Lowell E. Harter and Doretta Harter v. Iowa Grain Co.

Majority - Cudahy, Circuit Judge

Yes, a court properly compels arbitration of claims challenging the legality of a contract under the Commodity Exchange Act when the contract contains a broad arbitration clause covering "any disputes or controversies arising out of" the contract. Under the Federal Arbitration Act (FAA) and precedents like Prima Paint Corp. v. Flood & Conklin Mfg. Co. and Sweet Dreams Unlimited, Inc. v. Dial-A-Mattress Int’l, Ltd., a party cannot avoid arbitration by arguing that the entire contract (of which the arbitration clause is a part) is illegal or voidable; the challenge must be to the arbitration clause itself. Harter's claim that the HTA contracts violated the CEA and were therefore void was a dispute "arising out of" the contracts and thus arbitrable. The determination of whether HTA contracts are futures instruments or cash market transactions is a fact-intensive inquiry, not a pure question of law uniquely suited for judicial resolution, further supporting arbitration. No, "structural bias" of an arbitration panel does not constitute "evident partiality" under the Federal Arbitration Act, and thus does not warrant vacation of an arbitration award. "Evident partiality" requires a bias that is "direct, definite and capable of demonstration rather than remote, uncertain, or speculative" (United States Wrestling Federation v. Wrestling Division of the AAU, Inc.). Supreme Court cases like Rodriguez de Quijas v. Shearson/American Express, Inc. have strongly endorsed arbitration, even for statutory claims and by industry panels. Disqualifying arbitrators with industry experience would undermine the goals of arbitration. The NGFA's membership (which includes grain elevators) and the presence of an Andersons employee on its board do not, by themselves, demonstrate direct bias. The NGFA's procedural safeguards, such as arbitrator disclosure, the right to object, and the requirement for industry expertise, indicate fairness, and no direct bias was proven against Harter. No, the district court did not entirely abuse its discretion in awarding attorney's fees for collateral litigation, but it erred by including fees for proceedings not directly necessary for the collection of contract damages. While the FAA does not authorize post-arbitration fee awards, contractual agreements can provide for fee shifting (Menke v. Monchecourt). Under Illinois law, fee-shifting provisions are construed strictly and cover only services "so provided by the contract" and directly linked to the contract's enforcement or collection efforts (Northern Trust Co. v. Sanford; Zimmerman v. First Prod. Credit Ass’n; Helland v. Holland). The court found that opposing Harter’s interlocutory appeal from the order compelling arbitration and seeking an injunction to place Harter's farm asset profits in escrow were "necessary" to the collection of damages. However, The Andersons' involvement in a co-defendant's Rule 11 sanctions effort against Harter's attorney and its effort to limit Harter's subpoena of the NGFA were not "necessary" to collect damages, as these were discretionary or duplicative. The court affirmed fees for defending the dismissal of AISC due to Harter's initial belief that AISC and The Andersons were the same entity and the district court's wide discretion. The documentation and reasonableness of the fees were affirmed, noting Harter's choice to escalate the litigation.