Nissan North America v. Jim M'Lady Oldsmobile, 01-2993.

• Decision Date: 03 October 2002
• Docket Number: No. 01-2993.,01-2993.
• Citation: 307 F.3d 601
• Parties: NISSAN NORTH AMERICA, INC., Petitioner-Appellee, v. JIM M'LADY OLDSMOBILE, INC., d.b.a. Jim M'Lady Nissan, Respondent-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

307 F.3d 601

NISSAN NORTH AMERICA, INC., Petitioner-Appellee, v. JIM M'LADY OLDSMOBILE, INC., d.b.a. Jim M'Lady Nissan, Respondent-Appellant.

No. 01-2993.

United States Court of Appeals, Seventh Circuit.

Argued January 16, 2002.

Decided October 3, 2002.

Rehearing and Suggestion for Rehearing En Banc Denied November 4, 2002.

Kevin A. Russell, Janet Malloy Link (Argued), Latham & Watkins, Chicago, IL, for Plaintiff-Appellee.

James C. Geoly (Argued), Burke, Warren, Mackay & Serritella, Chicago, IL, for Defendant-Appellant.

Before BAUER, ROVNER, and WILLIAMS, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Jim M'Lady Nissan appeals from the district court's order compelling it to arbitrate a dispute concerning Nissan North America's announced intention to drop M'Lady as one of its dealers. Our doubts that Nissan produced sufficient evidence of arbitrability, coupled with M'Lady's lack of opportunity to introduce evidence rebutting arbitrability given the procedural posture in which the court decided the question, lead us to remand the case for further proceedings.

I.

In 1992, Nissan and M'Lady entered a written "dealer agreement" that allowed M'Lady to operate as an authorized dealer of Nissan cars and trucks. The agreement was set to expire automatically on April 1, 1995, but the parties amended it in writing by way of "Amendment No. 4" on May 18, 1998. That amendment changed the dealer agreement's expiration date to May 1, 1999, and declared that "Binding Arbitration with JAMS/ENDISPUTE, an independent and professional agency providing arbitration services," would be the exclusive means of resolving any dispute "arising out of" the dealer agreement.

Although no other written agreements between Nissan and M'Lady are part of the record before us, the parties continued doing business well past the dealer agreement's May 1999 expiration date. Indeed, M'Lady sells Nissan cars to this day. However, the parties' relationship did deteriorate: Nissan sent M'Lady a series of letters informing it that Nissan considered it to have breached a provision of the dealer agreement requiring it to construct an exclusive Nissan showroom by a particular date, and on October 3, 2000, Nissan notified M'Lady by letter of its intent to "terminate" M'Lady as a dealer. M'Lady protested the termination before the Illinois Motor Vehicle Review Board on October 20, 2000.

On November 17, 2000, Nissan filed an arbitration demand with the arbitration administrator named in the dealer agreement and moved the Board to stay its proceedings pending arbitration. The Board tentatively denied Nissan's motion to stay and ordered the parties to begin discovery. M'Lady declined to participate in the arbitration, and the arbitrator decided to proceed anyway.

In February 2001, Nissan filed in federal district court a petition under the Federal Arbitration Act to compel arbitration of the "termination dispute" and enjoin the Board proceedings. M'Lady responded on March 6 with a motion to dismiss or stay Nissan's petition under the Colorado River abstention doctrine in light of the parallel action pending before the Board, see Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), as well as an answer to the petition. Later that day, the district court issued an order giving M'Lady through March 15 "to respond to Nissan's memorandum in support of its petition to compel."

Nissan objected to M'Lady's "multiple filings" at a March 13 hearing before the district judge, arguing that M'Lady should be required to consolidate its arguments in favor of a stay and against arbitration into a single response. M'Lady, however, asked that its motion to dismiss be decided first and that its response to Nissan's supporting memorandum, then due on March 15, be "deferred until after a ruling" on the motion to dismiss. The court ultimately agreed to this procedure, noting that if it agreed with M'Lady's abstention argument it would not need to reach the merits of Nissan's petition to compel arbitration. The court decided to "isolate the issues" and so struck all prior briefing schedules and "all the other motions, objections and filings" in the case and set a deadline for Nissan to respond to M'Lady's motion to dismiss.

But instead of handling the motion and the petition separately, as it had indicated it would do in its oral ruling and briefing schedule, the district court issued an order on June 21 that denied M'Lady's motion to dismiss, stayed the Board proceedings, and summarily granted Nissan's petition to compel arbitration. The court concluded that the "termination dispute" was related to the dealer agreement that the parties agreed to arbitrate under Amendment No. 4. The district court later denied M'Lady's motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e). M'Lady appeals.

II.

At the outset, we pause to emphasize that we have no difficulty with the district court's refusal to stay Nissan's petition to compel arbitration. Such stays are appropriate only in exceptional circumstances, see Moses H. Cone Mem'l Hosp. v. Mercury Constr. Co., 460 U.S. 1, 19, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), and M'Lady did not even bother to tailor its opening argument on this question to the demanding abuse-of-discretion standard of review. Nor do we see any problem with the district court's decision to temporarily stay the Board proceedings pending a final resolution of Nissan's petition. We part with the district court only in its handling of the petition itself.

M'Lady...