Lagstein v. CERTAIN UNDERWRITERS, LLOYD'S, LONDON

                 FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

ZEV LAGSTEIN, M.D.,                   
               Plaintiff-Appellant,        No. 07-16094
               v.
                                            D.C. No.
                                          CV-03-01075 RCJ
CERTAIN UNDERWRITERS AT LLOYD’S,
LONDON,                                      OPINION
              Defendant-Appellee.
                                      
       Appeal from the United States District Court
                for the District of Nevada
        Robert C. Jones, District Judge, Presiding

                 Argued and Submitted
       November 3, 2009—San Francisco, California

                    Filed June 10, 2010

    Before: Betty B. Fletcher, William C. Canby, Jr., and
             Susan P. Graber, Circuit Judges.

                 Opinion by Judge Canby




                            8487
                  LAGSTEIN v. LLOYD’S LONDON                8491




                          COUNSEL

Thomas L. Hudson, Osborn Maledon, P.A., Phoenix, Arizona,
for the plaintiff-appellant.

Evan M. Tager, Mayer Brown LLP, Washington, D.C., for the
defendant-appellee.


                          OPINION

CANBY, Circuit Judge:

   After developing heart disease and other ailments, Zev
Lagstein, M.D., filed with Certain Underwriters at Lloyd’s,
London (“Lloyd’s”) a claim for benefits under a disability
policy. After nearly two years passed without a decision on
the claim, Lagstein sued Lloyd’s in federal court. The case
was stayed pending binding arbitration mandated by Lag-
stein’s policy. The majority of a three-member arbitration
panel found in favor of Lagstein, awarding him full policy
benefits, emotional distress damages, and punitive damages,
all of which totaled more than six million dollars. The district
court vacated the overall award on the ground of its excessive
size and vacated the punitive damages award on the additional
ground that the arbitration panel lacked jurisdiction to enter it
after the panel had entered its compensatory award. We
reverse the district court’s vacatur of the awards. We agree,
however, with the district court’s ruling that Lloyd’s did not
establish partiality of two of the arbitrators as an additional
ground of vacatur.
8492               LAGSTEIN v. LLOYD’S LONDON
                        BACKGROUND

   Appellant Lagstein is a cardiologist and disability exam-
iner. In 1999, he obtained an insurance policy from Appellee
Lloyd’s in which Lloyd’s agreed to pay Lagstein $15,000 per
month for up to sixty months in the event that Lagstein
became unable to practice medicine due to disability. In 2001,
Lagstein developed heart disease, as well as severe migraine
headaches and other neurological problems. Several physi-
cians who examined Lagstein concluded that he was perma-
nently disabled from practicing medicine. Lagstein then
submitted to Lloyd’s a claim for benefits under the disability
policy.

   Because Lagstein had received no benefits or even a deci-
sion on his claim by early 2002, he went back to work against
the advice of his doctors. Relations between the parties
increasingly soured, and each accuses the other of delay and
bad faith in the months that followed. In September 2003, still
having received no decision on his claim,1 Lagstein filed a
complaint in the United States District Court for the District
of Nevada for breach of contract, breach of the covenant of
good faith and fair dealing, and unfair trade practices. Upon
Lloyd’s motion, the district court stayed the lawsuit pending
binding arbitration required by Lagstein’s policy.

   As provided in Lagstein’s policy, each party appointed an
arbitrator and those two arbitrators appointed a third. Lagstein
selected Jerry Carr Whitehead, Lloyd’s selected Ralph O.
Williams, III, and Whitehead and Williams together
appointed Charles Springer. Each of the arbitrators submitted
a disclosure statement to the parties setting forth prior rela-
tionships with the parties, the parties’ attorneys, and those
attorneys’ law firms.
  1
  Lloyd’s finally denied Lagstein’s claim on July 29, 2005, approxi-
mately three and a half years after the claim was filed.
                  LAGSTEIN v. LLOYD’S LONDON                8493
   The initial arbitration hearing was held from July 11 to July
14, 2006, and the panel issued a decision on August 31, 2006.
All three arbitrators concluded that Lloyd’s breached the
insurance contract and acted unreasonably, but the panel split
on the amount of damages to be awarded. The majority,
formed by Springer and Whitehead, concluded that Lagstein
should be awarded the full value of his policy, $900,000, as
well as $1,500,000 for emotional distress. The majority also
concluded that punitive damages were warranted, but ordered
that the amount be determined at a separate hearing.

   The dissenting arbitrator, Williams, would have awarded
Lagstein only $11,000 under his policy and no emotional dis-
tress damages or punitive damages. The disagreement
between the majority and the dissent turned on whether the
evidence showed that Lagstein remained disabled from prac-
ticing medicine after he returned to work, whether Lagstein
proffered sufficient evidence of emotional distress, and the
significance of delays in Lloyd’s handling of the claim that
were attributable to Lagstein himself.

   The punitive damages hearing was held on November 20
and 21, 2006, over Lloyd’s objection that the panel’s jurisdic-
tion had ended once it issued the initial award. The same
majority of the panel, after explaining the basis for its contin-
ued jurisdiction, awarded Lagstein $4,000,000 in punitive
damages. Arbitrator Williams again dissented, arguing that
the panel lacked jurisdiction to make the award, and that, even
if it had jurisdiction, the award appropriately should have
been $50,000.

   Following the panel’s initial award, Lloyd’s investigated
the backgrounds of arbitrators Springer and Whitehead and
discovered their roles in a controversy that had occurred over
a decade earlier. In 1993, Whitehead, who at the time was a
Nevada trial judge, became involved in an ethics controversy
arising from his handling of peremptory strikes entered
against him under Nevada’s rule for peremptory striking of
8494               LAGSTEIN v. LLOYD’S LONDON
judges. The Nevada Commission on Judicial Discipline filed
a complaint alleging that on several occasions Whitehead,
through ex parte contacts, permitted counsel for the non-
challenging party to select a replacement judge. Although the
Commission’s complaint against Whitehead eventually was
dropped, the FBI subsequently investigated Whitehead on
unspecified charges. Whitehead ultimately signed a non-
prosecution agreement conditioned on his retiring from the
bench, agreeing not to seek reelection, and agreeing not to
serve again in “any state judicial capacity.”

   In the meantime, a related controversy erupted over the
Commission’s procedures and jurisdiction in the Whitehead
investigation. These matters were addressed by an increas-
ingly divided Nevada Supreme Court over the course of sev-
eral decisions.2 Arbitrator Springer was a member of the
Nevada Supreme Court at the time and consistently sided with
Whitehead on these procedural and jurisdictional issues. See,
e.g., Whitehead IV, 893 P.2d at 941-65 (Springer, J., concur-
ring).

  Lloyd’s filed in the district court a motion to vacate the
arbitration awards on several grounds, including Springer’s
and Whitehead’s failure to disclose the prior ethics contro-
versy, as well as the majority’s decision to hold a separate
punitive damages hearing after the issuance of the initial
award. Following a hearing on the matter, the district court
vacated the awards, concluding that the size of the awards
was excessive and in manifest disregard of the law, and that
  2
    See Whitehead v. Nev. Comm’n on Judicial Discipline, 869 P.2d 795
(Nev. 1994), amended by 906 P.2d 230 (Nev. 1994) (“Whitehead I”);
Whitehead v. Nev. Comm’n on Judicial Discipline, 873 P.2d 946 (Nev.
1994) (“Whitehead II”); Whitehead v. Nev. Comm’n on Judicial Disci-
pline, 878 P.2d 913 (Nev. 1994) (“Whitehead III”); Whitehead v. Nev.
Comm’n on Judicial Discipline, 893 P.2d 866 (Nev. 1995) (“Whitehead
IV”); Whitehead v. Nev. Comm’n on Judicial Discipline, 908 P.2d 219
(Nev. 1995) (“Whitehead V”); Whitehead v. Nev. Comm’n on Judicial Dis-
cipline, 920 P.2d 491 (Nev. 1996) (“Whitehead VI”).
                  LAGSTEIN v. LLOYD’S LONDON                8495
the punitive damages award contravened public policy and
exceeded the panel’s jurisdiction. The district court con-
cluded, however, that vacatur was not independently war-
ranted by Springer’s and Whitehead’s non-disclosure of the
prior controversy.

   Lagstein appeals the district court’s vacatur of the arbitra-
tion awards. We have jurisdiction pursuant to 28 U.S.C.
§ 1291, and we reverse.

                        DISCUSSION

   [1] We review de novo the district court’s vacatur of an
arbitration award. New Regency Prods., Inc. v. Nippon Herald
Films, Inc., 501 F.3d 1101, 1105 (9th Cir. 2007). “Our review
is limited by the Federal Arbitration Act (‘FAA’), which ‘enu-
merates limited grounds on which a federal court may vacate,
modify, or correct an arbitral award.’ ” Bosack v. Soward, 586
F.3d 1096, 1102 (9th Cir. 2009) (quoting Kyocera Corp. v.
Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 994 (9th
Cir. 2003) (en banc)), cert. denied, 130 S. Ct. 1522 (2010).
Section 10(a) of the FAA permits a district court to vacate an
arbitration award under only four circumstances:

    (1) where the award was procured by corruption,
    fraud, or undue means;

    (2) where there was evident partiality or corruption
    in the arbitrators, or either of them;

    (3) where the arbitrators were guilty of misconduct
    in refusing to postpone the hearing, upon sufficient
    cause shown, or in refusing to hear evidence perti-
    nent and material to the controversy; or of any other
    misbehavior by which the rights of any party have
    been prejudiced; or

    (4) where the arbitrators exceeded their powers, or
    so imperfectly executed them that a mutual, final,
8496                 LAGSTEIN v. LLOYD’S LONDON
      and definite award upon the subject matter submitted
      was not made.

9 U.S.C. § 10(a). Unless the award is vacated as provided in
§ 10, or modified as provided in § 11 (not in issue here),3
“confirmation is required even in the face of erroneous find-
ings of fact or misinterpretations of law.” Kyocera, 341 F.3d
at 997 (citation and internal quotation marks omitted); see
Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584
(2008) (holding that §§ 10 and 11 “provide the FAA’s exclu-
sive grounds for expedited vacatur and modification”).

                                    A

   The district court’s first ground for vacating the arbitration
awards was the awards’ total size. As the district court
explained, the amount of the awards “shock[ed] the Court’s
conscience,” suggested bias, was unsupported by the record,
manifestly disregarded the law, and contravened public pol-
icy. Lagstein argues that none of these reasons justified the
awards’ vacatur. We agree.

   [2] A district court may not vacate an arbitration award
simply because the court disagrees with its size. The heart of
such disagreement concerns the panel’s weighing of the evi-
dence, here, on matters such as the length and severity of Lag-
stein’s disability and the egregiousness of Lloyd’s conduct.
But § 10 of the FAA “does not sanction judicial review of the
merits,” Collins v. D.R. Horton, Inc., 505 F.3d 874, 879 (9th
Cir. 2007), and “[w]hether or not the panel’s findings are sup-
ported by the evidence in the record is beyond the scope of
our review,” Bosack, 586 F.3d at 1105. Thus, it was error for
  3
    Section 11 provides that a court may modify or correct an award when
(a) there is an evident miscalculation of figures or mistake in description;
(b) the arbitrators have awarded on a matter not submitted to them; or (c)
the award is imperfect in a matter of form not affecting the merits of the
controversy. 9 U.S.C. § 11. Neither party here has invoked § 11.
                      LAGSTEIN v. LLOYD’S LONDON                         8497
the district court to vacate the arbitration awards simply
because it found the total size either shocking or unsupported
by the record.4

   [3] Nonetheless, Lloyd’s argues that vacatur was proper
because the arbitration awards manifestly disregarded the law
and were completely irrational. Section 10 permits vacatur
“where the arbitrators exceeded their powers.” 9 U.S.C.
§ 10(a)(4). This is a high standard for vacatur; “[i]t is not
enough . . . to show that the panel committed an error—or
even a serious error.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp., 130 S. Ct. 1758, 1767 (2010). “[A]rbitrators ‘exceed
their powers’ . . . not when they merely interpret or apply the
governing law incorrectly, but when the award is ‘completely
irrational,’ or exhibits a ‘manifest disregard of law.’ ” Kyoc-
era, 341 F.3d at 997 (citations omitted). We conclude that
neither excess occurred in this case.

   [4] First, the district court erred in concluding that the size
of the arbitration awards demonstrated manifest disregard of
the law.5 “ ‘Manifest disregard of the law’ means something
  4
     We also find that the district court’s conclusions that the total size of
the award contravened public policy and showed bias are without support.
First, we note that mere inconsistency with a court’s generalized view of
public policy is not an appropriate ground for vacatur of an arbitration
award, and Lloyd’s does not attempt to defend this basis for vacatur on
appeal. See Stead Motors of Walnut Creek v. Auto. Machinists Lodge No.
1173, 886 F.2d 1200, 1212-13 (9th Cir. 1989) (en banc) (holding that, to
vacate an award on public policy grounds, “[a] court must both delineate
an overriding public policy rooted in something more than general consid-
erations of supposed public interests, and, of equal significance, it must
demonstrate that the policy is one that specifically militates against the
relief ordered by the arbitrator.”) (internal quotation marks and citation
omitted). Second, although an award may be vacated “where there was
evident partiality . . . in the arbitrators,” 9 U.S.C. § 10(a)(2), the district
court concluded that Lloyd’s failed to show that the arbitrators were par-
tial to Lagstein. Thus, the district court’s statement that the award “is
biased” is puzzling.
   5
     In Stolt-Nielsen, 130 S. Ct. at 1768 n.3, the Supreme Court left open
the question whether “manifest disregard” as an independent ground of
8498                 LAGSTEIN v. LLOYD’S LONDON
more than just an error in the law or a failure on the part of
the arbitrators to understand or apply the law.” Mich. Mut.
Ins. Co. v. Unigard Sec. Ins. Co., 44 F.3d 826, 832 (9th Cir.
1995). To vacate an arbitration award on this ground, “[i]t
must be clear from the record that the arbitrators recognized
the applicable law and then ignored it.” Id.; see, e.g., Comedy
Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1293 (9th
Cir.), cert. denied, 130 S. Ct. 145 (2009). Here, the district
court found “manifest disregard of the law” without citing any
applicable law that the panel recognized and ignored. Simi-
larly, on appeal, Lloyd’s does not cite a single Nevada statute
or decision pertinent to the size of the arbitration award that
the panel manifestly disregarded.

   [5] Lloyd’s argues, however, that at times “legally disposi-
tive facts are so firmly established that an arbitrator cannot
fail to recognize them without manifestly disregarding the
law.” Coutee v. Barington Capital Group, L.P., 336 F.3d
1128, 1133 (9th Cir. 2003). But the facts of Lagstein’s contin-
uing disability were hotly contested. The panel’s conclusion
that Lagstein remained disabled from the practice of medicine
after returning to work is not contrary to firmly established
legally dispositive facts. Thus, manifest disregard of the law
did not provide a basis for vacating the arbitration award.

   [6] Lloyd’s also attempts to recast the district court’s vaca-
tur as an expression that the arbitration awards were “com-
pletely irrational.” See, e.g., Kyocera, 341 F.3d at 997
(citation and quotation marks omitted). An award is com-
pletely irrational “only ‘where the arbitration decision fails to
draw its essence from the agreement.’ ” Comedy Club, 553
F.3d at 1288 (citation and brackets omitted). An arbitration
award “draws its essence from the agreement if the award is

vacatur survives Hall Street Associates, 552 U.S. at 585. Our earlier prece-
dent, however, establishes as the law of our circuit that it does so survive.
Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1281 (9th Cir.),
cert. denied, 130 S. Ct. 145 (2009).
                 LAGSTEIN v. LLOYD’S LONDON               8499
derived from the agreement, viewed in light of the agree-
ment’s language and context, as well as other indications of
the parties’ intentions.” Bosack, 586 F.3d at 1106 (citations
and internal quotation marks omitted). Lloyd’s, however,
defends the vacatur of the award on the ground that the
awards were irrational in light of the facts. For example,
Lloyd’s argues that it was irrational for the panel to conclude
that Lagstein was totally disabled from practicing medicine
when the evidence showed that Lagstein returned to work to
complete tasks that he considered “easy.” However, “the
question is whether the award is ‘irrational’ with respect to
the contract, not whether the panel’s findings of fact are cor-
rect.” Id. “Whether or not the panel’s findings are supported
by the evidence in the record is beyond the scope of our
review.” Id. at 1105.

   Further, Lloyd’s assertion that the majority misinterpreted
certain policy provisions is insufficient to show that the
amount of the awards was completely irrational. The fact that
the majority may have made a mistake in citing a benefit that
Lagstein had not purchased does not establish irrationality of
its ultimate conclusion that Lloyd’s breached its contract. The
majority provided several independent reasons for finding a
breach of contract, such as Lloyd’s failure to advise Lagstein
of the acceptance or denial of his claim within thirty days.
This rationale was consistent with applicable Nevada law, see
Nev. Rev. Stat. § 689A.410, and not inconsistent with the
terms of Lagstein’s policy.

   Equally unavailing is Lloyd’s argument that the majority,
in concluding that Lloyd’s acted in bad faith and repudiated
the contract, mistakenly concluded that Lloyd’s had violated
the policy’s “referee provision.” This provision required that
Lloyd’s physician and Lagstein’s physician, in the event that
they disagreed about whether Lagstein was disabled, choose
a third physician to evaluate Lagstein. After such a disagree-
ment arose, Lloyd’s hired a third physician of its own choos-
ing to evaluate Lagstein. While Lloyd’s claims that the
8500              LAGSTEIN v. LLOYD’S LONDON
physician was hired to evaluate an entirely different medical
condition, so that the referee provision was inapplicable, the
panel majority interpreted the evidence differently, conclud-
ing that Lloyd’s violated the provision by not informing Lag-
stein of its applicability. Disagreement over Lloyd’s
compliance with a policy provision is insufficient to show that
the award failed to draw its essence from Lagstein’s policy.
See Bosack, 586 F.3d at 1106 (“We will not vacate an award
simply because we might have interpreted the contract differ-
ently.”).

   [7] We conclude, therefore, that the district court’s vacatur
of the overall awards was not supported by any permissible
ground under the Arbitration Act or the controlling decisions
interpreting it.

                                B

   The district court also vacated the punitive damages award
on the alternative ground that the panel no longer had jurisdic-
tion over the dispute after issuing the initial arbitration award.
We conclude that the panel did not exceed its authority
because the timing of the arbitration award was a procedural
matter committed to the panel’s interpretation, and the panel’s
conclusion that it retained jurisdiction was a plausible con-
struction of the parties’ agreement and the procedural rules
the agreement incorporated.

   [8] Lagstein’s policy provided that the arbitration was gov-
erned by the commercial arbitration rules of the American
Arbitration Association (“AAA”). At issue is Rule R-41,
which provides that an award “shall be made promptly by the
arbitrator and, unless otherwise agreed by the parties or speci-
fied by law, no later than [thirty] days from the date of closing
the hearing.” Am. Arbitration Ass’n, Commercial Arbitration
Rules and Mediation Procedures, Rule R-41 (2005) (hereinaf-
ter “CAR”). Upon the close of the initial hearing on July 14,
2006, arbitrator Williams stated that the panel would treat the
                  LAGSTEIN v. LLOYD’S LONDON               8501
matter as submitted. He also noted that, “[u]nder the AAA
rules, a decision is required generally within 30 days.”
Because of scheduling concerns, Williams requested a fifteen-
day extension for making an award—until September 1, 2006
—which the parties granted.

   [9] The panel issued its initial decision on August 31,
2006, awarding compensatory and emotional distress dam-
ages. The initial award also specified that a punitive damages
hearing would be held at a later date. The parties, however,
did not expressly agree to extend the time for making an
award past September 1, 2006. Rule R-38 specifies that “the
arbitrator may for good cause extend any period of time estab-
lished by these rules, except the time for making the award.”
CAR, Rule R-38 (emphasis added). Thus, Lloyd’s argues that,
by holding the punitive damages hearing and then making an
award past September 1, 2006, the panel exceeded its jurisdic-
tion. We conclude that Lloyd’s is mistaken.

   Section 10 of the FAA permits vacatur “where the arbitra-
tors exceeded their powers.” 9 U.S.C. § 10(a)(4). A party has
“a right to arbitration according to the terms for which it con-
tracted,” W. Employers Ins. Co. v. Jefferies & Co., 958 F.2d
258, 261 (9th Cir. 1992), and arbitrators exceed their powers
for purposes of § 10(a)(4) when they “act outside the scope of
the parties’ contractual agreement,” Mich. Mut. Ins., 44 F.3d
at 830; see Stolt-Nielsen, 130 S. Ct. at 1772-75. However,
“[w]e . . . have no authority to vacate an award solely because
of an alleged error in contract interpretation.” Employers Ins.
of Wausau v. Nat’l Union Fire Ins. Co. of Pittsburgh, 933
F.2d 1481, 1486 (9th Cir. 1991). Instead, “[we] need only
determine whether the arbitrators’ interpretation was ‘plausi-
ble.’ ” Id. (citations omitted); see also McKesson Corp. v.
Local 150 IBT, 969 F.2d 831, 834 (9th Cir. 1992).

  [10] As a general matter, this narrow standard of review
applies to the arbitrator’s interpretation of matters of proce-
dure in the contract as well as matters of substance. “In the
8502              LAGSTEIN v. LLOYD’S LONDON
absence of an express agreement to the contrary, procedural
questions are submitted to the arbitrator, either explicitly or
implicitly, along with the merits of the dispute.” McKesson,
969 F.2d at 834; cf. Schoenduve Corp. v. Lucent Techs., Inc.,
442 F.3d 727, 733 (9th Cir. 2006) (explaining that “the arbi-
trator’s interpretation of the scope of his powers is entitled to
the same level of deference as his determination on the mer-
its”). As the Supreme Court has explained, “ ‘procedural
questions which grow out of the dispute and bear on its final
disposition’ are presumptively not for the judge, but for an
arbitrator, to decide.” Stolt-Nielsen, 130 S. Ct. at 1775 (inter-
nal quotation and citation omitted); see also United Paper-
workers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 40
(1987).

   [11] The question of the time frame within which an arbi-
tration panel may issue an award is a procedural matter. McK-
esson, 969 F.2d at 834 (“Courts have uniformly held that
limitations on the time in which an arbitrator may render an
award are procedural not jurisdictional.”).

   [12] Nothing in Lagstein’s policy or the CAR that it incor-
porated expressly withdrew determination of procedural
issues from the panel. In fact, Rule R-53, which provides that
“[t]he arbitrator shall interpret and apply these rules insofar as
they relate to the arbitrator’s powers and duties,” clearly con-
templates that arbitrators will decide the meaning of the
CAR’s procedural rules. CAR, Rule R-53; see also Gov’t of
India v. Cargill, Inc. (In re Arbitration No. AAA13-161-0511-
85), 867 F.2d 130, 134 (2d Cir. 1989) (rejecting a challenge
to an arbitration award that was not made within thirty days
of the close of hearing because the agreement gave arbitrators
authority to interpret the rules).

   We also conclude, for two reasons, that the panel plausibly
interpreted the arbitration agreement and its governing rules
to permit the panel to schedule a hearing beyond September
1, 2006.
                     LAGSTEIN v. LLOYD’S LONDON                       8503
   [13] First, because the initial award specified that further
proceedings would be held to decide the amount of punitive
damages, the panel plausibly determined that the initial award
constituted an interim award.6 See CAR, Rule R-43(b) (per-
mitting the panel to issue “interim, interlocutory, or partial
rulings, orders, and awards,” in addition to final awards).
Thus, because a final award had not issued, the hearing plau-
sibly could have been reopened under Rule R-36, which pro-
vides that “[t]he hearing may be reopened on the arbitrator’s
initiative . . . at any time before the award is made.” Id., Rule
R-36 (emphasis added). Further, while the parties must agree
to an extension of time for making the award “[i]f reopening
the hearing would prevent the making of the award within the
specific time agreed on by the parties in the contract(s) out of
which the controversy has arisen,” the panel could have con-
cluded that no such agreement was required in this case. Id.
The last sentence in Rule R-36 provides that, “[w]hen no spe-
cific date is fixed in the contract, the arbitrator may reopen the
hearing and shall have [thirty] days from the closing of the
reopened hearing within which to make an award.” Id.
(emphasis added). Lagstein’s policy contained “no specific
date” by which a final award must be made, and instead sim-
ply provided that the CAR would govern the arbitration.
Therefore, the panel did not need the agreement of the parties
to reopen the hearing and, because the panel issued the final
punitive damages award within thirty days of the punitive
damages hearing, Rule R-41 was satisfied.7
  6
     The panel majority pointed out that Nevada law instructs triers of fact
first to decide whether punitive damages are warranted and then to hold
a subsequent proceeding to determine their amount, see Nev. Rev. Stat.
§ 42.005(3). Although Lloyd’s argues that this Nevada bifurcation rule
does not apply to arbitration, any misapplication cannot justify vacatur;
“such legal . . . errors lie far outside the category of conduct embraced by
§ 10(a)(4).” Kyocera Corp., 341 F.3d at 1003.
   7
     The punitive damages hearing was held on November 21 and 22, 2006,
and the award issued on December 14, 2006.
8504                 LAGSTEIN v. LLOYD’S LONDON
   [14] Second, the panel plausibly interpreted the CAR rules
to conclude that the punitive damages award could be issued
later than September 1, 2006, because the dispute was subject
to the AAA’s Procedures for Large, Complex Commercial
Disputes (“PLCCD”). CAR Rule R-1 provides that “[u]nless
the parties agree otherwise, the [PLCCD] shall apply to all
cases in which the disclosed claim or counterclaim of any
party is at least $500,000.” Id. Rule R-1. Lagstein’s complaint
alleged that he was owed $900,000 in total disability benefits,
plus emotional distress and punitive damages, and there is no
record of an agreement between the parties that the PLCCD
would not apply. Thus, under the PLCCD, the arbitrators had
authority to “take such steps as they . . . deem[ed] necessary
or desirable to avoid delay and to achieve a just, speedy and
cost-effective resolution.” Id. Rule L-4. The panel plausibly
could have concluded that it would be “necessary or desir-
able” to determine whether punitive damages were appropri-
ate in the initial award and then hold a separate hearing to
determine their amount. To the extent that the application of
Rule L-4 conflicted with Rule R-41, Rule L-4 controlled. See
id., Rule R-1 (providing that, where the PLCCD apply, other
CAR rules apply only to the extent that they do not conflict
with PLCCD).

   [15] Undoubtedly, reasonable judges and arbitrators could
interpret the AAA rules differently from the way that the
majority did in this case. We stress that “[w]hether we would
find [the majority’s] arguments convincing were it up to us to
interpret the contract is beside the point.” Berklee Coll. of
Music v. Berklee Chapter of the Mass. Fed’n of Teachers,
Local 4412, 858 F.2d 31, 34 (1st Cir. 1988) (Breyer, J).
Because nothing in the parties’ agreement removed the arbi-
trators’ authority to resolve procedural matters, we need only
find that the panel’s interpretation of the agreement was plausi-
ble.8 Having concluded that this standard was met, we hold
  8
    Our case is to be distinguished from Stolt-Nielsen, in which the arbitra-
tion panel developed its own common-law rule to be applied to the parties,
which had not agreed to it. See Stolt-Nielsen, 130 S. Ct. at 1768-69. Here,
the panel reached its procedural decisions by plausibly interpreting the
CAR, which Lagstein’s policy expressly incorporated.
                     LAGSTEIN v. LLOYD’S LONDON                      8505
that the district court erred in vacating the punitive damages
award on the ground that the panel exceeded its authority.

                                    C

   In addition to the grounds relied upon by the district court
for vacating the awards, Lloyd’s argues that vacatur was war-
ranted by arbitrator Whitehead’s failure to disclose his and
arbitrator Springer’s roles in an ethics controversy that
occurred in the early 1990s. Lloyd’s argues that vacatur was
required under § 10(a)(2) of the FAA, which applies “where
there was evident partiality or corruption in the arbitrators, or
either of them.” 9 U.S.C. § 10(a)(2). We agree with the dis-
trict court, however, that Lloyd’s proved neither “an inappro-
priate relationship or contact between the judges, nor a failure
to disclose information that would warrant vacating the award.”9

   [16] To show “evident partiality” in an arbitrator, Lloyd’s
either must establish specific facts indicating actual bias
toward or against a party or show that Whitehead failed to
disclose to the parties information that creates “[a] reasonable
impression of bias.” Woods v. Saturn Distribution Corp., 78
F.3d 424, 427 (9th Cir. 1996); see also Commonwealth Coat-
ings Corp. v. Cont’l Cas. Co., 393 U.S. 145 (1968). The evi-
dence that Lloyd’s offers falls short of this standard.

   Under the FAA, vacatur of an arbitration award is not
required simply because an arbitrator failed to disclose a mat-
ter of some interest to a party. Instead, Whitehead was
required to disclose only facts indicating that he “might rea-
sonably be thought biased against one litigant and favorable
to another.” Commonwealth Coatings, 393 U.S. at 150
(emphasis added); see also Woods, 78 F.3d at 427 (“[V]acatur
  9
    We review de novo the district court’s standard for impartiality. Woods
v. Saturn Distribution Corp., 78 F.3d 424, 427 (9th Cir. 1996). “Factual
findings underlying the court’s decision will be reversed only for clear
error.” Id.
8506                 LAGSTEIN v. LLOYD’S LONDON
is appropriate where the arbitrator’s failure to disclose infor-
mation gives the impression of bias in favor of one party.”
(emphasis added)).

   [17] Lloyd’s has failed to show any connection between
the parties to this arbitration and any of arbitrator White-
head’s past difficulties that would give rise to a reasonable
impression of partiality toward Lagstein.10 Whitehead’s
alleged misconduct occurred more than a decade before this
arbitration and concerned neither of the parties to this case.
See PaineWebber Group, Inc. v. Zinsmeyer Trusts P’ship, 187
F.3d 988, 995 (8th Cir. 1999) (characterizing a claim of evi-
dent partiality as “border[ing] on the frivolous” where there
was no alleged relationship between the parties and the arbi-
trators, and “there [was] no evidence the arbitrators had any
financial or personal interest in the outcome of the arbitra-
tion”). The district court was not required to accept Lloyd’s
argument that an allegation of past abuse of power necessarily
demonstrated likely partiality against Lloyd’s in the present
case. Indeed, Whitehead disclosed that he had mediated “mul-
tiple cases for Lloyd’s of London” in his mediation practice.

   All three arbitrators in this case discharged their disclosure
obligations by providing information concerning their rela-
tionships with the parties, their attorneys, and those attorneys’
law firms. If Lloyd’s desired additional information about the
arbitrators’ backgrounds, it was free to seek that information
by its own efforts.11 We decline to create a rule that encour-
ages losing parties to challenge arbitration awards on the basis
   10
      Considering the absence of any connection between this arbitration
and the previous controversy, we also conclude that the district court did
not clearly err in rejecting Lloyd’s argument that, in light of arbitrator
Springer’s defense of arbitrator Whitehead in the prior controversy,
Springer would be unable to remain sufficiently independent in this case
to avoid evident corruption or partiality.
   11
      We note that details of the Whitehead controversy were publicly avail-
able and easily could have been discovered if Lloyd’s had conducted even
minimal due diligence on the arbitrators’ backgrounds.
                  LAGSTEIN v. LLOYD’S LONDON                 8507
of pre-existing, publicly available background information on
the arbitrators that has nothing to do with the parties to the
arbitration. The district court did not clearly err in concluding
that Lloyd’s failed to show evident partiality.

   For similar reasons, there is no merit to Lloyd’s claim that
the award must be vacated on the ground of “evident . . . cor-
ruption.” 9 U.S.C. § 10(a)(2). We have not previously been
called upon to define “evident corruption,” but Lloyd’s evi-
dence fails to satisfy any reasonable definition of that term. Its
evidence of alleged corruption at some time in the past does
not relate to this case or the parties to it, nor does it raise a
“reasonable impression of corruption” in the present case.

   [18] Therefore, because Lloyd’s failed to demonstrate
either evident partiality or evident corruption in the arbitrators
within the meaning of § 10(a)(2), the district court correctly
rejected those possible grounds of vacatur.

                        CONCLUSION

   [19] We previously have observed that, “[p]ossibly
because the nature of our review in these cases is so unusual,
there may be a tendency for judges, often with the most unob-
jectionable intentions, to exceed the permissible scope of
review and to reform awards in [the judge’s] own image of
the equities or the law.” Stead Motors of Walnut Creek v.
Auto. Machinists Lodge No. 1173, 886 F.2d 1200, 1204 (9th
Cir. 1989) (en banc). Under the FAA, however, the reform of
arbitration awards, including the severe remedy of vacatur, is
limited by those grounds established by Congress in the Act.
Because we conclude that vacatur in this case was not war-
ranted by any of the grounds permitted by § 10 of the FAA,
we reverse the district court’s vacatur of the arbitration
awards and remand for confirmation of all of the awards.

  REVERSED and REMANDED with instructions.