590 F. App'x 482
6th Cir.2014Background
- Milan Express Co., Inc. entered into a Reinsurance Participation Agreement with Applied Underwriters Captive Risk Assurance Company, Inc. (Applied Underwriters).
- Applied Underwriters is organized under the laws of the British Virgin Islands with its principal place of business in Omaha, Nebraska.
- The Agreement spans three years and contains an arbitration clause requiring informal resolution and binding arbitration under AAA in the British Virgin Islands or another agreed location.
- A dispute over premiums and fees arose; Milan sued in federal court asserting multiple claims including declaratory relief, misrepresentation, breach, and punitive damages.
- The district court denied Allied Underwriters’ motions to compel arbitration and to transfer venue, and granted Milan’s motion to stop arbitration.
- The Sixth Circuit vacated the district court’s order, held arbitrability should be decided by the arbitrator, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability—the court or the arbitrator? | Milan argued questions of arbitrability are for the court. | Applied Underwriters argued arbitrability must go to the arbitrator. | Arbitrator conducts arbitrability door per Rent-A-Center. |
| Is the arbitration clause unenforceable under Nebraska law | Milan contends Nebraska statute renders clause unenforceable. | Applied Underwriters asserts the clause is enforceable and arbitrable. | Enforceability is the arbitrator’s issue; validity challenges go to court if raised. |
| Did the district court err in stopping arbitration? | Milan sought to preserve litigation in court. | Applied Underwriters sought to compel arbitration. | District court erred; vacated and remanded for arbitration-oriented proceedings. |
| Should venue transfer be addressed, given forum clauses? | Nebraska forum could govern non-arbitrable claims. | Forum-selection clause favored Nebraska; transfer appropriate. | Ruling on venue moot after vacatur and remand; court did not address merits. |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (clear and unmistakable evidence of agreement to arbitrate arbitrability questions)
- Nitro-Lift Technologies, L.L.C. v. Howard, 133 S. Ct. 494 (2012) (arbitration clause validity matters limited to court; other issues to arbitration)
- Teamsters Local Union 480 v. United Parcel Service, Inc., 748 F.3d 281 (6th Cir. 2014) (presumption of arbitration extends to contract validity challenges)
- Southland Corp. v. Keating, 465 U.S. 1 (1984) (federal policy favoring arbitration; enforceability avoids litigation)
- Inland Bulk Transfer Co. v. Cummins Engine Co., 332 F.3d 1007 (6th Cir. 2003) (district court may dismiss or stay proceedings pending arbitration)
- Fazio v. Lehman v. Bros., Inc., 340 F.3d 132 (6th Cir. 2003) (courts assess validity attacks on arbitration agreements)
- Johnson Associates Corp. v. HL Operating Corp., 680 F.3d 713 (6th Cir. 2012) (de novo review for arbitrability questions)
- Atlantic Marine Construction Co. v. U.S. District Court, 134 S. Ct. 568 (2013) (forum-selection clauses merit controlling weight in venue disputes)
- Crossville Medical Onc ology, P.C. v. Glenwood Systems, LLC, 485 F. App’x 821 (6th Cir. 2012) (clarifies arbitrability clarity in some contexts)