Burlington Northern & Santa Fe Railway Co. v. Public Service Co.
636 F.3d 562
10th Cir.2010Background
- 1985: BNSF and PSO entered a long-term coal-transport agreement; PSO to build a connecting rail line and, after completion, BNSF would provide Single Line Direct Service with a Base Rate of $14 per ton and an Effective Rate adjusted annually.
- Section 4.2 created a rate floor: the Effective Rate for Single Line Direct Service will not be less than the Base Rate on file date, except as provided in Section 11 (renegotiation).
- Section 13 reserved arbitration for rate renegotiation (Section 11) and authorized the board to amend the rate or adjustment method to reflect the parties’ intentions; other disputes could be resolved in Oklahoma courts.
- 1994 arbitration resolved PSO’s favor: rate for single-line service set at $11.77/ton and a new cost-based adjustment procedure; the award did not mention a rate floor but kept board jurisdiction to resolve implementation disputes.
- 1995 amendment set the effective rate as of October 1, 1995 at $12.01/ton by applying the board’s adjustment to the 11.77 rate; the parties kept the ratefloor dispute alive but disagreed on its meaning.
- 2001 buy-out calculations used the 2001 adjusted rate; BNSF argued payment should reflect the higher rate, while PSO paid the lower amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the rate-floor dispute is arbitrable | BNSF contends the rate floor is non-arbitrable. | PSO argues the dispute was within the submission and arbitration scope. | Arbitrable; the district court correctly deferred to the board. |
| Whether the board exceeded its authority in denying a rate floor | BNSF claims the board exceeded its powers by finding no floor. | PSO contends board acted within its authority under the agreement. | Board did not exceed its authority; within the scope of the arbitration. |
| Whether the agreement should be interpreted by reviewing courts or by the arbitrator | BNSF seeks independent construction by court. | PSO relies on the arbitrator’s construction under deference. | Arbitrator’s construction is respected; court defers absent non-arbitrable issues. |
| Attorney fees | BNSF challenges PSO’s post-arbitral fees. | PSO seeks fees under Oklahoma law as prevailing party. | PSO awarded attorney fees under Okla. Stat. tit. 12 § 936. |
Key Cases Cited
- First Options of Chicago v. Kaplan, 514 U.S. 938 (U.S. 1995) (arbitrability and breadth of arbitration clause; deference to arbitrator on scope)
- United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29 (U.S. 1978) (scope of arbitrator’s authority; deference when within contract interpretation)
- DMA Int'l, Inc. v. Qwest Comm. Int'l, Inc., 585 F.3d 1341 (10th Cir. 2009) (highly deferential review for arbitrator’s power)
- Sterling Colo. Beef Co. v. United Food & Commercial Local Union No. 7, 767 F.2d 718 (10th Cir. 1985) (arbiter’s construction of contract; deferential review of arbitration rulings)
- Sheldon v. Vermonty, 269 F.3d 1202 (10th Cir. 2001) (deference to arbitrator’s factual and legal determinations)
- Schoenduve Corp. v. Lucent Techs., Inc., 442 F.3d 727 (9th Cir. 2006) (scope of arbitrator’s powers; deference to arbitration rulings)
- Cummings v. FedEx, 404 F.3d 1260 (10th Cir. 2005) (three-part inquiry for arbitrability; broad vs narrow clauses)
- Chelsea Family Pharmacy, PLLC v. Medco Health Solutions, Inc., 567 F.3d 1191 (10th Cir. 2009) (whether collateral claims arise out of payments under an arbitration clause)