JONES DAY, Petitioner-Appellant, v. ORRICK, HERRINGTON & SUTCLIFFE, LLP; MICHAEL D. TORPEY; MITCHELL ZUKLIE, Respondents-Appellees.
No. 21-16642
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
August 1, 2022
D.C. No. 4:21-mc-80181-JST
Before: Kim McLane Wardlaw, Sandra S. Ikuta, and Bridget S. Bade, Circuit Judges.
FOR PUBLICATION. Argued and Submitted February 10, 2022 San Francisco, California.
SUMMARY*
Arbitration / Summonses
The panel reversed the district court‘s order denying Jones Day‘s petitions to compel Orrick, Herrington & Sutcliffe, LLP, to comply with an arbitrator‘s subpoena requiring two Orrick partners to appear at a hearing in an international arbitration conducted pursuant to Chapter Two of the Federal Arbitration Act.
First, the panel held that the district court had subject matter jurisdiction over the action to enforce arbitral summonses issued by the arbitrator in an ongoing international arbitration being conducted in Washington, D.C., under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention. FAA Chapter Two‘s jurisdictional provision,
The panel further held that venue was proper in the Northern District of California. Section 204 of the FAA provides that where the arbitration agreement designates a place of arbitration in the United States, an action or proceeding may be brought in the district embracing the place of arbitration. However, where, as here, that federal district court lacks personal jurisdiction over the party against whom enforcement is sought, the action may be brought in any district court deemed appropriate under the general venue statute,
The panel reversed and remanded with instructions to enforce Jones Day‘s petitions to compel Orrick and its partners to comply with the arbitral summonses.
* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.
COUNSEL
Craig E. Stewart (argued), David C. Kiernan, and Paul C. Hines, Jones Day, San Francisco, California, for Petitioner-Appellant.
Sarah M. Harris (argued), Michael J. Mestitz, Benjamin W. Graham, and Aaron Z. Roper, Williams & Connolly LLP, Washington, D.C.; L. Christopher Vejnoska, Orrick Herrington & Sutcliffe LLP, San Francisco, California; for Respondents-Appellees.
WARDLAW, Circuit Judge:
Congress enacted Chapter Two of the Federal Arbitration Act (“FAA“), see
We first address subject matter jurisdiction. Unlike Chapter One of the FAA, which governs domestic arbitral disputes and does not include a jurisdictional provision, Chapter Two of the FAA includes a jurisdictional provision,
This conclusion raises the question of in which district court should the enforcement action be brought? Section 204 of the FAA provides that where the arbitration agreement designates a “place of arbitration” in the United States, an action or proceeding may be brought in the district embracing the place of arbitration. However, where, as here, that federal district court lacks personal jurisdiction over the party against whom enforcement is sought, we hold that the action may be brought in
I.
At the root of the ongoing international arbitration is a dispute between Jones Day and one of its former partners, a German national who was based in its Paris office, until he left to join Orrick, Herrington & Sutcliffe.1 Jones Day‘s partnership agreement provides for mandatory arbitration of all disputes among partners, and that all such arbitration proceedings are governed by the FAA. The partnership dispute proceeded to arbitration in Washington D.C., the location designated in the arbitration agreement.
Jones Day requested that the arbitrator issue a subpoena to Orrick for documents it deemed material to its claims against its former partner. The arbitrator issued a subpoena and summoned Orrick to appear before him to produce the specified documents. When Orrick failed to comply with the subpoena, Jones Day sought to enforce it in the Superior Court of the District of Columbia. That court dismissed Jones Day‘s petition, concluding that it lacked personal jurisdiction over Orrick, whose principal place of business is San Francisco, and that section 7 of the FAA “requires Jones Day to file its action to enforce an arbitral subpoena in a United States district court.”
Jones Day then requested that the arbitrator sit for a hearing in the Northern District of California and issue a revised subpoena requiring two Orrick partners residing in the Northern District to appear at a hearing in San Jose, California. The arbitrator granted Jones Day‘s request and issued the arbitral summonses. Orrick refused to comply with those summonses, so Jones Day filed this action to enforce them in the District Court for the Northern District of California.
The district court denied Jones Day‘s petition, concluding that it lacked authority to compel compliance with the summonses under FAA § 7, which it construed as providing that the district where the arbitrator sits is the only district in which a district court may compel attendance. See
II.
We have jurisdiction under
A.
Although the district court declined to decide the issue, we first conclude that the district court had subject matter jurisdiction to enforce the arbitral summonses. Section 203 of the FAA provides federal district courts with original jurisdiction, without regard to the amount in controversy, over “[a]n action or proceeding falling under the Convention.”
We begin with the text of the statute, here Chapter Two of the FAA, which governs arbitrations under the Convention. Section 203 provides that “[a]n action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States.”
Orrick argues that to “fall under” means to be “listed or classified as” or “included in,” citing Webster‘s New World Dictionary and the MacMillan Contemporary Dictionary. However, dictionaries from around 1970 (the year Congress enacted § 203, see
In addition to the ordinary meaning of § 203‘s text, the structure of the Convention and Chapter Two of the FAA supports the conclusion that actions or proceedings need not be explicitly listed in the Convention to “fall under” the Convention. The Supreme Court has rejected the notion that the New York Convention must list every “judicial tool” for it to “fall under the Convention.” In GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637 (2020), the Court determined that the domestic doctrine of equitable estoppel, which permits the enforcement of arbitration agreements against nonsignatories, does not
The Court began by examining the text of the New York Convention. Arbitration agreements are discussed only in Article II of the Convention, and enforcement of arbitration agreements is limited to just a single provision, Article II(3), which states that “courts of a contracting state ‘shall . . . refer the parties to arbitration’ when the parties to an action entered into a written agreement to arbitrate and one of the parties requests referral to arbitration.” Id. But the Court held that Article II(3) does not preclude application of the domestic doctrine of equitable estoppel because it “contains no exclusionary language; it does not state that arbitration agreements shall be enforced only in the identified circumstances.” Id. (emphasis in original). The Court viewed a counter interpretation inappropriate because “the provisions of Article II contemplate the use of domestic doctrines to fill gaps in the Convention.” Id. Thus, the Court did not “read the nonexclusive language of [Article II(3) of the Convention] to set a ceiling that tacitly precludes the use of domestic law to enforce arbitration agreements.” Id.
So too here. Neither the Convention nor Chapter Two contains any language excluding the use of petitions to enforce arbitral summonses. There is no language in either that limits the tools that may be utilized in international arbitrations in ways domestic arbitrations are not so limited. The only limitation is set forth in § 208, which as the Supreme Court noted in GE Energy, disallows only those processes provided for in domestic arbitrations under Chapter One that conflict with Chapter Two or the Convention.
As other courts have concluded, reading “falling under” more broadly to include proceedings necessary to complete the arbitration process for purposes of original jurisdiction is also supported by Chapter Two‘s delineation of the scope of district courts’ removal jurisdiction. Section 205 of the FAA provides that “[w]here the subject matter of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the Convention, the defendant or the defendants may, at any time before the trial thereof, remove such action or proceeding to the district court of the United States for the district and division embracing the place where the action or proceeding is pending.”
The Fifth Circuit engaged in a similar analysis in Stemcor USA Inc. v. CIA Siderurgica do Para Cosipar, 927 F.3d 906 (5th Cir. 2019), where the court determined it had § 203 jurisdiction over one party‘s action for an attachment related to an international arbitration covered by the New York Convention. The court reasoned that the meaning of § 203‘s term “falling under” must be guided by the removal statute, § 205, because “generally, the removal jurisdiction of the federal district courts extends to cases over which they have original jurisdiction.” Id. at 909 (cleaned up). The Fifth Circuit expressly rejected the argument Orrick makes here—that § 203 original jurisdiction is limited to actions compelling arbitration and appointing arbitrators under § 206 and confirming arbitration awards under § 207. Id. at 910 n.1.
Orrick argues that Stemcor‘s reliance on § 205 removal jurisdiction is “based on a faulty assumption that removal jurisdiction and original jurisdiction share the same scope.” Not so. Stemcor does not hold that removal jurisdiction is always coextensive with original jurisdiction, but more narrowly reasons that, in the context of Chapter Two, there is no reason to believe that Congress intended that original and removal jurisdiction would not be coextensive. See id. at 909. Thus, the Fifth Circuit in Stemcor considered the plain meaning of “relates to” in § 205 and falling under in § 203 and concluded that the terms share the same meaning for purposes of articulating the federal courts’ original jurisdiction in § 203. It reasoned that “reading ‘falling under’ to mean ‘relates to’ makes sense grammatically,” and cited the Merriam-Webster Collegiate Dictionary definition of “fall” as “to come within the limits, scope or jurisdiction of something.” Stemcor, 927 F.3d at 909. The Fifth Circuit then held that a federal court has jurisdiction under the Convention if two requirements are met: “(1) there must be an arbitration agreement or award that falls under the Convention, and (2) the dispute must relate to that arbitration agreement.” Id.
The Second and Eleventh Circuits agree with the Fifth Circuit‘s analysis. For example, in Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co., 668 F.3d 60 (2d. Cir. 2012), the Second Circuit concluded that the district court had jurisdiction under § 203 “to vacate an arbitral award,” an action not expressly authorized under Chapter Two. Id. at 64, 71; see also Borden, Inc. v. Meiji Milk Prods. Co., Ltd., 919 F.2d 822, 826 (2d. Cir. 1990) (finding that subject matter jurisdiction exists over an application for a preliminary injunction in aid of arbitration because it is “consistent with [the Act‘s] provisions and its spirit“).
Like the Fifth Circuit, the Eleventh Circuit‘s interpretation of § 203 was “reinforced” by its understanding of § 205. “Section 205 demonstrates congressional intent to provide a federal forum for resolving issues implicating the Convention.” Id. “It would make little sense for Congress to specifically authorize removal of cases over which the federal courts would lack subject-matter jurisdiction. . . . It makes far more sense to conclude Congress intended § 203 to be read consistently with § 205 as conferring subject-matter jurisdiction over actions or proceedings sufficiently related to agreements or awards subject to the Convention.” Id.; see also Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 391 n.6 (2d. Cir. 2011) (“The Convention should be interpreted broadly to effectuate its recognition and enforcement purposes.” (cleaned up)).
We agree with the Fifth and Eleventh Circuits’ expansive reading of § 203, and we hold that a federal court has original jurisdiction over an action or proceeding if two requirements are met: (1) there is an underlying arbitration agreement or award that falls under the Convention, and (2) the action or proceeding relates to that arbitration agreement or award. See Stemcor, 927 F.3d at 909. And, for purpose of the second requirement, we adopt the meaning of “relates to,” which we previously defined for purposes of § 205, as whether the proceeding “could conceivably affect the outcome of the plaintiff‘s case,” Infuturia Global Ltd. v. Sequus Pharms., Inc., 631 F.3d 1133, 1138 (9th Cir. 2011) (emphasis in original), citing another Fifth Circuit decision, Beiser v. Weyler, 284 F.3d 665, 669 (5th Cir. 2002).
Applying these jurisdictional requirements to the facts of this case is straightforward. The underlying arbitration agreement between Jones Day, an international law firm residing for jurisdictional purposes in Washington D.C., and its former non-U.S. citizen partner falls under the Convention as defined by § 202. The petition to compel Orrick‘s compliance
Not only are these proceedings “related to” an arbitration agreement falling under the Convention, petitions to enforce a summons issued by the arbitrator are necessary ancillary proceedings that ensure the proper functioning of the underlying arbitration. As Judge Watford has explained, “[c]onsidering the structure of the FAA as a whole, it seems evident . . . that Congress envisioned a § 7 petition [to enforce an arbitral summons to a third party] not as a freestanding lawsuit, but as an adjunct to the ‘underlying substantive controversy’ between the parties in arbitration.” Maine Cmty. Health Options, 993 F.3d at 725 (Watford, J., concurring) (quoting Vaden v. Discover Bank, 556 U.S. 49, 62 (2009)).2 “[T]he enforcement of a subpoena brings before the court one aspect of enforcing the parties’ agreement to arbitrate—not the right to arbitrate itself, but the enjoyment of a key procedural attribute of the arbitration the parties bargained for.” Bermann, 26 Am. Rev. Int‘l Arb. at 173.
This view of what “fall[s] under” the Convention is consistent with the contemplation of the signatories to the agreement. The New York Convention has been adopted by nearly 200 nations worldwide because of the expanding role arbitration plays in resolving international commercial disputes. The purpose of the Convention is twofold: (1) to ensure that countries recognize and enforce arbitration agreements, and (2) to ensure that countries recognize and enforce foreign arbitral awards. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974). By signing on to the Convention and adopting Chapter Two of the FAA, “the United States sought ‘to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries.‘” Castro v. Tri Marine Fish Co., 921 F.3d 766, 773 (9th Cir. 2019) (quoting Scherk, 417 U.S. at 520 n.15). Recognizing and enforcing arbitration agreements includes facilitating the arbitration process and providing arbitrators—in both domestic and international arbitrations—with access to the ancillary actions and proceedings necessary to arrive at an arbitration
award. This includes arbitral subpoenas and their enforcement.
Thus, under
Section 204 of the FAA provides a specific venue provision for actions or proceedings authorized by § 203. Such actions or proceedings “may be brought in any such [district] court in which save for the arbitration agreement an action or proceeding with respect to the controversy between the parties could be brought, or in such court for the district and division which embraces the place designated in the agreement as the place of arbitration if such place is within the United States.”
We “refuse to nullify general venue laws, even in the face of apparently more narrow venue provisions in specific federal statutes.” Go-Video, Inc. v. Akai Elec. Co., 885 F.2d 1406, 1413 (9th Cir. 1989). The general federal venue statute,
defendant, venue will always lie somewhere.” Atl. Marine Const. Co. v. U.S. Dist. Ct. for W.D. Tex., 571 U.S. 49, 57 (2013). “Congress does not in general intend to create venue gaps, which take away with one hand what Congress has given by way of jurisdictional grant with the other.” Id. (internal quotation marks and citation omitted). Only where there is evidence “that Congress intended the specific venue provision to be exclusive or . . . restrictively applied” will parties be deprived of relying on the general venue statute. Go-Video, Inc., 885 F.2d at 1409; see also Pure Oil Co. v. Suarez, 384 U.S. 202, 205-07 (1966) (same).
Nothing in the text of § 204 indicates that Congress intended the FAA venue provision to be exclusive or restrictively applied. Section 204 is the only provision addressing venue in Chapter Two, and it is silent as to
Case law interpreting venue provisions in Chapter One of the FAA also informs our reading of § 204. In Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (2000), the Supreme Court addressed the question whether the venue provisions in
at 204. Reasoning that the FAA was enacted at a time when the general venue statute was restrictive, allowing a civil action only where the defendant resided, the Court concluded that the venue provisions added to that location, rendering them permissive. See id. at 199-200. The Court found that “[t]he enactment of the special venue provisions in the FAA thus had an obviously liberalizing effect, undiminished by any suggestion, textual or
We expanded on this decision in Textile Unlimited, Inc. v. A..BMH & Co., Inc., 240 F.3d 781 (9th Cir. 2001), in which we held that the FAA venue provision in
The district court‘s analysis was focused on the specific venue provision set forth in
Orrick points to § 201, which provides that the “Convention . . . shall be enforced in the United States courts in accordance with this chapter.”
Unlike in Title VII, the language in
IV.
For these reasons, we reverse and remand with instructions to enforce Jones Day‘s petitions to compel Orrick and its partners to comply with the arbitral summonses.
REVERSED AND REMANDED.