[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 94-4984
D. C. Docket No. 94-779-CIV-FAM
KOTAM ELECTRONICS, INC.,
Plaintiff-Appellee,
versus
JBL CONSUMER PRODUCTS, INC.,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Florida
(August 19, 1996)
Before TJOFLAT, Chief Judge, KRAVITCH, HATCHETT, ANDERSON,
EDMONDSON, COX, BIRCH, DUBINA, BLACK, CARNES and BARKETT, Circuit
Judges.
DUBINA, Circuit Judge:
We voted to rehear this case en banc to determine whether
the holding in Cobb v. Lewis, 488 F.2d 41 (5th Cir. 1974),1 that
antitrust claims are non-arbitrable, remains controlling
precedent in this circuit in light of intervening decisions of
the United States Supreme Court. In 1985, the Supreme Court made
clear that antitrust disputes in the international context are
arbitrable. See Mitsubishi Motors Corp. v. Soler Chrysler-
Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444
(1985). Today we hold that antitrust disputes in the domestic
context are arbitrable as well.
I. BACKGROUND
Plaintiff-Appellee Kotam Electronics, Inc. ("Kotam") sells
and distributes consumer electronic products. From approximately
1984 to 1992, Kotam entered into annual dealer and distributor
contracts with Defendant-Appellant JBL Consumer Products, Inc.
("JBL"). Each of these contracts contained the following
arbitration clause explicitly requiring the parties to submit
antitrust claims to binding arbitration:
22. GOVERNING LAW AND ARBITRATION
b. Any controversy or claim arising out of
or relating to this Agreement, or the breach
or validity thereof, whether at common law or
under statute, including without limitation
claims asserting violation of the antitrust
1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th
Cir. 1981) (en banc), this court adopted as binding precedent all
decisions of the former Fifth Circuit handed down prior to
October 1, 1981.
2
laws, shall be settled by final and binding
arbitration in accordance with the Rules for
Commercial Arbitration of the American
Arbitration Association ("AAA") in effect at
the time of the execution of this Agreement.
(emphasis added).
In 1994, despite its agreement to arbitrate, Kotam filed
suit in federal district court against JBL alleging price
discrimination in violation of the Robinson-Patman Act, 15 U.S.C.
§ 13(a).2 In response, JBL moved to dismiss the complaint or,
in the alternative, to stay the judicial proceedings pending
arbitration pursuant to section 3 of the Federal Arbitration Act
(FAA), 9 U.S.C. § 3. The district court, relying on Cobb v.
Lewis, 488 F.2d 41 (5th Cir. 1974), denied JBL's motion.
JBL appealed, and a divided panel of this court affirmed the
district court's judgment. See Kotam Elecs., Inc. v. JBL
Consumer Products, Inc., 59 F.3d 1155 (11th Cir. 1995)(Gibson, J.
dissenting). A majority of the judges of this court in regular
active service voted to rehear the case en banc, see Kotam
Elecs., Inc. v. JBL Consumer Products, Inc., 69 F.3d 1097 (11th
Cir. 1995),3 and we now reverse the judgment of the district
court.
2
There is no dispute that Kotam's single claim for price
discrimination falls squarely within the terms of the parties'
agreement to arbitrate "claims asserting violation of the
antitrust laws."
3
This order vacated the panel's opinion. See 11th Cir. R.
35-11 ("Unless otherwise expressly provided, the effect of
granting a rehearing en banc is to vacate the panel opinion and
to stay the mandate.").
3
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction over this appeal pursuant to section 16
of the FAA, which provides that "[a]n appeal may be taken from an
order refusing a stay of any action under section 3 [of the
FAA]." 9 U.S.C. § 16(a)(1)(A). The district court denied JBL's
motion to stay judicial proceedings pending arbitration based on
its resolution of a question of law. Therefore, we review the
district court's decision de novo. See Luckie v. Smith Barney,
Harris Upham & Co., Inc., 999 F.2d 509, 512 (11th Cir. 1993).
III. DISCUSSION
Kotam argues that the district court correctly held that Cobb
remains controlling precedent in the Eleventh Circuit. In
contrast, JBL argues that in light of intervening decisions of the
Supreme Court, specifically Mitsubishi and its progeny, Cobb's
holding that antitrust claims are non-arbitrable can no longer be
considered controlling precedent in this circuit. We agree with
JBL.
A. Cobb v. Lewis
In 1974, the former Fifth Circuit held that, "as a general
matter, antitrust claims are not appropriate subjects of
arbitration." See Cobb, 488 F.2d at 47. Cobb involved an
agreement between the franchiser of a nationwide chain of motion
picture theaters and the owners of individual theaters. Id. at 43.
The individual theater owners filed a class action alleging, among
other things, violations of the Sherman Act, 15 U.S.C. § 1, and the
Clayton Act, 15 U.S.C. § 77e. Id. at 43-44. In concluding that
4
antitrust claims are not appropriate subjects of arbitration, the
Cobb court followed the lead of the Second, Eighth, and Ninth
Circuits. See Cobb, 488 F.2d at 47, relying on American Safety
Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 825 (2nd Cir.
1968); Helfenbsin v. International Indus. Inc., 438 F.2d 1068 (8th
Cir.), cert. denied, 404 U.S. 872, 92 S.Ct. 63, 30 L.Ed.2d 115
(1971); A & E Plastik Pak Co. v. Monsanto Co. , 396 F.2d 710 (9th
Cir. 1968).
Specifically, the Cobb panel expressly premised its holding on
"three major considerations" outlined by the Second Circuit in
American Safety: (1) the important role of private litigants in
enforcing the antitrust laws; (2) "the complexity of the issues and
the extensiveness and diversity of the evidence antitrust cases
usually involve;" and (3) "the questionable propriety of entrusting
the decision of antitrust issues to commercial arbitrators, who
`are frequently men drawn for their business expertise,' when `it
is the business community generally that is regulated by the
antitrust laws.'" Cobb, 488 F.2d at 47 (citing American Safety,
391 F.2d at 826-27).4
B. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.
4
The American Safety court also relied on two other considerations not
cited by the Cobb court: (1) that arbitration clauses might be contracts of
adhesion; and (2) that the claim in American Safety was "that the agreement itself
was an instrument of illegality." 391 F.2d at 827. (emphasis added). In
Mitsubishi, the Supreme Court rejected the first consideration, noting that "[t]he
mere appearance of an antitrust dispute does not alone warrant invalidation of
the selected forum on the undemonstrated assumption that the arbitration clause
is tainted." Mitsubishi, 473 U.S. at 632, 105 S.Ct. at 3357. While the second
rationale has not been called into question, it was not relied upon by the Cobb
court and does not apply under the facts of this case.
5
In 1985, the Supreme Court explicitly rejected the American
Safety doctrine and each of the underlying considerations upon
which the Cobb court relied. See Mitsubishi, 473 U.S. 614, 105
S.Ct. 3346. In Mitsubishi, the parties entered into a sales
agreement containing an arbitration clause. The clause provided
for arbitration of all controversies arising out of the agreement
in accordance with the rules of the Japan Commercial Arbitration
Association. Id. 473 U.S. at 617, 105 S.Ct. at 3349. When
disputes arose among the parties, Soler resisted the arbitration of
its antitrust claims on the basis of the American Safety doctrine.
Id. 473 U.S. at 620-23, 105 S.Ct. at 3350-52. However, the Supreme
Court explicitly rejected the American Safety considerations and
held that, in the international context, antitrust claims are
arbitrable.
First, the Court concluded that "[t]he importance of the
private damages remedy . . . does not compel the conclusion that it
may not be sought outside an American court." Mitsubishi, 473 U.S.
at 635, 105 S.Ct. at 3358. The Mitsubishi Court reasoned that
arbitrators are bound, as are judges, to apply the antitrust laws,
and that there is no basis for assuming that arbitration will not
provide an adequate mechanism for enforcement of the antitrust
laws. Id. 473 U.S. at 635-37, 105 S.Ct. at 3358-60. Second, the
Court dismissed the consideration that antitrust suits are "prone
to complications" and are therefore ill-suited for arbitration.
Id. 473 U.S. at 633, 105 S.Ct. at 3357. The Court emphasized that
adaptability and access to expertise are hallmarks of arbitration
6
and noted that the "anticipated subject matter of the dispute may
be taken into account when the arbitrators are appointed." Id.
Third, the Court declined to assume that arbitration panels will be
hostile to the constraints on business conduct that antitrust law
imposes. As the Court stated, "We decline to indulge the
presumption that the parties and arbitral body conducting a
proceeding will be unable or unwilling to retain competent,
conscientious, and impartial arbitrators." Id. 473 U.S. at 634,
105 S.Ct. at 3358.
It is true, as Kotam points out, that the Mitsubishi Court
noted at the outset of its opinion that it found it "unnecessary to
assess the legitimacy of the American Safety doctrine as applied to
agreements to arbitrate arising from domestic transactions." 473
U.S. at 629, 105 S.Ct. at 3355; see id. ("we conclude that concerns
of international comity . . . require that we enforce the parties'
agreement, even assuming that a contrary result would be
forthcoming in a domestic context"). However, we do not think that
this language decides the issue currently pending before this
court. While limited to the international context by its own
facts, Mitsubishi nevertheless substantially weakened the decision
in Cobb by dismantling all of the American Safety policy
considerations underlying the former Fifth Circuit's holding in
Cobb.
The American Safety doctrine, and consequently Cobb, is
further undermined by Mitsubishi's emphasis on the "federal policy
favoring arbitration." As the Supreme Court explained, "`the
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preeminent concern of Congress in passing the [FAA] was to enforce
private agreements into which parties had entered,' a concern which
`requires that we rigorously enforce agreements to arbitrate.'"
Mitsubishi, 473 U.S. at 625-26, 105 S.Ct. at 3353 (citing Dean
Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238,
84 L.Ed.2d 158 (1985)). Moreover, the Mitsubishi Court stated that
a party, having agreed to arbitrate, should be held to that
agreement unless Congress has "evinced an intention to preclude a
waiver of judicial remedies for the statutory rights at issue."
Mitsubishi, 473 U.S. at 628, 105 S.Ct. at 3354-55. Finally, the
Mitsubishi Court could find no evidence of Congressional intention
to preclude arbitration of antitrust claims in the text or
legislative history of either the Sherman Act or the FAA. See id.
473 U.S. at 628-29, 105 S.Ct. at 3355. Thus, we conclude that JBL
is correct in its contention that the decision in Mitsubishi casts
considerable doubt on the viability of Cobb in this circuit.
C. Mitsubishi's Progeny.
The Supreme Court itself has acknowledged that its rejection
of the American Safety considerations in Mitsubishi has application
outside the international context. Two years after the Mitsubishi
decision, the Supreme Court rendered its decision in
Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct.
2332, 96 L.Ed.2d 185 (1987) (hereinafter "McMahon"). In McMahon,
the Supreme Court again rejected the American Safety
considerations; however, it also discarded the distinction between
domestic and international transactions with respect to arbitration
8
of § 10(b) of the Securities Exchange Act of 1934, and civil RICO
claims. Most notably, the Supreme Court rejected the Second
Circuit's holding that the American Safety doctrine was still good
law, despite Mitsubishi, on the ground that Mitsubishi pertained
only to international transactions. Id. 482 U.S. at 238-42, 107
S.Ct. at 2344-46. The Supreme Court concluded that "[a]lthough the
holding in Mitsubishi was limited to the international context,
much of its reasoning is equally applicable [to domestic civil RICO
claims]." McMahon, 482 U.S. at 239, 107 S.Ct. at 2344; see also
id. 482 U.S. at 232, 107 S.Ct. at 2341 (declining to limit its
earlier decision in Scherk v. Alberto-Culver Co., 417 U.S. 506, 94
S.Ct. 2449, 41 L.Ed.2d 270 (1974), which involved the arbitrability
of § 10(b) claims, to cases arising in an international setting).5
Furthermore, the Supreme Court has since cited Mitsubishi for
the general proposition that antitrust claims are arbitrable.
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28, 111 S.Ct.
5
In McMahon, the Supreme Court also revisited an earlier
case, Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed 168
(1953), and that Court's concerns about arbitration. The McMahon
Court noted that Wilko stood for the proposition that arbitration
would "weaken [a plaintiffs'] ability to recover" under the
securities laws, and that the arbitration agreement in that case
was unenforceable "only because arbitration was judged inadequate
to enforce the statutory rights created by § 12(2) [of the
Securities Act, 15 U.S.C. § 771(2)]." McMahon, 482 U.S. at 228-
31, 107 S.Ct. at 2338-40. Questioning that reasoning, the Court
stated "[i]t is difficult to reconcile Wilko's mistrust of the
arbitral process with this Court's subsequent decisions involving
the Arbitration Act." McMahon, 482 U.S. at 231-32, 107 S.Ct. at
2340 (citing Mitsubishi). Ultimately, the Court overruled Wilko
in Rodriguez-De Quijas v. Shearson/American Express Inc., 490
U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989), relying largely
on McMahon and Mitsubishi.
9
1647, 1652, 114 L.Ed.2d 26 (1991) ("claims under [the Sherman Act]
are appropriate for arbitration"). See also Matsushita Elecs.
Indus. Co. v. Epstein, __ U.S. __, 116 S.Ct. 873, 883, 134 L.Ed.2d
6 (1996) ("As [McMahon] demonstrates, a statute conferring
exclusive federal jurisdiction for a certain class of claims does
not necessarily require resolution of those claims in federal
court.").
D. Other Circuits' Treatment Of This Issue.
Finally, we find it persuasive that since the Supreme Court's
ruling in Mitsubishi, four other circuits have expressed the view
that the American Safety doctrine is incompatible with the Supreme
Court's intervening decisions and that domestic antitrust claims
are therefore arbitrable. The Ninth Circuit found that:
Given the Court's meticulous step-by-step disembowelment
of the American Safety doctrine, this circuit will no
longer follow American Safety. We hold that Mitsubishi
effectively overruled American Safety and its progeny.
Nghiem v. NEC Elec., Inc., 25 F.3d 1437, 1441-42 (9th Cir.), cert.
denied, __ U.S. __, 115 S.Ct. 638, 130 L.Ed.2d (1994) (citations
omitted). Likewise, the Second Circuit affirmed, without opinion,
a district court's holding that "the reasoning of Mitsubishi
should apply with equal force to domestic claims" and that "`none
of the justifications for the American Safety doctrine retain their
vigor.'" Hough v. Merrill Lynch, 757 F.Supp. 283, 286 (S.D.N.Y.),
aff'd without op., 946 F.2d 883 (2d Cir. 1991) (citations omitted).
The Seventh Circuit, while not explicitly deciding the issue,
has stated in dicta that companies "may agree to arbitrate their
antitrust disputes -- certainly so for international transactions,
10
. . . and likely so for domestic transactions." Sanjuan v.
American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 250
(7th Cir. 1994), cert. denied, __ U.S. __, 116 S.Ct. 1044, 134
L.Ed.2d 191 (1996); see also Smokey Greenshaw Cotton Co., Inc. v.
Merrill Lynch, Pierce, Fenner and Smith, Inc., 785 F.2d 1282, 1282
(5th Cir. 1986) (per curiam, on petition for rehearing and
suggestion for rehearing en banc), cert. denied, 482 U.S. 928, 107
S.Ct. 3211, 96 L.Ed.2d 698 (1987) (stating, though not in an
antitrust context, that "although Mitsubishi arose in an
international antitrust dispute and its holding purports to be
limited to that context, we believe that its broad language may
carry significance for domestic disputes as well").
IV. CONCLUSION
In light of Mitsubishi and its progeny, as well as the
persuasive authority from our sister circuits, we hold that Cobb is
no longer controlling precedent in this circuit and that
arbitration agreements concerning domestic antitrust claims are
enforceable. Accordingly, we reverse the district court's judgment
denying JBL's motion to stay judicial proceedings pending
arbitration and remand this case for further proceedings consistent
with this opinion.
REVERSED and REMANDED.
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