Global Ebusiness Services, Inc. et al v. Interactive Broker LLC

Filing 48

ORDER RE ARBITRATION AWARD. Signed by Judge James Donato on 10/30/2017. (jdlc2S, COURT STAFF) (Filed on 10/30/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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GLOBAL EBUSINESS SERVICES, INC.,
et al.,

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United States District Court
Northern District of California

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Plaintiffs,

Case No. 16-cv-01264-JD
ORDER RE ARBITRATION AWARD

v.

Re: Dkt. Nos. 33, 37

INTERACTIVE BROKERS LLC,
Defendant.

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Plaintiff Global eBusiness Services, Inc. petitions the Court to vacate under 9 U.S.C. § 10

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an arbitration award issued against it by the Financial Industry Regulatory Authority (FINRA).

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Dkt. No. 33. Defendant Interactive Brokers LLC asks that the Court instead confirm the award

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under 9 U.S.C. § 9. Dkt. No. 37. Venue here is uncontested and not improper. See Dkt. Nos. 46,

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47; Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193, 195 (2000) (venue

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provisions of 9 U.S.C. §§ 9-11 are permissive, not restrictive). The Court denies plaintiff’s

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petition to vacate, and confirms the award.

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BACKGROUND
In this dispute between broker and customer, FINRA issued an award on November 13,

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2015, denying all of Global eBusiness’s claims against Interactive Brokers in their entirety. Dkt.

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No. 1 at ECF pp. 8-17. Global eBusiness had asserted claims for breach of fiduciary duty,

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churning, misrepresentation/non-disclosures, omission of facts and “bait and switch strategy,” all

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in relation to Interactive Brokers’ “handling of [Global eBusiness’s] margin account.” Id. at ECF

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p. 11. The award was issued by a panel of three public arbitrators. Id. at ECF pp. 15-17.

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DISCUSSION

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Global eBusiness acknowledges, as it must, that 9 U.S.C. § 10 sets out the “limited,

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exclusive grounds for vacating an arbitration award,” and that as the party seeking to vacate the

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award, it bears the burden of establishing that one of the grounds in that section justifies vacating

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the award. See Dkt. No. 33 at 8-9; U.S. Life Ins. Co. v. Superior Nat’l Ins. Co., 591 F.3d 1167,

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1173 (9th Cir. 2010). It has not met that burden.
Global effectively invokes two of the grounds in 9 U.S.C. § 10: that the arbitrators were

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“guilty of misconduct . . . in refusing to hear evidence pertinent and material to the controversy,” 9

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U.S.C. § 10(a)(3), and that the arbitrators “exceeded their powers” by issuing an award that

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exhibits a “manifest disregard of law.” 9 U.S.C. § 10(a)(4). See Dkt. No. 33 at 2; Kyocera Corp.

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v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 997 (9th Cir. 2003) (arbitrators “exceed

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their powers” under 9 U.S.C. § 10(a)(4) “when the award . . . exhibits a ‘manifest disregard of

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United States District Court
Northern District of California

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law’”).

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But Global has provided no evidence to satisfy § 10(a)(3). For example, although it

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repeatedly asserts as fact that the panel “failed to evaluate any of the 97 exhibits [it] provided,”

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Dkt. No. 33 at 6, its own reply brief makes clear that this is nothing more than pure speculation.

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See Dkt. No. 39 at 8 (“The sheer volume of the evidence makes the contention that petitioner’s

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evidence was adequately reviewed over a 4 day period unlikely.”). If anything, the fact that

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Global had the opportunity to submit this evidence weighs in favor of confirming the award. See

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Schoenduve Corp. v. Lucent Techs., Inc., 442 F.3d 727, 734 (9th Cir. 2006) (“Because the

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arbitrator did not abuse his powers by ruling on a[n] issue implicitly submitted to him, and

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because Lucent was never denied an opportunity to present evidence as to that issue, the arbitrator

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did not engage in any misbehavior under 9 U.S.C. § 10(a)(3).”).

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The expeditious resolution of disputes requires that arbitrators be provided with broad

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discretion and great deference in their determinations of procedural issues within the course of

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arbitration. A review of the record here shows that none of the procedural decisions plaintiff

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complains of, see, e.g., Dkt. No. 33 at 6-7, falls outside that broad scope of discretion or amounts

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to a denial of fundamental fairness. Global has not presented sufficient evidentiary support for

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any aspect of its request to vacate the FINRA award under 9 U.S.C. § 10(a)(3), and so that ground

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is rejected on that basis. See Kyocera, 341 F.3d at 1003 (proper for court to confirm arbitration
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award where party moving to vacate “presents no evidence” that arbitrators’ decision “contains or

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was based on any conduct that approaches the type that warrants vacatur under the Federal

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Arbitration Act”).

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Global’s invocation of 9 U.S.C. § 10(a)(4) also falls short. Our circuit has made clear that

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the scope of the “exceeded their powers” language in this subsection is quite narrow, and an award

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cannot be vacated under this subsection even when arbitrators “interpret or apply the governing

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law incorrectly.” Kyocera, 341 F.3d at 997. It is only when the award is “completely irrational”

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or manifestly disregards the law that this ground is satisfied. Id. But here, Global has not

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identified any governing law that was arguably incorrectly applied by the panel, let alone

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United States District Court
Northern District of California

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manifestly disregarded. So this ground, too, is rejected.
In sum, plaintiff has failed to sustain its burden of proving that any ground in 9 U.S.C.

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§§ 10 or 11 is satisfied here. The Court notes that plaintiff has also invoked the California

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Arbitration Act, and specifically, the grounds for vacating an arbitration award under California

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Code of Civil Procedure § 1286.2. Dkt. No. 33 at 9. It is quite doubtful, however, that the CCP

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has any application here. See Dkt. No. 19-4 (Interactive Brokers Institutional Services Customer

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Agreement) at ECF p. 53 (Connecticut choice-of-law provision). Even assuming for discussion

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purposes that it did apply, the Court would conclude that plaintiff has not provided sufficient legal

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or evidentiary support for the grounds in CCP § 1286.2(a), either.

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CONCLUSION

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Under the FAA, “a court ‘must’ confirm an arbitration award ‘unless’ it is vacated,

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modified, or corrected ‘as prescribed’ in [9 U.S.C.] §§ 10 and 11.” Hall St. Assocs., L.L.C. v.

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Mattel, Inc., 552 U.S. 576, 582 (2008). The Court consequently denies plaintiff’s petition to

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vacate the award, and grants defendant’s motion to confirm it. The action is dismissed with

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prejudice and judgment will be entered in favor of defendant.

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IT IS SO ORDERED.
Dated: October 30, 2017

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JAMES DONATO
United States District Judge

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