Stone & Youngberg, LLC v. Kay Family Revocable Trust UAD 02-07-90 FBO Lenore Bleadon Under Trust A

Filing 40

ORDER DENYING RESPONDENT'S MOTION TO DISMISS FOR LACK OF JURISDICTION; VACATING MAY 20, 2011 HEARING; SETTING BRIEFING SCHEDULE ON PETITIONER'S MOTION TO VACATE ARBITRATION AWARD. The motion to dismiss for lack of subject matter jurisdiction is denied. A hearing on the motion to vacate is scheduled for June 17, 2011, at 9:00 a.m. Signed by Judge Maxine M. Chesney on May 13, 2011. (mmclc1, COURT STAFF) (Filed on 5/13/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

For the Northern District of California

United States District Court

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STONE & YOUNGBERG, LLC,
Petitioner,

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No. C-11-0198 MMC

v.
KAY FAMILY REVOCABLE TRUST UAD
02-07-90 FBO LENORE BLEADON UNDER
TRUST A,
Respondent.

ORDER DENYING RESPONDENT’S
MOTION TO DISMISS FOR LACK OF
JURISDICTION; VACATING MAY 20,
2011 HEARING; SETTING BRIEFING
SCHEDULE ON PETITIONER’S MOTION
TO VACATE ARBITRATION AWARD

/

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Before the Court is the “Motion to Dismiss Pursuant to F.R.C.P. 12(b)(1),” filed

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March 22, 2011 by respondent Kay Family Revocable Trust UAD 02-07-90 FBO Lenore

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Bleadon Under Trust A. Petitioner Stone & Youngberg, LLC has filed opposition, to which

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respondent has replied. Having read and considered the papers filed in support of and in

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opposition to the motion, the Court deems the matter suitable for decision on the parties’

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respective written submissions, VACATES the hearing scheduled for May 20, 2011, and

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rules as follows.

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In an award dated December 14, 2010 (“Award”), an arbitration panel awarded

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respondent the sum of $750,000 against petitioner, an investment firm, on respondent’s

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claims arising from an investment in a specified fund. (See Compl. Ex. A.) Thereafter,

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petitioner filed the instant “Complaint and Petition for Vacation of Arbitration Award”

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seeking an order vacating the Award. By the instant motion, respondent argues the Court

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lacks subject matter jurisdiction to hear the matter. The Court disagrees.

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A district court has jurisdiction over a petition to vacate an arbitration award where

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the petitioner alleges the arbitrator engaged in a “manifest disregard of federal law.” See

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Luong v. Circuit City Stores, Inc., 368 F.3d 1109, 1110 (9th Cir. 2004) (holding district court

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had jurisdiction over petition alleging “arbitrator manifestly disregarded Toyota Motor Mfg.,

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Inc. v. Williams, 534 U.S. 184, 122 S.Ct. 681, 151 L.Ed.2d 615 (2002)”). Here, petitioner

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alleges the arbitrators manifestly disregarded federal law when they rendered the award at

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issue herein. (See Compl. ¶¶ 7, 20.) In particular, petitioner alleges that it brought to the

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panel’s attention a number of federal cases, which authority, according to petitioner, was

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“manifestly disregarded.” (See, e.g., Compl. ¶ 48 (identifying Jablon v. Dean Witter, 614

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F.2d 677, 680 (9th Cir. 1980) and Banca Cermi S.A. v. Alex Brown & Sons, Inc., 132 F.3d

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1017, 1032 (4th Cir. 1997) as among federal authorities brought to panel’s attention.)1

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In light of petitioner’s allegations, the Court finds it has jurisdiction over petitioner’s

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claim. In particular, the Court has jurisdiction to consider the issue of whether the panel in

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fact manifestly disregarded the federal authorities cited by petitioner. See, e.g., Luong, 368

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F.3d at 1110 (holding where petitioner claimed arbitrator manifestly disregarded federal

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law, “district court had subject matter jurisdiction over [ ] petition,” although “petition fail[ed]

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because the arbitrator did not manifestly disregard [federal law]”); Brezden v. Associated

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Securities Corp., 2009 WL 1531850, *3-4 (C.D. Cal. 2009) (holding jurisdiction existed to

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consider merits of petition alleging arbitrators “acted in ‘manifest disregard of federal law,’”

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although petition ultimately dismissed where petitioner failed to show arbitrators had in fact

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disregarded federal law).

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For the reasons stated above, the motion to dismiss for lack of subject matter
jurisdiction is hereby DENIED.

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The petition identifies six decisions issued by federal courts of appeal (see Compl.
¶¶ 48, 51) and four decisions issued by federal district courts (see Compl. ¶¶ 49-51) that
allegedly were brought to the panel’s attention and thereafter disregarded.
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In accordance with the Court’s order of April 20, 2011, the Court sets the following

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briefing schedule and hearing on petitioner’s Motion to Vacate Arbitration Award:
1. No later than May 27, 2011, respondent shall file its response to the motion to

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vacate.

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2. No later than June 3, 2011, petitioner shall file its reply.

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3. A hearing on the motion to vacate is hereby scheduled for June 17, 2011, at 9:00

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a.m.
IT IS SO ORDERED.

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Dated: May 13, 2011
MAXINE M. CHESNEY
United States District Judge

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