                   FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

NASD DISPUTE RESOLUTION, INC.;           
NEW YORK STOCK EXCHANGE, INC.,
                Plaintiffs-Appellants,
                  v.
JUDICIAL COUNCIL OF THE STATE OF
CALIFORNIA; RONALD M. GEORGE,
in his official capacity as Chair of
the Judicial Council; MARVIN R
BAXTER; RICHARD D. ALDRICH;
NORMAN L. EPSTEIN; RICHARD D.
HUFFMAN; GAIL ANDREA ANDLER;                  No. 02-17413
AVIVA K. BOBB; ROBERT A. DUKES;
LEONARD P. EDWARDS, WILLIAM C.                 D.C. No.
                                             CV-02-03486-SC
HARRISON; BRAD R. HILL; DONNA J.
HITCHENS; RONALD M. SABRAW;                    OPINION
BARBAR ANN ZUNIGA; MARTHA
ESCUTIA; ELLEN M. CORBETT; JOHN
J. COLLINS; PAULINE W. GEE; REX
A. HEESEMAN; THOMAS J.
WARWICK, JR., in their official
capacities as members of the
Judicial Council; WILLIAM C.
VICKERY, in his capacity as
Administrative Director of the
Courts,
               Defendants-Appellees.
                                         
        Appeal from the United States District Court
           for the Northern District of California
          Samuel Conti, District Judge, Presiding



                              6475
6476      NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL
                    Argued and Submitted
         January 10, 2007—San Francisco, California

                        Filed May 30, 2007

      Before: John T. Noonan and Richard R. Clifton,
  Circuit Judges, and George P. Schiavelli,* District Judge.

                    Opinion by Judge Clifton




   *The Honorable George P. Schiavelli, United States District Judge for
the Central District of California, sitting by designation.
       NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL   6477


                      COUNSEL

Douglas W. Henkin, Milbank, Tweed, Hadley & McCloy
LLP, New York, New York; Mark A. Perry (argued), William
M. Jay, Gibson, Dunn & Crutcher LLP, Washington, D.C.,
for the appellants.
6478    NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL
Mitchell C. Tilner, David S. Ettinger (argued), Horvitz &
Levy LLP, Encino, California; Mary Maloney Roberts, Judi-
cial Council of California, San Francisco, California, for the
appellees.


                          OPINION

CLIFTON, Circuit Judge:

   The parties agree that this appeal is moot. The underlying
dispute has been resolved in other litigation. The parties dis-
agree on what should happen now, however. Appellants
NASD Dispute Resolution, Inc. (“NASD”), and New York
Stock Exchange, Inc. (“NYSE”), the plaintiffs, say we should
vacate the district court’s judgment dismissing their lawsuit.
The defendant, the Judicial Council of the State of California
(“the Council”), asks us to dismiss this appeal without vacat-
ing the district court’s judgment. We agree with appellants
and vacate the district court judgment.

I.   Background

   In 2001, the California legislature passed a law ordering the
Judicial Council of California, the rule-making arm of the
California court system, to create ethical standards for com-
mercial arbitrators. Cal. Code Civ. Proc. § 1281.85. The
Council responded by enacting comprehensive standards
including requirements for conflict-of-interest checks, disclo-
sures to arbitrating parties, and penalties for unrevealed con-
flicts.

   NASD and NYSE objected to the California standards.
Those organizations have operated their own securities arbi-
tration services for decades under federal auspices. They have
their own standards and procedures, which are not entirely
consistent with the California standards. They feared the Cali-
        NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL        6479
fornia standards would make NASD or NYSE arbitration in
California more expensive, because of the added require-
ments, and less reliable, because an arbitrator’s decision could
be vacated if the arbitrator failed to comply with the Califor-
nia standards. Thus, they sued the Council and its individual
members in federal court, seeking a declaratory judgment that
(1) federal securities law preempted the California standards,
(2) the California standards could not constitutionally be
applied to the stock exchanges’ arbitration programs, and (3)
under state law the California standards did not cover NASD
or NYSE arbitrations.

   In November 2002, the district court dismissed the lawsuit.
NASD Dispute Resolution, Inc. v. Judicial Council, 232 F.
Supp. 2d 1055 (N.D. Cal. 2002). The dismissal did not reach
the merits of the arguments put forth by NASD and NYSE but
was instead based on the conclusion that the Eleventh
Amendment barred suit in federal court against the Judicial
Council and its individual members. Id. at 1064-66. NASD
and NYSE appealed.

   Before that appeal came to be heard by this court, we held
in a different case that federal securities law did preempt the
California standards, at least in the context of self-regulatory
bodies like NASD and NYSE. Credit Suisse First Boston
Corp. v. Grunwald, 400 F.3d 1119, 1126-36 (9th Cir. 2005).
The California Supreme Court came to a similar conclusion
in Jevne v. Superior Court, 111 P.3d 954 (Cal. 2005).

   NASD and NYSE now argue that Grunwald and Jevne ren-
der the present appeal moot, noting that this appeal addresses
no live controversy because those two cases effectively
granted the relief they sought in the present action. They ask
us to vacate the district court’s judgment and remand with
instructions to dismiss. The Council agrees that the appeal is
moot, but does not wish to taint with vacatur a published
opinion that says the Council and its members are immune
from lawsuit in federal court, and thus opposes vacatur.
6480      NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL
II.    Mootness

   Even though the parties agree that this appeal is moot, we
have “an independent obligation to consider mootness sua
sponte.” In re Burrell, 415 F.3d 994, 997 (9th Cir. 2005). That
obligation is easily satisfied here, as the parties are right. A
case is moot on appeal if no live controversy remains at the
time the court of appeals hears the case. See GTE Cal., Inc.
v. FCC, 39 F.3d 940, 945 (9th Cir. 1994). The test for whether
such a controversy exists is “whether the appellate court can
give the appellant any effective relief in the event that it
decides the matter on the merits in his favor.” In re Burrell,
415 F.3d at 998 (quoting Garcia v. Lawn, 805 F.2d 1400,
1402 (9th Cir. 1986)). We cannot give the appellants any fur-
ther relief because Grunwald and Jevne have already provided
the relief sought by them in this case. There is no live contro-
versy, and the appeal is moot.

III.   Vacatur

   [1] When a case becomes moot on appeal, the “established
practice” is to reverse or vacate the decision below with a
direction to dismiss. Arizonans for Official English v. Ari-
zona, 520 U.S. 43, 71 (1997) (citing United States v. Muns-
ingwear, Inc., 340 U.S. 36, 39 (1950)). Vacatur in such a
situation “eliminat[es] a judgment the loser was stopped from
opposing on direct review.” Arizonans for Official English,
520 U.S. at 71. Without vacatur, the lower court’s judgment,
“which in the statutory scheme was only preliminary,” would
escape meaningful appellate review thanks to the “happen-
stance” of mootness. United States v. Munsingwear, Inc., 340
U.S. 36, 39 (1950). Under the “Munsingwear rule,” vacatur is
generally “automatic” in the Ninth Circuit when a case
becomes moot on appeal. Publ. Util. Comm’n v. FERC, 100
F.3d 1451, 1461 (9th Cir. 1996).

  [2] Nonetheless, vacatur is not always appropriate when a
case becomes moot on appeal. The Supreme Court has termed
          NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL                  6481
vacatur an “extraordinary remedy,” one only available to
appellants who “demonstrate . . . equitable entitlement” to it.
U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513
U.S. 18, 26 (1994) (Bonner Mall). An appellate court consid-
ering whether to vacate a lower court’s opinion must also
“take account of the public interest.” Id. Specifically, the pub-
lic has an interest in protecting district court precedents from
“a refined form of collateral attack:” the appellant who settles
while appeal is pending and, having rendered the case moot
by his own actions, demands the adverse lower-court opinion
be vacated. Id. “Both the Supreme Court and this court have
recognized exceptions to this practice if the party seeking
appellate relief fails to protect itself or is the cause of subse-
quent mootness.” Publ. Util. Comm’n, 100 F.3d at 1461(em-
phasis in original). Thus, the Supreme Court held that vacatur
is not always appropriate if the case is moot only because the
parties settled while appeal was pending. Bonner Mall, 513
U.S. at 29.1 The appellants in Bonner Mall, by settling, had
forfeited the right to appeal and therefore lost their equitable
entitlement to vacatur. Id. at 26. Similarly, the Supreme Court
has also denied vacatur when a case is moot only because the
losing party failed to pursue appeal. Karcher v. May, 484 U.S.
72, 83 (1987). In such cases, principles of equity and the pub-
lic interest balance against vacatur. See Dilley v. Gunn, 64
F.3d 1365, 1369-71 (9th Cir. 1995).

   The Council contends that under Bonner Mall and Dilley,
equity and the public interest weigh against vacatur of the dis-
trict court’s opinion. NASD and NYSE would suffer no harm
if the opinion was allowed to stand, the Council argues,
because that opinion merely bars suits against Council mem-
  1
    In the case of such a settlement, vacatur may still be granted; appellate
courts can remand to the district court to decide whether the facts suggest
that vacatur is still appropriate. Bonner Mall, 513 U.S. at 29. See, e.g.,
DHX, Inc. v. Allianz AGF MAT, Ltd., 425 F.3d 1169, 1170 (9th Cir. 2005)
(remanding after parties settled so that district court could decide if vaca-
tur is appropriate).
6482     NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL
bers, and neither NASD nor NYSE is ever likely to sue Coun-
cil members again. Thus, the Council continues, the public
interest in preserving “judicial precedent” requires the district
court’s opinion to stand, because that opinion is valuable to
the public while vacatur is useless to NASD and NYSE.

   [3] In practical terms, the significance of this dispute
largely amounts to the impact of the phrase “vacated on other
grounds.” No matter what we conclude, the opinion of the dis-
trict court will not be ripped from Federal Supplement 2d. It
will still be available and will still be citable for its persuasive
weight. See United States v. Joelson, 7 F.3d 174, 178 n. 1 (9th
Cir. 1993); Gould v. Bowyer, 11 F.3d 82, 84 (7th Cir. 1993);
see also DHX, Inc. v. Allianz AGF MAT, Ltd., 425 F.3d 1169,
1176 (9th Cir. 2005) (Beezer, J., concurring). That’s all the
weight a district court opinion carries anyway, outside of
future litigation involving the same parties and their privies,
because a district court opinion does not have binding prece-
dential effect. See Hart v. Massanari, 266 F.3d 1155, 1174
(9th Cir. 2001) (noting that “the binding authority principle
applies only to appellate decisions, and not to trial court deci-
sions”).

   [4] The impact of the phrase “vacated on other grounds”
may motivate the parties before us to contest the issue, but it
is not enough to get this case out from under the general rule
of Munsingwear. This rule requires us to vacate the district
court’s judgment. The Supreme Court in Bonner Mall held
that it stood by “Munsingwear’s dictum that mootness by hap-
penstance provides sufficient reason to vacate.” 513 U.S. at
25 n. 3. The present case is one in which “happenstance,” not
the parties’ own actions, rendered the appeal moot. The appel-
lants did not settle the case, nor did they fail to appeal. Rather,
this court and the California Supreme Court resolved the con-
troversy with the decisions in Credit Suisse and Jevne. That
was not appellants’ doing. NASD and NYSE were not even
parties to those actions, though it would not matter if they had
been, because they could not be required to abandon their
        NASD DISPUTE RESOLUTION v. JUDICIAL COUNCIL       6483
consistent position in other pending litigation merely to avoid
mooting out another case. We therefore hold that the excep-
tion identified in Bonner Mall for settlements should not
apply to judgments mooted by court decisions in other cases.

  [5] We vacate the district court’s judgment and remand
with instructions to dismiss the case.

  VACATED AND REMANDED.
