IN THE SUPREME COURT OF THE STATE OF NEVADA
DR PARTNERS, A NEVADA GENERAL No. 68700
PARTNERSHIP, D/B/A STEPHENS
MEDIA GROUP,
Appellant,
vs.
FILED
LAS VEGAS SUN, INC., A NEVADA MAY 1 9 2016
CORPORATION, TRACIE K. LINDEMAN
CLERK OF SUPREME COURT
Respondent.
BY
ORDER OF REVERSAL AND REMAND
This is an appeal from a district court order denying a motion
to compel arbitration. Eighth Judicial District Court, Clark County;
Elizabeth Goff Gonzalez, Judge.
Respondent Las Vegas Sun, Inc. (the Sun) publishes the Las
Vegas Sun newspaper. Appellant DR Partners, d/b/a Stephens Media
Group (Stephens), publishes the Las Vegas Review Journal newspaper
(the RJ). In 1989, the Sun and Stephens' predecessor-in-interest, Donrey
of Nevada, Inc., entered into a joint operating agreement (JOA) to produce
and distribute the two newspapers. The 1989 JOA required the RJ to pay
the Sun a portion of the RJ's operating profit. In 2005, the Sun and
Stephens amended and restated the JOA, which has been in effect since
that time. The amended JOA required each newspaper to bear its own
editorial costs. It also set out a new formula for calculating the amount
that the RJ would pay the Sun, provided a mechanism for the Sun to audit
the books and records used by the RJ to calculate those payments, and
required disputes regarding the amount of those payments to be subject to
arbitration.
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In March 2015, the Sun filed a complaint against Stephens for
declaratory relief and specific performance of the JOA. After the district
court granted a motion by Stephens to compel arbitration, the Sun
amended its complaint, this time seeking only declaratory relief as to the
meaning of the provision of the JOA requiring the newspapers to bear
their own editorial costs. The Sun then filed a motion for summary
judgment on its amended complaint.
On the same day that the Sun filed its motion for summary
judgment, Stephens filed a renewed motion to compel arbitration. The
district court denied Stephens' motion but stayed the proceedings to allow
Stephens to appeal.
On appeal, Stephens raises the following issue: whether the
district court erred by denying Stephens' motion to compel arbitration
because the issue raised by the Sun in its amended complaint is arbitrable
under the JOA.
The dispute is subject to arbitration
Stephens argues that the Sun's amended complaint falls
within the arbitration clause of the JOA, which requires arbitration of
disputes over the amount paid to the Sun under the JOA. Therefore, the
district court erred when it denied Stephens' renewed motion to compel
arbitration.
The Sun argues that the arbitration provision is narrowly
tailored to factual accounting disputes, and the current dispute, which
involves legal questions of contract interpretation, is outside the scope of
the provision.
Section 4.2 of the JOA states:
News and Editorial Allocations. The [RJ] and the
Sun shall each bear their own respective editorial
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costs and shall establish whatever budgets each
deems appropriate.
The Sun's amended complaint seeks declaratory judgment as to the
meaning of Section 4.2.
Appendix D of the JOA refers to the payments that are owed
to the Sun by the lid under the JOA, including how those payments are to
be calculated, how the Sun can audit the books and records used to
calculate those payments, and how disputes regarding the calculation of
those payments may be resolved. In relevant part, Appendix D states:
[The RJ] shall calculate the percentage
change . . between the earnings, before interest,
taxes, depreciation and amortization ("EBITDA")
[of the prior year and the year before the prior
year]. . . .
. . . [The] Sun shall have the right. . . to
appoint [a] certified public accounting firm or law
firm as [the] Sun's representative to examine and
audit the books and records of the [RJ] and the
other publications whose earnings are included in
EBITDA for purposes of verifying the
determinations of the changes to the Annual Profit
Payments. . . . If as a result of such an audit, there
is a dispute between [the] Sun and the [RJ] as to
amounts owed to [the] Sun and they are not able
to resolve the dispute within 30 days, they shall
select a certified public accountant to arbitrate the
dispute. . . . The arbitrator shall make an award to
[the] Sun in the amount of the arrearage, if any,
found to exist . . . .
Whether a dispute is subject to arbitration is an issue of
contract interpretation that this court reviews de novo. Clark Cty. Pub.
Emps. Ass'n ii Pearson, 106 Nev. 587, 590, 798 P.2d 136, 137 (1990). "In
.
Nevada, disputes concerning the arbitrability of a subject matter are
resolved under a presumption in favor of arbitration." City of Reno v. Int?
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Ass'n of Firefighters, Local 731, 130 Nev., Adv. Op. 100, 340 P.3d 589, 593
(2014). "Courts should therefore order arbitration of particular grievances
unless it may be said with positive assurance that the arbitration clause is
not susceptible of an interpretation that covers the asserted dispute." Id.
(internal quotations omitted).
Shy v. Navistar International Corp.
In deciding this case, we find the Sixth Circuit Court of
Appeals' decision in Shy v. Navistar International Corp., 781 F.3d 820 (6th
Cir. 2015), to be instructive. In Shy, Navistar entered into an agreement
and consent decree that obligated it to make yearly profit-sharing
payments to a trust for retired Navistar employees. Id. at 822. The
methods for calculating and enforcing Navistar's obligation were outlined
in an appendix to the agreement and decree. Id. Within the appendix was
a section requiring "a regular report by Navistar to the [trust] of financial
information necessary to confirm that Navistar was making contributions
in the amounts required by the [appendix]." Id. at 822-23. That section
also contained an arbitration provision requiring disputes over the
information or calculations provided by Navistar to be subject to binding
arbitration by an accountant. Id. at 823. The trust filed a complaint
against Navistar, alleging that "Navistar had manipulated its corporate
structure and accounting analysis to eliminate its profit-sharing
obligations" in violation of the appendix to the agreement and consent
decree. Id. at 824. Navistar moved to dismiss the complaint, arguing that
all of the trust's claims were subject to arbitration. Id.
The Sixth Circuit held that because the claims in the trust's
complaint were "disput[ing] the categorization of various aspects of
Navistar's business in the reports Navistar provide[d]," the trust was
essentially "disputing the 'information' provided by Navistar." Id. at 825.
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Therefore, because the arbitration agreement applied to disputes of
information or calculations, the trust's complaints were subject to
arbitration. Id.
The Sixth Circuit also weighed in on whether the fact that the
terms of the arbitration provision, which stated that an accountant would
be selected as arbitrator, indicated that the provision only applied to
questions of accounting and not to questions of contract interpretation,
which would involve questions of law. Id. at 825-26. First, it held that
while
the accountant-based nature of the dispute
resolution procedure at most creates some
ambiguity as to whether the scope of disputes over
"information or calculation[s]" was intended to be
restricted to disputes in which no legal analysis
whatsoever might be necessary[,] . . . the
otherwise unqualified language of the agreement
trumps any assumption that the parties would not
have committed legal disputes to an accountant's
resolution.
Id. (first alteration in original). Second, the Shy court held that "the
contract disputes involved in the [trust]'s classification-based arguments
are relatively simple and closely related to [the subject of] accounting; it is
reasonable to suppose that the parties to the agreement intended such
disputes to be arbitrated." Id. at 826. Therefore, because the issues raised
by the trust "were at least arguably included in the arbitration clause[,]"
"the strong federal policy in favor of arbitration resolves any doubts as to
the parties' intentions in favor of arbitration." Id. at 827.
The contract in Shy is very similar to that of the JOA in the
current case in that (1) both require yearly payments according to a
formula provided in an appendix; (2) both allow for the information used
to calculate the payments to be provided to the party receiving the
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payments—the trust in Shy automatically received a report containing
this information every year while in the current case the Sun must
request an audit to be performed of the RJ's books; (3) both require that
disputes arising from the report or audit are to be arbitrated, although in
Shy the clause referred to disputes over information or calculations while
the clause in the current case refers to disputes "as to amounts owed to
[the] Sun"; and (4) both state that an accountant shall act as the
arbitrator. Id. at 822-23, 825.
We therefore hold that, like Shy, by disputing the meaning of
the provision of the JOA requiring the newspapers to bear their own
editorial costs, the Sun is essentially disputing the "amounts owed to [the]
Sun" pursuant to an audit under Appendix D of the JOA. We also hold
that this dispute is "relatively simple and closely related to [the subject of]
accounting' and that "it is reasonable to suppose that the parties to the
agreement intended such disputes to be arbitrated." Id. at 826. Thus,
although the accountant-based arbitration provision in the JOA creates
some ambiguity as to whether it "was intended to be restricted to disputes
in which no legal analysis whatsoever might be necessary," we conclude
that the "otherwise unqualified language of the agreement" and "the
strong federal policy in favor of arbitration" suggest that the current
dispute is subject to arbitration. Id. at 825, 827.
Conclusion
By disputing whether each newspaper should bear its own
editorial costs, the Sun is essentially disputing the amounts owed to it
under the JOA and therefore the dispute falls within the scope of the
JOA's arbitration provision. Furthermore, because this dispute is
relatively simple and closely related to the subject of accounting, it is
reasonable that the parties to the agreement intended it to be arbitrated.
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Lastly, any ambiguity in the arbitration provision should be resolved in
favor of arbitration. Therefore, we
ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order.'
, J.
Hardesty
J.
Douglas
Gibbons
cc: Hon. Elizabeth Goff Gonzalez, District Judge
Ara H. Shirinian, Settlement Judge
Morris Law Group
Lewis Roca Rothgerber Christie LLP/Reno
Moran Brandon Bendavid Moran
Eighth District Court Clerk
1 The Honorable Ron D. Parraguirre, Chief Justice, and the
Honorable Kristina Pickering, Justice, voluntarily recused themselves
from participation in the decision of this matter.
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