
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  Stephen R.  Miller, Andrew  C.               __________________            __________________  __________          Gately, John  D. Hanify, and  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.   Appellee MCI Telecommunications Corp.          insists that the  conflict must be resolved  through arbitration,          while appellant  Matrix  Communications Corp.  asserts  that  the          arbitration clause in the parties' contract  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  ruling based  on newly  discovered evidence.   Matrix          appeals  both the  judgment  on  the merits  and  the Rule  60(b)          decision.  After  close review of the tangled procedural backdrop          and the substantive issues, we affirm.                         I. Factual and Procedural Background                            _________________________________               Little  needs to  be said  about  the companies'  underlying          dispute,  which arises from an October 1995 agreement (the "Agent          Agreement") in which  MCI gave Matrix limited agency  to sell MCI          services.    The   Agent  Agreement   provided  for   substantial          commissions if  Matrix generated  a specified  minimum amount  of          revenue for MCI.  Matrix alleged, inter alia, that MCI improperly                                            _____ ____          terminated the Agent  Agreement eight months later, in June 1996,          because Matrix was so successful in obtaining  customers that MCI          owed it  more than  one billion dollars  in commissions  that the          corporation did not wish to  pay.  MCI countered that termination          was proper  because  Matrix  breached  the  terms  of  the  Agent          Agreement in various ways.                                         -2-               Following   MCI's   termination,   Matrix  filed   suit   in          Massachusetts state  court.  MCI  removed the  action to  federal          court.    It  then  moved  to  stay  the  litigation  and  compel          arbitration, on the ground that  the language of the  arbitration          clause  in  the  Agent  Agreement  unambiguously   evidenced  the          parties'  intent  to  arbitrate all  disputes  arising  from that          agreement.  The provision, contained in paragraph 22 of the Agent          Agreement, states:               Any  dispute  relating  to   this  Agreement  shall  be               submitted for  binding arbitration  in accordance  with               the  rules  contained  in  MCI Tariff  FCC  No.  1  and               judgement[sic]  on  any award  entered  therein may  be               entered in any court of competent jurisdiction.          Matrix  opposed the  motion to  stay, arguing  that,  because MCI          Tariff FCC No. 1 ("the Tariff") expressly  limited arbitration to          customer billing  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   about   the   provision  of          telecommunications services  to the  public that common  carriers          like MCI are required to file with the FCC.  MCI Tariff FCC No. 1          is a voluminous  document whose "Section  B," labeled "Rules  and          Regulations,"  spans  34  pages  and  contains  nineteen separate          rules.   Rule  No. 7  is labeled  "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   or  affecting  payment   of               invoices  issued after  February 28,  1994 for  charges               totaling  $10,000 and  above  may be  resolved  through               binding arbitration.          Subsection B-7.13  is further  divided into  numerous parts  that          detail the procedures  to be used in such  arbitrations.  Section          .1327,  for example,  requires  the Responding  Party  to file  a          written  answer within 17  days after the  arbitration commences;                                         -3-                Judge  Harrington of the  United States District  Court for          the District of  Massachusetts held a hearing on  MCI's motion to          compel arbitration  on September  27, 1996.   Later that  day, he          signed   an  order  granting  the  motion,  concluding  that  the          arbitration  clause unambiguously reflected  an intention  by the          parties to arbitrate all disputes  relating to the Agreement.  In                               ___          his view, the Tariff  was referenced not to  define the scope  of          the agreement  to arbitrate but  to provide the  procedural rules          under which any arbitration would take place.                 The same day,  Matrix filed a notice  of voluntary dismissal          under  Fed. R.  Civ.  P. 41(a)(1)(i).2    In  a letter  to  Judge          Harrington,  Matrix's  counsel  explained  that  the company  had          decided to  ask the  arbitrator to rule  on whether  Matrix could          receive all  the relief  it sought through  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.  On September 30, the          day  both the  order  compelling  arbitration  and the  grant  of          dismissal  were entered  on  the  docket,  Matrix  initiated  the                                        ____________________          section  .133 directs the case  manager to hold an administrative          conference within nine  days of  the arbitration's  commencement;          under section .1341, the appointed arbitrator may be removed only          for  bias or  "other good  cause"; section  .135 provides  for an          exchange of  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  Judge Harrington  may have  ruled before  Matrix          filed  for dismissal, it appears that Matrix did not learn of the          ruling until later,  and believed at the  time it filed  that the          decision would not be made for several days.                                         -4-          arbitration by filing a  claim with J.A.M.S./Endispute  ("JAMS"),          the  arbitration administrator designated  by MCI in  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  seeking to  compel arbitration  of          Matrix's claims.  Although Matrix was at that point participating          in arbitration,  MCI was concerned  that Matrix would  not follow          through if the arbitrator decided the threshold questions against          Matrix's position.   Because  of his  involvement in the  earlier          proceeding,  Judge  Harrington  was  assigned  the  MCI   action.          Without additional  hearings  or  any  responsive  pleading  from          Matrix, he  entered an order  on October 10 compelling  Matrix to          arbitrate all of its claims and awarding MCI attorney's fees.               Meanwhile, the  arbitration that  Matrix had  initiated went          forward,  and, on  December 10, 1996,  the arbitrator  ruled that          Matrix's claims were arbitrable but  that certain types of relief          sought by Matrix, including multiple damages and attorney's fees,          were unavailable  in the  arbitration because  the Tariff  barred          such  remedies.   In  February  1997, Matrix  filed  a motion  in          district court under  Fed. R. Civ. P. 60(b),  seeking relief from          the October 10 order.  Matrix contended that MCI had fraudulently          induced  it to  enter into  the arbitration  clause in  the Agent          Agreement by  concealing an agreement  between JAMS and  MCI that                                         -5-          provided  for  a  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.   MCI opposed the motion, filing  affidavits and          other  materials  in  support  of  its  position  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).  See infra at 16.                                           ___ _____               Matrix  appeals from the  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  the district court's October  10 judgment          and its subsequent  rejection of Matrix's  Rule 60(b) motion,  we          must  address a threshold  issue raised by MCI.   It claims that,          because Matrix  voluntarily submitted the  issue of arbitrability          to  the arbitrator, who then  determined that Matrix's claims are          arbitrable,  Matrix  cannot  at   this  juncture  challenge   the          arbitrator's  authority  to  hear the  case.    This  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  difficulty in  concluding  that the  appeal          should go  forward.  From  the outset, Matrix  explicitly advised          the district  court that it would return  to the courtroom if the          arbitrator ruled that  Matrix could not obtain all  the relief it          sought  in  the  arbitral forum.    Although  MCI  cites language          suggesting that Matrix  later agreed to  arbitrate its claims  if          the  arbitrator ruled that they were arbitrable, we are persuaded          that that  language was  unfairly drawn out  of context  and that          Matrix's actual position  has been consistently in  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  is worth  recalling the          context of the district court's  decision on October 10 to compel          arbitration.  The motion  on which the  court ruled was filed  by          MCI on October 2.   Only three working days earlier, on September          27, the  court had  held a hearing  on arbitrability  pursuant to          Matrix's action,  and had  concluded that  the Agent  Agreement's          ________          arbitration clause embraced  all disputes.  That decision was not                                       ___          enforced  then   because,  virtually   contemporaneously,  Matrix          dismissed  its  suit.    Seeking  to  resolve  the  arbitrability          question,  MCI jumped  in  with  its own  action,  and the  court          responded  on  October  10  by  compelling  arbitration,  thereby                                         -7-          effectively  (though  not  technically) reinstating  its  earlier          decision.4               If  review of that decision  posed only the question whether          the  court properly  interpreted the  Agent  Agreement to  compel          arbitration   of  the  parties'   dispute,  our  task   would  be          straightforward  and relatively easy.  But several factors affect          our analysis,  two of which  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  of          the Federal Arbitration  Act states that "[t]he  court shall hear          the parties" before ordering arbitration to proceed.5  The second          difficulty  is   that   Matrix's  appellate   challenge  to   the          arbitration  clause includes  arguments  that the  district court          never considered, an  omission that typically forecloses  us from          taking them  into account.   See United States v.  Bongiorno, 106                                       ___ _____________     _________          F.3d 1027, 1034 (1st Cir. 1997).   The two problems obviously are                                        ____________________               4 Matrix complains  that the district court  wrongly "based"          its October 10 order  on the September 27 order, which had become          a  "nullity" once  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  hear  the  parties,  and  upon  being               satisfied  that   the  making  of   the  agreement  for               arbitration or the  failure to comply therewith  is not               in  issue, the court shall make  an order directing the               parties to proceed  to arbitration  in accordance  with               the terms of the agreement.          9 U.S.C.   4.                                         -8-          intertwined;  Matrix  logically   points  out  that  it   had  no          opportunity to make any arguments to the district  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.   It maintains  that we  should resolve  "the underlying          issue  of whether  Matrix must arbitrate  its claims  against MCI          since such a determination is largely  a question of law in which          no  material facts  are  in dispute."   Procedural  errors alone,          therefore, are  waived  as  a basis  for  vacating  the  district          court's judgment.6               We  address  first the  straightforward  issue: whether  the          arbitration clause in the Agent Agreement  applies to the present          conflict.7    We  think it  does,  finding  unpersuasive Matrix's          argument that  the reference to  the Tariff in that  clause meant          that the  Agent Agreement  limited arbitration  only to  customer          billing  disputes in  excess of  $10,000 --  the types  of claims          specifically  arbitrable under  the Tariff.    Like the  district          court, we think the only sensible  reading is that the Tariff was          incorporated  to   provide  a   set  of   procedural  rules   for                                        ____________________               6  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.               7  Our review  on this  question  is de  novo. See  Keystone                                                    __  ____  ___  ________          Shipping Co. v.  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"  dispute relating  to this  agreement  "shall" be          submitted  for  arbitration  --  but   the  limited  construction          proposed  by Matrix  would  have the  absurd  result of  entirely          negating the arbitration provision.  Under Matrix's view, because          the  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.  In subsection 7.13, the          portion  titled "Arbitration of disputes," see  note 1 supra, the                                                     ___         _____          Tariff states  that arbitrations  "shall be  conducted under  the          arbitration  rules and procedures  set forth in  Sections B-7.131          through B-7.139  (Rules)," which account for more than four pages          of text.  Thus, while all of Section B of the Tariff carries  the          heading  "Rules and Regulations,"  this portion of  Rule 7, which          governs  arbitration,  makes  another, limited  use  of  the term                                         -10-          "Rules"   to   denote   the  specific   provisions   relating  to          arbitration.  It  is much more reasonable to construe  the use of          the  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  a          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.  v. Mercury  Constr.  Corp.,  460 U.S.  1,  24-25          _______________     _______________________          (1983),8  and  the  generous  reading  given  to  broadly  worded          commercial arbitration  agreements,  see, e.g.,  Raytheon Co.  v.                                               ___  ____   ____________          Automated  Bus. Sys.,  882  F.2d  6, 9-11  (1st  Cir. 1989),  the          ____________________          provision here  cannot bear  the interpretation  Matrix seeks  to          assign to it.   We thus  agree with the  district court that  the          arbitration  provision contained in  paragraph 22 applies  to any          dispute relating to the Agent  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  paragraph  22  requires  arbitration          between these parties,  we must confront Matrix's  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  arbitration, whether the problem at hand          is  the  construction of  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  billing disputes          involving customers brought to MCI  by Matrix.  Fraud in inducing          acceptance of the arbitration  clause unquestionably would negate          the  contractual agreement on  that issue.   See  generally Prima                                                       ___  _________ _____          Paint Corp. v. Flood & Conklin  Mfg. Co., 388 U.S. 395, 403-04  &          ___________    _________________________          n.12  (1967); see  also Three  Valleys Mun.  Water Dist.  v. E.F.                        ___  ____ ________________________________     ____          Hutton & Co.,  925 F.2d  1136, 1139-40 (9th  Cir. 1991); Wick  v.          ____________                                             ____          Atlantic Marine, Inc., 605 F.2d  166, 168 (5th Cir. 1979)("[i]f .          _____________________          . . the arbitration clause was induced  by fraud, there can be no          arbitration").               As  noted above, however, Matrix never  raised this issue of          fraud  before the district court,9  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  v.  State Mut.  Life          ___  _________                       ______      ________________          Assurance Co. of  Am., 101 F.3d  218, 222 (1st  Cir. 1996).   But          _____________________          applying this rule to these circumstances presents something of a          puzzle.  Matrix maintains that it cannot be penalized for failing          to  assert all  theories because  the district  court gave  it no                     ___          opportunity  to offer  any, having  ruled without  a hearing  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  parties have  not agreed to  arbitrate pursuant  to the          Tariff  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.   See J. Geils Band  Employee Benefit Plan                                   ___ ____________________________________          v.  Smith Barney  Shearson, Inc.,  76 F.3d  1245, 1250  (1st Cir.              ____________________________          1996).                                            -12-          before  Matrix answered  MCI's  complaint.   Seeking  to avoid  a          remand, Matrix  waives any claim  that the court's  procedure was          improper and  contends that  the questions we  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.    We  may  not  assume  the  trial  court's  role  of          factfinder.    In addition,  Matrix's  assertion that  it  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  had held  a  hearing  on  the          enforceability of the Agent  Agreement's arbitration provision --          with no suggestion of fraudulent inducement.  Putting to one side          the technical errors,  which Matrix waives, the  court reasonably          could  assume  that   Matrix's  position  with  respect   to  the          arbitration clause would be the same a week later.               It is theoretically  possible, of course, for Matrix to have          changed  its strategy during  that interim, and  for the district          court's quick  action thus  to have deprived  Matrix of  its most          direct opportunity to air  the claim of fraud.  If  that were the          case, however, we  would expect Matrix to have  alerted the court          to  its  new  position  through  a  motion  for  reconsideration.                                         -13-          Particularly when a new theory turns on questions of fact, we are          disinclined to  stray from our longstanding  raise-or-waive rule.          If  Matrix did  not have  the information  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  now          wishes to rely.  Although the circumstances here are peculiar, we          conclude  that Matrix's "failure  to move for  reconsideration of          the  district court  order should not  be excused,"  Vanhaaren v.                                                               _________          State Farm Mut.  Auto. Ins. Co., 989  F.2d 1, 5 (1st  Cir. 1993).          _______________________________          Cf. Berkovitz v.  Home Box Office, Inc., 89 F.3d 24, 31 (1st Cir.          ___ _________     _____________________          1996)  ("[T]his court  from time  to time  has refused  to permit          appellants to take advantage of supposed oversights  that had not          been called to the district court's attention by way of a timeous          motion to reconsider."); United States v.  Schaefer, 87 F.3d 562,                                   _____________     ________          570  n.9  (1st  Cir.  1996)   (failure  to  move  to  reopen  the          proceedings or  for reconsideration  undercuts claim  of surprise          about use  of police report in suppression  hearing); Beaulieu v.                                                                ________          IRS,  865 F.2d 1351,  1352 (1st  Cir. 1989)  ("[I]t is  a party's          ___          first obligation to  seek any relief that might  fairly have been          thought  available in  the district  court before  seeking  it on          appeal.").  We therefore conclude  that Matrix has forfeited  its          claim that  the arbitration clause  should be invalidated  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  effort to undo  the October  10 decision  via Rule          60(b)  rests   on  the   agreement  establishing   JAMS  as   the          administrator of MCI's arbitration program.  Under Rule 60(b)(2),                                        ____________________               11  We recognize that  Matrix's waiver of  procedural errors          was motivated by a desire  to have its claims heard promptly,  in          this court.  Omission of the hearing required by Section 4 of the          Arbitration Act also  could have been  addressed by the  district          court   if   brought   to  its   attention   on   a   motion  for          reconsideration, and, even if the issue were not waived, we would          be inclined to view it as defaulted.               12  Equally unavailing is  Matrix's new contention  that the          Agent  Agreement's  arbitration  clause  is  invalid because  the          Tariff  arbitration rules  foreclose remedies,  such as  multiple          damages, to which it is entitled.   Putting aside the question of          waiver, this  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  Great W.  Mortgage Corp.  v.                                          ___  ________________________          Peacock, 110 F.3d 222, 230-31  (3d Cir. 1997) ("Any argument that          _______          the  provisions of the Arbitration Agreement  involve a waiver of          substantive rights afforded by the state statute may be presented          in the arbitral  forum.   It would  be anomalous for  a court  to          decide that  a claim should  be referred to an  arbitrator rather          than  a court,  and then,  by  deciding issues  unrelated to  the          question  of  forum,  foreclose  the   arbitrator  from  deciding          them."); PaineWebber  Inc. v. Elahi,  87 F.3d 589, 599  (1st Cir.                   _________________    _____          1996)  ("[T]he signing  of  a valid  agreement  to arbitrate  the          merits of the subject matter in  dispute presumptively pushes the          parties  across  the  `arbitrability'  threshold;  we  will  then          presume  that  other issues  relating  to  the  substance of  the          dispute   or  the   procedures  of   arbitration   are  for   the          arbitrator.")               Matrix's reliance on  Graham Oil Co. v. ARCO  Prods. Co., 43                                     ______________    ________________          F.3d  1244  (9th Cir.  1994),  is misplaced  because,  unlike the          plaintiffs there, Matrix's claims are not brought under a statute          specifically  designed   to  protect  bargaining   rights.    The          applicable precedent in our  circuit is instead that  parties may          contract to limit  remedies in arbitration.  See  Raytheon Co. v.                                                       ___  ____________          Automated Bus. Sys.,  882 F.2d 6,  12 (1st Cir.  1989); see  also          ___________________                                     ___  ____          Mastrobuono  v. Shearson Lehman Hutton,  Inc., 514 U.S. 52, 60-62          ___________     _____________________________          (1995)  (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  not have          been  discovered  in time  to  move for  a  new trial  under Rule          59(b)."  See Hoult, 57 F.3d at 5-6.13  To prevail, a moving party                   ___ _____          must  demonstrate  that  "the missing  evidence  was  `of  such a          material  and  controlling  nature  as  [would]  probably  [have]          change[d] the outcome.'"  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  standard.   First,  it asserts  that  it had  no          ability  to discovered the concealed agreement, which it contends                                        ____________________               13 Although Matrix relied on both subsections (2) and (3) of          Rule  60(b) in the  district court, its  briefs on  appeal do not          refer to  subsection (3), which provides for relief from judgment          based  upon fraud, misrepresentation,  or other misconduct.   See                                                                        ___          Anderson  v. Cryovac,  Inc., 862  F.2d 910,  924 (1st  Cir. 1988)          ________     ______________          (setting  forth  the  standard  applicable  to  60(b)(3)  claims:          retrial  mandated   only  when  the  challenged   misconduct  has          "substantially"  interfered  with  aggrieved  party's ability  to          fully and  fairly prepare  for and proceed  at trial).   Matrix's          reply brief  contained no such argument even in the face of MCI's          assertion  in its  brief  that  the  60(b)(3) claim  was  waived.          Matrix does  argue generally,  however, that  the district  court          orders  should be  vacated  because  of  fraudulent  conduct  and          misrepresentations by  MCI.   To the extent  that Matrix  has not          waived a 60(b)(3)  claim by failing to brief it fully, we find no          abuse of  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  before          Judge  Harrington.  As  Matrix posits, if  the MCI/JAMS Agreement          had been  brought to Judge Harrington's attention,  he would have          had  to  consider,  in  addition  to  the  contractual  language,          "whether a reasonable person would  have agreed to an arbitration          provision  that  called for  JAMS  to handle  the  arbitration of          certain disputes,  in view  of the MCI/JAMS  Agreement."   As our          discussion of Matrix's  60(b)(2) claim  demonstrates, see  infra,                                                                ___  _____          access to the  MCI/JAMS Agreement would not have added measurably          to  Matrix's   effort   to  invalidate   the  Agent   Agreement's          arbitration provision.                                         -16-          even JAMS' general  counsel was unaware of  until this litigation          commenced.14    Second,  Matrix   emphasizes  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  that Matrix had  failed to          show that, with  due diligence, it could not  have discovered the          evidence earlier.   She pointed out that Matrix  conceded at oral          argument  that  corporate   sponsored  arbitration  programs  are          commonplace, and that the MCI  Tariff named JAMS as the company's          arbitration administrator.   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  was unaware of  the MCI/JAMS Agreement  until this          litigation  commenced,"  the  attorney, Michael  Young,  actually          stated that  he was unfamiliar  with the terms of  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  argues on appeal,  however, that it  was essentially          foreclosed  from   conducting  discovery   by  the   sequence  of          proceedings in  the  district  court.   In  the  original  Matrix          lawsuit,  MCI secured  an extension  of time  to comply  with its          obligation  to make the voluntary disclosures required under Fed.          R.  Civ.  P. 26,  which  had  the  effect of  holding  off  other          discovery.     The  court  then  granted  the  motion  to  compel          arbitration before the extended time  period had expired.  Matrix          argues   that  MCI  therefore  managed  to  avoid  producing  any          documents,  including the undisclosed MCI/JAMS Agreement.  In the          subsequent  MCI  lawsuit,   no  opportunity  for  discovery   was          presented  because  the  court's ruling  preceded  any  action by                                                             ___          Matrix.               We need  not resolve  whether the  district  court erred  in          finding that Matrix did  not exercise due diligence  with respect          to the MCI/JAMS relationship because we conclude, infra, that the                                                            _____          Agreement between them was  not likely to  have had an effect  on          Judge Harrington's decision.  Before moving on to the materiality          discussion, however, we  wish to note that MCI's  failure to make          the Agreement available when it  first was requested from JAMS in          November 1996 is incomprehensible to us.15   Its refusal to do so                                        ____________________               15  Matrix  on November  8  requested  that  a copy  of  the          Agreement  be  provided  before  a  meeting  scheduled  with  the          arbitrator for November 15.  In a reply sent on November  15, the          JAMS case manager  directed Matrix  to request  the document  via          subpoena  as  provided  in  the  Tariff  Arbitration  Rules.    A          conference was held on November  22 with counsel for both parties          and  the  arbitrator.   Matrix  again  requested  a copy  of  the          Agreement, but MCI refused to turn it over unless Matrix signed a          strict confidentiality agreement.  Matrix would not  sign such an                                         -18-          undoubtedly  fueled the already bitter nature of this litigation,          and  intensified the  wrangling  over  the Agreement's  contents.          Moreover, while the  provisions of the MCI/JAMS agreement are not          sufficiently troublesome to warrant the  extraordinary relief for          which   Rule  60(b)(2)  is  reserved,  they  do  include  matters          unquestionably  of interest and concern to parties contracting to          arbitrate with MCI.   Our judgment should not be taken to condone          MCI's nondisclosure.                Even if we  were to conclude that the  district judge erred          in  finding a  lack  of diligence,  her  judgment that  "Matrix's          motion flunks  the materiality test"  would stand  as a  separate          barrier to relief.  After noting that  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  by  JAMS, Judge  Saris          considered the provisions  of the MCI/JAMS Agreement  that Matrix          claimed were  pivotal.   She found only  one that  caused her  to          hesitate in finding  that the Agreement was  entirely immaterial.          That provision precluded  the arbitrator from making  findings of          fact  and  conclusions  of  law.   See  App.  at  1190  (MCI/JAMS                                             ___          Agreement at  Section XIIE).   Judge  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  next          conference with the arbitrator, on January 8, 1997.  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  spell out  findings and  legal          rulings that might  be used against  it in future cases  with its          customers.  But  there is no reason whatever to think that Matrix          would have  regarded such a  position as material.   Its contract          does not involve ordinary customer disputes,  and Matrix is fully          capable  of litigating  the  matters  afresh  whether  before  an          arbitrator or in court.               Indeed,  Matrix' only  explanation as to  why it  might have          cared  about the  provision  involves  a  terse  suggestion  that          arbitrator findings and  conclusions might help Matrix  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  limitation is  clearly directed  under  the Tariff  to          delays  and   installation  and  like  matters   involving  MCI's          relations  with its  customers and  has nothing  to do  with this          case,  and Matrix is  visibly silent on  this issue  in its reply          brief.   And,  as it  happens, the arbitrator  in this  case does          propose to make findings and conclusions.                                        ____________________               16  We note  that, like  the  arbitration rules  in the  MCI          Tariff, the MCI/JAMS  Agreement explicitly states that  it covers          the arbitration of  customer payment disputes over $10,000.   The                              ______________________________________          parties seem to  assume that the Agreement also  applies to other          arbitrations administered  by JAMS for  MCI, and we  likewise are          presuming its relevance here.                                          -20-               An  additional  factor  reinforces the  conclusion  that the          provision  was  immaterial.    "It  has  long  been settled  that          arbitrators are not required to make formal `findings of fact' to          accompany the awards they issue.  Indeed,  `[a]rbitrators have no          obligation .  . . to  give their reasons  for an award  at all.'"          Raytheon  Co.,  882 F.2d  at  8  (citation  omitted).   See  also          _____________                                           ___  ____          Prudential-Bache Sec., Inc. v. Tanner,  72 F.3d 234, 240 n.9 (1st          ___________________________    ______          Cir.  1995) ("It  is well  established that  arbitrators are  not          required to either make formal  findings of fact or state reasons          for the awards they issue.")  Moreover, errors in an arbitrator's          legal  rulings or  factual findings  do not  provide a  basis for          reversal.   See, e.g.,  Prudential-Bache, 72 F.3d  at 239  & n.6;                      ___  ____   ________________          Eljer Mfg., Inc. v. Kowin Dev.  Corp., 14 F.3d 1250, 1253-54 (7th          ________________    _________________          Cir. 1994); Advest,  Inc. v. McCarthy,  914 F.2d 6,  8 (1st  Cir.                      _____________    ________          1990).   We cannot see  how prohibiting a feature  of arbitration          that   was  not  guaranteed   to  begin  with   could  be  deemed          sufficiently  material to have  negated a party's  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  dedicated  phone  lines."    These          services, however, are for use  in connection with the tasks JAMS          is  required  to  provide under  the  contract  (such as  24-hour          electronic docketing and toll-free response to inquiries from MCI          customers about arbitration), and we  see nothing sinister in the                                         -21-          communications company contracting to provide the "tools" for the          work it  seeks to obtain  from its contractor,  particularly when          those  tools  are  its stock-in-trade.    Likewise,  the payments          specified  in  the  MCI/JAMS  Agreement are  for  services  to be          provided,  plus a $40,000  start-up fee "to  cover administration          design, computer services  and technical support".   See App.  at                                                               ___          1192-95.               Matrix knew from the outset, or should have known, that JAMS          had a substantial  relationship with MCI simply by  virtue of its          role  as  administrator  of MCI's  arbitration  program.   Matrix          should have known as well that the two parties  must have spelled          out  their  working  relationship  in  some  form;  we  think  it          virtually inconceivable that  there would be no  written contract          between them.  Moreover, many of the terms that Matrix  claims to          find shocking in  the MCI/JAMS Agreement  were included in  MCI's          public  request  for  bids  for  a  contract  to  administer  its          arbitration  program,   meaning  that  those  aspects   of  MCI's          relationship with its arbitration  administrator effectively were          public knowledge when Matrix entered the Agent Agreement.17               With  this much  reasonably  presumed to  be already  on the          table,  we are  unpersuaded that  the district  court  would have                                        ____________________               17  For example,  the MCI/JAMS  Agreement  requires JAMS  to          provide weekly reports on the status of current arbitrations, 24-          hour electronic docketing containing any change  in the status of          cases, deadlines  the parties must  meet and  any decisions  that          affect  what the parties  must do, a  centralized case scheduling          system,  and an 800 number  to handle inquiries about arbitration          from MCI customers.   All of these services were contained in the          bid request.  See App. at 1828-1830.                        ___                                         -22-          deemed  the additional  information  contained  in  the  MCI/JAMS          Agreement material  to Matrix's  decision to  participate in  the          arbitration.  None of the contacts between MCI and JAMS specified          in  the  Agreement  involve  the  arbitrators  who  are  deciding          cases,18  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  explicit assurance that  it did not          doubt the impartiality of the  arbitrator assigned to its case.19          We consequently  hold that the  district court did not  abuse its          discretion in denying Matrix's Rule 60(b) motion.               In sum, Judge Harrington, as  the appeal is presented to us,          committed no  reversible error  in issuing  the October 10  order          granting MCI's motion to compel arbitration, and  Judge Saris did                                        ____________________               18 In fact,  the MCI/JAMS Agreement states  that arbitrators          will  be  selected based  on,  among other  factors,  "absence of          conflicts of interest with MCI," and "demonstrated neutrality and          impartiality in professional practice".  See Section XII(A).  The                                                   ___          Agreement also provides:               ENDISPUTE  will ensure that  arbitrators serving on the               MCI panel have been screened for potential conflicts of               interest  with MCI  prior to  inclusion  on the  panel.               When appointed to  a particular proceeding, arbitrators               will  be required to disclose any conflicts of interest               with  MCI which may  have developed during  the interim               since  the arbitrator's  inclusion on  the  panel.   In               addition,  arbitrators  will   be  screened  prior   to               appointment to  a particular arbitration  for potential               conflicts with the  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.   Each party  to               __________________________________________    ______________          bear its own costs.          ___________________                                         -24-
