United States Court of Appeals,
Eleventh Circuit.
No. 94-4984.
KOTAM ELECTRONICS, INC., Plaintiff-Appellee,
v.
JBL CONSUMER PRODUCTS, INC., Defendant-Appellant.
July 28, 1995.
Appeal from the United States District Court for the Southern
District of Florida. (No. 94-779-CIV-FAM), Federico A. Moreno,
Judge.
Before HATCHETT and EDMONDSON, Circuit Judges, and JOHN R. GIBSON*,
Senior Circuit Judge.
HATCHETT, Circuit Judge:
In this appeal, the sole issue we address is whether the
holding in Cobb v. Lewis, 488 F.2d 41 (5th Cir.1974) that antitrust
claims are non-arbitrable remains controlling precedent in this
circuit in light of intervening decisions of the United States
Supreme Court. We affirm the district court's ruling that Cobb
controls.
FACTUAL AND PROCEDURAL BACKGROUND
From 1984 to 1992, Kotam Electronics, Inc. (Kotam), a dealer
and distributor of consumer electronics products, entered into
annual dealer and distributor contracts with JBL Consumer Products,
Inc. (JBL). These contracts contained identical provisions
requiring the parties to submit claims asserting violations of the
*
Honorable John R. Gibson, Senior U.S. Circuit Judge for the
Eighth Circuit, sitting by designation.
antitrust laws to binding arbitration.1 Despite the arbitration
provisions, Kotam brought this antitrust action alleging that JBL
engaged in price discrimination against Kotam and other dealers and
distributors in violation of the Robinson-Patman Act, 15 U.S.C. §
13.2 JBL moved to dismiss the complaint or, in the alternative, to
stay judicial proceedings pending arbitration pursuant to section
3 of the Federal Arbitration Act (FAA), 9 U.S.C. § 3.
The magistrate judge issued a report recommending that the
district court deny JBL's motion. The magistrate judge found that
Cobb v. Lewis, 488 F.2d 41 (5th Cir.1974), which held that
antitrust claims are non-arbitrable, constituted binding precedent
on this issue. In so doing, the magistrate judge rejected JBL's
contention that the Supreme Court has effectively overruled Cobb,
thus rendering Kotam's antitrust claims arbitrable. The district
court adopted the magistrate judge's report and recommendation.
This appeal followed.
1
The provisions provide, in relevant part:
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 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.
Judgment upon the award rendered by the Arbitrator
may be entered in any court having jurisdiction
thereof.
2
The district court adopted the magistrate judge's finding
that "Kotam does not deny that the claims at issue arose out of
the Dealer and Distributor Agreements." Kotam does not challenge
this finding on appeal.
DISCUSSION
We have jurisdiction 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's denial of JBL's motion to stay
judicial proceedings pending arbitration involved only 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).
In Cobb, the former Fifth Circuit "addressed [the] question[
] of the appropriateness of arbitration of issues arising under the
federal antitrust laws." Cobb, 488 F.2d at 47. The Fifth Circuit
concluded that "as a general matter, antitrust claims are not
appropriate subjects of arbitration." Cobb, 488 F.2d at 47.3 In
reaching this holding, the Cobb court followed the reasoning of the
Second Circuit's opinion in American Safety Equipment Corp. v. J.P.
Maguire & Co., 391 F.2d 821 (2d Cir.1968):
The American Safety Equipment Corp. case outlined three major
considerations supporting this rule. The first is the broad
range of public interests affected by private antitrust
claims. The Court recognized that "[a] claim under the
antitrust laws is not merely a private matter", because
private antitrust actions are an integral part of the effort
of the antitrust laws "to promote the national interest in a
competitive economy". 391 F.2d at 826. The Second Circuit
noted that it is doubtful Congress could have "intended such
claims to be resolved elsewhere than in the courts". Id. at
827. The second is the complexity of the issues and the
extensiveness and diversity of the evidence antitrust cases
3
The court in Cobb recognized "an "exception' to this "rule'
against arbitration of antitrust issues for situations "when the
agreement to arbitrate is made after the dispute arises.' "
Cobb, 488 F.2d at 47 (quoting Cobb v. Network Cinema Corp., 339
F.Supp. 95, 99 (N.D.Ga.1972)). This exception has no application
to this case.
usually involve. These render antitrust claims "far better
suited to judicial than to arbitration procedures". Id. The
third is 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". Id. at 827.
We are persuaded by these considerations.
Cobb, 488 F.2d at 47 (alteration in original).
In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th
Cir.1981) (en banc ), this court adopted as binding precedent all
decisions of the former Fifth Circuit rendered prior to October 1,
1981. This court also adopted the rule "that a prior decision of
the circuit (panel or en banc) could not be overruled by a panel
but only by the court sitting en banc." Bonner, 661 F.2d at 1209;
see also United States v. Machado, 804 F.2d 1537, 1543 (11th
Cir.1986) ("Only a decision by this court sitting en banc or by the
United States Supreme Court can overrule a prior panel decision.").
The Supreme Court has not expressly overruled Cobb, and neither has
an en banc court of this circuit.
"At the same time, however, according to both Eleventh and
Fifth Circuit precedent this panel may not overlook decisions by
the Supreme Court which implicitly overrule a binding circuit
decision, or undercut its rationale." Leach v. Pan American World
Airways, 842 F.2d 285, 286 (11th Cir.1988). JBL contends that the
Supreme Court has substantially undercut the rationale of Cobb in
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) and its progeny. Thus,
JBL argues that this panel has the authority to hold that Cobb is
no longer viable and that Kotam's antitrust claim is arbitrable.
We first address the Mitsubishi decision.
In Mitsubishi, Mitsubishi Motors Corporation (Mitsubishi),
Soler Chrysler-Plymouth, Inc. (Soler), and Chrysler International,
S.A. (CISA) were parties to a sales agreement containing a clause
providing for arbitration for all controversies arising out of the
agreement in accordance with the rules of the Japan Commercial
Arbitration Association. Mitsubishi, 473 U.S. at 616-17, 105 S.Ct.
at 3348-49. After disputes arose among the parties, Mitsubishi
brought an action in federal court, in part under the FAA, 9 U.S.C.
§ 1 et seq., seeking to compel arbitration. Mitsubishi, 473 U.S.
at 617-19, 105 S.Ct. at 3349-50. Soler counterclaimed against
Mitsubishi and CISA, asserting, in part, claims under the Sherman
Act, 15 U.S.C. § 1 et seq. Soler resisted the arbitration of its
antitrust claims. Mitsubishi, 473 U.S. at 619-21, 105 S.Ct. at
3350-51. The Supreme Court held that Soler's antitrust claims were
arbitrable. Mitsubishi, 473 U.S. at 629, 640, 105 S.Ct. at 3355,
3360-61.
In its analysis, the Supreme Court rejected the American
Safety considerations endorsed in Cobb. See Mitsubishi, 473 U.S.
at 637, 105 S.Ct. at 3359 ("[S]o long as the prospective litigant
effectively may vindicate its statutory cause of action in the
arbitral forum, the statute will continue to serve both its
remedial and deterrent function."); at 633-34, 105 S.Ct. at 3357
("[T]he factor of potential complexity alone does not persuade us
that an arbitral tribunal could not properly handle an antitrust
matter."); and at 634, 105 S.Ct. at 3357. ("[W]e also reject the
proposition that an arbitration panel will pose too great a danger
of innate hostility to the constraints on business conduct that
antitrust law imposes."). Therefore, JBL asserts that Mitsubishi
has undercut the rationale of Cobb to the extent that Cobb no
longer constitutes binding precedent on this panel.
Contrary to JBL's assertions, we do not believe that
Mitsubishi has undermined Cobb. In Mitsubishi, the Court stated
that it "granted certiorari primarily to consider whether an
American court should enforce an agreement to resolve antitrust
claims by arbitration when that agreement arises from an
international transaction." Mitsubishi, 473 U.S. at 624, 105 S.Ct.
at 3352 (emphasis added). Moreover, in deciding this issue, the
Court stated that:
We find it unnecessary to assess the legitimacy of the
American Safety doctrine as applied to agreements to arbitrate
arising from domestic transactions .... [W]e conclude that
concerns of international comity, respect for the capacities
of foreign and transnational tribunals, and sensitivity to the
needs of the international commercial system for
predictability in the resolution of disputes require that we
enforce the parties' agreement, even assuming that a contrary
result would be forthcoming in a domestic context.
Mitsubishi, 473 U.S. at 629, 105 S.Ct. at 3355 (emphasis added).4
In fact, the Court stated in introducing its application of the
American Safety doctrine that "we must weigh the concerns of
American Safety against a strong belief in the efficacy of arbitral
procedures for the resolution of international commercial disputes
and an equal commitment to the enforcement of freely negotiated
choice-of-forum clauses." Mitsubishi, 473 U.S. at 631, 105 S.Ct.
at 3356. The Court thus expressed its skepticism with American
4
JBL does not dispute that Kotam's lawsuit is a domestic
antitrust action.
Safety when applying that doctrine only to the international
commercial realm. See Mitsubishi, 473 U.S. at 631-37, 105 S.Ct. at
3356-59; see also Mitsubishi at 658, 105 S.Ct. at 3370 ("The Court
assumes for the purposes of its decision that the antitrust issues
would not be arbitrable if this were a purely domestic dispute ...
but holds that the international character of the controversy makes
it arbitrable.") (Stevens, J., dissenting). Consequently, we
conclude that Mitsubishi has not undercut the rationale of American
Safety and Cobb as applied to domestic antitrust actions. Thus,
Cobb remains the law of this circuit, and we are bound to apply it.
None of the cases the Supreme Court has decided subsequent to
Mitsubishi compel us to change this conclusion. No question exists
that the Court has relied on Mitsubishi to expand the scope of
statutory claims subject to arbitration. See Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114
L.Ed.2d 26 (1991) (Age Discrimination in Employment Act of 1967);
Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S.
477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989) (section 12(2) of the
Securities and Exchange Act of 1933); Shearson/American Express,
Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185
(1987) (section 10(b) of the Securities and Exchange Act of 1934
and the civil provisions of the Racketeer Influenced and Corrupt
Organizations Act). In none of these cases, however, did the Court
speak directly to the propriety of arbitrating domestic antitrust
claims. Accordingly, they do not change our view that
Cobb remains
controlling precedent in this circuit.
Neither does JBL's reliance on Nghiem v. NEC Electronic, Inc.,
25 F.3d 1437 (9th Cir.), cert. denied, --- U.S. ----, 115 S.Ct.
638, 130 L.Ed.2d 544 (1994). In Nghiem, a panel of the Ninth
Circuit, subject to a similar "prior panel rule" as this court,
relied on Mitsubishi to overrule Lake Communications, Inc. v. ICC
Corp., 738 F.2d 1473 (9th Cir.1984), a decision that endorsed the
American Safety reasoning and holding. The Nghiem court provided
three reasons to support its holding. First, the court noted that
in Gilmer "the Supreme Court ... cited Mitsubishi for the general
proposition that antitrust claims can be arbitrated." Nghiem, 25
F.3d at 1441. Second, the court stated that " Mitsubishi ...
specifically refuted the analysis of American Safety." Nghiem, 25
F.3d at 1441. Third, the court indicated that "Mitsubishi may be
seen as evidence of the Supreme Court's desire to make statutory
rights subject to arbitration." Nghiem, 25 F.3d at 1442. Our
analysis has already revealed that we disagree with the Ninth
Circuit's second and third reasons in support of its outcome in
Nghiem. With regard to the first reason, we believe that the best
source for deciding what Mitsubishi held is the Mitsubishi decision
itself, and not a phrase in a subsequent case summarizing
(imprecisely, we believe) the Mitsubishi holding. See Gilmer, 500
U.S. at 26, 111 S.Ct. at 1652, 114 L.Ed.2d at 37. In any event,
given the precise issue in this case, JBL's reliance on authority
outside of the Supreme Court or this circuit is misplaced.
Finally, Mitsubishi and the cases mentioned above have placed
"[t]he burden ... on the party opposing arbitration ... to show
that Congress intended to preclude a waiver of judicial remedies
for the statutory rights at issue." McMahon, 482 U.S. at 227, 107
S.Ct. at 2337-38; see also Gilmer, 500 U.S. at 26, 111 S.Ct. at
1652, 114 L.Ed.2d at 37; Rodriguez de Quijas, 490 U.S. at 483, 109
S.Ct. at 1921; Mitsubishi, 473 U.S. at 628, 105 S.Ct. at 3354-55.
We believe that Kotam has met this burden. "If such a[ ]
[congressional] intention exists, it will be discoverable in the
text of the [statute], its legislative history, or an "inherent
conflict' between arbitration and the [statute's] underlying
purposes." Gilmer, 500 U.S. at 26, 111 S.Ct. at 1652, 114 L.Ed.2d
at 37 (quoting McMahon, 482 U.S. at 227, 107 S.Ct. at 2337-38). As
outlined above, the Cobb court held that an inherent conflict
exists between arbitration and the underlying purposes of the
antitrust laws. See Cobb, 488 F.2d at 47 ("We agree that "the
pervasive public interest in enforcement of the antitrust laws, and
the nature of the claims that arise in such cases, combine to make
the outcome [that antitrust claims are non-arbitrable] clear'[.]")
(quoting American Safety, 391 F.2d at 828). Cobb constitutes
binding precedent on this panel. Therefore, because Kotam invoked
Cobb in opposing JBL's motion, Kotam has met its burden under
Mitsubishi and its progeny.
CONCLUSION
In sum, we hold that the district court properly relied on
Cobb in denying JBL's motion to stay judicial proceedings pending
arbitration. Accordingly, we affirm the judgment of the district
court.
AFFIRMED.
JOHN R. GIBSON, Senior Circuit Judge, dissenting:
The court today holds that Cobb v. Lewis, 488 F.2d 41 (5th
Cir.1974), is controlling circuit precedent and rejects the
argument that Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), is
intervening authority justifying this panel's departure from Cobb.
I respectfully dissent.
Mitsubishi makes plain that it deals only with arbitration of
antitrust cases in an international setting and, on several
occasions, disavows that it applies to domestic transactions. 473
U.S. at 629, 105 S.Ct. at 3355. Nevertheless, Mitsubishi devotes
nearly four pages to analyzing American Safety Equipment Corp. v.
J.P. Maguire & Co., 391 F.2d 821 (2d Cir.1968). The Court
considers and rejects the four ingredients supporting American
Safety 's conclusion that antitrust cases may not be arbitrated.
Only one of the four ingredients in American Safety, the
proposition that an arbitration panel will threaten business
conduct because of innate hostility to antitrust law, reflects any
difference between a domestic and international case. In turn,
Cobb is based on American Safety. Although a few other cases are
referred to in Cobb, American Safety is the first and foremost
authority discussed.
I conclude that Mitsubishi deals a death blow to Cobb.
Mitsubishi either overruled Cobb, or at least, destroyed circuit
authority refusing to enforce arbitration agreements in domestic
antitrust disputes.
Thus, I believe that the circuit operates on a clean slate,
and that it would be wise to directly consider the issue. If we
did so, I would conclude, like the Ninth Circuit and several other
district courts, that agreements to arbitrate domestic antitrust
disputes are enforceable. Nghiem v. NEC Elec., Inc., 25 F.3d 1437
(9th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 638, 130 L.Ed.2d
544 (1994); see also Sanjuan v. American Bd. of Psychiatry and
Neurology, Inc., 40 F.3d 247, 250 (7th Cir.1994).
I would reverse the district court's order and direct the
district court to enter a stay to allow arbitration of the
antitrust claims.