## Facts

- Debra M. Bacon held individual retirement accounts at Citigroup Global Markets, Inc.
- Bacon discovered that her husband forged her signature and made five unauthorized withdrawals totaling $238,000 from her accounts.
- Bacon notified Citigroup and pursued reimbursement through NASD (FINRA) arbitration.
- The arbitration panel awarded Bacon $218,000 in damages and $38,000 in attorneys’ fees.
- Citigroup petitioned the federal district court to vacate the award, arguing the arbitrators acted in “manifest disregard of the law.”
- The district court vacated the award on the view that the panel disregarded Texas law regarding lack of harm, timeliness of reporting, and apportionment among responsible parties.

## Issues

1. After Hall Street Associates, L.L.C. v. Mattel, Inc., do 9 U.S.C. §§ 10–11 provide the exclusive grounds for vacating or modifying an arbitration award under the FAA?
2. If so, may “manifest disregard of the law” still be used as an independent, non-statutory basis to vacate an arbitration award?

## Decision

- The Fifth Circuit vacated the district court’s judgment that set aside the arbitration award.
- The court held that, after Hall Street, “manifest disregard of the law” is no longer an independent ground for vacatur under the FAA.
- The case was remanded for further proceedings limited to the statutory vacatur grounds enumerated in 9 U.S.C. § 10.

## Legal Principles

- The FAA’s vacatur and modification grounds in 9 U.S.C. §§ 10–11 are exclusive; courts may not add non-statutory bases for reviewing arbitration awards.
- Fifth Circuit precedent recognizing “manifest disregard of the law” as a free-standing vacatur doctrine is displaced by Hall Street.
- Any continued use of “manifest disregard” must, if at all, operate only as shorthand for the statutory grounds in § 10 (such as arbitrators exceeding their powers), not as an independent standard.

## Conclusion

The Fifth Circuit concluded that federal courts reviewing arbitration awards under the FAA are confined to the statute’s enumerated vacatur grounds, and it vacated the district court’s reliance on “manifest disregard of the law” as a separate basis to overturn the award.


Citigroup Glob. Mkts., Inc. v. Bacon, 562 F.3d 349 (5th Cir. 2009)