Next Level Ventures, LLC v. Avid Holdings, Ltd.

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 10, 2024
• Docket: 23-35404
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 10 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

NEXT LEVEL VENTURES, LLC, a No. 23-35404 Washington limited liability company, D.C. No. 2:22-cv-01083-JCC Petitioner-Appellee,

v. MEMORANDUM*

AVID HOLDINGS, LTD., FKA Alderego Group, Ltd., a Hong Kong S.A.R. limited liability company,

Respondent-Appellant.

Appeal from the United States District Court for the Western District of Washington John C. Coughenour, District Judge, Presiding

Submitted October 8, 2024** San Francisco, California

Before: McKEOWN, KOH, and JOHNSTONE, Circuit Judges.

Avid Holdings, Ltd. (“Avid”) appeals the district court’s denial of its motion

to vacate an arbitration award in favor of Next Level Ventures, LLC (“Next Level”),

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). and confirmation of that award. The district court found that Avid’s motion to vacate

was untimely because it was filed more than three months after the arbitration award

was delivered and that equitable tolling did not apply because Avid did not diligently

pursue its rights.

We review “the confirmation or vacation of an arbitration award like any other

district court decision . . . accepting findings of fact that are not clearly erroneous

but deciding questions of law de novo.” Coutee v. Barington Cap. Grp., L.P., 336

F.3d 1128, 1132 (9th Cir. 2003) (omission in original) (quoting Barnes v.

Logan, 122 F.3d 820, 821 (9th Cir. 1997)). We review a district court’s decision

whether to apply equitable tolling for abuse of discretion. See Jones v. Blanas, 393

F.3d 918, 926 (9th Cir. 2004).

1. The district court had jurisdiction to confirm the arbitration award. Avid

argues that enforcing the parties’ agreement would violate the federal Controlled

Substances Act (“CSA”), 21 U.S.C. § 801 et seq. But regardless of its merits, Avid’s

illegality defense has no bearing on subject-matter jurisdiction. See Shulman v.

Kaplan, 58 F.4th 404, 409 (9th Cir. 2023) (“[T]he fact that Appellants seek damages

for economic harms related to cannabis is not relevant to whether a court could,

theoretically, fashion a remedy to redress their injuries. Therefore, the alleged harm

in this case is redressable by the federal court.”).

2 2. The district court did not clearly err in finding that Avid’s motion to vacate

was untimely. Under the Federal Arbitration Act (“FAA”), a motion to vacate “must

be served upon the adverse party or his attorney within three months after the award

is filed or delivered.” 9 U.S.C. § 12. The parties do not dispute that the final

arbitration award was entered on April 22, 2022, and that Avid did not file its motion

to vacate until more than seven months later, on December 7, 2022. Even accepting

Avid’s argument that § 21 of the Distribution Agreement’s delivery terms apply, the

motion to vacate is untimely. The arbitration award was mailed to the address

specified in the Distribution Agreement on April 22, 2022. Avid’s speculation that

it did not receive the arbitration award is unsupported by the record, and the district

court’s finding that the arbitration award was delivered is not clearly erroneous.

3. The district court did not abuse its discretion in determining that Avid is

not entitled to equitable tolling. A party seeking equitable tolling “bears the burden

of establishing two elements: (1) that he has been pursuing his rights diligently, and

(2) that some extraordinary circumstance stood in his way.” Pace v. DiGuglielmo,

544 U.S. 408, 418 (2005) (citing Irwin v. Dep’t of Veterans Affs., 498 U.S. 89, 96

(1990)); see also Move, Inc. v. Citigroup Glob. Markets, Inc., 840 F.3d 1152, 1156—

58 (9th Cir. 2016) (holding that the equitable tolling doctrine applies to the FAA).

We “will apply equitable tolling in situations where, ‘despite all due diligence, [the

party invoking equitable tolling] is unable to obtain vital information bearing on the

3 existence of the claim.’” See Socop-Gonzalez v. I.N.S., 272 F.3d 1176, 1193 (9th Cir.

2001) (en banc) (alteration in original) (quoting Supermail Cargo, Inc. v. United

States, 68 F.3d 1204, 1207 (9th Cir. 1995)), overruled on other grounds by Smith v.

Davis, 953 F.3d 582 (9th Cir. 2020) (en banc).

Avid seeks equitable tolling of the deadline to file its motion to vacate from

July (three months after the arbitration award was delivered) to December (when

Avid filed its motion to vacate). It is undisputed that Avid received actual notice of

the arbitration award on August 9, 2022, and that from that point forward Avid still

waited more than three months to file its motion to vacate. The district court did not

clearly err in finding that Avid had actual notice of the arbitration proceedings. Nor

did the district court clearly err in finding that Avid voluntarily chose not to

participate. Because Avid had actual notice of the arbitration award on August 9,

and through participation in the arbitration proceedings could have discovered the

information vital to their claim, no “extraordinary circumstance” prevented Avid

from filing a motion to vacate, at a minimum, three months after receiving actual

notice of the arbitration award. Pace, 544 U.S. at 418 (citing Irwin, 498 U.S. at 96).

Thus, the district court did not abuse its discretion in determining that Avid is not

entitled to equitable tolling.

AFFIRMED.