Trina Solar US, Inc. v. Jasmin Solar Pty LTD
| Decision Date | 02 April 2020 |
| Docket Number | Docket No. 17-572-cv,August Term, 2018 |
| Parties | TRINA SOLAR US, INC., Petitioner-Appellee, v. JASMIN SOLAR PTY LTD, Respondent-Appellant, JRC-Services LLC, Respondent. |
| Court | U.S. Court of Appeals — Second Circuit |
Jean-Claude Mazzola (Ruofei Xiang, on the brief), Mazzola Lindstrom LLP, New York, NY, for Petitioner-Appellee Trina Solar US, Inc.
Jody S. Kraus, Jody S. Kraus Legal Consulting, New York, NY (Jacob W. Buchdahl, Arun S. Subramanian, Susman Godfrey LLP, New York, NY, on the brief), for Respondent-Appellant Jasmin Solar Pty Ltd.
Before: POOLER, LOHIER, and CARNEY, Circuit Judges.
Jasmin Solar Pty Ltd ("Jasmin") appeals from a judgment of the United States District Court for the Southern District of New York (Caproni, J. ) granting the petition of Trina Solar US, Inc. ("Trina") to confirm an arbitration award entered in its favor and denying the motions of Jasmin and JRC-Services LLC ("JRC") to vacate the award. The commercial contract containing the arbitration clause at issue is governed by New York law and was signed by Trina and JRC, but not by Jasmin. We have recognized various theories under which nonsignatories may be bound by arbitration agreements entered into by others. See Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64 F.3d 773, 776 (2d Cir. 1995). The District Court relied on two of those theories—agency and the direct benefits theory of estoppel—to find that Jasmin was bound by the arbitration clause. For the reasons that follow, we reverse the judgment as it applies to Jasmin.
Jasmin, an Australian company founded in 2012, provides solar power equipment and installation to Australian residents. In 2012 Jasmin sought to exploit a favorable government-backed solar power rebate program in Queensland, Australia that was soon set to expire. It began to negotiate a contract (the "Contract") with the United States-based division of Trina, a Chinese solar panel manufacturer, to buy Trina’s solar panels. Trina demanded that a United States-based company sign the Contract as counterparty and submit the solar panel purchase orders, citing a need to protect the parties in the event litigation ensued and a desire to secure the sales commissions for Trina’s division in the United States rather than its Australian arm. Jasmin yielded to Trina’s demands. In August 2012 Jasmin authorized JRC, a Nevada-based company, to act as Jasmin’s agent for all business dealings between Jasmin and Trina, although it also recognized that Trina might contract with JRC as a principal in its own right rather than as an agent.
In November 2012 Trina and JRC signed the Contract, which was governed by New York law. The Contract refers to Trina as the "Seller," JRC as the "Buyer," and Trina and JRC—but not Jasmin—collectively as the "Parties." Appellant’s App’x 32, 33, 42. Jasmin is described only once in the Contract, as JRC’s "parent company" responsible for "guarantee[ing] payment" for solar panel shipments under the Contract. Appellant’s App’x 38. Importantly, for our purposes, the Contract also contains an arbitration clause that provides that "[a]ny dispute or controversy or difference arising out of or in connection with this Contract ... between the parties hereto ... shall be submitted to binding arbitration." Appellant’s App’x 40.
Shortly after the Contract was executed, Trina made clear that it viewed JRC, not Jasmin, as its client. A representative of Trina, John Dallapiazza, declared to a colleague that "all of the US contracts are being processed under JRC Services, LLC" and that "Jasmin Solar is no longer a client" of Trina. Appellant’s App'x 264. Dallapiazza also made clear to the same colleague that Trina regarded JRC as the sole counterparty to the Contract, stating that "currently [Trina] do[es] not have any executed contracts with Jasmin," and that Trina had "removed Jasmin Solar from the equation entirely." Appellant’s App’x 264, 268. In the meantime, Jasmin continued to communicate with Trina regarding delivery schedules and credit line issues and to review purchase orders prior to delivery. In addition, Jasmin confirmed that it would pay the invoices for the solar panels delivered to JRC.
The relationship among the companies broke down in 2014 when, as JRC and Jasmin allege, Trina failed to deliver the correct model of solar panels on time, and JRC and Jasmin refused to pay the invoices as a result.
Relying on the Contract’s arbitration clause, Trina initiated an arbitration proceeding against JRC and Jasmin. Jasmin asserted that it was not a party to the Contract and moved to dismiss the arbitration for lack of jurisdiction. The arbitrator denied Jasmin’s motion. To preserve its objection, Jasmin declined to participate further in the arbitral proceedings, which included a trial before the arbitrator between JRC and Trina. Following trial, the arbitrator issued an award of $1,305,131 against JRC and Jasmin jointly and severally, even though the latter had refused to participate.
Trina petitioned the District Court to confirm the arbitration award against both Jasmin and JRC. Jasmin moved to vacate the award, arguing that it was not a party to the Contract and could not be required to arbitrate. In its decision, the District Court found that the parties had not clearly and unmistakably agreed to arbitrate arbitrability and reviewed de novo the arbitrator’s decision that Jasmin was bound by the arbitration agreement. See Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 393 (2d Cir. 2011). Upon review, and as relevant here, the District Court denied Jasmin’s motion to vacate, granted the petition to confirm, and denied as moot Jasmin’s request for limited discovery on the issue of whether Jasmin was bound by the arbitration clause.
This appeal followed.
We have explained that the determination about whether parties have agreed to arbitrate their disputes, and in particular whether nonsignatories to an arbitration agreement may nevertheless be bound by the agreement, is "often fact specific and differ[s] with the circumstances of each case." Smith/Enron Cogeneration Ltd. P’ship, Inc. v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 97 (2d Cir. 1999) (quotation marks omitted). With that in mind, we review the District Court’s findings of fact relating to its confirmation of the arbitration award for clear error and its resolution of questions of law de novo. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947–48, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ; Corporación Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploración Y Producción, 832 F.3d 92, 100 (2d Cir. 2016).
The District Court concluded, based on an agency theory, that Jasmin was bound by the terms of the Contract as a principal. To determine whether Jasmin, a nonsignatory, was bound as a principal to the arbitration agreement between JRC and Trina, we consider, first, whether JRC had actual authority to act on Jasmin’s behalf in its business dealings with Trina, and second, whether JRC and Trina, in executing the contract, intended to bind Jasmin as a disclosed principal or instead intended to exclude Jasmin as a party. See Restatement (Third) Of Agency ("Restatement") § 6.01 cmt. b (Am. Law Inst. 2006) ( that "[a]n agent who acts on behalf of a disclosed principal may enter into a contract with a third party that by its terms excludes the principal as a party," and that an agent’s principal is not party to a contract between the agent and a third party if "the third party has not manifested assent to an exchange with the principal").1
The parties agree that when the Contract was signed JRC had actual authority to act on Jasmin’s behalf in its business dealings with Trina. Their dispute centers on whether JRC and Trina intended JRC to act as Jasmin’s agent in executing the Contract at issue here. See De Remer v. Brown, 165 N.Y. 410, 417, 59 N.E. 129 (1901) (); see also Fid. & Deposit Co. of Md. v. Goldman & Rio, 190 Misc.2d 748, 739 N.Y.S.2d 521, 521–22 (1st Dep’t 2002), aff’d as modified on other grounds, 307 A.D.2d 238, 763 N.Y.S.2d 270 (2003) ; Turner Press, Inc. v. Gould, 76 A.D.2d 906, 429 N.Y.S.2d 239, 240 (2d Dep’t 1980). We turn to New York law, which governs the Contract, to resolve that dispute.
New York courts have long held that "[u]nless the contract explicitly excludes the principal as a party," a court may consider extrinsic evidence to identify an unnamed principal to the contract, or to determine, more specifically, whether a nonsignatory is bound by the contract as a principal. Restatement § 6.01 cmt. c; see also B&H Assocs. of NY, LLC v. Fairley, 148 A.D.3d 1097, 50 N.Y.S.3d 495, 496–97 (2d Dep’t 2017) ; Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569–70, 750 N.Y.S.2d 565, 780 N.E.2d 166 (2002). A primary question for us, then, is whether the Contract "explicitly excludes" Jasmin as a party. We conclude that it does.
As an initial matter, a contract can explicitly exclude a principal as a party in a number of ways. We have found no New York law, and the parties do not point to any, that requires specific contractual language or mandates a one-size-fits-all approach to do so. For example, we are aware of no requirement that a contract state that "the principal is not a party to the contract," even though that language would surely qualify to explicitly exclude the principal. The fact that no single provision of the Contract states in so many words that Jasmin is excluded as a principal from its terms is therefore not dispositive. Instead, to determine whether Jasmin is explicitly excluded, we consider the language and structure of the Contract as a whole, without resorting to any extrinsic evidence of the parties’...
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