Opposition Brief — Terminix International Co. Ltd. Partnership v. Jackson

No. 93-1000

In The nin

Supreme Court of the United States

October Term, 1993

¢

THE TERMINIX INTERNATIONAL COMPANY

LIMITED PARTNERSHIP and

ALLIED-BRUCE TERMINIX COMPANIES, INC.,

Petitioners,

MARK JACKSON and LAURIE JACKSON,

Respondents.

———-—- —-—— ¢ —__—___—_—_-

On Petition For A Writ Of Certiorari

To The Supreme Court Of Alabama

°

BRIEF OF RESPONDENTS IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

—— ——- ---——-- § -——-- —-—-—- --—-

RoNaALD W. Wise*

2000 Interstate Park Drive

Suite 201

Montgomery, Alabama 36109

(205) 270-1300

‘Counsel of Record

Attorney for Respondents

Mark Jack on and Laurie Jackson

COMKLE LAW BRIEF PRINTIN mm) 22 4

OR CALL COWLECT (402) 442-28

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QUESTION PRESENTED

Whether the Alabama Supreme Court correctly held

that Section 2 of the Federal Arbitration Act, 9 U.S.C. § 2,

does not apply to contracts, the performance of which

does not involve interstate commerce to such a degree

that a reasonable person must have “contemplated sub-

stantial interstate activity” at the time of the contract?

il

TABLE OF CONTENTS

Page

QUESTIONS PRESENEED 6c vdevescurncevcessauets i

TABLE OF GOINTRI Eas oscinds civcensateveuntavess ii

TABLE OF AUTHRORITIGS ¢ vcccncstecssccseccsvecns iii

STATEMENT OF THE CASE... cccvccsescovenceess 2

REASONS FOR DENYING THE WRIT............. 4

I. THE ALABAMA SUPREME COURT DID NOT

ERRONEOUSLY CONSTRUE THE “INVOLVING

COMMERCE” ELEMENT CONTAINED IN § 2

OF THE FEDERAL ARBITRATION ACT....... 4

fl. THE OPINION OF THE ALABAMA SUPREME

COURT IS NOT IN CONFLICT WITH FEDERAL

APPEALS CORPRSG, ¢ccdscedesacnsseatiees sass 7

CON LUIGI 6c cccicerdiacnereeiecare reverses 10

**e

TABLE OF AUTHORITIES

Page

Cases

Allied-Bruce Terminix Companies, Inc. v. Dobson, [Ms

1920473, August 13, 1993] __ So.2d ___ (Ala.

EE Oe ee eee Pee eT TE TT CCT 2, 4,9

Bennish v. North Carolina Dance Theater, Inc., 108

N.C. App. 42, 422 S.E.2d 335 (1992).............. 7,9

Bernhardt v. Polygraphic Co., 350 U.S. 198 (1956) ...... 6

Burke County Pub. Schools Bd. of Educ. v. Shaver

Partnership, 303 N.C. 408, 279 S.E.2d 816 (N.C.

ENE Ta cee Oona 7, 8,9

Del E. Webb Constr. v. Richardson Hosp. Auth., 823

eC ie ces ec dae enees ciuswerhecen es 7

Foster v. Turley, 808 F.2d 38 (10th Cir. 1986) .......... 7

Home Buyers Warranty Corp. Il v. Lopez, NO. 93-995 ..... 2

Metro Indus. Painting Corp. v. Terminal Constr. Co.,

287 F.2d 382 (2d Cir.), cert. denied, 368 U.S. 817

Rea tid GAG hohe 6 6040006 coy 4ene Wieden ess 4

Pathman Constr. Co. v. Knox County Hosp. Ass‘n,

526 N32 G6 Gind. 1975). ..00.cccccvvcceses. 7, 8,9

Perry v. Thomas, 482 U.S. 483 (1987)................ 5, 6

S&H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d

ee SE EN bow oeeyeedndsdewkvesavs céweess 3

Snyder v. Smith, 736 F.2d 409 (7th Cir. 1984), cert.

ee UY MN UU GOMOD s occ cwensieenssvetevens 7

STATUTES

Federal Arbitration Act, 9 U.S.C. § 2............ 1, 4,5

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No. 93-1000

7

In The

Supreme Court of the United States

October Term, 1993

*

THE TERMINIX INTERNATIONAL COMPANY

LIMITED PARTNERSHIP and

ALLIED-BRUCE TERMINIX COMPANIES, INC.,

Petitioners,

MARK JACKSON and LAURIE JACKSON,

Respondents.

*

On Petition For A Writ Of Certiorari

To The Supreme Court Of Alabama

.

BRIEF OF RESPONDENTS IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

¢

Respondents Mark Jackson and Laurie Jackson

hereby submit their Brief in Opposition to the Petition for

a Writ of Certiorari to the Supreme Court of Alabama

filed by Petitioners. For the reasons set forth herein,

respondents urge the Court to deny the Petition for a Writ

of Certiorari.

We note preliminarily that this petition is one of three

that have been filed from several contemporaneous deci-

sions of the Alabama Supreme Court involving the scope

of the “involving commerce” language contained in sec-

tion 2 of the Federal Arbitration Act, 9 U.S.C. § 2. Home

nm

Buyers Warranty Corp. Il v. Lopez, NO. 93-995; Allied-Bruce

lerminix Cos. v. Dobson, No. 93-1001, Although this Brief

in Opposition is being filed prior to the opposition briefs

in the other two cases, we respectfully suggest that the

Court schedule all three petitions for the same conter-

ence, given the similarity of issues. Indeed, the petition in

this case merely incorporates by reference the substantive

arguments for granting review which were made in the

petition fled in Allied-Bruce Terminix Cos. v. Dobson, supra

And since the opposition briefs in the other two cases

will be tiled later this month, simultaneous consideration

of all three petitions will not unduly delay consideration

of this petition,

STATEMENT OF THE CASE

The salient facts in this case are as follows. In

essence, when respondents, the Jacksons, bought a home

in Montgomery, Alabama, they also acquired rights under

a termite protection plan from the previous owners with

their offices located in Montgomery, Alabama. (C.R. 1-3;

35). The purpose in the plan was to provide pest control

services at the respondents’ home in Montgomery Ala-

bama. When the Jacksons discovered termite damage in

their home was far more extensive than petitioners had

previously represented, they filed a Complaint in the

Montgomery County Circuit Court. (C.R. 1-6). Some

seven months later the petitioners filed a Motion to Com-

pel Arbitration and Stay Litigation. (C.R. 31-34). During

said seven months the petitioners filed requests for

admissions, interrogatories, requests tor production ot

documents, and took two depositions totaling over 100

pages. The plaintiffs, during that period of time, deposed

three individuals consisting of over 300 pages. (Cert. Pet

App. 7a). The trial court held that the pleadings and

evidence before it did not indicate a “sufficient nexus” to

bring it within the PAA. (Cert. Pet. App. 6a). It is to be

noted that the petitioners did not present any evidence

whatsoever evidencing interstate commerce in support of

their Motion to Compel Arbitration or in the hearing held

thereon. !

The Alabama Supreme Court affirmed, finding that

the performance of the contract “did not involve inter-

state commerce to such a degree that a reasonable person

must have contemplated substantial interstate activity”

when they entered into the same. (Cert. Pet. App. 4a)

Several factual assertions in the petition warrant a

brief response. The petitioner states at page 3 of his

Certiorari Petition that “the Supreme Court of Alabama

he!d that the FAA did not apply to a contract containing

an arbitration agreement because, notwithstanding the

' As is stated by Petitioners at page 4 at f. 3, the trial court

held in the alternative that petitioners had waived their right to

arbitration based upon the “totality of the circumstances” in

that they acted inconsistent with the arbitration right by waiting

7 months after the complaint was served before filing their

Motion to Compel Arbitration and Stay Litigation. During said

7 months the certified record in the court below indicates that

the petitioners filed Request for admissions, Interrogatories,

Request for Production of Documents, as well as deposing two

people. Further, during this period of time, the respondents

took several depositions consisting of over 300 pages. See, S&H

Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d 1507 (11th Cir

1990).

contract’s actual nexus with interstate commerce, the par-

ties had not ‘contemplated . . . substantial interstate activity.’

Pet. App. 4a (citing Metro Indus. Painting Corp. v. Terminal

Constr. Co., 287 F.2d 382, 387 (2d Cir.), cert. denied, 3638 U.S.

817 (1961)) (Lumbard, J., concurring) (emphasis added).”

However, nowhere in the Opinion of the Supreme Court

of Alabama is any language to the effect that the contract

involved in this case had an “actual nexus with interstate

commerce.” In fact, there is no evidence of a nexus with

interstate commerce contained in the certified record in

the court below.

REASONS FOR DENYING THE WRIT

The petition should be denied because, contrary to

the assertions made in the companion petition in Allied-

Bruce Terminix Cos. v. Dobson, No. 93-1001, the decision

below does not conflict with any decision of this Court,

nor is there a conflict with the decisions of other State

Supreme Courts or Federal Appeals courts.

I. THE ALABAMA SUPREME COURT DID NOT

ERRONEOUSLY CONSTRUE THE “INVOLVING

COMMERCE” ELEMENT CONTAINED IN § 2 OF

THE FEDERAL ARBITRATION ACT

The petition asserts that the Alabama Supreme Court

element

contained in Section 2 of the Federal Arbitration Act, a

erroneously construed the “involving commerce’

requirement which must be met in order for the provi-

sions of that Act to bind private parties to a contract.

Petitioners’ claim essentially reduces to a contention that

the decision below conflicts with this Court’s ruling in

Perry v. Thomas, 482 U.S. 483 (1987).

The petitioner basically argues that the FAA is a

statute “that embodies Congress’ intent to provide for the

enforcement of Arbitration agreements within the full

reach of the commerce clause.” Jd. at 490. Therefore, the

petitioners argue that the contracts at issue here must

,

therefore “involve commerce” within the meaning of the

Act. However, this is a misreading of Perry.

Perry involved a stockbroker’s dispute over commis-

sions paid in connection with the sale of certain stocks

with a national stock brokerage firm that employed him.

The issue was whether or not the Act trumped or pre-

empted a state law that required he be given a judicial

forum to resolve that conflict. The issue in Perry was not

whether commissions on stocks “involve commerce,” but

was whether the Act pre-empted a state law as to what

matters were and were not subject to arbitration. It is

difficult to see how one could dispute the fact that trans-

actions involving the sales of stock on national stock

exchanges are somehow not in commerce.

Therefore, the quoted statement in Perry about Con-

gress regulating within the full ambit of its commerce

clause powers refers to Congress’ exercise of its power to

resolve what issues are arbitrable. Perry certainly did not

stand for the proposition that Congress had, in fact,

decided to subject every transaction and therefore every

contract to the Act. It merely decided that if a transaction

was, in fact, governed by the Act, then inconsistent State

law was pre-empted.

The issue presented here, unlike that in Perry, is

whether there is evidence which would ailow our court to

decide the particular transaction “involves commerce”,

such that the requirements of the Act could be invoked to

compel arbitration.

As this Court recognized in Bernhardt v. Polygraphic

Company, 350 U.S. 198 (1956), not every contract or trans-

action “involves commerce, and is therefore subject to the

Act.” The contract involved in this case does not evidence

a “transaction involving commerce” or “commerce

among the several states.” It involves a resident of the

State of Alabama purchasing a home and obtaining a

tezmite bond on said home issued by a company with its

office located in Montgomery, Alabama.’ (C.R. 35).

Further, the petitioner's argument that the Alabama

Supreme Court has adopted a “subjective standard” in

determining whether the FAA applied is incorrect. The

trial court was not presented with any evidence what-

soever evidencing a “transaction involving commerce” or

“commerce among the several states”. Therefore, the Ala-

standard of

whether or not the performance of the contract involved

’

bama Supreme Court used an “objective’

interstate commerce to such a degree that a reasonable

person must have contemplated substantial interstate

activity when they entered into the same (Cert. Pet. App.

at 4a).

* The specific language on the bond is: Terminix Service,

P.O. Box 7028, Montgomery, AL 36107, 205-265-0233. (C.R. 35)

Il. THE OPINION OF THE ALABAMA SUPREME

COURT IS NOT IN CONFLICT WITH FEDERAL

APPEALS COURTS

Petitioners also err in arguing that the decision below

conflicts with various cases from federal appeals courts.

This is not the case.

Basically there are two types of contracts where

“commerce” has frequently been found: (1) construction

contracts, where there are building materials and other

items, as well as employees, moving in interstate com-

merce. Pathman Constr. Co. v. Knox County Hosp. Ass'n, 326

N.E.2d 844 (Ind. App. 1975); Burke County Pub. Schools Bd.

of Educ. v. Shaver Partnership, 303 N.C. 408, 279 S.E.2d 816

(N.C. 1981); Del E. Webb Constr. v. Richardson Hosp. Auth.,

823 F.2d 145 (5th Cir. 1987); and, (2) personal service

contracts where it is obvious that the individual would be

performing some of the terms of said contract in inter-

state commerce. Bennish v. North Carolina Dance Theater,

Inc., 108 N.C. App. 42, 422 S.E.2d 335 (1992).

There is also a third category of cases cited by the

petitioners which does not fall within the above two

categories but clearly evidences “commerce”. The case of

Snyder v. Smith, 736 F.2d 409 (7th Cir. 1984), cert. denied,

469 U.S. 1037 (1985) involved a contract dispute between

Illinois residents over property in Texas and Foster v.

Turley, 808 F.2d 38 (10th Cir. 1986) involved a contract

dispute over mining claims where the output of the mine

plainly traveled in interstate commerce.

The Petitioners overstate and misstate the extent to

which there is a conflict between federal cases on one

side and state cases on the other. As a preliminary matter,

the petition mistakenly cites Pathman Constr. Co., supra, as

a decision of the Indiana Supreme Court when in fact it is

a ruling of the Indiana Court of Appeals. As to Burke Co.

Pub. Schools Bd. of Educ. v. Shaver Partnership, supra, the

North Carolina Supreme Court held that a contract for

the construction of a school building between a multi-

state architectural firm and local Indiana school boards

contemplated substantial interstate activity so as to be

governed by the FAA. In Burke, the Court was addressing

whether or not “contemplation” could be found from the

factual criteria of the case. In doing so, the Court stated:

“We do not mean to suggest that where the

contracting parties are merely located in differ-

ent states or where other facts tending only to

show diversity of citizenship are present, the

contract must necessarily be found to contem-

plate substantial interstate activity so as to trig-

ger the act’s applicability. Where, however,

performance of the contract itself necessarily

involved, so that the parties to the agreement must

have contemplated substantial interstate activity the

contract evidences a transaction involving commerce

within the meaning of the Federal Arbitration Act.”

Burke County Public Schools Board v. Shaver, 279

S.E.2d at 822 (1981). (Emphasis added).

Although the wording of the various cited decisions

by the petitioners may vary to an extent, the petitioners

are overstating the existence of any conflict.

Petitioners err in characterizing the decision below as

requiring an inquiry into subjective intent, when a fair

reading suggests that the contested “contemplated” lan-

guage employed by the Alabama Supreme Court is in fact

closer to the objective standard used in cases such as

Pathman, supra, and Burke County, supra. The Alabama

Supreme Court stated: “The performance did not involve

interstate commerce to such a degree that a reasonable

person must have contemplated substantial interstate

activity when they entered into the contract.” See, Allied-

Bruce Terminix Cos. v. Dobson, (Ms. 1920473, August 13,

1993] __ So.2d __ (Ala. 1993).

Moreover, even if the case were to be judged by the

formulation of which petitioners seem to prefer, the result

reached by the Alabama Supreme Court is entirely cor-

rect. The result reached by the Alabama Supreme Court

would be the same however one worded the formulation.

The contract in question involved a contract between a

homeowner and an exterminator located in Montgomery,

Alabama, to protect the homeowner from termites in his

home. No evidence was presented to the trial court indi-

cating that the contract evidenced a “transaction involv-

ing commerce” and the Motion to Compel Arbitration

would have been denied were one to have used a “slight

nexus” test or the “relating to” commerce language test

that appear in some decisions.

Unlike large construction contracts where it is

obvious that building materials and labor would be mov-

ing in interstate commerce (e.g. Pathman, supra, or Burke,

supra) Or even personal service contracts which indicate

that the performer will travel to several states (Bennish,

supra), a homeowner would have no objective expectation

that “interstate commerce”

to a local exterminator about a termite problem in his or

her home.

was involved in a complaint

10

CONCLUSION

For the reasons stated herein, the Petition for Writ of

Certiorari to the Supreme Court of Alabama should be

DENIED.

This the 8th day of February, 1994.

Respectfully submitted,

Ronatp W. Wise

Counsel of Record

for Respondents