Adam Technologies International S.A. De C v. v. Sutherland Global Services, Inc.

729 F.3d 443, 2013 WL 4766671, 2013 U.S. App. LEXIS 18513
CourtCourt of Appeals for the Fifth Circuit
DecidedSeptember 5, 2013
Docket12-10760
StatusPublished
Cited by32 cases

This text of 729 F.3d 443 (Adam Technologies International S.A. De C v. v. Sutherland Global Services, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Adam Technologies International S.A. De C v. v. Sutherland Global Services, Inc., 729 F.3d 443, 2013 WL 4766671, 2013 U.S. App. LEXIS 18513 (5th Cir. 2013).

Opinions

LESLIE H. SOUTHWICK, Circuit Judge:

Adam Technologies International S.A. de C.V. appeals the district court’s denial of its motion to appoint an arbitrator under the Federal Arbitration Act. The district court denied the motion after determining the challenges to the appointment presented procedural questions to be decided by the International Centre for Dispute Resolution. We AFFIRM.

FACTUAL AND PROCEDURAL BACKGROUND

In March 2010, Sutherland Global Services, Inc., filed a demand for arbitration with the American Arbitration Association, alleging Adam owed Sutherland $618,626.08 for unpaid services. Sutherland referenced the parties’ Master Services Agreement, which provided that the parties agreed to resolve such dispute by arbitration in Rochester, New York, in accordance with the rules of the American Arbitration Association.

In May 2010, in a state court in Dallas, Texas, Adam filed an application to stay the arbitration and referenced the parties’ antecedent Letter of Intent, which provided a different forum-selection and choice-of-law clause for disputes regarding the interpretation and enforcement of the Letter of Intent. Adam contended that Sutherland performed the work under the Letter of Intent, while Sutherland argued that the subsequent Master Services Agreement controlled.

Sutherland removed the civil action to the United States District Court for the Northern District of Texas, invoking the [445]*445court’s original diversity jurisdiction. 28 U.S.C. § 1332. Sutherland then filed a motion to stay the proceeding in favor of arbitration or in the alternative to dismiss.

On October 18, 2010, the district court entered a final judgment and dismissed Adam’s claims for resolution by arbitration. In its original order, the district court determined the Master Services Agreement superseded the expired Letter of Intent. Accordingly, by basing its claims on an expired agreement, Adam had failed to state a claim upon which relief could be granted. Fed.R.Civ.P. 12(b)(6). Although not expressly using the word “compel” in its final judgment, the district court stated: “Plaintiffs claims are dismissed for resolution by arbitration.” Thus, the clear import of the judgment was that if Adam wished to proceed with its claims, it must do so in arbitration. On November 4, 2010, Adam filed a motion to alter or amend the judgment. As we will discuss, the district court ruled on the motion in May 2011.

In February 2011, the parties attempted to resolve their dispute through mediation. They selected attorney Phillip Spellane, who previously represented Sutherland in a labor dispute, as the mediator. By April, the parties were unable to reach an agreement through mediation and utilized the arbitration procedure provided in their Master Services Agreement. This agreement required the dispute to be brought to a sole arbitrator if the parties mutually agreed to one within a reasonable period. If not, the parties were required to refer the dispute to three arbitrators. Both Adam and Sutherland were required to appoint one arbitrator each, and those two appointed arbitrators were required to appoint a third, presiding arbitrator.

After not agreeing to a sole arbitrator, Sutherland appointed its arbitrator, and Adam appointed former mediator Spellane as its arbitrator. On May 13, 2011, the International Centre for Dispute Resolution (“ICDR”), which is the arm of the American Arbitration Association that administers arbitration between internationally diverse parties, informed Sutherland that both arbitrators had agreed to serve. On May 16, Sutherland challenged Spel-lane’s appointment under Articles 7 and 8 of the ICDR International Arbitration Rules because of Spellane’s former involvement in the controversy and his ex parte communications with the parties.

Adam contended that Sutherland’s challenge was untimely, but the ICDR sustained the objection on June 6, and required Adam to appoint a new arbitrator by June 21. Adam then filed a notice to arbitrate Spellane’s removal, which the ICDR denied on the basis that his removal “was decided and confirmed by the ICDR in its sole discretion as [an] administrative decision.” Adam received two extensions of the deadline to appoint an arbitrator and ultimatély failed to appoint anyone by the ICDR’s subsequent deadline of July 12. On July 29, the ICDR appointed the second arbitrator, who worked with Sutherland’s appointed arbitrator to select the third, presiding arbitrator. The panel initially set a final-hearing date for the arbitration in April 2012.

Meanwhile, on May 26, 2011, the district court vacated its October 18, 2010 order:

After careful consideration, the Court finds that it was unnecessary to determine that the [Letter of Intent] LOI was superseded by the [Master Services Agreement] MSA. Courts are required to resolve doubt over the coverage of an arbitration agreement in favor of arbitration. Southland Corp. v. Keating, 465 U.S. 1, 10 [104 S.Ct. 852, 79 L.Ed.2d 1] (1984). Adam Technologies does not dispute the Court’s finding that this case belongs in arbitration. However, in de[446]*446termining whether the arbitration agreement controlled in this case, it was unnecessary for the Court to determine whether the MSA or the LOI controlled the dispute between the parties. Sutherland maintains its claims are brought pursuant to the MSA. Adam Technologies argued that the claims appeared to be brought pursuant to the LOI. Because there was a dispute as to whether the MSA, and thus, the arbitration agreement, controlled, and whether the LOI was superseded by the MSA, the Court was required to resolve doubt in favor of arbitration. Id. The determination as to which contract controls the dispute between the parties is for the arbitrator. Because the Court finds that its determination that the LOI was superseded by the MSA was unnecessary to its judgment, the Order of October 18, 2010 is vacated.

The court held it was not necessary to determine whether Adam had brought suit under an expired agreement, which was the conclusion in the vacated order. Instead, because any doubts over the coverage of an arbitration agreement are to be resolved in favor of arbitration, the court held that it was for an arbitrator to determine which of the parties’ agreements controlled. This left undecided whether the Master Services Agreement superseded the Letter of Intent. Because only the Master Services Agreement provided for arbitration, this amended ruling left for the arbitrator the decision of whether arbitration was required. The amended order did not address what was to occur if the arbitration determined, which it did not, that the Letter of Intent controlled and that arbitration was not the procedure to be followed to resolve the dispute.

If the district court was still dismissing the suit, nothing in the order explicitly stated that. The most definitive statement as to the result of the amended order was that the “Court grants in part and denies in part” the motion to amend. The earlier decision to dismiss based on Rule 12(b)(6) no longer had its legal underpinning, namely, that the complaint was based on an expired agreement on which no relief could be based. As the court initially held:

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729 F.3d 443, 2013 WL 4766671, 2013 U.S. App. LEXIS 18513, Counsel Stack Legal Research, https://law.counselstack.com/opinion/adam-technologies-international-sa-de-c-v-v-sutherland-global-services-ca5-2013.