723 F.2d 155 (1st Cir. 1983), 82-1913, Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.
|Citation:||723 F.2d 155|
|Party Name:||MITSUBISHI MOTORS CORPORATION, Plaintiff, Appellee, v. SOLER CHRYSLER-PLYMOUTH, INC., Defendant, Appellant.|
|Case Date:||December 20, 1983|
|Court:||United States Courts of Appeals, Court of Appeals for the First Circuit|
Argued April 4, 1983.
Benjamin Rodriguez-Ramon, San Juan, P.R., with whom Jerome Murray, Robert G. Post, John Nocera, New York City, and
Rodriguez-Ramon, Pena & Cancio, San Juan, P.R., were on brief, for defendant, appellant.
Wayne A. Cross, New York City, with whom Robert L. Sills, William I. Sussman, William Dunnegan, Reboul, MacMurray, Hewitt, Maynard & Kristol, New York City, Samuel T. Cespedes, Ana Matilde Nin, and McConnell Valdes Kelley Sifre Griggs & Ruiz-Suria, San Juan, P.R., were on brief, for plaintiff, appellee.
William F. Baxter, Asst. Atty. Gen., Robert B. Nicholson, Marion L. Jetton, Attys., Dept. of Justice, Harold G. Maier, Counselor on International Law, Robert K. German, Atty., Dept. of State, Washington, D.C., on the brief, for amicus curiae.
Before CAMPBELL, Chief Judge, COFFIN and BOWNES, Circuit Judges.
COFFIN, Circuit Judge.
Soler Chrysler-Plymouth Corp. appeals from the grant of an order compelling arbitration of certain claims and counterclaims between it and Mitsubishi Motors Corp. The principal issue on this appeal is whether arbitration of federal antitrust claims may be compelled under the Federal Arbitration Act, 9 U.S.C. Secs. 4, 201, and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517 (1970).
Soler Chrysler-Plymouth ("Soler") is a Puerto Rico corporation, formerly a franchised Chrysler dealer, with its principal place of business in Puerto Rico. Mitsubishi Motors Corp. ("Mitsubishi") is a Japanese corporation and automaker with its principal place of business in Japan. Mitsubishi was formed in 1970 as part of a joint venture between Chrysler International, S.A. ("Chrysler"), a Swiss corporation and wholly owned subsidiary of the U.S. Chrysler Corp., and Mitsubishi Heavy Industries, Inc. Under the joint venture, Mitsubishi manufactured vehicles for sale in certain territories outside the continental United States through Chrysler dealers such as Soler.
Soler became a Chrysler-Mitsubishi dealer in 1979 when it entered into a "distributor agreement" with Chrysler. At the same time, Soler entered into a separate "sales procedure agreement" with both Chrysler and Mitsubishi, paragraph VI of which contains the arbitration clause in issue here. Under that clause, "[a]ll disputes, controversies or differences which may arise between [Mitsubishi and Soler] out of or in relation to Articles I-B through V of [the sales procedure agreement] or for breach thereof, shall be finally settled by arbitration in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association".
The dispute in this case had its genesis some two years later in the soft new car market of 1981 when Soler became unable to meet minimum sales commitments in its territory, and Mitsubishi and Chrysler refused to permit Soler to "transship" vehicles to Central and South America and the continental United States. As Soler's inventory swelled and its finances worsened, Mitsubishi withheld shipment of additional new vehicles to Soler, eventually storing some 966 vehicles in Japan.
In February 1982, Soler disclaimed responsibility for the 966 vehicles stored in Japan. A month later, on March 15, Mitsubishi brought suit against Soler in federal court, alleging nonpayment for the stored vehicles, nonpayment of contractual storage penalties, damage to Mitsubishi's warranties and goodwill, expiration of Soler's distributorship, and other breaches of the sales procedure agreement. On the basis of these allegations, Mitsubishi petitioned for an order compelling arbitration under the Federal Arbitration Act, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and the Convention's implementing legislation. On March 18, Mitsubishi filed a request for arbitration with the Japan Commercial Arbitration Association.
Soler denied the allegations and counterclaimed, alleging violations of, inter alia, the Sherman Act, 15 U.S.C. Secs. 1 et seq., the Federal Automobile Dealers' Day in Court Act, 15 U.S.C. Secs. 1221 et seq., the Puerto
Rico Dealers' Act, 10 L.P.R.A. Secs. 278 et seq., and the Puerto Rico antitrust and unfair competition statute, 10 L.P.R.A. Secs. 257 et seq.
The district court ordered arbitration of all the above claims and counterclaims and entered partial final judgment to that effect under Fed.R.Civ.P. 54(b). As to certain additional counterclaims against Mitsubishi and Chrysler, the district court retained jurisdiction, finding that they were outside the scope of the arbitration clause. Soler thereupon appealed.
Soler does not dispute the district court's referral of Mitsubishi's claims to arbitration, and neither Chrysler nor Mitsubishi challenges the district court's retention of jurisdiction over certain of Soler's counterclaims. Our review is therefore limited to two arguments raised by Soler: that its statutory counterclaims are outside the arbitration clause, and that its Sherman Act claims are in any event nonarbitrable as a matter of law. We examine each argument in turn.
II. Validity of the Arbitration Clause
Soler argues that the arbitration clause is of no effect because Puerto Rican law does not recognize any arbitration agreement that "obligates a dealer to ... arbitrate ... any controversy ... regarding [the] dealer's contract outside of Puerto Rico, or under foreign law or rule of law". 10 L.P.R.A. Sec. 278b-2. For several reasons, we reject Soler's argument.
First, federal law preempts the direct application of section 278b-2. Under 9 U.S.C. Sec. 2, arbitration agreements are declared valid and enforceable as a matter of preemptive federal law, "save upon such grounds as exist at law or in equity for the revocation of any contract" (emphasis added); state laws like 10 L.P.R.A. Sec. 278b-2 that single out arbitration agreements are preempted.
Evidently recognizing the force of federal preemption, Soler does not argue that section 278b-2 applies directly. Instead, it argues that section 278b-2 is in effect "incorporated" indirectly into the sales procedure agreement, on the theory that the Soler-Chrysler distributorship agreement contains a savings and separability clause for provisions in violation of local law, 1 and that article XII of the sales procedure agreement "incorporates" the savings and separability clause of the distributorship agreement into the sales procedure agreement.
The short answer to this tortured argument is that the savings and separability clause on its face applies only to the distributorship agreement between Chrysler and Soler; it does not apply to the sales procedure agreement with Mitsubishi. Moreover, the purposes of article XII and the separability clause are not implicated here. Article XII of the sales procedure agreement does not actually "incorporate" the distributorship agreement into the sales procedure agreement; it merely obligates Mitsubishi to avoid action inconsistent with the distributorship agreement in certain circumstances. 2 The separability clause of the
distributorship agreement in turn is designed to preserve the larger aspects of the distributorship agreement when one of its portions violates local law. Nothing in the arbitration clause, however, violates local law or threatens the distributorship agreement, for section 278b-2 is preempted by the federal Arbitration Act. Even if there were no preemption and section 278b-2 did apply, the only result would be to render the arbitration clause void; the remainder of the sales procedure agreement would stand, as would the distributorship agreement.
III. Scope of the Arbitration Clause
Our analysis of the arbitration clause is guided by two basic principles. First, the scope of the clause as it appears on the face of the contract is a question of law for our independent determination and not, as Mitsubishi argues, one of fact reversible only for clear error. Second, all doubts are resolved in favor of arbitration; arbitration will be ordered "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute". United Steelworkers of America v. Warrior and Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409 (1960).
Soler argues that it never specifically agreed to arbitrate controversies that arose under such statutes as the Sherman Act. Soler, however, mistakes the nature of our inquiry. The arbitration clause of the sales procedure agreement is not limited to contractual claims, but extends to "all disputes, controversies or differences" arising "out of" or "in relation to" Articles I-B through V of the agreement, as well as "for breach thereof" (emphasis added). The question, therefore, is not whether the arbitration clause mentions antitrust or any other particular cause of action, but whether the factual allegations underlying Soler's counterclaims--and Mitsubishi's bona fide defenses to those counterclaims--are within the scope of the arbitration clause, whatever the legal labels attached to those allegations. 3
At the same time, the arbitration clause is not unlimited in scope. It does not extend to all disputes of any sort or to all provisions of the sales procedure agreement, but only to disputes touching specified provisions of the agreement. In addition, although Soler itself argues in another context that the issues in the case are too interwoven to separate, Soler's "defenses" are...
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