Reply Brief — Missouri River Services, Inc. v. Omaha Tribe

Supreme Court, U.S.

FILED

@ APR23 2002

No. 01-1149 OFFICK OF THE CLERK

In The

Supreme Court of the United States

+

MISSOURI RIVER SERVICES, INC.,

a Delaware corporation,

Petitioner,

Vv.

OMAHA TRIBE OF NEBRASKA,

a federally recognized Indian Tribe,

Respondent.

¢

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

+

REPLY BRIEF IN SUPPORT OF

PETITION FOR A WRIT OF CERTIORARI

¢

Brian A. Macoon, Esq.

Joun G. Ne son, Eso.*

Breca & Winters P.C.

1700 Lincoln Street, Suite 2222

Denver, Colorado 80202

(303) 866-9400

. Attorneys for Petitioner

*Counsel of Record

TABLE OF CONTENTS

Page

SUMMARY OF ARGUMENT.........----eeeeeceees 1

Ee ois bea va Va cho 8 0d bd Ke Keene ese eds 2

A. This Court Should Grant This Petition Because The

G

Eighth Circuit Erroneously Ruled That A Court

May Vacate An Arbitration Award Which Satisfies

All Criteria Set Forth In The FAA But (Assertedly)

Violates Extra-Statutory Requirements Imposed By

The Court, And This Ruling Conflicts With The

Decisions Of Other Circuits ............+eeeeeeee

This Court Should Grant This Petition Because

The Eighth Circuit Erroneously Ruled That

Where A Question Possessing Jurisdictional

Implications Is Intertwined With The Merits Of

An Arbitration Decision, The Federal Courts Not

Only May But Must Disregard This Decision...

Intervention By This Court Is Imperative ......

CIEL oo cccccccccecceducsnsscvvseneseveess

5

ii

TABLE OF AUTHORITIES

CASES

First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938

(1995)... cceccccccccseccnccccscescevecsosserers

Missouri River Services, Inc. v. Omaha Tribe of

Nebraska, 267 F.3d 848 (8th Cir. 2001) ......-..-.

Moses H. Cone Memorial Hospital v. Mercury Const.

Co., 460 U.S. 1 (1983). ...... eee eee e rere ees

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388

U.S. 395 (1967) ....cccccccvcvcccccscccssceceees

Shearson/American Express, Inc. v. McMahon, 482

U.S. 220 (1987) .....cccccccccccccvcvcessssseers

United Steelworkers of America v. Enterprise Wheel &

Car Corp., 363 U.S. 593 (1960).....--.++eeereees

Swift & Co. v. United States, 276 U.S. 311 (1928) ..

REPLY BRIEF IN SUPPORT OF PETITION

FOR WRIT OF CERTIORARI

Missouri River Services, Inc. (“MRS”) hereby submits

the following Reply Brief in Support of Petition for Writ

of Certiorari.

SUMMARY OF ARGUMENT

This Court should issue a writ of certiorari to the

United States Court of Appeals for the Eighth Circuit

(“Eighth Circuit”) for the following reasons.

First, this case presents important issues concerning

the application and effect of the Federal Arbitration Act,

9 U.S.C. § 1 et seq. (“FAA”). The FAA establishes a “liberal

federal policy favoring arbitration agreements.” Moses H.

Cone Memorial Hospital v. Mercury Const. Co., 460 U.S. 1, 24

(1983); Shearson/American Express, Inc. v. McMahon, 482

U.S. 220, 226 (1987). One of the most important questions

that can arise under the FAA is the standard of review to

be applied to an arbitration award - the precise subject

presented by this Petition. Respondent, the Omaha Tribe

of Nebraska (“Tribe”), does not deny that this issue

merits the Court’s attention.

Second, this case poses questions of first impression

for this Court.? This lack of resolution is reflected in the

profound circuit split identified in MRS’ Petition for Writ

of Certiorari. Once again, the Tribe does not even dispute

1 The Court has addressed the questions presented in MRS’

Petition for Writ of Certiorari only in dicta.

the existence of this circuit split or the need to bring

order to this area of the law.

Third, this case provides a pristine factual back-

ground for the questions presented. The Tribe does not

ever argue that this case may turn on a narrow factual

issue, or that some obscure point in the record may

prevent the Court from reaching these questions. As a

result, this case offers the Court a promising vehicle for

addressing the broad legal issues raised herein.

The Tribe’s primary contention is that MRS mis-

construed the Eighth Circuit’s opinion. The Court readily

can identify the errors in this claim by examining this

opinion.

ARGUMENT

A. This Court Should Grant This Petition Because The

Eighth Circuit Erroneously Ruled That A Court

May Vacate An Arbitration Award Which Satisfies

All Criteria Set Forth In The FAA But (Assertedly)

Violates Extra-Statutory Requirements Imposed By

The Court, And This Ruling Conflicts With The

Decisions Of Other Circuits

The Tribe insists that the Eighth Circuit did not apply

extra-statutory criteria in striking down the arbitration

award. According to the Tribe, the Eighth Circuit’s deci-

sion “had nothing to do with the merits of the case, but

everything to do with the arbitrator’s authority.” Brief in

Opposition at 9. This view is inaccurate.

The Eighth Circuit did not focus on whether the

arbitrator was asked to decide the issues before her. This

point was not open to serious question. Indeed, in an

earlier phase of the case, the Tribe stipulated that each

claim filed in the arbitration proceeding was subject to

arbitration (App. at 58-60). The District Court entered an

Order encapsulating this stipulation (App. at 47-48), and

the Tribe did not appeal this Order.

Rather, the Eighth Circuit’s inquiry focused on

whether the arbitrator’s decision was correct. The Eighth

Circuit had access only to a “cold” record. As a result, the

court was not well positioned to second-guess the arbitra-

tor’s decision. Relying on this record and its own views

of the case, the Eighth Circuit determined that the arbi-

trator had erred.

The Eighth Circuit expressly based this decision

upon non-statutory grounds. The Eighth Circuit first

noted that the FAA provides for vacation of an arbitration

award if the arbitrator exceeds the scope of his or her

authority. Missouri River Services, Inc. v. Omaha Tribe of

Nebraska, 267 F.3d 848, 854 (8th Cir. 2001) (App. at 12).

The Eighth Circuit then stated that “in addition to” this

statutory criterium, an award may be set aside based

upon non-statutory grounds. Id. at 854 (App. at 12). The

Eighth Circuit concluded that MRS’ arbitration award

violated these judge-made criteria. Id. at 855 (App. at 12)

“we find that the award failed to draw its essence from

the agreement”).

The Tribe later suggests that even though the Eighth

Circuit did apply non-statutory criteria, its decision still

did not conflict with the decisions of other circuits. Brief

in Opposition at 11-12. According to the Tribe, “(t]he very

language which supposedly creates the conflict among

circuit courts has been used, not only by the Eighth

Circuit in this case, but also by the United States Supreme

Court itself.” Id. at 12. This may be so. The fact remains,

however, that the case law of Second, Fifth, Seventh, and

Ninth Circuits expressly holds that an arbitration award

may be vacated only upon the grounds set forth in the

FAA, while other circuits hold otherwise. The Tribe does

not even deny the existence of this disagreement.

Moreover, the Tribe’s assertion that this Court

already has ruled that the lower courts may strike down

arbitration awards based upon non-statutory criteria is

erroneous. United Steelworkers of America v. Enterprise

Wheel & Car Corp., 363 U.S. 593 (1960), concerned labor

arbitration. This case did not apply or construe the FAA.

Further, this decision, which is over 40 years old, may not

reflect the modern view of arbitration. See Petition for a

Writ of Certiorari at 21-23 for a discussion of changing

judicial perspectives on arbitration.

The second case cited by the Tribe, First Options of

Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), was decided

under the FAA. The issue in that case, however, was

whether the court or the arbitrator should decide the

question of arbitrability. Id. at 942. Any discussion con-

cerning the application of extra-statutory criteria to arbi-

tration awards set forth in the Court’s opinion was dicta.

The fact is that this Court never has resolved the

question raised by this Petition. This lack of resolution is

reflected in the disarray of the lower courts’ decisions.

This Petition offers the Court an opportunity to settle this

important question. MRS respectfully submits that the

Court should accept this opportunity.

B. This Court Should Grant This Petition Because The

Eighth Circuit Erroneously Ruled That Where A

Question Possessing Jurisdictional Implications Is

Intertwined With The Merits Of An Arbitration

Decision, The Federal Courts Not Only May But

Must Disregard This Decision

The second issue in this case is whether a Federal

Court to which an arbitration award is submitted for

confirmation may independently determine a question

possessing jurisdictional implications where the jurisdic-

tional question is inextricably intertwined with the merits

of the case and necessarily was resolved by the arbitrator.

The Tribe presents a scattering of arguments for the posi-

tion that the Court should not grant certiorari on this

issue. None is persuasive.

The Tribe states that “[t]he first problem with peti-

tioner’s argument on this point is that none of the cases it

cited dealt with arbitration, and therefore are factually

remote to the case before the court.” Brief in Opposition

at 13. This point is not novel. MRS conceded in its Peti-

tion that this factual distinction between the cases exists.

Petition for Writ of Certiorari at 27. This fact, however,

does not mean that the Court should reject this case. The

cases cited by MRS are closely analogous to the instant

case. These cases strongly support MRS’s argument. In

light of the established federal policy favoring the

enforcement of arbitration agreement, this Court should

establish that the same rule applies in the instant case.

The Tribe further asserts that “the jurisdictional issue

was not in any way ‘intertwined’ with the merits of the

case, or the arbitration award.” Brief in Opposition at 13.

This puzzling assertion is not supported by the facts. The

jurisdictional question identified by the Eighth Circuit

may be stated as follows: whether the Tribe’s waiver of

its tribal sovereign immunity was broad enough to permit

the relief awarded by the arbitrator. Missouri River Ser-

vices, Inc. v. Omaha Tribe of Nebraska, 267 F.3d 848, 852-854

(8th Cir. 2001) (App. at 6-11). The arbitrator necessarily

resolved this issue when she issued her award.? As a

result, the jurisdictional question not only was “inter-

twined” with the merits, but it was identical to the case

decided on the merits.

The Tribe next avers that “[s]overeign immunity has

always been viewed by the courts as a limitation on their

jurisdiction, and as a matter for the court to examine and

decide on its own.” Brief in Opposition at 14. The first

half of this statement undeniably is true; sovereign

immunity is a jurisdictional issue. The latter allegation,

however, is erroneous. In cases where a jurisdictional

issue is intertwined with the merits, the proper approach

is to assume jurisdiction exists and deal with the objec-

tion as an attack on the merits of the plaintiff’s case. See

Petition for Writ of Certiorari at 24-25 and cases cited

therein. The Tribe’s unsupported assertion that parties

may ask a court to intrude on the responsibilities of the

finder of fact by challenging federal jurisdiction does

2 The arbitrator could not have awarded the relief she

selected without first determining that this relief was not

contemplated by the Tribe’s waiver of its immunity.

nothing to impair the case for certiorari in this proceed-

ing.

The Tribe finally maintains that the real issue in this

case is whether the court or the arbitrator should decide

whether a question is arbitrable. Brief in Opposition at

15-16. This assertion is erroneous. As set forth above in

this memorandum, the parties stipulated that each claim

filed in the arbitration proceeding was subject to arbitra-

tion. (App. at 58-60). The District Court entered an Order

incorporating this stipulation (App. at 47-48), and the

Tribe did not appeal this Order.* Thus, the question of

arbitrability was not before the Eighth Circuit, and is not

at issue in this Petition.

C. Intervention By This Court Is Imperative

The ultimate question in this case is whether the

federal policy favoring arbitration is to be maintained. As

set forth above in this memorandum, the FAA establishes

a “liberal federal policy favoring arbitration agreements.”

Moses H. Cone Memorial Hospital v. Mercury Const. Co., 460

U.S. 1, 24 (1983); Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220, 226 (1987). The “unmistakably

clear” purpose of the FAA is to ensure that arbitration,

when selected by the parties to a contract, be “speedy

and not subject to delay or obstruction in the courts.”

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,

3 Even if the Tribe had attempted to appeal this Order, this

appeal would not have been effective. Swift & Co. v. United

States, 276 U.S. 311, 324 (1928) (“a decree that appears to have

been entered by consent, is always affirmed, without

considering the merits of the case.”).

404 (1967). The Court regularly has accepted arbitration

cases in recent years where necessary to effectuate this

policy.

The determination of the standard of review to be

applied to an arbitration award is critical to the achieve-

ment of this policy objective. Further, the deep split

between the circuits makes it apparent that the lower

courts are not likely to resolve this issue without leader-

ship from this Court. MRS accordingly, and respectfully,

suggests that intervention on the part of the Court is

imperative.

CONCLUSION

For the foregoing reasons, this Court should grant

MRS’ Petition for a Writ of Certiorari.

Dated this 19th day of April, 2002.

Respectfully submitted,

Breca & Winters P.C.

Brian A. MAGOON

Joun. G. NeLson*

1700 Lincoln Street, Suite 2222

Denver, CO 80203

(303) 866-9400

"Counsel of Record