Summary
The Eighth Circuit held that removal under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards was proper because the related arbitration could conceivably affect the outcome of the plaintiffs’ environmental-injury case. The court declined to exercise pendent appellate jurisdiction over the denial of a discretionary stay. It affirmed the denial of a mandatory stay under 9 U.S.C. § 3, concluding that the claims were related to, but not referable to, the arbitration.
Topics
Practice areas
Questions Presented
- Whether the action was removable under 9 U.S.C. § 205 because it related to an arbitration agreement falling under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
- Whether the Eighth Circuit had pendent appellate jurisdiction over the denial of a discretionary stay pending arbitration.
- Whether the issues in the children's tort and environmental claims were referable to arbitration so as to require a stay under 9 U.S.C. § 3.
- Whether the nonsignatory plaintiffs were bound to the arbitration agreement under a direct-benefits estoppel theory.
Holdings
- A case may be removed under 9 U.S.C. § 205 if the arbitration could conceivably affect the outcome of the case. Because the related arbitration could affect issues such as ownership, causation, and the possible involvement of Peru, this action was properly removed.
- The court lacked pendent appellate jurisdiction over the denial of a discretionary stay because resolution of the mandatory-stay claim did not necessarily resolve the discretionary-stay claim.
- The issues in the children's claims were not referable to the arbitration, so the district court properly denied a mandatory stay under 9 U.S.C. § 3.
- Direct-benefits estoppel did not require a stay because the children did not directly benefit from or invoke the Stock Transfer Agreement; their references to it were limited to challenging jurisdiction and refuting defendants' liability arguments.
Key quotations
“Joining the Fifth and Ninth Circuits, this court holds that a case may be removed under § 205 if the arbitration could conceivably affect the outcome of the case.” (843)
“For this court to exercise pendent appellate jurisdiction, the prerequisite is clear: the resolution of the direct claim must necessarily resolve the pendent claim.” (846)
“The issues in this case are not referable to arbitration.” (851)
“This court holds that the issues in this case “relate to” the arbitration but are not “referable to” arbitration.” (852)
Factual background
Thirty-five children living near a smelting facility in Peru alleged that environmental contamination caused by the facility's owners and operators injured them. Doe Run and related entities acquired and operated the facility under a Stock Transfer Agreement with Peru's state-owned predecessor, while Peru separately guaranteed the predecessor's obligations. Renco, a Doe Run affiliate, commenced arbitration against Peru seeking defense, indemnification, release, remediation, and related relief concerning environmental claims.
Procedural history
Plaintiffs originally sued in 2007 and voluntarily dismissed without prejudice, then refiled in 2008. Defendants removed under 9 U.S.C. § 205, and the district court denied plaintiffs' motion to remand. After Renco commenced arbitration against Peru, defendants moved for mandatory and discretionary stays; the district court denied both motions. The Eighth Circuit considered the interlocutory appeal and affirmed.