# Opposition Brief — Active Erectors & Installers, Inc. v. Hoffman Construction Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1662%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1993 - **Citation:** 507 U.S. 911 ## Text | Supreme Court, U.S. | FILED JAN 7 1993 No. 92-869 OFFICE OF THE CLK | In The Supreme Court of the United States October Term, 1992 . ACTIVE ERECTORS & INSTALLERS, INC., a Washington Corporation, Petitioner, V. HOFFMAN CONSTRUCTION COMPANY OF OREGON, an Oregon Corporation, Respondent. * On Petition For Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit ¢ BRIEF IN OPPOSITION ¢ MicHaEL E. KREGER Perkins Coie 1029 West Third Avenue Suite 300 Anchorage, Alaska 99501 (907) 279-8561 COCKLE LAW BRIEF PRINTING CO, bo 225-6964 OR CALL COLLECT (402) 342-283 QUESTIONS PRESENTED 1. Whether the federal court may determine if a waiver of an agreement to arbitrate has occurred. 2. Whether the Ninth Circuit Court of Appeals, on the facts before it, properly determined that Active had waived its right to arbitration of RICO claims against Hoffman. ii LIST OF PARTIES The caption of the case in this Court contains the names of all parties. Hoffman Corporation is the parent company of Respondent Hoffman Construction Company of Oregon. eee | ili TABLE OF CONTENTS Page TABLE OF AUTHORITIES .............-eeeeeeeeee iv e. . 8. |. 06) nna nen 1 JURISDICTION .... 0... ccc ccc cece eee e teen eee e eee 1 reser rere eee Tee ee eee ee 1 Ec cake gee nec ns bees es aceesestenvananss 5 I. Reasons For Denying The Petition For Cer- IE wa cea SAA Ned pak eccecernscesscssenacecess 5 A. The Ninth Circuit Court Of Appeals’ Deci- sion Regarding Waiver Of The Right To Arbitrate Is Not In Conflict With The Deci- sions Of Other Courts Of Appeals ....... 5 B. There Is No Conflict With This Court's Applicable Decisions ........-.--++++++++> 6 C. The Ninth Circuit Properly Decided A Fact- Specific Issue .........--.- 2s eee eee eee 8 Cn ccc accu msec ncacscuessecesssccnes 12 iv TABLE OF AUTHORITIES Page CAsES Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023 (11th Cir. 1982)..........ccceee essences 5, 6 Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d DD TUFF ia vane ko ccdcwcscscanetscansecesstsunseeses 11 Conticommodities Services v. Phillip & Lyon, 613 F.2d bee Ee’ Foe) | rer Terre rere tre re errr 6 Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985)............----- 6, 7 Dickinson v. Heinold Securities, Inc., 661 F.2d 638 lls Cie, BOD n cca ince cecccsvewecsantesscessss 7 Fisher v. A. G. Becker Paribas, Inc., 791 F.2d 691 (9th CO FO anne seece ce scanscnnsadsyucedecsssecsecs 5 General Atomic Company v. Felter, 436 U.S. 493, 98 S.Ct. 1939, 56 L.Ed.2d 480 (1978)........-..-----5-- 7 Hoffman Construction Company of Oregon v. Active Erectors & Installers, Inc., 969 F.2d 796 (9th Cir. Nak sine thd oss nkebed hanced skaeetaceenxerees 1, 8, 10 Hoxworth v. Blinder, Robinson & Co., Inc., __ F.2d __, 1992 WL 356747 (3rd Cir. 1992) ...........---- 6 John Morrell & Company v. Local Union 304A of the United Food & Commercial Workers AFL/CIO, 913 F.2d 544 (8th Cir. 1990)...........cccceeeeeeeeecees 8 Lou v. Belzberg, 834 F.2d 730 (9th Cir. 1987) .......--. 9 Miller Brewing Company v. Fort Worth Distributing Company, 781 F.2d 494 (5th Cir. 1986)...........--. 7 Vv TABLE OF AUTHORITIES - Continued Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (|) PP eeeererrr Tree te ee Moses H. Cone Memorial Hospital v. Mercury Const. Corp., 460 U.S. 1, 74 L.Ed.2d 765, 103 S.Ct. 927 1" RN i ress ee Shearson/American Express, Inc. v. McMahan, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d Vid Ce Ce NO iiss cvkcticst ieee Sparling v. Hoffman Construction Co., 864 F.2d 635 RT AN iain caraextayeenareeine eres: Telephone Workers Union of New Jersey Local 827 v. New Jersey Bell Telephone, 584 F.2d 31 (3d Cir. OE LOONIE PEELE NLT AD STATUTE , BIL oh >.) rrr rrr ree ees oar yrs Page a eee cmaaacacaaeeae eae | OPINIONS BELOW The opinion of the court of appeals (Pet. App. i-xxii) is reported at Hoffman Const. v. Active Erectors & Installers, 969 F.2d 796 (9th Cir. 1992). The findings of fact, conclu- sions of law and partial final judgment of the district court (Pet. App. I-lx) are unreported. a JURISDICTION The judgment of the court of appeals was entered on July 8, 1992. A petition for rehearing was denied on August 20, 1992. The petition for a writ of certiorari was filed on November 11, 1992. The jurisdiction of this Court is apparently invoked by Petitioner under 28 U.S.C. 1254(1). STATEMENT For its Statement, Respondent incorporates pertinent portions of the decision of the court of appeals, 969 F.2d 796, at pages 797-798: in October 1983, Hoffman and the Kenai Peninsula Borough entered into a contract for the construction of a high school in Homer, Alaska. Hoffman then subcontracted the struc- tural steel work to Active. The contract between Hoffman and Active provided that disputes between them that did not involve the conduct of the property owner had to be arbitrated unless they agreed otherwise. A dispute subsequently arose among the Borough, Hoffman, and Active concerning cost overruns. In December 1984, Active sued Hoff- man in federal court asserting, among others, a RICO claim. In February 1985, Active demanded arbitration against Hoffman. On April 15 of that year, Active wrote a letter to Hoffman asserting that Active was prepared to “bring[] all of the monetary claims of Active against Hoffman” arising out of the construction project in Alaska state court. (Emphasis added). The letter, how- ever, also stated that the RICO claim, along with two other claims would remain in federal court. Active further informed Hoffman that it would dismiss its arbitration demand as soon as Hoff- man assured Active that it would not change its position “that all claims against it may be tried [in state court].” In May 1985, the district court dismissed the federal suit on the ground that the claims should have gone to arbitration instead of to federal court. We subsequently affirmed the dis- missal in Sparling v. Hoffman Construction Co., 864 F.2d 635 (9th Cir. 1988). In December 1985, Active brought its Alaska state suit without any RICO claim. Thus, as of the time the state suit was initiated, the federal district court had dismissed the RICO claim (along with all the other claims), and no RICO claim had been asserted in any state court proceeding. Then, when Hoffman responded to the state suit and did not raise the issue of arbitration, Active, in March 1986, withdrew its arbitration request. The state court case was tried in July and August of 1987, and in March 1988 the superior court entered judgment in favor of Active. We issued our opinion in Sparling in Decem- ber 1988. We affirmed the district court on the ground that Active had agreed to submit its claims to arbitration. In January 1989, shortly after this opinion was issued, Active filed a new demand for arbitration of its RICO claim. Hoff- man brought this suit in federal district court seeking declaratory and injunctive relief to pre- vent such an arbitration from proceeding. The district court ruled in favor of Hoffman. The court held that the RICO claim had always been arbitrable under the agreement, and that by pro- ceeding in state court without a RICO claim, having waived arbitration to get into state court, Active was precluded from adjudicating the RICO claim in a new arbitration. In its Statement, at page 9, Petitioner asserts that it was “effectively enjoined” and “legally barred” from arbitrating its claims as a result of a state court injunction issued on April 15, 1985 (Pet. 9; see also Pet. 15). To correct this inaccuracy, Hoffman sets out, verbatim, the pertinent findings of fact made by the district court below as fol- lows: 3. The subcontract between Hoffman and Active created two categories of claims which were potentially to be resolved in two different forums. Claims “on account of acts or omissions of the owner” were required to be litigated in Alaska Superior Court. Claims directed against Hoffman were subject to arbitration if a demand for arbitration was filed within 30 days of Hoff- man’s decision regarding a subcontractor’s claim. 6. Active also filed a demand for arbitra- tion on February 4, 1985, in which it asserted claims both against Hoffman directly, pursuant to paragraph XV(d) of the subcontract, and claims “on account of acts or omissions of owner, or his representatives,” pursuant to para- graph XV(b) of the subcontract. 7. Hoffman then filed a declaratory judg- ment action in the Alaska Superior Court at Kenai and moved to enjoin Active from pursu- ing the paragraph XV(b) claims in arbitration. 8. By order dated April 11, 1985, the Alaska Superior Court enjoined Active from pursuing arbitration of claims arising under paragraph XV(b) of the subcontract. A copy of the April 11, 1985 order is attached as Exhibit C to Bringman Aff. in Support of Preliminary Injunction (“Bringman Aff.”) 9. The April 11, 1985 order did not, how- ever, enjoin arbitration of claims against Hoff- man under paragraph XV(d) of the contract, based upon the alleged actions of Hoffman, and Active remained free to pursue its paragraph XV(d) claims in arbitration. Appendix li-liii; see also Appendix xxix-xxxi. The remainder of Petitioner’s Statement is argument. To the extent a response is required, it will be addressed in Respondent’s Argument. ¢ ARGUMENT I. Reasons For Denying The Petition For Certiorari. A. The Ninth Circuit Court Of Appeals’ Decision Regarding Waiver Of The Right To Arbitrate Is Not In Conflict With The Decisions Of Other Courts Of Appeals The court of appeals’ decision that Active waived its right to demand arbitration does not conflict with the decisions of any other circuit court regarding the court’s adjudicative authority to determine that a party has waived an agreement to arbitrate. Shearson Lehman Hut- ton, Inc. v. Wagoner, 944 F.2d 114 (2d Cir. 1991), cited by Petitioner, at 24, supports the proposition that the court may determine that a waiver has occurred. In Shearson, the Second Circuit analyzed whether a party’s delay in seeking arbitration and its use of discovery in other fed- eral actions resulted in waiver. 944 F.2d at 122. In so doing, the Second Circuit, like the Ninth Circuit in Fisher v. A. G. Becker Paribas, Inc., 791 F.2d 691 (9th Cir. 1986), and in this case below, implicitly concluded that it has the adjudicative authority to make a determination of whether there is an enforceable right to arbitrate. Similarly, the Eleventh Circuit’s decision in Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023 (11th Cir. 1982), is consistent with Fisher and with this case. In Belke, the Eleventh Circuit carefully analyzed whether a waiver had occurred. As in Shearson v. Wagoner, the deci- sion confirms a court’s authority to determine whether a waiver has occurred. See generally, Hoxworth v. Blinder, Robinson & Co., Inc., __ F.2d __, __, 1992 WL 356747, 13-15 (3rd Cir. 1992) (citing cases). Stated in brief, the assertion that the Ninth Circuit’s decision is in conflict with rulings in other circuits is belied by the very cases cited by Petitioner. Conticommodities Services v. Phillip & Lyon, 619 F.2d 1222 (2d Cir. 1980), cited by Petitioner at 24, is also inapt. This case involved an untimely demand for arbitration. Untimeliness is a procedural defense. Untimeliness does not go to the existence of an enforceable agreement to arbitrate. See Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d at 1028. B. There Is No Conflict With This Court’s Applica- ble Decisions. The suggestion that the court of appeals’ decision conflicts with any decisions of this Court is also mistaken. Petitioner first implies that the Ninth Circuit’s decision in this case is inconsistent with this Court’s decision in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). Byrd resolved a conflict in the circuits over whether arbitrable issues may be inter- twined with nonarbitrable issues triable in federal court. Id. The waiver of arbitration was not at issue in Byrd. In Moses H. Cone Memorial Hospital v. Mercury Const. Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), this Court stated that a federal court properly determines allegations of waiver, delay, or like defenses to arbitra- bility. 460 U.S. at 26, 103 S.Ct. at 941. In Moses H. Cone, this Court cited Dickinson v. Heinold Securities, Inc., 661 F.2d 638, 643 (7th Cir. 1981), as an illustration of a lower court’s resolving doubts about arbitrability. See Moses H. Cone, 460 U.S. at 26, n.31, 103 S.Ct. at 941, n.31. Notably, in Dickinson, the Seventh Circuit addressed whether a waiver of right to compel arbitration had occurred as a result of acts inconsistent with the arbitration right. 661 F.2d at 641. Further, in General Atomic Company v. Felter, 436 U.S. 493, 98 S.Ct. 1939, 56 L.Ed.2d 480 (1978) (per curiam), this Court acknowledged a lower court’s discretion to make findings concerning whether a party had waived. any right to arbitrate. 436 U.S. at 497, 98 S.Ct. at 1940. In sum, there is no conflict between the decision below and this Court’s decisions regarding the federal court’s proper determination of a wavier of the agreement to arbitrate. See generally, Mitsubishi Motors Corp. v. Soler Chrysler- Plymouth, 473 U.S. 614, 626, 105 S.Ct. 3346, 3353-54, 87 L.Ed.2d 444 (1985) (a court determines the parties’ inten- tions by applying the federal substantive law of arbitra- bility). Petitioner also implies that this Court’s decision in Dean Witter Reynolds, Inc. v. Byrd precludes a court from finding that the state court judgment had preclusive effect on the arbitration of the RICO claim. Byrd has no bearing on this issue and is not inconsistent with the decisions of courts which have held that a prior state court adjudication precludes re-litigation of claims in a subsequent arbitration. See Miller Brewing Company v. Fort Worth Distributing Company, 781 F.2d 494, 501 (5th Cir. 1986); Telephone Workers Union of New Jersey Local 827 v. New Jersey Bell Telephone, 584 F.2d 31, 33-34 (3d Cir. 1978); John Morrell & Company v. Local Union 304A of the United Food & Commercial Workers AFL/CIO, 913 F.2d 554 (8th Cir. 1990). C. The Ninth Circuit Properly Decided A Fact- Specific Issue. In its Sections 2, 3 and 4, pages 31-42, petitioner disputes the Ninth Circuit’s application of the law of waiver to this case. There is no suggestion that the Ninth Circuit did not apply the correct law. Instead, Petitioner takes issue with the Ninth Circuit’s view of the facts. The Ninth Circuit’s interpretation of the facts and application of the facts to the law is correct and does not raise an important issue for review by this Court. Active argues that the Ninth Circuit erred in conclud- ing that Active had knowledge of the right to compel arbitration (Pet. 32). The Ninth Circuit properly con- cluded that Active had knowledge of the right to compel arbitration of the RICO claim since both the subcontract and a federal court had informed Active of the arbitra- bility of its claim. See Hoffman Construction Company v. Active Erectors & Installers, 969 F.2d at 798 (citing factual record). Apparently in reference to the April 11, 1985 injunc- tive order, Active asserts “it knew it could not arbitrate” the RICO claim between February 22, 1985 and March 10, 1988.1 The court of appeals’ opinion below did not address the scope or the effect of the state court’s injunc- tion, perhaps because Active did not argue in its briefs below that the state court enjoined Active from arbitrat- ing RICO claims against Hoffman. Active cannot raise an argument not presented to or decided by the court of appeals. Further, Active has misstated the effect of the state court injunction. The federal district court below analyzed the effect of the state court’s April 11, 1985 injunctive order. It found: 9. The April 11, 1985 order did not, how- ever, enjoin arbitration of claims against Hoff- man under paragraph XV(d) of the contract based on the alleged actions of Hoffman, and Active remained free to pursue its XV(d) claims in arbitration. Pet. App. liii. Active’s “knowledge” is contradicted by the record. Active also asserts the Ninth Circuit erred in finding that Active had knowledge of an existing right to compel arbitration because the Ninth Circuit had not affirma- tively held that the statutory cause of action in RICO was arbitrable until Lou v. Belzberg, 834 F.2d 730, 735-736 (9th Cir. 1987). Prior to Lou v. Belzberg, there was, as the Ninth Circuit stated, no precedential barrier to bringing the claim. The fact that the Supreme Court had not yet definitively affirmed the arbitrability of RICO claims did not vitiate the conclusion that Active was aware its claim was arbitrable. 969 F.2d at 798, citing Shearson/American 1 February 22, 1985 is the date that the motion for prelimi- nary injunction in state court was filed. See Pet. at 6. 10 Express, Inc. v. McMahan, 482 U.S. 220, 238-242, 107 S.Ct. 2332, 2343-46, 96 L.Ed.2d 185 (1987). Equally important, the status of the law was resolved well prior to Active’s final judgment in the state court. 969 F.2d at 799. Although Active now asserts that uncertainty over the state of the law explains its election of claims against Hoffman in state court, other facts explain the decision as well. Cf. Transcript, Pet. App. xxxiv-xxxv (addressing Active’s potential trial strategy). Active now asserts that it “withheld its RICO claims” from the state court action without any objection by Hoffman. Pet. 35. Hoffman never acquiesced to Active’s splitting of its claims against it. To the contrary, Hoffman told Active that all of Active’s claims could be brought in the Alaska state court action. 969 F.2d at 798. See also Pet. App. liv (“11. In a series of letters, Hoffman and Active agreed to permit Active to bring all of its claims against Hoffman under the subcontract on the Alaska Superior Court action, rather than assert paragraph XV(b) claims in one forum and paragraph XV(d) claims in another.”). Based on that assurance, Active told Hoffman that it would prepare pleadings to bring “all of its monetary claims of Active against Hoffman in the Alaska state court.” Id.; see also Appendix liv, { 12. Active further informed Hoffman that it would dismiss its arbitration demand as soon as Hoffman assured Active that it would not change its position that “all claims against it may be tried in state court.” Id. Active then, in December of 1985, brought its claims in state court and later withdrew its demand for arbitration. By the time it brought its claims in state court, Active’s federal court action had been dismissed for nearly six months. See 969 F.2d at 798. 11 Hoffman had no reason nor obligation to believe that Active had not then brought all of its claims in the Alaska state court. Active asserts that the Ninth Circuit incorrectly decided that Hoffman was prejudiced because Active did not receive all of the monetary judgment against Hoff- man, some portion going instead to pay Active’s lawyers and experts. It was not inappropriate for the court of appeals to consider the final judgment in determining whether Hoffman had been prejudiced. As Active con- cedes, both sides spent enormous funds in the state court litigation. The court need not evaluate how successful Active was in its state court litigation to find that litiga- tion of arbitrable issues to final judgment was prejudicial to Hoffman. The further suggestion that Hoffman was not preju- diced since its subcontract with Active envisioned bifur- cated litigation is inaccurate. The subcontract required subcontractor claims against the owner to be made according to the owner’s dispute resolution procedures in the Hoffman/Owner contract, namely, litigation. Sub- contract, XV(b) (Pet. App. cx); see also Pet. App. li. The subcontract provides that claims by Active against Hoff- man were arbitrable. Id. Hoffman did not agree to defend claims against it in separate proceedings. Quite the con- trary, Hoffman limited remedies against it to one forum. See 969 F.2d at 799. Finally, Active asserts that the Ninth Circuit’s result is contrary to the decision in Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Liberal rules of pleading are not at issue in this case. Active was told by 12 the district court it had a right to arbitrate RICO claims against Hoffman. Active agreed to bring all of its arbitra- ble claims against Hoffman in state court litigation. Active sued both Hoffman and the owner’s architects in state court. The Ninth Circuit Court of Appeals correctly determined that Active waived its right to demand arbi- tration in favor of litigation in the state court. As the foregoing discussion illustrates, this case involves the construction of an agreement by the parties to join all of the subcontractor’s claims in one forum. The - decision is the correct interpretation of the facts of that agreement. No important federal questions are raised by the decision. ’ CONCLUSION The petition for a writ of certiorari should be denied. January 8, 1993. Respectively submitted, MICHAEL E. KREGER Respondent's Attorney --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1662%3A2. Public record. Not legal advice.