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Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 

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IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-20251

Summary Calendar

CHERYL RANZY,

Plaintiff-Appellee,

v.

EDMUNDO TIJERINA; CYNTHIA SALINAS; EXTRA CASH OF TEXAS, INC.,

Defendants-Appellants.

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:09-CV-3334

Before KING, BENAVIDES, and ELROD, Circuit Judges.

PER CURIAM:

*

This appeal concerns whether the district court properly denied

Defendants’ motion to compel arbitration. We find that it did and we AFFIRM.

The arbitration provision at issue requires the parties to arbitrate all

disputes before the National Arbitration Forum (NAF). Specifically, it states,

You and we agree that any and all claims, disputes, or controversies

. . . shall be resolved by binding individual (and not class)

arbitration by and under the Code of Procedure of the National

Arbitration Forum . . . . This agreement to arbitrate all disputes

shall apply no matter by whom or against whom the claim is filed.

United States Court of Appeals

Fifth Circuit

F I L E D

August 25, 2010

Lyle W. Cayce

Clerk

 Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not *

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

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No. 10-20251

Rules and forms of the NAF may be obtained and all claims shall be

filed at any NAF office, [or by contacting the NAF via the internet,

phone, or mail].

(emphasis added). At the time of the dispute, however, the NAF had ceased to

handle the type of consumer claims that Ranzy had brought against Defendants.

In other words, the contractually designated arbitration forum was no longer

available.

The district court, Judge Miller, in a very well-reasoned decision,

identified that the dispositive inquiry was whether the parties’ designation of

the NAF as the sole arbitration forum was an integral part of the arbitration

agreement. The court found that it was because the “mandatory, not permissive”

plain language of the arbitration provision “evinces a specific intent of the

parties to arbitrate before the NAF.”

This court reviews the district court’s denial of a motion to compel

arbitration de novo. In re Mirant Corp., — F.3d —, 2010 WL 2992079, at *3 (5th

Cir. 2010) (citation omitted). Defendants acknowledge that the NAF is no longer

an available forum, but they contend that, under Section 5 of the Federal

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Arbitration Act (FAA), 9 U.S.C. § 5, the district court should have appointed a

substitute arbitration forum. Section 5 states,

If in the agreement provision be made for a method of naming or

appointing an arbitrator or arbitrators or an umpire, such method

shall be followed; but if no method be provided therein, or if a

method be provided and any party thereto shall fail to avail himself

of such method, or if for any other reason there shall be a lapse in the

naming of an arbitrator or arbitrators or umpire, or in filling a

In July 2009, the NAF ceased consumer arbitrations under a settlement with the 1

State of Minnesota. That settlement resolved a lawsuit filed by Minnesota against the NAF,

alleging unlawful conduct arising from collusion with its clients.

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No. 10-20251

vacancy, then upon the application of either party to the controversy

the court shall designate and appoint an arbitrator or arbitrators or

umpire, as the case may require, who shall act under the said

agreement with the same force and effect as if he or they had been

specifically named therein; and unless otherwise provided in the

agreement the arbitration shall be by a single arbitrator.

(emphasis added).

Section 5 does not, however, permit a district court to circumvent the

parties’ designation of an exclusive arbitration forum when the choice of that

forum “is an integral part of the agreement to arbitrate, rather than an ancillary

logistical concern.” Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222

(11th Cir. 2000) (citation and internal quotation marks omitted); see also In re

Salomon Inc. S’Holders’ Derivative Litig., 68 F.3d 554, 561 (2d Cir. 1995) (citing

Nat’l Iranian Oil Co. v. Ashland Oil, Inc., 817 F.2d 326, 333-34 (5th Cir.), cert.

denied, 484 U.S. 943 (1987)). In order to determine whether the designation of

the NAF as the sole arbitration forum is an integral part of the arbitration

agreement, “the court must employ the rules of contract construction to

determine the intent of the parties.” Harvey v. Joyce, 199 F.3d 790, 793 (5th Cir.

2000) (citation omitted). Any doubts concerning the scope of arbitrable issues

should be resolved in favor of arbitration. Id. (citation omitted).

Here, the arbitration agreement plainly states that Ranzy “shall” submit

all claims to the NAF for arbitration and that the procedural rules of the NAF

“shall” govern the arbitration. Put differently, the parties explicitly agreed that

the NAF shall be the exclusive forum for arbitrating disputes. In National

Iranian, we explained that, where the parties’ agreement specifies that the laws

and procedures of a particular forum shall govern any arbitration between them,

that forum-selection clause is an “important” part of the arbitration agreement.

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No. 10-20251

817 F.2d at 334 (“Not only did NIOC choose Tehran as the site of any

arbitration, but the contract also provides that Iranian law governs the

interpretation and rendition of any arbitral awards. . . . The language of the

contract thus makes self-evident the importance of Iranian law and Iranian

institutions to NIOC.”). Thus, a federal court need not compel arbitration in a

substitute forum if the designated forum becomes unavailable. See id. at 333-35.

Applying this rule, the Second Circuit, in In re Salomon, held that the district

court properly declined to appoint a substitute arbitrator under § 5 and then

compel arbitration because (1) the parties had contractually agreed that only the

New York Stock Exchange could arbitrate any disputes between them and (2)

that forum became unavailable. See 68 F.3d at 561. We agree with the Second

Circuit’s application of National Iranian, and we also find this case to be

indistinguishable from In re Salomon. Therefore, we hold that the district court

properly denied the motion to compel arbitration.

AFFIRMED.

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