PTA-FLA, Inc. v. ZTE USA, Inc.

844 F.3d 1299, 2016 U.S. App. LEXIS 22237, 2016 WL 7240137
CourtCourt of Appeals for the Eleventh Circuit
DecidedDecember 15, 2016
Docket15-15159
StatusPublished
Cited by190 cases

This text of 844 F.3d 1299 (PTA-FLA, Inc. v. ZTE USA, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
PTA-FLA, Inc. v. ZTE USA, Inc., 844 F.3d 1299, 2016 U.S. App. LEXIS 22237, 2016 WL 7240137 (11th Cir. 2016).

Opinion

MARCUS, Circuit Judge:

In this appeal, we are asked to decide a number of jurisdictional questions arising from the district court’s confirmation of an arbitration award. The case began as a contract dispute between two corporations—PTA-FLA, Inc., and ZTE USA, Inc.—commenced in the United States District Court for the Middle District of Florida. Shortly thereafter, three corporations affiliated with PTA-FLA filed similar cases against ZTE USA and its parent corporation, ZTE Corp., in several different federal district courts. All of the parties involved in these disputes participated in a consolidated arbitration proceeding that resulted in' a zero-dollar award binding ZTE USA and the four affiliated plaintiff corporations. ZTE USA then moved the district court in the Middle District of Florida to reopen PTA-FLA’s case, join the three other plaintiff corporations to the case, and, finally, to confirm the arbitrator’s award against all four plaintiff corporations. But before the district court could rule on that motion, PTA-FLA—the original plaintiff—voluntarily dismissed its *1302 claims. The district court eventually confirmed the arbitral award against all parties, concluding that it had subject matter jurisdiction (grounded in diversity of citizenship) to confirm the award against the original parties and supplemental jurisdiction to confirm the award against the later-joined parties despite PTA-FLA’s voluntary dismissal and the reduction in the amount in controversy.

The three joined parties now appeal the confirmation of the award, claiming that the district court was without subject matter or supplemental jurisdiction. After careful review, and having the benefit of oral argument, we conclude that the district court properly exercised its jurisdiction and, accordingly, affirm.

I.

We lay out in some detail the complex procedural history surrounding this case in order to properly address the district court’s power to entertain the matter. The appeal arises from a contract entered into by PTA-FLA, Inc., and ZTE USA, Inc., pursuant to which ZTE USA provided PTA-FLA with telecommunications equipment. PTA-FLA, in turn, is affiliated with three other companies: Daredevil, Inc.; NTCH-WA, Inc.; and NTCH-West Tenn., Inc. All four entities are owned and controlled by Eric Steinmann, and they operate together under the name “ClearTalk,” The ClearTalk entities each offer prepaid and flat-rate cell phone service to customers with poor credit or who otherwise cannot-open accounts with major cell phone providers, While only-PTA-FLA’s contract was originally relevant in this case, each of the ClearTalk entities entered into a similar contract with ZTE USA that was governed by a Master- Supply Agreement (“MSA”) identical to the one governing PTA-FLA’s contract.

PTA-FLA eventually discovered that the telecommunications equipment- provided by ZTE USA was defective, lacking in functionality, or limited in functionality. PTA-FLA contacted ZTE USA as required by the MSA’s dispute-resolution provision, but the parties were not able to resolve the dispute through “good faith senior level negotiations.” If the negotiations failed, the MSA provided that

either party may ... initiate an arbitration proceeding which shall be administered by the International Centre for Dispute Resolution of the American Arbitration Association (“AAA”) in accordance with its International Arbitration Rules. The place of arbitration shall be Jacksonville, Florida. The language of the arbitration shall be English. The parties to this Agreement expressly agree that any order or award of the arbitrator shall be final and binding and may be enforced in any court of competent jurisdiction.

Despite this provision, PTA-FLA sued ZTE USA in state court (the Fourth Judicial Circuit in and for Duval County, Florida) seeking damages for alleged breach of warranty, breach of the covenant of good faith and fair dealing, rescission, and fraud in the inducement. 1 Similar suits were filed across the country by the other ClearTalk entities, including suits by - Daredevil, NTCH-WA, NTCH-West Tenn., and Ste-inmann against both ZTE USA and ZTE Corp. Ultimately, ten suits were filed in six different jurisdictions. 2

*1303 ZTE USA removed the original suit from state court to the United States District Court for the Middle District of Florida, grounding jurisdiction on the diverse citizenship of the parties, ZTE USA then moved to compel arbitration. The district court granted that motion, and stayed its case pending the resolution of the arbitration proceedings. The other ClearTalk cases were all referred to the same arbitration proceeding and either dismissed or stayed pending the resolution. The arbitration proceeding went forward as a single unified proceeding that bound ZTE USA, PTA-FLA, Daredevil, NTCH-WA, and NTCH-West Tenn, The arbitrator, former Florida Supreme Court Chief Justice Mar jor B. Harding, noted that “[t]he entities ha[d] been collectively referred to by counsel throughout the arbitration as Clear-Talk.”

After considering evidence presented over ten days, the arbitrator determined that “[t]he ClearTalk entities shall take nothing from this action and the Respondents ,.. owe nothing in regard to” the claims of fraud, fraudulent inducement, breach of contract, breach of warranty, or overpayment. The arbitrator also decided that “Respondents shall take nothing from this action and Claimants known as Clear-Talk owe nothing in regard to” ZTE’s [claim for damages due to novnpayment. The decision referred to the ClearTalk entities au a single unit; it did not specify different conclusions or awards concerning the independent component entities that made up ClearTalk.

On the same day the arbitrator issued his.award, ZTE USA returned to the District Court in the Middle District of Florida and moved to reopen the case, join the other parties to the arbitration (Daredevil, NTCH-WA, NTCH-West Tenn., and Ste-inmann), confirm the final arbitral award as to all parties, and enter a final judgment. PTA-FLA moved the district court to stay the case pending a request that the arbitrator correct an ambiguity as to which parties were bound by the award. Daredevil, NTCH-WA, and NTCH-West Tenn. entered limited appearances to oppose ZTE USA’s motion to confirm for similar reasons, and Steinmann objected to joining the suit at all. The arbitrator corrected the award on March 11, 2014, and clarified that the award involved only ZTE USA, not ZTE Corp., because Steinmann’s claims were- the only claims asserted against ZTE Corp. and they had been dismissed,.

While the motion to confirm was pending, ZTE USA sought to transfer all the related cases to the Judicial Panel for Mul-tidistrict Litigation (JPML) for consolidation. The district court ordered the case stayed pending the JPML’s order. Then, with both ZTE USA’s motion to confirm and the consolidation request pending, PTA-FLA voluntarily dismissed its claims in the original Middle District of Florida proceeding. Because “there [was] no monetary award to confirm and PTA-FLA [did] .not seek to vacate the Award,” PTA-FLA saw it as “appropriate to terminate the action forthwith” “due to the lack of fur *1304

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844 F.3d 1299, 2016 U.S. App. LEXIS 22237, 2016 WL 7240137, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pta-fla-inc-v-zte-usa-inc-ca11-2016.