ISC Holding AG v. Nobel Biocare Fin. AG

• Decision Date: 25 July 2012
• Docket Number: Nos. 10–4867–cv(L), 11–239–cv(CON).,s. 10–4867–cv(L), 11–239–cv(CON).
• Citation: 688 F.3d 98,83 Fed.R.Serv.3d 194
• Parties: ISC HOLDING AG, Petitioner–Appellant, v. NOBEL BIOCARE FINANCE AG , Respondent–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

688 F.3d 98

83 Fed.R.Serv.3d 194

ISC HOLDING AG, Petitioner–Appellant,

v.NOBEL BIOCARE FINANCE AG ^*, Respondent–Appellee.

Nos. 10–4867–cv(L), 11–239–cv(CON).

United States Court of Appeals,Second Circuit.

Argued: Sept. 27, 2011.

Decided: July 25, 2012.

Louis B. Kimmelman (Pamela Rogers Chepiga, on the brief), Allen & Overy LLP, New York, NY, for Petitioner–Appellant.

Martin S. Hyman, (Jeffrey T. Golenbock, on the brief), Golenbock Eiseman Assor Bell & Peskoe LLP, New York, NY, for Respondent–Appellee.

Before: JOHN M. WALKER, JR., STRAUB, and LIVINGSTON, Circuit Judges.

Judge STRAUB files a separate opinion concurring in part and dissenting in part.

DEBRA ANN LIVINGSTON, Circuit Judge:

Petitioner–Appellant ISC Holding AG (“ISC”) appeals from a November 23, 2010 order of the United States District Court for the Southern District of New York (Stanton, J.) vacating its voluntary notice of dismissal and from a judgment, entered on January 20, 2011, dismissing with prejudice its petition to compel arbitration. The matter presents two issues. First, ISC contends that the district court abused its discretion in denying its motion for recusal. Second, ISC argues that the court erred in vacating its notice of voluntary dismissal, filed pursuant to Fed.R.Civ.P. 41(a)(1)(A)(i).

ISC based its recusal motion on the district court's receipt of supposedly prejudicial information from a putatively “extrajudicial” source. Said source was ISC's own lawyer, who spoke briefly with the district judge, in camera and ex parte, after moving to withdraw prior to a scheduled evidentiary hearing and after indicating that he believed his withdrawal was mandatory, but that he was not comfortable discussing the details in the presence of counsel for Respondent–Appellee Nobel Biocare Finance AG (“Nobel”).¹ Even assuming that the information conveyed by ISC's counsel was extrajudicial—at best a dubious proposition—we conclude that the district court's denial of the motion to recuse was not an abuse of discretion.

The vacatur issue is less straightforward. The district court vacated the notice of voluntary dismissal, filed by new counsel one business day before the evidentiary hearing was to commence, on the authority of Harvey Aluminum, Inc. v. American Cyanamid Co., 203 F.2d 105 (2d Cir.1953). In resolving the issue, we reach the same result as the district court, but by a different route. As previously noted, ISC purported voluntarily to dismiss its petition to compel arbitration (filed pursuant to 9 U.S.C. § 4) on the authority of Fed.R.Civ.P. 41(a)(1)(A)(i). We conclude, however, based on the interaction of Rule 41(a)(1)(A)(i) and Fed.R.Civ.P. 81(a)(6) with 9 U.S.C. §§ 4 and 6, that ISC's purported voluntary dismissal was improper because Rule 41(a)(1)(A)(i) does not apply in the context of petitions to compel arbitration. We thus agree with the district court that vacatur was appropriate and therefore Affirm its judgment, without reaching the question whether Harvey Aluminum remains good law.

Background

This appeal is the second time that the present matter has come before this Court. We begin with the background to the first appeal, relevant here. This case centers on a document, stating itself to be an “Asset Management Facilitation Agreement” (“Agreement”), that was signed, purportedly in January 2008, by a representative of ISC and by one Martin Gerber, the corporate treasurer of what was then Nobel's parent company. (As noted, the subsidiary and its parent have since merged.) According to the Agreement, ISC was to act as Nobel's asset and investment manager regarding $200 million of specified assets, with concomitant control over those assets; the Agreement also provided for arbitration of disputes arising thereunder.

On December 19, 2008, ISC, claiming Nobel to be in breach of its obligations under the Agreement and urging that “[t]ime was of the essence,” filed a petition to compel arbitration in the United States District Court for the Southern District of New York pursuant to 9 U.S.C. §§ 4 and 206. Nobel duly opposed the petition, contending, inter alia, that the district court lacked personal jurisdiction over Nobel, and that the Agreement itself had been fraudulently entered into by ISC, a three-person Swiss firm with no track record in asset management, and Gerber, who, without actual authority to bind Nobel, had signed the Agreement in exchange for a six-figure kickback from ISC.² The briefs from both sides, and the numerous and extensive accompanying exhibits, totaled more than 800 pages.

In April 2009, shortly after the conclusion of briefing, the district court denied the petition to compel. Mem. Op., ISC Holding AG v. Nobel Biocare Inv. N.V., No. 08–11051 (S.D.N.Y. April 3, 2009), ECF No. 29. The district court noted that the American Arbitration Association (“AAA”) had refused to arbitrate the dispute, because the International Chamber of Commerce rules specified in the Agreement's arbitration clause were incompatible with AAA arbitration.³ The court then held that the Agreement's stated alternative to AAA arbitration, submission of the dispute “to any other U.S. court,” clearly referred to resolution of disputes only in a judicial, rather than arbitral forum. Since an “agreement to submit the disputes to a court is not an agreement to arbitrate them,” id. at *1, the court held that there was no enforceable agreement to arbitrate, and it denied the petition to compel on the merits.⁴ ISC timely filed a notice of appeal.

The parties thereafter submitted some 850 pages of briefing and appendix material to this Court. In November 2009, following oral argument in the matter, a panel of the Court vacated the district court's judgment by summary order. ISC Holding AG v. Nobel Biocare Inv. N.V., 351 Fed.Appx. 480 (2d Cir.2009). We held that, considering the Agreement as a whole, the arbitration clause's reference to “any other U.S. court” was ambiguous, and could fairly be read as referring either to a judicial or to an arbitral forum. Id. at 482–483. Since the arbitration clause was, contrary to the view of the district court, potentially an enforceable agreement to arbitrate, we remanded for further proceedings.

Following remand, the parties met with the district court in December 2009 and concurred that an evidentiary hearing would be required to resolve facts concerning the meaning of the purported arbitration clause, Gerber's authority to sign the Agreement, and personal jurisdiction over Nobel. The parties agreed on a provisional discovery schedule and thereafter commenced discovery here. Document discovery was begun and completed by February 2010; by March 2010 the parties had agreed that depositions of all party witnesses who might testify at the evidentiary hearing (essentially a bench trial) on arbitrability would occur in London, England in the space of a week in mid-May 2010.

Testimonial discovery, however, did not run entirely to schedule. On May 4, 2010, only shortly before the scheduled depositions, ISC notified Nobel that a sudden and unavoidable obligation had arisen that would prevent ISC's principal, Asher Tchividjian, from being deposed in May.⁵ ISC requested that all depositions be postponed until some time in June. Following an exchange of letters from the parties to the district court, the court directed that Tchividjian's deposition alone be postponed, with the other depositions to go forward as scheduled; the parties eventually agreed that Tchividjian's deposition would occur in New York on June 23.

On June 21, ISC e-mailed Nobel to notify it that Tchividjian would not be appearing for his scheduled deposition for a second time because his passport had allegedly been torn coming through customs in Dubai, thus preventing him from traveling to the United States until a replacement passport could be obtained. This e-mail provoked an exchange of heated letters to the court, in which Nobel cast doubt on the veracity of Tchividjian's statements and argued that ISC should be sanctioned.

The district court ordered the Tchividjian deposition rescheduled for mid-July 2010; the court simultaneously directed ISC to produce all documents related to the passport incident, including proof that Tchividjian had made plans to travel to New York for his deposition prior to the alleged tearing of his passport. On July 7, counsel for ISC provided Nobel with documents that purported to be from the travel service Expedia, namely: (1) a purported e-mail from Expedia confirming that Tchividjian had booked a flight to New York; and (2) a purported acknowledgement by Expedia of Tchividjian's request for a refund of his airfare in light of the supposed passport mishap. At Tchividjian's deposition, which finally occurred on July 13 and 14, Nobel questioned Tchividjian regarding his explanations for both postponements of his deposition and sought details regarding the alleged passport incident.

Nobel, unsatisfied with Tchividjian's account, wrote the district court on July 30, describing inconsistencies in Tchividjian's statements and implying that Tchividjian had simply fabricated his need to be in Madrid for a week and the later damage to his passport.⁶ The letter made clear that Nobel planned to file a motion for discovery sanctions to recover the additional costs incurred as a result of the deposition postponements. Nobel further requested that the district court set a date for the evidentiary hearing in October 2010.

By early August, Nobel had also come to the conclusion that the purported Expedia documents were probable forgeries, and it wrote to ISC on August 9 to demand electronic copies of those documents in native format. The parties conferred with the district court on this issue on August 10. Following the August 10 conference, in response to Nobel's allegations that Tchividjian and ISC had made false statements to the court and had fabricated the Expedia documents, the district court ordered...