Commercial Litigation and Arbitration

Recall of Appellate Mandate Is Extraordinary Remedy Reserved for Matters of Last Resort, Requiring Grave Unforeseen Contingency, and Unwarranted Where Other Avenues to Raise Intervening Supreme Court Decision Exist

From Kashner Davidson Securities Corp. v. Mscisz, 601 F.3d 19 (1st Cir. 2010):

Kashner Davidson argues that a recent Supreme Court decision, Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576, 128 S. Ct. 1396, 170 L. Ed. 2d 254 (2008), undermines our earlier mandate in this case. In Hall Street, the Supreme Court held that the grounds for prompt vacatur or modification of an arbitral award enumerated in the Federal Arbitration Act, 9 U.S.C. §§ 10-11, are exclusive and may not be supplemented by contract. 552 U.S. at 584. Kashner Davidson contends that our holding in the first appeal — that the award must be vacated because the arbitrators manifestly disregarded the law — is in conflict with Hall Street because manifest disregard of the law is not explicitly listed as a ground for vacatur in section 10 of the FAA.

The continued vitality of the manifest disregard doctrine in FAA proceedings is a difficult and important issue that the courts have only begun to resolve. See, e.g., Citigroup Global Mkts., Inc. v. Bacon, 562 F.3d 349, 358 (5th Cir. 2009) (manifest disregard of the law is no longer an "independent, nonstatutory ground" for setting aside an arbitration award); Comedy Club, Inc. v. Improv West Assocs., 553 F.3d 1277, 1281 (9th Cir. 2009) (manifest disregard of the law "remains a valid ground for vacatur of an arbitration award under § 10(a)(4) of the Federal Arbitration Act"); Stolt-Nielsen SA v. AnimalFeeds Int'l Corp., 548 F.3d 85, 94-96 (2d Cir. 2008) (manifest disregard doctrine is "a judicial gloss on the specific grounds for vacatur enumerated in section 10 of the FAA"), cert. granted on other grounds, 129 S. Ct. 2793, 174 L. Ed. 2d 289 (2009). We have referred to the issue in dicta, see Ramos-Santiago v. United Parcel Serv., 524 F.3d 120, 124 n.3 (1st Cir. 2008), but have not squarely determined whether our manifest disregard case law can be reconciled with Hall Street.

In an effort to have us decide that issue now, Kashner Davidson has asked us to take the unusual step of recalling our earlier mandate. We will not oblige. The power to recall a mandate is "one of last resort, to be held in reserve against grave, unforeseen contingencies." Calderon v. Thompson, 523 U.S. 538, 550, 118 S. Ct. 1489, 140 L. Ed. 2d 728 (1998). We have exercised that power sparingly over the course of many years, recalling mandates in only the most extraordinary circumstances.

[Footnote 4] Compare United States v. Fraser, 407 F.3d 9, 10-11 (1st Cir. 2005) (per curiam) (declining to recall mandate) [and numerous other authorities] with Alsamhouri v. Gonzales, 471 F.3d 209, 209-10 (1st Cir. 2006) (recalling mandate where an asylum seeker subject to removal raised a "serious" jurisdictional argument, and the Supreme Court had not yet acted on a pending petition for writ of certiorari); In re: Union Nacional de Trabajadores, 527 F.2d 602, 604 (1st Cir. 1975) (per curiam) (recalling writ of mandamus where the original decision requiring the district court to hold an "unprecedented" jury trial was "demonstrably wrong and created manifest injustice"). We have occasionally recalled a mandate for the purpose of correcting a clerical error or matter of form. See, e.g., Estate of Abraham v. Comm'r, 429 F.3d 294 (1st Cir. 2005). ***

Kashner Davidson's current predicament is hardly extraordinary. The company failed to take advantage of numerous earlier opportunities to raise the Hall Street argument through ordinary procedures. Most immediately, it could have cross-appealed in this proceeding from the district court's remand order and urged us to revisit our previous decision under ordinary law of the case principles. See Nulankeyutmonen Nkihtaqmikon v. Impson, 585 F.3d 495, 498 (1st Cir. 2009) ("We could revisit our own earlier decision if [the appellant] could show that controlling legal authority has changed dramatically; proffer significant new evidence, not earlier obtainable in the exercise of due diligence; or convince the court that a blatant error in the prior decision will, if uncorrected, result in a serious injustice.") (internal quotation marks and citations omitted). Kashner Davidson did not do so, and now it is faced with the well-settled rule that an appellee who fails to file a cross-appeal may "urge in support of a decree any matter appearing in the record" but may not "attack the decree with a view either to enlarging his own rights thereunder or of lessening the rights of his adversary." El Paso Natural Gas Co. v. Neztsosie, 526 U.S. 473, 479, 119 S. Ct. 1430, 143 L. Ed. 2d 635 (1999) (quoting United States v. Am. Ry. Express Co., 265 U.S. 425, 435, 44 S. Ct. 560, 68 L. Ed. 1087 (1924)); see also Greenlaw v. United States, 128 S. Ct. 2559, 2564, 171 L. Ed. 2d 399 (2008).

[Footnote 5] The Supreme Court decided Hall Street on March 25, 2008 — after we heard oral argument in the first appeal but before we issued our decision. Kashner Davidson could have submitted a letter bringing Hall Street to our attention while the first appeal was pending. See Fed. R. App. P. 28(j). Once the appeal was decided, it could have requested panel rehearing and/or rehearing en banc. See Hall Street Fed. R. App. P. 35, 40. It could have petitioned the Supreme Court for a writ of certiorari. See Sup. Ct. R. 12, 13. On remand, it could have attempted to show that "exceptional circumstances" justified deviation from our mandate. United States v. Wallace, 573 F.3d 82, 89 (1st Cir. 2009).

Considering the circumstances, we cannot say that we are faced with the sort of "grave, unforeseen contingenc[y]" that would justify the recall of a mandate. Thompson, 523 U.S. at 550. By strategic choice or through lack of diligence, Kashner Davidson waited until the last possible moment to raise its Hall Street argument. It cannot now circumvent the cross-appeal rule by invoking a remedy reserved for extraordinary situations. Kashner Davidson's request is denied.

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