                                                                            FILED
                           NOT FOR PUBLICATION
                                                                            DEC 28 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS


                            FOR THE NINTH CIRCUIT


SCHILLING LIVESTOCK, INC.;                       No.   15-35995
KENNETH A. SCHILLING; LESLEY R.
SCHILLING,                                       D.C. No. 6:14-cv-00054-CCL

              Plaintiffs-Appellants,
                                                 MEMORANDUM*
 v.

UMPQUA BANK, FKA Sterling Savings
Bank,

              Defendant-Appellee.


                    Appeal from the United States District Court
                            for the District of Montana
                    Charles C. Lovell, District Judge, Presiding

                        Argued and Submitted June 9, 2017
                                Portland, Oregon

Before: GOULD and RAWLINSON, Circuit Judges, and RAYES,** District
Judge.




      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Douglas L. Rayes, United States District Judge for the
District of Arizona, sitting by designation.
      Appellants Kenneth Schilling, Lesley Schilling, and Schilling Livestock,

Inc. (collectively, the Schillings) appeal the district court’s order confirming an

arbitration award in favor of Appellee Umpqua Bank, FKA Sterling Savings Bank

(Sterling). The Schillings contend that the award should be vacated because the

arbitrators engaged in misconduct by allowing Sterling to rely on an undisclosed

defense premised on the Gramm-Leach-Bliley Act (GLBA). According to the

Schillings, Sterling’s expert falsely testified that Sterling was not liable for

fraudulent investment advice due to a networking exception to the GLBA.

      The Schillings fail to meet the high standard for vacatur of an arbitration

award. See Lagstein v. Certain Underwriters at Lloyd’s, London, 607 F.3d 634,

641 (9th Cir. 2010) (“Arbitrators exceed their powers 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.”) (citation, alterations, and

internal quotation marks omitted). The Schillings’ assertion that they were

deprived of adequate notice of Sterling’s reliance on the GLBA defense is belied

by the record. As the district court correctly observed, the Schillings opened the

door to Sterling’s introduction of a rebuttal witness concerning the bank’s statutory

duties. Moreover, the Schillings were afforded an opportunity to submit

supplemental briefing on the GLBA defense, but declined to do so. Thus, the


                                            2
arbitrators did not engage in misconduct in permitting rebuttal testimony regarding

the statutory defense, and their decision did not otherwise deprive the Schillings of

a fair hearing. See U.S. Life Ins. Co. v. Superior Nat’l Ins. Co., 591 F.3d 1167,

1177 (9th Cir. 2010) (“In short, perhaps [Appellant] did not enjoy a perfect

hearing; but it did receive a fair hearing. It had notice, it had the opportunity to be

heard and to present relevant and material evidence, and the decisionmakers were

not infected with bias. . . .”) (citation omitted).1

       The record does not reflect that Sterling’s expert falsely or fraudulently

testified concerning the GLBA defense. As the district court observed, the expert

responded to an ambiguous question and did not otherwise provide false testimony.

Notably, the arbitration award makes no mention of the expert’s testimony in

finding that Sterling was not liable. As a result, the Schillings fail to demonstrate

by clear and convincing evidence that any fraud or false testimony warranted

vacatur of the arbitration award. See AG Edwards & Sons Inc. v. McCollough, 967

F.2d 1401, 1404 (9th Cir. 1992) (explaining that challenges to an arbitration award


       1
         The Schillings’ reliance on Move, Inc. v. Citigroup Global Mkts., 840 F.3d
1152 (9th Cir. 2016), is misplaced, as that case is entirely distinguishable. In
Move, the “arbitrator’s purposeful and material deception” that he was a licensed
attorney and his impersonation of a retired attorney warranted vacatur of the
arbitration award. Id. at 1155, 1158. In contrast, this appeal involves the
arbitrators’ procedural decision permitting evidence concerning a potentially
relevant statutory defense. See U.S. Life Ins. Co., 591 F.3d at 1177.
                                             3
based on fraud must be “established by clear and convincing evidence”) (citation

omitted).

      AFFIRMED.




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