                             In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

Nos. 03-4171, 03-4173, 03-4175, 03-4194
SIGMUND LEFKOVITZ, et al.,
                          Plaintiffs-Appellees, Cross-Appellants,
                                 v.

NATHAN WAGNER, et al.,
                                            Defendants-Appellants,
                                and


JARNIS UNITED PROPERTIES CO.,
                                   Proposed Intervenor-Appellant,
                                and

GRIPPO & ELDEN, et al.,
                                                     Cross-Appellees,
                                and
29-31 ASSOCIATES,
                                                            Appellant.
                         ____________
         Appeals from the United States District Court for
         the Northern District of Illinois, Eastern Division.
              No. 97 C 7555—Elaine E. Bucklo, Judge.
                         ____________
   ARGUED NOVEMBER 10, 2004—DECIDED JANUARY 18, 2005
                         ____________
2                    Nos. 03-4171, 03-4173, 03-4175, 03-4194

    Before POSNER, WOOD, and EVANS, Circuit Judges.
   POSNER, Circuit Judge. Before us is a multifaceted chal-
lenge to the confirmation of an arbitration award. We omit
many details in the interest of simplicity. In 1990, six
individuals who had been working together for many years
in the real estate business created a partnership that they
called “Jarnis.” Each took an equal share in the partnership,
although each one-sixth share was divided in turn among
the active member of the partnership, members of his fam-
ily, and trusts for the benefit of the family members. The
partners (by which we mean, unless otherwise indicated,
the active members) later had a falling out. Four of them
ganged up against the other two, the Lefkovitzes, who in
1997, joined by their family trusts, brought this suit against
their four oppressors plus four companies controlled by the
latter. The suit charges that the defendants, in violation of
RICO, the Jarnis partnership agreement, and fiduciary ob-
ligations arising from the partnership, diverted to themselves
partnership income in which the plaintiffs as co-partners
were entitled to share. The defendants had done this, the
plaintiffs alleged, by paying themselves inflated compensa-
tion for services that they had rendered or purported to have
rendered to the partnership.
  Although Jarnis was not a party to the suit, the suit might
seem to be really a derivative suit on the partnership’s
behalf, charging that the defendants looted it. “When a
corporation is injured by a wrongful act but the board of
directors refuses to seek legal relief, a shareholder can sue
the wrongdoer on behalf of the corporation. Such a suit is
known as a derivative suit, and is an asset of the corpora-
tion.” Kennedy v. Venrock Associates, 348 F.3d 584, 589 (7th
Cir. 2003). Although most derivative suits are brought on
behalf of corporations, a derivative suit can be brought on
behalf of a partnership or other unincorporated firm. Fed. R.
Nos. 03-4171, 03-4173, 03-4175, 03-4194                         3

Civ. P. 23.1. No party has sought to have this case litigated
as a derivative suit; but if individual partners sue to enforce
rights belonging to a nonconsenting third party, namely the
partnership, the court must dismiss the suit. See Fieldturf,
Inc. v. Southwest Recreational Industries, Inc., 357 F.3d 1266,
1268 (Fed. Cir. 2004); Paradise Creations, Inc. v. UV Sales, Inc.,
315 F.3d 1304, 1309 (Fed. Cir. 2003); Enzo APA & Son, Inc. v.
Geapag A.G., 134 F.3d 1090, 1093-94 (Fed. Cir. 1998). One
cannot sue, other than in a representative capacity, to
enforce a right that belongs to someone else. Cf. People
Organized for Welfare & Employment Rights (P.O.W.E.R.) v.
Thompson, 727 F.2d 167, 173 (7th Cir. 1984). Thus—to bring
the point closer to home—shareholders cannot maintain a
RICO suit for injury to their corporation. Sears v. Likens, 912
F.2d 889, 892 (7th Cir. 1990); Mid-State Fertilizer Co. v. Ex-
change National Bank, 877 F.2d 1333, 1335-37 (7th Cir. 1989);
In re Sunrise Securities Litigation, 916 F.2d 874, 887-88 (3d Cir.
1990).
  But it is the law of the jurisdiction under which a part-
nership is organized that determines who has a legally en-
forceable right to sue to prevent or correct an improper
diversion of partnership income. Kamen v. Kemper Financial
Services, Inc., 500 U.S. 90 (1991); In re Abbott Laboratories
Derivative Shareholders Litigation, 325 F.3d 795, 803-04 (7th
Cir. 2003). Jarnis is a Florida general partnership, and under
Florida law the partners in a general partnership owe fidu-
ciary obligations to each other. Fla. Stat. Ann. § 620.8404; see
id., § 620.8405; Hallock v. Holiday Isle Resort & Marina, Inc.,
885 So. 2d 459, 462-63 (Fla. App. 2004); Lundstrom Realty
Advisors, Inc. v. Schickedanz Bros.-Riviera Ltd., 856 So. 2d
1117, 1121-22 (Fla. App. 2003). (This is the general rule, not
anything peculiar to Florida. See, e.g., Meinhard v. Salmon,
164 N.E. 545, 546 (N.Y. 1928) (Cardozo, J.); RTRA Group, Inc.
v. Salomon Bros. Holding Co., 680 N.E.2d 769, 772 (Ill. App.
4                    Nos. 03-4171, 03-4173, 03-4175, 03-4194

1997); McSweeney v. Buti, 637 N.E.2d 420, 424 (Ill. App.
1994).) So the plaintiffs were not required to file this as a
derivative, or any kind of representative, suit. The plaintiffs
could sue, and are suing, on their own behalf rather than on
behalf of the partnership.
   This point is fogged up by the fact that, as we shall see,
Jarnis received an award from the arbitrator. This has no
practical significance; the award was no different from
awarding two-thirds of the amount of it to the defendants
(and entities controlled by them to which they had trans-
ferred fractions of their shares) and the other third to the
plaintiffs. Similarly, although the corporation or other entity
on whose behalf a suit is brought, being the owner of the
claim sued upon, normally is an indispensable party, Koster
v. (American) Lumbermens Mutual Casualty Co., 330 U.S. 518,
523 n. 2 (1947); Bagdon v. Bridgestone/Firestone, Inc., 916 F.2d
379, 382 (7th Cir. 1990); Fogade v. ENB Revocable Trust, 263
F.3d 1274, 1289 (11th Cir. 2001), this observation is inappli-
cable to a suit such as the present one in which the partner
(or shareholder) is allowed to sue in an individual rather
than representative capacity. The next step, which however
we declined to take in Frank v. Hadesman & Frank, Inc., 83
F.3d 158, 161-62 (7th Cir. 1996), would be to allow a deriva-
tive suit to be brought instead as an individual suit when-
ever the corporation (the usual entity on behalf of which a
derivative suit is brought) is closely held, at least where, as
in this case (were Jarnis a corporation), all the shareholders
are before the court, so that there are no merely represented
shareholders.
  But by virtue of the principles of partnership law, the
plaintiffs in this case had and exercised an option to sue as
individuals rather than on behalf of the partnership. The
analogy is to a suit by a minority shareholder against the
majority shareholder, claiming that the latter has violated
Nos. 03-4171, 03-4173, 03-4175, 03-4194                        5

the fiduciary duty that such a shareholder, especially in a
closely held corporation, owes to minority shareholders.
Kennedy v. Venrock Associates, supra, 348 F.3d at 589; Strougo
v. Bassini, 282 F.3d 162, 173 (2d Cir. 2002); see also United
States v. Byrum, 408 U.S. 125, 137-38 (1972); Lawton v. Nyman,
327 F.3d 30, 40-41 (1st Cir. 2003); Hollis v. Hill, 232 F.3d 460,
468 (5th Cir. 2000); but see Combs v. PricewaterhouseCoopers
LLP, 382 F.3d 1196, 1200 (10th Cir. 2004).
  So we can proceed to the merits of the appeal. The
defendants demanded arbitration pursuant to the arbitration
clause in the Jarnis partnership agreement. The plaintiffs
resisted on the ground that some of the entities that they
had joined as defendants along with the four active members
of Jarnis that they were suing had not signed arbitration
agreements. But the four assured the court that they con-
trolled those entities, together with Jarnis itself, because they
controlled two-thirds of the voting power in the partner-
ship. They owned less than two-thirds, but that was only
because they had transferred some of their partnership inter-
ests to relatives and family trusts; and both the relatives and
the trusts were under their thumb.
  The court ordered arbitration. That was in 1998. The
proceedings before the arbitrator—which swelled when the
arbitration was consolidated with two other arbitrations be-
tween the parties—were protracted, but finally ended in
2003 with an award that among other things ordered the
defendants to repay Jarnis more than $7 million and ordered
Jarnis to reimburse the plaintiffs for $1.8 million in attorneys’
fees. The district court confirmed the award in its entirety,
and the flurry of appeals here consolidated for decision fol-
lowed.
  One of the appeals is by Jarnis itself, from the district
court’s refusal to allow it to intervene in the confirmation
proceeding on the ground that it should have sought in-
6                     Nos. 03-4171, 03-4173, 03-4175, 03-4194

tervention earlier. The civil rules authorize the grant of
intervention only “upon timely application” for it. Fed. R.
Civ. P. 24; NAACP v. New York, 413 U.S. 345, 365-66 (1973).
The aim is “to prevent a tardy intervenor from derailing a
lawsuit within sight of the terminal;” and so “as soon as a
prospective intervenor knows or has reason to know that his
interests might be adversely affected by the outcome of the
litigation he must move promptly to intervene.” United
States v. South Bend Community School Corp., 710 F.2d 394,
396 (7th Cir. 1983); see also Reid L. v. Illinois State Board of
Education, 289 F.3d 1009, 1017-18 (7th Cir. 2002); Sokaogon
Chippewa Community v. Babbitt, 214 F.3d 941, 949 (7th Cir.
2000). Jarnis argues that since it was not a party to the pro-
ceedings before the arbitrator it had no reason to intervene
until the arbitrator unexpectedly ordered it to pay the
plaintiffs’ attorneys’ fees. And it is certainly unusual—so un-
usual as to be unforeseeable—for a nonparty to a litigation
to be treated as Jarnis was, namely as a defendant (with
respect to the attorneys’ fees). It was not until the arbitrator
made the award against Jarnis that it had a ground for in-
tervention—unless it wanted more than the $7 million that
it was awarded, but it did not.
  This discussion may seem to be leading ineluctably to the
conclusion that Jarnis was entitled to intervene in the district
court; more fundamentally, and without need to invoke Rule
24, because someone against whom a judgment is entered is
entitled to the rights of a party. Motorola Credit Corp. v. Uzan,
388 F.3d 39, 61-62 (2d Cir. 2004); Alemite Mfg. Corp. v. Staff,
42 F.2d 832, 832-33 (2d Cir. 1930) (L. Hand, J.); cf. Devlin v.
Scardelletti, 536 U.S. 1, 7-8 (2002); In re Bridgestone/ Firestone,
Inc., Tires Products Liability Litigation, 333 F.3d 763, 768 (7th
Cir. 2003); Cordoza v. Pacific States Steel Corp., 320 F.3d 989,
995-96 (9th Cir. 2003). And ordinarily the award of relief
against a nonparty would be just the kind of ultra vires act
Nos. 03-4171, 03-4173, 03-4175, 03-4194                        7

by an arbitrator that would justify judicial intervention. 9
U.S.C. § 10(a)(4); BEM I, L.L.C. v. Anthropologie, Inc., 301 F.3d
548, 554-55 (7th Cir. 2002); Lindland v. U.S. Wrestling Ass’n,
Inc., 227 F.3d 1000, 1003 (7th Cir. 2000); Katz v. Feinberg, 290
F.3d 95, 97-98 (2d Cir. 2002); Coady v. Ashcraft & Gerel, 223
F.3d 1, 9 (1st Cir. 2000). But not here. The only plausible
motivation for Jarnis’s arguing against its being included in
the award is that the defendants, who control Jarnis, are
trying to derail the arbitration because they are dissatisfied
with its outcome. Cf. Dighello v. Busconi, 673 F. Supp. 85, 88-
89 (D. Conn. 1987). As we noted earlier, a judgment that
Jarnis pay the plaintiffs $1.8 million has exactly the same
consequence as a judgment that the defendants pay them
$1.2 million (two-thirds of $ 1.8 million), because the
defendants and their dependents own two-thirds of Jarnis.
  Jarnis (which is to say the defendants, the puppeteers)
argues that the defendants cannot adequately represent its
interests because, not owning 100 percent of it, they have an
incentive to shift costs from their shoulders to Jarnis. Indeed
so. But then it is the minority owners, namely the plaintiffs,
who should be arguing against the award’s having been
directed against Jarnis rather than the defendants, who have
managed to offload one-third of the award onto the
plaintiffs—who are not complaining. The issue of the
attorneys’ fee award is therefore moot.
  The defendants argue that the arbitrator engaged in ex
parte communications and also exhibited bias in favor of the
plaintiffs, and either type of behavior could be a basis for
refusing to confirm an arbitrator’s award. 9 U.S.C.
§ 10(a)(2)-(3); Sphere Drake Ins. Ltd. v. All American Life Ins.
Co., 307 F.3d 617, 619-20 (7th Cir. 2002); Dow Corning Corp.
v. Safety Nat’l Casualty Corp., 335 F.3d 742, 749-52 (8th Cir.
2003). But not in the circumstances of this case.
8                    Nos. 03-4171, 03-4173, 03-4175, 03-4194

  One of the issues in the arbitration was whether the
defendants had caused Jarnis to overpay them for their ser-
vices—the motive being, as should be evident from our
previous discussion, that one-third of the overpayment
would be borne by the plaintiffs. The arbitrator hired an
accounting firm to provide neutral expert evidence to assist
him in analyzing that issue. The defendants complain that
the arbitrator met with the firm in their absence. He did,
though it is unclear whether he discussed the overpayment
issue in those meetings. If he did discuss it, still there is no
indication that the discussion had any effect on his rulings.
  The issue of bias arises from a hearing at which the arbi-
trator complained that his fee was in arrears. The plaintiffs’
lawyer clucked his tongue sympathetically and said that the
arbitrator “shouldn’t have to deal” with the issue of fees.
The defendants’ lawyer was silent—because he was planning
to challenge the arbitrator’s fee, and did so a few days later.
Under the rules of the American Arbitration Association,
which governed this arbitration, fees and fee protests are
lodged with the Association, which after resolving any pro-
test remits the fees to the arbitrator. He is not supposed to
learn of the protests. If he wants to complain about a party’s
failure to pay his fee, he is supposed to complain to the
Association rather than raise the matter with the parties.
The defendants argue that by saying what he did the
plaintiffs’ lawyer violated the rule and signaled the arbi-
trator that the defendants were responsible for the delay in
the payment of his fee. Cf. Sullivan v. Conway, 157 F.3d 1092,
1095-96 (7th Cir. 1998).
  The argument is highly conjectural, but there is a little
more. The defendants refused to pay their full share of the
arbitrator’s fee, and the arbitrator learned of this at some
point—we know because his final award required the
defendants to reimburse the plaintiffs for the amount they
Nos. 03-4171, 03-4173, 03-4175, 03-4194                         9

had paid in excess of their share of the fee. The defendants
speculate that when the arbitrator learned that they had
challenged his fee, he became furious and resolved to retal-
iate against the defendants in his award. This is another
stretch. It is not as if the arbitrator were denied his fee. He
got every penny that he thought himself entitled to, and
merely learned that the defendants had wanted him to get
less. It is difficult to see how this is different from any other
case in which a litigant challenges a judge’s ruling. It would
be different if the challenger succeeded in taking money out
of the judge’s, or in this case the arbitrator’s, pocket. But the
challenge failed, thus costing the arbitrator nothing. Liteky
v. United States, 510 U.S. 540, 555-56 (1994); Brokaw v. Mercer
County, 235 F.3d 1000, 1025-26 (7th Cir. 2000); Hepperle v.
Johnston, 590 F.2d 609, 613-14 (5th Cir. 1979). Anyway the
defendants can’t be heard to complain about their own
strategy. If the arbitrator’s knowledge that his fee is being
challenged precludes enforcement of his award, then anyone
who sees that the case is going badly can scuttle the arbitra-
tion just by disputing the arbitrator’s fee.
   Both allegations of impropriety bespeak a lack of under-
standing of how arbitration differs from adjudication. Arbi-
trators are not professional judges; often they are not lawyers
at all, though this one was. Parties that opt for arbitration
trade the formalities of the judicial process for the expertise
and expedition associated with arbitration, a less formal
process of dispute resolution by an umpire who is neither a
generalist judge nor a juror but instead brings to the
assignment knowledge of the commercial setting in which
the dispute arose. Sphere Drake Ins. Ltd. v. All American Life
Ins. Co., supra, 307 F.3d at 620; Merit Ins. Co. v. Leatherby Ins.
Co., 714 F.2d 673, 679-80 (7th Cir. 1983); ANR Coal Co., Inc.
v. Cogentrix of North Carolina, Inc., 173 F.3d 493, 500 (4th Cir.
1999); Commonwealth Coatings Corp. v. Continental Casualty
10                    Nos. 03-4171, 03-4173, 03-4175, 03-4194

Co., 393 U.S. 145, 150-51 (1968) (concurring opinion). Stricter
rules cabin the generalist because he is more apt to be led
astray by the lawyers and witnesses in a matter in which his
only knowledge comes from them. When disputants repose
their trust in a specific individual rather than having to take
the luck of the draw, it is right that they should have to take
the bad with the good unless the individual runs completely
off the rails. The improprieties here, if improprieties they
were, were harmless in the setting of a voluntary arbitration.
  The only other issue presented by the defendants that
we need to discuss is the arbitrator’s consolidating separate
arbitration proceedings without the defendants’ express
consent. Selection of the decision maker by or with the con-
sent of the parties is the cornerstone of the arbitral process.
The fact that a party has consented to arbitrate one dispute
before Arbitrator Smith and an unrelated dispute, albeit
with the same antagonist, before Arbitrator Jones doesn’t
mean that he’s agreeable to having Jones arbitrate the first
dispute or Smith the second. Hence the rule that consolida-
tion of arbitrations is permissible only if the arbitration
clauses authorize it. Connecticut General Life Ins. Co. v. Sun
Life Assurance Co., 210 F.3d 771, 773-74 (7th Cir. 2000); Champ
v. Siegel Trading Co., 55 F.3d 269, 274-75 (7th Cir. 1995);
Hartford Accident & Indemnity Co. v. Swiss Reinsurance America
Corp., 246 F.3d 219, 229-30 (2d Cir. 2001).
   But that is in general, and this case is special. The suit was
filed in 1997 and the following year the defendants began an
arbitration proceeding against the plaintiffs to resolve a
dispute over one of the Jarnis investments. It was in that
proceeding that the arbitrator to whom we have been re-
ferring throughout this opinion (a Chicago lawyer named
Robert Grossman) was selected, with the agreement of the
defendants. When in the present suit the district judge—at
the defendants’ request—ordered arbitration, the plaintiffs
Nos. 03-4171, 03-4173, 03-4175, 03-4194                        11

filed the claim on which their suit was based as a counter-
claim in the first arbitration proceeding, the one the defen-
dants had initiated, and the arbitrator accepted the filing.
The defendants contend that this was improper because
there were different parties in the two arbitration proceed-
ings and the issues were different as well.
  The difference in parties has no significance, since the
additional parties to the counterclaim were under common
control with the parties to the original claim. The defendants
point out that some of these parties are trusts and that trustees
have a fiduciary duty to their beneficiaries. But trustees can
consent to join forces with others in a litigation and delegate
control to one or more of those others, who may have a
larger stake or better counsel. In effect the trustee as principal
hires an agent, and there is no doubt that like other princi-
pals a trustee can delegate authority to agents. Illinois
Conference of Teamsters & Employers Welfare Fund v. Mrowicki,
44 F.3d 451, 463 (7th Cir. 1994). If a trustee is careless or
disloyal in delegating, the beneficiaries may have a griev-
ance against him, but parties that represent to the court that
they have been authorized to control the entire litigation, as
the defendants did here, cannot later repudiate their rep-
resentation in an effort to obtain a favorable judgment; that
would be a fraud on the court. Cf. Jankowski Lee & Associates
v. Cisneros, 91 F.3d 891, 896 n. 2 (7th Cir. 1996); Davenport
Recycling Associates v. Commissioner, 220 F.3d 1255, 1261-62
(11th Cir. 2000).
  The issues in the two arbitrations, as far as we can judge,
weren’t different, but if they were, we can’t see why that
should matter when the defendants consented to have
Grossman preside in both arbitrations. Since the parties in
interest were the same, and the arbitrator the same, it made
perfect sense to consolidate the proceedings. The defendants’
12                    Nos. 03-4171, 03-4173, 03-4175, 03-4194

objection is understandable only as a tactical effort to derail
an arbitration that they lost.
  The third arbitration, instituted in 1998 by an entity con-
trolled by the defendants (29-31 Associates), sought overdue
rent from a partnership controlled by the plaintiffs. The
issues presented by this claim did not overlap those pre-
sented by the other claims. Nor were the parties the same.
But they were all under the control of the parties to the
other arbitrations and to this lawsuit, and once again the
defendants consented to have Grossman arbitrate. Never-
theless, there was neither complete diversity nor a federal
question; and an arbitration award cannot be enforced in
federal court unless the dispute giving rise to the award
would have been within the court’s jurisdiction to resolve
had the dispute given rise to a lawsuit rather than to an
arbitration. Moses H. Cone Memorial Hospital v. Mercury
Construction Corp., 460 U.S. 1, 25 n. 32 (1983).
   But there is a wrinkle. The arbitrator awarded several mil-
lion dollars to the claimant in this third arbitration— which
meant, in effect, to the defendants, who control the
claimant—and having done so he then imposed a lien on
that award to secure payment to the plaintiffs of the amount
that he had awarded them in the other consolidated pro-
ceedings. So if, as argued in William A. Fletcher, “ ‘Common
Nucleus of Operative Fact’ and Defensive Set-Off: Beyond
the Gibbs Test,” 74 Ind. L.J. 171, 172-78 (1998); see also United
States for Use and Benefit of D’Agostino Excavators, Inc. v.
Heyward-Robinson Co., 430 F.2d 1077, 1081 n. 1 (2d Cir. 1970);
6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice and Procedure § 1422 (2004 supp.); 3 James
Wm. Moore, Moore’s Federal Practice-Civil § 13.31 (3d ed.,
2004 supp.), a setoff, unlike the usual permissive counter-
claim, doesn’t require an independent basis for federal
jurisdiction, jurisdiction over the third arbitration is secure.
Nos. 03-4171, 03-4173, 03-4175, 03-4194                        13

  Our view is that jurisdiction in such a case is possible but
not automatic, because the jurisdictional issue is governed
by 28 U.S.C. § 1367. That statute defines the supplemental
jurisdiction of the federal courts, which is to say their juris-
diction over matters related to matters over which federal
jurisdiction is explicitly conferred. Channell v. Citicorp Nat’l
Services, Inc., 89 F.3d 379, 384-86 (7th Cir. 1996); Jones v. Ford
Motor Credit Co., 358 F.3d 205, 212-14 (2d Cir. 2004). The
statute makes the exercise of supplemental jurisdiction dis-
cretionary with the district court. So if this arbitration were
instead a proceeding before the district court, it would be up
to the judge, subject only to light appellate review, to
determine whether to allow the setoff to be litigated before
him. It seems to us—we cannot find a case on the point—
that where the matter is before an arbitrator, the discretion
should be his to exercise, with due regard for the principle
that the scope of the arbitrator’s authority is defined by the
arbitration clause itself. The discretion was exercised here in
favor of allowing the setoff to be included in the consoli-
dated arbitrations.
  The defendants raise other objections to the arbitration
award. But though phrased as challenges to the arbitrator’s
authority, they are really objections to the merits of the
arbitrator’s rulings and thus fall outside the limited scope of
judicial review of arbitration.
  The plaintiffs, joined by their lawyers, have cross-appealed
from the district judge’s denial of sanctions. We have no-
thing to add to her discussion of the issue. The defendants’
arguments, while highly technical and, in part for that rea-
son, unpersuasive, are not frivolous.
  29-31 Associates, the claimant in the third arbitration, has
appealed from the ruling that the arbitrator had jurisdiction
over it. It was not a party in the district court and has not
moved for intervention, so it is not a party in this court
either. Its appeal is dismissed.
14                 Nos. 03-4171, 03-4173, 03-4175, 03-4194

  The district court’s judgment confirming the award and
denying sanctions is
                                                AFFIRMED.

A true Copy:
       Teste:

                        _____________________________
                         Clerk of the United States Court of
                           Appeals for the Seventh Circuit




                  USCA-02-C-0072—1-18-05
