148 F.3d 32 (1st Cir. 1998), 98-1124, PCS 2000 LP v. Romulus Telecommunications, Inc.

Docket Nº:98-1124.
Citation:148 F.3d 32
Party Name:PCS 2000 LP, et al., Plaintiffs, Appellees, v. ROMULUS TELECOMMUNICATIONS, INC., et al., Defendants, Appellants.
Case Date:July 08, 1998
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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148 F.3d 32 (1st Cir. 1998)

PCS 2000 LP, et al., Plaintiffs, Appellees,


ROMULUS TELECOMMUNICATIONS, INC., et al., Defendants, Appellants.

No. 98-1124.

United States Court of Appeals, First Circuit

July 8, 1998

Submitted June 5, 1998.

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Guillermo Ramos Luina and Rivera, Tulla & Ferrer on brief for appellants.

Jorge Bermdez-Torregrosa and Cuevas, Kuinlam & Bermdez on brief for appellees.

Before SELYA, Circuit Judge, ROSENN [*] and CAMPBELL, Senior Circuit Judges.

SELYA, Circuit Judge.

This appeal requires us to address, for the first time, the question of whether the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (1994) (the FAA), in and of itself confers subject matter jurisdiction on a federal court. We answer this question in the negative.

At all times material hereto, plaintiff-appellee Unicom Corporation, a Puerto Rico entity, functioned as the general partner of plaintiff-appellee PCS 2000 LP (PCS), a limited partnership engaged in the business of acquiring so-called personal communications services licenses. PCS periodically participated in license auctions conducted by the Federal Communications Commission (the FCC). To assist in this endeavor, PCS enlisted the services of defendant-appellant Romulus Telecommunications, Inc. (Romulus), a Puerto Rico corporation, as its bidding agent. The Service Agreement between PCS and Romulus contained an arbitration clause providing that "[a]ny disputes under this agreement shall be resolved in San Juan under the rules of the American Arbitration Association."

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Early in 1996, PCS authorized Romulus to bid slightly over $18,000,000 ($18,006,000, to be precise) to acquire an FCC license in the Norfolk, Virginia market. Romulus, acting through one of its principals, defendant-appellant Anthony Terence Easton, mistakenly entered a bid for $180,060,000 on PCS's behalf. In the aftermath of this debacle, Easton, eager to avoid the penalties incident to the withdrawal of the inflated bid, attempted to persuade the FCC that it, rather than Romulus, had committed the bevue. The attempt backfired when the FCC concluded that Easton had intentionally misrepresented material facts, and levied hefty fines against PCS for the bidding error and Easton's botched cover-up.

The plaintiffs sued Romulus, Easton, and Easton's spouse in a local Puerto Rico court, alleging fraud, breach of contract, and breach of fiduciary duty. Romulus countered by filing a demand for arbitration with the American Arbitration Association (the AAA) and moved to dismiss the court action on the strength of the Service Agreement's arbitration clause. This motion remains outstanding.

The AAA agreed to hear the dispute...

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