Court Opinion

ID: 174061
Source: CourtListenerOpinion
Date Created: 2010-08-25 23:33:08+00
Date Added: 2024-06-11T17:25:28.816447
License: Public Domain

Case: 10-20251     Document: 00511214531          Page: 1    Date Filed: 08/25/2010

            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                           August 25, 2010
                                     No. 10-20251
                                   Summary Calendar                         Lyle W. Cayce
                                                                                 Clerk

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.

        *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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,1 but they contend that, under Section 5 of the Federal
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

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