Opinion ID: 1436064
Heading Depth: 1
Heading Rank: 19

Heading: Questions of Existence and of Scope

Text: It seems clear that because Century predicated its argument on its contention that an incorporated arbitration clause's narrow or broad phrasing determines whether there is an arbitration agreement between the incorporating parties, it risks confusing its proposed rule with the narrow-versus-broad distinction relating to the separate question of an arbitration agreement's scope. Local 827, Int'l Bhd. of Elec. Workers v. Verizon N.J., Inc., 458 F.3d 305, 310 (3d Cir.2006). In particular, Century cites to Rohm & Haas, 522 F.3d 324, 331-32, in asserting that we have refused to enforce arbitration agreements and have respected clauses' limitations where such clauses are narrow. Appellant's opening br. at 35-36; Appellant's reply br. at 22. In Rohm & Haas, a labor-dispute case, we addressed whether certain employees who disputed denials of their disability claims under an employee-benefits plan could compel the company and the plan administrator to submit the dispute to arbitration pursuant to a separate collective-bargaining agreement's grievance procedure. The first agreement, effective 2000-2004, was the collective-bargaining agreement between the company and the union covering a particular facility (the CBA). The CBA applied only to the wages, hours, and working conditions of the ... employees and created a dispute-settlement procedure for disputes involv[ing] wages ..., hours ..., and working conditions. Id. at 327-28. According to this procedure, if other means fail, either party [the union or the company] may submit the matter to arbitration as described in another CBA provision. Id. at 328. The second agreement, effective beginning in 2003, was the employee-benefits plan. This plan provided certain benefits to both union and non-union employees working at various facilities, not merely the one covered by the CBA, and the plan, as is common under such plans, vested the sole discretion to interpret and apply the plan in an administrative committee. Id. at 329. Moreover, the plan provided a procedure for submitting claims, including a requirement for claimants denied benefits to be notified of their statutory rights to bring ERISA claims. [24] Unlike the CBA, the plan did not provide for arbitration of disputes. Id. at 329-30. The union was not a signatory to the benefits plan which, significantly, did not incorporate or otherwise refer to the CBA. Id. at 329. Addressing whether the CBA's arbitration clause should be deemed narrow or broad, we concluded that the clause was broad because it did not expressly exclude categories of grievances, such as issues concerning disability benefits, from arbitration. Id. at 332. But we emphasized that, regardless of whether an arbitration clause is labeled as broad or narrow, the central questions with respect to its application remain whether the parties agreed to submit disputes to arbitration and whether the particular dispute falls within the arbitration agreement's scope. Id. There was no dispute that the CBA contained a valid agreement between the company and the union to arbitrate certain matters. Nevertheless, we concluded that the employees and their union could not compel arbitration of disputes arising from the benefits plan pursuant to the CBA's arbitration clause despite that clause's broad wording because the dispute over employee benefits was outside that clause's scope, which was limited to wages, hours, and working conditions, and because neither agreement referred to or incorporated the other: the CBA's mention of a sickness plan did not incorporate the benefits plan and the benefits plan did not provide that adverse determinations were subject to the CBA's grievance procedure. Id. at 332-36. We based our decision in Rohm & Haas on the scope of a valid arbitration agreement. Accordingly, Century's attempt to apply the logic of Rohm & Haas to support its contention that the parties did not form a valid arbitration agreement is misplaced. Our decision in Rohm & Haas does not confirm Century's proposed approach to the incorporation-by-reference question based on an incorporated arbitration clause's narrow-versus-broad or restrictive-versus-unrestrictive phrasing. Similarly, Century cites Chimicles, 447 F.3d at 210-11 to support its contention that we should not apply the incorporation-by-reference clause in the retrocessional agreements to form an agreement between Century and Lloyd's to arbitrate. In essence, Century reads Chimicles to hold that a narrow arbitration clause when incorporated into another contract cannot apply to disputes under that contract, and thus, in its view, Chimicles supports our adoption of the rule in Progressive Casualty : the incorporation of an arbitration clause that specifies parties to which it applies does not bind parties to the distinct agreement containing the incorporation-by-reference clause. In Chimicles, we considered whether two limited partners in a partnership in receivership could compel the partnership's receiver to arbitrate a dispute over the requirements of subscription agreements between the limited partners and the partnership. The limited partners based their argument on an arbitration clause contained in the partnership agreement between the limited partners and the general partner. The partnership agreement was between an LLC as general partner and certain investors as private limited partners. The partnership agreement contained an arbitration clause stating that [t]he General Partner and the Private Limited Partners... hereby agree that any and all controversies... arising out of ... this Agreement... shall be settled by arbitration.... Chimicles, 447 F.3d at 210. The partnership agreement also included a choice-of-venue clause providing that an [a]ction to enforce any provision of this Agreement or any action brought by the Partners against the General Partner or the Partnership shall be brought through arbitration in New Jersey, pursuant to [the arbitration clause]. Id. The partnership agreement indicated that it was a fully integrated contract. Id. In the subscription agreements between each investor and the partnership, each investor agreed to make certain capital contributions to the partnership in accordance with the terms and conditions described herein and in the Partnership Agreement. Id. at 210. In addition, each investor agreed to be bound by all of the terms and conditions of the Partnership Agreement. Id. But neither subscription agreement contained an arbitration clause, and the subscription agreements indicated that they were fully integrated contracts. Id. When the partnership's receiver sought to enforce the investors' contribution requirements under the subscription agreements, the investors moved to compel arbitration pursuant to the partnership agreement's arbitration clause. We rejected this effort on several grounds. We explained that the partnership itself was not bound directly by the partnership agreement because it was not a signatory to the agreement. Even assuming that the subscription agreements incorporated by reference the partnership agreement's arbitration clause, they did so against the investors and not against the partnership itself. Id. at 209-10 (subscription agreements providing that investors agree to be bound by all terms and conditions of the Partnership Agreement). And even if a court were to read the incorporation-by-reference clause as binding against the partnership, the arbitration clause was intended to apply to suits that the limited partners brought, not to those that the partnership brought. Id. at 210-11. Finally, even if the partnership somehow were bound to arbitrate, we noted a provision in the partnership agreement that would have negated that obligation in the circumstances of the case. Id. In what did not seem to be a close case, we concluded that the partnership had not formed an arbitration agreement with the investors, so it could not be compelled to arbitrate. Century focuses on our statement in Chimicles that [e]ven assuming arguendo that [the incorporation clause of] the subscription agreement incorporates by reference the terms and conditions of the partnership agreement, the arbitration provision does not apply to an action brought by [the partnership or its receiver]. Id. at 210; Appellant's opening br. at 38-39. Century argues that this statement directs that the narrow arbitration clause in the [reinsurance treaties] be interpreted according to its own terms, even if incorporated into the [retrocessional agreements]. Appellant's reply br. at 26. But in concluding that the arbitration provision did not apply to actions brought by the partnership, even if incorporated, we also relied on the incorporation clause itself, which incorporated the terms and conditions of the partnership agreement only against the limited partners. Chimicles, 447 F.3d at 210. Considering the multiple bases for our conclusion that there was not an agreement to arbitrate, Chimicles does not bear the weight that Century would put on it.