Card v. Stratton Oakmont, Inc.

933 F. Supp. 806 (1996)

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Card v. Stratton Oakmont, Inc.

United States District Court for the District of Minnesota
933 F. Supp. 806 (1996)

Facts

Card (plaintiff) and Stratton Oakmont, Inc. (defendant) entered a contract containing a clause providing that the Code of Arbitration Procedure of the National Association of Securities Dealers (NASD Code of Arbitration Proceedings) would govern any arbitration. In his Statement of Claim in the arbitrator, Card referenced a civil complaint by the U.S. Securities and Exchange Commission (SEC) against Stratton Oakmont. The arbitral tribunal admitted evidence referencing the civil complaint to the SEC over the objection of Stratton Oakmont. The arbitral tribunal later entered an arbitration award in favor of Card. Card then petitioned the United States District Court for the District of Minnesota for an order to confirm the award. Stratton countered that the court should vacate the arbitration award because a verbatim record of a portion of an arbitration proceeding was not made as required under the NASD Code of Arbitration Proceedings. Stratton Oakmont also argued any consideration of the SEC proceedings demonstrates partiality by the arbitral tribunal. Stratton Oakmont cited U.S. judicial decisions striking references to SEC complaints under the applicable Federal Rules of Evidence. Card countered that the Federal Rules of Evidence does not apply to arbitration proceedings. Stratton further argued that the arbitral tribunal failed to make a tape recording of key points of the hearing as required under § 37 of the NASD Code of Arbitration Procedure. Stratton Oakmont argued this failure to record certain portions of the hearing required the vacation of the arbitral award.

Rule of Law

Issue

Holding and Reasoning (Davis, J.)

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