Nonsignatory Successfully Moves to Compel Arbitration

plaintiff, * had breached the 1999 agreements in regard to obligations concerning the territory -9- by both the nonsignatory and one or more of the signatories to the contract.") clause raises allegations of . . . substantially interdependent and concerted misconduct kobe steel. on june 19, 2006, the district court granted kobe steel's motion in part, on appeal, prm argues that federal law applies, and kobe steel cites only federal law arbitrate claims in limited circumstances. see, e.g., finnie v. h & r block fin. (broadly construing "arising under" in statutory language). a non-signatory worked hand-in-hand with the signatory in a fraudulent scheme and are therefore within the scope of the broad arbitration clause. -11- prm further contends that even if kobe steel can compel arbitration, prm's and concerted misconduct of a nonsignatory and a signatory. kobe steel argues that steel's motion. prm now appeals, arguing that kobe steel, as a nonsignatory to the relationship. this is not a situation, then, where the nonsignatory co-conspirator "is attempted to undermine the 1999 agreements' contemplated authority over licensee may be somewhat narrower, it includes no limiting language and is generally broad prm's technology. executed an option granting an unrelated company a license for the technology in negotiations with primenergy seeking to circuitously obtain the benefits of prm's discussions stalled. at the same time, kobe steel was allegedly negotiating with donaldson that there was no allegation of "pre-arranged collusive behavior" as targetedthe1999agreements,theywere"intimatelyfoundedinandintertwinedwith" made common allegations against [the signatory and nonsignatory], it did not make collusive conduct between kobe steel and primenergy allegedly arose from partners, 424 f.3d at 799 ("a willing nonsignatory seeking to arbitrate with a arbitrable issues should be resolved in favor of arbitration," including "the complaint. mitsubishi motors corp. v. soler chrysler-plymouth, inc., 473 u.s. 614, 625 n.13 cooperated, or worked hand-in-hand." (internal quotations omitted)). as such, misconduct it must have had knowledge of the 1999 agreements but that is the extent "required by the case law" of other circuits. id. at 734 ("although [the] cross-claim to compel arbitration when, as a result of the nonsignatory's close relationship with decision from the arbitration between prm and primenergy. kobe steel and prm federal arbitration act, we generally construe broad language in a contractual f.3d at 798. the first relies on agency and related principles to allow a nonsignatory concerted misconduct. dealer as persuasive authority, imported the eleventh circuit's "concerted this agreement to prm. united states court of appeals kobe steel moved to compel arbitration of prm's claims pursuant to ii. neither party contends that any particular state's law applies. growers, inc., 10 f.3d 753, 757 (11th cir. 1993) (citing with approval and adopting the same set of operative facts covered by a contract between the parties to the connectedtothecontractanddemonstratetherequisiterelationshipsbetweenpersons, the scope of the arbitration clause is broad enough to cover the claims at issue, we do in donaldson, the supreme court has held that "state contract law governs the ability -4- in cd partners, we relied upon ms dealer in which the eleventh circuit set allowing kobe steel to compel arbitration. the district court also entered a stay of the of the allegations' involvement with those agreements. -3- estoppel theory which takes into consideration the relationships of persons, wrongs, more than one test for its application, and has been termed "alternative estoppel." cd energy process technologies, inc., * to the contract." accordingly, the district court did not err in its reliance on a construction of the contract language itself." moses h. cone mem'l hosp. v. mercury no. 08-1987 * subject matter or the geographic reach of the prm/primenergy contract itself. indeed, does prm allege the sort of interdependent and concerted misconduct discussed in revocability, and enforceability of contracts generally.'" (quoting perry v. thomas, (alteration and quotation omitted). the district court in the instant case, turning to ms whatsoeverrelatingtothesupposedkobesteel/primenergy"exclusivecollaboration" against a co-conspirator . . . will always be intertwined to a degree sufficient to work intertwined with and involving the obligations imposed by the contract containing the thehonorablejimmlarryhendren,chiefjudge,unitedstatesdistrictcourt * of nonsignatories to enforce arbitration provisions." id. at 732; arthur andersen llp partners, see coregis ins. co. v. am. health found., inc., 241 f.3d 123, 128�29 (2d arkansas law (the only state's law arguably applicable to the present agreement). we the scope, and purposefully outside of, the licensing authority granted primenergy. steel"), a potential licensee, for tortious interference with, and inducement to breach, enter into sublicense agreements in a number of countries. after a series of disputes submitted: october 15, 2008 in a separate action against kobe steel asserting tortious interference and conspiracy. "had their genesis in, arose out of, and related to" the operations under the contracts. with primenergy, and the 1999 agreements attempted to govern that expected defendants, * steel for a period of two years, but it did not award damages because prm had not ___________ filed a complaint in the district court against primenergy and its officers alleging f.2d 836, 838 (7th cir. 1981)). 2001, a u.s. subsidiary of kobe steel (a japanese company) contacted prm and basis of the district court's decision in the present case relies on the interdependent company v. cazort, 871 s.w.2d 575, 579�80 (ark. 1994), in a letter to our court in then filed cross-motions for judgment on the pleadings as to prm's claims against in scope. see int'l paper co. v. schwabedissen maschinen & anlagen gmbh, 206 in determining whether also sought to invalidate certain royalty provisions of the 1999 agreements because cd partners, 424 f.3d at 801 (emphasis added). and even though the clause here breach of contract, fraud, conspiracy, misappropriation of trade secrets, unfair -2- the problem is, insofar as this appeal is concerned, that prm asserts only a in2004,whilethearbitrationbetweenprmandprimenergywaspending,prm length, described the type of claims and allegations that would be necessary to invoke defendant - appellee. * * western district of arkansas. technology for use in japan, kobe steel is not "a complete stranger to the plaintiffs' restrictions in the 1999 agreements. neither primenergy nor kobe steel disclosed thus, the concerted misconduct requirements of donaldson, the case that asserting the existence of a confidentiality agreement and several exclusive -6- limited liability company; don r. * 2001)). see also first option of chi., inc. v. kaplan, 514 u.s. 938, 944 (1995). here, lynch, pierce, fenner & smith, inc., 7 f.3d 1110, 1121 (3d cir. 1993) (applying a (discussing the application of the concerted misconduct test in ms dealer serv. corp. "arises under" is "relatively broad"); cf. heckler v. ringer, 466 u.s. 602, 615 (1984) technology in a number of countries, including the united states but not including not consider the fact that the defendant is not party to the agreement containing the ms dealer, 177 f.3d at 947). as such, we agree with the district court's conclusion arbitration." (internal quotations and alterations omitted)).4 terminate the option, citing primenergy's purported right of first refusal. primenergy other theories of alternative estoppel apply and that the close relationship or agency as a starting point, we note that a nonsignatory may compel a signatory to 733�35. we said that to warrant the benefit of alternative estoppel based on concerted cir. 1995) (applying an estoppel theory based on a close relationship of parties and the 1999 agreements and for conspiring with primenergy to convert prm's allege substantially interdependent and concerted misconduct by both the that "prm's claims either make reference to or presume the existence of the 1999 valid arbitration agreement where the relationship between the parties is based on the * 482 u.s. 483, 493 n.9 (1987))). garden variety tort claim against kobe steel that does not directly touch either the concerted-misconduct theory of alternative estoppel to grant nonsignatory kobe -7- to the contract demonstrates the requisite relationships between persons, wrongs, and however, long after the district court ordered and subsequently confirmed arbitration to give context to this dispute, we set forth the facts as alleged in prm's -12- this potential relationship. prm alleges that kobe steel and primenergy concealed guidant corp., 143 f.3d 428, 430�31 (8th cir. 1998) ("[a]ny doubts raised in plaintiff - appellant, * i. ___________ for the western district of arkansas. an estoppel." ross v. am. express co., 547 f.3d 137, 148 (2d cir. 2008) (quotation nonsignatory defendant. ms dealer, 177 f.3d at 947 ("[a]pplication of equitable for the foregoing reasons, we affirm the judgment of the district court. agreement between prm and primenergy. this is clearly not the situation discussed in ross v. american express co., 547 allegations of pre-arranged collusive behavior, and kobe steel's arbitration demand insurer-nonsignatory could compel arbitration pursuant to an arbitration agreement issues necessary to compel arbitration. prm "specifically allege[d] coordinated . . . agreements." ross, 547 f.3d at 148. but, kobe steel is virtually so. the claim, controversy or dispute arising out of or relating to" the agreement. id. at 797, * (compelling arbitration based on a close relationship between signatories and below, the district court applied federal law to address kobe steel's ability to invoke claims either make reference to or presume the existence of the 1999 agreements, and determine which contracts are binding under � 2 [of the federal arbitration act] and steel's motion to compel arbitration. is no agency or other close relationship between the signatory plaintiff and co. v. mosaic tile co., 259 f. supp. 688, 692 (s.d.n.y. 1966))). in fact, in cazort, and the federal cases we cite herein rely, in part, on hughes masonry and the in the 1999 agreements, prm licensed primenergy to use prm's gasification arbitration provisions in the 1999 agreements, and the district court1 arbitration." donaldson co., inc. v. burroughs diesel, inc., 581 f.3d 726, 730 (8th donaldson sufficient to place the claims within the scope of the arbitration clause. concerted misconduct of the defendant and a different signatory. as we recognized thatincludedspecificallegationsconcerningtheinteractionsbetweenprimenergyand estoppel is warranted . . . when the signatory to the contract containing the arbitration typically relies, at least in part, on the claims being so intertwined with the agreement v. carlisle, 129 s. ct. 1896, 1902 (2009) ("`state law,' therefore, is applicable to japan. although primenergy's license did not extend to japan, primenergy maintains 4 although we have recognized and described the theory of concerted misconduct, we before melloy, beam, and gruender, circuit judges. arbitration may be compelled under "a broad arbitration clause . . . as long as theory recognized in cd partners provides an independent basis for compelling cir. 2009) (internal quotation omitted). the first question before us is whether a have not yet expressly applied it to compel a party to arbitration. arbitration clause). certainly, because of kobe steel's allegedly surreptitious signatory that is unwilling may do so under what has been called an alternative anticipated that an entity such as kobe steel might enter into a licensing relationship this theory, but found the theory inapplicable on the facts of that case. 581 f.3d at both the nonsignatory [kobe steel] and one or more of the signatories [primenergy] expressed its interest in licensing the technology in the united states. prm referred the second relies loosely on principles of equitable estoppel, broadly encompasses determined that arkansas law was consistent with our analysis as set forth herein and and prm argues this language is substantially narrower than the corresponding between a signatory and a nonsignatory." id. at 734. we did not "suggest that a claim intellectual property for their own use. 1999) (same); thompson-csf, s.a. v. am. arbitration ass'n, 64 f.3d 773, 779 (2d * * appeal from the united states claims. see randolph, 531 u.s. at 88�89. corp.-ala. v. randolph, 531 u.s. 79, 87 n.2 (2000). it became "final" within the concluding that prm's tort claims are "disputes arising under" the 1999 agreements agreements. "[a]s a matter of federal law, any doubts concerning the scope of 1999 agreements, should not be permitted to enforce the arbitration provisions from prm/primenergy agreements do not mention kobe steel and perform no function prm energy systems, inc., an * arbitration, including a claim that primenergy breached the 1999 agreements by * ___________ containing the arbitration clause that it would be unfair to allow the signatory to rely founded in and intertwined with' the agreement at issue." donaldson, 581 f.3d at on may 18, 2005, prm filed an amended complaint in its lawsuit against primenergy misconduct" basis for applying alternative estoppel. primenergy, inducing primenergy to breach the 1999 agreements by sublicensing the construing contract language on arbitrability should be resolved in favor of donaldson co., inc. v. burroughs diesel, inc., 581 f.3d 726, 733-34 (8th cir. 2009) (discussed infra); ms dealer serv. corp. v. franklin, 177 f.3d 942, 947�48 (11th cir. -10- mentioned in them, and . . . performs no function whatsoever relating to their kobe steel cited arthur andersen and an arkansas case, american insurance of japan. the arbitrator enjoined primenergy from further discussions with kobe nesslage v. york secs., inc., 823 f.2d 231, 233 (8th cir. 1987) (permitting a relied upon the theory of concerted misconduct, we confine our discussion to broader "related to" portion of the arbitration clause. rather, we held that the claims respond to this letter. kobe steel asserts that cazort would permit a nonsignatory to primenergy and kobe steel, through their concerted actions, were attempting to and we compel arbitration of such claims."); cd partners, 424 f.3d at 800 ("broadly the district court's interlocutory order directing arbitration and staying the language at issue in cd partners. the cd partners arbitration clause included "any and issues . . . .'") (quoting merrill lynch inv. managers v. optibase, ltd., 337 f.3d ___________ those agreements. we affirm. concluding that the claims were subject to arbitration. collaboration agreements between primenergy and kobe steel. prm further alleged the reasoning of hughes masonry co. v. greater clarke county sch. bldg corp., 659 behavior between a signatory and a nonsignatory." id. the 1999 agreements the specific theory or test for application of alternative estoppel that formed the consolidate the two actions, but it dismissed the claims against primenergy, at 733-34. accordingly, as in donaldson, this litigation, too, lacks sufficient claims against kobe steel are outside of the scope of the arbitration clause of the 1999 v. franklin, 177 f.3d 942, 945, 948 (11th cir. 1999), wherein the plaintiff alleged that patents to primenergy, l.l.c. ("primenergy"). through a network of agreements (the would lead to the same result. see cazort, 871 s.w.2d at 579�80 (holding that an cir. 2001) (discussing "related to" as broader than "arising out of" where contract district court later confirmed the arbitrator's dismissal of the claims, and prm now agreements, and allege substantially interdependent and concerted misconduct by the underlying patents had expired. prm asserted several cross-claims in the that the 1999 agreements gave it a right of first refusal for a license in japan. in 2 shown any. at issue here purports to cover "all disputes arising under" a technology licensing f.3d 411, 416 n.3 (4th cir. 2000) (recognizing "[a]ny dispute arising out of the technology to kobe steel and planning joint projects in japan. in 2003, kobe steel contract." an arbitrator subsequently dismissed the claims against kobe steel. the negotiate lower royalty premiums and broader territorial rights for the licensing of "1999agreements"),prmlicensedprimenergytousethegasificationtechnologyand omitted). rather, we stated, "the concerted-misconduct test requires allegations of having undisclosed dealings with kobe steel. in a final ruling on april 22, 2005, an on november 18, 2005, prm filed an amended complaint against kobe steel, arbitration provision to include tort claims arising from the contractual relationship, that primenergy and kobe steel conspired to hide their dealings from prm and that the supreme court issued arthur andersen, and our court issued donaldson, proceedings was not an immediately appealable "final decision." green tree fin. the district court was correct in applying this test. in addition, kobe steel argues that compel arbitration under arkansas law. in light of arthur andersen and donaldson, iv. f.3d 137, 148 (2d cir. 2008), one of the principal cases relied upon by the court. nor prm energy systems, inc. ("prm"), licensed certain gasification technology in determining the arbitrability of a dispute, we generally apply these 3 primenergy, l.l.c., an oklahoma * filed: january 8, 2010 also am. ins. co. v. cazort, 871 s.w.2d 575, 579�80 (ark. 1994). advisors, inc., 307 f. app'x 19, 21 (8th cir. 2009) (unpublished per curiam) meaning of 9 u.s.c. � 16(a)(3), and thus appealable, upon the later dismissal of the unaware of the collaboration between primenergy and kobe steel, prm "traditional agency theory" regarding a nonsignatory employee of a signatory); see the arbitration clause here covers "all disputes arising under" the agreement, agreement."). in light of the interpretive preference for arbitration, we have no trouble agreement. and, kobe steel was never a participant in the prm/primenergy deal. contract" as "broad"); united food and commercial workers union, local 400 v. melloy, circuit judge. kobe steel. on november 15, 2005, the district court granted prm's motion to ___________ [plaintiff] cannot have it both ways. it cannot rely on the contract when it works to its ______________________________ -8- the arkansas supreme court cited with approval hughes masonry co. v. greater and sub-licensee relationships. the alleged collusive actions not only arose out of and here, we believe that the nature of the alleged misconduct and its connection hudson v. conagra poultry co., 484 f.3d 496, 499�500 (8th cir. 2007) ("under the in cd partners, we recognized two such circumstances. see cd partners, 424 constr. corp., 460 u.s. 1, 24�25 (1983); see also telectronics pacing sys., inc. v. iii. subsequently, in donaldson, we discussed concerted misconduct at some -5- `pre-arranged, collusive behavior' demonstrating that the claims are `intimately reasoning of the seventh circuit in that case. kobe steel, ltd., * advantage and ignore it when it works to its disadvantage.'" (quoting tepper realty any allegations suggesting that [they] knowingly acted in concert, improperly should be rejected. id. at 735. -13- appeals the june 19, 2006 order compelling the arbitration.2 800. while prm asserts that the language at issue here is narrower than that in cd proceedings. the district court held that kobe steel could enforce the arbitration mellot; w.n. scott, also known as * according to prm, the tortious activities of kobe steel deal with transactions beyond discussed by the parties on appeal, and by the district court below, regarding the the underlying factual allegations simply `touch matters covered by' the arbitration provision uses both terms), we note that in cd partners we did not rely solely on the claims that were intertwined with contract rights and duties); pritzker v. merrill japan. in 2004, primenergy filed a demand for arbitration seeking to force prm to on march 21, 2006, the district court confirmed an april 2005 arbitration to be sure, it is axiomatic that in order for kobe steel to have engaged in the alleged mainly drives the court's analysis in this appeal, are almost totally absent. 581 f.3d clause. cd partners, 424 f.3d at 801 n.3. nonsignatory to compel arbitration where it was the "disclosed agent" of a signatory). competition, and tortious interference. on march 24, 2005, prm filed a complaint ct. at 1902 (quoting 21 r. lord, williston on contracts � 57:19, p. 183 (4th ed. bill scott, * principles as matters of "federal substantive law," moses h. cone, 460 u.s. at 24, nonsignatories); cd partners, llc v. grizzle, 424 f.3d 795, 798�99 (8th cir. 2005) between prm and primenergy, prm brought claims against kobe steel, ltd. ("kobe japan with prm, but kobe steel declined to sign a confidentiality agreement, and the provisions of the 1999 agreements on an estoppel theory because "all of prm's arbitrator found that the royalty provisions were unenforceable and that both parties a complete stranger to the plaintiffs' . . . agreements[,] . . . did not sign them, . . . is not forth the theory of concerted misconduct as a basis to compel arbitration when there primenergy's underlying contract obligations. donaldson, 581 f.3d at 735 (quoting "this court reviews de novo a district court's grant of a motion to compel ability of a nonsignatory to compel arbitration.3 accordance with eighth circuit rule of appellate procedure 28(j). prm did not their actions from prm, conspired to violate the terms of the 1999 agreements, and shoppers food warehouse corp., 35 f.3d 958, 960 (4th cir. 1994) (stating that between an insured-broker and one of the broker's clients, stating, "`in short, granted kobe informed by "`traditional principles'" of relevant state law, arthur andersen, 129 s. worded arbitration clauses . . . are generally construed to cover tort suits arising from provision." 3m co. v. amtex sec., inc., 542 f.3d 1193, 1199 (8th cir. 2008) (quoting for the eighth circuit arbitration in the present case. because we conclude that the district court correctly on the agreement in formulating its claims but to disavow availability of the arkansas corporation, * in its brief as to this issue. accordingly, we rely primarily upon the federal law as enforceable under � 3 `if that law arose to govern issues concerning the validity, beam, circuit judge, dissenting. v. * district court for the a signatory, a failure to do so would eviscerate the arbitration agreement. id.; see also in the present case and after the parties briefed and argued this matter to our court. nonsignatory [kobe steel] and one or more of the signatories [primenergy] to the i disagree with the court's conclusion that the nature of prm's claims are 734�35 (quoting ms dealer, 177 f.3d at 948). ultimately, we found on the facts of the subsidiary to primenergy. in 2002, kobe steel began discussing licensing in (1985)). it generally does not matter that claims sound in tort, rather than contract. and notwithstanding the history of this case, we conducted an independent review of operation." ross, 547 f.3d at 148. clarke county school building corporation, 659 f.2d 836, 838�41 (7th cir. 1981), nonsignatory defendant may compel a signatory plaintiff to arbitrate claims under a and primenergy reached a collaboration agreement in violation of the territorial the arbitration provisions of the contract between prm and primenergy. in its brief i dissent. arbitration clause of that same agreement. see sunkist soft drinks, inc. v. sunkist wrongs,andissuesnecessarytocompelarbitration. thearbitrationclausetangentially misconduct,ataminimum,"theplaintiffmustspecificallyallegecoordinatedbehavior 1 125, 131 (2d cir. 2003)) (alteration omitted, emphasis added). alternative estoppel