265 So. 3d 216
Ala.2018Background
- JWR (later Warrior Met Coal) purchased multiple SL750 longwall shearers from Eickhoff by separate purchase-order contracts (no arbitration clauses; venue Birmingham).
- JWR and Eickhoff signed November 2014 and June 2016 "master service agreements" (rebuild/life-cycle support) that included an arbitration clause incorporating the AAA Commercial Rules and an integration clause purporting to supersede prior agreements.
- Warrior Coal assumed JWR contracts after bankruptcy and operated the machines; it later revoked acceptance and sued Eickhoff (breach of warranty, contract, products liability) seeking > $10M.
- Eickhoff demanded arbitration under the master service agreements and moved to compel; Warrior Coal argued claims arise under the purchase orders (no arbitration) not the master service agreements.
- Trial court denied the motion to compel arbitration; Alabama Supreme Court reversed, holding the arbitrability question belongs to the arbitrator and remanding with instructions to compel arbitration and stay proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability? | Court should decide whether claims fall under non-arbitration purchase orders. | Arbitrator should decide because the master service agreements incorporate AAA Commercial Rules that empower arbitrators to rule on jurisdiction. | Incorporation of AAA rules amounts to clear and unmistakable evidence that arbitrability is for arbitrator to decide; arbitrator decides. |
| Whether claims fall within scope of arbitration | Claims arise from purchase orders for initial sale (no arbitration); master service agreements concern post-sale rebuilds and thus are irrelevant. | Claims are at least arguably connected to the master service agreements (maintenance, life-cycle manager, rebuild obligations), so arbitration clause covers dispute. | Because the dispute is at least arguably within the master service agreements, scope questions are for the arbitrator; trial court erred in denying motion to compel. |
Key Cases Cited
- Federal Ins. Co. v. Reedstrom, 197 So.3d 971 (Ala. 2015) (AAA rule incorporation empowers arbitrator to decide arbitrability)
- CitiFinancial Corp., L.L.C. v. Peoples, 973 So.2d 332 (Ala. 2007) (adopts rule that incorporation of AAA Rules is clear evidence delegating arbitrability to arbitrator)
- Auto Owners Ins., Inc. v. Blackmon Ins. Agency, Inc., 99 So.3d 1193 (Ala. 2012) (if question whether another agreement is encompassed by arbitration clause is arguable, arbitrator decides)
- Bugs "R" Us, LLC v. McCants, 223 So.3d 913 (Ala. 2016) (disputes involving multiple contracts with overlapping subject matter are for arbitrator when arbitration clause delegates arbitrability)
- Managed Health Care Admin., Inc. v. Blue Cross & Blue Shield of Alabama, 249 So.3d 486 (Ala. 2017) (termination and scope of arbitration provisions in multipart contracts are matters for arbitrator)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (courts should not assume parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence they did)