Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-02576/USCOURTS-azd-2_14-cv-02576-0/pdf.json

Nature of Suit Code: 896
Nature of Suit: Other Statutes - Arbitration
Cause of Action: 09:0010 Petition to Vacate Arbitration Award

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Christopher Sanguigni, 

Plaintiff, 

v. 

E*Trade Securities, LLC, 

Defendant.

No. CV-14-02576-PHX-SRB

AMENDED ORDER 

 The Court now considers Plaintiff’s Amended Motion to Vacate Award and 

Motion to Compel Defendant’s Performance (“MTV”) (Doc. 9) and Defendant’s CrossMotion to Confirm Arbitration Award (“MTC”) (Doc. 10). 

I. BACKGROUND 

This case arises out of a dispute between Plaintiff Christopher Sanguigni and 

Defendant E*Trade Securities, LLC, an online discount brokerage firm, regarding 

Plaintiff’s investment in Bancorp International Group, Inc. (“BCIT”). After a fraud was 

committed against BCIT shareholders in 2005, Depository Trust Company (“DTC”), a 

securities depository and clearing corporation, issued an alert to Defendant that it would 

cease processing any transactions in BCIT stock. (MTC at 3; Doc. 10-1, Ex. 2, DTC 

Special Alert.) Shortly after DTC issued its alert, the Securities and Exchange 

Commission (“SEC”) suspended trading in BCIT. (MTC at 3; Doc. 10-1, Ex. 3, SEC 

Order of Suspension of Trading.) When Plaintiff had purchased his BCIT shares prior to 

the 2005 fraud, the shares were traded electronically and not by paper certificate. (MTV 

Case 2:14-cv-02576-SRB Document 21 Filed 04/29/15 Page 1 of 6
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

at 2.) Following the DTC and SEC’s actions concerning the trading of BCIT stock, 

Plaintiff requested that Defendant deliver a physical certificate for his shares; however, 

Defendant informed him that it was unable to do so due to the “global lock” imposed on 

BCIT’s stock. (Id.; MTC at 4.) 

 Plaintiff then initiated the underlying arbitration proceeding against Defendant 

before the Financial Industry Regulatory Authority (“FINRA”), seeking an order 

compelling Defendant to deliver a physical certificate for his BCIT shares. (MTV at 2.) 

The parties agreed that the arbitration would be conducted in accordance with the FINRA 

Code of Arbitration Procedure (“FINRA Code”). (MTC at 4; Doc. 10-1 Ex. 6, FINRA 

Arbitration Submission Agreement.) In the arbitration, Defendant submitted a discovery 

request to Plaintiff. (Doc. 10-1, Ex. 8, Doc. Req.) Plaintiff objected to almost all of 

Defendant’s discovery requests and refused to produce any of the requested documents. 

(Doc. 10-1, Ex. 10, Pl.’s Objections.) Defendant then sent Plaintiff a letter asking him to 

comply with its discovery requests, otherwise Defendant would file a motion to compel 

discovery. (Doc. 10-1, Ex. 11, July 3, 2014 Letter.) After Plaintiff still failed to submit 

the requested documents, Defendant filed a motion to compel discovery and the 

Arbitration Chairperson granted the motion. (Doc. 10-1, Ex. 15, Aug. 6, 2014 Order.) 

Plaintiff again failed to comply with Defendant’s discovery request, so Defendant 

submitted a motion for sanctions. (Doc. 10-1, Ex. 17, Mot. for Sanctions.) The 

Arbitration Panel (“Panel”) granted Defendant’s motion for sanctions, finding that 

Plaintiff had “failed to comply with the discovery provisions of the Code, frivolously 

objected to the production of documents and information requested by [Defendant], failed 

to comply with a discovery order of the Panel, and shown a disregard for the arbitration 

forum.” (Doc. 10-1, Ex. 20, Arbitration Award at 2.) Under the FINRA Code, the Panel 

sanctioned Plaintiff by dismissing his claims with prejudice and assessing forum fees 

against him. (Id. at 2-5.) Plaintiff now moves to have the arbitration award vacated 

pursuant to Section 10 of the Federal Arbitration Act (“FAA”). (MTV at 11-15.)1

 

1

 Plaintiff also argues that he is entitled to relief pursuant to Federal Rule of Civil 

Case 2:14-cv-02576-SRB Document 21 Filed 04/29/15 Page 2 of 6
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

II. LEGAL STANDARDS AND ANALYSIS 

 Under the FAA, a court’s “review of the actual award is ‘both limited and highly 

deferential.’” Schoenduve Corp. v. Lucent Technologies, Inc., 442 F.3d 727, 730 (9th Cir. 

2006). “[A] court ‘must’ confirm an arbitration award ‘unless’ it is vacated, modified, or 

corrected ‘as prescribed’ in Sections 10 and 11.” Hall St. Assocs., 552 U.S. at 582 

(quoting 9 U.S.C. § 9). Here, Plaintiff is requesting that the Court vacate the final 

arbitration award in favor of Defendant and therefore Plaintiff bears the burden of 

establishing grounds for vacatur. U.S. Life Ins. Co. v. Superior Nat’l Ins. Co., 591 F.3d 

1167, 1173 (9th Cir. 2010) (“The burden of establishing grounds for vacating an 

arbitration award is on the party seeking it.”). Section 10 of the FAA provides the sole 

grounds on which a court may vacate an arbitration award. See Hall St. Assocs., 552 U.S. 

at 582-84; U.S. Life Ins. Co., 591 F.3d at 1173. Courts will vacate an award only where 

there is evidence that it was (1) “procured by corruption, fraud, or undue means”; (2) 

“there was evident partiality or corruption in the arbitrators”; (3) “the arbitrators were 

guilty of misbehavior by which the rights of any party have been prejudiced”; or (4) “the 

arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, 

and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10; 

Coutee v. Barington Capital Grp., 336 F.3d 1128, 1132 n.4 (9th Cir. 2003). 

 Plaintiff first argues that the arbitration award should be vacated because “it was 

procured by fraud and undue means.” (MTV at 12.) To vacate an arbitration award as 

procured by fraud, the party challenging the award must show the fraud was “(1) not 

discoverable upon the exercise of due diligence prior to the arbitration, (2) materially 

related to an issue in the arbitration, and (3) established by clear and convincing 

evidence.” Lafarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 

1334, 1339 (9th Cir. 1986). Plaintiff has failed to establish by clear and convincing 

 Procedure 60(b). (MTV at 9-11.) The Court does not address Plaintiff’s arguments concerning Rule 60(b) because the award is not an “order” or “final judgment” of a federal court. See Fed. R. Civ. P. 60(b). Further, the Supreme Court has stated that the four grounds listed in Section 10 of the FAA are the “exclusive” grounds for vacating an arbitration award. See Hall St. Assocs., LLC v. Mattel, 552 U.S. 576, 584-86 (2008). 

Case 2:14-cv-02576-SRB Document 21 Filed 04/29/15 Page 3 of 6
- 4 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

evidence that the award was procured by fraud. Plaintiff’s only argument regarding fraud 

is that “the irrational cancelation of the scheduled hearing suggest[s] the arbitrators were 

subject to influence[,] which caused them to abandon their role as neutral decision 

makers.” (Id. (citing 9 U.S.C § 10(a)(1)-(2).)

2

 Plaintiff has failed to present any evidence 

to support his position that the Panel’s ruling was “irrational,” let alone that it was 

procured by fraud. All of the proffered evidence demonstrates that Plaintiff failed to 

comply with Defendant’s requests for discovery, despite the Panel’s express order to do 

so. (See Exs. 8-17.) Plaintiff has not shown that the Panel’s dismissal of Plaintiff’s claim 

with prejudice was irrational or fraudulent, as it was clearly within the Panel’s authority 

pursuant to the procedural rules governing Plaintiff’s arbitration claim. (See Doc. 10-1, 

Ex. 21, FINRA Code Section 12212 (stating that the Panel “may dismiss a claim . . . with 

prejudice as a sanction for material and intentional failure to comply with an order of the 

[P]anel if prior warnings or sanctions have proven ineffective”).) The Court will therefore 

deny Plaintiff’s motion to vacate the arbitration award for fraud. 

 Plaintiff further argues that the arbitration award should be vacated because the 

Panel’s decision to issue a sanction dismissing his claim with prejudice was “draconian” 

and an abuse of the Panel’s discretion that ultimately prevented Plaintiff from enforcing 

his claim. (MTV at 12-13 (citing 9 U.S.C. § 10(a)(3)).) Plaintiff also argues that the 

arbitration award should be vacated because the Panel had no authority to dismiss his 

claims with prejudice. (Id. at 13-14 (citing 9 U.S.C. § 10(a)(4)).) In support of these 

arguments, Plaintiff claims that the Panel violated the FINRA Code because he received 

“no warning” that the Panel was going to impose sanctions and dismiss his claim with 

prejudice. (Id. at 15 (citing FINRA Code Sections 1211(b), 12512(c)).) 

 

2

 Although Plaintiff cites to 9 U.S.C. § 10(a)(2), he does not develop an argument that the Panel or individual arbitrators acted with “evident partiality.” (See MTA at 12.) 

To vacate the award for evident partiality, Plaintiff would have to “establish specific facts which indicate improper motives on the part of the [arbitrators]. The appearance of impropriety, standing alone, is insufficient.” Sheet Metal Workers Int’l Assoc. Local 

Union #420 v. Kinney Air Conditioning Co., 756 F.2d 742, 746 (9th Cir. 1985). To the 

extent Plaintiff’s Motion relies on this ground for vacatur, the Court will deny the Motion because Plaintiff has not offered any evidence or facts that would allow the Court to determine the arbitrators acted with evident partiality. 

Case 2:14-cv-02576-SRB Document 21 Filed 04/29/15 Page 4 of 6
- 5 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

Plaintiff has failed to offer any evidence demonstrating that the Panel was guilty 

of misconduct, engaged in any misbehavior that prejudiced Plaintiff’s rights, or exceeded 

its authority by dismissing Plaintiff’s claims with prejudice. The evidence demonstrates 

that Plaintiff had notice of Defendant’s discovery requests. It also shows that the Panel 

afforded Plaintiff sufficient opportunity to comply with Defendant’s discovery requests 

before dismissing his claims with prejudice, pursuant to the FINRA Code. Such evidence 

fails to demonstrate any misconduct on the part of the Panel or that the Panel exceeded its 

authority. See Schoenduve, 442 F.3d at 731 (“[A]rbitrators exceed their powers . . . the 

award is completely irrational, or exhibits a manifest disregard of law.”) The Court will 

deny Plaintiff’s motion to vacate the arbitration award based on any Panel misconduct or 

the Panel exceeding its authority. 

III. CONCLUSION 

The Court concludes that Plaintiff has failed to establish any grounds for vacating 

the arbitration award and, therefore, the Court denies Plaintiff’s Motion. Because the 

award is not subject to vacatur, the Court will grant Defendant’s Cross-Motion to 

Confirm Arbitration Award. See 9 U.S.C. § 9.3

 

IT IS ORDERED denying Plaintiff’s Amended Motion to Vacate Award and 

Motion to Compel Defendant’s Performance (Doc. 9). 

IT IS FURTHER ORDERED granting Defendant’s Cross-Motion to Confirm 

Arbitration Award (Doc. 10). 

/ / / 

/ / / 

 / / / 

/ / / 

 

3

 Defendant has moved to strike a filing titled, “Petitioner Submits a Document 

which Shows that Respondent Cannot Have the Shares and that FINRA Arbitration 

Could Not Grant the Relief Being Sought,” (Docs. 13 and 13-1) that Plaintiff submitted 

after the parties fully briefed the pending motions. (See Doc. 15, Def.’s Mot. to Strike at 

1-3). The resolution of the motion to strike is unnecessary given the disposition of this 

matter. 

Case 2:14-cv-02576-SRB Document 21 Filed 04/29/15 Page 5 of 6
- 6 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

IT IS FURTHER ORDERED denying as moot Defendant’s Motion to Strike 

(Doc. 15). 

 Dated this 28th day of April, 2015. 

Case 2:14-cv-02576-SRB Document 21 Filed 04/29/15 Page 6 of 6