National Credit Union Administration Board v. Goldman, Sachs & Co.

14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
3
August Term, 2013 4
(Argued: June 20, 2014 Decided: December 23, 2014) 5
Docket No. 14-312-cv 6
-----------------------------------------------------------X 7
N ATIONAL CREDIT U NION A DMINISTRATION BOARD, as liquidating agent of Southwest 8
Corporate Federal Credit Union, 9
Plaintiff-Appellee, 10
v. 11
G OLDMAN, SACHS & CO. AND GS MORTGAGE SECURITIES CORP ., 12
Defendant-Appellants. 13
-----------------------------------------------------------X 14
15
Before: WINTER, LEVAL, and LYNCH, Circuit Judges: 16
Goldman, Sachs & Co. and GS Mortgage Securities Corp. (collectively, 17
“Goldman”) appeal from the order of the United States District Court for the Southern 18
District of New York (Cote, J.) denying Goldman’s motion to compel arbitration of a suit 19
brought against it by the National Credit Union Administration Board (“NCUA”) acting 20
as liquidating agent for a failed credit union. Goldman based its arbitration demand on an 21
arbitration clause appearing in a Cash Account Agreement between Goldman and the 22
failed credit union. NCUA opposed the motion to compel on the grounds that it had 23
repudiated the agreement pursuant to its statutory authority. The Court of Appeals 24
concludes that NCUA validly repudiated the arbitration agreement. AFFIRMED. 25
RICHARD H. K LAPPER (William B. Monahan, 26
Peter A. Steciuk, Mark S. Geiger, on the brief), 27
Sullivan & Cromwell LLP, New York, NY, for 28
Defendant-Appellants 29

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D AVID C. FREDERICK (Wan J. Kim, Gregory G. 1
Rapawy, Christopher B. Brown, on the brief), 2
Kellogg, Huber, Hansen, Todd, Evans & Figel, 3
P.L.L.C., Washington, D.C., George A. Zelcs, 4
Korein Tillery LLC, Chicago, IL, Michael J. 5
McKenna, John K. Ianno, National Credit 6
Union Administration, Alexandria, VA, for 7
Plaintiff-Appellee 8
Leval, Circuit Judge: 9
Goldman, Sachs & Co. and GS Mortgage Securities Corp. (collectively, 10
“Goldman”) appeal from an order of the United States District Court for the Southern 11
District of New York (Cote, J.) denying Goldman’s motion to compel arbitration of a suit 12
brought against it by the National Credit Union Administration Board (“NCUA”).1
13
NCUA brought this action as liquidating agent for Southwest Corporate Federal Credit 14
Union (“Southwest”), a failed credit union. NCUA’s complaint alleged that Goldman 15
violated federal and state securities laws in its dealings with Southwest prior to 16
Southwest’s failure. Goldman sought arbitration of the claims, citing an arbitration clause 17
included in a 1992 Cash Account Agreement (“CAA”) between Goldman and Southwest. 18
NCUA rejected Goldman’s demand, asserting that, pursuant to its statutory powers as 19
Southwest’s liquidating agent under 12 U.S.C. § 1787(c), it was repudiating the 20
1 This opinion uses the acronym “NCUA” to refer without distinction to the National
Credit Union Administration and the National Credit Union Administration Board, which
is charged by statute with the management of the Administration’s affairs. See 12 U.S.C.
§ 1752a.
2

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National Credit Union Administration Board v. Goldman, Sachs & Co.
agreement. The district court ruled that NCUA had validly repudiated its agreement to 1
arbitrate, and denied Goldman’s motion. 2
On appeal, Goldman argues that NCUA’s repudiation power does not extend to 3
arbitration clauses. In the alternative, Goldman argues that (1) the district court failed to 4
appropriately scrutinize NCUA’s determination that the contract was burdensome, and 5
(2) the repudiation was invalid because it was not done within a reasonable period 6
following NCUA’s appointment as liquidating agent. 7
We conclude that NCUA successfully repudiated the Cash Account Agreement, 8
including the arbitration provision. We therefore affirm the district court’s order denying 9
arbitration. 10
BACKGROUND 11
NCUA is a federal agency, which charters and regulates federal credit unions. 12
Among other duties, the agency insures the deposits of account holders in all federal 13
credit unions through the National Credit Union Share Insurance Fund (“Share Insurance 14
Fund”). The Share Insurance Fund is financed by deposits from all federally insured 15
credit unions and “backed by the full faith and credit of the U.S. Government.” Share 16
Insurance Overview, National Credit Union Administration, 17
http://www.ncua.gov/DataApps/Pages/SI-NCUA.aspx (last visited Dec. 18, 2014); see 12 18
U.S.C. § 1782(c). If an insured credit union is in a precarious financial condition, NCUA 19
has the power to place the credit union under conservatorship or into liquidation. 12 20
U.S.C. §§ 1786(h), 1787. 21
3

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14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
Southwest was a “corporate credit union,” a class of credit union that provides 1
liquidity, investment and financial services to other, consumer-owned credit unions. 2
Southwest served over 1,300 consumer-owned credit unions, which in turn provided 3
services to approximately 33 million consumers. Between 2006 and 2007, Southwest 4
purchased from Goldman three certificates for residential mortgage-backed securities 5
(“RMBS”) totaling $40 million. The RMBS were rated triple-A at the time they were 6
issued. Within a few years, however, they were downgraded to below investment grade, 7
resulting in substantial diminution in their market value. 8
On September 24, 2010, NCUA placed Southwest into conservatorship, and on 9
October 31, 2010, into involuntary liquidation, with NCUA serving as liquidating agent. 10
As liquidating agent, NCUA acquired all rights, titles, powers, and privileges of 11
Southwest, including the right to bring litigation on its behalf. 12
PROCEDURE 13
On September 23, 2013, NCUA filed suit against Goldman in the Southern District 14
of New York. The complaint alleged that Goldman violated federal and state securities 15
laws by making untrue statements and omissions of material fact in the offering 16
documents covering the sales of the RMBS. In response, Goldman sent a letter to NCUA 17
dated October 8, 2013, requesting that NCUA submit the claims to arbitration. Goldman 18
attached the CAA, which provided that it governed “individually and collectively all 19
accounts which [Southwest] may maintain with [Goldman]” and that “[a]ny controversy 20
between [Southwest and Goldman] arising out of or relating to this Agreement or the 21
4

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14‐312‐cv
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accounts established hereunder, shall be settled by arbitration . . . .” Joint App’x (“JA”) at 1
174. 2
On October 17, 2013, NCUA refused Goldman’s demand for arbitration. NCUA 3
asserted that it was repudiating the CAA pursuant to its statutory authority under 12 4
U.S.C. § 1787(c). Section 1787(c) authorizes a liquidating agent for an insured credit 5
union to “repudiate any contract” if the liquidating agent determines, in its discretion, that 6
performance of the contract would be “burdensome” and repudiation of the contract 7
would “promote the orderly administration of the credit union’s affairs.” 12 U.S.C. 8
§ 1787(c)(1). NCUA attached a letter of its agent Mike Barton stating his determination 9
that “continuation of [the CAA] would be burdensome and would hinder the orderly 10
administration of the affairs of Southwest.” JA 178. 11
On November 13, 2013, Goldman moved in the district court to compel 12
arbitration, citing the Federal Arbitration Act, 9 U.S.C. § 1, et seq.2 NCUA opposed, 13
arguing, inter alia, that it had repudiated the CAA, rendering the arbitration provision 14
unenforceable. The district court agreed and denied Goldman’s motion. Goldman brought 15
this appeal. 16
2 Section 4 of the Act permits “[a] party aggrieved by the alleged failure, neglect, or
refusal of another to arbitrate . . . [to] petition any United States district court . . . for an
order directing that such arbitration proceed in the manner provided for in such
agreement.” 9 U.S.C. § 4. Section 3 provides for the district court to stay the court
proceedings pending arbitration. Id. § 3.
5

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DISCUSSION 1
I. NCUA’s Power to Repudiate an Arbitration Agreement 2
Goldman argues that NCUA’s repudiation power does not extend to arbitration 3
provisions within a repudiated contract. We disagree and conclude that NCUA was 4
empowered by statute to repudiate the agreement to arbitrate contained in the CAA. 5
Section 1787(c) was enacted as part of the Financial Institutions Reform, 6
Recovery, and Enforcement Act of 1989 (“FIRREA”), Pub. L. No. 101-73, 103 Stat. 183 7
(1989). Congress passed FIRREA in the wake of the savings and loan crisis, with the 8
purpose of “stem[ming] the financial hemorrhaging resulting from the large number of 9
failures in the thrift industry.” Resolution Trust Corp. v. Diamond, 45 F.3d 665, 674 (2d 10
Cir. 1995) (internal quotation marks omitted). FIRREA sought to “put the Federal deposit 11
insurance funds on a sound financial footing,” “provide funds . . . to deal expeditiously 12
with failed depository institutions,” and “strengthen the enforcement powers of Federal 13
regulators of depository institutions.” FIRREA § 101, 103 Stat. at 187. 14
FIRREA addressed NCUA’s powers and responsibilities as conservator or 15
liquidating agent for a failed credit union. FIRREA § 1217, 103 Stat. at 530. Among 16
these, FIRREA granted NCUA the power to repudiate contracts of the failed credit union. 17
FIRREA § 1217(c), 103 Stat. at 537 (codified as amended at 12 U.S.C. § 1787(c)). 18
Section 1787(c) provides: 19
(c) Provisions relating to contracts entered into before appointment of 20
conservator or liquidating agent 21
6

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14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
(1) Authority to repudiate contracts 1
In addition to any other rights a conservator or liquidating agent may have, 2
the conservator or liquidating agent for any insured credit union may 3
disaffirm or repudiate any contract or lease-- 4
(A) to which such credit union is a party; 5
(B) the performance of which the conservator or liquidating agent, in the 6
conservator’s or liquidating agent’s discretion, determines to be 7
burdensome; and 8
(C) the disaffirmance or repudiation of which the conservator or liquidating 9
agent determines, in the conservator’s or liquidating agent’s discretion, will 10
promote the orderly administration of the credit union’s affairs. 11
(2) Timing of repudiation 12
The conservator or liquidating agent appointed for any insured credit union 13
shall determine whether or not to exercise the rights of repudiation under 14
this subsection within a reasonable period following such appointment. 15
Id. § 1787(c)(1)-(2) (emphasis added). 16
Under these provisions, NCUA, as liquidating agent, is empowered to repudiate 17
“any” contract of the failed entity upon NCUA’s determination, in its discretion, that the 18
contract is burdensome or that repudiation will promote the orderly administration of the 19
credit union’s affairs. In interpreting 12 U.S.C. § 1821(e),3 a provision materially 20
identical to § 1787(c), this court has interpreted the term “contract” to mean “a 21
promissory agreement between two or more persons that creates, modifies, or destroys a 22
legal relation.” Diamond, 45 F.3d at 672 (alterations omitted). Arbitration agreements are 23
3 Section 1821(e), which was also enacted as part of FIRREA, granted essentially
identical powers to the Federal Deposit Insurance Corporation (“FDIC”) and Resolution
Trust Corporation (“RTC”) to repudiate contracts of financial institutions for which those
entities were appointed conservator or receiver. FIRREA § 212, 103 Stat. at 234; § 501,
103 Stat. at 370.
7

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National Credit Union Administration Board v. Goldman, Sachs & Co.
considered contracts. See Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67 (2010) 1
(“The FAA reflects the fundamental principle that arbitration is a matter of contract.”). 2
Thus, on its face, § 1787(c) appears to authorize NCUA to repudiate an arbitration 3
agreement. 4
Goldman opposes this plain reading by three related arguments. First, Goldman 5
draws an analogy to bankruptcy law, relying on its interpretation of a precedential 6
bankruptcy opinion. Goldman notes that the repudiation power codified in FIRREA was 7
modeled in part on the Bankruptcy Code’s authorization to a trustee in bankruptcy to 8
reject executory contracts of the debtor. See 11 U.S.C. § 365(a) (authorizing a bankruptcy 9
trustee, “subject to the court’s approval,” to “assume or reject any executory contract or 10
unexpired lease of the debtor”); S. Rep. No. 101-19, at 314 (describing the FDIC’s 11
materially identical repudiation power as “incorporat[ing] rights and principles 12
established at common law or in bankruptcy”); see also 1185 Ave. of Ams. Assocs. v. 13
RTC, 22 F.3d 494, 497 (2d Cir. 1994) (noting that the bankruptcy trustee’s rejection 14
power “provides a helpful analogy” to repudiation under FIRREA). Goldman contends, 15
based on its interpretation of Truck Drivers Local Union No. 807, Int’l Bhd. of Teamsters 16
v. Bohack Corp., 541 F.2d 312 (2d Cir. 1976), that an arbitration clause survives a 17
bankruptcy trustee’s rejection of the overall contract. It argues the same should apply to 18
NCUA’s repudiation of an overall cash account agreement containing an arbitration 19
clause. 20
8

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14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
Truck Drivers involved a labor dispute between a truck drivers’ union and an 1
employer corporation. After the employer filed for bankruptcy, the union filed grievances 2
against the employer via a grievance procedure established in the collective bargaining 3
agreement. Id. at 314. The grievance committee made an award in favor of the union, and 4
the employer refused to comply with the award. Id. at 315. Thereafter, the employer 5
(acting as debtor-in-possession with the powers of a trustee) moved the bankruptcy court 6
for permission to reject the collective bargaining agreement. Id. at 314 & n.1, 315. The 7
union then petitioned in district court to compel the employer to “specifically perform its 8
collective bargaining agreement . . . and to submit any grievances between them to 9
grievance procedure.” Id. at 316. The employer counterclaimed, seeking to submit the 10
dispute to arbitration if so authorized by the bankruptcy court. The district court 11
dismissed the union’s petition to confirm the grievance award and remanded to the 12
bankruptcy judge the “issue of the advisability of granting the debtor leave to arbitrate.” 13
Id. The union appealed. Id. 14
The issue on appeal to our circuit was whether it had been permissible for the 15
parties to use the grievance procedure without first obtaining authorization from the 16
bankruptcy court. Our court concluded that the bankruptcy court’s authorization was 17
necessary for arbitration to proceed even under the pre-existing collective bargaining 18
agreement, and therefore the grievance award obtained by the union was unenforceable. 19
Id. at 319-20. On remand, the bankruptcy judge was to determine whether to grant the 20
employer’s motion to reject the collective bargaining agreement and “whether to order 21
9

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14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
arbitration under its terms in any event, and on what issues.” Id. at 321. We explained in a 1
footnote: 2
If the contract is rejected by the bankruptcy court, it will be deemed to have 3
been breached as of the date of filing of the petition under Ch. XI. But like 4
any other unilateral breach of contract, it does not destroy the contract so as 5
to absolve the parties (particularly the breaching party) from a contractual 6
duty to arbitrate their disputes. Hence, the provisions for arbitration could 7
continue to support an order of the bankruptcy judge that the parties 8
arbitrate their dispute . . . . 9
Id. at 321 n.15 (internal citations omitted). That is, even if the bankruptcy court approved 10
rejection of the collective bargaining agreement, the court could still order arbitration 11
under its terms. 12
While we did indeed rule that the debtor’s purported rejection of the CBA would 13
not necessarily, of its own force, terminate the obligation to arbitrate, we did not rule that, 14
as a matter of law, termination of the overall agreement cannot terminate the obligation to 15
arbitrate. We did not consider the question, much less decide, whether a trustee in 16
bankruptcy is empowered by the bankruptcy law to free himself or herself from the 17
debtor’s preexisting contractual obligation to arbitrate. Goldman reads more into the 18
Truck Drivers opinion than is there. Subsequent to Truck Drivers, our court treated as an 19
open question whether a bankruptcy trustee may in some cases have the power to reject 20
an arbitration agreement. See Allegaert v. Perot, 548 F.2d 432, 435 n.7 (2d Cir. 1977). 21
Furthermore, while the repudiation provisions of FIRREA were modeled in part on 22
similar provisions of the Bankruptcy Code and therefore have features in common with 23
them, there are also differences–significant for our purposes–between the roles of trustees 24
10

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14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
in bankruptcy and NCUA as liquidating agent for a failed institution. NCUA is a federal 1
agency which has insured the credit union’s accounts and sustained losses thereby upon 2
the failure of the credit union. The Share Insurance Fund operated by NCUA is financed 3
by deposits from all federally insured credit unions and guaranteed by the United States. 4
The liquidation of a failed credit union thus implicates the finances of the broader federal 5
credit union system, as well as the public fisc. In these respects, the interpretation of 6
NCUA’s powers is subject to considerations not pertinent to the powers of a bankruptcy 7
trustee.4
8
In short, for numerous reasons we reject Goldman’s contention that Truck Drivers 9
binds us to rule, or even gives substantial support to the proposition, that NCUA’s 10
statutory power to repudiate any contract does not encompass a power to repudiate an 11
obligation to arbitrate, or that its repudiation of an overall agreement governing the 12
relationship between the failed entity and another person or entity does not result in 13
repudiation of an arbitration clause contained in the overall agreement. 14
4 The facts of Truck Drivers, furthermore, were significantly different from ours in several
respects. Among them, the employer had refused to comply with the grievance award
even before it sought to reject the contract, and after seeking rejection, the employer itself
asked the bankruptcy court to order arbitration of the dispute, though not pursuant to the
CBA’s grievance process. It is also notable that Truck Drivers involved a labor dispute, as
to which there is a strong “federal labor policy favoring arbitration as the means of
resolving disputes over the meaning and effect of collective-bargaining agreements.”
Bohack Corp. v. Truck Drivers Local Union No. 807, Int’l Bhd. of Teamsters, 431
F. Supp. 646, 652 (E.D.N.Y.), aff’d, 567 F.2d 237 (2d Cir. 1977) (internal quotation
marks omitted). That consideration is absent here.
11

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14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
Second, Goldman argues that repudiation constitutes a breach, and that at common 1
law a party breaching a contract generally remains bound by the contract’s terms. 2
Repudiation of a contract did not relieve a party of the contractual obligation to arbitrate 3
disputes under it. We think this common law rule has little bearing on whether § 4
1787(c)’s authorization of NCUA to repudiate any contract permits it to avoid arbitration 5
if it finds that arbitration would be burdensome or detrimental to the orderly 6
administration of the institution’s affairs. Common law, unlike the statute, does not confer 7
a right of repudiation. Rather, the common law recognizes repudiation as a form of 8
breach. Breaching an obligation, needless to say, does not nullify it. Section 1787(c), in 9
contrast to the common law rule, explicitly establishes NCUA’s right to repudiate so as to 10
avoid having to perform burdensome contractual obligations of the failed institution. 11
Whether the repudiation constitutes a breach, giving rise to liability for damages caused 12
by the breach, is another question and is irrelevant to whether, by repudiation under § 13
1787(c), NCUA can avoid having to arbitrate. We reject Goldman’s argument. 14
Finally, Goldman argues that the repudiation of a contract does not extend to 15
“purely procedural provisions” of the contract, and that arbitration provisions are 16
therefore not subject to repudiation. Even assuming that an arbitration agreement should 17
be considered “procedural,” Goldman has furnished neither reason nor authority why 18
such agreements as a class should be uniformly excluded from NCUA’s repudiation 19
power. 20
12

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14‐312‐cv
National Credit Union Administration Board v. Goldman, Sachs & Co.
Section 1787(c) explicitly authorizes NCUA, in its role as the liquidating agent, to 1
repudiate “any contract,” with the purpose of avoiding burdensome obligations and 2
facilitating the orderly wind-up of the failed credit union. We see no reason to interpret 3
this grant of authority as excluding agreements to arbitrate. We conclude that § 1787(c)’s 4
grant of authority to NCUA in its role as liquidating agent to repudiate contracts includes 5
authority to repudiate arbitration agreements, and we reject Goldman’s arguments that 6
NCUA’s repudiation of the CAA in this case should not be understood to encompass 7
repudiation of the arbitration clause contained in the overall agreement. 8
II. Judicial Review of NCUA’s “Burdensome” Determination 9
Goldman argues that even if NCUA was authorized to repudiate an agreement to 10
arbitrate, the district court had an obligation under § 1787(c) to subject NCUA’s 11
burdensomeness determination to review for abuse of discretion and erred in failing to 12
perform that review. The district court explained, “[A]s NCUA . . . exercised its statutory 13
discretion to deem the contract between Southwest and Goldman Sachs burdensome, th[e] 14
Court will not second-guess that determination.” JA 214. 15
Section 1787(c) is ambiguous as to whether the liquidating agent’s determination 16
of burdensomeness is subject to judicial review. It provides that a liquidating agent may 17
disaffirm or repudiate any contract 18
(B) the performance of which the . . . liquidating agent, in the . . . 19
liquidating agent’s discretion, determines to be burdensome; and 20
(C) the disaffirmance or repudiation of which the . . . liquidating agent 21
determines, in the . . . liquidating agent’s discretion, will promote the 22
orderly administration of the credit union’s affairs. 23
13

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12 U.S.C. § 1787(c)(1). This language could reasonably be interpreted either as 1
delegating absolute unreviewable repudiation power to the liquidating agent, or as calling 2
for deferential judicial review of whether the liquidating agent abused its discretion. Our 3
court has not conclusively addressed whether the statute calls for judicial review in this 4
context.5
5
It is not clear, furthermore, whether the district court, in saying that it would not 6
“second-guess [NCUA’s] determination,” meant that it regarded NCUA’s discretionary 7
determination as exempt from judicial review, or that it believed the determination was 8
clearly within the scope of permissible discretion. 9
We have no need in this appeal to resolve either question. Even if we concluded 10
that judicial review for abuse of discretion is required, and interpreted the district court’s 11
decision as having erroneously failed to undertake that compulsory review, the error 12
would be harmless. 13
Goldman advances no reasonable argument why NCUA’s determination that the 14
arbitration agreement was burdensome and would hinder the orderly administration of 15
5 In 1185 Avenue of Americas Associates, the appellant argued that the RTC, exercising
its parallel repudiation power under Section 1821(e), was required to submit evidence
showing that it had made the requisite finding that the repudiated contract was
burdensome. The court rejected the proposition that the RTC was required to make a
formal finding that the contract was burdensome, and added (1) “it c[ould] hardly be said
that it was not reasonable for the RTC to find” that the contract at issue was burdensome,
and (2) “whether the [contract] [wa]s burdensome [wa]s to be decided at the discretion of
the conservator or receiver.” 1185 Ave. of Ams. Assocs., 22 F.3d at 498. As we understand
that ruling, it left open the question whether, notwithstanding deference, some judicial
review for abuse of discretion is nonetheless required.
14

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Southwest’s affairs should be found an abuse of discretion. Depending on the facts of any 1
particular dispute, the party’s litigating posture in it, and innumerable other factors, a 2
party might reasonably find relative burden or advantage in arbitration or court litigation. 3
Because arbitration awards are reviewed on an extremely deferential standard and are 4
generally upheld so long as the award draws its essence from the agreement and does not 5
manifestly disregard the governing law or exhibit bias or corruption, see 9 U.S.C. § 10(a); 6
Schwartz v. Merrill Lynch & Co., 665 F.3d 444, 451-52 (2d Cir. 2011); ReliaStar Life Ins. 7
Co. of N.Y. v. EMC Nat’l Life Co., 564 F.3d 81, 85-86 (2d Cir. 2009), the more one 8
believes one might find some advantage in the availability of full appellate review, the 9
more one might reasonably conclude that arbitration would be burdensome and 10
disadvantageous. Furthermore, a litigant who contemplates being involved in numerous 11
arguably related litigations has a better chance of coordination of the various proceedings, 12
at least to the extent the party considers coordination advantageous, in court proceedings 13
than in arbitration. At the time Goldman sought arbitration, NCUA was in the process of 14
litigating multiple actions on behalf of liquidated credit unions against underwriters of 15
RMBS, including another suit against Goldman. As NCUA in its role as liquidating agent 16
of failed institutions represents the public interest, the statute gives it wide discretion in 17
deciding whether to repudiate those institutions’ contracts. The record reveals no basis 18
whatever for us to conclude that NCUA’s decision to repudiate this arbitration agreement 19
15

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was not within the discretion granted to it by the statute.6
1
III. Whether NCUA Repudiated Within a “Reasonable Period” 2
Goldman contends NCUA’s repudiation should be disallowed because it was 3
untimely. Section 1787(c) requires a liquidating agent to determine whether or not to 4
exercise the rights of repudiation “within a reasonable period following [the liquidating 5
agent’s] appointment.” 12 U.S.C. § 1787(c)(2). NCUA was appointed as liquidating agent 6
for Southwest on October 31, 2010. It did not repudiate the CAA until October 17, 2013, 7
nearly three years later. Goldman contends the delay was not reasonable. 8
NCUA counters that the three-year delay was reasonable because it was not aware 9
of the CAA’s existence until Goldman brought the contract to its attention during this 10
litigation. In support of the reasonableness of its delay, NCUA submitted a declaration of 11
Debora Richter of NCUA’s Asset Management and Assistance Center (the “Center”). The 12
Center is responsible for managing and preserving the records of credit unions that 13
NCUA places under conservatorship or liquidation. Richter’s declaration averred that in 14
6 Goldman argues that, because arbitration is widely believed to be more cost-effective
than court litigation, NCUA’s contention that arbitration would be burdensome is subject
to doubt. In addition, Goldman contends NCUA’s assertion of an intention to seek
coordination with related actions is belied by the fact that NCUA opposed a motion filed
by defendants in actions related to this case to consolidate certain NCUA actions into a
multi-district litigation proceeding. Neither argument is persuasive. As for the cost-
effectiveness of arbitration, there are nonetheless many reasons why NCUA might
reasonably find it burdensome. As for consolidation, there is no inconsistency between a
desire to obtain some coordinated litigation, such as the coordinated discovery obtained in
this case, and opposition to consolidation and transfer of several cases to another district
pursuant to an order of the Judicial Panel on Multidistrict Litigation. See 28 U.S.C. §
1407.
16

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October 2010, when Southwest was placed into liquidation, the Center obtained a 1
spreadsheet from Southwest with over 1,900 entries, supposedly listing all of Southwest’s 2
contracts, including those with Goldman. Additionally, the Center “obtained and 3
reviewed copies of contracts maintained by Southwest to determine which contracts 4
should be repudiated, transferred . . . or otherwise terminated.” JA 182. In so doing, the 5
Center did not discover any additional contracts with Goldman beyond those listed on the 6
spreadsheet. The CAA was not among the entries on Southwest’s spreadsheet, nor did the 7
Center discover the CAA in Southwest’s files. Richter declared that, to her knowledge, 8
NCUA was not aware of the CAA until Goldman disclosed it during this litigation. 9
Goldman contends NCUA’s delay was unreasonable because it should have known 10
that the materials it obtained from Southwest were incomplete. NCUA had in its 11
possession confirmations reflecting Southwest’s purchase of the RMBS involved in this 12
lawsuit. Goldman characterizes these confirmations as contracts that should have been 13
listed on Southwest’s spreadsheet, but were not. Thus, Goldman argues, NCUA should 14
have realized that the spreadsheet was incomplete and, based on NCUA’s experience with 15
RMBS investments, that Southwest must have had account agreements for the RMBS 16
investments not shown on the spreadsheet, which, in the exercise of diligence, NCUA 17
needed to find. 18
Goldman’s artful Monday-morning quarterbacking is not persuasive. On the basis 19
of the evidence set forth in the district court, NCUA’s lack of awareness of the CAA, and 20
its consequent delay in repudiating it, cannot be deemed unreasonable. The evidence in 21
17

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no way suggests that NCUA was dilatory or in bad faith. Once Goldman brought the 1
CAA to NCUA’s attention on October 8, 2013, NCUA repudiated the contract within 2
nine days. Given NCUA’s excusable unawareness of the CAA until Goldman disclosed it, 3
we reject Goldman’s challenge to the timeliness of the repudiation. 4
CONCLUSION 5
For the reasons stated above, the district court’s order denying Goldman’s motion 6
to compel arbitration is AFFIRMED. 7
18

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