Bouriez v. Carnegie Mellon Univ

• Court: Court of Appeals for the Third Circuit
• Decided: March 1, 2004
• Docket: 03-1709P
• Status: Published

Opinion

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

3-1-2004

Bouriez v. Carnegie Mellon Univ Precedential or Non-Precedential: Precedential

Docket No. 03-1709P

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Recommended Citation "Bouriez v. Carnegie Mellon Univ" (2004). 2004 Decisions. Paper 897. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/897

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UNITED STATES COURT OF ___________ APPEALS FOR THE THIRD CIRCUIT James A. Vollins, Esq. (Argued) No. 03-1709 Squire, Sanders & Dempsey ___________ 127 Public Square 4900 Key Tower CHRISTIAN BOURIEZ; Cleveland, OH 44114-1304 MONTANELLE BEHEER B.V., Counsel for Appellants

Appellants, George E. Yokitis, Esq. (Argued) vs. DeForest, Koscelnik & Yokitis 436 Seventh Avenue CARNEGIE MELLON UNIVERSITY 3000 Koppers Building ___________ Pittsburgh, PA 15219 Counsel for Appellee APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE ___________ WESTERN DISTRICT OF PENNSYLVANIA OPINION OF THE COURT ___________ (D.C. No. 02-cv-02104) NYGAARD, Circuit Judge. District Judge: The Honorable Arthur J. Schwab Christian Bouriez and M ontanelle ___________ Beheer B.V. (collectively referred to as “Bouriez”) appeal the District Court’s ARGUED order compelling arbitration and JANUARY 27, 2004 dismissing their case. We will reverse and remand. BEFORE: NYGAARD and FUENTES, Circuit Judges, and O’NEILL,* District Judge.

(...continued) * Honorable Thomas N. O’Neill, States District Court for the Eastern Jr., Senior District Judge for the United District of Pennsylvania, sitting by (continued...) designation. I. By the end of 2000, Carnegie In 1996, Carnegie Mellon Mellon was in need of additional funds University entered into an agreement (the for the Project. Carnegie Mellon again “1996 Agreement”) with Zeta Projects approached Bouriez and he agreed to Limited. Under the terms of this assist Carnegie Mellon in finding Agreement, Zeta Projects would fund additional investors. Before finding certain of Carnegie Mellon’s research those investors, the Project underwent an projects. In 1997, Governors Refining audit and, according to Bouriez, that Technologies assumed Zeta Projects’ audit revealed that Carnegie Mellon position in the 1996 Agreement. never had Proof-of-Concept for the Governors Refining was a partially Project. As a result of this discovery, owned subsidiary of Governors Bouriez did not try to find additional Technologies Corp. investors for the Project and sued Carnegie Mellon. Bouriez claims that In 1999, Carnegie Mellon Carnegie Mellon made approached Bouriez about investing in a misrepresentations to him about the research project (“the Project”) that was status of the Project in order to convince being conducted under the 1996 him to purchase shares in Governors Agreement. 1 According to Bouriez, Technologies and, thereby fund the Carnegie Mellon represented to him that Project. they had Proof-of-Concept on the technology at issue. Bouriez agreed to Carnegie Mellon filed a support the Project and did so by motion seeking to compel Bouriez to investing in, and thereby becoming a arbitrate his claims and to have his shareholder of, Governors Technologies. federal action dismissed. Carnegie Governors Technologies then took the Mellon based this motion on the $5,000,000 that Bouriez invested and arbitration clause contained in the 1996 used it to fund the Project. Agreement. The clause requires that, “Any dispute or claim arising out of or relating to the Agreement will be settled by arbitration in Pittsburgh, 1. The 1996 Agreement does not Pennsylvania.” App. 24. Neither specifically lay out research projects, but Bouriez nor Governors Technologies contemplates that proposals will be signed this Agreement. submitted pursuant to the terms of that Agreement. The project that Governors The District Court granted Refining was involved in was submitted Carnegie Mellon’s motion after finding under this procedure and involved the that Bouriez “as agent[] of [Governors upgrading of crude petroleum using Technologies], [is] bound by [his] microwave-enhanced catalytic cracking.

2 principal’s [Governors Technologies] inappropriate to force a party to arbitrate agreement to arbitrate” and “[Bouriez] their disputes unless that party agreed to embraced the Agreement and directly such arbitration. E.I. Dupont de benefitted therefrom and thus [is] Nemours & Co. v. Rhone Poulenc Fiber equitable [sic] estopped from avoiding its & Resin Intermediates, S.A.S., 269 F.3d arbitration clause.” App. at 6. 187, 194 (3d Cir. 2001). A party, however, can be compelled to arbitrate II. under an agreement, even if he or she did not sign that agreement, if common law We have jurisdiction over this principles of agency and contract support appeal under 28 U.S.C. § 1291.2 We such an obligation on his or her part. Id. exercise plenary review over the District at 194-95. Court’s order compelling arbitration. Pritzker v. Merrill Lynch, Pierce, Fenner Generally, the common law & Smith, Inc., 7 F.3d 1110, 1113 (3d theories used to bind a non-signatory to Cir. 1993). an arbitration clause include third party beneficiary, agency and equitable The right to a jury trial is a estoppel. Here, Carnegie Mellon argued, fundamental right that is expressly and the District Court accepted, that protected by the Seventh Amendment to Bouriez could be compelled to arbitrate the United States Constitution. Molthan under the 1996 Agreement based on the v. Temple Univ. of Com. Sys. of Higher principles of agency and equitable Educ., 778 F.2d 955, 963 (3d Cir. 1985). estoppel. Although the Federal Arbitration Act “establishes a strong federal policy in In its agency analysis, the District favor of compelling arbitration over Court found that Bouriez was an agent of litigation,” this Court has held that it is Governors Technologies and, therefore, was bound to arbitrate under the 1996 Agreement. Bouriez raises several factual arguments regarding his status as 2. We note that as its primary form an agent of Governors Technologies and of relief, Carnegie Mellon requested that Governors Technologies’ obligation to the District Court compel arbitration and arbitrate under an agreement assumed, dismiss Bouriez’s federal action. We not by Governors Technologies, but by express no opinion as to whether, had Governors Refining. However, even Carnegie Mellon requested a stay under assuming Bouriez was an agent of Section 3 of the Federal Arbitration Act, Governors Technologies and it was 9 U.S.C. § 3, it would have been proper obligated to arbitrate under the 1996 for the District Court to dismiss this Agreement, this does not mean Bouriez action, and for us to hear an appeal from was also obligated to arbitrate his claims. that dismissal.

3 In Bel-Ray Co. v. Chemrite, we held that Group., Inc., 215 F.3d 677 (7th Cir. an agent can only be bound by the 2000). agreements of his principal when that principal acted with the agent’s actual, In Industrial Electronics, iPower implied, or apparent authority. 181 F.3d approached Industrial Electronics in an 435, 445 (3d Cir. 1999). There is no attempt to convince it to join an evidence that Governors Technologies, association of other companies. Id. at Governors Refining, or any other entity 678-79. Once established, that was acting with implied, actual or association would enter into a franchise apparent authority for Bouriez when it agreement with iPower, for iPower to agreed to the 1996 Agreement. In fact, provide computer software that would the record shows that Bouriez did not allow customers to purchase from all even become involved in the Project until members of the association in a single 1999, approximately two years after order. Id. Industrial Electronics decided Governors Refining assumed the 1996 to enter into the association, which was Agreement. Therefore, the District Court created as a limited liability corporation. is incorrect in its conclusion that any Id. at 679. One year later, the association agency relationship between Bouriez and entered into the intended franchise Governors Technologies obligated him to agreement with iPower. Id. arbitrate. Eventually, Industrial Electronics A person may also be equitably came to believe that iPower estopped from challenging an agreement misrepresented certain facts and that includes an arbitration clause when fraudulently induced Industrial that person embraces the agreement and Electronics to enter the association. Id. directly benefits from it. E.I. Dupont, It sued iPower. Id. In an attempt to 269 F.3d at 199-200. Here, there is compel arbitration, iPower argued that simply no evidence in the record to Industrial Electronics was bound by an indicate that Bouriez directly benefitted arbitration clause that existed in the from the 1996 Agreement. At most, the franchise agreement between iPower and facts show that Bouriez became a the association. Id. The Court of minority shareholder in Governors Appeals for the Seventh Circuit correctly Technologies for the sole purpose of observed that Industrial Electronics’ funding the Project. There is no claims were not based on the franchise evidence that any benefit the Project agreement, but on iPower’s statements would produce would go to him directly. that induced it to enter into the In this respect, this case is nearly association. Id. at 680-81. Thus, identical to Industrial Electronics Corp. Industrial Electronics was not exploiting of Wisconsin v. iPower Distribution or directly benefitting from the agreement that contained the arbitration

4 clause, and would not be equitably estopped from avoiding that clause.

The facts here are not distinguishable and we find Industrial Electronics persuasive. Bouriez is complaining that Carnegie Mellon wrongly induced him to enter into a shareholder agreement with Governors Technologies. While the purpose of that agreement was that Bouriez could provide money to Governors Technologies that Governors Technologies would use to fund Carnegie Mellon, the fact remains that Bouriez’s claims deal with his shareholder agreement, and not the 1996 Agreement. As in Industrial Electronics, “A dispute that arises under one agreement may be litigated notwithstanding a mandatory arbitration clause in a second agreement, even where the two agreements are closely intertwined.” Id. at 681. Such is the circumstance here. The District Court’s contrary conclusion fails to acknowledge that Bouriez was one step removed from the 1996 Agreement and, therefore, is not equitably estopped from avoiding the arbitration clause contained in that Agreement.

III.

For the foregoing reasons, we will remand the cause. _________________________