Finding the alleged breach of an anti-assignment provision in a Settlement Agreement was not material, the Ninth Circuit held that the FAA did not provide grounds for vacatur of an arbitration award. In so holding, the Court held the award was not procured by fraud; the arbitrator did not exceed his powers; and the plaintiffs-appellants cited no case wherein a court vacated an award based on an arbitrator’s failure to consider an argument the parties did not present during the arbitration.

The Central District of California previously held that, even if the assignment breached the Settlement Agreement, it did not relieve plaintiffs-appellants “of its duty to arbitrate because the agreement was merely a personal ‘covenant not to assign’ that ‘[gave] rise only to a right to sue for damages.’” The purpose of the Settlement Agreement was to resolve certain disputes between the parties, while reserving others for arbitration. “Under these facts, the alleged assignment of rights in one claim does not ‘defeat the purposes of the entire’ Settlement Agreement, which resolved $550,000 worth of other claims.”

The Ninth Circuit Court thus affirmed the District Court’s decision to deny the motion to vacate the arbitration award.

Watermill Ventures, Ltd. et al. v. Cappello Cap. Corp., No. 15-55145 (9th Cir. Dec. 1, 2016).