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T he H onor abl e J ohn R . T unhe i m , U ni t e d S t a t e s D i s tr i c tJ udge f orthe ** D i s tr i c tof

M i nne s ot a , s i tt i ng by de s i gna t i on.

NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T U M G R E C O R D I N G S , I N C . a nd U N I V E R S A L M U S I C G R O U P , I N C ., P l ai n t i ffs - A p p el l ees,

v. A M ERI CA N H O M E A SSU RA N CE C OMP AN Y, D e f

e n d a n t - A p p e lla n t. N o. 08- 56905 D. C . No . C V- 0 7 - 0 3 2 5 7 GA F (A G R x) ME MOR AN DU M *

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e C e n tr a l D is tr ic t o f C a lif o rn ia G a ry A . F e e s s , D i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d M a r c h 4, 2010 P a s a d e n a , C a lif

o rn ia B e f or e : K O Z I N S K I , C hi e f J udge , W . F L E T C H E R , C i r c ui tJ udge , a nd T U N H E I M, D i stri ctJudg e.

** 

# FI LED MA Y13 2 010 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

A m e r i c a n H om e A s s ur a nc e C om pa ny( “ A m e r i c a n H om e ” ) appe a l s the di s tr i c tc ourt ’ s de ni a l of i t s m ot i on t o s t a ypr oc e e di ngs pe ndi ng a rbi tr a t i on. T he d is tr ic t c o u rt c o n c lu d e d th a t th e m a n d a to rya rb itr a tio n p r o v is io n d o e s n o t e x te n d to the cl ai m s by U M G R ec ordi ng s, Inc. and U ni vers al M usi c G roup , Inc. ( c o lle c tiv e ly , “U M G ” ) a g a in s t A m e r ic a n H o m e . W e h a v e ju r is d ic tio n p u r s u a n t to 9 U . S. C. § 1 6 ( a ) ( 1 ) ( A ) , a n d w e a f f i rm. F i r s t , the di s tr i c tc ourtpr ope r l yr e a c he d the i s s ue of a rbi tr abi l i ty . T he a rbi tr a t i on pr ovi s i ons i n the pa y m e nta gr e e m e nt s do notc ont a i n c l e a ra nd u n m is ta k ab le e v id e n c e th a t th e p a rtie s a g r e e d to a rb itr a te a rb itr ab ility . See Fi rst O pt i ons of Chi . , I nc . v . Kaplan , 5 1 4 U .S . 9 3 8 , 9 4 4 ( 1 9 9 5 ) . F o re x a m p le , th e ys ta te tha ta rbi tr a t or s ha ve e xc l us i ve j ur i s di c t i on t o r e s ol ve que s t i ons of a rbi tr abi l i ty , but they a l so st at e thatac t i on s c on ce rni ng arbi trabi l i ty m ustbe brou gh ti n N ew Y ork c o u rts . S e c o n d , th e u n d e r ly in g d is p u te d o e s n o t a r is e o u t o f th e p a y m e n t a g r e e m e n ts and there fore i s notsubj ec tt o the m andat ory arbi tra t i on prov i si on s. A m er i can H om e c onc e de s tha tthe a rbi tr a t i on pr ovi s i ons do note xt e nd t o di s put e s ove rthe po l i ci es , i ncl ud i ng the cl ai m s U M G ra i se s i n i t s c om pl ai nt . U M G ’ s c on t ent i on that i tm i gh tno tbe ob l i gat ed t o p er form i n ful l i t s dut i es un der the po l i ci es i f A m er i can H om e a c t e d i n ba d f

a i th doe s nottr a ns f

orm thos e c l a i m s i nt o di s put e s “ a r i s i ng out3

o f ” th e p a y m e n t a g r e e m e n ts . Se e Me di te rr ane an E nte rs . , I nc . v . Ss angy ong C or

p. , 7 0 8 F .2 d 1 4 5 8 , 1 4 6 4 ( 9 th C ir . 1 9 8 3 ) ; c f . A l t i c or, I

nc . v . N at ’ l U ni on Fi r e I

ns . C o. of P i t t s bur gh, P a. , 41 1 F . 3d 66 9, 67 0-72 (6th C i r. 20 05 ). F or the foregoi ng re as on s, w e AF F I RM the di s tr i c tc ourt ’ s de ni a l of A m e r i c a n H om e ’ s m ot i on t o s t a y pr oc e e di ngs pe ndi ng a rbi tr a t i on.