USCA1 Opinion

United States Court of Appeals

For the First Circuit
____________________

Nos. 96-2246
97-1570

MCI TELECOMMUNICATIONS CORPORATION,

Plaintiff, Appellee,

v.

MATRIX COMMUNICATIONS CORPORATION,

Defendant, Appellant.
____________________

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Edward F. Harrington, U.S. District Judge]

___________________
[Hon. Patti B. Saris, U.S. District Judge]
___________________

____________________

Before

Boudin, Circuit Judge,

_____________
Coffin, Senior Circuit Judge,
____________________
and Dowd,* Senior District Judge.
_____________________

____________________

Richard W. Miller with whom

__________________
Gately, John D. Hanify, and
______ _______________

Stephen R. Miller, Andrew C.

__________________ __________

Joseph A. Cortellini were

____________________

on brief

for appellant.

Paul M. Smith with whom Ross B. Bricker, Terri L. Mascherin,

_____________
_______________ __________________

Mark A. Berthiaume, Louis J. Scerra, Jr., and David J. Brecher

___________________ _____________________
_________________
were on brief for appellee.

____________________

January 27, 1998

___________________

____________________

*Of the Northern District of Ohio, sitting by designation.

COFFIN, Senior Circuit Judge.

____________________

The parties in this case have

been engaged in a heated battle over the proper setting for their

underlying legal dispute.

insists that the

while appellant

Appellee MCI Telecommunications Corp.

conflict must be resolved

Matrix

Communications Corp.

arbitration clause in the parties' contract

through arbitration,

asserts

that

the

does not apply here,

and that it is entitled to a judicial forum for its claims.

The

district court sided with MCI -- thus ordering arbitration -- and

then

rejected Matrix's motion under Fed. R. Civ. P. 60(b) to set

aside that

appeals

decision.

ruling based

both the

After

on newly

judgment

on

discovered evidence.

the merits

and

the Rule

Matrix

60(b)

close review of the tangled procedural backdrop

and the substantive issues, we affirm.

I. Factual and Procedural Background

_________________________________

Little

dispute,

needs to

be said

about

the companies'

which arises from an October 1995 agreement (the "Agent

Agreement") in which

services.

The

commissions if

MCI gave Matrix limited agency

Agent

Agreement

Matrix generated

revenue for MCI.

provided

a specified

for

to sell MCI

substantial

minimum amount

of

Matrix alleged, inter alia, that MCI improperly

_____ ____

terminated the Agent

Agreement eight months later, in June 1996,

because Matrix was so successful in obtaining

owed it

underlying

more than

one billion dollars

corporation did not wish to

pay.

was proper

breached

because

Matrix

Agreement in various ways.

-2-

customers that MCI

in commissions

that the

MCI countered that termination

the

terms

of

the

Agent

Following

MCI's

Massachusetts state

court.

It

then

termination,

court.

moved

MCI

to

clause

in

parties'

agreement.

removed the

stay

arbitration, on the ground that

Matrix

the

filed

suit

action to

litigation

the language of the

the

Agent

Agreement

unambiguously

intent

to

arbitrate all

disputes

federal

and

compel

arbitration

evidenced

arising

in

the

from that

The provision, contained in paragraph 22 of the Agent

Agreement, states:

Any

dispute

relating

submitted for
the

rules

to

this

Agreement

binding arbitration

contained

judgement[sic]

on

in

in accordance

MCI Tariff

any award

shall

FCC

entered

No.

be
with

therein may

and
be

entered in any court of competent jurisdiction.

Matrix

opposed the

motion to

stay, arguing

Tariff FCC No. 1 ("the Tariff") expressly

customer billing

that,

because MCI

limited arbitration to

disputes of $10,000 or more, and Matrix neither

was a customer nor had a billing

dispute of any amount with MCI,

the arbitration clause did not apply to its dispute.1

____________________

1 A tariff is a detailed compilation of charges, regulations

and

other

relevant

information

telecommunications services

to the

about

document whose "Section

Regulations,"

spans

34

rules.

No. 7

is labeled

Rule

pages

and

provision

public that common

like MCI are required to file with the FCC.

is a voluminous

the

of

carriers

MCI Tariff FCC No. 1

B," labeled "Rules

contains

and

nineteen separate

"Payment Arrangements"

and has

twenty-one subsections.

One

of those

subsections, B-7.13,

is

entitled "Arbitration of disputes," and states, in part:

All

disputes

concerning

invoices

issued after

totaling

$10,000 and

or

affecting

February 28,
above

may be

payment

of

1994 for

charges

resolved

through

binding arbitration.

Subsection B-7.13

is further

detail the procedures

.1327,
written

for example,

divided into

to be used in such
requires

answer within 17

numerous parts
arbitrations.

the Responding

days after the

-3-

Party

that

Section

to file

arbitration commences;

Judge

Harrington of the

the District of

United States District

Massachusetts held a hearing on

compel arbitration

on September

signed

granting

an

order

arbitration

27, 1996.

the

his view, the Tariff

the agreement

motion,

concluding

day, he

that

an intention

the

by the

relating to the Agreement.

was referenced not to

to arbitrate but

MCI's motion to

Later that

clause unambiguously reflected

parties to arbitrate all disputes

___

Court for

define the scope

to provide the

In

of

procedural rules

under which any arbitration would take place.

The same day,

under

Fed. R.

Harrington,

decided to

receive all

Matrix filed a notice

Civ.

P. 41(a)(1)(i).2

Matrix's

ask the

of voluntary dismissal

counsel

explained

arbitrator to rule

the relief

In

a letter

that

Judge

the company

on whether

it sought through

to

had

Matrix could

arbitration.

If so,

Matrix would consent to continue the

arbitration; if not, Matrix

would refile its action in federal court.

Judge Harrington dismissed the action.

day

both the

dismissal

order

compelling

were entered

on

On September 30, the

arbitration

the

docket,

and the

Matrix

grant

initiated

of

the

____________________

section

.133 directs the case

conference within nine

manager to hold an administrative

days of

the arbitration's

commencement;

under section .1341, the appointed arbitrator may be removed only

for

bias or

exchange of

"other good

cause"; section

.135 provides

for an

documents and other information within 23 days after

the arbitration

commences; and

section .1391

provides for

the

privacy of all arbitration conferences and hearings.

2 Although
filed

Judge Harrington

may have

ruled before

Matrix

for dismissal, it appears that Matrix did not learn of the

ruling until later,

and believed at the

time it filed

decision would not be made for several days.

that the

-4-

arbitration by filing a

the

claim with J.A.M.S./Endispute

arbitration administrator designated

by MCI in

("JAMS"),

its Tariff.

Matrix argued to the arbitrator, as it had to the court, that its

claims were not

arbitrable, and again relied on a reading of the

arbitration clause

that limited

its scope

to billing

disputes

exceeding $10,000.

MCI responded

two days later,

on October 2, by

filing its

own

action in

federal court

Matrix's claims.

in arbitration,

seeking to

compel arbitration

of

Although Matrix was at that point participating

MCI was concerned

that Matrix would

not follow

through if the arbitrator decided the threshold questions against

Matrix's position.

proceeding,

Judge

Without additional

Matrix, he

Because

of his

Harrington

was

hearings

entered an order

or

any

involvement in the

assigned

the

responsive

MCI

earlier

action.

pleading

on October 10 compelling

from

Matrix to

arbitrate all of its claims and awarding MCI attorney's fees.

Meanwhile, the

forward,

and, on

arbitration that

December 10, 1996,

Matrix's claims were arbitrable but

Matrix had

initiated went

the arbitrator

ruled that

that certain types of relief

sought by Matrix, including multiple damages and attorney's fees,

were unavailable

in the

such

In

remedies.

district court under

the October 10 order.

induced

it to

Agreement by

arbitration because

February

1997, Matrix

Fed. R. Civ. P. 60(b),

the Tariff

filed

barred

a motion

in

seeking relief from

Matrix contended that MCI had fraudulently

enter into

the arbitration

concealing an agreement

-5-

clause in

between JAMS and

the Agent

MCI that

provided

for

close

working

relationship

between

the

two

companies and specified various payments and services to be given

by

MCI to

JAMS.

Matrix argued

that

the MCI/JAMS

Agreement

constituted newly discovered evidence of bias on the part of JAMS

in favor of MCI.

other

materials

MCI opposed the motion, filing

in

support

of

its

position

affidavits and

that

the

JAMS

Agreement had not been concealed and did not evidence bias on the

part either of JAMS, or, more importantly, the arbitrator.

Following a hearing,

District Court Judge Saris

denied the

Rule 60(b) motion,3 concluding that Matrix had failed to show the

elements

necessary for post-judgment relief, see Hoult v. Hoult,

___ _____
_____

57 F.3d 1, 5-6 (1st Cir. 1995).

Matrix

appeals from the

See infra at 16.

___ _____

October 10, 1996

order compelling

arbitration of

its claims, and the March

27, 1997 denial of its

rule 60(b) motion.

II. Discussion
__________

Before discussing

and its subsequent

must

rejection of Matrix's

address a threshold

because Matrix

to

the district court's October

the arbitrator, who then

arbitrable,

arbitrator's

Matrix

cannot

authority

Rule 60(b) motion,

issue raised by MCI.

voluntarily submitted the

to

10 judgment

we

It claims that,

issue of arbitrability

determined that Matrix's claims are

at

this

hear the

juncture

case.

challenge

This

the

appeal, MCI

contends, is moot.

____________________

3 The case had been

reassigned to Judge Saris subsequent to

Judge Harrington's October 10, 1996 order.

-6-

We

have little

should go

forward.

the district

difficulty in

From

in

the outset, Matrix

court that it would return

arbitrator ruled that

sought

concluding

the

to the courtroom if the

Although

later agreed to

appeal

explicitly advised

Matrix could not obtain all

arbitral forum.

suggesting that Matrix

that the

MCI

the relief it

cites language

arbitrate its claims

if

the

arbitrator ruled that they were arbitrable, we are persuaded

that that

language was

unfairly drawn out

Matrix's actual position

of context

has been consistently in

and that

opposition to

resolving

its claims through arbitration unless it were possible

to obtain

full relief.

Indeed, we

think it

disingenuous, and

bordering on effrontery, for MCI to suggest otherwise.

We now turn to the issues raised by Matrix on appeal.

A. The October 10 Ruling

_____________________

At the

outset of

our analysis, it

context of the district court's

arbitration.

The motion

is worth

recalling the

decision on October 10 to compel

on which the

court ruled was filed

by

MCI on October 2.

Only three working days earlier, on September

27, the

held a hearing

court had

Matrix's action,

and had

on arbitrability

concluded that

the Agent

pursuant to

Agreement's

________

arbitration clause embraced

enforced

then

because,

dismissed

its

question,

MCI jumped

responded

on

suit.

October

all disputes.
___

virtually

Seeking

in

10

to

contemporaneously,

resolve

with

its own

by

compelling

-7-

That decision was not

the

action,

Matrix

arbitrability

and the

arbitration,

court

thereby

effectively

(though

not

technically) reinstating

its

earlier

decision.4

If

the

review of that decision

court properly

arbitration

of

straightforward

our analysis,

posed only the question whether

interpreted the

the

parties'

Agent

dispute,

and relatively easy.

two of which

Agreement to

our

task

compel

would

be

But several factors affect

complicate the inquiry.

First, the

court ruled before Matrix had answered MCI's complaint seeking to

compel arbitration, and without a hearing, although Section 4

the Federal Arbitration

Act states that "[t]he

court shall hear

the parties" before ordering arbitration to proceed.5

difficulty

arbitration

is

that

Matrix's

clause includes

appellate

arguments

challenge

that the

of

The second

to

the

district court

never considered, an

taking them

omission that typically forecloses

into account.

See United States v.

___ _____________

F.3d 1027, 1034 (1st Cir. 1997).

us from

Bongiorno, 106
_________

The two problems obviously are

____________________

4 Matrix complains
its October 10 order
a

"nullity" once

that the district court

wrongly "based"

on the September 27 order, which had become

Matrix

dismissed its

suit.

Although

Judge

Harrington's October 10 order stated that it was "[i]n accordance

with" the earlier decision, we take that as a shorthand reference

to the content of that decision -- which he chose not to repeat - rather than

as a statement of precedent

governing the October

10 ruling.

5 The relevant portion of the statute states:

The

court shall

satisfied

that

arbitration or the
in

hear

the

the

making

parties,
the

upon

for

is not

an order directing the

to arbitration

the terms of the agreement.

being

agreement

failure to comply therewith

issue, the court shall make

parties to proceed

of

and

in accordance

with

9 U.S.C.

4.

-8-

intertwined;

Matrix

logically

points

out

that

opportunity to make any arguments to the district

___

it

had

no

court because,

in its view, the court ruled prematurely.

The third

factor, somewhat

simplifying our

task, is

that

Matrix asserts that it does not challenge any procedural flaws in

the district court's ruling, specifically waiving its

complaints

about the speed of the court's judgment and its failure to hold a

hearing.

issue

It maintains

of whether

that we

should resolve

Matrix must arbitrate

since such a determination is largely

no

material facts

therefore, are

are

waived

a basis

its claims

against MCI

a question of law in which

in dispute."

as

"the underlying

Procedural

for

vacating

errors alone,

the

district

court's judgment.6

We

address

first the

straightforward

arbitration clause in the Agent Agreement

conflict.7

We

argument that

that the

billing

think it

does,

the reference to

Agent Agreement

disputes in

finding

issue: whether

applies to the present

unpersuasive Matrix's

the Tariff in that

limited arbitration

excess of

$10,000 --

the

clause meant

only to

the types

customer

of claims

specifically

arbitrable under

the Tariff.

court, we think the only sensible

incorporated

to

provide

Like the

district

reading is that the Tariff was

set

of

procedural

rules

for

____________________

In any

event, as

we

discuss infra
_____

at 13-14,

Matrix's

failure to raise issues before the district court in a motion for

reconsideration bars them on appeal.

Our review

Shipping Co. v.
____________

on this

question

is de
__

novo. See
____ ___

Keystone
________

New England Power Co., 109 F.3d 46, 50 (1st Cir.

_____________________

1997).

-9-

arbitrations arising from

the Agent Agreement.

Not

only is the

opening language of the arbitration clause in the Agent Agreement

broad

-- "any"

submitted

proposed

for

dispute relating

arbitration

by Matrix

would

--

to this

but

have the

negating the arbitration provision.

the

the

absurd

agreement

limited

"shall" be

construction

result of

entirely

Under Matrix's view, because

Agreement established an agency relationship between MCI and

Matrix, and the Tariff provided

for arbitration only of customer

________

billing disputes, no issue arising between the two parties to the

Agent Agreement could fall within the arbitration clause.

Matrix

explains this disjunction by arguing that the clause was inserted

to specify the dispute resolution procedure for customers brought

to

MCI by

Matrix.

We find

this argument

to be

implausible.

Either the MCI Tariff would directly govern the customers' claims

--

making

reference

to

the

Tariff

in

the

Agent

Agreement

unnecessary -- or the customers themselves would have to agree to

arbitration.

The Tariff language, moreover, reinforces our reading of the

Agent Agreement's arbitration provision.

portion

titled "Arbitration of disputes," see

___

Tariff states

arbitration

that arbitrations

rules and procedures

through B-7.139

of text.

In subsection 7.13, the

"shall be

note 1 supra, the

_____

conducted under

set forth in

the

Sections B-7.131

(Rules)," which account for more than four pages

Thus, while all of Section B of the Tariff carries

the

heading

"Rules and Regulations,"

governs

arbitration,

makes

this portion of

another, limited

Rule 7, which

use

of

the term

-10-

"Rules"

to

arbitration.

the

denote

It

the

specific

provisions

is much more reasonable to construe

relating

to

the use of

word "rules" in the

Agent Agreement's arbitration clause to

refer to the limited set

of rules concerning arbitration than to

all nineteen rules

contained in

Section B

of the

Tariff on

broad range of subjects.

In addition, when viewed against the backdrop of the federal

policy favoring arbitration, see, e.g., Volt Info. Sciences, Inc.

___ ____ _________________________

v.

Board of Trustees, 489 U.S. 468, 475-76 (1989); Moses H. Cone

_________________
_____________

Memorial Hosp.
_______________

(1983),8

and

v. Mercury Constr. Corp.,

_______________________

the

generous

commercial arbitration

Automated Bus. Sys.,

____________________

agreements,

882

provision here

cannot bear

assign to it.

We thus

arbitration

reading

F.2d

given

to

see, e.g.,
___ ____

6, 9-11

(1st

the interpretation

agree with the

provision contained in

dispute relating to the Agent

460 U.S.

1,

broadly

24-25

worded

Raytheon Co.
____________

v.

Cir. 1989),

the

Matrix seeks

to

district court that

paragraph 22 applies

the

to any

Agreement, and that the Tariff was

incorporated by reference

merely "to guide

an arbitrator as

to

how he should conduct his hearing."

Having concluded

that

between these parties,

paragraph

22

requires

we must confront Matrix's

arbitration

assertion that

it was duped into accepting the provision by representations from

____________________

8 The Supreme

Court in Moses H. Cone Memorial Hosp. stated

_____________________________

that "any doubts concerning the scope of arbitrable issues should

be resolved in favor of
is

the

construction of

arbitration, whether the problem at hand

the

contract

language

itself

or

an

allegation of waiver, delay, or a like defense to arbitrability."

460 U.S. at 24-25.

-11-

MCI officials

that the clause

applied only to

involving customers brought to MCI

by Matrix.

billing disputes

Fraud in inducing

acceptance of the arbitration

clause unquestionably would negate

the

that issue.

contractual agreement on

See
___

generally Prima
_________ _____

Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04
___________
_________________________

n.12

(1967); see
___

Hutton & Co.,

____________

also Three Valleys Mun. Water Dist.

____ ________________________________

925 F.2d

1136, 1139-40 (9th

Atlantic Marine, Inc., 605 F.2d

_____________________

&

v. E.F.
____

Cir. 1991); Wick

____

v.

166, 168 (5th Cir. 1979)("[i]f .

. . the arbitration clause was induced

by fraud, there can be no

arbitration").

As

fraud

noted above, however, Matrix never

before the district court,9

raised this issue of

a default that implicates our

bedrock principle that new arguments may not be made on appeal.10

See
___

Bongiorno, 106
_________

F.3d

at

1034; Lawton
______

Assurance Co. of Am., 101 F.3d

_____________________

v.

218, 222 (1st

State Mut. Life

________________

Cir. 1996).

But

applying this rule to these circumstances presents something of a

puzzle.

to

Matrix maintains that it cannot be penalized for failing

assert all
___

opportunity

theories because

to offer

any, having

the district

court gave

ruled without

a hearing

it no

and

____________________

9 In fact,

in its Memorandum

in Opposition to

Defendants'

Motion

to Stay

Action

and Compel

Arbitration

(in the

first,

Matrix-filed lawsuit),

Matrix stated:

"Matrix does not

contend

that the

not agreed to

arbitrate pursuant

to the

Tariff

parties have
Rules,

and

therefore

raises

no

questions

about

the

existence or validity of the arbitration agreement generally."

10

In reviewing the district court's substantive ruling, we

may not consider materials added to the record in connection with

the Rule 60(b) motion.
v.

See J. Geils Band Employee Benefit Plan

___ ____________________________________

Smith Barney Shearson, Inc.,

____________________________

1996).

-12-

76 F.3d

1245, 1250

(1st Cir.

before

Matrix answered

remand, Matrix

improper and

MCI's

complaint.

waives any claim

contends that

Seeking

that the court's

the questions we

to avoid

procedure was

face are

legal in

nature and thus suitable for resolution by the appellate court.

Although we do not wish to condone precipitous action by the

district

court (and the procedural irregularities), we have some

difficulty with Matrix's

position.

First,

while interpretation

of the arbitration provision presents a legal question that is as

suitable

for our review as

for the trial

court's, the issue of

fraud is decidedly fact-based and thus inappropriately brought to

us

first.

factfinder.

We

may

not

In addition,

assume

the

Matrix's

trial

court's

assertion that

role

it

of

had no

opportunity to raise the issue of fraud before the district court

is at

least somewhat disingenuous.

Only days before

MCI filed

its

action,

the

district

court

enforceability of the Agent

had held

could

assume

that

on

the

Agreement's arbitration provision --

with no suggestion of fraudulent inducement.

the technical errors,

hearing

Putting to one side

which Matrix waives, the

Matrix's

position

with

court reasonably

respect

to

the

arbitration clause would be the same a week later.

It is theoretically

changed

possible, of course, for Matrix to have

its strategy during

court's quick

action thus

direct opportunity to air

case, however, we

to

its

new

that interim, and

to have deprived

Matrix of

the claim of fraud.

would expect Matrix to have

position

through

-13-

motion

for the district

for

If

its most

that were the

alerted the court

reconsideration.

Particularly when a new theory turns on questions of fact, we are

disinclined to

stray from our longstanding

If

not have

Matrix did

the information

raise-or-waive rule.

within

the post-trial

motion period, its only recourse was through its 60(b) motion.

In short, neglecting to seek reconsideration

meant omission

before the trial court of the fraud theory upon which Matrix

wishes to rely.

now

Although the circumstances here are peculiar, we

conclude

the

that Matrix's "failure

district court

to move for

order should not

State Farm Mut. Auto. Ins. Co., 989

_______________________________

Cf. Berkovitz v.
___ _________

1996)

reconsideration of

be excused,"

Vanhaaren v.
_________

F.2d 1, 5 (1st

Cir. 1993).

Home Box Office, Inc., 89 F.3d 24, 31 (1st Cir.

_____________________

("[T]his court

from time

to time

has refused

appellants to take advantage of supposed oversights

to permit

that had not

been called to the district court's attention by way of a timeous

motion to reconsider."); United States v.

_____________

570

n.9

(1st

proceedings or

about use

IRS,
___

Cir.

1996)

(failure

for reconsideration

to

1352 (1st

move

to

undercuts claim

of police report in suppression

865 F.2d 1351,

Schaefer, 87 F.3d 562,

________

Cir. 1989)

reopen

the

of surprise

hearing); Beaulieu v.
________

("[I]t is

a party's

first obligation to

thought

available in

seek any relief that might

the district

appeal.").

We therefore conclude

claim that

the arbitration clause

court before

fairly have been

seeking

it on

that Matrix has forfeited

should be invalidated

its

on the

basis of MCI's alleged statements that the arbitration clause did

-14-

not apply to the Agent

Agreement.11

Consequently, we affirm the

district court's October 10 judgment compelling arbitration.12

B. The Rule 60(b) Motion

_____________________

Matrix's

60(b)

rests

effort to undo

on

the

the October

agreement

10 decision

establishing

administrator of MCI's arbitration program.

JAMS

via Rule

as

the

Under Rule 60(b)(2),

____________________

11

We recognize that

was motivated by a desire

this court.

if

procedural errors

to have its claims heard promptly,

in

Omission of the hearing required by Section 4 of the

Arbitration Act also

court

Matrix's waiver of

brought

could have been

to

its

addressed by the

attention

on

district

motion

for

reconsideration, and, even if the issue were not waived, we would

be inclined to view it as defaulted.

12
Agent
Tariff

Equally unavailing is
Agreement's

arbitration

arbitration rules

Matrix's new contention

clause

is

that the

invalid because

foreclose remedies,

such as

the

multiple

damages, to which it is entitled.

waiver, this

Putting aside the question of

argument must be brought to

the arbitrator because

it does not go to the arbitrability of the claims but only to the

nature

of available

relief.

See
___

Peacock, 110 F.3d 222, 230-31

_______
the

Great W. Mortgage Corp.

________________________

v.

(3d Cir. 1997) ("Any argument that

provisions of the Arbitration Agreement

involve a waiver of

substantive rights afforded by the state statute may be presented

in the arbitral
decide that
than

It would

a claim should

a court,

question

forum.

of

and then,
forum,

be anomalous for

be referred to an
by

deciding issues

foreclose

the

them."); PaineWebber Inc. v. Elahi,

_________________
_____
1996)

("[T]he signing

of

a valid

merits of the subject matter in

parties

across

presume

that

dispute

or

the

the

relating

procedures

unrelated to
from

87 F.3d 589, 599

the

deciding

(1st Cir.

to arbitrate

the

dispute presumptively pushes the

`arbitrability'

other issues

to

arbitrator rather

arbitrator

agreement

a court

of

threshold;
to

the

arbitration

we

will

substance of
are

for

then

the

the

arbitrator.")
Matrix's reliance on
F.3d

1244

(9th Cir.

Graham Oil Co. v. ARCO Prods. Co., 43

______________
________________

1994),

is misplaced

because,

unlike the

plaintiffs there, Matrix's claims are not brought under a statute

specifically

designed

to

applicable precedent in our

contract to limit

protect

bargaining

circuit is instead that

remedies in arbitration.

Automated Bus. Sys.,

rights.

882 F.2d 6,

See
___

12 (1st Cir.

The

parties may

Raytheon Co. v.
____________
1989); see

also

___________________
Mastrobuono
___________
(1995)

___

____

v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 60-62

_____________________________

(finding that arbitration

agreement did not

include "an

unequivocal exclusion of punitive damages claims").

-15-

the district court has discretion to vacate a judgment based upon

"newly discovered evidence which by due diligence could

been

discovered

59(b)."

in time

to

move for

See Hoult, 57 F.3d at 5-6.13

___ _____

new trial

not have

under Rule

To prevail, a moving party

must

demonstrate

material

and

that

"the missing

controlling

change[d] the outcome.'"

nature

evidence

as

[would]

was

`of

such a

probably

[have]

Id. at 6 (citations omitted).

___

Matrix argues that the

MCI/JAMS Agreement easily

satisfies

both the "newly discovered" and "material and controlling" impact

prongs

of this

ability

standard.

First,

it asserts

that

it had

no

to discovered the concealed agreement, which it contends

____________________

13 Although Matrix relied on both subsections (2) and (3) of

Rule

60(b) in the

refer to
based

district court, its

briefs on

appeal do not

subsection (3), which provides for relief from judgment

upon fraud, misrepresentation,

Anderson
________

v. Cryovac, Inc., 862

______________

(setting

forth

retrial

mandated

"substantially"

the

standard
only

when

interfered

or other misconduct.

F.2d 910,
applicable
the

with

924 (1st
to

aggrieved

Cir. 1988)

60(b)(3)

challenged

See
___

claims:

misconduct

party's ability

has

to

fully and

fairly prepare

reply brief
assertion

in its

brief

that

argue generally,

should be

vacated

misrepresentations by
waived a 60(b)(3)
abuse of

at trial).

Matrix's

contained no such argument even in the face of MCI's

Matrix does
orders

for and proceed

MCI.

the

60(b)(3) claim

however, that

because

of

waived.

the district

fraudulent

To the extent

was

court

conduct

that Matrix

and

has not

claim by failing to brief it fully, we find no

discretion in

the district court's

rejection of

that

claim, as we agree with its conclusion that lack of access to the

MCI/JAMS Agreement was

inconsequential in the proceeding

Judge

Matrix posits, if

Harrington.

had been
had

to

As

in

addition

to

"whether a reasonable person would

provision

the MCI/JAMS Agreement

brought to Judge Harrington's attention,

consider,

that

called for

certain disputes,

in view

discussion of Matrix's

JAMS

before

the

he would have

contractual

language,

have agreed to an arbitration

to handle

of the MCI/JAMS

60(b)(2) claim

the

arbitration of

Agreement."

demonstrates, see
___

As our

infra,
_____

access to the

MCI/JAMS Agreement would not have added measurably

to

effort

Matrix's

to

invalidate

arbitration provision.

-16-

the

Agent

Agreement's

even JAMS' general

commenced.14

counsel was unaware of

Second,

Matrix

emphasizes

until this litigation

that

the

MCI/JAMS

Agreement reveals an improper relationship involving "substantial

financial and reporting ties" between MCI and JAMS, and it argues

that the Agreement's terms are so obviously suggestive of bias in

favor of MCI that its mere existence is enough to invalidate

the

contested arbitration provision.

The district court, after a hearing, found Matrix's argument

lacking in

several respects.

We may

reject its

judgment only

upon finding an abuse of discretion, see Ahmed v. Rosenblatt, 118

___ _____

F.3d

886, 891

(1st Cir.

1997); Hoult, 57
_____

__________

F.3d at

3.

We are

unable to do so.

Judge

Saris initially concluded

show that, with

due diligence, it could not

evidence earlier.

argument

that

that Matrix had

have discovered the

She pointed out that Matrix

corporate

sponsored

commonplace, and that the MCI

arbitration administrator.

failed to

conceded at oral

arbitration

programs

are

Tariff named JAMS as the company's

Had Matrix been concerned

about the

details of the arrangement, she observed, it could have sought to

discover them.

____________________

14

Although

Matrix

asserts

that

JAMS'

general

counsel

"professes he
litigation
stated that

was unaware of

commenced,"

the

he was unfamiliar

the MCI/JAMS Agreement

attorney, Michael

until this

Young,

with the terms of

_____

actually

the agreement,

not that he was unaware of any contractual relationship.

Matrix's attorney states that he discovered the agreement in

November 1996 as

a result of an offhand remark by an attorney in

an unrelated case.

-17-

Matrix

foreclosed

argues on appeal,

from

conducting

however, that it

discovery

by

the

was essentially

sequence

of

proceedings in

lawsuit,

district

MCI secured

obligation

R.

the

Civ.

court.

an extension

In

of time

original

to comply

P. 26,

which

The

court

had

the

then

effect of

with its

that

MCI

therefore

holding

off

other

motion

to

compel

period had expired.

Matrix

granted

arbitration before the extended time

managed

the

to

avoid

producing

documents,

including the undisclosed MCI/JAMS Agreement.

subsequent

MCI

presented

Matrix

to make the voluntary disclosures required under Fed.

discovery.

argues

the

lawsuit,

because

the

no

opportunity

court's ruling

for

In the

discovery

preceded

any
___

any

was

action by

Matrix.

We need

not resolve

finding that Matrix did

whether the

district

court erred

not exercise due diligence

in

with respect

to the MCI/JAMS relationship because we conclude, infra, that the

_____

Agreement between them was

not likely to

Judge Harrington's decision.

discussion, however, we

have had an effect

on

Before moving on to the materiality

wish to note that MCI's

the Agreement available when it

failure to make

first was requested from JAMS in

November 1996 is incomprehensible to us.15

Its refusal to do so

____________________

15
Agreement

Matrix
be

on November
provided

subpoena

as

requested

before

arbitrator for November 15.

JAMS case manager

in

the

the

arbitrator.

scheduled

Matrix

to request

Tariff

conference was held on November

and

a copy

In a reply sent on November

directed Matrix

provided

meeting

that

of

the

with

the

15, the

the document

Arbitration

Rules.

via

22 with counsel for both parties

again

requested

a copy

of

the

Agreement, but MCI refused to turn it over unless Matrix signed a

strict confidentiality agreement.

-18-

Matrix would not

sign such an

undoubtedly

and

fueled the already bitter nature of this litigation,

intensified the

Moreover, while the

wrangling

over

Rule

unquestionably

contents.

provisions of the MCI/JAMS agreement are not

sufficiently troublesome to warrant the

which

the Agreement's

60(b)(2)

is

reserved,

extraordinary relief for

they

do

include

matters

of interest and concern to parties contracting to

arbitrate with MCI.

MCI's nondisclosure.

Our judgment should not be taken to condone

Even if we

in

finding a

motion flunks

were to conclude that the

lack

of diligence,

her

the materiality test"

barrier to relief.

district judge erred

judgment that

would stand

After noting that

"Matrix's

as a

separate

the burden is on the party

presenting the new evidence to demonstrate that it would probably

have changed the outcome, and that Matrix was not challenging the

impartiality

of the

arbitrator selected

considered the provisions

claimed were

pivotal.

hesitate in finding

and

She found only

Agreement at

one that

that the Agreement was

conclusions

JAMS, Judge

of the MCI/JAMS Agreement

That provision precluded

fact

by

Section XIIE).

law.

See
___

Judge

App.

that Matrix

caused her

to

entirely immaterial.

the arbitrator from making

of

Saris

at

findings of

1190

(MCI/JAMS

Saris ultimately

concluded

that the provision had no significant effect, and we agree.

____________________

agreement.

On December 10,

the arbitrator entered an order that

all documents exchanged in the arbitration would be confidential,

but Matrix

did not receive

notice of the

order until the

conference with the arbitrator, on January 8, 1997.

next

The MCI/JAMS

Agreement was given to Matrix at that conference.

-19-

MCI

is

an

institutional

litigant

and

probably

has

no

interest in

having an arbitrator

rulings that might

spell out

be used against

customers.

But

would have

regarded such a

findings and

it in future cases

legal

with its

there is no reason whatever to think that Matrix

position as material.

Its contract

does not involve ordinary customer disputes,

and Matrix is fully

capable

whether

of litigating

the

matters

afresh

before

an

arbitrator or in court.

Indeed,

cared

Matrix' only

about the

provision

arbitrator findings and

explanation as to

involves

why it

terse

might have

suggestion

conclusions might help Matrix

that

establish

willfulness, a requirement that Matrix says is necessary to avoid

a limitation on liability otherwise

imposed by the Tariff.

That

limitation provision is not part of the Tariff arbitration rules,

however, and is

therefore inapplicable.16

MCI argued that

the

liability

delays

and

relations

case,

limitation is

installation

with its

and Matrix is

brief.

clearly directed

And,

as it

and

like

customers and

under

matters

has nothing

visibly silent on

the Tariff

involving

to do

this issue

happens, the arbitrator

to

MCI's

with this

in its reply

in this

case does

propose to make findings and conclusions.

____________________

16

We note

that, like

Tariff, the MCI/JAMS

the arbitration of
parties seem to

the

arbitration rules

in the

Agreement explicitly states that

it covers

customer payment disputes over $10,000.

______________________________________

assume that the Agreement also

arbitrations administered

by JAMS for

presuming its relevance here.

-20-

MCI

The

applies to other

MCI, and we

likewise are

An

provision

additional

was

factor

reinforces the

immaterial.

"It

has

conclusion

long

that the

been settled

that

arbitrators are not required to make formal `findings of fact' to

accompany the awards they issue.

obligation .

Raytheon Co.,
_____________

. . to

Indeed,

give their reasons

882 F.2d

at

for an award

(citation

Prudential-Bache Sec., Inc. v. Tanner,

___________________________
______

`[a]rbitrators have no

omitted).

at all.'"

See
___

also
____

72 F.3d 234, 240 n.9 (1st

Cir.

1995) ("It

is well

established that

required to either make formal

for the awards they issue.")

legal

rulings or

reversal.

not

findings of fact or state reasons

Moreover, errors in an arbitrator's

factual findings

See, e.g.,
___ ____

arbitrators are

do not

provide a

Prudential-Bache, 72 F.3d
________________

basis for

at 239

& n.6;

Eljer Mfg., Inc. v. Kowin Dev. Corp., 14 F.3d 1250, 1253-54 (7th
________________
_________________

Cir. 1994); Advest, Inc. v. McCarthy,

_____________
________

1990).

that

We cannot see

was

not

sufficiently

914 F.2d 6,

how prohibiting a feature

guaranteed

to

material to have

begin

with

8 (1st

of arbitration

could

negated a party's

Cir.

be

deemed

willingness to

arbitrate.

Matrix also highlights various payments and "perks" that the

MCI/JAMS

Agreement requires

to

be furnished

by

MCI to

JAMS,

including provision of "[f]ree MCI 800 numbers," a "free MCI Mail

Account,"

and

"[t]wo

free

services, however, are for use

is

required

to

provide under

dedicated

phone

lines."

These

in connection with the tasks JAMS

the

contract

(such as

24-hour

electronic docketing and toll-free response to inquiries from MCI

customers about arbitration), and we

-21-

see nothing sinister in the

communications company contracting to provide the "tools" for the

work it

those

seeks to obtain

tools

are

the

from its contractor,

its stock-in-trade.

specified

in

MCI/JAMS

provided,

plus a $40,000

design, computer services

particularly when

Likewise,

Agreement are

start-up fee "to

for

the payments

services

to be

cover administration

and technical support".

See App.
___

at

1192-95.

Matrix knew from the outset, or should have known, that JAMS

had a substantial

role

as

relationship with MCI simply by

administrator

of MCI's

arbitration

should have known as well that the two parties

out

their

working

relationship

virtually inconceivable that

in

some

program.

Matrix

must have spelled

form;

there would be no

virtue of its

we

think

it

written contract

between them.

Moreover, many of the terms that Matrix

find shocking in

public

request

arbitration

the MCI/JAMS Agreement

for

bids

program,

for

meaning

were included in

contract

that

relationship with its arbitration

claims to

those

to

MCI's

administer

aspects

of

its

MCI's

administrator effectively were

public knowledge when Matrix entered the Agent Agreement.17

With

table,

this much

we are

reasonably

unpersuaded that

presumed to

be already

the district

court

on the

would have

____________________

17

For example,

the MCI/JAMS

Agreement

requires JAMS

to

provide weekly reports on the status of current arbitrations, 24hour electronic docketing containing any change
cases, deadlines
affect
system,

the parties must

what the parties

and an 800 number

from MCI customers.

bid request.

must do, a

meet and

in the status of

any decisions

that

centralized case scheduling

to handle inquiries about arbitration

All of these services were contained in the

See App. at 1828-1830.

___

-22-

deemed

the additional

Agreement material

arbitration.

in

the

cases,18

information

to Matrix's

contained

decision to

in

the

MCI/JAMS

participate in

the

None of the contacts between MCI and JAMS specified

Agreement

involve

the

arbitrators

who

are

deciding

and Matrix's suggestion that any arbitrator working for

JAMS would have

an inherent bias toward MCI,

as JAMS' customer,

is

contradicted by Matrix's

doubt the impartiality of the

We consequently

explicit assurance that

it did not

arbitrator assigned to its case.19

hold that the

district court did not

abuse its

discretion in denying Matrix's Rule 60(b) motion.

In sum, Judge Harrington, as

committed no

reversible error

the appeal is presented to us,

in issuing

the October 10

granting MCI's motion to compel arbitration, and

order

Judge Saris did

____________________

18 In fact,
will

be

the MCI/JAMS Agreement states

selected based

on,

among other

that arbitrators

factors,

"absence of

conflicts of interest with MCI," and "demonstrated neutrality and

impartiality in professional practice".

See Section XII(A).

___

Agreement also provides:

ENDISPUTE

will ensure that

arbitrators serving on the

MCI panel have been screened for potential conflicts of

The

interest

with MCI

When appointed to

prior to

inclusion

on the

panel.

a particular proceeding, arbitrators

will

be required to disclose any conflicts of interest

with

MCI which may

since

have developed during

the arbitrator's

addition,

arbitrators

appointment to

inclusion on
will

be

the

screened

a particular arbitration

conflicts with the

the interim
panel.

In

prior

to

for potential

MCI customer who is a

party to the

case.

Id. at (C).
___

19

The

arbitrator

is the

Honorable

Robert

L. Steadman,

former chief justice of the Massachusetts Superior Court.

-23-

not abuse her discretion in

rejecting a new trial under

Fed. R.

Civ. P. 60(b).

Their judgments accordingly are affirmed.

__________________________________________

bear its own costs.

___________________

Each party to
______________

-24-