Cape Flattery Limited v. Titan Maritime, LLC
647 F.3d 914
| 9th Cir. | 2011Background
- Cape Flattery's vessel M/V Cape Flattery ran aground off Oahu, Hawaii, triggering government response and liability for removal costs under 33 U.S.C. § 2702.
- Cape Flattery entered into a salvage agreement with Titan Maritime to salve the vessel and prevent oil discharge, including an arbitration clause for disputes in London under English law.
- Titan recovered the vessel and mitigated oil-discharge risk, but the grounding caused reef damage for which Cape Flattery could be liable to the United States government.
- Cape Flattery filed suit in district court seeking contribution and indemnity from Titan for gross negligence, and sought to enjoin arbitration.
- Titan moved to compel arbitration; the district court ruled that federal arbitrability law applied and, under that standard, the dispute was not arbitrable.
- The Ninth Circuit affirmed, holding that federal arbitrability law applies and, applying the narrow Mediterranean/Tracer interpretation, the dispute is not arbitrable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What arbitrability law applies? | Cape Flattery: federal arbitrability law applies, regardless of contract. | Titan: contracting parties may choose non-federal arbitrability law; English law may apply. | Federal arbitrability law applies unless clear evidence of non-federal choice. |
| Did the agreement show a clear intent to apply non-federal arbitrability law? | No clear evidence; general language not enough to override federal default. | Agreement language could show intent to apply English arbitrability law. | No clear and unmistakable evidence; no agreement to non-federal arbitrability law. |
| Under federal arbitrability law, is the dispute arbitrable? | Dispute arises under the contract and should be arbitrable. | Dispute is tort-based, involving gross negligence and resource damages; not within narrow contract scope. | Not arbitrable under Mediterranean and Tracer narrow interpretation. |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (federal arbitrability law applies to FAA disputes)
- Volt Information Sciences, Inc. v. Board of Trustees, 489 U.S. 468 (1989) (FAA preemption; respect private agreement to arbitrate; non-mandatory arbitration rules)
- Mediterranean Enterprises, Inc. v. Ssangyong Construction Co., 708 F.2d 1458 (9th Cir. 1983) (arising under language is narrow; arbitrable issues limited to contract interpretation/performance)
- Tracer Research Corp. v. National Environmental Services Co., 42 F.3d 1292 (9th Cir. 1994) (tort claims not arbitrable if independent from contract; narrow reading of arising under)
- Kaplan v. First Options of Chicago, Inc., 514 U.S. 938 (1995) (presumption against arbitrability of arbitrability; clear evidence required for non-federal law)
- Ford v. NYL-Care Health Plans of Gulf Coast, Inc., 141 F.3d 243 (5th Cir. 1998) (contracting parties may choose non-federal arbitrability law)