Court Opinion

ID: 3037662
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:56:55.107543+00
Date Added: 2024-06-11T11:48:47.748293
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 04-2021
                                   ___________

Clyde Wiser; Wanda Wiser,               *
                                        *
            Appellees,                  *
                                        * Appeal from the United States
      v.                                * District Court for the
                                        * Eastern District of Arkansas.
Wayne Farms, a division of              *
Continental Grain Co.,                  *
                                        *
            Appellant.                  *
                                   ___________

                             Submitted: January 14, 2005
                                Filed: June 17, 2005
                                 ___________

Before MELLOY, SMITH, and COLLOTON, Circuit Judges.
                           ___________

COLLOTON, Circuit Judge.

       Wayne Farms appeals from the district court’s1 denial of its motion to compel
arbitration, arguing that the court erroneously applied Arkansas law rather than
Georgia law. Wayne Farms filed its motion in response to Clyde and Wanda Wiser’s
complaint alleging fraud, fraudulent inducement, and promissory estoppel. The
district court found that the arbitration clauses in two agreements between Wanda

      1
       The Honorable Stephen M. Reasoner, United States District Judge for the
Eastern District of Arkansas.
Wiser and Wayne Farms were unenforceable under Arkansas law due to lack of
mutuality of obligation. We affirm.

                                          I.

      In 1997, Wayne Farms and Wanda Wiser signed two Breeder Flock
Agreements (the “Agreements”) contemplating a five-year relationship in which
Wanda would care for chickens supplied by Wayne Farms and harvest the chickens’
eggs in exchange for compensation. This arrangement remained essentially
unchanged until 1999, when the Wisers attempted to sell their farm. Instead of a
buyer, the Wisers located a potential lessee who was interested in operating the
Wisers’ farm with an option to purchase it. The potential lessee wanted to retain the
contracts with Wayne Farms, and offered to pay the Wisers a percentage of the
income received therefrom.

      The Wisers allege that upon hearing of the lessee’s interest, they contacted
Wayne Farms regarding the potential lease. Wayne Farms, according to the Wisers,
agreed to permit the lessee to operate under the Agreements so long as certain
improvements were made to the Wisers’ facilities. The Wisers needed to borrow
money in order to make the improvements, so, according to the Wisers’ complaint,
Clyde Wiser sought assurances from Wayne Farms that if the lessee did not perform
acceptably under the Agreements, Wayne Farms would permit Wanda Wiser to
resume raising its poultry. Wayne Farms, the Wisers allege, “promised both Wanda
and Clyde Wiser that in the event Wayne Farms decided to terminate its relationship
with the [lessee], Wanda Wiser would be allowed to again raise breeder hens for
Wayne Farms.” (Compl. ¶ 7).

       The Wisers borrowed about $54,000 to make the required improvements and
proceeded to lease their farm in 2000. The lessee did not perform to Wayne Farms’s
satisfaction, and, as a result, Wayne Farms removed its hens from the Wisers’ farm

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in 2002. The Wisers repeatedly requested that they be permitted again to raise
breeder hens for Wayne Farms, but they were denied each time.

       The Wisers brought suit against Wayne Farms on March 7, 2003, seeking
damages in excess of $500,000 for alleged fraud, fraudulent inducement, and
promissory estoppel. Wayne Farms answered on April 21, 2003, and, on the same
day, moved the court to compel arbitration pursuant to the arbitration clauses
contained in the Agreements. The district court issued its order denying Wayne
Farms’s motion on March 25, 2004, holding that the Wisers were not bound by the
arbitration clauses in the Agreements. The court’s order contained no express
consideration of choice of law, but relied on the Arkansas Supreme Court opinion in
Tyson Foods, Inc. v. Archer, 147 S.W.3d 681 (Ark. 2004). Archer was decided
subsequent to the parties’ filings in this case, and held that “Arkansas precedent on
mutuality requires that the terms of the agreement must fix a real liability upon both
parties,” id. at 687, and that a contract clause permitting one party to “pursue any
other remedies at law or equity,” id. at 685, while requiring the other party to submit
any controversies to arbitration, lacked mutuality. Id. at 687. The district court found
the Agreements to be similar in relevant part to the contract at issue in Archer, and
therefore held that the arbitration clauses contained in the Agreements were
unenforceable for lack of mutuality.

                                          II.

       The parties do not dispute that if Arkansas law applies to the Agreements, then
their requirement to arbitrate is unenforceable. Wayne Farms asserts that the district
court erred in applying Arkansas law because the Agreements clearly state that
Georgia law is to govern any disputes arising between the parties. The Agreements
each contain a paragraph entitled “Governing Law” providing that the Agreements
are to “be governed by, and interpreted and construed in accordance with, the laws
of the State of Georgia.” They also contain arbitration clauses stipulating to the

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application of Georgia law in the event of arbitration. The Wisers contend, however,
that any error committed by the district court in applying Arkansas law is of Wayne
Farms’s own making, and that Wayne Farms “waived” the argument that Georgia law
should apply by its conduct in the district court.

       The Wisers are certainly correct that “[o]rdinarily this court will not consider
arguments raised for the first time on appeal.” Wever v. Lincoln County, Nebraska,
388 F.3d 601, 608 (8th Cir. 2004). In the choice of law context, in particular, we
repeatedly have refused to consider arguments not presented to the district court.
E.g., Colonial Ins. Co. of Cal. v. Spirco Envtl., Inc., 137 F.3d 560, 561 (8th Cir.
1998); Davidson & Schaaff, Inc. v. Liberty Nat’l Fire Ins. Co., 69 F.3d 868, 869 (8th
Cir. 1995); Kostelec v. State Farm Fire & Cas. Co, 64 F.3d 1220, 1224 (8th Cir.
1995); Pellerin Laundry Mach. Sales Co. v. Reed, 300 F.2d 305, 309-10 (8th Cir.
1962).

       This case fits that category. Wayne Farms failed to argue for the application
of Georgia law in the district court. The references to Georgia law contained in the
Agreements were never urged upon the district court, and citations to Georgia cases
or statutes are wholly absent from Wayne Farms’s pleadings, motions, and supporting
documents. Wayne Farms, in fact, affirmatively relied on Arkansas law to argue
almost every legal issue. In its Brief in Support of Motion to Compel Arbitration and
to Stay, Wayne Farms cited Arkansas cases regarding the interpretation of the Federal
Arbitration Act, 9 U.S.C. §§ 1-14, and the enforceability of arbitration clauses. With
respect to the crucial issue on appeal, Arkansas’ requirement of mutuality of
obligation, Wayne Farms cited only opinions of the Arkansas Supreme Court. “The
rule that we will not address arguments raised for the first time on appeal applies even
more forcefully when the appellant took the opposite position in the district court,”
Davidson & Schaaff, 69 F.3d at 869 (internal citations omitted), and this is such a
case.

                                          -4-
       Wayne Farms attempts to explain its failure to argue for the application of
Georgia law by noting that there was no difference between the mutuality
requirements of Georgia and Arkansas until the Arkansas Supreme Court decided
Archer in 2004. As Wayne Farms conceded at oral argument, however, after Archer
was decided on February 19, 2004, there was more than a month delay before the
district court issued its order, during which time Wayne Farms again failed to direct
the district court’s attention to a choice of law issue. Responsibility for the district
court’s application of Arkansas law thus lies squarely with Wayne Farms.

       Wayne Farms argues that despite its repeated citation of Arkansas law and
failure to direct the district court’s attention to Georgia law, the court’s application
of Arkansas law should be reviewed for plain error. According to Wayne Farms, the
district court’s application of Arkansas law is “an obvious instance of misapplied
law.” (Appellant’s Reply Br. at 7). “[I]t is well settled,” according to Wayne Farms,
that a court of appeals may consider an issue for the first time on appeal “in order to
prevent plain error or a miscarriage of justice.” (Id.) This contention draws some
support from Singleton v. Wulff, 428 U.S. 106 (1976), where the Supreme Court
allowed that a court of appeals would be “justified” in resolving a new issue on
appeal where “the proper resolution is beyond any doubt” or where “injustice might
otherwise result.” Id. at 121.

       More recently, however, the Court has established a stringent test for the
correction of unpreserved errors in the criminal context, requiring an obvious error
that would affect a defendant’s substantial rights and “seriously affect the fairness,
integrity, or public reputation of judicial proceedings” before a court of appeals may
take corrective action. United States v. Olano, 507 U.S. 725, 736-37 (1993). We
have suggested that Olano also applies in the civil context, see Rush v. Smith, 56 F.3d
918, 923 & n.3 (8th Cir. 1995), and other circuits have concluded that “the principles
and decision enunciated in Olano apply a fortiori in the civil context where courts
pay less strict attention to procedural protocol.” Smith v. Gulf Oil Co., 995 F.2d 638,

                                          -5-
646 (6th Cir. 1993); Highlands Ins. v. Nat’l Union Fire Ins., 27 F.3d 1027, 1032 (5th
Cir. 1994) (quoting Smith); see also Owens-Ill., Inc. v. Rapid Am. Corp. (In re
Celotex Corp.), 124 F.3d 619, 631 (4th Cir. 1997) (“Because we cannot conceive of
a reason why an appellant in a civil case should bear a lesser burden for obtaining
correction of a forfeited error than an appellant in a criminal case, we hold that, at a
minimum, the requirements of Olano must be satisfied before we may exercise our
discretion to correct an error not raised below in a civil case.”); Fashauer v. N. J.
Transit Rail Operations, Inc., 57 F.3d 1269, 1289 (3d Cir. 1995) (“If anything, the
plain error power in the civil context – which is judicially rather than statutorily
created – should be used even more sparingly.”).

       The law in our circuit on the plain-error test in a civil context, however, is not
entirely clear. Although Rush has been interpreted as “appl[ying] the Olano test in
the civil context without expressly saying so,” Owens-Ill., Inc., 124 F.3d at 631; see
also United States v. Pirani, 406 F.3d 543, 563-64 (8th Cir. 2005) (Bye, J.,
concurring in part and dissenting in part), since Rush, on occasion, we have corrected
errors raised for the first time on appeal in civil cases, observing among other things
that we may do so when proper resolution of the issue is “beyond any doubt.” E.g.,
Williams v. Chai-Hsu Lu, 335 F.3d 807, 809 (8th Cir. 2003); Tarsney v. O’Keefe, 225
F.3d 929, 939 (8th Cir. 2000); United States Dep’t of Labor v. Rapid Robert’s Inc.,
130 F.3d 345, 348 (8th Cir. 1997) (quoting Singleton, 428 U.S. at 121); Miller v.
FEMA, 57 F.3d 687, 689 (8th Cir. 1995). Wayne Farms urges us to follow this latter
line of analysis.

       Even assuming Wayne Farms did not waive, i.e., intentionally relinquish, any
argument about choice of law by its citation in the district court of Arkansas (rather
than Georgia) precedents, we think the better view among our apparently conflicting
precedents is that an unpreserved error in the civil context must meet at least the
Olano standard to warrant correction. The alleged error in this case is that the district
court failed to apply a contract provision that Wayne Farms never invoked, with the

                                          -6-
consequence that this dispute will be litigated in federal court. To hold Wayne Farms
to the application of Arkansas law under these circumstances surely would not
“seriously affect the fairness, integrity, or public reputation of judicial proceedings.”
Olano, 507 U.S. at 736.

       But even if there remains discretion to resolve newly-raised issues based
simply on the presence of an obvious error, it is clear that “[t]he matter of what
questions may be taken up and resolved for the first time on appeal is one left
primarily to the discretion of the courts of appeals, to be exercised on the facts of
individual cases.” Singleton, 428 U.S. 121. We are unaware of any case in which
this court has applied the “beyond any doubt” exception described in Singleton to
decide a choice-of-law question not raised below, and several opinions of this court
cited above steadfastly decline to consider such an issue. Even assuming, arguendo,
that the Agreements call for the application of Georgia law, the only effect of a
mistaken use of Arkansas law is that this dispute will be litigated in federal court
rather than in an arbitral forum. As Wayne Farms concedes, the requirement to
proceed in federal court can hardly be considered a miscarriage of justice. We see no
good reason to exercise our discretion to reach Wayne Farms’s belated choice-of-law
argument, even assuming we have such authority.

      The judgment of the district court is affirmed.
                     ______________________________

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