United States Court of Appeals
For the First Circuit
No. 01-1262
SEACOAST MOTORS OF SALISBURY, INC.,
Plaintiff, Appellant,
v.
DAIMLERCHRYSLER MOTORS CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nancy Gertner, U.S. District Judge]
Before
Boudin, Chief Judge,
Coffin, Senior Circuit Judge,
and Lynch, Circuit Judge.
Nicholas J. Decoulos and Decoulos & Decoulos on brief for
appellant.
George W. Mykulak, Susan B. Hanmer and Hale and Dorr LLP on
brief for appellee.
November 8, 2001
BOUDIN, Chief Judge. This case has its origin in a law
suit against the auto manufacturer DaimlerChrysler Motors
Corporation ("DaimlerChrysler") by Seacoast Motors of Salisbury
("Seacoast"), one of its dealers. Seacoast claims that
DaimlerChrysler's decision to authorize a new competing dealer
near Salisbury was an arbitrary and unfair trade practice under
Mass. Gen. Laws. ch. 93B, § 4(3)(l) (West 1997). The district
court dismissed Seacoast's suit and ordered arbitration pursuant
to a clause in Seacoast's dealership agreement that, both sides
concede, covered the claim. Seacoast Motors of Salisbury, Inc.
v. Chrysler Corp., 959 F. Supp. 52, 56 (D. Mass. 1997).
Seacoast appealed to this court, arguing that its
chapter 93B claim sounded in antitrust and was thus not
arbitrable under the so-called American Safety doctrine. See
Am. Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821,
827-28 (2d Cir. 1968). This court, on a ground later rejected
by the Supreme Court in another case, Green Tree Fin. Corp. v.
Randolph, 531 U.S. 79, 88-89 (2000), held that it lacked
jurisdiction over Seacoast's appeal because the arbitrability
decision was "embedded" in the underlying substantive dispute
and thus interlocutory. Seacoast, 143 F.3d 626, 628-29 (1st
Cir.), cert. denied, 525 U.S. 965 (1998).
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Thereafter, Seacoast's claim was submitted to
arbitration and DaimlerChrysler prevailed. Seacoast then
repeated its objection to arbitrability in a new federal suit,
brought in the same district court that had ordered arbitration,
seeking to enjoin enforcement of the arbitration award. The
district court once again dismissed, this time without a written
opinion, and Seacoast now appeals. We review the issue de novo.
Rosa v. Park West Bank & Trust Co., 214 F.3d 213, 215 (1st Cir.
2000).
At the threshold, there is uncertainty whether Seacoast
has a timely cause of action in this case. DaimlerChrysler
argues that Seacoast's challenge to the arbitration award is a
suit to vacate the arbitration award under section 10 of the
Federal Arbitration Act ("FAA"), 9 U.S.C. § 10 (1994). If so,
Seacoast's claim is time-barred, because it failed to serve
notice of the action on DaimlerChrysler within three months of
the filing of the award (its service came six days late). 9
U.S.C. § 12. Seacoast's reply is that this is not a motion to
vacate under section 10 but an independent equitable action to
enjoin the award not subject to section 12's time limit.
Section 10 sets forth a restricted list of grounds on
which a court may entertain a motion to vacate an award; those
grounds are directed primarily to fundamental errors within the
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arbitration process itself (e.g., fraud, misconduct) and, read
literally, they may not include the anterior claim that the
arbitration contract is itself invalid. Although section 12's
three-month statute of limitations is not formally limited to
motions to vacate "under section 10," such motions were surely
what the drafters of the FAA had principally in mind.
Of course, the existence of a valid arbitration
contract embracing the dispute is the predicate for everything
else. Section 10 omits any reference to disagreements on this
issue as a ground for attacking an award; but this is probably
because the drafters assumed that any party who resisted
arbitration would do so at the outset. If so, the issue would
be presented to the trial court on a motion to compel
arbitration, either by a de novo motion (9 U.S.C. § 4) or in
resisting a civil suit by an adversary (9 U.S.C. § 3), and
resolved prior to arbitration.
Here, Seacoast brought a civil suit and did contest
arbitrability; but when the district court held the matter
subject to arbitration, it dismissed the case instead of staying
the civil action. As already described, we in turn dismissed an
immediate appeal on the ground that the judgment was not final
and the Supreme Court then denied certiorari (even though it
later held that such judgments are final). The question, then,
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is what vehicle is available for Seacoast to get appellate
review now of its original claim that the dispute was not
arbitrable.
One way is to read section 10, stretching its language,
to include any adequately preserved ground ( e.g., public policy)
on which an arbitration award might be challenged--over and
above those specifically listed in section 10. Alternatively,
one might imagine some form of independent equitable action.
There is limited precedent for both courses, and both have
difficulties.1 But even if an independent action were permitted,
section 12 might still be read as a three-month time limit on
attacks on arbitration awards subject to the FAA, however
framed.
These puzzles need not be resolved here and should be
left for cases where they have to be decided. The procedural
gap in the FAA that ensnared Seacoast has been closed by Green
Tree: in the future, the party in Seacoast's position will be
able to appeal the order of dismissal it suffered as a "final"
order (and will at least risk a claim of waiver or law of the
case if it does not). And where the district court finds that
1See Advest, Inc. v. McCarthy, 914 F.2d 6, 8-9 (1st Cir.
1990); Societe Generale de Surveillance, S.A. v. Raytheon Eur.
Mgmt. & Sys. Co., 643 F.2d 863, 867-68 (1st Cir. 1981); see also
4 MacNeil, Speidel & Stipanowich, Federal Arbitration Law § 40.5
(1999); 2 id. § 23.5.
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arbitration is required and enters a stay of the action before
it, the arbitrability issue it decided will be adequately
preserved for appellate review when the stay is ended and the
district court later proceeds with enforcement.
We turn then to the merits, assuming arguendo that
Seacoast has brought a timely challenge to the arbitrability
ruling. There is no "jurisdictional" bar to our approach: the
parties are diverse and there is clearly a constitutional case
or controversy. See Steel Co. v. Citizens for a Better Env't,
523 U.S. 83, 93-95 (1998). We conclude that even assuming that
Seacoast's claim is properly before the court and not out of
time, Seacoast still loses.
Seacoast argues that its claim under chapter 93B sounds
in antitrust and is therefore nonarbitrable under American
Safety. The provision of chapter 93B that gives rise to the
suit is typical of so-called auto dealer protection statutes
passed by many states since the 1960s. See generally ABA
Antitrust Section, Monograph No. 17, Franchise Protection: Laws
Against Termination and the Establishment of Additional
Franchises (1990). Massachusetts' version prohibits inter alia
auto manufacturers from "arbitrarily" granting a franchise to a
dealer who intends to sell the same line of cars in the same
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retail market area as an existing franchisee. Mass. Gen. Laws.
ch. 93B, § 4(3)(l).
To describe such a chapter 93B claim as "antitrust" is
a very dubious use of language. The central aim of the
antitrust laws is to protect consumers against certain abusive
business practices--especially price-fixing and monopoly. See
1 Areeda & Hovenkamp, Antitrust Law ¶ 100a (2000). By contrast,
dealer protection statutes, so far as they allow existing
dealers to block new ones, are commonly aimed at restricting
intrabrand competition (i.e., among dealers selling the same
product). See Heritage Jeep-Eagle, Inc. v. Chrysler Corp., 655
N.E.2d 140, 143-44 (Mass. App. Ct. 1995). Such restrictions are
not normally pro-consumer, and, where imposed by dealers
themselves as a naked restraint, can readily violate the
antitrust laws. United States v. Topco Assocs., 405 U.S. 596,
608 (1972).2
Insofar as such statutes protect against arbitrary
ousters of existing dealers (e.g., by a refusal to renew a
franchise), Mass. Gen. Laws. ch. 93B, § 4(3)(e), they may in
2
In some situations, a supplier like DaimlerChrysler may
lawfully impose such restrictions (e.g., granting exclusive
territories) to protect dealer services against "free riding" or
to promote dealer investment, Continental T.V., Inc. v. GTE
Sylvania, Inc., 433 U.S. 36, 54-55 (1977); but here
DaimlerChrysler seeks to expand dealer competition.
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principle serve to protect a small business from being
mistreated by a large one. But even there, the aim is often one
of fairness, not promotion of competition. See Beard Motors,
Inc. v. Toyota Motor Distribs., Inc., 480 N.E.2d 303, 306 (Mass.
1985). Antitrust law protects competition, not competitors.
Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962). In
all events, nothing in Seacoast's complaint has to do with a
threatened dealer cut-off; Seacoast simply does not want to face
a new competitor.
Even if we assumed arguendo that Seacoast's claim could
be classified as an antitrust claim, it remains arbitrable.
Seacoast argues that the Massachusetts legislature made chapter
93B claims nonarbitrable in 1977 when it deleted a provision
that automatically required arbitration absent clear agreement
to the contrary. The inference that the 1977 change meant to
preclude arbitration is doubtful and, in any event, is
irrelevant. Because of the FAA's preemptive effect, the
question is solely whether federal law or policy exempts
antitrust claims from the pro-arbitration presumption of the
FAA. Southland Corp. v. Keating, 465 U.S. 1, 10-11 (1984).
To this, Seacoast urges a positive answer based on
American Safety, in which the Second Circuit held that antitrust
claims are not arbitrable because of "the pervasive public
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interest in enforcement of the antitrust laws." 391 F.2d at
827-28. This circuit once adopted American Safety, but the
Supreme Court reversed, at least in the context of antitrust
claims arising from international transactions. Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, 723 F.2d 155, 169 (1st
Cir. 1983), rev'd, 473 U.S. 614, 629 (1985).
Since then, several circuits have abandoned the
American Safety doctrine in its entirety. See, e.g., Kotam
Elecs., Inc. v. JBL Consumer Prods., Inc., 93 F.3d 724, 725-28
(11th Cir. 1996), cert. denied, 519 U.S. 1110 (1997); Nghiem v.
NEC Elec., Inc., 25 F.3d 1437, 1442 (9th Cir.), cert. denied,
513 U.S. 1044 (1994). Others have expressed doubt whether it
remains good law. See, e.g., Sanjuan v. Am. Bd. of Psychiatry
& Neurology, Inc., 40 F.3d 247, 250 (7th Cir. 1994), cert.
denied 516 U.S. 1159 (1996); Swensen's Ice Cream Co. v. Corsair
Corp., 942 F.2d 1307, 1310 (8th Cir. 1991). It is time to lay
it to rest.
American Safety rested on the basic premise that the
public interest in antitrust enforcement, the complexity of the
antitrust laws, and the inadequacy of arbitral tribunals make
arbitration of private antitrust claims inappropriate. This
premise has since been rejected by the Supreme Court with
respect to a variety of other statutory claims no less important
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or complex. See Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20 (1991) (Age Discrimination in Employment Act); Rodriguez
de Quijas v. Shearson/American Express, Inc., 490 U.S. 477
(1989) (1933 Securities Act); Shearson/American Express Inc. v.
McMahon, 482 U.S. 220 (1987) (1934 Securities Act and civil
RICO).3
There is no question here of an advance waiver of
antitrust claims; arbitration clauses do not eliminate
substantive rights but submit them for resolution in an
arbitral, rather than a judicial forum. Mitsubishi, 473 U.S. at
628. And while some antitrust cases do involve large issues in
which the public has an interest, others are essentially
business quarrels peculiar to the parties. For those in the
former category, government agencies remain free to pursue the
defendant regardless of private actions, whether before courts
or arbitrators. We think time has passed by the American Safety
doctrine and so hold.
Affirmed.
3
In Page v. Moseley, Hallgarten, Estabrook & Weeden, Inc.,
806 F.2d 291 (1st Cir. 1986), this court stated that the Supreme
Court’s decision in Mitsubishi did not overrule the American
Safety doctrine where the context was domestic rather than
international, and on this basis, Page held that civil RICO
claims were not arbitrable. Id. at 299. But Page's holding was
itself abrogated by the Supreme Court in Shearson/American
Express, 482 U.S. at 225.
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