                  United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 17-2447
                         ___________________________

                               DFM Investments, LLC

                         lllllllllllllllllllllPlaintiff - Appellant

                                            v.

                            Brandspring Solutions, LLC

                        lllllllllllllllllllllDefendant - Appellee
                                       ____________

                     Appeal from United States District Court
                    for the District of Minnesota - Minneapolis
                                   ____________

                              Submitted: June 13, 2018
                                Filed: July 25, 2018
                                   [Unpublished]
                                   ____________

Before GRUENDER, ERICKSON, and GRASZ, Circuit Judges.
                         ____________

PER CURIAM.

       DFM Investments challenges an arbitration decision in favor of Brandspring
Solutions. In 2011, Brandspring purchased DFM. The Asset Purchase Agreement
(“APA”) provided for possible “earn-out” payments in the event the “Total Gross
Margin” increased above a certain threshold in the two one-year periods after the sale.
In the first year, Brandspring released the earn-out payment after concluding that
sales met the threshold. In the second year, Brandspring declined to release the earn-
out payment after concluding that the threshold was not met.

       DFM disputed this conclusion and claimed that Brandspring was
undercharging certain Brandspring-affiliated companies to reduce the gross margin.
According to DFM, this alleged underbilling violated the APA’s requirement that the
billing rates be calculated without deviation from “historical payment practices.”
DFM initiated the arbitration processes described in the APA and submitted the
dispute to the “Independent Accounting Firm” Wipfli LLP. The arbitrator was Dan
Szidon (“Szidon” or “the arbitrator”), a partner and certified public accountant at
Wipfli.

        After reviewing some material related to the dispute, Szidon told both parties
that he doubted that DFM’s claim had merit and that “further detailed examination
of records on my part would not likely result in a finding that any additional amounts
were owed by Brandspring.” Despite this assessment, Szidon agreed to conduct
further review and hear additional arguments. Two years later, after receiving more
material and hearing additional arguments by DFM, he reaffirmed his initial
conclusion. He wrote that he had “reservations” regarding whether DFM could
establish underbilling as an “accounting matter,” because “billing rates are inherently
judgmental and vary greatly depending upon numerous circumstances.” But “even
if” billing rates could be “objectively determined” and were “within the scope of the
dispute provision of the APA,” he added, “substantial revisions to the rates used
would be needed to even begin to impact the amounts owed.” Based on Szidon’s
professional judgment and the work already performed, he concluded that under no
circumstances would Brandspring owe additional payments to DFM and that DFM’s
claim therefore lacked merit. He ended his decision: “[O]ur role in the resolution of
the Dispute is concluded. We do not believe there should be any revision to the
amounts originally calculated by the Buyer and provided to the Seller pursuant to the
APA.”

                                         -2-
       DFM brought this action in Minnesota state court challenging the arbitrator’s
decision, and Brandspring removed the case to federal court based on diversity
jurisdiction. The district court1 denied DFM’s request to vacate the decision and
appoint a new arbitrator, and it confirmed the arbitration decision. DFM appealed.

       We review the district court’s legal conclusions de novo and its fact findings
for clear error, and we afford “an extraordinary level of deference” to the underlying
arbitration award. McGrann v. First Albany Corp., 424 F.3d 743, 748 (8th Cir.
2005). We “will confirm the arbitrator’s award even if we are convinced that the
arbitrator committed serious error, so long as the arbitrator is even arguably
construing or applying the contract and acting within the scope of his authority.” Id.
In conducting our review, we will apply the standards set forth in the Federal
Arbitration Act (“FAA”).2

       DFM advances two arguments on appeal. DFM’s first argument concerns the
district court’s understanding of the arbitrator’s decision. In particular, DFM claims
that the district court mischaracterized the arbitrator’s findings. In relevant part, the
district court wrote: “Szidon interpreted the APA to conclude that . . . the APA’s
requirement that Brandspring calculate the Gross Margin without ‘deviation from
historical payment practices’ did not require Brandspring to charge any particular
hourly rate.” For his part, Szidon wrote that he had “reservations” about finding
underbilling by Brandspring because “it is not immediately clear to what extent (if
any) billing rates is an ‘accounting matter’ since billing rates are inherently


      1
      The Honorable Michael J. Davis, United States District Judge for the District
of Minnesota.
      2
       The parties are agnostic on the question whether the FAA or Minnesota
Arbitration Act governs the dispute. Because no party contends—and we see no
reason why—the analysis would differ in this case under the two statutes, we will
assume without deciding that the FAA governs.

                                          -3-
judgmental and vary greatly depending upon numerous circumstances.” DFM
emphasizes that Szidon expressed only “reservations” and, in DFM’s view, offered
no “definitive indication” on the propriety of analyzing billing rates under the APA.
According to DFM, the district court therefore erred in treating the reservations as a
rationale for the arbitrator’s decision.

       We fail to see how the district court erred or, for that matter, why any error
would warrant relief. The district court was correct to conclude that Szidon believed
the APA to “not require Brandspring to charge any particular hourly rate,” because,
to use Szidon’s words, “billing rates are inherently judgmental.” Although Szidon
referred to certain views as “reservations”—a qualifier that the district court twice
quoted and clearly understood—those reservations concerned an interpretation of the
APA. Indeed, he offered the interpretation to explain his decision in favor of
Brandspring. Yet even if Szidon’s interpretation was not sufficiently “definitive” to
supply a basis for upholding the award, DFM does not advance the same challenge
to Szidon’s alternative rationale: that “even if” the billing rates could be “objectively
determined” and were “within the scope of the dispute provision of the APA,” the
alleged underbilling, as supported in the proffered documents, would be insufficient
to find for DFM.3 Reversing the district court based on its characterization of
Szidon’s decision is therefore unwarranted.

       DFM’s second argument focuses on the arbitration decision itself. Specifically,
DFM argues that Szidon refused to consider material evidence. Under the FAA, we
may vacate an arbitrator’s decision where the arbitrator was “guilty of misconduct . . .
in refusing to hear evidence pertinent and material to the controversy,” 9 U.S.C.

      3
        DFM suggests that the district court overlooked Szidon’s alternative rationale,
but it did not. The district court described the rationale in its fact section. And in its
analysis section, the district court wrote, among other things, that Szidon “considered
DFM’s arguments and decided to reject them,” including arguments related to the
“even-if” point.

                                           -4-
§ 10(a)(3), but we “have absolutely no authority to reconsider the merits of an
arbitration award, even when the parties allege the award rests on factual errors or on
a misinterpretation of the underlying contract,” McGrann, 424 F.3d at 748.

       Contrary to DFM’s assertions, the arbitrator did not refuse to consider material
evidence. Instead, he concluded that certain additional evidence was not material.
He wrote: “Then and now, we are unconvinced that [DFM’s] claim has any merit and
as a consequence we are foregoing any further work as we do not feel it would
change our opinion in this matter.” This decision was a reasoned one. Even putting
aside Szidon’s view that “billing rates are inherently judgmental” and that DFM’s
claim of underbilling therefore necessarily failed, Szidon also concluded that revising
the rates based on DFM’s proffered documents would be insufficient to find for DFM
in any event. Szidon reached this conclusion in his professional judgment, after
assessing the evidence and hearing DFM’s arguments. DFM is dissatisfied with the
quality and extent of Szidon’s analysis, but such dissatisfaction does not support
vacatur. See id. Indeed, absent exceptional circumstances not present here, we
cannot vacate an arbitration award “based on the arbitrator’s determination of the
relevancy or persuasiveness of the evidence submitted by the parties.” Swink & Co.
v. Norris & Hirschberg, Inc., 845 F.2d 789, 790 (8th Cir. 1988) (per curiam).
Szidon’s decision to forgo analyzing the additional evidence, made as part of his
“review” and “final determination” on the earn-out dispute under the APA, thus does
not provide grounds for vacating the award.

       DFM’s responses are unpersuasive. It cites two out-of-circuit cases in its reply
brief for the proposition that the arbitrator’s actions here warrant relief. See
Teamsters, Local Union 506 v. E.D. Clapp Corp., 551 F. Supp. 570 (N.D.N.Y. 1982),
aff’d sub nom. Teamsters v. Ed Clapp Corp., 742 F.2d 1441 (2d Cir. 1983); Gulf
Coast Indus. Workers Union v. Exxon Co., USA, 70 F.3d 847 (5th Cir. 1995). But
those cases did not involve, as here, an arbitrator’s reasoned decision to forgo
analyzing additional material. See, e.g., Teamsters, 551 F. Supp. at 574 (noting that,

                                         -5-
according to one account, the arbitrator “stood up and stated, ‘[expletive deleted] it,
I quit, I’m prejudiced, I never wanted these cases, they are making a patsy out of me’”
(alteration in original)); U.S. Life Ins. Co. v. Superior Nat’l. Ins. Co., 591 F.3d 1167,
1175 (9th Cir. 2010) (distinguishing Teamsters and Gulf Coast Industries). DFM
also emphasizes that in Szidon’s decision, he noted that he had “not taken any action”
on (and apparently was not paid for) “possible additional testing” that he had
proposed two years prior to his final decision. According to DFM, this
acknowledgment establishes that the arbitrator refused to consider the evidence
submitted in the intervening years. But DFM over-reads the statement. The arbitrator
did not state that he declined to consider the additional evidence; he merely stated
that he declined to perform particular testing. In any case, an arbitrator’s reasoned
decision to forgo analyzing additional evidence does not, without more, provide
grounds for vacating the decision. See Swink, 845 F.2d at 790. To hold otherwise
would amount to reconsidering the merits of the award—something we have “no
authority” to do. McGrann, 424 F.3d at 748.4

      For the foregoing reasons, we affirm.
                      ______________________________




      4
        DFM similarly argues that Szidon’s supposed unwillingness to act as an
arbitrator supports its position under the FAA. But this argument fails for the same
reasons the refusal-to-consider-evidence argument fails. Szidon made a reasoned
decision not to conduct further review; he was not unwilling to act as an arbitrator.

                                          -6-
