Opinion ID: 4027030
Heading Depth: 4
Heading Rank: 1

Heading: Margin equity security, except for an

Text: exempted security, money market mutual fund or exempted securities mutual fund, warrant on a securities index or foreign currency or a long position in an option: 50 percent of the current market value of the security or the percentage set by the regulatory authority where the trade occurs, whichever is greater. Id. § 220.12(a). 25 Without taking a position on the merits of that argument, we agree with the District Court that the Goldmans’ invocation of 15 U.S.C. § 78g and 12 C.F.R. § 220.12 is insufficient to raise a substantial question of federal law in their motion to vacate. Even if “manifest disregard” is a valid basis for vacatur,13 it can only support 13 The continued validity of manifest disregard as a basis for vacating arbitration awards has been thrown into doubt by the Supreme Court’s holding in Hall Street Associates, L.L.C. v. Mattel, Inc. that “§§ 10 and 11 respectively provide the FAA’s exclusive grounds for expedited vacatur and modification.” 552 U.S. 576, 584 (2008). Subsequently, the Court expressly declined to “decide whether ‘manifest disregard’ survives ... Hall Street ... as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 672 n.3 (2010). The Courts of Appeals have divided on the answer to that question. Compare Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1290 (9th Cir. 2009) (holding that manifest disregard survives as “shorthand for ... 9 U.S.C. § 10(a)(4), which states that the court may vacate ‘where the arbitrators exceeded their powers’”), with Affymax, Inc. v. Ortho-McNeil-Janssen Pharm., Inc., 660 F.3d 281, 285 (7th Cir. 2011) (holding that after Hall Street, “‘manifest disregard of the law’ is not a ground on which a court may reject an arbitrator’s award under the Federal Arbitration Act”). Because we conclude that the Goldmans’ manifest disregard claim does not raise a substantial question of federal law, we need not inquire into 26 federal question jurisdiction “where ... the petitioner complains principally and in good faith that the award was rendered in manifest disregard of federal law ... .” Greenberg v. Bear, Stearns & Co., 220 F.3d 22, 27 (2d Cir. 2000) (emphasis added). The Goldmans do not meet that standard because the legal issues they raise are, at most, merely supportive of their principal complaint that partiality, corruption, and ineptitude infected the arbitration process. More broadly, the Goldmans fail to establish any of the four parts of the Grable test with their manifest disregard claim. The claim does not “necessarily raise a ... federal issue,” nor is the federal issue in question “substantial,” Grable, 545 U.S. at 314, because the margin regulations are invoked simply as evidence for the factual claim that a margin call occurred. That alone does not create a basis for federal subject-matter jurisdiction, because determining whether the arbitrator “fail[ed] to consider pertinent and material evidence” “plainly [does] not require resolution of a uniquely federal issue.” Greenberg, 220 F.3d at 27 (internal quotation marks omitted). In reality, no question of federal law is “actually disputed” here. Grable, 545 U.S. at 314. We agree with the District Court that the fundamental dispute is not legal at all, but is factual: “no party contests the existence, applicability, or construction of these statutes and regulations. Instead, the Goldmans argue that the panel erred in its factual determination that no margin call occurred.” (App. 13.) Finally, we are concerned that sweeping this kind of run-of-the-mill arbitration dispute into federal court would upset the “prominent role” that state the continuing validity of manifest disregard as a basis for vacatur. 27 courts “play as enforcers of agreements to arbitrate” under the FAA. Vaden, 556 U.S. at 59. Expanding federal question jurisdiction to contractual disputes like this one runs the risk of “disturbing [the] congressionally approved balance of federal and state judicial responsibilities.” Grable, 545 U.S. at 314.