Emily Decker v. Merrill Lynch , Pierce , Fenner and Smith , Inc.

*The Honorable Robert Holmes Bell, United States District Judge for
the Western District of Michigan, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0080P (6th Cir.)
File Name: 00a0080p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
EMILY DECKER,
Plaintiff-Appellant,
v.
M ERRILL LYNCH , P IERCE ,
FENNER AND S MITH , INC.,
Defendant-Appellee.
;>

1
Nos. 98-1658;
99-1558
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 98-71347—Julian A. Cook, Jr., District Judge.
Argued: February 2, 2000
Decided and Filed: March 6, 2000
Before: MERRITT and MOORE, Circuit Judges; BELL,*
District Judge.

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2 Decker v. Merrill Lynch Nos. 98-1658; 99-1558
_________________
COUNSEL
ARGUED: Joseph H. Spiegel, Southfield, Michigan, for
Appellant. Thomas R. Cox, MILLER, CANFIELD,
PADDOCK & STONE, Detroit, Michigan, for Appellee.
ON BRIEF: Joseph H. Spiegel, Southfield, Michigan, for
Appellant. Thomas R. Cox, Clarence L. Pozza, Jr., MILLER,
CANFIELD, PADDOCK & STONE, Detroit, Michigan, for
Appellee.
_________________
OPINION
_________________
KAREN NELSON MOORE, Circuit Judge. This appeal is
a consolidation of two related appeals before this court
involving the same parties and the same underlying dispute.
Emily Decker and Merrill Lynch engaged in a National
Association of Securities Dealers (“NASD”) arbitration
hearing to resolve a dispute regarding Merrill Lynch’s
management of Decker’s securities investment. After
receiving an arbitration award, Decker filed a lawsuit against
Merrill Lynch claiming that Merrill Lynch improperly
interfered with the arbitration when one of its wholly owned
subsidiaries hired the chairperson of the arbitration panel to
act as a closing agent for various real estate transactions. In
her suit, Decker seeks damages based on tortious interference
with contract, breach of contract, and other grounds. Merrill
Lynch filed a motion to dismiss for failure to state a claim and
to confirm the arbitration award, while Decker filed a motion
for summary judgment on her claims. The district court
denied Decker’s motion for summary judgment and granted
Merrill Lynch’s motion to dismiss holding in part that
Decker’s claims constitute an impermissible collateral attack
on the arbitration award in violation of the Federal Arbitration
Act (“FAA”). Decker appeals the district court’s decision.
As this appeal was pending, Decker filed a second statement
of claim for arbitration with NASD that was identical to the

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10 Decker v. Merrill Lynch Nos. 98-1658; 99-1558
3There is no need for this court to address the district court’s
conclusion that preclusion doctrines bar Decker from arbitrating her
second NASD claim or its determination that Decker waived her right to
arbitrate by substantially invoking the litigation machinery because we
conclude that, consistent with our holding in Corey, the FAA bars
Decker’s second arbitration claim.
We believe that it is logical to extend our holding in Corey
to Decker’s claims presented in a second arbitration. The
FAA provides the exclusive remedy for challenging acts that
taint an arbitration award whether a party attempts to attack
the award through judicial proceedings or through a separate
second arbitration. It would be a violation of the FAA to
allow Decker to arbitrate the very same claims that we have
determined constitute an impermissible collateral attack when
previously presented for adjudication by a court. Decker may
not bypass the exclusive and comprehensive nature of the
FAA by attempting to arbitrate her claims in a separate
second arbitration proceeding. Therefore, we hold that the
district court properly granted Merrill Lynch’s motion to
enjoin Decker’s separate arbitration of her claims.3
III. CONCLUSION
For the reasons stated above, we AFFIRM the district
court’s judgment granting Merrill Lynch’s motion to dismiss
and AFFIRM the district court’s judgment enjoining
Decker’s second arbitration claim.
Nos. 98-1658; 99-1558 Decker v. Merrill Lynch 3
complaint she filed in court. Merrill Lynch responded by
filing a motion with the district court requesting the court to
enforce its judgment granting Merrill Lynch’s motion to
dismiss and to enjoin Decker from proceeding with her new
arbitration claim. The district court granted Merrill Lynch’s
motion and enjoined Decker from arbitrating her second
claim, which judgment Decker also appeals. We AFFIRM
the district court’s grant of Merrill Lynch’s motion to dismiss
because Decker’s claims collaterally attack the arbitration
award and the FAA provides the exclusive remedy for
challenging acts that taint an arbitration award. We also
AFFIRM the district court’s injunction barring Decker from
proceeding with her second NASD arbitration claim because
this claim also operates as an impermissible collateral attack
on the arbitration award in violation of the FAA.
I. FACTS AND PROCEDURE
Decker and Merrill Lynch entered into a Uniform
Submission Agreement to resolve through NASD Arbitration
a dispute over Merrill Lynch’s handling of Decker’s securities
investment. After nine days of hearing sessions, the
chairperson of the three-person arbitration panel transmitted
a letter to the parties disclosing that his law office had been
hired by Lender’s Service, Inc., a wholly owned subsidiary of
Merrill Lynch, to act as a closing agent for several real estate
transactions in his geographic area. He stated that because
such transactions are unrelated to Merrill Lynch’s securities
business, he did not believe that this client relationship would
affect his impartiality. In response, Decker filed with the
arbitration panel a motion for sanctions against Merrill Lynch
for interfering with the arbitration process and for depriving
her of a fair hearing. She also asked the chairperson to step
down due to this conflict of interest. The entire arbitration
panel met in executive session and decided to deny Decker’s
motion for sanctions and request for recusal. The arbitration
concluded on November 12, 1997, and Decker was awarded
damages in the amount of $40,000 on December 9, 1997.

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4 Decker v. Merrill Lynch Nos. 98-1658; 99-1558
On March 5, 1998, Decker filed a complaint against Merrill
Lynch in Michigan state court claiming that Merrill Lynch
owed Decker a duty not to interfere with the arbitration
process by directly or indirectly hiring the chairperson of the
arbitration panel during the course of the arbitration, conduct
it should have known would harm her. Decker does not seek
vacatur of the arbitration award under the FAA in this suit,
but instead asserts various common law tort and contract
claims. Merrill Lynch removed the case to federal court
based on diversity jurisdiction. It then moved, under Federal
Rule of Civil Procedure 12(b)(6), to dismiss all of Decker’s
claims against it for failure to state a claim upon which relief
may be granted and to confirm the arbitration award. Decker
filed a motion for summary judgment pursuant to Federal
Rule of Civil Procedure 56(c), asserting no genuine issue of
material fact exists regarding Merrill Lynch’s liability. The
district court confirmed the arbitration award and granted
Merrill Lynch’s motion to dismiss because it concluded that
Decker’s complaint constitutes a collateral attack on the
arbitration award in violation of the FAA, which provides the
exclusive remedy to challenge an arbitration award. The
district court also held that these issues had already been
decided by the arbitration panel in response to Decker’s
motion for sanctions and thus were precluded from
relitigation. Decker appeals the district court’s judgment
granting Merrill Lynch’s motion to dismiss and denying her
motion for summary judgment.
After filing her appeal with this court, Decker filed a
second statement of claim for arbitration with NASD,
asserting the same allegations as in her complaint. In
response, Merrill Lynch filed a motion with the district court
to enforce its judgment granting Merrill Lynch’s motion to
dismiss and to enjoin Decker from proceeding with this
second arbitration claim. The district court granted Merrill
Lynch’s motion, holding that Decker is precluded from
relitigating in arbitration the court’s determination that her
claims are a collateral attack on the arbitration award and also
holding that Decker has waived her right to arbitrate these
claims by first substantially invoking the judicial process.
Nos. 98-1658; 99-1558 Decker v. Merrill Lynch 9
issue preclusion.
B. Injunction Barring Decker’s Second Arbitration
Claim
Decker also argues that the district court erred in granting
Merrill Lynch’s motion to enjoin arbitration of her second
NASD claim because she asserts that her claims fall within
the scope of a valid arbitration agreement and thus must be
arbitrated. There is strong federal policy in favor of
arbitration of disputes. The FAA establishes that “any doubts
concerning the scope of arbitrable issues should be resolved
in favor of arbitration, whether the problem at hand is the
construction of the contract language itself or an allegation of
waiver, delay, or a like defense to arbitrability.” Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-
25 (1983). This strong federal policy in favor of arbitrating
claims governed by an arbitration contract, however, also
provides that arbitration awards may only be subject to
limited judicial review under the FAA. See Federated Dep’t
Stores, Inc. v. J.V.B. Indus., Inc., 894 F.2d 862, 866 (6th Cir.
1990) (citing Moses H. Cone Mem’l Hosp., 460 U.S. at 24).
As discussed above in Part II.A supra, we concluded in
Corey that a party’s exclusive remedy for challenging an
arbitration award is to seek relief under the FAA; a party may
not file a suit in court making claims alleged to be
independent but that in fact collaterally attack an arbitration
award. See Corey v. New York Stock Exch., 691 F.2d 1205,
1213 (6th Cir. 1982). The question of whether a party may
pursue these same types of allegedly independent claims
though a second arbitration proceeding, instead of a judicial
proceeding, is one of first impression in this circuit. Nor have
we found much law addressing this issue in other federal
courts. But see Prudential Sec. Inc. v. Hornsby, 865 F. Supp.
447, 453 (N.D. Ill. 1994) (granting a party’s motion to enjoin
arbitration because the court concluded that the arbitration
claims were merely an impermissible collateral attack on a
prior arbitration award and thus in violation of the FAA).

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8 Decker v. Merrill Lynch Nos. 98-1658; 99-1558
an impermissible collateral attack on the award. Unlike the plaintiff in
Turner, however, Decker could have raised her claims under the FAA.
2Because we conclude that Decker’s claims are clearly prohibited
under our reasoning in Corey, we need not address the district court’s
alternate holding that Decker’s claims are barred under the doctrine of
this argument to be persuasive. Like the plaintiff in Corey,
Decker’s alleged prejudice did not result when the Merrill
Lynch subsidiary hired the chairperson of the arbitration panel
to perform legal services, but instead resulted from the impact
of this action on the arbitration award. Her ultimate objective
in this damages suit is to rectify the alleged harm she suffered
by receiving a smaller arbitration award than she would have
received in the absence of the chairperson’s relationship with
Merrill Lynch. In order to pursue this objective, Decker
should have filed a motion to vacate the arbitration award
under the FAA by claiming that “the award was procured by
corruption, fraud, or undue means” or that “there was evident
partiality or corruption in the arbitrators.” 9 U.S.C.
§ 10(a)(1)-(2). As noted above, the FAA “provides the
exclusive remedy for challenging acts that taint an arbitration
award.” Corey, 691 F.2d at 1211. Because Decker chose to
attack collaterally the arbitration award in violation of the
FAA, she fails to state a claim upon which relief may be
granted.
Decker argues that it would violate public policy to apply
Corey to this case because it would encourage fraud and
deceit in the arbitration process. However, we have noted
that in light of the strong federal policy in favor of enforcing
arbitration agreements, courts only have a limited role in
reviewing arbitration awards as authorized under the FAA.
See Federated Dep’t Stores, Inc. v. J.V.B. Indus., Inc., 894
F.2d 862, 866 (6th Cir. 1990) (citing Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Co., 460 U.S. 1, 24 (1983)).
Decker did not follow the proper procedure for challenging
her arbitration award under the FAA, and therefore we affirm
the district court’s grant of Merrill Lynch’s motion to dismiss
for failure to state a claim upon which relief can be granted.2
Nos. 98-1658; 99-1558 Decker v. Merrill Lynch 5
Decker filed a timely notice of appeal of the district court’s
order. This appeal has been consolidated with Decker’s
appeal of the district court’s judgment granting Merrill
Lynch’s motion to dismiss.
In sum, Decker now asks this court to reverse the district
court’s grant of Merrill Lynch’s motion to dismiss, reverse the
district court’s denial of her motion for summary judgment
regarding Merrill Lynch’s liability, and remand for a
determination of damages. In the alternative, Decker requests
that we reverse the district court’s grant of Merrill Lynch’s
motion to enjoin arbitration and allow Decker to pursue her
second NASD claim.
II. ANALYSIS
A. Dismissal of Decker’s Complaint
We review de novo a dismissal under Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim upon which
relief can be granted. See Merriweather v. City of Memphis,
107 F.3d 396, 398 (6th Cir. 1997). “The claim should not be
dismissed unless it appears beyond doubt that plaintiff can
prove no set of facts in support of [her] claim which would
entitle [her] to relief.” Scheid v. Fanny Farmer Candy Shops,
Inc., 859 F.2d 434, 436 (6th Cir. 1988) (quoting Windsor v.
The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983), cert.
denied, 469 U.S. 826 (1984)).
The FAA states, “[a] written provision in . . . a contract
evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such
contract or transaction . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2.
Once an arbitration is conducted under a valid arbitration
contract, the FAA “provides the exclusive remedy for
challenging acts that taint an arbitration award.” Corey v.
New York Stock Exch., 691 F.2d 1205, 1211 (6th Cir. 1982).
A party may file a petition to vacate an arbitration award
where (1) “the award was procured by corruption, fraud, or

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6 Decker v. Merrill Lynch Nos. 98-1658; 99-1558
undue means”; (2) “there was evident partiality or corruption
in the arbitrators, or either of them”; (3) “the arbitrators were
guilty of . . . misbehavior by which the rights of any party
have been prejudiced”; or (4) “the arbitrators exceeded their
powers, or so imperfectly executed them that a mutual, final,
and definite award upon the subject matter submitted was not
made.” 9 U.S.C. § 10(a). In addition, a party may petition a
federal court to modify or correct an award “[w]here there
was an evident material miscalculation of figures or an
evident material mistake” in description; “[w]here the
arbitrators have awarded upon a matter not submitted to
them”; or “[w]here the award is imperfect in matter of form
not affecting the merits of the controversy.” 9 U.S.C. § 11(a)-
(c). An arbitrator’s award will be binding on the parties
unless they challenge the validity of the underlying contract
to arbitrate under § 2 of the FAA or seek to vacate, modify, or
correct the award under §§ 10 or 11. See Corey, 691 F.2d at
1212.
In this case, Decker does not challenge the validity of her
contract to arbitrate with Merrill Lynch. Nor does she seek to
vacate, modify, or correct the arbitration award. Instead,
Decker makes several claims under contract and tort law that
she argues constitute an independent action. In her first
count, she alleges that Merrill Lynch’s hiring of the
chairperson of the arbitration panel constitutes tortious
interference with their contract to have a fair and impartial
arbitration of their dispute. Second, Decker claims that
Merrill Lynch breached its obligations to her under their
arbitration contract. In her third count, Decker argues that
Merrill Lynch breached its contract with NASD to comply
with NASD procedures and codes thereby harming Decker,
the intended third-party beneficiary of the contract. Fourth,
Decker alleges that Merrill Lynch breached its duty of good
faith owed to her under their arbitration contract. Finally, in
the alternative, she asserts a negligence claim, arguing that
Merrill Lynch breached its general duty not to hire an
arbitrator who was presiding over an arbitration involving
Decker and Merrill Lynch, which resulted in harm to Decker.
Because these claims do not directly challenge the arbitration
Nos. 98-1658; 99-1558 Decker v. Merrill Lynch 7
1She also cites to a Florida state appellate court decision which
allowed a plaintiff to bring a legal malpractice action against the lawyer
who represented him in an arbitration proceeding. In Turner v. Anderson,
704 So.2d 748, 750 (Fla. Dist. Ct. App. 1998), the court concluded that
the plaintiff could not have raised this claim to set aside the arbitration
award under the FAA, and thus it is a separate, distinct claim rather than
award, Decker asserts that they constitute a separate,
independent action and do not fall under the scope of the
FAA.
We have held that where a party files a complaint in federal
court seeking damages for an alleged wrongdoing that
compromised an arbitration award and caused the party
injury, it “is no more, in substance, than an impermissible
collateral attack on the award itself.” Corey, 691 F.2d at
1211-12. In Corey, the plaintiff filed a complaint against the
sponsor of an arbitration for improperly selecting a biased
panel of arbitrators which had allegedly caused him prejudice.
See id. at 1211. Although the plaintiff filed his suit against a
different defendant than his original adversary in the
arbitration and requested damages instead of vacatur or
modification of the arbitration award, the court concluded that
the suit was in effect a collateral attack on the award. The
court reasoned that the selection of biased arbitrators in itself
did not injure the plaintiff; it was the impact that the allegedly
biased arbitrators had on his award that injured him. See id.
at 1213. Because the FAA is the exclusive means of
challenging an arbitration award, the court concluded that the
plaintiff should have filed a motion for vacatur under § 10 of
the Act, which allows review of an arbitration award where
the arbitrators are alleged to have been biased. See id.
Therefore, the court affirmed the district court’s grant of
summary judgment dismissing the plaintiff’s claims.
Decker attempts to distinguish Corey by noting that her
case involves a different allegation of wrongdoing and that
the Corey court did not specifically hold that claims for
tortious interference and breach of contract are impermissible
collateral attacks on an arbitration award.1 We do not find

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