N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
SC HILLING LIVESTOC K, INC .; KENNETH A. SC HILLING; LESLEY R
. SC HILLING,

Pla i ntiffs-Appe lla

nts,
v. UM PQUA B A

NK, FKA Ste rling Sa

vings B an k, De fe nda

n t-Appe l le e . No. 15-35995 D.C . No. 6:14-c v-00054-C C L
M EM O R ANDUM *

Appe a l from

the Unite d

Sta t e s Distric t C ourt for the Distric t of M o nta

na C ha rle s C . Love ll, Distric t Judge , Pre siding Argue d and Subm itte d June 9, 2017 Portla nd, Ore gon B e fore : GOULD a

nd R A W LINSON, C irc uit Judge s, a n d R AYES, ** Distric t Judge
. 

# FIL ED
DEC 28 2017 M OLLY C. DW Y ER, CLERK U

. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The Honora

ble Dougla s L. R ay e s, Unite d Sta t e s Distric t Judge for the Distric t of Ariz ona , sitting by de signa tion.Appe lla nts Ke nne th Sc hilling, Le sle y Sc hilling, a

nd Sc hilling Live stoc k, Inc
. (c olle c tive ly , the Sc h i llings) a p pe a l the distric t

c ourt’ s orde r c onfirm i ng a n
arbitration a

ward in fa

v o r of Appe lle e Um

pqua B ank, FKA Ste rling Sa

vings B ank (Ste rling). The Sc hillings c onte nd tha t the award should beva c a te d be c a u s e the
arbitrators e nga ge d in m isc onduc t by a llowing Ste rling to re ly

on a n undisc lose d de fe nse pre m ise d on the Gra m m -Le a c h-B l ile y

Ac t (GLB A). Ac c ording to the Sc hillings, Sterling’ s e xp e rt fa lse ly te stifie d tha

t Ste rling wa s not lia

ble for fraudule nt inve stm e nt a dvic e due to a ne tworking e xc e ption to the GLB A. The Sc hillings fa il to m e e t the high sta n da rd for va c atur of a

n a rbitra tion
award. Se e Lagste in v . C e rtain Unde rw r ite rs at Lloyd’s, London , 607 F.3d 634, 641 (9th C i r. 2010) (“ Arbitra tors e xc e e d the ir powe rs not whe n the y m e re ly inte rpre t or a

pply the gove rning la

w inc orre c tly , but whe n the award is c om ple te ly irra tiona l, or e x hibits a

m anife st disre ga

rd of la w.” ) (c ita tion, a lte ra tions, a

nd inte rna l quota

tion m arks om itte d). The Sc hillings’ a sse rtion tha t the y we re de prive d of a de quate notic e of Ste rling’ s re lia nc e on the GLB A de fe nse is be lie d by the re c ord. As the distric t c o urt c o rre c tly obse rve d, the Sc hillings ope ne d the door to Ste rling’ s introduc tion of a re butta l witne s s c onc e rning the ba nk’ s sta tutory dutie s. M ore ove r, the Sc hillings we re a fforde d an opportunity

to subm i t supple m e nta l brie fing on the GLB A de fe nse , but de c line d to do so. Thus, the
2arbitrators did not e nga ge in m isc onduc t in pe rm itting re butta l te stim ony re g arding the s tat utory de fe n se , a

n d the i r de c ision did not othe rwise de prive the Sc hillings of
a fa i r he a ring. Se e U.S. Life

Ins. C o. v . Supe rior N

at’l Ins. C

o. , 591 F.3d 1167, 1177 (9th C ir. 2010) (“ In short, pe rha ps [Appe l la

nt] did not e njoy

a pe rfe c t he aring; but it did re c e ive a fa ir he aring. It ha d

notic e , it ha d the opportunity to be he ard and to pre se nt re le va nt a nd m a te ria l e vide nc e , a

nd the de c isionm a ke rs we re not infe c te d with bia s. . . .” ) (c ita tion om itte d). 1 The re c ord doe s not re fle c t tha t Ste rling’ s e xpe rt fa lse ly

or fra u dule ntly te stifie d c onc e rning the GLB A de fe nse . As the distric t c ourt obse rve d, the e xpe rt
re sponde d to a

n am biguous que stion a

nd did not othe

rwise provide fa lse te stim ony . Nota bly , the arbitration a

ward m a ke s no m e n tion of thee xpe rt’ s te stim ony in finding tha

t Ste rling wa s not lia

ble
. As a re sult, theSc hillings fa il to de m onstra te by c l e ar and c onvinc i ng e vide nc e tha t a ny fra ud or fa lse te s tim ony

wa rra nte d
va c a tur of the arbitration a ward. Se e AG Edw ards & Sons Inc . v . Mc C o llough , 967 F.2d 1401, 1404 (9th C ir. 1992) (e xpla ining tha t c ha l le nge s to a

n a rbitration a

ward

1 The Sc hillings’ re lia

nc e on Mov e

, Inc . v . C i tigroup Global Mk

ts. , 840 F.3d 1152 (9th C ir. 2016), is m ispla c e d, a s tha

t c a se is e n tire l y distinguisha ble . In Mov e , the “ arbitrator’ s purpose ful a nd m a te ria l de c e p tion” that he wa s a lic e nse d a ttorne y and his im

pe rsonation of a

re tire d attorne y

wa rra nte d va c at

ur of the arbitration a

ward. Id. a t 1155, 1158. In c ontra st, this a ppe a l involve s the arbitrators’ proc e dura l de c ision pe rm i tting e vide nc e c o nc e rning a pote ntia lly re le va nt sta tutory de fe nse . Se e U.S. Life

Ins. C o. , 591 F.3d a

t 1177. 3ba se d on fra ud m ust be “ e s ta

blishe d by

c le ar and c onvinc ing e vide n c e ” ) (c ita tion
om i tte d). AFFIRM E D.

4