Robert ROSS and Randal Wachsmuth, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees-Cross-Appellants,
v.
AMERICAN EXPRESS COMPANY, American Express Travel Related Services Company, Inc., and American Express Centurion Bank, Defendants-Appellants-Cross-Appellees.
Docket No. 06-4598-CV(L).
Docket No. 06-4759-CV(XAP).
United States Court of Appeals, Second Circuit.
Argued: November 21, 2006.
Decided: February 13, 2007.
Merrill G. Davidoff, Berger & Montague, P.C., Philadelphia, PA, for Plaintiffs-Appellees-Cross-Appellants.
Jonathan M. Jacobson, Wilson Sonsini Goodrich & Rosati, New York, N.Y. (Meredith Kotler, Wilson Sonsini Goodrich & Rosati; Evan R. Chesler, Cravath, Swaine & Moore LLP, New York, NY, on the brief) for Defendants-Appellаnts-Cross-Appellees.
Before: WINTER, HALL, Circuit Judges, and GLEESON,* District Judge.
WINTER, Circuit Judge.
American Express Company, American Express Travel Related Services Company, Inc., and American Express Centurion Bank (collectively, "Amex") appeal from Judge Pauley's denial of а motion to compel arbitration. Appellees Robert Ross and Randal Wachsmuth move to dismiss on the ground that we lack jurisdiction under Section 16 of the Federal Arbitration Act ("FAA"). For the reasons stated below, we deny thе motion.
We assume familiarity with the opinion below. See Ross v. American Express Co.,
More than twenty class action complaints have been filed against VISA and MasterCard — the two largest credit card networks — and their member banks (collectively, the "MDL Defendants"), alleging violations of the Sherman Act arising from an alleged conspiracy to fix fees for conversion of foreign currencies. See In re Currency Conversion Fee Antitrust Litig.,
Subsequent to consolidation, the district court granted, in part, a motion by the MDL Defendants to compel arbitration. To the extent relevant here, the court held that: (i) cardholders whose cardholder agreements contained arbitration clauses as of the date on which they became putative class members were subjеct to arbitration; (ii) those cardholders were also required to arbitrate their claims against non-signatory banks under the doctrine of equitable estoppel; and (iii) the cardholders' claimed defense against arbitration — that the arbitration agreements were unenforceable as the result of an illegal conspiracy — could not defeat a motion to compel arbitration where the complaint had not alleged an antitrust claim based on that defense. See In re Currency Conversion Fee Antitrust Litig.,
In July 2004, appellees filed a class action complaint against appellants Amex in which they asserted the same claims raised in the MDL suit: that appellants hаd conspired with the MDL Defendants to fix fees for transactions in foreign currencies. Ross,
In April 2005, appellants moved, pursuant to 9 U.S.C. §§ 3 and 4, to dismiss the complaint and compel arbitration or, in the alternative, stay the proceedings pending arbitration. Appellants acknowledged that they were not a signatory to any express arbitration agreement with the appellees. Nevertheless, they argued that the arbitration clauses contained in the cardholder agreements with the MDL Defendants bound appellees to arbitrate their dispute with appellants in accordance with those clauses under principles of equitable estoppel.
The district court agreed with appellants. Ross,
Nevertheless, the district court refused to stay the proceedings or to compel arbitration. It reasoned that, because the appellees had raised an antitrust claim concerning the validity of the arbitration clauses, a jury trial was necessary to determine the validity of the arbitration clauses prior to enforcement. Id. at *10.
Appellants then brought the рresent appeal, invoking Section 16 of the FAA, which grants jurisdiction to courts of appeals over interlocutory appeals from refusals to stay an action under 9 U.S.C. § 3 and from denials of petitions to comрel arbitration under 9 U.S.C. § 4. 9 U.S.C. § 16(a)(1)-(2). Section 3 provides:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until suсh arbitration has been had in accordance with the terms of the agreement . . . .
9 U.S.C. § 3 (emphasis added). Section 4 provides that "[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4 (emphasis added).
In support оf their motion to dismiss for lack of jurisdiction, appellees argue that because the obligation to arbitrate arises from principles of estoppel and because Sections 3 and 4 apply only to fаilures to arbitrate pursuant to a "written" agreement, Section 16 does not provide for appellate jurisdiction in the present matter. If so, the appeal would have to be dismissed because it is clearly of an interlocutory nature. See 28 U.S.C. § 1291.
We disagree. We have noted that "[a]rbitration is strictly a matter of contract." Thomson-CSF, S.A. v. Am. Arbitration Ass'n,
In the present matter, the district court held that appellants are entitled to the benefit of a written arbitration agreement because the claims against them are "`inextricably intertwined' with the cardholder agreements." Ross,
To hold otherwise would depart from the language and policies of the FAA and quite possibly lead to perverse and unnecessary complexities in cases involving arbitration agreements. Where a party is deemed bound by a written arbitration agreement because of principles of equitable estoppel, that written agreement alone creates, defines, and provides procedures — including the method for selecting the arbitrators — for implementing the arbitration obligation. Both the language of the FAA requiring a writing and all possible policy reasons underlying that requirement are thus satisfied in the present matter. In every relevant sense, therefore, appellants are appealing from the refusal to compel arbitration under a written arbitration agreement.
Moreover, a contrary ruling here would be difficult to contain. Because the requirement of a written arbitration agreement is pervasive in the FAA, see 9 U.S.C §§ 2-4; see also id. §§ 5, 9, 13, 16, appellees' reasoning would not only deprive appellate courts of interlоcutory jurisdiction over equitable estoppel cases but would drastically alter the application of the FAA to arbitration proceedings based on equitable estoppel. For example, district сourts would seemingly have no authority to stay proceedings or compel arbitration pursuant to Sections 3 and 4 of the FAA where principles of equitable estoppel bind parties to arbitrate under an arbitration agreement, even though the arbitration agreement is written. See 9 U.S.C. § 3 (court may stay suit "referable to arbitration under an agreement in writing") (emphasis added), id. § 4 (court may compel arbitration "under a written agreement for arbitration") (emphasis added). Moreover, cases, such as the presеnt matter, may involve signatories to arbitration agreements bound to arbitrate with other signatories to that agreement and with yet other parties under equitable estoppel. Were appellees' view to prevail, parties seeking to delay arbitration or to introduce mischievous complexities that would be grounds for judicial appeals, would have ample opportunity to do so, including the assertion of clаims for the partial or full bifurcation of cases involving a single writing.2
Finally, to hold the writing requirement unfulfilled would be contrary to the caselaw in this and several other circuits, where courts have frequently stayed proceedings аnd compelled arbitration under the FAA on equitable estoppel grounds. See, e.g., JLM Industries, Inc. v. Stolt-Nielsen SA,
For the above reasons, we hold that when a district court finds that a signatory to a written arbitration agreement is equitably estopped from avoiding arbitration with a nonsignatory, the writing requirement of Seсtion 16 of the FAA is met. Accordingly, the motion to dismiss is denied.
Notes:
Notes
The Honorable John Gleeson, United States District Judge for the Eastern District of New York, sitting by designation
In ruling on this motion, we make no determination as to whether the district court was correct in holding that appellants are entitled to arbitration via equitable estoppel — a determination that will only be made following full briefing and argument on appeal. This ruling touches only upon our jurisdiction under the FAA to hear such an appeal
To the extent cases in other circuits are contrary to our holding,see DSMC Inc. v. Convera Corp.,