United States Court of Appeals For the First Circuit No. 20-1237 UBS FINANCIAL SERVICES, INC.; UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO; UBS TRUST COMPANY OF PUERTO RICO, Petitioners, Appellees, v. ASOCIACIÓN DE EMPLEADOS DEL ESTADO LIBRE ASOCIADO DE PUERTO RICO, Respondent, Appellant. No. 20-1238 ASOCIACIÓN DE EMPLEADOS DEL ESTADO LIBRE ASOCIADO DE PUERTO RICO, Plaintiff, Appellant, v. UBS FINANCIAL SERVICES, INC.; UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO; UBS TRUST COMPANY OF PUERTO RICO, Defendants, Appellees. APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. William G. Young,* U.S. District Judge] * Of the District of Massachusetts, sitting by designation. Before Thompson and Lipez, Circuit Judges, and Laplante,** District Judge. Daniel N. Marx, with whom William W. Fick and Fick & Marx LLP were on brief, for appellant. Ross E. Firsenbaum, with whom Peter G. Neiman, Ilya Feldsherov, and Wilmer Cutler Pickering Hale and Dorr LLP were on brief, for appellees. May 7, 2021 ** Of the District of New Hampshire, sitting by designation. Laplante, District Judge. Asociación de Empleados del Estado Libre Asociado de Puerto Rico ("AEELA"), a private financial institution serving Puerto Rico government employees, suffered significant investment losses when the market for municipal bonds in Puerto Rico crashed in 2013. Blaming its exposure to those assets on its former financial consultant, UBS Financial Services, Inc. and related entities (collectively, "UBS"), AEELA initiated arbitration with UBS before the Financial Industry Regulatory Authority ("FINRA"). A panel of three neutral arbitrators unanimously entered an arbitration award denying AEELA's claims. AEELA sought to vacate the award in the district court on the ground that one of the arbitrators had failed to disclose that he had several professional connections to UBS. The district court confirmed the arbitration award, ruling that AEELA had failed to show that those undisclosed connections amount to "evident partiality" warranting vacatur under section 10 of the Federal Arbitration Act. We affirm. I. Standard of Review We review a district court's decision to confirm or vacate an arbitration award de novo. Wonderland Greyhound Park, Inc. v. Autotote Sys., Inc., 274 F.3d 34, 35 (1st Cir. 2001). The burden is on the party challenging the arbitral award to establish that it should be set aside. Ortiz-Espinosa v. BBVA Sec. of P.R., Inc., 852 F.3d 36, 48 (1st Cir. 2017). - 3 - II. Background1 AEELA is a private, not-for-profit institution with more than 200,000 members who are current and former Puerto Rico government employees. AEELA offers its members a range of financial and insurance services, including retirement accounts, mortgage loans, and life insurance. By law, AEELA must procure "specialized professional services" to invest its members' funds. See P.R. Laws Ann. tit. 3, § 9009. From 2006 until mid-2013, AEELA engaged UBS to provide those services. In a "consulting services agreement," the parties agreed to arbitrate their disputes in a FINRA forum. In April 2014, AEELA commenced an arbitration proceeding against UBS before FINRA. AEELA asserted claims for fraud, negligence, breach of fiduciary duty, breach …
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