Court Opinion

ID: 811824
Source: CourtListenerOpinion
Date Created: 2012-11-13 21:17:39+00
Date Added: 2024-06-11T18:00:42.670512
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                NOV 13 2012

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

WYNN RESORTS, LIMITED, a Nevada                 No. 11-15841
corporation,
                                                D.C. No. 2:10-cv-00722-KJD-LRL
              Plaintiff - Appellee,

  v.                                            MEMORANDUM*

ATLANTIC-PACIFIC CAPITAL, INC., a
Connecticut corporation,

              Defendant - Appellant.

                   Appeal from the United States District Court
                            for the District of Nevada
                    Kent J. Dawson, District Judge, Presiding

                     Argued and Submitted October 15, 2012
                           San Francisco, California

Before: B. FLETCHER,** HAWKINS, and MURGUIA, Circuit Judges.

        *
         This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
         The Honorable Betty Binns Fletcher, Senior Circuit Judge for the Ninth
Circuit Court of Appeals, fully participated in the case and concurred in the
judgment prior to her death.
       At issue in this appeal is whether the district court correctly assumed for

itself the task of deciding the issue of arbitrability and, if so, whether it properly

concluded that the dispute is arbitrable.

       In 2009, Atlantic-Pacific Capital, Inc. (“APC”) and Wynn Resorts, Limited

(“Wynn”) entered into a written agreement in which Wynn engaged APC as its

exclusive global placement agent to raise $1.5 billion in equity capital for gaming

and hospitality assets or related securities. The parties agreed that “any dispute,

controversy or claim arising from or relating to th[e] Agreement shall be submitted

to and determined by binding arbitration in Las Vegas, Nevada, conducted by”

JAMS. The agreement further provided that it “shall be governed by and construed

in accordance with the laws of the State of New York.”

       In 2010, APC filed a demand for arbitration, alleging four causes of action

arising out of the agreement. Wynn responded by filing a complaint in state court

and requesting a stay of the arbitration proceedings. APC removed Wynn’s action

to federal court, after which the district court stayed the arbitration proceedings and

denied APC’s motion to compel.

1.     Responsibility for Deciding the Arbitrability Issue

       “The question whether the parties have submitted a particular dispute to

arbitration, i.e., the ‘question of arbitrability,’ is ‘an issue for judicial

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determination [u]nless the parties clearly and unmistakably provide otherwise.’”

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002) (quoting AT & T

Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986)). In

evaluating whether the parties so intended to provide, courts apply ordinary

state-law contract principles. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938,

944 (1995).

      Under New York law, an agreement’s incorporation of arbitral rules that

expressly confer upon arbitrators the power to decide the issue of arbitrability

demonstrates a clear and unmistakable intent by the parties to proceed accordingly.

See, e.g., Shaw Grp. Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 122 (2d Cir. 2003)

(“parties’ intent to arbitrate arbitrability [wa]s further evidenced [under New York

law] by their agreement to refer all disputes to the ‘International Chamber of

Commerce . . . in accordance with the rules and procedures of International

Arbitration,’” which required that the arbitral body address questions of

arbitrability); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1202 (2d Cir. 1996) (same

as to National Association of Securities Dealers’ rules).

      The agreement here incorporated the JAMS arbitration rules, stating,

“[e]xcept as otherwise provided herein, arbitration shall be conducted pursuant to

and in accordance with J.A.M.S.’ [sic] Streamlined Arbitration Rules and

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Procedures in effect at the time of the filing of the demand for arbitration.”1 JAMS

Rule 8(c) provides that an arbitrator shall decide the issue of arbitrability:

      Jurisdictional and arbitrability disputes, including disputes over
      the formation, existence, validity, interpretation or scope of the
      agreement under which Arbitration is sought, and who are
      proper Parties to the Arbitration, shall be submitted to and ruled
      on by the Arbitrator. The Arbitrator has the authority to
      determine jurisdiction and arbitrability issues as a preliminary
      matter.

(emphasis added). By incorporating the JAMS rules, the parties demonstrated their

clear and unmistakable intent to have an arbitrator resolve the issue of arbitrability.

Gibson v. Seabury Transp. Advisor LLC, 936 N.Y.S.2d 539, 539 (App. Div. 2012)

(intent to allow arbitrator to decide issue of arbitrability demonstrated by parties’

incorporation of JAMS/Endispute’s commercial rules).

      The inclusion of a broad arbitration provision also evinces the parties’ intent to

have an arbitrator decide the question of arbitrability under New York law. See, e.g.,

Shaw Grp. Inc., 322 F.3d at 121 (“a ‘broad grant of power to the arbitrators’ . . .

evidence[s] the parties’ clear ‘inten[t] to arbitrate issues of arbitrability’” (quoting

PaineWebber, 81 F.3d at 1199-1200)). The arbitration provision here is worded

broadly, providing that “[a]ny dispute, controversy or claim arising from or relating

      1
       Notwithstanding the “except as otherwise provided therein” language, the
agreement evidences no intent by the parties to supersede the JAMS rules or render
them inapplicable.

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to this Agreement shall be submitted to and determined by binding arbitration . . . .”

This language is similar to language found to demonstrate an intent to arbitrate

arbitrability. See, e.g., id. (provision that stated “[a]ll disputes . . . concerning or

arising out of” contract shall be subject to arbitration demonstrated parties “clearly

and unmistakably” agreed to have arbitrator decide arbitrability); Smith Barney

Shearson Inc. v. Sacharow, 689 N.E.2d 884, 885, 887-88 (N.Y. 1997) (agreement

stating that “any controversy” between the parties would be “settled by arbitration”

was sufficiently “plain and sweeping” to indicate an intent to have arbitrator resolve

issue of arbitrability).

       Thus, the parties’ incorporation of the JAMS rules and their employment of a

broad arbitration provision establish their clear and unmistakable intent to submit the

issue of arbitrability to arbitration.

2.     Arbitrability of the Dispute

       Alternatively, even if the district court properly assumed for itself the task of

deciding the issue of arbitrability, it was error to find the dispute fell outside the scope

of the arbitration provision. Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1267 (9th

Cir. 2006) (en banc) (“The validity and scope of an arbitration clause are reviewed de

novo.”)

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      Where a contract contains an arbitration clause, courts apply a presumption in

favor of arbitrability as to particular grievances, and the party resisting arbitration

bears the burden of establishing that the arbitration agreement is inapplicable. AT &

T Techs., Inc., 475 U.S. at 650; Westinghouse Hanford Co. v. Hanford Atomic Metal

Trades Council, 940 F.2d 513, 517–18 (9th Cir. 1991).

      That presumption applies with particular force where, as here, the arbitration

clause is phrased in broad and general terms. Westinghouse Hanford Co., 940 F.2d

at 517. In such circumstances, “[a]n order to arbitrate the particular grievance should

not be denied unless it may be said with positive assurance that the arbitration clause

is not susceptible of an interpretation that covers the asserted dispute. Doubts should

be resolved in favor of coverage.” United Steelworkers of Am. v. Warrior & Gulf

Navigation Co., 363 U.S. 574, 582–83 (1960) (emphasis added). Stated differently,

“[t]o require arbitration, [an aggrieved party’s] factual allegations need only ‘touch

matters’ covered by the contract containing the arbitration clause . . . .” Simula, Inc.

v. Autoliv, Inc., 175 F.3d 716, 721 (9th Cir. 1999). Accordingly, we must compare

APC’s allegations with the terms of the agreement’s arbitration provision.

      The parties’ agreement provides that “any dispute, controversy or claim arising

from or relating to th[e] Agreement” shall be subject to arbitration. In its arbitration

demand, APC alleged that Wynn breached the agreement by (1) failing to compensate

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APC for the $1.5 billion in investments that APC obtained but that Wynn rejected; (2)

failing to compensate APC for the use and deployment of equity capital represented

by the investments in an initial public offering (“IPO”) initiated by Wynn’s

subsidiary, Wynn Macau, SA (“Wynn Macau”); (3) using sales agents other than APC

(i.e., the underwriters of the IPO) to effectuate investments in the investment vehicle;

(4) using Wynn’s subsidiary (Wynn Macau) to circumvent or adversely impact the

exclusivity and rights granted to APC under the agreement; and (5) improperly

terminating the agreement.

      APC’s claims not only relate to and touch matters covered by the agreement,

they directly arise out of it. Indeed, whether APC is entitled to fees hinges upon

whether, under the agreement: Wynn was obligated to accept the alleged $1.5 billion

in equity capital raised by APC; proceeds from the Wynn Macau IPO constituted

“equity capital” raised by APC; the underwriters for the Wynn Macau IPO qualified

as “sales agents with respect to the soliciting of investors for the purposes of

effectuating an Investment”; the sale of shares through Wynn Macau qualified as

“conduct or services [by a Wynn affiliate] which circumvent[ed] or adversely

impact[ed] the exclusivity and rights . . . granted to APC”; and APC’s cessation of

marketing constituted “cause” for Wynn’s termination.

                                           7
      Without resolving the merits of APC’s allegations, AT & T Techs., Inc., 475

U.S. at 649 (“in deciding whether the parties have agreed to submit a particular

grievance to arbitration, a court is not to rule on the potential merits of the underlying

claim”), it is clear this dispute falls within the terms of the arbitration provision.

Simula, Inc., 175 F.3d at 722 (finding that arbitration clause covered claims that

would require “closely examin[ing] [the parties’ agreements] in order to determine

whether [one] performed its contractual obligations in a manner consistent with” the

agreement’s terms).

      We therefore vacate the district court’s order and remand with instructions for

the district court to (1) grant APC’s motions to (a) dissolve the interim stay of

arbitration proceedings, (b) vacate the ex parte injunction, and (c) compel arbitration,

and (2) stay proceedings in accordance with 9 U.S.C. § 3.

      Costs on appeal to APC.

      VACATED AND REMANDED.

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