Swissmex-Rapid S.A. de C.V. v. SP Systems, LLC
151 Cal. Rptr. 3d 229
Cal. Ct. App.2012Background
- SP Systems, LLC (SP) appeals a judgment confirming an arbitration award in favor of Swissmex-Rapid S.A. de C.V. (Swissmex).
- The arbitration concerned a dispute over SP’s distribution of Swissmex backpack agricultural sprayers with claims totaling around $1.5 million.
- The arbitration was conducted under AAA Commercial Arbitration Rules, administered by the ICDR division of AAA, in Los Angeles in December 2010.
- The arbitrator awarded Swissmex net damages of $1,424,039.81 after credits and offsets.
- Swissmex petitioned the Los Angeles Superior Court under California Arbitration Act (CAA) Code of Civil Procedure §1285 et seq. to confirm the award and enter judgment.
- SP challenged the petition, arguing FAA §9 requires express prior consent to judicial confirmation and that FAA preempts California law absent such consent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA §9 preempts state court confirmation. | Swissmex argues FAA applies only procedurally in federal court, not state court and does not preempt state law here. | SP asserts FAA §9 is substantive and preempts the California Arbitration Act, requiring explicit prior consent to confirm. | §9 is procedural; does not apply in state court. |
| Whether the arbitration agreement satisfied consent to judicial confirmation. | Swissmex contends AAA rules incorporated into the agreement authorize entry of judgment on awards. | SP contends there was no express provision for confirmation in the arbitration agreement. | Yes; incorporation of AAA rules implies consent to confirmation. |
| Whether AAA Rule R-48(c) constitutes consent to entry of judgment in any court. | Swissmex relies on Rule R-48(c) to show consent to judgment in any court. | SP argues the matter was improperly characterized as ICDR administration rather than AAA rules. | Rule R-48(c) incorporated via Rule R-1(a) demonstrates consent to judgment. |
Key Cases Cited
- Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394 (Cal. 1996) (FAA §2 preempts state law; enforceability policy)
- Siegel v. Prudential Ins. Co. of America, 67 Cal.App.4th 1270 (Cal. App. 1998) (FAA §9 procedural in nature; state court not bound)
- Idea Nuova, Inc. v. GM Licensing Group, Inc., 617 F.3d 177 (2d Cir. 2010) (incorporation of AAA rules implies consent to confirmation)
- Volt Info. Sciences v. Leland Stanford Jr. Univ., 489 U.S. 468 (U.S. 1989) (distinguishes substantive FAA provisions from procedural ones)
- Varley v. Tarrytown Associates, Inc., 477 F.2d 208 (2d Cir. 1973) (precedent before Rule R-48(c) incorporation; old view on consent)