Sphere Drake Ins., 307 F.3d at 619.

  At an April 11, 2001 organizational meeting, Sphere Drake requested permission to file a motion for judgment on the pleadings, claiming that All American had admitted in its position statement that Stirling Cooke did not have authority to bind All American. In Sphere Drake's view, All American had made a judicial admission that Stirling Cooke did not have the capacity to make a valid offer to EIU and, thus, there were no binding contracts. (PI. 56.1 ¶ 41; Ex. E to PI. 56.1, at 45-48; Ex. C2 to PI. 56.1, at 5.) All American responded that the position statements did not constitute pleadings and that the statements were being taken out of context. (Ex. C 16 to PI. 56.1, at 8-10.) All American also argued that (1) Stirling Cooke had authorization from All American's underwriting agent, WEB, to bind the coverage; (2) Sphere Drake never argued in its opening position statement that Stirling Cooke lacked such authority; (3) Sphere Drake waived its right to contest the existence of the contracts by accepting premium payments; (4) Stirling Cooke was All American's agent under Illinois agency law; and (5) granting Sphere Drake's motion would deprive All American of a fair hearing by denying the company its right to take discovery and present evidence. (Def. Mem., at 9; Ex. K to Amer Aff.)

  On July 5, 2001, after reviewing the parties' written submissions and hearing oral argument on the motion, the arbitration panel, in a 2 to 1 decision, issued a Final Award in Sphere Drake's favor. The panel found that All American's position statement was a pleading and that the company had made a judicial admission that Stirling Cooke was not authorized to contract with EIU. (Ex. C3 to PI. 56.1, at 1-2; Ex. M to Amer Aff., at 1-2.) The arbitrator selected by All American, Robert Mangino, vigorously dissented, finding the majority's decision an "extraordinary and unprecedented departure from applying industry practice and procedures to reinsurance disputes." Mangino stated that All American did not receive due process because it was not permitted to engage in discovery and present evidence in the case. He also disagreed with the majority's conclusion that there was no binding contract, noting that "Sphere Drake accepted premiums pursuant to the contracts from All American." (Ex. N to Amer Aff.)

  On July 6, 2001, Sphere Drake moved this court to confirm the Final Award and All American responded with a cross motion to vacate. On May 17, 2002, the court granted All American's motion, finding that Ronald Jacks, Sphere Drake's chosen arbitrator, demonstrated evident partiality. Sphere Drake Ins., 2002 WL 1008464, at *6-11. The Seventh Circuit reversed that decision on October 9, 2002. Sphere Drake Ins., 307 F.3d at 620-23. On February 19, 2003, All American renewed its motion to vacate, arguing that it did not receive a fair hearing and that the arbitrators exceeded their authority and improperly disregarded Illinois law in reaching their decision. In support of that motion, All American seeks to introduce certain new evidence that, it says, demonstrates Stirling Cooke's authority to bind the six contracts at issue: trial testimony from the case pending before the English commercial court (the "UK Action"), and discovery conducted in the case pending before Judge Hart (the "Unicare Litigation"). Sphere Drake opposes the motion to vacate and has moved to strike all references to this additional evidence.


  "Federal courts extend extraordinary deference to the decisions of arbitrators," and once a dispute has been resolved through arbitration, the role of a reviewing court is extremely limited. Stulberg v. Intermedics Orthopedics, Inc., 997 F. Supp. 1060, 1063 (N.D. III. 1998) (citing United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 36-37 (1987)); Moseley, Hallgarten, Estabrook & Weeden, Inc. v. Ellis, 849 F.2d 264, 267 (7th Cir. 1988). "The court may not `consider the disputants' arguments afresh,' Dean v. Sullivan, 118 F.3d 1170, 1171 (7th Cir. 1997), nor may it overturn the arbitrator's decision on the ground that the arbitrator committed serious error." Ganton Technologies, Inc. v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, U.A.W., Local 627, _ F.3d 2004 WL 253562 (7th Cir. Feb. 12, 2004). As the party challenging the arbitration award, All American bears the substantial burden of proving grounds for vacation. Middlesex Mutual Ins. Co. v. Levine, 675 F.2d 1197, 1201 (11th Cir. 1982).

  All American claims that the Final Award must be vacated because (1) All American was denied a fundamentally fair hearing; (2) the panel members exceeded their authority in issuing the award; and (3) the panel exhibited a manifest disregard of the law. The court addresses each argument in turn.

 I. Fundamentally Fair Hearing

  A federal court may vacate an arbitration award where the challenging party shows that "the arbitrators were guilty of misconduct in refusing to . . . hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced." 9 U.S.C. § 10(a)(3). As the Seventh Circuit has stated, "[i]t is clear that an arbitrator must provide a fundamentally fair hearing." Generica Ltd. v. Pharmaceutical Basics, Inc., 125 F.3d 1123, 1129-30 (7th Cir. 1997) (citing Iran Aircraft Indus. v. Avco Corp., 980 F.2d 141, 146 (2d Cir. 1992) ("an arbitral award should be denied or vacated if the party challenging the award proves that he was not given a meaningful opportunity to be heard as our due process jurisprudence defines it").

  A hearing is fundamentally fair if it "meets the minimal requirements of fairness — adequate notice, a hearing on the evidence, and an impartial decision by the arbitrator." Slaney v. International Amateur Athletic Federation, 244 F.3d 580, 592 (7th Cir. 2001). At the same time, parties who have chosen to submit their disputes to arbitration "should not expect the same procedures they would find in the judicial arena." Id. (citing Generica, 125 F.3d at 1130). An arbitrator must give the parties an adequate opportunity to present their evidence and arguments, but it is only when "the exclusion of relevant evidence actually deprived a party of a fair hearing that it is appropriate to vacate an arbitral award." Id.

  All American contends that the arbitration hearing was fundamentally unfair because (1) All American never in fact admitted that Stirling Cooke lacked authority to bind the reinsurance contracts; (2) All American's position statement was not a "pleading" and did not support dismissal "on the ...

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