author: DYK, Circuit Judge.

text:
    Luis ORTIZ-ESPINOSA; Maritza Soto-Garcia; Conjugal Partnership Ortiz-Soto; Luis Ortiz-Espinosa, as Trustee of Centro Dermatológico San Pablo PSC Retirement Plan, Plaintiffs, Appellants, v. BBVA SECURITIES OF PUERTO RICO, INC.; Rafael Rodríguez-Abella, Defendants, Appellees.
    No. 16-1122
    United States Court of Appeals, First Circuit.
    January 20, 2017

      Harold D. Vicente Colon, with whom Harold D. Vicente-González and Vicente & Cuebas were on brief, for appellants.
    Luis A Oliver, with whom Melissa Her-nández-Carrasquillo and Fiddler González & Rodríguez, PSC were on brief, for ap-pellees.
    Mark C. Fleming, Ari J. Savitzky, Peter J. Macdonald, Ross E. Firsenbaum, Adriel I. Cepeda Derieux, Michael J. Morillo, and Wilmer Cutler Pickering Hale and Dorr LLP on brief for UBS Financial Services Inc. and UBS Financial Services Incorporated of Puerto Rico, amici curiae.
    Before HOWARD, Chief Judge, DYK  and THOMPSON, Circuit Judges.

       Of the Federal Circuit, sitting by designation.

   DYK, Circuit Judge.

This case requires us to determine the test for district court federal question jurisdiction in the context of motions to vacate or modify an arbitration award. This turns on whether the court may look through the motion to the underlying dispute to determine whether the court would have federal question jurisdiction. Here, the district court applied the look-through test, finding that jurisdiction existed and that there was no basis for setting aside the award. We affirm, holding that the look-through approach is the correct test, that federal jurisdiction existed, and that the district court did not err in refusing to vacate the award and in confirming it.

I.

In 2006, appellants Dr. Luis Ortiz-Espi-nosa and his wife, Maritza Soto-Garcia; the conjugal partnership formed by them (Es-pinosa-Soto); and Luis Ortiz-Espinosa, as trustee of Centro Dermatológico San Pablo PSC Retirement Plan, opened two sets of brokerage investment accounts with BBVA Securities of Puerto Rico, Inc. (“BBVA”). The accounts included personal accounts for the married couple and accounts for a retirement plan. Rafael Rodriguez-Abella, a securities broker employed at BBVA, managed the accounts. The married couple deposited $2,113,154 into the personal accounts and $491,054 into the retirement plan accounts. By September 2009, the accounts had collectively suffered large losses in the amount of $2,049,340. The married couple believed that BBVA and Rodriguez-Abella were responsible for the losses. The brokerage agreements provided for arbitration of disputes before the Federal Industry Regulatory Authority (“FINRA”).

On March 25, 2010, the married couple and representatives of the retirement plans (hereinafter, “claimants”) sought arbitration with BBVA and Rodriguez-Abella in the FINRA forum. We refer to BBVA and Rodriguez-Abella as “defendants.” In their statement of claim requesting arbitration, claimants alleged that between 2006 and 2009, defendants

in total disregard and open violation of the instructions received from [claimants and of [claimants’ investment objectives, engaged in a pattern of unsuitable investments in high risk securities, with the sole objective of maximizing commissions or trading profits for [defendants], while deceiving [claimants about the true nature of the investments made by [defendants] in the Accounts. Said investments were made by [defendants] without consulting [claimants, and [defendants] exercised unauthorized discretion in the handling of the Accounts.

Appellants’ Appx. 23-24.

Claimants asserted several claims under both federal and Puerto Rico law, alleging, inter alia, violations of Section 10(b) of the Securities Exchange Act, Rule 10b-5 of the Securities Exchange Commission, and also the securities laws of Puerto Rico. The statement of claim alleged claims under state tort and contract law as well. With respect to the retirement plan accounts, claimants also alleged that the investments and margin loans were violations of the Employee Retirement Income Security Act. Finally, in addition to compensatory damages in the amount of at least $2,102,976, claimants sought punitive damages, interest, attorney’s fees, expenses, and disgorgement of defendants’ commissions and service fees.

A FINRA arbitration panel comprised of three members conducted seventeen hearing sessions in Puerto Rico. On April 3, 2012, the arbitrators issued an award denying claimants’ claims. The award stated in its entirety:

After considering the pleadings, the testimony and evidence presented at the hearing, and the post-hearing submissions, the Panel has decided in full and final resolution of the issues submitted for determination as follows:
The Panel finds for Respondents and Claimants’ claims are denied in their entirety.
Any and all relief not specifically addressed herein, including Claimants’ request for attorneys’ fees and punitive damages, is denied.

Appellants’ Appx. 38.

On July 29, 2012, claimants filed a complaint (hereinafter, “petition to vacate”) in the Puerto Rico Court of First Instance requesting that the court vacate or modify the arbitration award. Claimants, in their petition to vacate, did not invoke the Federal Arbitration Act (“FAA”); instead, claimants sought relief under the Puerto Rico Arbitration Act (“PRAA”), 32 L.P.R.A. §§ 3201 et seq. The petition alleged various errors of the arbitrators, including the fact that they denied claimants’ claims despite an alleged admission of responsibility by defendants and “clear evidence” supporting claimants’ claims on the merits. Appellants’ Appx. 15. The petition to vacate also alleged that the arbitrators were biased against claimants and had refused to hear relevant evidence.

On July 30, 2012, defendants removed the case to the United States District Court for the District of Puerto Rico asserting that the district court had federal question jurisdiction. There was no basis for diversity jurisdiction because all of the parties in this case are residents of Puerto Rico or are entities created or organized under the laws of Puerto Rico. Defendants based their claims of federal subject matter jurisdiction on a look-through approach, asserting that the underlying claims were based on federal securities laws, and that the district court would have had jurisdiction if the claims had been filed in district court. Defendants urged that the court also had supplemental jurisdiction over the state law claims.

On August 17, 2012, claimants moved to remand the case to Puerto Rico state court for lack of jurisdiction. The district court denied the motion for remand, holding that the court had federal question jurisdiction. It applied the look-through approach, determining that the underlying statement of claim alleged federal claims. Claimants filed an interlocutory appeal of the order denying their motion to remand, but on May 28, 2013, this Court dismissed the appeal because the order was not a final decision under 28 U.S.C. § 1291.

On December 17, 2015, the district court denied claimants’ petition to vacate or modify the arbitration award and entered a judgment confirming the award, holding that claimants “did not demonstrate any plausible ground to vacate or modify the award.” Appellants’ Br. Add. 28. The court did not decide whether the FAA or PRAA standards for vacating or modifying an arbitration award applied. Instead, the court held that “given the similarities between the FAA and PRAA with respect to the grounds for vacating or modifying” an arbitration award, disturbing the award “is not warranted under FAA or PRAA.” Appellants’ Br. Add. 24 n.9. Claimants appeal both the district court’s denial of their motion to remand and the judgment confirming the arbitration award. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II.

We first consider the issue of federal question jurisdiction. Where pertinent facts are not in dispute, we review the district court’s determination of subject matter jurisdiction de novo. Samaan v. St. Joseph Hosp., 670 F.3d 21, 27 (1st Cir. 2012).

Defendants argue that the FAA applies here and that this circuit should adopt the look-through doctrine to determine whether the district court has subject matter jurisdiction over a motion to vacate an arbitration award. Claimants argue that they sued under the PRAA, and alleged only state law causes of action in their petition to vacate, so the district court did not have subject matter jurisdiction. Furthermore, they claim that the text of the FAA prohibits the extension of the look-through doctrine beyond § 4. For the reasons explained below, we agree with defendants on both points.

Although claimants brought then-petition to vacate under 32 L.P.R.A. § 3222, the FAA applies to arbitration agreements “in any maritime transaction or a contract evidencing a transaction involving commerce.” 9 U.S.C. § 2; see also Bernhardt v. Polygraphic Co. of Am., 350 U.S. 198, 200-02, 76 S.Ct. 273, 100 L.Ed. 199 (1956). The Supreme Court has suggested that the parties may agree to review of arbitration awards under state law, explaining that “[t]he FAA is not the only way into court for parties wanting review of arbitration awards: they may contemplate enforcement under state statutory or common law, for example, where judicial review of different scope is arguable.” Hall St. Assocs. v. Mattel, Inc., 552 U.S. 576, 590, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008). But we read Hall Street as holding that where the FAA applies, it may be displaced by state law (if at all) only if the parties have so agreed explicitly. See id. Here, claimants have made no showing that the parties “contemplate[d] enforcement under” the PRAA, id. rather than the FAA. Claimants have not pointed to any language in their arbitration agreement indicating that the parties intended that state law would govern vacatur of the arbitration award. Accordingly, we will apply the FAA.

The FAA provides several mechanisms for enforcing arbitration agreements and awards. Sections 3 and 4 provide that a court may, upon application, stay litigation pending arbitration and compel arbitration pursuant to an arbitration agreement. 9 U.S.C. §§ 3, 4. Once an arbitration award has issued, FAA sections 9 through 11 supply means for acquiring “a judicial decree confirming an award, an order vacating it, or an order modifying or correcting it.” Hall St., 552 U.S. at 582, 128 S.Ct. 1396. Upon an application to the court under § 9, the court “‘must’ confirm an arbitration award ‘unless’ it is vacated, modified, or corrected ‘as prescribed’ in §§ 10 and 11.” Id. (quoting 9 U.S.C. § 9). Sections “10 and 11 respectively provide the FAA’s exclusive grounds for expedited vacatur and modification.” Id. at 584, 128 S.Ct. 1396.

An important goal of the FAA was to make arbitration agreements enforceable in the first instance. But the post-arbitration remedies were also a central component of the FAA structure, which sought to combat delays and expenses normally associated with litigation to enforce awards.

Before the FAA, “the only recourse of the successful party was to sue in a court of law upon the award,” where the party was “subject to the delay always incident in any action at law and to defeat upon technicalities or otherwise in proving the award itself.” Arbitration of Interstate Commercial Disputes, Joint Hearings before the Subcomms. of the Comms. on the Judiciary on S. 1005 and H.R. 646, 68th Cong., 1st Sess., 36 (1924). The FAA was viewed as solving these problems: “[ujnder the statute, if the award is not voluntarily performed, it must be entered as a judgment of the court, as a matter of course, unless grounds exist for its vacation, correction, or modification.” Id.; see also id. (“In all these proceedings there is no material expense or delay and no opportunity for technical procedure.”).

The very existence of sections 9, 10, and 11 demonstrates the importance of post-award federal court review. Those provisions show that Congress contemplated that the federal courts would have a central role and broad authority to enforce arbitration agreements (including confirming, vacating, or modifying an arbitration award). Sections 9, 10, and 11 provide that proceedings may be brought in “the United States court in and for the district wherein the award was made.” 9 U.S.C. § 10(a); accord §§ 9, ll. While these provisions do not themselves confer jurisdiction, they evidently contemplate that award enforcement will occur in federal courts as a matter of course. In fact, there is no explicit provision for post-award enforcement in state courts.

The Supreme Court has determined that the FAA adopted the look-through approach with respect to petitions to compel arbitration under 9 U.S.C § 4. In Vaden v. Discover Bank, 556 U.S. 49, 62, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009), the Court held that a “court may ‘look through’ a § 4 petition to determine whether it is predicated on an action that ‘arises under’ federal law.” The proper jurisdictional inquiry for a motion to compel arbitration is whether, “save for [the arbitration] agreement,” the court would have jurisdiction “over ‘a suit arising out of the controversy between the parties.’ ” Id. at 70, 129 S.Ct. 1262 (alteration in original) (quoting 9 U.S.C. § 4). In so holding, the Court rejected a test that would require the court to look to the issues presented in the petition alone, which might include, for example, the parties’ dispute over the arbi-trability of the claims. Id. at 68, 129 S.Ct. 1262.

The Yaden Court relied on the text of § 4, which provides in relevant part that a party seeking to compel arbitration “may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties.” 9 U.S.C. § 4. The Court reasoned that “[t]he phrase ‘save for [the arbitration] agreement’ indicates that the district court should assume the absence of the arbitration agreement and determine whether it “would have jurisdiction under title 28’ without it.” Vaden, 556 U.S. at 62, 129 S.Ct. 1262 (alteration in original). The phrase, “the controversy between the parties,” the Court explained, “is most straightforwardly read to mean the ‘substantive conflict between the parties.’ ” Id. at 62-63,129 S.Ct. 1262 (quoting Discover Bank v. Vaden, 396 F.3d 366, 370 (4th Cir. 2005)).

The Court noted that rejecting the look-through approach would lead to “curious practical consequences.” Id. at 65, 129 S.Ct. 1262. The Court explained that if a federal court were permitted “to entertain a § 4 petition only when a federal-question suit is already before the court, when the parties satisfy the requirements for diversity-of-citizenship jurisdiction, or when the dispute over arbitrability involves a maritime contract,” such an “approach would not accommodate a § 4 petitioner who could file a federal-question suit in (or remove such a suit to) federal court, but who has not done so.” Id. By contrast, the look-through approach avoids this situation because it allows a party to request an order compelling arbitration without first “seeking federal adjudication of the very questions it wants to arbitrate rather than litigate.” Id.

The Supreme Court has not decided whether the same jurisdictional look-through approach also applies to petitions to confirm, vacate, or modify an arbitration award under §§ 9-11. To be sure, there is a difference in statutory language between § 4 and the latter sections. In particular, the latter sections do not include the “save for [the arbitration] agreement” and “arising out of the controversy between the parties” language relied upon by the Supreme Court in Vaden. The question is whether this difference in language between the pre-award enforcement provision of § 4 and the post-award enforcement provisions of §§ 9-11 warrants a different test for federal question jurisdiction.

Following Vaden, there exists a split among our sister circuits on this question. The Second Circuit has held that the look-through approach applies at least to § 10 petitions to vacate. Doscher, 832 F.3d at 388. By contrast, the Seventh and Third Circuits have held the opposite: that Yaden is distinguishable (primarily based on the difference in statutory language) and that “a federal issue resolved by the arbitrator does not supply subject-matter jurisdiction for review or enforcement of the award.” Magruder v. Fid. Brokerage Servs. LLC, 818 F.3d 285, 288 (7th Cir. 2016); see also Goldman v. Citigroup Glob. Mkts. Inc., 834 F.3d 242, 255 (3d Cir. 2016) (look-through does not apply to § 10 motions to vacate).

As we now explain, we agree with the Second Circuit that the look-through approach cannot be limited to § 4 petitions to compel. Initially, we note that the mere difference in statutory text between the sections does not itself compel a holding that the sections are to be interpreted differently. See Clay v. United States, 537 U.S. 522, 529-30, 123 S.Ct. 1072, 155 L.Ed.2d 88 (2003); City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 435-36, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002); Martin v. Hadix, 527 U.S. 343, 355-57, 119 S.Ct. 1998, 144 L.Ed.2d 347 (1999); see also Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, — U.S. —, 136 S.Ct. 1562, 1570-71, 194 L.Ed.2d 671 (2016) (construing “completely different language” — the phrase “brought to enforce” in § 27 of the Securities Exchange Act of 1934 and the phrase “arising under” in 28 U.S.C. § 1331 — to have the same meaning for determining federal jurisdiction).

There are, moreover, several important policy reasons supporting applying the look-through approach to the award enforcement provisions. In light of the important role intended for the federal courts in enforcing arbitration agreements post-award, it would make no sense to effectively exclude federal question jurisdiction over those cases. And, the look-through approach is the only possible approach that would provide such federal jurisdiction.

There would seem to be only three possible tests for “arising under” jurisdiction under 28 U.S.C. § 1331. First, FAA §§ 9-11 could be viewed as each creating a federal cause of action because section 10 on its face provides substantive rules of decision for vacating an arbitration award. See Doscher, 832 F.3d at 387; Kasap, 166 F.3d at 1247. Such a reading would appear to be consistent with the general rule that a court has federal question jurisdiction where federal law creates the cause of action and provides the rules of decision.

However, the Supreme Court has foreclosed this first possibility, holding that federal question jurisdiction over controversies involving arbitration cannot be based on the fact that the FAA establishes the relevant substantive law. See Hall St., 552 U.S. at 581-82, 128 S.Ct. 1396; Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

The second possible test for federal question jurisdiction invokes the theory that federal jurisdiction exists where non-FAA federal law provides grounds for vacating the award. See Goldman, 834 F.3d at 255; Carter v. Health Net of Cal., Inc., 374 F.3d 830, 836-37 & n.4 (9th Cir. 2004); Greenberg v. Bear, Stearns & Co., 220 F.3d 22, 27 (2d Cir. 2000) overruled on other grounds by Doscher, 832 F.3d 372. However, this theory largely depends on the continued vitality of the “manifest disregard” doctrine (allowing an award to be set aside if it was made in manifest disregard of federal law), which “has been thrown into doubt by [Hall Street], where the Supreme Court ‘h[e]ld that [9 U.S.C. § 10] ... provide[s] the FAA’s exclusive grounds for expedited vacatur.’ ” Bangor Gas Co. v. H.Q. Energy Servs. (U.S.) Inc., 695 F.3d 181, 187 (1st Cir. 2012) (alteration in original) (quoting Hall St., 552 U.S. at 584, 128 S.Ct. 1396). This circuit has “not squarely determined whether our manifest disregard case law can be reconciled with Hall Street.” Raymond James Fin. Servs., Inc. v. Fenyk, 780 F.3d 59, 64-65 (1st Cir. 2015) (citation and quotation marks omitted).

We need not and do not decide now whether manifest disregard remains 'as an available basis for vacatur. However, if it does survive, we agree with the courts that have held that Hall Street compels the conclusion that it does so only as a judicial gloss on § 10. See Johnson v. Wells Fargo Home Mortg., Inc., 635 F.3d 401, 414 (9th Cir. 2011); T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 340 (2d Cir. 2010). If this is so, however, a claim of manifest disregard cannot provide federal question jurisdiction since, as discussed above, the law is settled that the FAA, including § 10, does not create a basis for federal question jurisdiction. See Hall St., 552 U.S. at 581-82, 128 S.Ct. 1396; Moses H. Cone, 460 U.S. at 25 n.32, 103 S.Ct. 927.

This leaves only a third, alternative approach: that the look-through test adopted in Vaden for § 4 petitions applies to sections 9, 10, and 11 of the FAA. It is the only approach available that provides broad federal court jurisdiction over proceedings to enforce awards, a clear objective of the FAA. Congress cannot have intended jurisdiction over §§ 9-11 petitions only to exist in diversity or perhaps in admiralty.

The look-through approach also provides a unitary jurisdictional approach to the FAA, an objective endorsed by various cases. See Harry Hoffman Printing, 912 F.2d at 611 n.1; Garrett, 7 F.3d at 884. Applying the look-through approach to post-award decisions avoids a “bizarre” distinction that would otherwise follow: “a petition to compel arbitration could be brought in federal court, but a petition under FAA §§ 9 or 10 to confirm or vacate the arbitration award in the same dispute could not.” Westmoreland Capital Corp. v. Findlay, 100 F.3d 263, 268 (2d Cir. 1996) abrogated by Vaden, 556 U.S. 49, 129 S.Ct. 1262; see also Doscher, 832 F.3d at 383 (“[H]ow can a federal court’s jurisdiction under the same jurisdictional statute differ between § 4 and all other remedies under the Act?”); id. at 387 (noting that excluding federal question jurisdiction here would result in a “totally artificial distinction” between cases stayed under § 3 and freestanding § 10 petitions filed in the same court) (quoting Vaden, 556 U.S. at 65, 129 S.Ct. 1262).

Applying the look-through approach to §§ 9-11 additionally avoids “curious practical consequences” similar to those that the Supreme Court recognized in Vaden as supporting § 4‘jurisdiction. 556 U.S. at 65, 129 S.Ct. 1262. Allowing a federal court to compel arbitration in a federal question case but then later denying a federal forum for confirming, modifying, or vacating the award would lead to strange consequences. Remitting the litigants to state court for post-award enforcement proceedings would create potential inconsistency between the federal pre-award decision and the later state court decision involving the question of whether the arbitrators exceeded their powers by deciding issues that are not properly subject to arbitration. See Coady v. Ashcraft & Gerel, 223 F.3d 1, 9 (1st Cir. 2000). Doctrines of issue preclusion may not protect against this eventuality in part because some state courts do not regard the FAA as preempting state law.

Finally, apart from arbitration agreement interpretation, a reviewing court in post-arbitration proceedings may be called to answer questions that implicate federal law. For example, a reviewing court may be asked to determine whether the arbitrators “refus[ed] to hear evidence pertinent and material to the controversy,” possibly requiring the court to consider questions of federal law in deciding whether the disregarded or excluded evidence was “material to the controversy.” 9 U.S.C. § 10(a)(3). Regardless of the avenue by which federal law becomes relevant in reviewing an arbitration award, it would seem particularly strange to deny a federal forum where the underlying claim, as here, is based on the Securities Exchange Act of 1934, claims over which the federal district courts have exclusive jurisdiction. See Manning, 136 S.Ct. at 1566. This potential for conflict further counsels that the look-through approach should apply consistently under the FAA.

For all of these reasons, we conclude that the look-through approach applies to sections 9, 10, and 11 of the FAA. Applying the look-through approach here, upon review of claimants’ statement of claim, there is no question that claimants’ claims involving federal securities laws arise under federal law. Indeed, at oral argument, claimants conceded that if we were to adopt the look-through approach, claimants lose on this issue. Accordingly, the district court properly exercised jurisdiction over claimants’ petition to vacate.

III.

We review the district court’s decision to confirm or vacate an arbitration award de novo. Cytyc Corp. v. DEKA Prods. Ltd. P’ship, 439 F.3d 27, 32 (1st Cir. 2006). As a threshold matter, the parties dispute whether the court should apply the FAA or the state PRAA grounds for vacatur in reviewing the award. The district court did not resolve this question, holding that the statutory grounds are essentially the same. Because we have already held that the FAA governs in this case, we need not decide whether the PRAA confers different grounds for vaca-tur.

Turning to the merits, we see no error in the district court’s decision here refusing to vacate (and confirming) the award under the FAA. The court’s review of an arbitration award “is extremely narrow and exceedingly deferential.” Raymond James, 780 F.3d at 63 (citation and quotation marks omitted); see also Cytyc Corp., 439 F.3d at 32; Teamsters Local Union No. 42 v. Supervalu, Inc., 212 F.3d 59, 61 (1st Cir. 2000) (“Arbitral awards are nearly impervious to judicial oversight.”). In reviewing an arbitration award under the FAA, “courts ‘do not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of lower courts.’ ” Advest, Inc. v. McCarthy, 914 F.2d 6, 8 (1st Cir. 1990) (quoting United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987)). This limited review applies “[e]ven where such error is painfully clear, [because] courts are not authorized to reconsider the merits of arbitration awards.” Id. (internal quotation marks omitted); see also Stolt-Nielsen, 559 U.S. at 671, 130 S.Ct. 1758 (“It is not enough for petitioners to show that the panel committed an error — or even a serious error.”); McCarthy v. Citigroup Glob. Mkts. Inc., 463 F.3d 87, 93-94 (1st Cir. 2006). The burden is on the claimants to establish that the award should be set aside. See JCI Commc’ns, Inc, v. Int’l Bhd. of Elec. Workers, Local 103, 324 F.3d 42, 51 (1st Cir. 2003). The grounds are set forth in Section 10 and include only the following:

(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
(4)where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

9 U.S.C. § 10(a).

Claimants did not expressly invoke FAA § 10. Instead, claimants’ petition to vacate and subsequent briefing cite vacatur provisions of the PRAA, 32 L.P.R.A. § 3222(b) and (c), which are analogous to FAA § 10(a)(2) and (a)(3), respectively. Accordingly, we address claimants’ claims under the PRAA as though they had been brought under the analogous provisions of the FAA.

Claimants have put forth essentially three theories as to why vacatur or modification of the arbitration award is warranted. Claimants argue that these errors collectively show evident partiality of the arbitrators (§ 10(a)(2)) and that the arbitrators engaged in misconduct or misbehavior that prejudiced claimants’ rights (§ 10(a)(3)).

Claimants’ first and primary theory is that the arbitrators were obligated to impose liability on defendants — but did not— after they were presented with “overwhelming” evidence supporting their case and after defendants’ counsel made an alleged admission of “shared responsibility” during closing arguments at the hearing. Appellants’ Br. 11,14.

The available grounds of vaca-tur do not allow a federal court to revisit the arbitrators’ ultimate determination .of whether or not to impose liability. See Advest, 914 F.2d at 8. That the arbitrators apparently were unconvinced by claimants’ evidence and denied their claims, without more, does not establish that the arbitrators were biased or guilty of misbehavior. To the extent that claimants suggest that defense counsel made an “admission” at closing argument, we do not read counsel’s comments as a clear admission of liability. Read in context, counsel's statements are more reasonably interpreted as an argument that claimants should be held accountable for their role, if any, in their own losses. Counsel does not appear to have suggested that defendants admitted to any particular proportion of responsibility.

Second, claimants argue that one arbitrator was partial to defendants as evidenced by comments he made during one of the hearings. During claimants’ questioning of a witness apparently related to claimants’ allegations of defendants’ prior bad acts, the arbitrator said “if I were [defendants’ counsel], I would have a sore throat from objection for irrelevancies.” Appellants’ Appx. at 75. Read in context, however, the arbitrator’s statements indicate that he was concerned with the number and length of the hearings, as well as the potential for scheduling issues if the hearings needed to be prolonged. He suggested to claimants that he believed the particular line of questioning was irrelevant and that claimants should move on to other questions. This hardly supports the existence of bias, and without more, claimants have not established “specific facts that indicate improper motives on the part of an arbitrator.” JCI Commc’ns, 824 F.3d at 51 (quoting Al Harbi v. Citibank, N.A., 85 F.3d 680, 683 (D.C. Cir. 1996)). A reasonable person would not “have to conclude” from this exchange that the arbitrator was evidently partial to defendants. Id.

Third and finally, claimants argue that the arbitrators failed to admit relevant evidence relating to claims previously brought against defendant Rodriguez-Abella by unrelated parties. Claimants’ third theory also fails. “Of course, § 10(a)(3) does not require arbitrators to consider every piece of relevant evidence presented to them.” Doral Fin. Corp. v. Garcia-Velez, 725 F.3d 27, 31 (1st Cir. 2013). “An arbitration award must not be set aside for the arbitrator’s refusal to hear evidence that is cumulative or irrelevant.” Hoteles Condado Beach, La Concha & Convention Ctr. v. Union De Tronquistas Local 901, 763 F.2d 34, 40 (1st Cir. 1985) (citations omitted). “Vacatur is appropriate only when the exclusion of relevant evidence so affects the rights of a party that it may be said that he was deprived of a fair hearing.” Id. (internal quotation marks omitted).

Here, claimants have not established that they were deprived of a fair hearing. The record shows that claimants were permitted to ask some questions about Rodriguez-Abella’s former clients’ actions against him. The arbitrators sustained objections based on relevancy only because those prior actions had been settled. We need not decide whether under the Federal Rules of Evidence, such evidence would be admissible. See United States v. Bailey, 696 F.3d 794, 800 (9th Cir. 2012). Whether or not such evidence would be admissible in federal court, we will not disturb the arbitrators’ decisions sustaining defendants’ evidentiary objections. See Hoteles Condado Beach, 763 F.2d at 39-40 (“Absent exceptional circumstances, ... a reviewing court may not overturn an arbitration award based on the arbitrator’s determination of the relevancy or persuasiveness of the evidence submitted by the parties.”).

Apart from claimants’ three theories of vacatur, claimants suggest in their petition to vacate that the same alleged errors resulted in an error in number calculation warranting modification of the award. See 9 U.S.C. § 11(a). However, § 11 plainly does not provide for modification where claimants’ sole position is that the arbitrators erred in denying their claims. See Advest, 914 F.2d at 8 n.4 (noting that “§ 11 provides for correction of ‘evident’ and ‘material’ arithmetic or descriptive errors”).

Because we affirm the district court’s determination that vacatur or modification of the arbitration award is not warranted, we also affirm the court’s confirmation of the award. See 9 U.S.C. § 9 (“[T]he court must grant [an order confirming the award] unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.”).

IV.

We conclude that the district court properly exercised jurisdiction over claimants’ petition to vacate or modify the arbitration award. We also hold that the district court was correct in denying claimants’ petition and confirming the award. Accordingly, we affirm.

AFFIRMED. Costs to appellees.

      . The Seventh Circuit has suggested that § 10 is of lesser importance than §§ 3-4 because "[t]he central federal interest [of the FAA] was enforcement of agreements to arbitrate, not review of arbitration decisions.” Minor v. Prudential Sec., Inc., 94 F.3d 1103, 1107 (7th Cir. 1996). The statutory language and legislative history make clear that post-award review was an important component of the statute. Other courts have likewise not found this suggestion compelling. See Doscher v. Sea Port Grp. Sec., LLC, 832 F.3d 372, 386 (2d Cir. 2016) ("If enforcement were Congress’s only goal, however, it would have had no need to pass §§ 10 or 11 at all."); Kasap v. Folger Nolan Fleming & Douglas, Inc., 166 F.3d 1243, 1247 (D.C. Cir. 1999) (finding "little evidence supporting” this understanding).

      . Section 10 provides, "[i]n any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration [upon satisfaction of the conditions set forth infra in section III of the opinion].”

      .Section 9 provides, in relevant part,
      If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made.
      9 U.S.C. § 9. Section 11 provides, "the United States court in and for the district wherein the award was made may make an order modifying or correcting the award upon the application of any party to the arbitration” where certain conditions are met. 9 U.S.C. § 11.

      . See Garrett v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 882, 883 (9th Cir. 1993) (noting that § 10 "appears on its face to confer subject-matter jurisdiction”); Harry Hoffman Printing, Inc. v. Graphic Commc'ns, Int'l Union, Local 261, 912 F.2d 608, 611 n.1 (2d Cir. 1990) (noting "that the broad language of sections 9 and 10 of the Act might be read as a grant of subject matter jurisdiction").

      . See Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 132 S.Ct. 740, 748, 181 L.Ed.2d 881 (2012); Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 317, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) (explaining that “a federal cause of action [is] a sufficient condition for federal-question jurisdiction”); Am. Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 60 L.Ed. 987 (1916) (“A suit arises under the law that creates the cause of action.”).

      .See also, e.g., Bull HN Info. Sys., Inc. v. Hutson, 229 F.3d 321, 328 (1st Cir. 2000); PCS 2000 LP v. Romulus Telecomms., Inc., 148 F.3d 32, 34-35 (1st Cir. 1998); Garrett, 7 F.3d at 884; Harry Hoffman Printing, 912 F.2d at 611.

      . The Supreme Court has explicitly reserved the question, stating "[w]e do not decide whether ‘manifest disregard’ survives our decision in [Hall Street], as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10.” Stolt-Nielsen S.A. v. Animal-Feeds Int'l Corp., 559 U.S. 662, 672 n.3, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010).

      . See Jill I. Gross, Over-Preemption of State Vacatur Law: State Courts and the FAA, 3 J. Am. Arb. 1, 20 (2004) (collecting cases)..

      . Although the statement of claim also includes claims arising under state law, there is no suggestion that those claims do not constitute part of the same controversy as the federal securities law claims. See Vaden, 556 U.S. at 69 n.18, 129 S.Ct. 1262 ("[I]f a federal court would have jurisdiction over the parties' whole controversy, we see nothing anomalous about the court’s ordering arbitration of a state-law claim constituting part of that controversy. Federal courts routinely exercise supplemental jurisdiction over state-law claims. See 28 U.S.C. § 1367.”).

      . Claimants quote cases discussing the manifest disregard doctrine, but they provide no supporting explanation as to how the doctrine applies to this case. We also note that the petition to vacate contains several pages discussing the applicability of a "ratification defense” to this case. However, claimants have not raised this issue on appeal.


source: Caselaw Access Project

author: LYNCH, Circuit Judge.

license: Public Domain

text:
    IN RE: IDC CLAMBAKES, INC., Debtor Goat Island South Condominium Association, Inc.; Capella South Condominium Association, Inc., Appellees, Cross-Appellants, v. IDC Clambakes, Inc., Appellant, Cross-Appellee.
    Nos. 15-1771, 15-1818
    United States Court of Appeals, First Circuit.
    March 24, 2017

      Matthew J. McGowan, with whom Salter McGowan Sylvia ⅛ Leonard, Inc., Providence, RI, William P. Devereaux, Matthew C. Reeber, Johnston, RI, Joel K. Goloskie, Boston, MA, and Pannone Lopes Dever-eaux & West LLC, were on brief, for appellant/cross-appellee.
    William R. Grimm, with whom Adam M. Ramos, Hinckley, Allen & Snyder LLP, Providence, RI, Charles D. Blackman, and Levy & Blackman LLP, Providence, RI, were on brief, for appellees/cross-appel-lants.
    Before LYNCH, BALDOCK, and KAYATTA, Circuit Judges.

       Of the United States Court of Appeals for the Tenth Circuit, sitting by designation.

   LYNCH, Circuit Judge.

This bankruptcy appeal is the latest in decades-long litigation over a lucrative banquet facility, the Regatta Club in Newport, Rhode Island, which was constructed on a parcel of land at a time when the validity of the development rights to that parcel was in dispute. In 2004 and 2005, the Rhode Island Supreme Court found that the development rights had expired at the time of construction. See Am. Condo. Ass’n v. IDC, Inc. (“America I”), 844 A.2d 117, 134 (R.I. 2004); Am. Condo. Ass’n v. IDC, Inc. (“America II”), 870 A.2d 434, 443 (R.I. 2005). As a result, it found that title to both the land and the Regatta Club belonged to a group of condominium associations, not to IDC, Inc. and IDC Properties, Inc. (“Properties”), the development entities that had incurred the cost to build the Club. Two of the title-holding associations, Capella South Condominium Association, Inc. and Goat Island South Condominium Association, Inc. (“the Associations”), are the appellees and cross-appellants in this suit. IDC Clambakes, Inc. (“Clambakes”), the debtor here, was not a party before the Rhode Island Supreme Court.

Following the America decisions, Clambakes, which operated the Regatta Club, voluntarily filed for bankruptcy under Chapter 11 of the Bankruptcy Code. The Associations then filed proofs of claim seeking relief for Clambakes’ alleged trespass on their property between 1998 and April 8, 2005, the date of the America II decision. In 2013, this court rejected that trespass claim, affirming the bankruptcy court’s finding that the Associations had impliedly consented to Clambakes’ use and occupancy of the Regatta Club. See In re IDC Clambakes, Inc., 727 F.3d 58, 69 (1st Cir. 2013). We also remanded on the issue of whether there was a corresponding implied obligation that Clambakes pay the Associations for its use and occupancy of the Club. See id. at 72.

On remand, the bankruptcy court first found that there was no implied-in-fact contract between the parties such that Clambakes was contractually obligated to make rent payments to the Associations. The bankruptcy court then considered whether the Associations were nonetheless entitled to relief under a theory of unjust enrichment. The court answered that question in the negative, finding that the benefit that the Associations conferred on Clambakes was fully offset by the value that the Associations themselves gained by being awarded ownership over the Regatta Club facility. See In re IDC Clambakes, Inc. (“Clambakes”), 510 B.R. 678, 695 (Bankr. D.R.I. 2014).

The district court disagreed, finding clear error in the bankruptcy court’s characterization of the benefit conferred on Clambakes as merely a ground lease, as well as in the bankruptcy court’s unjust enrichment analysis. Central to the district court’s reasoning was its reading of the America opinions as to the ownership of the Regatta Club. The district court held that the findings in the America opinions must serve as “established facts” and bind “[a]ny equitable analysis” in this lawsuit. Goat Island S. Condo. Ass’n v. IDC Clambakes, Inc. (“Goat Island”), 533 B.R. 845, 848-49 (D.R.I. 2015). Ultimately, the district court concluded that Clambakes owed the Associations $2.6 million for its use and occupancy of the Regatta Club during the claim period. Id. at 851.

We affirm the bankruptcy court’s decision to award no equitable relief to the Associations. No implied-in-fact contract existed between the parties. As to unjust enrichment, we see nothing in the America opinions to suggest that their holding regarding the Regatta Club’s ownership should bear on, much less control, the question of whether principles of equity entitle the Associations to even more relief than the Rhode Island Supreme Court already afforded them. Having concluded that the America opinions did not bind the bankruptcy court’s equitable authority, we find no abuse of discretion in the bankruptcy court’s ultimate decision that the Associations failed to meet their burden of showing that inequity would result if Clambakes did not pay them for the use and occupancy of the Regatta Club during the claim period. Equity does not bestow additional relief on the Associations, which continue to benefit from the Regatta Club facility that they inherited without any investment of their own.

I.

The saga of this litigation has been exhaustively documented by various state and federal courts. We recite only those facts relevant to this appeal. We rely principally on the bankruptcy court’s recounting of the facts, which the district court also adopted in full. See Clambakes, 510 B.R. at 682-85; Goat Island, 533 B.R. at 847.

In January 1988, Globe Manufacturing Co. (“Globe”) recorded a declaration of condominium in the Land Evidence Records of the City of Newport. Clambakes, 510 B.R. at 682. That declaration, as amended and restated in March 1988, reserved Globe’s right to develop a parcel of land known as the Reserved Area, but the development rights would expire if not exercised by December 31, 1994. Id. Globe assigned its development rights to IDC, Inc. and then to Properties. Id. From April to December 1994, Properties introduced multiple amendments to the declaration seeking to extend the expiration date for the development rights and to exercise those rights. Id. The Associations questioned the validity of these amendments, and negotiations over the amendments carried on for years. Id.

In late 1997 and early 1998, while negotiations over Properties’ development rights were ongoing, Properties spent approximately $3 million to construct the Regatta Club in the Reserved Area. Id. Despite the ongoing dispute over the development rights, the record reveals no evidence that the Associations sought to halt the construction. Id. As the bankruptcy court noted:

In an oft-cited letter during this conflict, a representative of the America Condominium Association wrote to the Newport building inspector on February 9, 1998: “It’s our understanding that a permit application has been filed with your Office for the purpose of constructing [the Regatta Club].... While we don’t have a particular objection as to the land use with respect to the building itself,. we do have a substantial problem with the parking requirements for that [building]....”

Id. (alterations in original).

Clambakes came into existence on April 18, 1996 as a corporate entity separate from the other IDC entities. Id at 683. On March 1, 1998, Clambakes and Properties entered into a twenty-year lease, under which Clambakes would “use the Regatta Club and surrounding land making up the Reserved Area to provide event hosting and catering services.” Id. Clambakes would pay Properties an annual rent equal to the higher of $180,000 or six percent of Clambakes’ annual gross revenues. Id. Clambakes began operating the Club in late 1998 and began paying rent to Properties in 1999. Id. Until Clambakes filed for bankruptcy on June 16, 2005, “it ran a profitable business during the approximately seven years it operated the Regatta Club.” Id.

A. The America Litigation

On May 29, 1999, the Associations sued Roos, IDC, Inc., and Properties in state court. Id. Clambakes was not a party to that suit. The Associations alleged that-Properties had failed to exercise its development rights with respect to the Reserved Area before the December 31, 1994 expiration date; that the 1994 declaration amendments that had sought to extend the expiration date were invalid; and that “as a result, fee simple title to the Reserved Area had vested in the condominium unit owners on whose behalf the Associations acted.” Id

In America I, the Rhode Island Supreme Court ruled in favor of the Associations. See 844 A.2d at 133. It found that the amendments were invalid because they did not conform to the requirements of the Rhode Island Condominium Act. See R.I. Gen. Laws §§ 34-36.1-1.01 to -4.20; America I, 844 A.2d at 127-30. Accordingly, Properties had failed to exercise its development rights before their expiration, and title to the disputed property had vested in the Associations. Id. at 133. In reaching this conclusion, the Supreme Court rejected the defendants’ argument that they had invested $3 million in developing the Regatta Club and that this investment should weigh against the Associations’ winning title to the Club: “Considering that [the defendants] developed the Reserved Area at a time when they were on notice that their right to do so was in dispute, we conclude that they constructed the parcel at their peril and cannot now contend that equity should prevent plaintiffs from prevailing because of their expenditures.” Id. at 135.

Nonetheless, the Rhode Island Supreme Court remanded for an accounting of the common expenses that Properties had continued to pay for the Reserved Area after December 31, 1994, the date on which its development rights expired. Id. “[T]o permit the plaintiffs to enjoy the benefits of such expenditures would constitute an inequitable windfall.” Id. In remanding for this purpose, the court expressly stated that the accounting should “not include any profits that [Properties] may have earned from its operation of the Newport Regatta Club.” Id. at 135 n.24.

On April 8, 2005, after hearing reargument, the Rhode Island Supreme Court reaffirmed its ruling that title to the Reserved Area, including the Regatta Club, rested with the Associations. See America II, 870 A.2d at 443.

B. Clambakes’ Bankruptcy Filing and 2013 First Circuit Decision

After the America II decision, the Associations asked the state court to issue writs of execution for possession and ejectment of Clambakes from the Reserved Area. Clambakes, 510 B.R. at 684. On June 16, 2005, Clambakes voluntarily filed for bankruptcy under Chapter 11 of the Bankruptcy Code. See 11 U.S.C. §§ 1101-1174; Clambakes, 510 B.R. at 684. In August 2005, a bankruptcy court judge entered a consent order that allowed Clambakes to operate the Regatta Club until November 5, 2005 after appropriately remunerating the Associations. Clambakes, 510 B.R. at 684. Clambakes complied and vacated the premises after hosting its final event on that date. Id.

Another order dated March 15, 2006 confirmed a plan of reorganization for Clambakes, under which its creditors would be paid in full. Funds to pay the Associations were escrowed because of the dispute over the amount, if any, that Clambakes owed the Associations. Id. The Associations collectively asserted a claim for approximately $3.5 million for Clambakes’ alleged trespass on the Reserved Area from March 1, 1998 — the date on which the Properties-Clambakes lease for the Regatta Club began — to April 7, 2005. Id. Clambakes objected to the Associations’ trespass-based proofs of claim, and the bankruptcy court granted summary judgment in Clambakes’ favor. Id. at 685. After much procedural history that we need not recount, the bankruptcy court held that the Associations had impliedly consented to Clambakes’ use and occupancy of the Reserved Area and thus that Clambakes had not trespassed. Id. The district court affirmed.

On appeal before this court, we first affirmed the bankruptcy court’s conclusion that Clambakes had not trespassed because the Associations had given implied consent to Clambakes’ use and occupancy of the Reserved Area. See In re IDC Clambakes, 727 F.3d at 69. Next, we turned to the Associations’ argument that “implied consent necessarily gives rise to an implied obligation to pay.” Id. at 71. Although the Associations had properly preserved this argument, we found that it was “insufficiently developed for proper adjudication on appeal,” as the bankruptcy court had not addressed it. Id. at 72. We thus remanded for determination of “whether implied consent in this case also gives rise to an implied obligation to pay the fair value for use and occupancy of the property.” Id.

C. The Bankruptcy and District Courts’ Decisions on Remand

On remand, the Associations advanced three arguments before the bankruptcy court. First, they argued that “in the context of a trespass actionf,] implied consent includes a presumed obligation to pay fair value absent proof of contrary intent.” Clambakes, 510 B.R. at 686. Second, they argued that there was an implied-in-fact contract between the parties such that Clambakes was obligated to pay the Associations. Id at 688. Finally, they argued that they were entitled to relief under a theory of implied-in-law contract, also known as quasi-contract or unjust enrichment. Id. at 685-86, 689.

The bankruptcy court quickly rejected the Associations’ first argument, noting that there was no Rhode Island case law to support the proposition that “implied consent necessarily gives rise to a presumptive obligation-to pay fair value absent a showing of contrary intent.” Id. at 687. The court also ruled that the Associations had failed to show the existence of an implied-in-fact contract because there was no evidence of a “mutual intent [between the parties] to enter into an agreement for the use and occupancy of the Reserved Area.” Id at 689.

Likewise, the bankruptcy court found that the Associations failed to prove their entitlement to equitable relief. “Recovery in quasi-contract requires a plaintiff to prove that ‘(1) the plaintiff conferred a benefit on the defendant, (2) the defendant appreciated the benefit, and (3) under the circumstances it would be inequitable for the defendant to retain such benefit without payment of the value thereof.’” Id. (quoting Fondedile, S.A. v. C.E. Maguire, Inc., 610 A.2d 87, 97 (R.I. 1992)). While the Associations had carried their burden of proof as to the first two elements, id at 691-92, the bankruptcy court concluded that they had failed to do so as to the third element, id. at 692-96.

In arriving at this result, the bankruptcy court first relied on expert testimony from both parties to estimate that the benefit that the Associations conferred on Clambakes — “allowing it to use and occupy the Reserved Area land” — was worth between $1 million and $1.625 million. Id. at 692. The unjust enrichment inquiry did not end there, however. The court observed that the Associations had denied Roos permission to remove the Regatta Club structure from the Reserved Area after the America II decision, even though “the owner of land is entitled to a mandatory injunction to require the removal of a structure that has been unlawfully placed upon his land.” Id. at 693 (quoting Santilli v. Morelli, 102 R.I. 333, 230 A.2d 860, 863 (1967)). Accordingly, “since the Associations chose to retain and profit from the Regatta Club, the resulting benefit reaped by the Associations must factor into the quasi-contract analysis.” Id. at 694.

From this perspective, the bankruptcy court considered the fact that Properties had invested $3 million to build the Regatta Club while the Associations had not invested any amount, that Clambakes had spent more than $550,000 to outfit and maintain the Club, and that the Associations had been able to rent the Club building to another tenant within two weeks of the date when Clambakes vacated the premises. Id. at 692-93. Of the minimum annual rent of $450,000 that the new tenant pays the Associations, $240,000 was attributable to the Regatta Club structure, based on both parties’ expert testimony. Id. at 695. Taking all of these factors into account, the bankruptcy court concluded that “Clambakes is entitled to a ‘credit’ for at least $1,625,000.00[,] ... equal to the high end of the value of a ground lease” conferred on Clambakes. Id. at 695.

The district court affirmed the bankruptcy court’s conclusion that no implied-in-fact contract existed, but it found reversible error in the bankruptcy court’s unjust enrichment analysis. See Goat Island, 533 B.R. at 847-48. Before delving into the particularities of the bankruptcy court’s alleged errors, the district court first noted that, notwithstanding the $3 million that Properties incurred to build the Regatta Club, the Rhode Island Supreme Court had ruled that the Associations owned the Club since its construction. Id. at 848. “These determinations are the established facts of this case, and this proceeding cannot be a vehicle to revisit or temper the effects of those holdings,” the district court said. Id. at 848-49.

From that premise, the district court ruled that the bankruptcy court committed clear error on four fronts. First, the bankruptcy court should not have characterized the benefit conferred on Clambakes as a ground lease but rather as a ground and building lease. Properly characterized, according to the district court, the value of the benefit to Clambakes was $2.6 million. Id. at 849. Second, the bankruptcy court should not have considered the $3 million that Properties had incurred in constructing the Regatta Club. Id. at 850. Third, the bankruptcy court should not have considered the $550,000 that Clambakes had incurred in outfitting and maintaining the Regatta Club. Id. Finally, the bankruptcy court should not have “deduct[ed] at least $240,000 per year from the use and occupancy payment to account for goodwill and the value of the Regatta Club” when there was “insufficient particularized evidence” on which to ground the quantification of that goodwill. Id. at 851. The district court ordered Clambakes to pay the Associations $2.6 million for its use and occupancy of the Regatta Club during the claim period. Id.

D. Arguments on Appeal

Each party appeals discrete aspects of the bankruptcy and district courts’ decisions. Clambakes argues that the bankruptcy court should not have reached the Associations’ arguments about implied-in-fact contract and unjust enrichment. Further, even assuming the unjust enrichment claim was properly heard, Clambakes challenges the district court’s finding of clear error in the bankruptcy court’s equitable analysis.

The Associations argue that the bankruptcy and district courts both erred in finding that no implied-in-fact contract existed. They also argue that the bankruptcy court erred in awarding no restitutionary relief and that the district court erred in granting no interest on top of the $2.6 million award for use and occupancy.

II.

A. Clambakes’ Threshold Arguments

Before we proceed further, we reject Clambakes’ various arguments that the bankruptcy court should not havé reached the implied-in-fact contract and unjust enrichment claims, but rather should have ended the case earlier. Clambakes advances two arguments on this point. It primarily argues that our remand in 2013 required the bankruptcy court to explore only whether implied consent necessarily, as a matter of law, gives rise to an obligation to pay. Once the bankruptcy court found that no such principle exists under Rhode Island law, the inquiry should have been over and the Associations’ claims dismissed. In the alternative, Clambakes contends that the Associations should have been barred from making any implied-in-fact contract or unjust enrichment claim because they failed to preserve such arguments by articulating only a trespass theory in their proofs of claim.

Each line of reasoning misunderstands aspects of our 2013 opinion. First, the plain language of that opinion renders unavailing Clambakes’ argument that our remand was limited to a question of law. As we there stated, the remand order “directed ... the trial court in the first instance [to] determin[e] whether the facts in this case and the law of Rhode Island support a finding of consent to operate free of charge or whether the Associations conditioned their implied consent on an implied obligation to pay.” In re IDC Clambakes, 727 F.3d at 72 (emphasis added).

As to Clambakes’ contention that the Associations’ claims based on the existence of an implied-in-fact or quasi-contract are unpreserved, we already addressed — and already rejected — this precise argument in 2013. See id. at 71-72 (finding that Associations’ argument was preserved because they had raised it “[i]n a post-trial motion filed ... just over a week after the trial and 18 months before the bankruptcy court issued its decision”). We do not revisit that ruling today.

B. Standard of Review

“The court of appeals ... undertakes an independent review of [a] bankruptcy court order, utilizing the same appellate standards governing the district court review.” In re LaRoche, 969 F.2d 1299, 1801 (1st Cir. 1992). We thus review the bankruptcy court’s findings of fact for clear error and its conclusions of law de novo “without deference to the district court’s ruling.” In re IDC Clambakes, 727 F.3d at 68.

“[T]o the extent that the ultimate decision in a restitution case rests on a judgment regarding the equities of the case, rather than application of an established rule of restitution, that exercise of judgment is reviewed only for abuse of discretion.” Invest Almaz v. Temple-Inland Forest Prods. Corp., 243 F.3d 57, 66 (1st Cir. 2001). This approach “reflect[s] our view that the finder of fact “who has had first-hand exposure to the litigants and the evidence is in a considerably better position to bring the scales into balance than an appellate tribunal.’ ” Id. (quoting Texaco P.R., Inc. v. Dep’t of Consumer Affairs, 60 F.3d 867, 875 (1st Cir. 1995)).

C. Implied-in-Fact Contract

We affirm, as did the district court, the bankruptcy court’s conclusion that there was no implied-in-fact contract under which Clambakes agreed to pay the Associations for its use and occupancy of the Regatta Club.

Under Rhode Island law, an implied-in-fact contract “is a form of express contract wherein the elements of the contract are found in and determined from the relations of, and the communications between the parties, rather than from a single clearly expressed written document.” Marshall Contractors, Inc. v. Brown Univ., 692 A.2d 665, 669 (R.I. 1997). “[A] contract implied in fact must contain all the elements of an express contract. So, such a contract is dependent on mutual agreement or consent, and on the intention of the parties; and a meeting of the minds is required.” Bailey v. West, 105 R.I. 61, 249 A.2d 414, 416 (1969) (citation omitted); see also Goat Island, 533 B.R. at 847 n.2.

The bankruptcy court properly applied this case law to the facts to find that the Associations had failed to show evidence of a meeting of the minds. As the court noted, the record lacked evidence “that the Associations ever requested a rent payment from Clambakes or that Clambakes ever made a rent payment to the Associations. There [wa]s no evidence of mutual agreement as to duration and scope of occupancy.” Clambakes, 510 B.R. at 689. If anything, the fact that Clambakes paid rent to Properties demonstrated Clambakes’ understanding that Properties, rather than the Associations, was the property owner. Given Clambakes’ lease with Properties, “there would be no reason to lease the property again from another entity,” as the bankruptcy court observed. Id. There is no error.

D.Unjust Enrichment

We do not find error in the bankruptcy court’s fact finding in the course of its unjust enrichment analysis. Nor do we find any abuse of discretion in its equitable balancing or its ultimate conclusion that the Associations failed to prove their entitlement to restitutionary relief.

“The Supreme Court has long recognized that bankruptcy courts are courts of equity with the power to apply flexible equitable remedies in bankruptcy proceedings.” In re Trailer Source, Inc., 555 F.3d 231, 242 (6th Cir. 2009) (citing Young v. United States, 535 U.S. 43, 50, 122 S.Ct. 1036, 152 L.Ed.2d 79 (2002)). Nothing in the America decisions suggests that they should be read as diminishing the bankruptcy court’s broad equitable authority. Indeed, neither America I nor America II suggests that its findings on the rightful ownership of the Regatta Club should have preclusive effect over all future litigation related to the Club, let alone over a claim of unjust enrichment from the Associations after they have already won the keys to the Club building.

The question presented in the America litigation was whether the Associations or one of the IDC entities' (precisely, IDC, Inc. or Properties) had title to the Regatta Club. The issues of trespass and unjust enrichment were not before the America court. In order to answer the question of ownership, the Rhode Island Supreme Court principally engaged in an exercise of statutory interpretation, analyzing whether the amendments to the condominium declaration abided by the requirements of the Rhode Island Condominium Act. America I, 844 A.2d at 127-30.

Of course, the Rhode Island Su-' preme Court also found that Properties had begun constructing the Regatta Club in the Reserved Area despite knowing that title to that land was in dispute and, as a result, that Properties’ construction expenditure would not factor into the question of proper ownership. ML at 134-35. But the fact that the America court declined to take into account the construction expenditure when adjudicating the Regatta Club’s ownership does not mean that the construction expenditure cannot be considered in a later equitable analysis — by a federal bankruptcy court dealing with a debtor that was not a party to the. America litigation — as to whether the Associations should receive additional relief beyond the Regatta Club building to which they have already won title.

In fact, even after declaring the Associations to be the rightful owners of the Regatta Club, the America court was careful to avoid bestowing on the Associations an “inequitable windfall.” Id. at 135. Accordingly, it remanded for an accounting of the common expenses that Properties had paid after its development rights expired, so that the Associations would not benefit at Properties’ expense. Id. It further emphasized that this accounting should “not include any profits that [Properties] may have earned from its operation of the Newport Regatta Club,” signaling that redistributing such profits to the Associations would be inequitable. Id. at 135 n.24. In short, we do not read the America decisions as tying the hands of the bankruptcy court in deciding whether the equities of this case weigh in favor of additional relief for the Associations.

Having determined that the America decisions do not dictate the result of the bankruptcy court’s equitable determination, we can quickly conclude that the bankruptcy court did not err in its factual findings and did not abuse its discretion in awarding no restitutionary relief.

The Associations first argue that the bankruptcy court erred by characterizing the benefit conferred on Clambakes as occupancy of only the Reserved Area land, rather than of both the land and the Regatta Club facility built on it. The district court similarly found error in the bankruptcy court’s characterization of the benefit as a ground lease. See Goat Island, 533 B.R. at 849. The district court fairly read the bankruptcy court opinion as determining the benefit conferred on Clambakes to equal the value of a ground lease even though Clambakes used both the building and the ground. We see no reason, though, why this reasoning constituted clear error sufficient to set aside the equitable balancing undertaken by the bankruptcy court. While Clambakes indeed used both the building and the land, it paid over $550,000 to improve the building, and it made rental payments to Properties totaling approximately $1.125 million to use the building. The Associations, in turn, received for free a building that collectively cost Properties and Clambakes roughly $3.55 million to build and improve. In determining on this record the net benefit Clambakes received, it was by no means unreasonable not to require Clambakes to also pay the Associations for use of the building.

The Associations also .contend that the bankruptcy court should not have taken into account Properties’ construction cost and Clambakes’ rent payments to Properties in the unjust enrichment analysis. Doing so was error, they say, because Clambakes itself did not bear the construction cost, and we must treat Properties and Clambakes as the separate corporate entities that they are. But Rhode Island law on the equitable remedy of unjust enrichment “presupposes that if plaintiff were left without a remedy, plaintiff would suffer a net loss. That is, defendant would have received a benefit ‘at the expense of plaintiff.” R.I. Bhd. of Corr. Officers v. Rhode Island, 264 F.Supp.2d 87, 105 (D.R.I. 2003) (emphases added) (quoting Merchs. Mut. Ins. Co. v. Newport Hosp., 108 R.I. 86, 272 A.2d 329, 332 (1971)). Regardless of which IDC entity paid for the Regatta Club’s construction, it is undisputed that the Associations did not contribute a penny toward construction. See Clambakes, 510 B.R. at 693. The Associations’ inability to recover rent for the claim period thus does not result in a “net loss” to them.

Likewise, the bankruptcy court properly considered the $550,000 that Clambakes incurred in outfitting and maintaining the Regatta Club during the claim period. In Dellagrotta v. Dellagrotta, 873 A.2d 101 (R.I. 2005), the Rhode Island Supreme Court allowed a woman to recover, under an unjust enrichment theory, half the cost of improvements that she made to a house that she initially mistakenly believed her former in-laws had gifted to her and her former spouse. Id. at 114-15. The former daughter-in-law was able to recover although she had stayed in the house after the end of her marriage, even after receiving a notice of termination of tenancy from her in-laws. Id. 113. In allowing her to recover, the court noted that “although the circumstances do not warrant conveyance of the house to [her], it is quite another thing to allow plaintiffs to realize the bounty of her labors.” Id. at 114. So too here. Even assuming that Clambakes knew that title to the Regatta Club was in dispute, that knowledge is insufficient to withhold credit to Clambakes for its expenses and effort in improving upon the Club structure.

Finally, we reach the issue of goodwill. The district court concluded that although the bankruptcy court did not err in finding some transfer of goodwill from Clambakes to the Associations, it erred in quantifying the value of that goodwill as “at least $240,000.” Goat Island, 533 B.R. at 851. On appeal, the Associations also emphasize that Clambakes did not transfer any business to the Associations because Clambakes continues to operate its business in other Newport locations.

As an initial matter, it is not clear from the bankruptcy court’s opinion that the $240,000 per year “credit” that it identified was a quantification of goodwill. Rather, the bankruptcy court’s description suggests that it sought to quantify the value of the Regatta Club building to the Associations. See Clambakes, 510 B.R. at 695 (“The quasi-contract analysis boils'down to weighing Clambakes’ use of the Reserved Area land valued at $1,000,000.00 to $1,625,000.00 for the claim period against the stream of income to the Associations from the Regatta Club building, sluicing along at a rate of at least $240,000.00 per year.” (emphasis added)). Further, the bankruptcy court derived the $240,000 figure by relying on a report submitted by the Associations’ expert. Id.

Even if the bankruptcy court’s aim was to quantify goodwill, however, we cannot say that the court clearly erred. Given the risk and effort that Clambakes undertook in establishing a successful event-catering business at the Reserved Area location, it is not unreasonable to infer that the Associations were able to charge a premium to rent that location to a similar business beyond what they could have charged for an unproven lot of land. At oral argument, the Associations could not point to a single piece of record evidence to rebut this inference that the prior operation of a successful business on a lot of land would enhance the value of that lot.

III.

There was no abuse of discretion in the bankruptcy court’s decision to award no restitutionary relief; to sustain Clambakes’ objections to each of the Associations’ claims; and to disallow Claims 16, 17, 18, and 19 in their entirety. Nor was there any legal or factual error. We also agree with the district court’s award of $7,290.00, plus interest, for the sewer repair cost. In light of this disposition, we need not entertain the Associations’ argument for interest on their restitutionary award. The judgment of the bankruptcy court is affirmed with the noted modification.

Costs are awarded to Clambakes.

      . Thomas Roos is the president and sole shareholder of all the IDC entities, including IDC, Inc., Properties, and Clambakes. Only Clambakes is a party to this suit, and the parties do not dispute that Clambakes is a corporate entity distinct from IDC, Inc. and Properties.

      . The bankruptcy court recognized that Properties, and not Clambakes, had constructed the Regatta Club. But it also noted that "Clambakes paid Properties rent of approximately $1,125,000.00 over the course of the claim period, which could be viewed in whole or in part as shifting a substantial portion of Properties’ construction costs to Clambakes.” Id. at 694.

      . Dissatisfied with the $2.6 million award, the Associations moved to alter or amend the district court's judgment. The Associations sought (1) an additional $7,290, plus interest, for sewer repair costs; (2) approximately $2.7 million in interest on the $2.6 million award for use and occupancy; and (3) costs under Rule 54(d)(1) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1920. The district court granted the motion as to the sewer repair costs but denied it as to the other two claims. The Associations have cross-appealed that ruling, which our resolution has made moot.

      . We do not wade into the difficult preclusion issues that would exist if the Rhode Island Supreme Court’s decisions were treated otherwise. We simply read the America decisions differently than did the district court.


author: BARRON, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Christian VÁZQUEZ-VÁZQUEZ, Defendant, Appellant.
    No. 15-2073
    United States Court of Appeals, First Circuit.
    March 24, 2017

      German A. Rieckehoff, San Juan, PR, on brief for appellant.
    Nelson Pérez-Sosa, Assistant United States Attorney, Rosa Emilia Rodriguez-Vélez, United States Attorney, and Mariana E. Bauzá-Almonte, Assistant United States Attorney, Chief, Appellate Division, on brief for appellee.
    Before TORRUELLA, SELYA, and BARRON, Circuit Judges.
   BARRON, Circuit Judge.

In this appeal, Christian Vázquez-Vázquez (Vázquez) challenges his sentence of thirty-six months’ imprisonment following the revocation of his term of supervised release. We affirm.

I.

On November 18, 2011, Vázquez pled guilty to the offense of conspiracy to possess with intent to distribute controlled substances, in violation of 21 U.S.C. §§ 841(a)(1), 846, and 860, in the United States District Court for the District of Puerto Rico. On May 24, 2012, he was sentenced to twenty-four months’ imprisonment and eight years’ supervised release, which began on February 18, 2014. On June 24, 2015, however, Vázquez’s probation officer filed a motion notifying the District Court of alleged violations of the conditions of Vázquez’s supervised release. After a hearing, the District Court determined that Vázquez had violated the conditions, revoked supervised release, and sentenced Vázquez to thirty-six months’ imprisonment.

Under 18 U.S.C. § 3583(e)(3), a court may revoke a term of supervised release and require the defendant to serve a term of imprisonment upon finding, by a preponderance of the evidence, that the defendant violated a condition of supervised release. Under that subsection, the term of imprisonment may not be longer than the term of the supervised release that had been imposed. Id. In addition, that subsection provides that the term of imprisonment may not be longer than three years if the conviction for which the supervised release was imposed was a Class B felony — which Vázquez’s conviction was. Id.

Section 3583(e) directs the sentencing court to consider a subset of the factors listed in 18 U.S.C. § 3553(a) before setting a term of imprisonment after revocation of supervised release. These factors include “the nature and circumstances of the offense and the history and characteristics of the defendant,” § 3553(a)(1); the need for “adequate deterrence,” § 3553(a)(2)(B); and the need to “protect the public,” § 3553(a)(2)(C).

The United States Sentencing Guidelines prescribe an advisory range for the term of imprisonment to be imposed upon revocation of supervised release. The guidelines base that range on the defendant’s criminal history category and the nature of the violations of the conditions of supervised release. U.S.S.G. § 7B1.4. Under the guidelines, violations of conditions of supervised release are assigned a grade of “A,” “B,” or “C.” Id. § 7Bl.l(a). The guidelines provide that where “there is more than one violation of the conditions of supervision ... the grade of the violation is determined by the violation having the most serious grade.” Id. § 7Bl.l(b).

Vázquez’s violation with the most serious grade is the violation for possession of a firearm as a felon, which is a violation of 18 U.S.C. § 922(g) and is punishable by a term exceeding one year. Id. § 924(a)(2) (providing for sentence of “not more than 10 years”). Under the guidelines, that violation of a condition of supervised release is a Grade B violation, because it is a “federal ... offense punishable by a term of imprisonment exceeding one year.” U.S.S.G. § 7Bl.l(a)(2).

The guidelines establish a sentencing range of six to twelve months’ imprisonment upon revocation of supervised release if the defendant has a criminal history category of II, as Vázquez did, and has committed a Grade B violation, which Vázquez had. U.S.S.G. § 7B1.4(a). Both Vázquez and the government advocated for a sentence within that guidelines range. The District Court, however, imposed a sentence of thirty-six months. That sentence was three times greater than the upper end of the guidelines range and equal to the statutory maximum the District Court could impose under 18 U.S.C. § 3588(e)(3). Vázquez now appeals that sentence.

II.

Vázquez first contends that, in varying from the guidelines range, the District Court erred procedurally by not explaining the sentence imposed with reference to the factors in 18 U.S.C. § 3583(e). Generally, for procedural challenges, “we afford de novo review to the sentencing court’s interpretation and application of the sentencing guidelines, assay the court’s factfinding for clear error, and evaluate its judgment calls for abuse of discretion.” United States v. Ruiz-Huertas, 792 F.3d 223, 226 (1st Cir.), cert. denied, — U.S. —, 136 S.Ct. 258, 193 L.Ed.2d 191 (2015). But, Vázquez did not object below to the District Court’s failure to provide an explanation of the sentence by reference to § 3583(e). And, “where the appellant has failed to preserve a claim of procedural error below, review is for plain error.” United States v. Montero-Montero, 817 F.3d 35, 37 (1st Cir. 2016). Vázquez has not satisfied this demanding standard.

We are mindful that “[t]he farther the judge’s sentence departs from the guidelines sentence ... the more compelling the justification based on factors in [the statute] that the judge must offer in order to enable the court of appeals to assess the reasonableness of the sentence imposed.” United States v. Smith, 445 F.3d 1, 4 (1st Cir. 2006) (quoting United States v. Dean, 414 F.3d 725, 729 (7th Cir. 2005)). But, given the explanation that the District Court did provide, “it is easy to infer the district court’s sentencing rationale.” Ruiz-Huertas, 792 F.3d at 228.

At the sentencing hearing, the District Court explained that Vázquez is “no neophyte” to crime and that the presentenee report gave a “good history” of “everything he has done before.” The District Court then gave a lengthy summary of its factual findings from the evidentiary hearing regarding Vázquez’s violations of the conditions of supervised release.

The District Court stated that, after being released from custody on supervised release, Vázquez left his hometown of Co-rozal, Puerto Rico, for the town of Guaya-ma, and upon arriving there, chose to live near the Luis Pales Matos Housing Project, which is “a nest of drug dealing.” And, the District Court found, once Vázquez moved there, he associated with at least three people who sell drugs, one of whom was on probation. The District Court then found, based on testimony at the evidentiary hearing, that Vázquez possessed a firearm, which he shot twice into the air.

Finally, the District Court pointed out— correctly — that these events happened “not too long” after Vázquez was placed on supervised release. The shooting at the Luis Pales Matos Public Housing Project took place on March 15, 2015, and Vázquez had begun his term of supervised release on February 18, 2014.

Thus, the District Court directly referenced both “the nature and circumstances of the offense and the history and characteristics of the defendant.” 18 U.S.C. § 3553(a)(1). And while the District Court did not then expressly state that those factors warranted a sentence of the length imposed for reasons of ensuring “adequate deterrence” or “protecting] the public,” 18 U.S.C. § 3553(a)(2), it is evident that this was the District Court’s rationale.

This case is thus unlike United States v. Franquiz-Ortiz, 607 F.3d 280 (1st Cir. 2010), upon which Vázquez relies. There, we found that the district court had failed to adequately explain its imposition of a sentence of twenty-four months’ imprisonment upon revoking the defendant’s term of supervised release. Id. at 282. The sentence, which was the maximum possible sentence under the statute, was more than double the high end of the guidelines range, which was four to ten months’ imprisonment. Id at 281-82. But in that case, the district court provided only a three-line explanation, which did not reference the presentence report. Id. at 282. And, the district court gave that brief explanation after the defendant had waived his right to a preliminary hearing to determine whether he had violated the conditions of supervised release. Id. Thus, we explained that the district court in that ease did not have before it any specific facts related to the violation. Id. Here, by contrast, the District Court gaye a lengthy description of the basis for the sentence imposed, which relied on both the details of Vázquez’s criminal history, as set forth in the presen-tence report, and on facts related to the violations of the conditions of supervised release that the District Court found at the hearing.

Moreover, in explaining its basis for imposing the sentence, the District Court did not err (as Vázquez contends the District Court did) by failing expressly to mention possibly mitigating facts, such as Vázquez’s earning of a general educational development certificate — referred to as a GED — and his enrollment in college. As we have made clear before, “a sentencing court is not required to address the § 3553(a) factors one by one, in some sort of rote incantation when explicating its sentencing decision, nor must the court afford each of the § 3553(a) factors equal prominence.” United States v. Pulido, 566 F.3d 52, 64 (1st Cir. 2009) (citation omitted).

Thus, we find that the District Court committed no procedural error. Rather, the District Court adequately explained the sentence with reference to the statutory factors prescribed in § 3583(e).

III.

Vázquez also challenges his sentence on the ground that it is substantively unreasonable. He does so by arguing that the sentence was too harsh in light of the fact no state criminal charges were filed against him relating to the firearm at issue here; that he obtained his GED and was attending college; that he had experienced a difficult childhood and family life; and that he had learning disabilities. But, even assuming, favorably to Vázquez, that our review of this challenge is for abuse of discretion rather than for plain error, United States v. Pérez, 819 F.3d 541, 547 (1st Cir.), cert. denied, — U.S. —, 137 S.Ct. 111, 196 L.Ed.2d 90 (2016), we see no basis for reversal.

“[T]he linchpin of a reasonable sentence is a plausible sentencing rationale and a defensible result.” United States v. Martin, 520 F.3d 87, 96 (1st Cir. 2008). And, “the greater the variance, the more compelling the sentencing court’s justification must be.” United States v. Guzman-Fernandez, 824 F.3d 173, 178 (1st Cir. 2016) (citation omitted). But, in light of the particular details of Vázquez’s criminal history and the seriousness of the violations of the conditions of supervised release, we can discern a plausible sentencing rationale for a result that, while harsh, is defensible. That criminal history showed that Vázquez had twice before engaged in criminal activity shortly after he had been released from custody. Moreover, the violations of his conditions of supervised release included Vázquez’s firing a weapon in a public housing project soon after his supervised release term began. Nor do the facts in mitigation require us to reach a different conclusion. See United States v. Vargas-García, 794 F.3d 162, 167 (1st Cir. 2015) (“While the defendant points to some mitigating considerations, a sentencing court is entitled to conduct an appropriate triage and weigh some factors more heavily than others.”). Thus, we find no abuse of discretion.

IV.

The sentence is affirmed.

      . "To succeed under plain error review, an appellant must show (1) that an error occurred (2) which was clear or obvious and which not only (3) affected the [appellant’s] substantial rights, but also (4) seriously impaired the fairness, integrity, or public reputation of judicial proceedings.” United States v. Montero-Montero, 817 F.3d 35, 37 (1st Cir. 2016) (alteration in original) (citation omitted).

      . The presentence report states the following. Vázquez was previously arrested in February 2007 for attempt or conspiracy to violate a controlled substances offense, in violation of Article 406 of the Puerto Rico Controlled Substances Act. He was released on bail, and while out on bail in August of 2007, used a knife to rob a gas station, in violation of Article 198 of the Puerto Rico Penal Code and Article 5.05 of the Puerto Rico Weapons Act. Vázquez was then re-arrested and sentenced to serve a term of four years for the first offense and three and a half years for the second offense. Vázquez was released from custody in July 2011. He was then indicted in September 2011 for the offense for which he was sentenced to the supervised release term at issue here — conspiracy to possess with intent to distribute controlled substances, in violation of 21 U.S.C. §§ 841(a)(1), 846, and 860.