W.J. O'Neil Co. v. Shepley, Bulfinch, Richardson & Abbott, Inc.
765 F.3d 625
6th Cir.2014Background
- O’Neil sued Barton Malow in Michigan state court for construction damages; arbitration consolidated O’Neil with Barton Malow, the University, Shepley Bulfinch, and Smith Seckman.
- O’Neil asserted claims against Barton Malow in arbitration; design-team claims were implicated but not formally asserted against Shepley Bulfinch or Smith Seckman.
- Arbitrators awarded O’Neil $2.4 million interim in favor of O’Neil against Barton Malow; indemnity claims against the design-team were denied.
- No party sought judicial confirmation or review of the arbitration award in any forum.
- O’Neil then sued the two non-Michigan design firms in federal court, and the district court dismissed on res judicata grounds under Michigan law.
- The Sixth Circuit held an unreviewed arbitration award does not bar later claims not subject to arbitration and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an unreviewed arbitration award bars later nonarbitrable claims | O’Neil didn’t agree to arbitrate these claims against the defendants | Arbitration-joined party conduct precludes later claims | No; unreviewed award does not bar nonarbitrable claims |
| Whether O’Neil’s claims against Shepley Bulfinch and Smith Seckman were within the arbitration consent | Consent to arbitrate flowed through Barton Malow’s contract | O’Neil was bound by arbitration through contracts and flow-through provisions | O’Neil did not consent to arbitrate these specific claims against the defendants |
| Whether Michigan res judicata would bar the federal claims if arbitration were reviewed or confirmed | Arbitration review would not preclude federal claims | Res judicata bars if issues could be resolved in first action | Even with potential state court review, res judicata does not bar the claims here |
Key Cases Cited
- McDonald v. City of W. Branch, 466 U.S. 284 (U.S. Supreme Court 1984) (arbitration cannot preclude nonarbitrable claims (unreviewed award))
- AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (U.S. Supreme Court 1986) (arbitrators derive authority from agreement; cannot decide non-consented disputes)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (U.S. Supreme Court 2010) (court may enforce arbitration only for disputes parties agreed to arbitrate)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (U.S. Supreme Court 2010) (limits on arbitration authority rely on parties’ agreement)