Move, Inc. v. Citigroup Global Markets, Inc.
Move commenced arbitration proceedings alleging that Citigroup mismanaged $131 million of Move’s funds by investing in speculative auction rate securities. FINRA provided the parties with a list of thirty proposed arbitrators and their employment histories, including ten proposed arbitrators from FINRA’s chairperson roster. Move ranked “James H. Frank” first who, according to the FINRA Arbitrator Disclosure Report (ADR), received a law degree from Southwestern University in 1975 and was licensed to practice law in California, New York, and Florida. Mr. Frank subsequently served as the chairperson of the panel along with Arthur T. Berggren, a licensed attorney, and Daniel R. Brush, a Certified Public Accountant and Certified Financial Planner. After Move subsequently discovered that Mr. Frank lied about his qualifications, Move filed a complaint arguing that vacatur was warranted because of Mr. Frank's misrepresentations. On appeal, Move challenges the district court's dismissal of its action and denial of its motion to vacate the arbitration award under the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq. The court held that Move’s motion was not untimely because the FAA is subject to equitable tolling. The court also held that Move’s right to a fundamentally fair hearing was prejudiced by the fraudulent misrepresentations of the arbitration panel’s chairperson, resulting in proceedings led by an arbitrator who should have been disqualified from the dispute under the rules and regulations of FINRA. Accordingly, the court reversed and remanded. View "Move, Inc. v. Citigroup Global Markets, Inc." on Justia Law