Outokumpu Stainless, LLC v. Siemens Indus., Inc.

• Decision Date: 19 October 2015
• Docket Number: Civil Action No. 15-00243-KD-N
• Parties: OUTOKUMPU STAINLESS, LLC, formerly known as Thyssenkrupp Stainless USA, LLC, Plaintiff, v. SIEMENS INDUSTRY, INC., successor in interest to Siemens Energy & Automation, Inc., Defendant.
• Court: U.S. District Court — Southern District of Alabama

OUTOKUMPU STAINLESS, LLC, formerly knownas Thyssenkrupp Stainless USA, LLC, Plaintiff, v. SIEMENS INDUSTRY, INC., successor in interestto Siemens Energy & Automation, Inc., Defendant.

Civil Action No. 15-00243-KD-N

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

October 19, 2015

REPORT AND RECOMMENDATION

This matter is before the Court on the Motion to Remand (Doc. 7) filed by Plaintiff Outukumpu Stainless USA, LLC, formerly known as Thyssenkrupp Stainless USA, LLC ("Plaintiff"). This motion has been referred to the undersigned United States Magistrate Judge for report and recommendation pursuant to 28 U.S.C. § 636(b) and S.D. ALA. GEN. L.R. 72(b). In reaching its decision, the Court considers the Notice of Removal (Doc. 1), the Motion to Remand (Doc. 7), Defendant Siemems Industry, Inc.'s (successor in interest to Siemens Energy & Automation Inc. ("Defendant")) Response in Opposition (Doc. 15), Plaintiff's Reply in Support (Doc. 17), Defendant's Sur-Reply (Doc. 18-1), Plaintiff's Sur-Sur-Reply (Doc. 22), and related exhibits.

Oral argument on the present motion was held before the undersigned on September 18, 2015. See Doc. 23. Present for the Plaintiff were Ricardo Woods, Esq. and Devin Dolive, Esq. Id. Present for the Defendant were Andrew Chamberlain, Esq.; Jon Berkelhammer, Esq.; and Archibald Reeves IV, Esq. Id. Upon consideration, and for the reasons stated herein, the undersigned RECOMMENDS that the Motion to Remand be DENIED.

I. Background

Plaintiff's and Defendant's predecessors in interest entered into two contracts. The first contract, Contract 1034, was entered into on May 19, 2008, and provided for the

Engineering, Manufacturing, Procurement, Supply, Supervision of Erection, Commissioning, Optimization, Training and Technical Documentation of a Stainless Melt Shop, consisting mainly of

One (1) Electric Arc Furnace (EAF)

One (1) Argon Oxygen Decarburisation Converter (AOD)

One (1) Continuous Caster (CCM) and

One (1) Slab Grinding Plant

And other components defined in detail in this Contract and its Annexes Inclusive electrical equipment as specified in detail in Annexes to this Contract [sic]

Doc. 1-1 at 4. "Disputes arising between both parties in connection with or in the performances of Contract 1034 which cannot be settled through consultation between the parties are subject to "arbitration for settlement." Id. at 64 (§ 23.1). Arbitration mandated under Contract 1034 is to take place in Düsseldorf, Germany, and be conducted "in accordance with the Rules of Arbitration and Conciliation of the International Chamber of Commerce, Paris, (ICC Rules) in the English language by three arbitrators appointed in accordance with said rules." Id. (§ 23.2).

The second contract, Contract 1080, was entered into on September 17, 2009, and provided for

Design, Engineering, Manufacturing, Procurement, Preassembly, Supply, Delivery, Commissioning, Optimization, Training, Technical Documentation and Supervision Services for the Melt Shop Emissions Control System.

Doc. 4-3 at 4. Disputes arising out of or related to Contract 1080 "shall be subject to mediation, arbitration or the institution of legal or equitable proceedings" at the "sole discretion of the Buyer [Plaintiff]." Id. at 63 (§ 23.2). Any legal action arising under Contract 1080

may be brought, at the election of Buyer [Plaintiff], in the Circuit Court of the State of Alabama in Mobile County, or in the United States District Court for the Southern District, Southern Division, of Alabama, and each assents and submits to the personal jurisdiction of any such courts in any such action or proceeding.

Id. at 70-71 (§ 28.15).

On December 17, 2014, Plaintiff filed a complaint against Defendant in the Circuit Court of Mobile County, Alabama. See Doc. 1-3 at 2-14. Defendant was served on March 13, 2015. Id. at 27. On May 8, 2015, Defendant removed the case to this Court pursuant to 9 U.S.C. § 205, which allows removal of actions whose subject matters "relates to an arbitration agreement or award falling under the [New York] Convention" so long as removal is made before trial. Accord Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (the "New York Convention).¹

On May 11, 2015, Plaintiff filed the present Motion to Remand this case to the Circuit Court for Mobile County. Doc. 7. Plaintiff argues, in sum, that the Defendant's Notice of Removal does not contain "enough information" or "factual matter" to meet the FED. R. CIV. P. 8(a) requirement of a "short and plain statement of the grounds for the court's jurisdiction" as elucidated by Ashcroft v. Iqbal (556 U.S. 662, 678 (2009)) and Bell Atlantic Corp. v. Twombly (550 U.S. 544, 545 (2007)). Doc. 7 at 2, 4. Plaintiff further argues that the Contract 1080 forum-selection provision supersedes the early arbitration clause. Id. at 4. Contract 1080 does not provide for foreign arbitration, and without an agreement covered by the New York Convention, there is no basis for the Court to exercise jurisdiction.

Defendant's Response argues, in sum, based on Bautista v. Star Cruises (396 F.3d 1289, 1294 n.7 (11th Cir. 2005))² analysis that the Contract 1034 arbitration agreement falls under the New York Convention. Doc. 15 at 8-9. Since the arbitration agreement relates to this action, removal is appropriate under 9 U.S.C. § 205. Doc. 15 at 9-10. Defendant also points out that the § 205 removal right is "substantially broader" (Reid v. Doe Run Resources Corp., 701 F.3d 840, 843 (8th Cir. 2012) than the general removal statute and that "whenever an arbitration agreement falling under the Convention could conceivably affect the outcome of the plaintiff's case, the agreement 'relates to' the plaintiff's suit" (Beiser v. Weyler, 284 F.3d 665, 670 (5th Cir. 2002) (emphasis in original)). Doc. 15 at 10.

The Plaintiff's Reply reiterates that the main issue is a facial deficiency in the Notice of Removal. Doc. 17 at 1. Plaintiff argues that in order to meet the burden of Iqbal and Twombly, Defendant's Notice of Removal would have had to allege "that some of the claims in the case relate exclusively to Contract 1034 . . . and not to Contract 1080. Doc. 17 at 5 (emphasis in original). Plaintiff does not make it clear why this is so. Plaintiff further develops its argument that Contract 1080's subsequent forum-selection agreement modifies and supersedes the Contract 1034 arbitration agreement. Id. at 7-8.

Defendant's Sur-Reply argues that Contract 1034 is not superseded by Contract 1080 because the two contracts do not concern the same subject matter. Doc. 18-1 at 2. Defendant also argues that Plaintiff is estopped from arguing that Contract 1034 is superseded because Plaintiff relies on Contract 1034 in its Complaint. Id. at 5. According to Defendant, such reliance in the Complaint is incompatible with Contract 1034 being superseded, since Contract 1080 specifies that any prior agreement concerning the same subject matter is cancelled in its entirety. Id. Defendant further argues that removal jurisdiction pursuant to 9 U.S.C. § 205 applies to actions in their entirety, and Plaintiff has not attempted to argue that the Contract 1034 arbitration clause is connected to the case and falls under the New York Convention. Id. at 7. Defendant maintains that questions of jurisdiction and the merits of the arbitration clause must be decided separately, with issues of arbitrability being reserved for the arbitrator. Id. at 8.

Finally, the Plaintiff's Sur-Sur-Reply presses again the argument that the Notice of Removal is facially deficient, stating the Defendant had a duty to reference Contract 1080 when removing. Doc. 22 at 1, 3. Plaintiff contends that the two contracts "overlap" and that the issue of whether they cover the same or different subject matter is a "false dichotomy" and that the provisions of the subsequent contract control. Id. at 5, 8. Plaintiff also replies that arbitrability is not an issue for arbitration. Id. at 10.

II. Standard of Review

"It is . . . axiomatic that the inferior federal courts are courts of limited jurisdiction. They are 'empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,' and which have been entrusted to them by a jurisdictional grant authorized by Congress." Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)). One such Congressional grant of jurisdiction is found in 28 U.S.C. § 1332(a)(1), which provides that federal "district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States . . . "

Generally, a defendant may remove "any civil action brought in a State court of which the district courts of the United States have original jurisdiction . . . to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). See also Roe v. Michelin N. Am., Inc., 613 F.3d 1058, 1060 (11th Cir. 2010) ("If a state-court complaint states a case that satisfies federal jurisdictional requirements, a defendant may remove the action to federal court pursuant to 28 U.S.C. § 1446(b).").³ "Just as a plaintiff bringing an original action is bound to assert jurisdictional bases under Rule 8(a), a removing defendant must also allege the factual bases for federal jurisdiction in its notice of removal under [28 U.S.C. ]§ 1446(a)[,]" Lowery v. Alabama Power Co., 483 F.3d 1184, 1216-17 (11th Cir. 2007), and "bears the burden of proving that federal jurisdiction exists." Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001). The district court must evaluate all factual issues and questions of controlling substantive law in favor of the plaintiff...