Opposition Brief — Ventilatoren Stork Hengelo B. V. v. Forsikringsaktieselskabet Hafnia

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No. 90-528 Supreme Court, U.S. .

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oct 15 7

In the Supreme Courteces - PH I

OF THE EB wen ai

United States

CcTOBER TERM, 1990

VENTILATOREN STORK HENGELO B.V,

VERENIGDE MACHINEFABRIEKEN STORK N.V.,

Petitioners,

vs.

FORSIKRINGSAKTIESELSKABET HAFNIA,

aka HAFNIA,

Respondent,

Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

BRIEF IN OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI AND REQUEST FOR SANCTIONS

WILLIAM H. CoLLigER, JR.

ALBERT E. PEacock, III

(Counsel of Record)

KEESAL, YOUNG & LOGAN

A Professional Corporation

Catalina Landing

310 Golden Shore

Post Office Box 1730

Long Beach, CA 90801-1730

Telephone: (213) 436-9051

, .

Counsel of Record for

Respondent

Forsikringsaktieselskabet

Hafnia, aka Hafnia

Bowne of Los Angeles, inc., Law Printers. (213) 627-2200.

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QUESTIONS PRESENTED FOR REVIEW

Respondent asserts that only the following questions

are presented for review:

(1) Whether a remand order for lack of federal court

subject matter jurisdiction is reviewable on appeal or

otherwise under 28 U.S.C. § 1447(d);

(2) Whether the United States Court of Appeals for

the Ninth Circuit abused its discretion in awarding sanc-

tions against Petitioners under Rule 38 of the Federal

Rules of Appellate Procedure where Petitioner’s appeal

was frivolous and wholly without merit; and

(3) Whether additional sanctions should be awarded

against the Petitioners under Supreme Court Rule 42.2

and 28 U.S.C. § 1912.

~

ii

TABLE OF CONTENTS

Page

I

QUESTIONS PRESENTED FOR REVIEW...... i

pet cP Ft #itvy . | eee iv

II

JURISDICTIONAL STATEMENT .............. 1

III

STATUTORY PROVISIONS INVOLVED ........ 2

IV

STATEMENT OF THE CASE ........cccecccees 2

A. FACTUAL BACKGROUND .............. 2

B. PROCEDURAL BACKGROUND.......... 4

A STE TER TTT CT 4

SS nino ob0d ccs tibneces xe 5

V

REASONS WHY THE PETITION SHOULD BE

RE og. kth cd eda bade Paes Geshe o0s> 6

A. SUMMARY OF ARGUMENT ............. 6

B. THE NINTH CIRCUIT’S RULING IS A

MATTER OF BLACK LETTER LAW ..... 7

C. THIS CASE DOES NOT FALL WITHIN

ANY EXCEPTION TO THE BLACK LET-

THE DAW 5 ccc cccccesivscraperervvecee. 9

D. PETITIONERS’ ARGUMENTS CONCERN-

ING ARBITRATION ARE NOT RELE-

1. 9 U.S.C. $15 Does Not peers Ly CPE ee 11

2. 9 U.S.C. §15 Does Not Conflict with 28

a es dese daaeehvccan es 12

iii

TABLE OF CONTENTS

3. The Lower Courts’ Rulings Do Not Con-

flict With the Public Policy Favoring Arbi-

ME AE yo Ue beG OES e de ce ¥aedeterecess

E. THE NINTH CIRCUIT'S AWARD OF

SANCTIONS WAS REASONABLE AND

DRE SAS PECAN C6 od vba ke Sb decsetcce

REASONS WHY ADDITIONAL SANCTIONS

SHOULD BE AWARDED UNDER SUPREME

COURT RULE 42.2 AND 28 U.S.C. §1912......

Vill

eee ea CEC i eet ocscecssecvvcses

APPENDIX

Order, United States Court of Appeals for the

Ninth Circuit, Filed October 9, 1990 .........

Page

12

13

15

17

ee

iv

TABLE OF AUTHORITIES

Federal Cases

Page

AT&T Technologies v. Communications Workers, 476

U.S. 643, 89 L.Ed 2d 648, 106 S. Ct. 1415 (1986) 13

Clorox v. U.S. District Court for the Northern

District of California, 779 F.2d 517 (9th Cir.

RR Re Rae Se i ee = LET TN rr 9,11

Cooter & Gell v. Hartmarz Corp., 496 U.S. —_,

110 L.Ed. 2d 395, 110 S. Ct. 2447 (1990)....... 14

Emrick v. Touche Ross and Co., 846 F.2d 1190 (9th H

Che: Ns scis pod eaeeteie eases aba ecass 7

FDIC v. Van Lannen, 769 F.2d 666 (10th Cir.

I vias gin i ee ee an os no ces 13

Gattuso v. Pecorella, 733 F.2d 709 (9th Cir. 1984) 13 |

Good Shot v. United States, 179 U.S. 87, 21 S. Ct.

ee Se ere Terr Tree 1

Hansen v. Blue Cross of California, 891 F.2d 1384

Ce EE nha vee ee aa beeene esto heeeeb eens i)

Heatherton v. Playboy, Inc., 60 F.R.D. 372 (D. C.

RAR erro ree ore Pr aoe 7

Jones v. General Tire, 541 F.2d 660 (7th Cir. 1976) 7

Kelly v. International Brotherhood of Electrical

Workers, 803 F.2d 516 (9th Cir. 1986) ......... 13

Kunzi v. Pan American World Airways, Inc., 833

Pe ee Es Ns i Sin do 4b 664020 09,0 0 8,9

NLBB v. Catalina Yachts, 679 F.2d 180 (9th Cir.

SR ick cin bh Wo os a eRe tk hada cee eebeees 13

Nesbitt v. Blazer Financial, 550 F. Supp. 819 (N.D.

ieee bap vehuckseuee sabe kee 7

EN me

CLR ee tees ee

ek arte

Vv

TABLE OF AUTHORITIES

CASES

Page

Pelleport Investors v. Budco Quality Theatres, 741

Pies: Fo Fs | ee ee eee 9,10, 11

Rosenthal v. Emmanuelle Deetjen & Company, 516

Pe AE I EE no ok ne dda dee ch eecds 13

Schmitt v. Insurance Company of North America,845

We, Be Ce Ge ID 6 oc vce cc becdecccers 8,9

Scott v. Machinist’s Automotive Trades District

Lodge No. 190 of Northern California, 827 F.2d

ey, I RE eG Sap aa 9

Sullivan v. First Affiliated Securities, Inc., 813 F.2d

E.R arse pret eae 7

Thermtron Products, Inc. v. Hermansdorfer, 423

U.S. 336, 46 L.Ed. 2d 542, 96 S. Ct. 584 (1976)

iM kbwE REAR RWEN Eee eS Und Lenbecaeen eck 8,9, 10, 11

United States v. Rice, 327 U.S. 742, 90 L.Ed. 982,

Dee es PRD oc odes Co Wee Secneccececs 15

Volvo Corporation of America v. Schwarzer, 429

U.S. 1331, 50 L.Ed. 2d 278, 97 S. Ct. 284 (1976) 9

Waco v. United States Fidelity & Guarantee Com-

pany, 239 U.S. 140, 55 S. Ct. 6, 79 L.Ed. 244

GR a ice dod auWed ue Gs KOSS NU ha ke ons 11

Whitney v. Cook, 99 U.S. 607, 25 L.Ed. 446 (1878) 16

Wilson v. Republic Iron and Steel Co., 257 U.S. 92,

66 L.Ed. 144, 42 S. Ct. 35 (1921) ............. 7

Federal Statutes

DP A AACS eat ce weWh Peed che Ceaceeeess 12

PW EES 2d fs chs sedan cGbushuceubecanucs 4

vi

TABLE OF AUTHORITIES

CASES

Page

pO ES PTET TORT TCT TOTES 4

OR RAE OER) sb 6.00 ca bines ce 84 000 60 Seems 1

RE er ee Pet eee 8

SE SS TODD bins cccvcsveceessdeasees 4, 7, 8, 12

Re ere eer ere i, 1, 5, 8, 12, 15, 17

Se MI I occ s cacwanvincskecsbuee i, 2, 6, 14, 16

Federal Rules of Appellate Procedure, Rule 38

i, 14, 15, 17

Federal Rules of Civil Procedure, Rule 11......... 14

Supreme Court Rule 42.2 (formerly Rule 49.2).... i,2

No. 90-528

In the Supreme Court

OF THE

United States

OcTOBER TERM, 1990

VENTILATOREN STORK HENGELO B.V,

VERENIGDE MACHINEFABRIEKEN STORK N.V.,

Petitioners,

vs.

FORSIKRINGSAKTIESELSKABET HAFNIA,

aka HAFNIA,

Respondent,

Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

BRIEF IN OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI AND REQUEST FOR SANCTIONS

II.

JURISDICTIONAL STATEMENT

Contrary to Petitioners’ claim, this Court lacks juris-

diction. 28 U.S.C. $1447(d) specifically provides: “An

order remanding a case to the State Court from which it

was removed is not reviewable on appeal or

otherwise. ...”

Additionally, jurisdiction under 28 U.S.C. § 1254(1) is

lacking, because the case is not properly one “in the Court

of Appeals” inasmuch as the Ninth Cireuit Court of

Appeals dismissed Petitioners’ appeal for lack of appel-

late court jurisdiction. See Good Shot v. United States, 179

2

U.S. 87, 21 S. Ct. 33, 45 L.Ed. 101 (1900). Petitioners

should not be allowed to claim Supreme Court jurisdic-

tion where both the District Court and Ninth Circuit

concluded that they lacked jurisdiction.

Ill.

STATUTORY PROVISIONS INVOLVED

In addition to the statutes cited by Petitioners,

Respondnet HAFNIA refers this Court to:

A. Supreme Court Rule 42.2 (formerly Rule 49.2)

which states:

.2. When a petition for a writ of certiorari, an

appeal, or application for other relief is frivolous, the

court may award the respondent or appellee just

damages and single or double costs. Damages or

costs may be awarded against the petitioner, appel-

lant or applicant, or against the party’s attorney or

against both.

B. 28 U.S.C. $1912, titled “Damages and costs on

affirmance” which states:

Where a judgment is affirmed by the Supreme

Court or a court of appeals, the court, in its discre-

tion, may adjudge to the prevailing party just dam-

ages for his delay, and single or double costs.

IV.

STATEMENT OF THE CASE

A. FACTUAL BACKGROUND.

Petitioner, VENTILATOREN STORK HENGELO

B.V. is a wholly-owned subsidiary of Petitioner VER-

3

ENIGDE MACHINEFABRIEKEN STORK N.V. (here-

inafter collectively referred to as “STORK”.) Both are

Dutch corporations. STORK designed, manufactured and

sold windmill blades to Nordtank A/S, a Danish windmill

manufacturer. STORK contends that the supply con-

tracts between these companies (the “Stork-Nordtank

contracts”) contained an arbitration agreement.’

Nordtank sold windmills using STORK blades to the

Cannon Capitol Group for use in its California windparks.

The sales contract between these parties (the “Nordtank-

Cannon contract”) did not assign or otherwise obligate

Cannon to any of the terms of the Stork-Nordtank con-

tracts nor did it identify Cannon as an intended third-

party beneficiary to the contracts. Nordtank and Cannon

jointly obtained warranty insurance for the windmills

from Respondent FORSIKRINGSAKTIESELSKABET

HAFNIA, aka HAFNIA.

After the installation of the windmills, Cannon exper-

ienced difficulties with the blades manufactured by

STORK. Cannon sought repair or replacement by

STORK of the defective blades. STORK responded that

it nad no contractual obligations to Cannon, because

Cannon was not a party to the Stork-Nordtank contracts.

Cannon then made a claim on its warranty insurance

with HAFNIA. HAFNIA beeame subrogated to the rights

of Cannon and was given a written assignment by Cannon

‘The only evidence produced by Stork to support this is a letter

dated April 15, 1986 from Stork’s managing director to Nordtank.

The signature spaces provided on that letter for Nordtank’s accept-

ance and approval of the arbitration agreement are blank. Conse-

quently, the question remains whether Nordtank agreed in writing to

arbitration with Stork as is required by Article II {{ 1 and 2 of the

Convention on the Recognition and Enforcement of Foreign Arbitra!

Awards.

4

of all claims it had against STORK for the defective

windmill blades.

HAFNIA sued STORK in the California state court

asserting four separate causes of action. Under Cal‘fornia

law, none of the four causes of action requires privity by

Cannon in the Stork-Nordtank contracts or relies upon

the Stork-Nordtank contracts.

As a result of STORK’s legal maneuvering, tais lawsuit

has now been pending for over two years, focusing exclu-

sively on the issue of federal court subject matter juris-

diction rather than the merits.

B. PROCEDURAL BACKGROUND.

1. District Court.

STORK removed this case from California state court

to federal court based on 9 U.S.C. § 205 which provides

federal court subject matter jurisdiction over disputes

falling within the Convention on the Recognition and

Enforcement of Foreign Arbitral Awards. STORK relied

exclusively on the alleged arbitration agreement in the

Stork-Nordtank contracts to which Cannon/Hafnia was

not a party. STORK then filed two motions to dismiss and

a motion to compel arbitration pursuant to 9 U.S.C. § 206.

HAFNIA responded with a Motion to Remand for Lack

of Federal Subject Matter Jurisdiction pursuant to

28 U.S.C. § 1447(¢c). Contrary to STORK’s representa-

tions, only HAFNIA’s motion to remand was ever heard

and decided by the District Court.” It is clear from the

District Court’s opinion that STORK did not meet its

"Stork repeatedly misrepresented to the Ninth Circuit that the

Distriet Court heard and decided its Motion to Compe! Arbitration

before it d&cided to remand the case. The Ninth Circuit found that

the facts did not support this “strained assertion” on Stork’s part.

Oe ee NATE Oe Se

ee ee ea SS

5

burden of establishing subject matter jurisdiction by

proving that the dispute related to a written arbitration

agreement between the parties to the litigation. Conse-

quently, the District Court granted the motion and re-

manded the case.

2. Court of Appeals.

STORK appealed the District Court’s remand order to

the Ninth Cireuit Court of Appeals. HAFNIA’s counsel

contacted STORK’s counsel to point out that the remand

order could not be reviewed on appeal under 28 U.S.C.

§ 1447(d) and requested that the appeal be voluntarily

dismissed. STORK refused to withdraw its appeal.

STORK attempted to have its appeal consolidated with

another appeal.” HAFNIA opposed consolidation because

of the substantial differences between the cases and the

issues on appeal.‘ STORK’s Motion to Consolidate the

Appeals was denied.

To avoid further delay and unnecessary expense,

HAFNIA filed a Motion to Dismiss the Appeal and For

Award of Sanctions based on a lack of appellate court

jurisdiction under 28 U.S.C. §1447(d). The Motions

Panel of the Ninth Circuit did not decide the motion and,

instead, referred it to the panel hearing the appeal on its

merits. This panel granted HAF'NILA’s motion to dismiss

See Memorandum, United States Court of Appeals for the Ninth

Cireuit, filed April 30, 1990, in Petitioners’ Appendix at p. 7a.

*Difwind Farms Lid. VIII, el. al. v. Ventilatoren Slork Hengelo B.V.,

United States District Court for the Central District of California,

Case No. CV 88-5038 MRP, appeal dismissed, United States Court of

Appeals for the Ninth Circuit, No. 89-55145, June 14, 1989.

“The Difwind v. Slork case was originally filed in federal court

based on diversity jurisdiction. Consequently, subject matter juris-

diction was never an issue as it was in this case.

6

the appeal. In addition, this panel concluded that

STORK’s appeal was frivolous and “wholly without

merit”, and awarded HAFNIA its costs and attorney’s

fees in opposing the appeal.

STORK filed a Petition for Rehearing, suggesting a

hearing en banc. This petition was denied.

By Order dated October 9, 1990, the Ninth Circuit fixed

the sanctions award at $28,478.75 based on HAFNIA’s

unopposed application.

V.

REASONS WHY THE PETITION SHOULD BE

DENIED

A. SUMMARY OF ARGUMENT.

STORK characterizes the case as one involving arbitra-

tion. It is, instead, a case involving the appealability of a

remand order based on lack of subject matter jurisdic-

tion. When the issue is framed properly, it is apparent

that: (1) the Ninth Circuit’s dismissal of STORK’s ap-

peal was a matter of black letter law; (2) this case does

not fall within any-exception to the black letter law;

(3) Petitioner’s arguments on arbitration are not rele-

vant; and (4) the Ninth Cireuit’s award of sanctions

under F.R.A.P. 38 was proper and reasonable.

HAFNIA also requests that this Court consider an

additional award of sanctions against petitioner STORK

under Supreme Court Rule 42.2 and 28 U.S.C. $1912

under ‘he circumstances of this case.

7

B. THE NINTH CIRCUIT'S RULING IS A MATTER

OF BLACK LETTER LAW.

The issue raised by Petitioner STORK is nothing new,

novel or controversial. Instead, it is a matter of black

letter law set out by statute and case law.

28 U.S.C. § 1447(c) provides: k

(c) If at any time before final judgment it appears

that the district court lacks subject matter jurisdic-

tion, the case shall be remanded.

When a motion for remand is brought pursuant to this

statute, the burden of proving the existence of subject

matter jurisdiction is on the party claiming that jurisdic-

tion. Jones v. General Tire, 541 F.2d 660 (7th Cir. 1976);

Nesbitt v. Blazer Financial, 550 F. Supp. 819 (N.D. Cal.

1982).

Doubts as to the existence of federal court subject

matter jurisdiction are resolved against such jurisdiction;

statutes conferring jurisdiction are strictly construed

against jurisdiction; and removal statutes are strictly

construed against removal and in favor of remand. Wilson

v. Republic Iron and Steel Co., 257 U.S. 92, 97, 66 L.Ed.

144, 42 S. Ct. 35, 37 (1921); Emrick v. Touche Ross and

Co., 846 F.2d 1190, 1195 (9th Cir. 1988); Sullivan v. First

Affiliated Securities, Inc., 813 F.2d 1368, 1371 (9th Cir.

1987); Heatherton v. Playboy Inc., 60 F.R.D. 372 (D.C.

Cal. 1973).

In the case at hand, Respondent HAFNIA moved for

remand citing 28 U.S.C. § 1447(c). The District court was

not convinced that STORK had met its burden of estab-

8

lishing federal court subject matter jurisdiction and,

therefore, remanded the case.

“None of the parties have made any showing that

any agreement was ever entered into by the parties to

this action to submit the issues raised by the com-

plaint to arbitration.” See the District Court’s

Amended Memorandum Decision in Petitioner’s Ap-

pendix at P. 12A-13A.°

When a case is remanded pursuant to 28 U.S.C.

§ 1447(c), that decision is not reviewable by appeal or by

writ. 28 U.S.C. § 1447(d) specifically states:

(d) An order remanding a case to the State court

from which it was removed is not reviewable on

appeal or otherwise. .. ig

The language of 28 U.S.C. § 1447(d) is clear, precise

and unambiguous. As this Court has stated:

It is unquestioned in this case and conceded by

petitioners that this section prohibits review of all

remand orders issued pursuant to § 1447(c) whether

erroneous or not and whether review is sought by

appeal or by extraordinary writ. This has been the

established rule under § 1447(d) and its predeces-

sors stretching back to 1887. Thermtron Products,

Inc. v. Hermansdorfer, 423 U.S. 336, 343, 46 L.Ed. 2d

542, 549, 96 S. Ct. 584, 589 (1976).

eee a re

*While the District Court did not specifically cite 28 U.S.C.

§ 1447(c) in its Memorandum Decision or Amended Memorandum

Decision, this is not necessary to preclude appeal. See Schmili v.

Insurance Company of North America, 845 F.2d 1546, 1549-50 (9th

Cir. 1988); Kunzi v. Pan American World Airways, Inc., 833 F.2d

1291, 1293 (9th Cir. 1987).

*98 U.S.C. §1447(d) exempts civil rights cases brought under

28 U.S.C. § 1443. This exception is not applicable here.

ee ee eS ee

———

9

This black letter law has been repeated many times by

many courts. Volvo Corporation of America v. Schwarzer,

429 U.S. 1331, 1332-3, 50 L.Ed. 2d 273, 275, 97 S. Ct. 284

(1976); Hansen v. Blue Cross of California, 891 F.2d 1384,

1387-8 (9th Cir. 1989); Schmitt v. Insurance Company of

North America, 845 F.2d 1546, 1549 (9th Cir. 1988); Kunzi

v. Pan American World Airways, Inc., 833 F.2d 1291, 1293

(9th Cir. 1987).

This black letter law was specifically cited to STORK

by HAFNIA with a request that its appeal be voluntarily

dismissed. This black letter law was cited by the Ninth

Cireuit in its decision dismissing STORK’s appeal and

awarding sanctions.

This black letter law, as it applies to this case, does not

need to be addressed again by this Court.

C. THIS CASE DOES NOT FALL WITHIN ANY

EXCEPTION TO THE BLACK LETTER LAW.

An exception to the black letter law discussed above

has been recognized where remand is based on a decision

of “substantive law apart from any jurisdictional deci-

sion.” Pelleport Investors v. Budco Quality Theatres, 741

F.2d 273, 276 (9th Cir. 1984). See also Thermtron Prod-

ucts v. Hermansdorfer, 423 U.S. 336, 46 L.Ed. 2d 542, 96

S. Ct. 584 (1976); Hansen v. Blue Cross of California, 891

F.2d 1384, 1387-8 (9th Cir. 1989); Schmitt v. Insurance

Company of North America, 845 F.2d 1546, 1550-1551

(1988); Scott v. Machinist’s Automotive Trades District

Lodge No. 190 of Northern California, 827 F.2d 589, 592

(9th Cir. 1987); Kunzi v. Pan American World Airways, -

Inc., 833 F.2d 1291, 1293 (9th Cir. 1987); and Cloroz v.

U.S. District Court for the Northern District of California,

779 F.2d 517, 520 (9th Cir. 1985).

10

The case of Pelleport Investors v. Budco provides the

best and clearest example of the distinction between a

ease remanded for lack of subject matter jurisdiction

which is not appealable and a case remanded on other

grounds which may be appealable.’

In Pelleport, the Ninth Cireuit noted that there were

two alternative theories upon which the District Court

could have remanded the case: (1) diversity jurisdiction

was lacking; or (2) by contract, the parties had agreed to

litigate in a forum other than the U.S. District Court. The

Ninth Cireuit noted:

Had the District Court based its remand order on

the first theory, $ 1447{d) would no doubt apply,

because, even if clearly erroneous, a District Court’s

decision that it lacks subject matter jurisdiction to

hear a case is not reviewable. See Thermtron Products,

Inc. v. Hermansdorfer, 423 U.S. 336, 343, 96 S.Ct.

584, 589, 46 L.Ed. 2d 542 (1976). But the Court did

not base its remand order on lack of subject matter

jurisdiction. It relied instead upon the forum selec-

tion clause. The novel question before this Court,

then, is whether a remand order based on the en-

foreceability of such a clause is reviewable. We believe

it is. Pelleport v. Budco, 741 F.2d at 276.

In the case at hand, the question of whether or not the

case related to a written arbitration agreement between

the parties and the question of subject matter jurisdiction

were and are one and the same.

"A remand order based on grounds other than a lack of subject

matter jurisdiction is not automatically appealable. Depending upon

the nature of the order, it may be reviewable on appeal, it may be

reviewable only by extraordinary writ or may not be reviewable at all.

11

This is not a case in which the District Court had

subject matter jurisdiction but chose not to exercise it

because of other considerations such as a forum selection

clause between the parties,* nor is this a case in which the

court, through the exercise of its subject matter jurisdic-

tion, destroyed that jurisdiction.’ As a result, this case

does not fit within the exception to the rule cited by

STORK. Instead, it is the paradigm case for the applica-

tion of 28 U.S.C. § 1447(d).

D. PETITIONERS’ ARGUMENTS CONCERNING

ARBITRATION ARE NOT RELEVANT.

As it did in its Ninth Circuit appeal, STORK attempts

to have this Court look beyond the issues of subject

matter jurisdiction and appellate jurisdiction to focus on

its Motion to Compel Arbitration. However, this motion

was never heard or decided by the District Court or Ninth

Cireuit and, therefore, is not properly before this Court.

Nevertheless, HAF'NIA feels compelled to briefly respond

to some of the arguments raised in STORK’s Petition.

1. 9 U.S.C. § 15 Does Not Apply.

STORK argues that the Ninth Circuit’s dismissal of its

appeal conflicts with 9 U.S.C. § 15. However, on its face

that statute is limited to the appeal of “an order ...

denying an application under § 206 of this Title to compel

arbitration.” In this case, the District Court neither heard

nor decided STORK’s Motion to Compel Arbitration

*See Tieton Products, Inc. v. Hermansdorfer, 423 U.S. 336, 46

L.Ed. 2d 542, 96 S. Ct. (1976); Cloroz v. U.S. District Courl, 779 F.2d

517 (9th Cir. 1985); Pellepori Inveslors v. Budco Qualily Thealres, 741

F.2d 273 (9th Cir. 1984).

*Waco v. Uniled Slates Fidelity & Guaranly Company, 239 U.S. 140,

55 8S. Ct. 6, 79 L.Ed. 244 (1935).

12

under 9 U.S.C. § 206. Consequently, there is no order

from which STORK may appeal.

2. 9 U.S.C. §15 Does Not Conflict with 28 U.S.C.

§ 1447.

STORK asserts that 9 U.S.C. § 206 should take prece-

dence over 28 U.S.C. § 1447 on the ground that it is more

specific. However, this rule of statutory construction does

not apply unless the statutes in question conflict. No

conflict exists here.

9 U.S.C. § 15 allows for the appeal of an order denying

a motion to compel arbitration and 28 U.S.C. § 1447(d)

prohibits an appeal of an order remanding a case for lack

of subject matter jurisdiction. In this case, the District

Court issued an order remanding the case; it did not issue

an order denying STORK’s Motion to Compel Arbitra-

tion. The application of the statutes is, therefore, clear

and not in conflict.’

3. The Lower Court’s Rulings Do Not Conflict With

the Public Yolicy Favoring Arbitration.

STORK insists that the District Court’s and the Ninth

Cireuit’s rulings are in conflict with the public policy

favoring arbitration enunciated by Congress and by this

Court. STORK ignores fundamental principles of arbitra-

tion law.

Arbitration is a matter of contract and a party

eannot be required to submit to arbitration a dispute

which he has not agreed so to submit. AT&T Technolo-

“STORK also implies that since 9 U.S.C. § 15 was just enacted on

November 19, 1988, it should take preeedence. STORK ignores the

fact that 28 U.S.c. § 1447(c) was aniended by the same Act on the

same day.

13

gies v. Communications Workers, 476 U.S. 643, 648, 89

L.Ed. 2d 648, 655, 106 S. Ct. 1415 (1986).

A mere assertion that there is a dispute that is

arbitrable does not make one exist. Rosenthal v.

Emmanuelle Deetjen & Company, 516 F.2d 325, 327

(2nd Cir. 1975).

STORK had the opportunity in opposing the remand

motion to: (1) establish the existence of an arbitration

. agreement; and (2) establish that HAF'NIA was contrac-

~tually bound by it. STORK failed on both counts. As a

result, the public policy favoring arbitration does not

apply here.

E. THE NINTH CIRCUITS AWARD OF SANC-

TIONS WAS REASONABLE AND PROPER.

Under F.R.A.P. 38, the Ninth Circuit Court of Appeals

had discretion to award sanctions against STORK if its

appeal was frivolous. An appeal is deemed frivolous where

“the result is obvious and the arguments of error are

wholly without merit.” FDIC v. Van Lannen, 769 F.2d 666,

667 (10th Cir. 1985); Gattuso v. Pecorella, 733 F.2d 709,

710 (9th Cir. 1984); NLRB v. Catalina Yachts,

679 F.2d 180, 182 (9th Cir. 1982).

The clarity and unambiguous nature of statutory law

and prior case law can serve as evidence that an appeal

contradicting that law is frivolous and that sanctions are

appropriate. Kelly v. International Brotherhood of Electri-

cal Workers, 803 F.2d 516, 519 (9th Cir. 1986).

Given that sanctions under F.R.A.P. 38 are a matter of

discretion, an “abuse of discretion” standard should ap-

ply. See Cooter & Geil v. Hartmarz Corp., 496 U.S. —_,

110 L.Ed. 2d 395, 110 S. Ct. 2447 (1990). Under such a

standard, the award of sanctions by the Ninth Circuit-

14

should be upheld for a number of reasons. First, the

appeal was dismissed rather than being decided on its

merits, evidencing the clear and unambiguous nature of

the law. Second, the lack of appellate court jurisdiction

was specifically made known to STORK at the outset of

the appeal. Nevertheless, STORK persisted “needlessly

requiting the parties and the court to incur time and

effort.” See Petitioner’s Appendix at P. 2A. Third, the

Ninth Cireuit concluded that STORK’s arguments on

appeal were “strained”, not supported by the facts and

“wholly without merit.” See Petitioner's Appendix at

P. 7A. Fourth, the Ninth Circuit Panel’s Decision was

unanimous. Fifth, with the exception of an amendment to

and a deletion in the wording of the sanctions portion of

the opinion, that award was affirmed and upheld following

STORK’s request for a rehearing and suggestion for a

rehearing en banc. Sixth, while STORK argues that only

one of its arguments was deemed meritless, that one

argument went to the very heart of the entire appeal:

whether the Appellate Court had jurisdiction or not.

STORK argues that the award of sanctions under

F.R.A.P. Rule 38 wiil discourage access to the appellate

process. Indeed, the intent cf this rule as well as

28 U.S.C. § 1912, this court’s Rule 42.2 (formerly 49.2)

and F.R.C.P. Rule 11 is to discourage meritless and

frivolous pleadings which delay the resolution of cases on

their merits while costing opposing parties and the courts

considerable time and money. They do not discourage nor

do they apply to cases with some merit even if those cases

are ultimately lost.

Unfortunately, the clear language of 28 U.S.C.

§ 1447(d) and this court’s prior decisions on point did

not discourage STORK from filing its appeal; the threat

of Rule 38 sanctions did not discourage STURK from

15

filing its frivolous appeal; and the current threat of

additional sanctions under Supreme Court Rule 42.2 has

not discouraged STORK from filing this frivolous Peti-

tion for Writ of Certiorari. Unfortunately, STORK has

had too much access to the courts.

VI.

REASONS WHY ADDITIONAL SANCTICNS

SHOULD BE AWARDED UNDER SUPREME

COURT RULE 42.2 AND 28 U.S.C. § 1912

There is no doubt that in order to prevent delay in

the trial of remanded cases by protracted litigation

of jurisdictional issues, United States v. Rice, 327

U.S., at 751, 90 L.Ed. 982, 66 S. Ct. 835, Congress

immunized from all forms of appellate review any

remand order issued on the grounds specified in

§ 1447(c), whether or not that order mighi be

deemed erroneous by an appellate court. Thermtron

Products, Inc. v. Hermansdorfer, 423 U.S. 336, 351, 46

L.Ed. 2d 542, 554, 96-S. Ct. 584 (1976).

By filing its appeal with the Ninth Circuit and by

seeking a Petition for Writ of Certiorari from this Court,

STORK has violated the clear language, purpose and

intent of 28 U.S.C. §1447(d). STORK has delayed the

litigation of this case on its merits for over two years by

arguing and appealing the question of subject matter

juridiction. Even if its Petition to this Court is denied,

STORK has accomplished that which 28 U.S.C. § 1447(d)

was intended to prevent.

Unless this Court awards additional sanctions under

Rule 42.2 and/or 28 U.S.C. § 1912, Respondent HAFNIA

will return to the California state court where this case

16

was initiated with nothing to show but legal bills and a

two year delay.

Many years ago, this Court recognized the importance

of using sanctions as a tool te discourage frivolous

appeals.

Our experience teaches that the only way to dis-

courage frivolous appeals and writs of error is by the

use of our power to award damages, and we think this

a proper case in which to say that hereafter, more

attention will be given to that subject, and the rule

enforced both according to its letter and spirit.

Parties should not be subjected to the delay of

proceedings for review in this court without reasona-

ble cause, and our power to make compensation to

some extent for the loss occasioned by an unwar-

ranted delay ought not to be overlooked. Whitney v.

Cook, 99 U.S. 607, 25 L.Ed. 446 (1878).

This quote rings true in this case, and HAFNIA submits

that this Court should award against STORK the attor-

ney’s fees and costs incurred by HAFNIA in opposing

this Petition for Writ of Certiorari.

17 ay

VII.

CONCLUSION

STORK ’s Petition for Writ of Certiorari should be seen

for what it really is: an improper attempt to seek review of

a remand order in violation of 28 U.S.C. § 1447(d). To

deter similar conduct by STORK and its counsel in the

future and to compensate HAF'NIA for the delay ana

expenses the Appeal and this Petition have caused,

HAFNIA requests that this Court affirm the Ninth Cir-

cuit Court of Appeal’s award of sanctions under F.R.A.P.

Rule 38 and that it award additional sanctions under

Supreme Court Rule 42.2 and 28 U.S.C. § 1912.

Dated: October 18, 1990

Respectfully submitted,

WILLIAM H. CoLLigErR, JR.

ALBERT E. PEacock, III

(Counsel of Record for Respondent

FORSIKRINGSAATIESELSKABET

HaAFNIA, aka HAFNIA)

KEESAL, YOUNG & LOGAN

Catalina Landing —

310 Golden Shore

Post Office Box 1730

Long Beach, California 90801-1730

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APPENDIX A

FILED OCTOBER 9, 1990

CLERK, U.S. COURT OF APPEALS

No. 88-15708

United States Court of Appeals

For the Ninth Circuit

FORSIKRINGSAKTIESELSKABET HAFNIA,

Plaintiff-Appellee,

vs.

VENTILATOREN STORK HENGELO B.V, ET AL.,

Defendants-Appellants.

DC #CV-88-0475-EDP

Eastern California (Sacramento)

ORDER

Appellee’s unopposed application for attorneys’ fees is

granted. Fees are awarded in the amount of $28,478.75.

For the Court:

Chris Goelz

Motions Attorney/Deputy Clerk