# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 4- 18 92

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Uni so n C o., Ltd

.

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el le e

v.

Ju hl Ener gy Devel op m en t, In c.; J uh l En erg y , Inc .; Wino na W in d Ho ld in gs , LLC;

W in on a Co un ty W in d, LLC; Dani el Ju hl ; J oh n M it ol a; Jo hn Bran d; Bart ly J.

Loe th en ; Au dr ey

Loet he n; Jef

f Ben de l

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el la nt

s

__ __ __ __ __ __

App eal fro m

Uni te d S ta te s Di st ric t Co ur t
fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

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Su bm it te d: Feb ru ary 11 , 20 15
Fil ed : M ay

26 , 20 15

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Befo re GRUENDER, SHEPHERD, and KELLY , Cir cu it Ju dg es

.

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KELLY, Cir cu it Ju dg e.

Ju hl Ene rg y Dev el op m en t, In c. (J EDI), ap pe al s fro m th e di st ric t co ur t’s or de r

de nyin g it s m ot io n to co m pe l arb it rat io n fo r co nt ract di sp ut es be twee n J ED I a n d

Uni so n C o

. , Lt d

. (Un is on ). Bec au se th e arb it rat io n cl au se in th e Turb in e Su pp ly
Agr eem en t (TSA) c ov ers th e p art ie s’ di sp ut e, we rev ers e th e jud gm en t.I. Ba ck gr ou nd

Uni so n is a So ut h Kor ean c o m pa ny th at m an uf

act ur es , se ll s, de li ve rs , an d

se rv ic es W in d Turb in e Gen erat or s (WT Gs). JEDI is a co rp or at e su bs id ia ry of an ot he r

na m ed de fen da nt

, Ju hl Ene rg y , In c., an d is in co rp or at ed an d lo cat ed in Mi nn es ot a.

JEDI an d Uni so n are pa rti es to th e co nt ract ua l ag reem en ts at is su e; th e ot he r

de fen da nt s are no t. The re are two ag reem en ts be twee n JEDI a n d Uni so n th at are 1

rel ev an t in th is cas e: th e TSA an d th e Fi na nc in g Agr eem en t (F A )

. In th e TSA,

Uni so n ag reed to de si gn , m an uf act ur e, an d se ll two W TGs to JEDI fo r in st al la ti on in

Mi nn es ot a in ex ch an ge fo r $2 ,57 4,9 00 ; th e effe ct iv e da te fo r th e TSA was Apr il 16

, 2 01 0. In th e FA, Uni so n ag reed to le nd to JEDI th e am ou nt of th e TSA co n t r a c t

pr ic e—$ 2,5 74 ,90 0; th e eff ect iv e d at e fo r th e FA was Apri l 1 4, 2 01 0.

Uni so n br ou gh t su it ag ai ns t JEDI in fed eral co ur t in Mi nn es ot a, as se rti ng

17 cl ai m s fo r rel ie f, al l of whi ch rel at e to th e FA. JEDI f i l e d a mo t i on to co m

pe l

arb it rat io n, ba se d o n a n a r b it rat io n cl au se in th e TSA, an d to di sm is s Uni so n’s

co m pl ai nt

. Fo ll owi ng a he ari ng , th e di st ric t co ur t de ni ed th e m ot io n, an d JEDI ti m el y

ap pe al ed

. Thi s co ur t ha s juri sd ic ti on pu rs ua nt to 28 U.S.C. § 12 94 an d 9 U.S.C. §

16 (a)( 1) (C).

II

. Dis cus si on

“ W e rev ie w de no vo th e di st ric t co ur t’s de ni al of a m ot io n to co m pe l arb it rat io n

ba se d on co nt ract in te rp ret at io n.” In du s. W ire Pro ds

., In c

. v

. Co st co W ho le sa le

Co rp ., 57 6 F.3 d 51 6, 52 0 (8 th Ci r. 20 09 ) (q uo ta ti on om it te d)

. “ If th e di st ric t co ur t’s

The pa rti es co nc ed e al l ot he r de fen da nt s’ rig ht s reg ard in g arb it rat io n wil l be 1

de ci de d ba se d on JEDI’s rig ht to co m pe l arb it rat io n, be cau se th e cl ai m s ag ai ns t al l

na m ed de fen da nt s s ho ul d b e h eard in on e fo ru m

.

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-or de r co nc ern in g arb it rab il it y is ba se d o n fa ct ua l fi nd in gs , we rev ie w su ch fin di ng s

fo r cl ear erro r.” Ly st er v. Ry an ’s Fam il y St eak Hou se s, In c., 23 9 F.3 d 94 3, 94 5 (8 th

Ci r. 20 01 ). “ [A]rbi tra ti on is a m at t e r o f c o n tra ct an d a pa rty can no t be req ui red to

su bm it to arb it rat io n an y di s p u t e w h i c h he ha s no t ag reed so to su bm it .” AT&T

Tech s., In c. v. Co mm c ’n s W or ke rs of Am

., 47 5 U.S. 64 3, 64 8 (1 98 6) (q uo ta ti on

om it te d)

. “ The [Fed eral Arb it rat io n Act] li m it s a di st ric t co ur t’s in it ia l ro le in an y

ch al le ng e to an arb it rat io n ag reem en t to

. . . 1) whe th er th e ag reem en t fo r arb it rat io n

was va li dl y

m ad e an d 2 ) whe th er t he arb it rat io n a gr eem en t ap pl ie s t o th e d is pu te at

ha nd

, i.e., whe th er th e di sp ut e fa ll s wi th i n t h e s c o

p e of th e arb it rat io n ag reem en t.”

In du s. W ire Pro ds

., 57 6 F.3 d at 52 0 (in te rn al qu ot at io n om it te d)

. The pa rti es co nc ed e

th e arb it rat io n cl au se in th e TSA is va li d; t h e y d i s ag ree ab ou t whe th er it ap pl ie s to

Uni so n’s co m

pl ai nt

.

W e m us t li be ral ly co ns tru e a va li d arb it rat io n cl au se , “ res ol vi ng an y do ub ts in

fav or of arb it rat io n

. . . un le ss it m ay be sa id wit h po si t i v e as su ran ce th at th e

arb it rat io n cl au se is no t su sc ep ti bl e of an in te rp ret at io n t ha t co ve rs th e as se rte d

di sp ut e.” 3M Co

. v. Am

te x Sec., In c., 54 2 F.3 d 11 93

, 11 99 (8 th Ci r. 20 08 ) (q uo ta ti on

om itt ed ). In m ak in g th is de te rm in at io n, we m us t de ci de whe th er th e arb it rat io n cl au se

is br oa d or na rro w. Fl eet Tire Serv

. of N. Lit tl e Ro ck v. Oli ve r Ru bb er Co

., 11 8 F.3 d

61 9, 62 1 (8 th Ci r. 19 97 ) (fi nd in g th e arb it rat io n cl au se at is su e was br oa d, be cau se

arb it rat io n was av ai la bl e fo r cl ai m s bo th “ ari si ng f r o m” an d “ rel at in g to ” th e

ag reem en t). If th e cl au se is br oa d, th e “ li be ral fed era l p o li cy fav or in g arb it rat io n

ag reem en ts req ui res th at a di st ric t co ur t se nd a cl ai m to arb it rat io n

. . . as lo ng as th e

un de rlyin g fact ua l al le ga ti on s si m pl y to uc h m at te rs co ve red by th e arb it rat io n

pr ov is io n.” 3M Co ., 54 2 F .3d at 1 19 9 (q uo ta ti on s an d i nt ern al cit at io n o m it te d)

.

The arb it rat io n cl au se at is su e in th is cas e is lo cat ed in th e TSA. The rel ev an t

pa rag rap hs of t he TSA read as f ol lo ws:

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-16 .1 Neg ot ia ti on of Di sp ut es

. The Part ie s agre e th at in th e ev en t an y di sp ut e a r i s e s be twee n th em un de r or in co nn ect io n wit h th is Agr eem en t or an y le ga l r el at io ns hi p as so ci at ed wit h or

co nt em pl at ed by th is Agr eem en t (th e “ Dis pu te ”), th e Part ie s sh al l

fir st pr om pt ly m ak e al l re as on ab le effo rts to res ol ve th e Dis pu te by am ic ab le ne go ti at io ns in vo lv in g sen io r rep res en ta ti ve s of the

Part ie s. . . .

16 .2 A r bi tra ti on

. If th e Part ie s fai l to res ol ve th e Dis pu te wit hi n 21
da y s pu rs ua nt to S e c t i o n 16 .1 (o r an y su ch lo ng er pe rio d as Part ie s m ay m

ut u a l l y ag ree to in writ in g) , t he n ei th er Part y m ay

su bm it th e Dis p ut e fo r bi nd in g arb it rat io n by de li ve rin g to th e

ot he r Part y

a writ te n n ot ic e (a “ Not ic e o f Arb it rat io n” ) . . . .

Acco rd in g to th e te rm s of th e TSA, a Dis pu te is “ an y di sp ut e” ari si ng be twee n

th e pa rti es “ un de r or in co nn ect io n wit h [th e TSA] or an y le ga l rel at io ns hi p as so ci at ed

wit h o r co nt em

pl at ed by [th e TSA] .” A pa rty m ay th en su bm it an y su ch Dis pu te , if

no t reso lv ed in a sp eci fie d ti m e, “ fo r bi nd in g arb it rat io n . . . .” The FA, i n c on tra st

,

co nt ai ns no su ch pro vi si on

.

The arb it rat io n cl au se in th e TSA is at le as t as br oa d as th e arb it rat io n cl au se s

th is co ur t ha s co ns id ered in two in st ru ct iv e cas es

. In Fl eet Tire

, th e cl au se st at ed th at

“ [a]ny co nt ro ve rs y or cl ai m ari si ng ou t of or rel at in g to th is Agr eem en t or an y br each

of it s te rm s sh al l be se tt le d by arb it rat io n

. . . .” 11 8 F.3 d at 62 0. W e fo un d in Fl eet

Tire th at th e cl a u s e “co ns ti tu te s th e br oa de st la ng ua ge th e pa rti es co ul d reas on ab ly

us e to su bjec t t he ir d is pu te s t o t ha t form of se tt le m en t, inc lu di ng co ll at eral di sp ut es

th at rel at e to th e ag reem en t co nt ai ni ng th e cl au se .” Id

. at 62 1. Si m il arl y , in 3M Co

., th e arb it rat io n cl au se at is su e req ui red arb it rat io n if th e p a rti es di sp ut ed “ th e

ex is te nc e, cau se , or va lu e of an y ch an ge t o th e sc op e of se rv ic es Am te x was to

pr ov i d e

. ” 5 4 2 F.3 d at 11 96 (p arap hr as in g th e cl au se at is su e). W e co nc lu de d th is

la ng ua ge , to o, was bro ad in sco pe . Id. at 11 99

.

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-The arb it rat io n cl au se in th e TSA co ve rs an y di sp ut e th at ari se s “ in co nn ect io n

wit h” th e TSA or “ an y le ga l rel at io ns hi p a s s o c ia te d wit h or co nt em pl at ed by” th e

TSA. W e co nc lu de th at th is la ng ua ge ren de rs th e arb it rat io n cl au se in th e TSA br oa d,

no t n arro w, in sco pe

. 2

Bec au se th e arb it rat io n cl au se is br oa d, we m us t th en de te rm in e w h e t h e r th e

un de rlyin g fact ua l al le ga ti on s to uc h on m at te rs co ve red by th e arb it rat io n cl au se

. See id

. at 11 99

. As no te d, th e arb it rat io n cl au se in th is cas e co ve rs di sp ut es th at ari se

in co nn ect io n wit h “ an y le ga l rel at io ns hi p as so ci at ed w i t h or co nt em pl at ed by [th e TSA] .” Th e q u es ti on , th en , is whe th er th e FA—wh ic h m ak es no m en ti on of

arb it rat io n— em

bo di es a “ le ga l rel at io ns hi p” th at is ei th e r “as so ci at ed wit h or

co nt em pl at ed by” th e TSA.

The TSA spe ci fi ca lly ad dr es se s the fin an ci ng arra ng em en t be twee n Uni so n an d

JEDI, whi ch is th e su bjec t m at te r of th e le ga l di sp ut e be twee n th e pa rti es

. The TSA 3

Uni so n co nt en ds th e TSA cl au se is pe rm is si ve , rat he r th an m an da tory

, an d th at 2

th is di st in ct io n req ui res us to c o n s t r u e th e arb it rat io n cl au se na rro wly. Howev er, wh et he r an arb it rat io n cl au se is pe rm is si ve or m an da to ry do es no t, at le as t in th is

cas e, sp eak to whet he r th e cl au se is bro ad or n arro w.

TSA ¶ 3.4 read s, i n p art , as fo ll ows : 3

Uni so n wil l pr ov id e fin an ci ng to Pu rch as er fo r th e pu rch as e pr ic e of th e W TGs

The lo an pr oc eed s sh al l be use d so le ly fo r th e pa y m en t of t he Co nt ract
Pri ce d ue Uni so n fo r th e WT Gs fo r th e Pro ject. . . .

The ob li ga ti on s of Pu rch as er un de r th e Fi na nc in g Doc um en ts s ha ll be

se cu red by a fir st -p rio rit y se cu rit y in te res t in Pu rch as er’s no te fro m th e

us er o f th e WT G. . .

.

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-is co nt in ge nt on fin al iz in g th e fin an ci ng do cu m en ts on or be fo re th e effe ct iv e da te of

th e TS A, an d th e FA ex pr es sl y st at es th at th e pa rti es ha ve “ en te red in to a Turb in e

Su pp ly Agr eem en t.” The FA al so li m it s th e am ou nt of JEDI’s lo an to “ th e ag gr eg at e

am ou nt of al l pa y m en ts d u e an d pa y ab le to [Un is on ] un de r th e Turb in e Su pp ly
Agr eem en t

. . . .” And th e FA co nd it io ns Uni so n’s ob li ga ti on to lo an th is m on ey on ,

am on g ot he r th in gs , Uni so n ha vi ng rece iv ed a co py of “ each Pro ject Doc um en t.” The

FA, in tu rn , de fin es “ Pro

ject Doc um en ts ” to inclu de th e TSA. The se cro ss -ref eren ces , al on g wit h th e in te rd ep en de nt na tu re of the par ti es ’ ob li ga ti on s un de r bo th th e TSA

an d th e FA, m ak e it di ffi cu lt to read th es e do cu m en ts wit ho ut reac hi ng th e co nc lu si on

th at th ey are two pa rts of on e ov erar ch in g bu si ne ss pl an be twee n th e sa m e pa rti es

. 4

The TSA an d th e FA each em bo di es a le ga l rela ti on sh ip th at is as so ci at ed wit h, an d

co nt em pl at ed by, th e ot he r. Any di sp ut e reg ard in g th e FA wou ld

, th eref o r e, be a

di sp ut e th at is co ve red by the arb it rat io n c la us e in th e TSA.

The fin an ci ng do cu m en ts sh al l be pr ep ared an d ne go ti at ed on or be fo re Apr il 16 th

, 20 10

, an d th is Agr eem en t sh al l be co nt in ge nt up on fin al iz in g

su ch do cu m en ts on or b efo re s ai d d at e.

Dak ot a Gas ifi cat io n Co

. v. Natu ral Gas Pi pe li ne Co

. of Am eri ca, 96 4 F.2 d 73 2 4 (8 th Ci r. 19 92 ), is di st in gu is ha bl e fro m th e pr es en t m at te r. The re were two rel ev an t

ag reem en ts in th at cas e—a ga s pu rch as e ag reem en t an d a fin an ci ng ag r eem en t.
Howev er, th e pa rti es to th e two ag reem en ts w ere no t th e sa m e. The ga s pu rch as e

ag reem en t was execu te d b et ween a pa rtn ers hi p a nd fou r co m pa ni es . The fi na nc in g

ag reem en t was ex ecu te d be twee n th e fo u r co m pa ni es an d th e U.S. Dep art m en t of

Ene rg y —n ot th e pa rtn ers hi p. The co ur t in th at cas e he ld th at th e pa rti es co ul d no t be

co m pe ll ed to arb it rat e ba se d on “ th e co nd it io ns un de r whi ch th e Secr et ary of Ene rg y

ag reed to gu aran te e th e fin an ci ng fo r th e ga si fic at io n pl an t” in th e fin an ci ng

ag reem en t, be cau se it was ev id en t th at an y di sp ut es wit h th e Secr et ary of Ene rg y were in te nd ed to be br ou gh t in fed eral co ur t, rat he r th an an arb it ral fo ru m

. Dak ot a, 96 4

F.2 d at 73 5– 36

. In th is cas e, th e pa rti es to th e TSA are al so th e pa rti es to th e FA, th e

ag reem en ts were co nt in ge nt on on e an ot he r, an d t he re i s no sh owi ng th at an y pa rty

req ui red li ti ga ti on in fed eral co ur t as o p p o s ed to arb it rat io n whe n en te rin g in to th e

ag reem en ts

.

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-Uni so n co nt en ds

, ne ve rth el es s, th at th e TSA arb it rat io n cl au se can no t be

in te rp ret ed to co ve r th e pr es en t di sp ut e wit ho ut m ak in g th e juri sd ic ti on cl au se in th e

FA a nu ll it y

. W e di sa gr ee be cau se th e juri sd ic ti on cl au se an swe rs a di ffer en t qu es ti on

th an do es th e arb it rat io n c la us e. The F A juri sd ic ti on cla us e rea ds as f ol lo ws:

Sect io n 1 0.8 Su bm is si on to Ju ris di ct io n; Serv ic e o f Pro ces s.

(a) Bo rro wer he reb y su bm it s to th e juri sd ic ti on of co ur ts of th e St at e of Mi n ne so ta in th e Co un ty of Hen ne pi n an d of th e Uni te d St at es fo r th e W es te rn Dis tri ct of Mi nn es ot a fo r an y le ga l act io n or pr oc eed in g br ou gh t ag ai ns t it in co nn ect io n wit h th is Agr eem en t an d an y ot he r Fi na nc in g Doc um en t. By ex ecu ti on an d de li ve ry of th is Agr eem en t, Bo rro wer he reb y irr ev oc ab ly acce pt s fo r it se lf an d in res pe ct of it s

pr op ert y , ge ne ral ly an d un co nd it io na ll y , th e juri sd ic ti on of

th e afo res ai d c ou rts

. 5

The TSA arb it rat io n cl au se pe rm it s a pa rty to su bm it a di sp ut e to bi nd in g arb it rat io n,

whi le th e FA juri sd ic ti on cl au se si m pl y id en ti fie s th e ag reed -u po n ju ris di ct io n “ fo r

an y le ga l act io n or pr oc eed in g br ou gh t ag ai ns t it in co nn ect io n wit h th is Agr eem en t

an d an y ot he r Fi na nc in g Doc um en t.” Not ab ly, t h e juri sd ic ti on cl au se do es no t

ad dr es s whe th er, or un de r wha t ci rcu m st an ces , a di sp ut e m us t b e li ti ga te d an d

res ol ve d in co ur t. As we read th es e two cl au se s, th ey are n ot in co nf

li ct : If a pa rty

wan ts to se tt le a di sp ut e th ro ug h arb it rat io n, it m ay in it ia te arb it rat io n pr oc eed in gs

un de r th e TSA arb it rat io n cl au se ; if th e pa rti es ch oo se no t to arb it rat e a di sp ut e un de r

th e FA, or se ek to en fo rce an arb it rat io n de ci si on , th en th e pa rti es ha ve co ns en te d to

th e juri sd ic ti on of th e st at e an d fed eral co ur ts in Mi nn es ot a fo r al l li ti ga ti on rel at in g

to th at di sp ut e. Had bo th do cu m en ts in cl ud ed se pa rat e arb it rat io n an d juri s d i c t i on

As th e di st ric t co ur t reco gn iz ed at th e he ari ng , th ere is no W es te rn Dis tri ct of 5

Mi nn es ot a in th e fed eral syste m

. Fu rth er, Hen ne pi n Co un ty is no t in w es te rn Mi nn es ot a.

-7

-cl au se s, th e pa rti es m ay ha ve ne go ti at ed a di ffer en t co nt ract ua l ag reem en t. Bu t as th e

do cu m en ts are writ te n, en fo rci ng th e arb it rat io n cl au se in t he TSA in a di sp ut e

al le gi ng vi ol at io ns of th e FA do e s n o t r e nd er th e juri sd ic ti on cl au se in th e FA a

nu ll it y

. 6

“ W he n th e pa rti es ha ve ag reed on an ar b i tra ti on cl au se th at ap pe ars to co ve r

th ei r di sp ut e, it sh ou ld be up he ld .” 3M Co

., 54 2 F.3 d at 11 99

. The arb it rat io n cl au se

i n t h e TS A is a br oa d on e. And th e di sp ut e co nc ern in g th e FA, at a m in im um ,
to uc he s o n m at te rs su bjec t to th e arb it rat io n cl au se

. The TSA arb it rat io n cl au se

th eref or e co ve rs th e d is pu te s al le ge d i n t hi s ca se

.

II I. Conc lu si on

W e rev ers e th e de ni al of JEDI’s m ot io n to co m pe l arb it rat io n. On rem an d, th e

di st ric t co ur t m ay de ci de in th e fir st in st an ce whe th er it is ap pr op ria te at th is jun ct ur e

to di sm is s Uni so n’s co m

pl ai nt or st ay th e act io n in fed eral co ur t pe nd in g th e ou tc om e

of th e arb it rat io n p ro ceed in gs . See Green v. Su pe rSh ut tl e In t’l, In c., 65 3 F.3 d 7 66

, 76 9– 70 (8t h C ir. 2 01 1)

.

SHEPHERD, Cir cu it Ju dg e, co nc ur rin g.

I co nc ur in th e co ur t’s op in io n rev ers in g th e de ni al of JEDI’s m ot io n to co m pe l

arb it rat io n. I w r i te se pa rat el y to rei te rat e m y vi ew th at se ct io n 3 of th e Fed eral

Arb it rat io n Act un am

bi gu ou sl y di rect s a di st ric t co ur t to st ay an act io n an d do es no t gi ve a di st ric t co ur t th e di sc ret io n to di sm is s an act io n. Se e G r e e n v. Su pe rSh ut tl e

The pa rti es al so di sa gr ee ab ou t t he m ean in g o f TSA ¶ 18 .3, the “ Co nf li ct in g 6

Pro vi si on s” se ct io n of th e TSA, a nd wha t effe ct i t h a s o n th e ap pl ic at io n of th e FA juri sd i c t i o n cl au se in th is cas e. Bec au se th e TSA arb it rat io n cl au se an d FA juri sd ic ti on cl au se do no t co nf li ct an d can be ap pl ie d ha rmo n i o u s l y, we ne ed no t
ad dr es s t hi s i ss ue

. -8

-In t’l, In c., 65 3 F.3 d 76 6, 77 0- 71 (8 th Ci r. 20 11 ) (Sh ep he rd

, J., co nc ur rin g) ; se e al so

9 U.S.C. § 3 (d is tri ct co ur ts “ sh al l

. . . st ay th e tri al of th e act io n un ti l su ch arb it rat io n

ha s b e e n h a d in acco rd an ce wit h th e te rm s of th e ag reem en t” ). Rec og ni zi ng , ho wev er, th at we are bo un d by pr io r pa ne l de ci si on s fro m ou r co ur t, I al so co nc ur in

th e di rect io n th at th e di st ric t co ur t m ay de ci de whe th er it is ap pr op ria te to di sm is s or

st ay th e act io n.

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