Petition for Writ of Certiorari — United Health Care of Ohio, Inc. v. Academy of Medicine of Cincinnati (No. 05-1465)

(\) Supreme Oqurt US.

No. 05146 5mAy 16 2006

OFFICE OF THE CLERK

IN THE.

Supreme Court of the United States

UNITED HEALTHCARE OF OHi0, INC.,

Petitioner,

Vv.

ACADEMY OF MEDICINE OF CINCINNATI, ETAL..

Respondents.

On Petition for Writ of Certiorari to the

Supreme Court of Ohio

PETITION FOR WRIT OF CERTIORARI

Stephen J. Butler Gregory S. Coleman

THOMPSON HINE Counsel of Record

312 Walnut Street Lisa R. Eskow

14th Floor Melanie P. Sarwal

Cincinnati, Ohio 45202 WEIL, GOTSHAL & MANGES LLP

($13) 352-6700 8911 Capital of Texas Hwy.

Suite 1350

Austin, Texas 78759

(512) 349-1930

Debra J. Pearlstein

Elizabeth M. Avery

WEIL, GOTSHAL &

MANGES LLP Counsel for Petitioner

767 Fifth Avenue

New York, New York 10153

(212) 310-8000

oF QUESTION PRESENTED

May a state court that is applying the Federal Arbitration

Act adopt a distinct test for the arbitrability of statutory and

tort claims that considers only whether the elements of those

claims reference the parties’ contract and ignores whether

they “touch matters” within the scope of the parties’ arbi-

tration agreement?

{i)

il

PARTIES TO THE PROCEEDINGS BELOW AND

CORPORATE DISCLOSURE STATEMENT

The parties to the proceedings in the Ohio Supreme Cour

were plaintiffs-appellees Academy of Medicine of Cincinnati

Butler County Medical Society, Luis Pagani, M.D., Pau

Jennewine, M.D., Bradford H. Woodall, M.D., Willian

Randall Cox, M.D., and Newton H. Bullard, M.D., an

defendants-appellants United HealthCare of Ohio, Inc.

Community Insurance Company d/b/a Anthem Blue Cros

and Blue Shield and Aetna Health, Inc. The Ohio Suprem

Court dismissed Aetna and Anthem pnior to issuing it

decision.

This petition is being filed on behalf of United HealthCar.

of Ohio, Inc. No publicly held companies own 10% or mor

of United HealthCare of Ohio, Inc. United HealthCare o

Ohio, Inc. is owned 100% by United HealthCare Services

Inc., which in turn is owned 100% by UnitedHealth Grou;

Inc., a publicly held company.

TABLE OF CONTENTS

CREA SII in sssiinscinseinasnind dnitchnpencndncasnsiatiniins i

Parties to the Proceedings Below and Corporate

Disclosure Statement................... pcheanbendangasucahienhiensed li

SE Fa iiss ath catia ick casiaas etierrementbaiadnes iv

Opinions and Orders Below ............sssssesssseeseesesseseeeneeee 3

PN ii ico isu dsth sinunditn cp candhacsnseeniesvenmnconinientiantede 4

Statutory Provisions Involved ................::cccccssceseeeeeeeeeee 4

Staneenant of the Cant ii 6

Reasons for Granting the Writ....................ccccseeeeeeseseeee 9

I. The Ohio Supreme Court’s Decision Conflicts

with Established Arbitrability Principles

Articulated by This Court and the Federal

CN BIE PR so isis widaeesosansennieeninccbacbensien 10

A. The National Policy Favoring Arbitration

Applies Equally to State Courts................... 10

B. Ohio’s Arbitrability Standard for Non-

Breach-of-Contract Claims Contravenes

Fundamental Principles for Analyzing

the Scope of FAA-Governed Arbitration

POON sisi. sininis iacichardniesarminepctonnncines 1]

C. Ohio’s Standard Conflicts with the Court’s

Recognition of the Arbitrability of

Antitrust Claims Generally and with the

Second Circuit’s Analysis of Price-Fixing

Conspiracy Claims Specifically................... 15

Il. The Ohio Supreme Court’s Hostility to

Arbitration Invites Gamesmanship and Forum

RINE isis ckicsitnsins Riactiaineness 18

SN RUE re nee REM IIE Cav ONS Het OO a NP a Ae) a eee 21

iV

TABLE OF AUTHORITIES

Cases

Acad. of Med. of Cincinnati v.

Aetna Health, Inc.,

842 N.E.2d 488 (Ohio 2006) ......... eee

Acad. of Med. of Cincinnati v.

Aetna Health, Inc.,

800 N.E.2d 1185 (Ohio App. 2003),

aff'd, 842 N.E.2d 488 (Ohio 2006) ...........0...... 3-«

Aiken v. World Fin. Corp. of S.C.,

623 S.E.2d 873 (S.C. App. 2005).................. 11, 18, 1!

Anthem Health Plans of Ky., Inc. v.

Acad. of Med. of Cincinnati,

Nos. 2003-CA-000752-MR, 2003-CA-000753-

MR, 2003-CA-000754-MR, 2004 Ky. App.

LEXIS 315 (Ky. App. Oct. 29, 2004), review

denied sub nom. Anthem Health Plans of Ky.,

Inc. v. Baldridge, No. 2005-SC-0109-D (Ky.

PD, Ddig SOO ccc scksbs bah teecanw tinchitateseaens , escags Ye

Brown v. [TT Consumer Fin. Corp.,

BRE TEI EBT AGREE, BOO) veces ceicieisindacsiesiés le

Cox Broad. Corp. v. Cohen,

SD Fe Fe CID es itnpeness csiscasaeiiavianatin anise é

Crown Homes, Inc. v. Landes,

27 Cal.Rptr.2d 827 (Cal. App. 1994) .........000.... l!

Dean Witter Reynolds, Inc. v. Byrd,

IEA) Shs LANE Setisvsnersncsasencidansancestnn iinpedulcar E

Fazio v. Lehman Bros.,

340 F.3d 386 (CA6 2003)...........ccsecccosessase 8, 12, 13, 1°

Fyrnetics (H_.K.) Ltd. v. Quantum Group, Inc.,

FORE ae RAE A PR BUD cnn scecasipaddeenacivicincedsion 14, 1°

Genesco, Inc. v. T. Kalcuchi & Co., Ltd.,

SEE cee CAPR FET Paiva vcssscamnptctenicscerencests 13, l¢

Gilmer v. Interstate/Johnson Lane Corp.,

SP Si MN TED Sidhe tiidcbadipatindeomineee 3,16, 14

Vv

TABLE OF AUTHORITIES ~

Gregory v. Electro-Mech. Corp.,

83 F.3d 382 (CA11 1996)..........c.ceccccsssscececeeeeees 14

Hunt v. Up N. Plastics, Inc.,

980 F.Supp. 1046 (Minn. 1997) .00..... eee 15

In re Currency Conversion Fee Antitrust Litig.,

265 F.Supp.2d 385 (SDNY 2003) ................... 17

JLM Indus., Inc. v. Stolt-Nielsen S.A.,

387 F.3d 163 (CA2 2004)... eeeeeee 3, 16, 17, 18

Kotam Elecs., Inc. v. JBI Consumer Prods., Inc.,

93 F.3d 724 (CA11 1996) (en banc).................. 15

Loy v. Harter,

128 S.W.3d 397 (Tex. App. 2004) «0.0.0... 12, 18, 19

Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc.,

RES TIER FOO) vik ks peencechadisrcocingseistcarecauns passim

Moses H. Cone Mem 'l Hosp. v.

Mercury Constr. Corp.,

A SG RS |) RRR epee ee reen 12,17

MS Credit Ctr., Inc. v. Horton,

— $o.2d —, No. 2004-CA-01699-SCT,

2006 WL 408415 (Miss. Feb. 23, 2006)............ 13

N.Y. Cross Harbor R.R. Terminal Corp. v.

Consol. Rail Corp.,

72 F.Supp.2d 70 (EDNY 1998)..........:c:cecesesee: 15

Nghiem v. NEC Elecs., Inc.,

25 FSG NTEASTICAD 1998) ook. Senn 15

PacifiCare Health Sys., Inc. v. Book,

See eC EE GD ae sawp ka do ck cance vebhackccedrenee 3,15

Pennzoil Exploration & Prod. Ca. v.

Ramco Energy Ltd.,

SF FIR IOOR Cad BO ION i citi inigccectnwcnete 14

Seacoast Motors of Salisbury, Inc. v.

DaimlerChrysler Motors Corp.,

ZFE Pe GCE FO Paivivbsesstsvcecccinaetiaaxsiicicen 15

Vi

TABLE OF AUTHORITIES

Shearson/American Express, Inc. v. McMahon,

REZ ID, £LO CLDOT ) isisisciesnsccinospebeninnes guises 3, 12, 15, 1

Southland Corp. v. Keating,

MU CRN S REP canssvvss inca tesitonidiopiinecsiieannel 10, 11,2:

United Steelworkers of Am. v.

’ Warrior & Gulf Navigation, Co.,

Rd Adee TD AAD es csaineaiocrcvertenctiugeksdiordeabans 1

Statutes & Rules

SP Rhee Gets tiitcs dot ecaiahanctlstiinasssaainks kedamiseminie

RR ars BS ta vencsessdsiatickeapcakeaphunsids deeains toscana bnie docs

RE MEG OE Sokidncisk, Saisie Lockneniphaphucaieanipiebassauionsdomies 5,

BA EAC PERO FO iiss 46ckikidpns sackaceenhcgesnsbhoesan cides

SPI IRI Ys SAME, ORDA EOD cciiickssipsscceneaciinctasdniosvans

OHIO REV. CODE. §1331.04 oo... nnn... cescsecsoseneee

LEAS OE Vn RIMES Shae FAN Saas eckiiensvansarnassonivevebacche

CR RV TI. 6278 809 niki sccdestsancuaccve

Bene Ss, SOD cde Sa asda cacedce nbaaks spin ch ednstabeanese lt

Ny GiB ies WA ii cdhsyinsesdssosnaicens athdsisnnecee bobaaetn aie lt

IN THE

Supreme Court of the United States

—_—-—__

UNITED HEALTHCARE OF OHIO, INC.,

Petitioner,

V.

ACADEMY OF MEDICINE OF CINCINNATI, ET AL.,

Respondents.

On Petition for Writ of Certiorari to the

Supreme Court of Ohio

PETITION FOR WRIT OF CERTIORARI

The Court should grant the petition to halt a growing trend

in which state courts are determining the arbitrability of

statutory and tort causes of action using a test that egregiously

undermines the Federal Arbitration Act’s policy favoring

arbitration and the Court’s arbitration precedent. By focusing

restrictively on whether the elements of a claim reference the

parties’ contract, and not on whether the claims “touch mat-

ters” within the scope of the parties’ arbitration agreement,

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,

473 U.S. 614, 625 n.13 (1985), the Ohio Supreme Court

disregarded the intent expressed in the language of the

parties’ agreement to arbitrate. The court recognized that the

agreement was broad, encompassing all disputes related to

the parties’ business relationship. Yet, the court held that

state antitrust claims could not be arbitrated because the ele-

ments of those claims did not reference the contract at issue—

even though the contract embodied the precise price-fixing

2

conspiracy alleged as the antitrust violation. Under thi

Ohio court’s contract-reference reasoning, parties may evad

their arbitration obligations through artful pleading an

semantics, even when the substance of a claim unques

tionably touches matters within the scope of the parties

agreement to arbitrate. The Court should determine whethe

the FAA and this Court’s established arbitrability principle:

permit that result.

Ohio’s dangerous distortion of federal arbitration law i:

compounded by Kentucky’s adoption of the same test. Sex

Anthem Health Plans of Kentucky, Inc. v. Academy of Medi.

cine of Cincinnati, Nos. 2003-CA-000752-MR, 2003-CA-

000753-MR, 2003-CA-000754-MR, 2004 Ky. App. LEXIS

315 (Ky. App. Oct. 29, 2004), review denied sub nom

Anthem Health Plans of Ky., Inc. v. Baldridge, No. 2005-SC-

0109-D (Ky. Feb. 15, 2006). Because these two cases presen’

the same arbitrability question and, together, demonstrate <

growing state-court trend, United is simultaneously filing <

petition for wrt of certiorari in the Kentucky case tha

reiterates the arguments in this petition. '

The Ohio and Kentucky decisions assail the fundamenta

premise of the federal arbitration system, which requires

courts to respect and enforce contracting parties’ agreements

not to litigate particular categories of disputes by designating

them for arbitration. In adopting a constrictive test for the

arbitrability of statutory and tort causes of action, the Ohic

and Kentucky courts ignored the Court’s consistent directives

that, under the FAA, arbitration agreements must be imple-

mented according to their negotiated terms, that they must be

interpreted with a presumption in favor of arbitrability, anc

that broad arbitration agreements must be faithfully enforcec

to effectuate their liberal scope, rendering arbitrable all dis-

' See Petition for Writ of Certiorari, United HealthCare of Ohio, Inc. \

N. Ky. Med. Soc. (No. 05-__ ).

3

putes with allegations that touch matters covered by the

arbitration agreement. See, e.g., Mitsubishi, 473 U.S., at 625-

626 & n.13.

Moreover, the Ohio and Kentucky decisions directly con-

flict with the Court’s explicit recognition of the arbitrability

of statutory causes of action in Mitsubishi, 473 U.S., at 614

(international antitrust claims), Shearson/ American Express,

Inc. v. McMahon, 482 U.S. 220, 238, 242-243 (1987) (RICO

and §10(b) Securities Exchange Act claims), Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (Age

Discrimination in Employment Act claims), and PacifiCare

Health Systems, Inc. v. Book, 538 U.S. 401, 407 (2003)

(RICO claims). And the Ohio and Kentucky decisions also

specifically conflict with the Second Circuit’s analysis of the

arbitrability of price-fixing conspiracy claims, in particular,

in JLM Industries, Inc. v. Stolt-Nielsen S.A., 387 F.3d 163

(CA2 2004).

Under Ohio and Kentucxy’s unsupportable arbitrability

approach—which implemen's a standard previously applied

by Texas and South Carolina courts as well—these courts

now treat arbitration agreements differently than other state

and federal courts whenever litigants bring statutory and tort

claims without explicitly referencing the parties’ underlying

contract. This rule not only puts Ohio and Kentucky at odds

with other jurisdictions, but also invites gamesmanship and

forum shopping. The Court should grant the petition to

protect arbitral nghts and halt the end run around arbitration

reflected by this growing sta‘e-court trend.

OPINIONS AND ORDERS BELOW

The Hamilton County Court of Common Pleas refused to

compel arbitration or to dismiss or stay the proceedings in an

un, shed order. App. la. The Ohio Court of Appeals

affirmed ihe trial court in a decision reported at Academy of

Medicine of Cincinnati v. Aetna Health, Inc., Inc., 800

4

N.E.2d 1185 (Ohio App. 2003), aff'd, 842 N.E.2d 488 (Ohi

2006). See App. 6a. The Ohio Supreme Court affirmed th

court of appeals in an opinion reported at Academy o

Medicine of Cincinnati v. Aetna Health, Inc., 842 N.E.2d 48:

(Ohio 2006), App. 12a, and denied reconsideration in ai

unpublished order, App. 26a.

JURISDICTION

| The Ohio Supreme Court denied a motion for reconsidera

tion of its decision on April 26, 2006. App. 26a. The Cour

“has jurisdiction under 28 U.S.C. §1257(a). See Cox Broad

Corp. v. Cohen, 420 U.S. 469, 480-483 (1975).

STATUTORY PROVISIONS INVOLVED

The enforcement provision of the Federal Arbitration Ac

provides:

“A written provision in any maritime transaction or <

contract evidencing a transaction involving commerce tc

settle by arbitration a controversy thereafter arising ou'

of such contract or transaction, or the refusal to perform

the whole or any part thereof, or an agreement in writing

to submit to arbitration an existing controversy arising

‘out of such a contract, transaction, or refusal, shall be

valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the revocation ot

any contract.” 9 U.S.C. §2.

The FAA permits parties to petition a court for an order

compelling arbitration when another party does not arbitrate

as required by an arbitration agreement:

“A party aggrieved by the alleged failure, neglect, or

refusal of another to arbitrate under a written agreement

for arbitration may petition any United States district

court which, save for such agrecment, would have

jurisdiction under Title 28, im a civil action or in

admiralty of the subject matter of a suit arising out of the

controversy between the parties, for an order directing

5

that such arbitration proceed in the manner provided for

in such agreement. Five days’ notice in writing of such

application shall be served upon the party in default.

Service thereof shall be made in the manner provided by

the Federal Rules of Civil Procedure. The court shall

hear the parties, and upon being satisfied that the making

of the agreement for arbitration or the failure to comply

therewith is not in issue, the court shall make an order

directing the parties to proceed to arbitration in accor-

dance with the terms of the agreement. The hearing and

proceedings, under such agreement, shall be within the '

district in which the petition for an order directing such

arbitration is filed. If the making of the arbitration

agreement or the failure, neglect, or refusal to perform

the same be in issue, the court shall proceed summarily

to the trial thereof. If no jury trial be demanded by the

party alleged to be in default, or if the matter in dispute

is within admiralty jurisdiction, the court shall hear and

= determine such issue. Where such an issue is raised, the

party alleged to be in default may, except in cases of

admiralty, on or before the return day of the notice of

application, demand a jury trial of such issue, and upon

such demand the court shall make an order refernng the

issue or issues to a jury in the manner provided by the

Federal Rules of Civil Procedure, or may specially call a

jury for that purpose. - If the jury find that no agreement

in writing for arbitration was made or that there is no

default in proceeding thereunder, the proceeding shall be

dismissed. If the jury find that an agreement for

arbitration was made in writing and that there is a default

in proceeding thereunder, the court shall make an order

summarily directing the parties to proceed with the

arbitration in accordance with the terms thereof.” 9

U.S.C. §4.

The relevant state antitrust statutory provisions from Ohio

appear in the appendix.

6

STATEMENT OF THE CASE

United HealthCare of Ohio, Inc., enters into provide

agreements with physicians and physician groups unde

which the providers agree to accept rates established in th

contract when they treat individuals covered by health benefi

plans insured or administered by United. These contract

establish and govern the parties’ relationships, including th:

categories of medical services, claim-reimbursement proce

dures, and fee schedules. The provider agreements requir:

United to reimburse contracting physicians who provid

covered services to members of United health plans and se

out remmbursement rates for particular types of services.

Each of the respondents in this case is a party to a provide

agreement with United. In addition to setting fee schedule:

that establish the reimbursement rates to be paid for medica

services provided to patients covered by United’s health

plans, each contract also addresses the possibility of disagree

ments in the course of the parties’ relationship by including

an expansively worded clause that mandates arbitration o

“any disputes about their business relationship.” See App. 9a

12a, 22a.

Five physicians practicing in the Cincinnati area and twc

local medical societies, acting in a representative capacity

filed this state antitrust suit against United and three othe:

health care companies.” The single-count, class-action com-

plaint alleges that the reimbursement rates set by the contracts

containing the arbitration clauses are unreasonably low as <

result of a conspiracy among the defendant managed care

companies to fix prices in violation of state antitrust law

App. 8a; see also OHIO REV. CODE §§1331.01, 1331.04.

? In the trial court, the defendants also included Aetna Health, Inc.

Anthem Blue Cross and Blue Shield, and Humana, Inc. Humana was

dismissed from the case by the trial court, and Aetna and Anthem were

dismissed from the case by the Ohio Supreme Court prior to the issuance

of its decision.

7

As remedies for the alleged wrongdoing, respondents seek

an injunction ordering United to cease and desist from the

alleged unlawful conspiracy to depress the physician reim-

bursement rates reflected in the provider agreements and to

modify the parties’ contracts by setting reimbursement rates

at reasonable levels in relation to comparable regional

markets. See Pls.” Compl. 11. Respondents also seek

damages for the compensation they contend should have been

paid beyond the amount of the contractual reimbursement

rates they received for providing services. Jbid.

Because the allegations center on the parties’ business

relationship, United and its codefendants invoked §4 of the

Federal Arbitration Act, 9 U.S.C. §4, and §2711.03 of the

Ohio Arbitration Act, OHIO REV. CODE §2711.03, to compel

arbitration of the claims under the parties’ arbitration agree-

ments. . United and the other defendants also moved to

dismiss or, alternatively, to stay the proceedings pending

arbitration pursuant to §3 of the FAA, 9U.S.C. §3, and

§2711.02 of the Ohio Arbitration Act, OHIO REV. CODE

§2711.02.

The trial court denied the motions, holding that respon-

dents’ claims were not arbitrable because the alleged price-

fixing conspiracy “does not arise out of or relate to the

contracts” between the parties, “nor does it involve disputes

about the parties’ business relationships.” App. 2a. In the

trial court’s view, the arbitration agreement did not include

within its scope any “claims that were independent of any

breach of contract.” /bid. —

The Ohio Court of Appeals affirmed the trial court,

reasoning that the antitrust claims were not arbitrable because

“(t]he express elements of an antitrust claim do not depend,

as a matter of law, on the provider agreements.” App. 10a.

The court hinged the arbitrability of a claim on whether

the claim “could be maintained without reference to the

individual provider agreements,” and, concluding that the

8

_antitrust claims did not reference the parties’ contracts, hel

that those claims fell outside the scope of the arbitratior

agreements. App. Ila.

The Ohio Supreme Court granted review to determine

whether the court of appeals properly considered and imple

mented the federal standard for arbitrability in evaluating

respondents’ state-law antitrust conspiracy claims. The cour

affirmed, agreeing with the court of appeals’s contract:

reference arbitrability test as an accurate reflection of federa

law. Purporting to rely on the Sixth Circuit’s decision ir

Fazio v. Lehman Brothers, 340 F.3d 386 (CA6 2003), the

court articulated an arbitrability standard for statutory and tort

causes of action that permits a court to ignore the contractual

language the parties used to memorialize their agreement to

arbitrate. See App. 21a.

Two justices dissented, concluding that the majority had

distorted the federal standard for arbitrability, and Fazio, by

asking solely whether respondents’ claims referenced the

parties’ contract, rather than whether, in accordance with

Mitsubishi, 473 U.S., at 625 n.13, the claims touch matters

that fall within the scope of the parties’ broad agreement to

arbitrate disputes about their business relationship. See App.

23a. The dissent further noted that the majority’s test marked

a grave departure from the FAA and established arbitration

principles:

“{A]sking whether the action could be maintained

without reference to the contract, is not consistent with

either the federal policy or Ohio’s policy of favoring

arbitration. The appropriate federal standard is whether

allegations underlying the claims ‘touch matters’

covered by the agreements.” App. 24a.

9

The dissenting justices also demonstrated why the antitrust

allegations necessarily fell within the seope of the parties’

agreement to arbitrate:

“I]t is difficult to see how antitrust actions may be

maintained against the HMO provider ‘without reference

to’ the individual provider agreements... [that] are at

the core of the [antitrust] claims, for they allegedly

contain the evidence of anti-competitive conduct and

financial harm. They contain the reimbursement rates

allegedly implicating unlawful restraint.” Jbid.

Accordingly, the dissent reasoned, “[t]he antitrust conspiracy

claims relate to the provider contracts that contain the broad

clauses requiring arbitration of any dispute ‘about the busi-

ness relationship’ between the physicians and United Health-

care.” Ibid.

Compounding the effect of Ohio’s restrictive arbitrability

approach, the Kentucky Court of Appeals adopted the same

contract-reference test in a case involving another group

of physicians that sued United and other managed care com-

panies, alleging violations of Kentucky antitrust law based on

the same rate-fixing theory. Anthem, 2004 Ky. App. LEXIS,

at *7-*8. Together, the Ohio and Kentucky opinions stake

out an approach to arbitrability that, as the dissenting Ohio

justices observed, impermissibly deviates from the

established “federal standard that inquires whether the

allegations underlying the claims touch matters covered by

the agreement.” ‘App. 24a.

REASONS FOR GRANTING THE WRIT

The Ohio Supreme Court’s decision contravenes the

FAA’s strong policy favoring arbitration, as reflected in the

arbitrability principles articulated by the Court, including the

Court’s express recognition of the arbitrability of antitrust

claims. By insisting that elements of claims reference

parties’ underlying contracts as a prerequisite to compelling

10

arbitration under the FAA, the Ohio test renders nonarbitrablk

nearly all tort and statutory causes of action, which wil

almost never refer to or directly depend on an underlyin;

contract. Thus, under the Ohio standard, now adopted by

Kentucky as well, the antitrust claims in this case, anc

statutory and tort claims generally, must be litigated ir

derogation of the parties? contractual bargains to arbitrate—

even under the broadest of arbitration clauses. That contract:

reference approach eviscerates the protections afforded tc

arbitration by the FAA. It also creates an untenable

circumstance in which arbitrability under the FAA is treatec

differently in the state courts of Kentucky and Ohio thar

elsewhere, encouraging litigants to forum shop to escape thei:

arbitration commitments. Because this case presents an

important federal question on which the Kentucky and Ohio

decisions conflict with relevant decisions of the Court, and of

the federal courts of appeals, the Court should grant the

petition. Sup. CT. R. 10(b), (c).

I. THE OHIO SUPREME COURT’S DECISION CONFLICTS

WITH ESTABLISHED ARBITRABILITY PRINCIPLES

ARTICULATED BY THIS COURT AND THE FEDERAL

COURTS OF APPEALS.

A. The National Policy Favoring Arbitration Applies

Equally to State Courts.

Through the FAA, Congress “reverse[d] the longstanding

judicial hostility to arbitration agreements” and “place[d]

arbitration agreements upon the same footing as other

eontracts.” Gilmer, 500 U.S., at 24; sce also Southland Corp.

v. Keating, 465 U.S. 1, 12-13 (1984). Additionally, Congress

“declared a national policy favoring arbitration and withdrew

the power of the states to require a judicial forum: for the

resolution of claims which the contracting parties agreed to

resolve by arbitration.” Southland, 465 U:S., at 10.

1]

In pursuing its clear objective of ensuring the enforcement

of agreements to arbitrate, Mitsubishi, 473 U.S., at 625-626,

Congress did not limit the applicability of its mandates to

federal courts; rather, it expressly rejected the notion that

enforcement of arbitration nghts might depend on the forum

in which they are asserted. Southland, 465 U.S., at 15.

Indeed, the two problems against which Congress legislated

were endemic to state courts: a common-law hostility toward

arbitration and the failure of state arbitration statutes to

mandate enforcement of arbitration agreements. /d., at 14.

Congress’s purpose in enacting the FAA, therefore, “was to

assure those who desired arbitration and whose contracts

related to interstate commerce that their expectations would

not be undermined by federal judges, or... by state courts or

legislatures.” /d., at 13 (internal quotation marks and citation

omitted).

B. Ohio’s Arbitrability Standard for Non-Breach-

of-Contract Claims Contravenes Fundamental

Principles for Analyzing. the Scope of FAA-

Governed Arbitration Agreements.

The Ohio Supreme Court’s test for arbitrability—whether

an action can be maintained without reference to the

underlying contract—conflicts with the national policy

favoring arbitration that is embodied in the FAA and in the

arbitration precedent of this Court and the federal courts of

appeals. Coupled with Kentucky’s adoption of the identical,

impermissibly constrictive arbitrability standard, the Ohio

decision exemplifies a state-court trend of undermining

arbitration of statutory and tort claims in a manner that

fundamentally guts the arbitral protections Congress enacted

in the FAA, warranting the Court’s intervention. See also,

e.g., Aiken v. World Fin. Corp. of S.C., 623 S.E.2d 873, 875,

876 (S.C. App. 2005) (noting breadth of arbitration clause

covering “all disputes, controversies or claims of any kind

and nature” but refusing to compel arbitration of business-tort

12

claims by a borrower against a finance corporation for misus:

of personal information, concluding that the claims could b

“maintained without reference to the contract” between th

borrower and the bank); Loy v. Harter, 128 S.W.3d 397, 403

405 (Tex. App. 2004) (denying arbitration of business-tor

claim for breach of fiduciary duty against a company’

director and CFO after concluding that the claim “could b:

maintained without reference to the contract” governing hi:

employment and was nonarbitrable as unrelated to hi:

employment relationship).

Although purportedly based on language from the Sixtl

Circuit’s decision in. Fazio, 340 F.3d, at 386, the Ohi

Supreme Court’s contract-reference arbitrability standar<

actually conflicts with the approach of the Sixth Circui

and other courts that have faithfully applied Mitsubishi’:

requirement that parties arbitrate all claims—with nc

exception for statutory or tort claims—that “touch matters’

within the scope of the parties’ arbitration agreements. 47:

U.S., at 625 n.13 (requiring arbitration of antitrust claims)

Indeed, as the Court has made clear, the FAA’s “federa

policy favoring arbitration . . . is not diminished when a party

bound by an agreement raises a claim founded on statutory

rights.” McMahon, 482 U.S., at 225-226 (quoting Moses H

Cone Mem’! Hosp. v. Mercury Constr. Corp., 460 U.S. 1

24 (1983)). “‘[W]e are well past the time when judicia

suspicion of the desirability of arbitration and of the

competence of arbitral tribunals’ should inhibit enforcemen

of the Act ‘in controversies based on statutes.”” McMahon

482 US., at 226 (quoting Mitsubishi, 473 U.S., at 626-627).

The Ohio Supreme Court correctly recognized that Ohic

courts may—and must—apply the federal arbitrability stan-

dard when the party seeking arbitration grounds its request ir

the FAA, as did United in this case. But—by creating <

distinct test for arbitrability of statutory and tort causes

of action—the Ohio court distorted the federal arbitrability

13

standard in a manner that critically deviates from the FAA’s

mandates and settled federal arbitration precedent.

Specifically, the Ohio Supreme Court isolated language in

Fazio that discussed whether an action can be maintained

without reference to the contract at issue, erroneously equat-

ing that inquiry with the benchmark for arbitrability. App.

19a (citing Fazio, 340 F.3d, at 395). As the dissent correctly

observed, however, the Sixth Circuit did not limit its arbi-

trability test to that contract-reference inquiry but, rather, -

broadly held that arbitration provisions encompass claims

“Tilf the allegations underlying the claims ‘touch matters’

covered by the [agreement].” Fazio, 340 F.3d, at 395

(quoting Genesco, Inc. v. T. Kalcuchi & Co., Ltd., 815 F.2d

840, 846 (CA2 1987)); see also App. 23a (Lanzinger, J.,

dissenting) (“Fazio recognized the true federal standard to be

whether allegations ‘touch matters’ covered by the agree-

ment.”). Thus, the Sixth Circuit, contrary to the Ohio

Supreme Court, recognized that “[e]ven real torts can be

covered by arbitration clauses if the allegations underlying

the claims touch matters covered by the agreement.” Fazio,

340 F.3d, at 395 (original brackets, citation, and quotation

marks omitted).

Other federal courts of appeals, consistent with the Sixth

Circuit and similarly in conflict with the Ohio and Kentucky

courts, have adhered to Mitsubishi’s touch-matters test for

tort and statutory claims, requiring a “focus on the factual.

allegations in the complaint rather than the legal causes

of action asserted . . . whatever the legal labels attached.”

Genesco, 815 F.2d, at 846 (applying the touch-matters test to

determine the arbitrability of tort claims). These courts of

* State courts, too, have recognized the propriety of applying the touch-

matters test to claims other than breach of contract. See, e.g., MS Credit

Ctr., Inc. v. Horton, — So.2d -—, No. 2004-CA-01699-SCT, 2006 WL

408415, at *6 (Miss. Feb. 23, 2006) (analyzing arbitrability of business-

tort claims under the touch-matters test).

14

appeals have rejected attempts to evade arbitration by artfulh

pleading, as torts, claims relating to the parties’ contractual o

business relationships. See, e.g., Fyrnetics (H.K.) Ltd. v

Quantum Group, Inc., 293 F.3d 1023, 1030 (CA7 2002

(rejecting attempt to avoid arbitration by casting allegation:

as torts of negligence and misrepresentation); Pennzoi

Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3«

1061, 1067 (CA5 1998) (holding that a broad arbitratior

agreement “embrace[s] all disputes between the partie:

having a significant relationship to the contract regardless o

the label attached to the dispute”); Gregory v. Electro-Mech

Corp.; 83 F.3d 382, 384 (CAI1 1996) (“Whether a claim fall:

within the scope of an arbitration agreement turns on the

factual allegations in the complaint rather than the lega

causes of action asserted.”).*

The Ohio Supreme Court purported to reject artful pleading

as a means to evade arbitration, App. 18a, yet its opinior

promotes that detrimental result by adopting a standard tha’

hinges arbitrability on whether the complaint reference:

the contract containing the arbitration clause. The touch-

matters test, by contrast, looks to the substance of the

plaintiff's claims and does not have the practical effect of the

Ohio decision, which effectively limits arbitration to breach-

of-contract claims.

* Moreover, when, as in this case, the arbitration agreement is broad,

courts have declined to carve out categories of claims from the expansive -

scope of the parties’ arbitration agreement. See Brown v. ITT Consumer

Fin. Corp., 211 F.3d 1217, 1221 (CA11 2000) (explaining that use of

the phrase “any dispute” in an arbitration agreement means that the

“parties agreed to arbitrate any and all claims against each other, with no

exceptions’); see also, e.g., Genesco, 815 F.2d, at 846.

15

C. Ohio’s Standard Conflicts with the Court’s

Recognition of the Arbitrability of Antitrust

Claims Generally and with the Second Circuit’s

Analysis of Price-Fixing Conspiracy Claims

Specifically.

Ohio’s contract-reference test effectively excludes antitrust

claims from traditional arbitrability analysis, contravening the

Court’s longstanding precedent that such claims—indeed,

statutory claims generally—are arbitrable. See, ¢.g.,

PacifiCare, 538 U.S., at 405-406 (RICO claims); Gilmer, 500

U.S., at 26 (ADEA claims); McMahon, 482 U.S., at 230-233

(RICO and Securities Exchange Act claims); Mitsubishi, 473

U.S., at 627, 632-637 (international antitrust claims).

Since Mitsubishi, the federal courts of appeals have uni-

formly held that antitrust claims are arbitrable. See, e.g.,

Seacoast Motors of Salisbury, Inc. v. DaimlerChrysler

Motors Corp., 271 F.3d 6, 11 (CA1 2001); Kotam Elecs., Inc.

v. JBI Consumer Prods., Inc., 93 F.3d 724, 726-727 (CAI11

1996) (en banc); Nghiem v. NEC Elecs., Inc., 25 F.3d 1437,

1441-1442 (CA9 1994). Moreover, federal district courts and

state courts have compelled arbitration of antitrust claims.

See, e.g., N.Y. Cross Harbor R.R. Terminal Corp. v. Consol.

Rail Corp., 72 F.Supp.2d 70 (EDNY 1998); Hunt v. Up N.

Plastics, Inc., 980 F.Supp. 1046 (Minn. 1997): Crown

Homes, Inc. v. Landes, 27 Cal.Rptr.2d 827, 834 (Tai. App.

1994). By creating a narrow arbitrability test for statutory

causes of action that, as a practical matter, will render them

nonarbitrable in virtually every case, the Ohio and Kentucky

courts’ decisions—like prior Texas and South Carolina

opinions—conflict with this Court’s and the lower federal

and state courts’ accepted recognition that antitrust claims

are arbitrable under the same conditions as other claims:

when they touch matters within the scope of the parties’

arbitration agreement.

16

Moreover, the Ohio and Kentucky opinions conflict nc

only generally with the “touch matters” test from Mitsubish

and its progeny, but also specifically with the Secon

Circuit’s decision in JLM Industries, Inc. v. Stolt-Nielse:

S.A., 387 F.3d 163 (CA2 2004), which used the touch-matter

standard to determine the arbitrability of price-fixing con

spiracy claims against ocean carriers whom the plaintiff

alleged exploited their market power to fix worldwid

shipping rates. /d., at 167-168, 172-173. Analyzing precisels

the type of dispute that this case presents, the Second Circui

reversed the trial court’s ruling that the claims wer

nonarbitrable because they could be proven without reliance

on the parties’ contracts. /d., at 168.

The Second Circuit acknowledged that the price-fixing

conspiracy allegations “rest{ed] on factual allegations whict

concern matters beyond the making of a particular contrac!

between the parties and the performance of its terms” anc

therefore “will not focus exclusively ‘upon the parties’

conduct under the terms of the charter.’” /d., at 175.

Nonetheless, the court reasoned that the plaintiffs could not

have suffered the damages from the alleged price fixing had

they not entered into the contracts, “each of which specifies

price terms which are variously characterized in the amended

complaint as ‘artificially high’ and as ‘overpayments.’” /bid.

Accordingly, the price-fixing claims, though alleged as extra-

contractual, arose out of the contracts and fell within the

parties’ broad arbitration agreements. /d., at 176 (holding

that antitrust disputes “unquestionably involve a core issue of

the contracts between the parties—allegations that the price

terms set forth in those contracts have been artificially

inflated as a result of the price-fixing conspiracy”).

* A district court within the Second Circuit similarly applied the touch-

matters standard in determining the arbitrability of claims alleging that

banks engaged in price fixing regarding currency conversion fees when

cardholders conducted foreign currency transactions with their credit

17

Under JLM’s reasoning, the price-fixing allegations in

this case would fall plainly within the scope of the parties’

arbitration agreement, which the Ohio Supreme Court ac-

knowledged was broad. App. 17a. The court, however,

violated fundamental arbitrability principles by paying lip

service to, but disregarding in practice, the requirement that

courts construe arbitration agreements in favor of arbitration.

App. 16a; see, e.g., Mitsubishi, 473 U.S., at 625; Dean Witter

Reynolds, Inc. v. Byrd, 470 U.S. 213, 219-220 (1985). Under

the FAA, any doubts about arbitrability must be resolved in

favor of coverage, and arbitration must be compelled unless it

can “be said with positive assurance that the arbitration

clause is not susceptible of an interpretation that covers the

asserted dispute.” United Steelworkers of Am. v. Warrior &

Gulf Navigation Co., 363 U.S. 574, 589 (1960); see also

Moses H. Cone, 460 U.S., at 24-25 (“[A]ny doubts con-

cerning the scope of arbitrable issues should be resolved in

favor of arbitration.”).

Despite its duty to construe the United arbitration agree-

ments broadly under the Court’s precedent, the Ohio Supreme

Court’s impermissibly constrictive scope analysis defeated

the parties’ agreement -to arbitrate all disputes “about their

business relationship.” See App. 12a, 17a. Under a proper

analysis, as the dissent observed, respondents’ price-fixing

conspiracy allegations plainly touch matters concerning the

parties’ business relationship because the parties’ contracts

“allegedly contain the evidence of anti-competitive conduct.

and financial harm” and “the reimbursement rates allegedly

implicating unlawful restraint.” App. 24a. Accordingly, the

dissent reasoned, “[t}he antitrust conspiracy claims relate to

cards and the fixed prices appeared on the credit card accounts. Jn re

Currency Conversion Fee Antitrust Litig., 265 F Supp.2d 385, 406, 410

(SDNY 2003). The court held that the claims were arbitrable because the

terms of plaintiffs’ use of the credit-card accounts were governed by the

cardholder agreements containing the arbitration clause. Jbid.

18

the provider contracts that contain the broad clauses requirin;

‘arbitration of any dispute ‘about the business relationship

between the physicians and United Healthcare.” Jbia

Indeed, the dissent’s analysis closely mirrors that of th

Second Circuit in JLM. 387 F.3d, at 175-176.

Because the price-fixing conspiracy allegations necessaril:

center on the parties’ business relationship, the Ohio Suprem«

Court’s refusal to compel arbitration and its creation of :

distinct, narrow arbitrability standard for statutory and tor

claims reflect a revived judicial hostility to arbitration tha

is compounded by Kentucky’s adoption of the identical

restrictive standard. In light of this state-court trend—whict

includes similar holdings from Texas and South Carolina’—

the Court should grant the petition to clarify whether, a:

Mitsubishi and McMahon indicated, 482 U.S., at 225-226

473 U.S., at 626-627, the FAA, the national policy favoring

arbitration, and this Court’s directive to faithfully enforce the

negotiated terms of parties’ arbitration agreements apply

equally to motions to compel arbitration of statutory claims o1

whether, as Ohio and Kentucky concluded, courts should

enforce arbitration rights only when the elements of such

claims expressly reference the contract in question.

Il. THE OHIO SUPREME COURT’S HOSTILITY TO

ARBITRATION INVITES GAMESMANSHIP AND FORUM

SHOPPING.

By focusing on the formal elements of claims to the exclu-

sion of textual analysis of parties’ arbitration agreements,

the Ohio Supreme Court’s restrictive standard improperly

encourages gamesmanship by tying the scope-of-arbitrability

determination to the formalities of a plaintiff's pleadings,

which can be creatively drafted to avoid reference to

the relevant contract and thus permit plaintiffs to evade

° See, e.g., Aiken, 623 S.E.2d, at 875-876; Loy, 128 S.W.3d, at 403-

405. :

19.

arbitration. Rather than ensuring the enforcement of valid

arbitration agreements, as Congress mandated in the FAA, the

Ohio standard creates a safe harbor for parties who wish to

breach their obligation to arbitrate, authorizing plaintiffs to do

precisely what other courts have forbidden: escape arbitration

commitments by recasting a dispute in tort or as a statutory

violation. See, e.g., Fazio, 340 F.3d, at 395 (holding that a

party cannot avoid arbitration simply by framing its action in

tort); Fyrnetics, 293 F.3d, at 1030 (rejecting attempt to avoid

arbitration by casting allegations as torts of negligence and

misrepresentation). In other words, the decision effectively

creates a zone of nonarbitrability for plaintiffs sufficiently

sophisticated to plead their claims as statutory or tort claims,

rather than directly as contractual violations.

This dangerous erosion of arbitration rights, exacerbated by

Kentucky’s adoption of the Ohio standard, will encourage

forum shopping and generate jurisdictional disputes when

parties seeking to escape arbitration obligations target Ohio

and Kentucky state courts, while those wishing to enforce

arbitration agreements attempt to be heard in federal court or ~

other state courts.’ The Court should grant the petition to

reaffirm that arbitrability depends on the language of parties’

agreements, not the forum chosen.

Additionally, by departing from traditional scope analysis

in favor of a new contract-reference test, the Ohio and

Kentucky decisions will create confusion and uncertainty

over the availability of arbitration for statutory and tort

claims. For countless contracts containing broad arbitration

clauses like respondents’ agreements with United, the Ohio

and Kentucky decisions will upset parties’ settled, and

” South Carolina and Texas courts’ implementation of the same

~Aarbitrability test makes additional inroads on arbitration rights and further

demonstrates the need for review of the arbitrability standard for non-

contractual claims. See, e.g., Aiken, 623 S.E.2d, at 875-876; Loy, 128

S.W.3d, at 403-405.

20

reasonable, expectations that courts will honor their carefull:

negotiated agreements. By effectively excluding statutor

and tort claims from arbitration regardless of. the languag:

parties include in their arbitration agreements, the Ohio anc

Kentucky opinions also introduce unavoidable unpredict

ability for parties negotiating contracts that reflect broac

agreements to arbitrate but rely on Ohio or Kentucky law

Indeed, these decisions may deter parties seeking broac

arbitration agreements from entering into agreements gov:

erned by Ohio or Kentucky law.

The Kentucky and Ohio opinions, unless addressed by the

Court, stand as an open invitation to other courts that have

never fully embraced arbitration and now have ammunition tc

disparately treat motions to compel arbitration of claims other

than breach of contract. This trend dangerously threatens the

FAA’s arbitral protections and the strong national policy

favoring arbitration in two significant respects. First, it will

undermine Congress’s primary goal of permitting parties to

avoid litigation by honoring their agreements not to liti-

gate certain—or all—disputes between them. See, e.g.,

Southland, 465 U.S., at 7 (noting that one party’s avoidance

of arbitration may lead to protracted litigation, “one of the

very risks the parties, by contracting for arbitration, sought to

eliminate”). Second, these opinions, if unreviewed, will

signal that no consequences lie for a court that egregiously

deviates from Congress’s clearly expressed will in enacting

the FAA. See supra Part LA. —

Because the Ohio Supreme Court’s arbitrability standard,

and its adoption by Kentucky, undermines the national policy

favoring arbitration, dramatically departs from established

federal precedent, and eviscerates parties’ contractual rights

while also establishing an incentive for litigants to use the

Ohio and Kentucky courts in a manner inconsistent with the

FAA, the Court should grant the petition and determine

whether statutory claims must be arbitrated only when they

21

reference the underlying contract or whether, consistent with

arbitrability principles governing all other categories of

claims, courts must compel arbitration when allegations touch

matters within the scope of the parties’ arbitration agreement.

CONCLUSION

The Court should grant the petition.

Respectfully submitted,

Stephen J. Butler Gregory S. Coleman

THOMPSON HINE Counsel of Record

312 Walnut Street Lisa R. Eskkow

14th Floor Melanie P. Sarwal

Cincinnati, Ohio 45202 WEIL, GOTSHAL & MANGES LLP

(513) 352-6700 8911 Capital of Texas Hwy.

Suite 1350

eanannamaeeraone Austin, Texas 78759

Elizabeth M. Avery

WEIL, GOTSHAL & (512) 349-1930

MANGES LLP Counsel for Petitioner

767 Fifth Avenue

New York, New York 10153

(212) 310-8000

May 16, 2006