                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUN 7 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

MICHAEL JAY DEMARTINI; RENATE                   No.    15-15205
DEMARTINI,                                             16-15078

                Plaintiffs-Appellees,           D.C. No. 3:12-cv-03929-JCS

 v.
                                                MEMORANDUM*
THOMAS CHRISTOPHER JOHNS;
JOHNS & ALLYN, A.P.C.,

                Defendants-Appellants.


MICHAEL JAY DEMARTINI; RENATE                   No.    16-15134
DEMARTINI,
                                                D.C. No. 3:12-cv-03929-JCS
                Plaintiffs-Appellants,

 v.

THOMAS CHRISTOPHER JOHNS;
JOHNS & ALLYN, A.P.C.,

                Defendants-Appellees.

                   Appeal from the United States District Court
                      for the Northern District of California
                   Joseph C. Spero, Magistrate Judge, Presiding

                       Argued and Submitted April 20, 2017

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
                               San Francisco, California

Before: THOMAS, Chief Judge, MURGUIA, Circuit Judge, and BAYLSON,**
District Judge.

      Thomas Christopher Johns and the law firm Johns & Allyn, A.P.C.

(collectively, “Defendants”) appeal the district court’s order denying their motion

to vacate an arbitration award entered against them on Michael and Renate

DeMartini’s (collectively, “Plaintiffs”) legal malpractice claims. Defendants also

appeal the district court’s denial of their request for a stay in response to Plaintiffs’

motion to confirm the arbitration award. Plaintiffs cross-appeal the district court’s

grant of Defendants’ motion to amend the judgment pursuant to Federal Rule of

Civil Procedure 59(e). We have jurisdiction pursuant to 28 U.S.C. § 1291, and we

affirm in part and reverse and remand in part.

                                            I.

      We review de novo the district court’s decision to deny a motion to vacate

an arbitration award. Woods v. Saturn Distrib. Corp., 78 F.3d 424, 427 (9th Cir.

1996). Defendants argue that the district court erred in denying their motion to

vacate under § 10 of the Federal Arbitration Act (“FAA”), which, in relevant part,

authorizes vacatur “where the arbitrators exceeded their powers, or so imperfectly




      **
             The Honorable Michael M. Baylson, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.

                                            2
executed them that a mutual, final, and definite award upon the subject matter

submitted was not made.” 9 U.S.C. § 10(a)(4). We have strictly interpreted this

standard, emphasizing that review of an arbitration award itself is “both limited

and highly deferential.” Sheet Metal Workers’ Int’l Ass’n v. Madison Indus., Inc.,

84 F.3d 1186, 1190 (9th Cir. 1996). Accordingly, “arbitrators exceed their powers

in this regard not when they merely interpret or apply the governing law

incorrectly, but when the award is completely irrational, or exhibits a manifest

disregard of law.” Kyocera Corp. v. Prudential–Bache Trade Servs., Inc., 341 F.3d

987, 997 (9th Cir. 2003) (en banc) (internal quotation marks and citations omitted).

This means that “[i]t must be clear from the record that the arbitrators recognized

the applicable law and then ignored it.”’ Lagstein v. Certain Underwriters at

Lloyd’s, London, 607 F.3d 634, 641 (9th Cir. 2010) (quoting Mich. Mut. Ins. Co. v.

Unigard Sec. Ins. Co., 44 F.3d 826, 832 (9th Cir. 1995)). “As such, mere

allegations of error are insufficient.” Carter v. Health Net of Cal., Inc., 374 F.3d

830, 838 (9th Cir. 2004).

      Defendants argue that the arbitrator showed a manifest disregard of law

when she denied their requests to dismiss Plaintiffs’ malpractice claims as time-

barred. Defendants specifically argue that the arbitrator correctly recognized the

one-year statute of limitations that applies to malpractice claims, but then

intentionally ignored it in applying the law to the facts before her. See Cal. Code


                                           3
Civ. P. § 340.6(a); see also Peregrine Funding, Inc. v. Sheppard Mullin Richter &

Hampton, LLP, 35 Cal. Rptr. 3d 31, 51 (Cal. Ct. App. 2005) (explaining that the

one-year limitations period “is triggered by the client’s discovery of ‘the facts

constituting the wrongful act or omission,’ not by his discovery that such facts

constitute professional negligence”). We cannot conclude from the record that the

arbitrator’s decision—while perhaps an erroneous application of the California

statute of limitations for legal malpractice claims—constitutes a “manifest

disregard” of law. See Bosack v. Soward, 586 F.3d 1096, 1104 (9th Cir. 2009)

(“[T]here must be some evidence in the record, other than the result, that the

arbitrators were aware of the law and intentionally disregarded it.” (alteration in

original) (quoting Lincoln Nat’l Life Ins. Co. v. Payne, 374 F.3d 672, 675 (8th Cir.

2004)); cf. American Postal Workers Union AFL-CIO v. U.S. Postal Serv., 682

F.2d 1280, 1284 (9th Cir. 1982) (finding a manifest disregard of law when the

record showed the arbitrator recognized the applicable law, but refused to apply it

because of “the arbitrator’s belief that the penalty was too severe” under the

circumstances). Defendants have failed to carry their heavy burden of showing the

arbitrator’s award warrants vacatur based on a manifest disregard of law on the

part of the arbitrator.

       Defendants also argue the district court erred in denying its motion to vacate

the arbitration award on public policy grounds. While a court may vacate an


                                          4
arbitration award that is contrary to public policy, this is a very narrow exception.

Stead Motors v. Auto. Machinists Lodge No. 1173, 886 F.2d 1200, 1209 (9th Cir.

1989) (en banc) (“[A] court need not, in fact cannot, enforce an award which

violates public policy.”). To vacate an arbitration award on public policy grounds,

the panel must find (1) that an “explicit, well defined and dominant” public policy

exists, and (2) “that the policy is one that specifically militates against the relief

ordered by the arbitrator.” Id. at 1210–13.

      Defendants argue that the arbitration award should be vacated because it is

based on perjury committed by Mr. DeMartini in the underlying partition action,

and the “the public policy against perjury is explicit and well-defined.” A review

of the record reveals that Defendants made similar claims of perjury to the

arbitrator, and the arbitrator directly questioned Mr. DeMartini during the

arbitration proceeding about whether he had lied under oath during the partition

action. The arbitrator’s final decision indicates that the arbitrator rejected

Defendants’ claims that Mr. DeMartini intentionally gave false testimony during

his deposition and at the underlying trial. See Cal. Penal Code § 118 (defining

“perjury” as when an individual, under oath, “willfully states as true any material

matter which he or she knows to be false”). The arbitrator found that Mr.

DeMartini was “being asked to juggle competing complex concerns and follow

difficult instructions under pressure,” and ultimately entered an award in Plaintiffs’


                                            5
favor, which strongly indicates that the arbitrator did not believe that Mr.

DeMartini had intentionally misrepresented any material facts during his

deposition. Although the arbitrator did not expressly address whether Mr.

DeMartini intentionally gave false testimony at trial in her written decision, she

was not required to do so. Bosack, 586 F.3d at 1104 (stating that and arbitrator’s

“award may be made without explanation of their reasons and without a complete

record of their proceedings”). Because Defendants’ public policy argument would

require the Court to revisit the arbitrator’s findings of fact and conclusions of law

with respect to Defendants’ perjury argument put forth to the arbitrator, the Court

will not vacate the award on this ground. Kyocera, 341 F.3d at 994.

      Accordingly, we affirm the district court’s denial of Defendants’ motion to

vacate the arbitration award under § 10 of the FAA or on public policy grounds.

                                          II.

      We review a district court’s denial of a motion to stay for abuse of

discretion. United States v. Peninsula Comm., Inc., 287 F.3d 832, 838 (9th Cir.

2002). A district court “has broad discretion to stay proceedings as an incident to

its power to control its own docket” in an effort to promote judicial economy.

Clinton v. Jones, 520 U.S. 681, 706–07 (1997); Lockyer v. Mirant Corp., 398 F.3d

1098, 1109 (9th Cir. 2005). The party who moves for a stay has the burden to

“make out a clear case of hardship or inequity in being required to go forward,”


                                          6
and the court must weigh the competing interests that will be affected by the

granting of or refusal to grant the stay. Landis v. N. Am. Co., 299 U.S. 248, 255

(1936).

      We cannot conclude that the district court abused its discretion in denying

Defendants’ request to stay ruling on Plaintiffs’ motion to confirm the arbitration

award. The FAA mandates courts to confirm an arbitration award unless the award

has been vacated, modified or corrected. See 9 U.S.C. § 9 (“[A]t any time within

one year after the award is made any party to the arbitration may apply to the court

so specified for an order confirming the award, and thereupon the court must grant

such an order unless the award is vacated, modified, or corrected.” (emphasis

added)). The Supreme Court has noted that § 9 of the FAA “carries no hint of

flexibility.” Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 587 (2008).

Because the district court had already denied Defendants’ motion to vacate the

arbitration award, and the three-month limitation period for bringing any further

motion to vacate or alter the arbitration award had passed by the time Plaintiffs

moved to confirm the arbitration award, see 9 U.S.C. § 12, the district court was

obligated to summarily confirm the award. The district court properly rejected

Defendants’ arguments that ruling on the motion to confirm the arbitration award

would result in a considerable waste of resources for both the parties and the court.

Further, Defendants have not persuasively argued that they were subjected to any


                                          7
“hardship or inequity” in requiring to litigate Plaintiffs’ motion to confirm the

award. See Landis, 299 U.S. at 255.

      Accordingly, we affirm the district court’s denial of Defendants’ request to

stay ruling on Plaintiffs’ motion to confirm the arbitration award.

                                         III.

       Plaintiffs cross-appeal the district court’s grant of Defendants’ motion to

amend the judgment pursuant to Rule 59(e). We review a district court’s grant of a

Rule 59(e) motion to amend judgment for abuse of discretion. Int’l Rehab. Sci. Inc.

v. Sebelius, 688 F.3d 994, 1000 (9th Cir. 2012).

      The district court initially entered judgment in favor of Plaintiffs “in the

amount of $177,100.00” and, consistent with the arbitration award, granted

“prejudgment interest from June 30, 2011, at the California statutory rate.”

Defendants filed a Rule 59(e) motion to amend the judgment, arguing that the

district court’s judgment conflicted with California law, which only allows for

prejudgment interest to start from the date the legal malpractice arbitration award

was issued—July 30, 2014. See Cal. Civ. Code § 3287. The district court agreed

and granted Defendants’ motion to amend the award, concluding that “the date

stated in its previous order and judgment is clearly erroneous,” as it does not

comport with § 3287 of the California Civil Code. The court then entered an




                                          8
amended judgment in the amount of $177,100 “plus prejudgment interest from

July 30, 2014 at the California statutory rate.”

      The district court abused its discretion in granting Defendants’ Rule 59(e)

motion and amending the judgment so that it conflicted with the arbitrator’s grant

of prejudgment interest. Sections 10 and 11 of the FAA provide the “exclusive

grounds” for vacating or modifying an arbitration award. Hall Street, 552 U.S. at

584. Under the FAA, motions to vacate, modify, or correct the arbitration award

must be served on the opposing party within three months after the award is filed.

9 U.S.C. § 12. Here, the arbitrator issued her final decision on July 30, 2014 and,

although Defendants knew that the award consisted of prejudgment interest

beginning from June 30, 2011 through the date of the award, Defendants did not

raise this issue in their motion to vacate the award, or otherwise move to modify

the grant of prejudgment interest within three months of the award. Accordingly, at

the time Defendants filed their Rule 59(e) motion, they were time-barred from

amending the arbitration award pursuant to the FAA. See 9 U.S.C. § 12.

Defendants’ attempt to circumvent the FAA through a Rule 59(e) motion was

improper. See Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1133,

1133 n.3 (9th Cir. 2000). Further, we note that it is well-established that a Rule

59(e) motion “may not be used to raise arguments . . . for the first time when they

could reasonably have been raised earlier in the litigation,” Kona Enter., Inc. v.


                                          9
Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). The argument that the

arbitrator’s grant of prejudgment interest from June 30, 2011 violated state law

most certainly “could reasonably have been raised earlier in the litigation.” Id.

         Accordingly, we reverse the district court’s Rule 59(e) order and remand to

the district court with instructions to enter judgment consistent with the arbitration

award—“$158,000 plus interest thereon at the California statutory prejudgment

interest rate from June 30, 2011 through the date of [the arbitration award],” and

“$19,100.00 for arbitration fees and costs”1—including post-award prejudgment

interest under California Civil Code § 3287(a).

         AFFIRMED in part, REVERSED in part, and REMANDED. Costs are

taxed against Defendants.




1
    The $19,100 for arbitration fees and costs is not subject to prejudgment interest.

                                            10
