HPD, LLC v. Tetra Technologies, Inc.
2012 Ark. 408
| Ark. | 2012Background
- HPD appeals a denial to compel arbitration of TETRA’s claims.
- The contract (Nov. 2007) includes a broad arbitration clause and AAA Construction Industry Rules.
- Parties: HPD (Delaware) designs industrial equipment; TETRA (Delaware) produces chemicals.
- TETRA sued in Union County, Arkansas for negligence, malpractice, fraud, and related damages.
- TETRA sought declaratory relief that the contract/arbitration clause are illegal due to lack of certificate of authority under Arkansas law.
- Court held threshold arbitrability issues should be decided by the court or arbitrator based on delegation; reversed and remanded to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability, court or arbitrator? | TETRA argues court decides non-delegated issues. | HPD argues AAA Rules delegate arbitrability to arbitrator. | Arbitrability properly delegated; court error in failing to compel arbitration. |
| Does incorporation of AAA Rules show clear and unmistakable intent to arbitrate arbitrability? | TETRA contends severability/default clauses do not negate delegation. | HPD asserts AAA delegation is clear. | Yes, delegation evidenced; arbitration should decide arbitrability. |
| Does severability clause undermine delegation of arbitrability? | TETRA argues severability creates ambiguity about delegation. | HPD argues severability negates delegation. | Severability did not negate clear intent to arbitrate arbitrability. |
| Do illegality and lack of certificate of authority affect arbitrability? | TETRA claims illegality defeats enforceability of arbitration. | HPD contends void contract invalidates arbitration. | Arbitration provision remains subject to arbitration; issues to be decided there. |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (clear-and-unmistakable delegation governs arbitrability when present)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (FAA promotes arbitration; court decides gateway issues unless delegated)
- AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643 (U.S. 1986) (two threshold questions: valid agreement and scope)
- Awuah v. Coverall North America, Inc., 554 F.3d 7 (1st Cir. 2009) (severability clause not fatal to delegation under AAA Rule 7)
- Contec Corp. v. Remote Solution Co., 398 F.3d 205 (2d Cir. 2005) (discussed delegation when arbitration clause references rules granting arbitrator jurisdiction)
- Imthe case referenced Sarkco v. Edwards, 252 Ark. 1082 (Ark. 1972) (invalidity of contract grounds raised via arbitration)