Opinion ID: 3064630
Heading Depth: 3
Heading Rank: 3

Heading: Park Place’s Arbitration Demand

Text: On June 16, 2003, Park Place filed a $100 million arbitration demand with the AAA based upon its claims before the Court of Federal Claims, and asked the court to stay the litigation pending the arbitration. In response, the United States requested that the AAA terminate the arbitration or, in the alternative, suspend the proceedings until after the Court of 6 The Federal Circuit also noted that neither party had invoked the arbitration agreement. Id. The United States has consistently argued throughout this litigation as an alternative to its opposition on sovereign immunity grounds, that Park Place waived its right to elect arbitration because it chose instead to pursue its claims in the federal courts. UNITED STATES v. PARK PLACE ASSOCIATES 4677 Federal Claims ruled upon Park Place’s motion to stay the litigation. Before the arbitration panel, the United States again asserted that, because it was not a named party to the JVA and it acquired the interest in LCP pursuant to its sovereign powers under RICO, it could not be held liable under state law. When the arbitration panel informed the United States that it would proceed absent a court order that arbitration be terminated or suspended, the United States filed a motion with the Court of Federal Claims to enjoin the arbitration proceedings on grounds of sovereign immunity. In November 2003, the Court of Federal Claims issued an order denying both Park Place’s motion to stay the litigation and the United States’ motion to stay the arbitration proceedings. The court reasoned that “[g]iven its lack of subjectmatter jurisdiction to compel, arrest, or enforce arbitration, and its questionable authority under the JVA to enter an arbitration award [because the choice of law provision calls for entry of an award only in a court of competent jurisdiction ‘in the State of California’], the court may not give either party the equitable relief it expects or demands here.” The following month, the United States asked the Federal Circuit for an injunction pending its interlocutory appeal of the Court of Federal Claims’ decision, which was denied. In May 2004, the Federal Circuit dismissed the interlocutory appeal for lack of jurisdiction. Hardie v. United States, 367 F.3d 1288, 1291 (Fed. Cir. 2004) (“Hardie II”). The Federal Circuit rejected the argument that the United States had not waived its sovereign immunity as to binding arbitration. Id. at 1290-91. The court reiterated that “the United States was bound by the terms of the [JVA] under the law applicable to contracts between private individuals because it had elected to step into the shoes of the general partner of LCP, and [Park Place] had no choice but to accept its new ‘partner’ . . . [and c]onsequently, the United States is subject to the arbitration clause of the joint venture agreement just as any private party 4678 UNITED STATES v. PARK PLACE ASSOCIATES would be.” Id. at 1291 (internal quotation marks omitted) (referring to Hardie I, 19 F. App’x at 905). Meanwhile, in April 2004, a ten-day arbitration hearing took place in Los Angeles. Prior to the hearing, the United States responded to the demand, helped select the arbitration panel members, and participated in the preliminary hearing; however, the United States refused to participate in discovery and failed to attend the arbitration hearing. Following the hearing, the arbitration panel found in favor of Park Place. The panel rejected the United States’ immunity argument, noting that the Eleventh Circuit had invalidated the RICO forfeiture proceeding under which the United States had obtained its interest in the Club, see Gilbert, 244 F.3d at 922, and that the United States chose to become LCP’s general partner, engaged in a concerted effort to obtain control of the Club and reap pecuniary gain, and consequently “shed whatever public personna [sic]” it had and “stepped into the shoes” of the general partner of LCP. In a 67-page award issued in July 2004, the panel found that “[a]s a result of the [United States’] breaching conduct, [Park Place] suffered, and continue[s] to suffer, significant diminution of [its] partnership distributions” and awarded Park Place a total sum of $93,612,892.