Central West Virginia Energy, Inc. v. Bayer Cropscience LP
2011 U.S. App. LEXIS 14336
| 4th Cir. | 2011Background
- CWVE and Bayer entered into a 1997 coal-supply agreement with an arbitration clause in Charleston, WV, governing disputes under that agreement.
- A 2006–2008 extension dispute and a 2008 new agreement (the 2008 Agreement) created competing arbitration provisions: 1997 -> Charleston, WV; 2008 -> Richmond, VA.
- The 2008 Agreement contained a merger clause and provided for arbitration in Richmond under AAA Rules; CWVE challenged the 2006 extension and the 2008 Agreement’s validity.
- Bayer paid the higher price under the 2008 Agreement; CWVE alleged the 2008 Agreement was invalid and that the 1997 Agreement remained in effect.
- A Charleston Panel (2009 arbitration) concluded the 1997 extension survived to 2008 and the 2008 Agreement was void for breach/mistake, awarding Bayer damages; Richmond Panel stayed proceedings pending arbitration resolution.
- Virginia and West Virginia district courts held the Charleston Panel did not exceed its powers by ruling on the 2008 Agreement; CWVE appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Charleston Panel exceeded powers by ruling on the 2008 Agreement | CWVE argues panel lacked jurisdiction over 2008 Agreement (arbitrability). | Bayer contends panel properly exercised jurisdiction as a procedural issue under the 1997 Agreement. | Panel did not exceed powers; ruling was procedural and within contract scope. |
| Whether the dispute over 2008 Agreement should be decided by Charleston or Richmond panel | CWVE contends Richmond should decide 2008 Agreement’s validity. | Bayer argues Charleston address is proper under Howsam framework as a procedural gateway issue. | Issue is procedural; arbitrators decide which panel should address it. |
| Whether Stolt-Nielsen alters the procedural/arbitrability distinction in this context | CWVE asserts Stolt-Nielsen narrows arbitral authority about procedural questions. | Bayer maintains Stolt-Nielsen does not disturb the procedural-vs-arbitrability framework here. | Stolt-Nielsen does not change the result; issue remains procedural and arbitrable. |
| Whether the Charleston Panel’s basis for jurisdiction (waiver theory) was rationally inferable from the contract | CWVE claims panel relied on an improper waiver theory outside the contract. | Bayer argues panel relied on a plausible reading of the 1997 Agreement’s broad grant of jurisdiction. | Panel’s jurisdiction grounded in plausible contract interpretation; not irrational. |
| Whether the court should review the arbitrator’s procedural ruling under § 10(a)(4) de novo | CWVE asserts de novo review should correct alleged misreading. | Bayer urges narrow, contract-interpretation-based review of procedural decisions. | Review is limited; authorities show deferential review for procedural issues within arbitrator’s authority. |
Key Cases Cited
- Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1 (U.S. 1983) (federal policy favoring arbitration; enforce terms)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (distinction between arbitrability and procedure)
- Dockser v. Schwartzberg, 433 F.3d 421 (4th Cir. 2006) (number of arbitrators as procedure; arbitration favors arbitration)
- Misco, Inc. v. United States, 484 U.S. 29 (U.S. 1987) (narrow judicial review of arbitral decisions under FAA)
- Garvey v. Major League Baseball Players Ass'n, 532 U.S. 504 (U.S. 2001) (arbitration decisions must be interpreted in light of contract)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 130 S. Ct. 2847 (U.S. 2010) (arising under; scope of arbitration clause)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (U.S. 2010) (class arbitration consent not procedural; limits on arbitrator authority)