Move, Inc. v. Citigroup Global Markets, Inc.
2016 U.S. App. LEXIS 19930
| 9th Cir. | 2016Background
- Move, Inc. invested with Citigroup and agreed to arbitrate disputes before FINRA under a Client Agreement and FINRA’s Uniform Submission Agreement.
- Move filed a FINRA arbitration (three-arbitrator panel) in 2008 alleging Citigroup mismanaged ~$131 million; the panel (chaired by “James H. Frank”) issued a unanimous award for Citigroup in 2009.
- In 2014 Move learned Frank had falsified his attorney credentials (he was impersonating a retired lawyer); FINRA removed him from the roster after confirming the deception.
- Move filed a complaint and moved to vacate the arbitration award more than four years after the award, arguing vacatur under 9 U.S.C. § 10(a)(3) and (4) due to the chair’s fraud; Citigroup argued the FAA’s 3‑month vacatur deadline barred the motion and, alternatively, that Move was not prejudiced.
- The district court held equitable tolling may apply but denied vacatur on the merits; Move appealed and the Ninth Circuit reviewed de novo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FAA’s 3‑month limitations period is subject to equitable tolling | FAA deadlines should be equitably tolled where fairness requires; Move only discovered fraud later | The FAA’s scheme and finality goals preclude equitable tolling | FAA is subject to equitable tolling; Move is entitled to tolling (fairness/diligence and lack of prejudice) |
| Whether the arbitration award must be vacated under 9 U.S.C. § 10(a)(3) for arbitrator misbehavior | Frank’s fraudulent misrepresentations deprived Move of a fundamentally fair hearing because Move specifically chose an attorney chair and relied on ADR disclosures | No proof Frank influenced outcome; mere falsity alone is insufficient to show prejudice | Vacatur is warranted under § 10(a)(3): inclusion of an arbitrator who would have been disqualified prejudiced Move’s right to a fundamentally fair hearing |
Key Cases Cited
- Young v. United States, 535 U.S. 43 (2002) (presumption that limitations periods are subject to equitable tolling absent contrary text or purpose)
- Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990) (background principle that statutes of limitations are subject to equitable tolling)
- John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008) (Congress presumed to legislate against presumption of tolling unless indicated otherwise)
- Holland v. Florida, 560 U.S. 631 (2010) (factors to consider whether tolling is barred by statutory text)
- Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576 (2008) (scope of judicial review under the FAA and the policy favoring arbitration finality)
- Lafarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334 (9th Cir. 1986) (prior Ninth Circuit case addressing timely challenges to awards but not equitable tolling)
- U.S. Life Ins. Co. v. Superior Nat. Ins. Co., 591 F.3d 1167 (9th Cir. 2010) (standard: vacatur requires showing arbitrator misbehavior that prejudiced a party’s rights and deprived a fundamentally fair hearing)
- Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987 (9th Cir. 2003) (FAA review limits preserve due process concerns)
- Totem Marine Tug & Barge, Inc. v. North American Towing, Inc., 607 F.2d 649 (5th Cir. 1979) (arbitrator’s ex parte receipt of evidence may justify vacatur)
- M & A Elec. Power Co-op. v. Local Union No. 702, 977 F.2d 1235 (8th Cir. 1992) (arbitrator’s outside consultation that taints decision can warrant vacatur)