Simula, Inc. v. Autoliv, Inc., No. 98-16563

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: TASHIMA
• Citation: 175 F.3d 716
• Parties: 1999-1 Trade Cases P 72,512, 50 U.S.P.Q.2d 1599, 99 Cal. Daily Op. Serv. 3117, 1999 Daily Journal D.A.R. 4055 SIMULA, INC., an Arizona corporation; Simula Automotive Safety Devices, Inc., an Arizona corporation, Plaintiffs-Appellants, v. AUTOLIV, INC., a Delaware corporation; Autoliv, AB, a Swedish corporation; Autoliv Development GMBH, a German corporation; Autoliv ASP, INC., an Indiana corporation; Autoliv North America, Inc., a Delaware corporation, Defendants-Appellees.
• Docket Number: No. 98-16563
• Decision Date: 30 April 1999

Page 716

175 F.3d 716 1999-1 Trade Cases P 72,512, 50 U.S.P.Q.2d 1599,
99 Cal. Daily Op. Serv. 3117,
1999 Daily Journal D.A.R. 4055 SIMULA, INC., an Arizona corporation; Simula Automotive
Safety Devices, Inc., an Arizona corporation,
Plaintiffs-Appellants,
v.
AUTOLIV, INC., a Delaware corporation; Autoliv, AB, a
Swedish corporation; Autoliv Development GMBH, a German
corporation; Autoliv ASP, INC., an Indiana corporation;
Autoliv North America, Inc., a Delaware corporation,
Defendants-Appellees. No. 98-16563. United States Court of Appeals,
Ninth Circuit. Argued and Submitted Feb. 10, 1999.
Filed April 30, 1999.

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John H. Cotton, Scottsdale, Arizona, and John Alan Doran, Bryan Cave, Phoenix, Arizona, for the plaintiffs-appellants.

Peter E. Greene, Skadden, Arps, Slate, Meagher & Flom, New York, New York, for the defendants-appellees.

Appeal from the United States District Court for the District of Arizona; Roslyn O. Silver, District Judge, Presiding. D.C. No. CV-98-00305-ROS.

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Before: FLETCHER and TASHIMA, Circuit Judges, and FITZGERALD, District Judge. ^*

TASHIMA, Circuit Judge:

This appeal presents the question of how broadly an arbitration clause containing the phrase "arising in connection with this Agreement" should be construed. The district court held that it encompassed all disputes having their origin or genesis in the contract and granted appellees' motion to compel arbitration. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

I.

In 1992, Simula, Inc., and Simula Automotive Safety Devices, Inc. (together "Simula"), invented the Inflatable Tubular Structure ("ITS"), an automotive side impact head protection air bag system. In 1993, Simula approached BMW, a German automaker, about purchasing the ITS. BMW instructed Simula to work through Autoliv, AB, and its subsidiaries, Autoliv, Inc., Autoliv Development GMBH, Autoliv ASP, Inc., and Autoliv North America (collectively "Autoliv"), a previously-approved "first-tier" vendor/supplier of automotive components, to present Simula's technology for incorporation into BMW's cars.

As directed by BMW, Simula approached Autoliv about the ITS technology. In May 1993, Autoliv and Simula signed nondisclosure agreements. Thereafter, Simula disclosed to Autoliv confidential, proprietary, and trade secret information regarding the ITS, as well as testing data illustrating the enhanced safety advantages it offered.

In January 1994, Autoliv and Simula signed a letter of intent outlining the proposed relationship between them. Under the proposal, Simula would manufacture the ITS and give a conditional license of confidential, proprietary, and trade secret technology to Autoliv. In return, Autoliv would integrate the ITS into the BMW automobile. Autoliv was to pay Simula for each ITS unit delivered by Simula to Autoliv and pay royalties on the sales of the ITS integrated systems. In July 1994, Autoliv received a contract and a sum of money from BMW to fund a portion of the ITS integration cost.

In August 1994, with Simula's permission, Autoliv presented the Simula ITS system to Mercedes Benz. Because BMW and Mercedes Benz were head-to-head competitors and viewed one another as leaders in European automotive safety, Mercedes Benz suggested to Autoliv that it begin development of a product that differed from the ITS. Autoliv agreed. As Simula alleges, Autoliv subsequently began to replicate features of the ITS into a competing "inflatable curtain," accelerated its efforts to develop the inflatable curtain as a competitive "first-to-the-market" product, and undertook a scheme to disparage the ITS to automotive manufacturers and to represent favorably the qualities of Autoliv's own side protective technology.

In September 1994, Autoliv made a presentation to the Mercedes Benz and Ford Motor Companies regarding the ITS. Simula alleges that Autoliv knowingly presented inaccurate test data and false, misleading, and disparaging information concerning the ITS system. At the same time, however, Autoliv committed to BMW and Simula to provide the ITS on BMW automobiles.

In January 1995, Simula and Autoliv entered into three related agreements including: (1) a Joint Development and Cooperation Agreement; (2) a Licensing Agreement; and (3) a Frame Supply Agreement (collectively, the "1995 Agreement"). At the time that Simula signed the agreements, Simula did not know of and Autoliv did not disclose its inflatable

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curtain concept. Under the Joint Development and Cooperation Agreement and the Frame Supply Agreement, the first customer project between Simula and Autoliv was BMW. Under the Licensing Agreement, Autoliv maintains it acquired the exclusive rights to all marketing and sales of any ITS system for all automobile manufacturers and that Simula may not market the ITS itself.

In February 1998, Simula brought suit against Autoliv alleging causes of action for: (1) violation of the Sherman Act, 15 U.S.C. § § 1 and 2; (2) violation of the Trademark Act of 1946 ("Lanham Act"), 15 U.S.C. § 1125; (3) misappropriation of trade secrets and breach of the non-disclosure agreements; (4) defamation; and (5) breach of the Arizona Trade Secrets Act, Ariz.Rev.Stat. § 44-401. Simula sought preliminary and permanent injunctive relief, treble damages for antitrust violations, punitive damages, compensatory damages, attorney's fees, and costs.

Autoliv moved to compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 3-4, and either to dismiss the complaint or stay the action pending the resolution of arbitration proceedings. The district court granted Autoliv's motion to compel arbitration and its motion to dismiss. It held that all of Simula's claims against Autoliv were subject to the arbitration clause contained in the 1995 Agreement because all of Simula's claims relate to, derive from, and arise in connection with that contract. Simula appeals.

II.

Determinations of arbitrability, like the interpretation of any contractual provision, are subject to de novo review. See Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 474 (9th Cir.1991); Mediterranean Enter., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1462-63 (9th Cir.1983). Therefore, we review de novo the district court's interpretation of the contract language in the parties' 1995 Agreement.

Federal substantive law governs the question of arbitrability. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); Republic of Nicaragua, 937 F.2d at 474-75. The FAA reflects Congress' intent to provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause. See Republic of Nicaragua, 937 F.2d at 475 (citing Perry v. Thomas, 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987)). The FAA embodies a clear federal policy in favor of arbitration. ¹ "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone, 460 U.S. at 24-25, 103 S.Ct. 927.

The standard for demonstrating arbitrability is not high. The Supreme Court has held that the FAA leaves no place for the exercise of discretion by a district court, but instead mandates that district courts direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed. See Dean Witter Reynolds v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). Such agreements are to be rigorously enforced. See id. at 221, 105 S.Ct. 1238. Under § 4 of the FAA, ² the

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district court must order arbitration if it is satisfied that the making of the agreement for arbitration is not in issue. Therefore, the district court can determine only whether a written arbitration agreement exists, and if it does, enforce it in accordance with its terms. See Howard Elec. & Mech. v. Briscoe Co., 754 F.2d 847, 849 (9th Cir.1985).

We must first determine the breadth of the disputed arbitration clauses. The three arbitration clauses in the 1995 Agreement identically state in relevant part:

All disputes arising in connection with this Agreement shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said rules.

(Emphasis added.) Although we have not yet construed this precise language, we have expansively interpreted similar language and other courts have construed identical language liberally.

In Republic of Nicaragua, relying on Mediterranean Enter. and Moses H. Cone, we held that an arbitration clause containing the phrase "any and all disputes arising under the arrangements contemplated hereunder" must be interpreted liberally. See Republic of Nicaragua, 937 F.2d at 479. We concluded that the lower court's narrow interpretation of the clause conflicted with the strong federal policy favoring arbitral dispute resolution, one which applied with special force in the field of international commerce. See id. at 478 (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (other citations omitted)). Although we acknowledged that we were interpreting language in the arbitration agreement that was similar to that in Mediterranean Enter., we ultimately compelled arbitration under the admonition of Moses H. Cone to construe arbitration clauses expansively. ³ See id. at 479. See also Prograph Int'l Inc. v. Barhydt, 928 F.Supp. 983, 989 (N.D.Cal.1996) (interpreting virtually identical language expansively).

Other courts have also liberally construed arbitration agreements containing language identical to the parties' arbitration clause. In J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315 (4th Cir.1988), the court held that an arbitration agreement providing that "[a]ll disputes arising in connection with the present contract shall be finally settled" by...