Opposition Brief — Kotam Electronics, Inc. v. JBL Consumer Products, Inc.

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Supreme Court, U S.

ee op

ov DFC 23 1996

No. 96-800

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1996

KOTAM ELECTRONICS INC.,

Petitioner,

Vv.

JBL CONSUMER PRODUCTS, INC.,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Eleventh Circuit

RESPONDENT’S OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

ROBERT H. RAWSON, JR., Eso.

(Counsel of Record)

STEPHEN J. SQUERI, Esq.

JONES, DAY, REAVIS & POGUE

901 Lakeside Ave.

Cleveland, OH 44114

(216) 586-3939

DAVID L. Ross, Esq.

GREENBERG, TRAURIG, HOFFMAN,

LIPOFF, ROSEN & QUENTEL

1221 Brickell Avenue

Miami, Florida 33131

(305) 579-0590

Counsel for Respondent

QUESTION PRESENTED

Whether a negotiated agreement to arbitrate a domestic anti-

trust dispute is enforceable under the Federal Arbitration Act ‘n

the absence of evidence that Congress intended to preclude a

waiver of judicial remedies for alleged antitrust violations.

PARTIES TO THE PROCEEDINGS

All parties in the courts below and here are listed in the

caption. Respondent JBL Consumer Products, Inc. is a division

of JBL Incorporated. JBL Incorporated is a subsidiary of Harman

Investment Company, Inc., which in turn is a subsidiary of

Harman International Industries, Inc. The following is a list of

the affiliates of JBL Incorporated:

AKG Acoustics GmbH

AKG Acoustics India Ltd.

AKG Acoustics plc

AKG Akustische u. Kino-Gerate Gesellschaft m.b.H.

Allen & Heath Limited

Amek Systems and Controls Ltd.

Amek Technology Group Pic

Audax Industries SNC

Audax of America, Inc.

Bandive Limited

Becker Automotive (Pty) Ltd.

Becker GmbH

Becker Holding GmbH

Becker of North America, inc.

Becker Service und Verwaltung GmbH

BSS Audio Ltd.

D.A.V.1.D. GmbH

Edge Technology Group Ltd.

Entel, Ltd.

Environmental Investments, Ltd.

Epicure Products, Inc.

Fosgate, Inc.

Gatehit Limited

Hall Effects Laboratories, Ltd

Harco Indiana, Inc.

Harman Audio Outlet, Inc.

Harman Belgium NV

Harman Consumer Europe A/S

Harman Consumer France SNC

Harman Consumer Manufacturing - El Paso, Inc.

Harman Consumer Nederland, B.V.

Harman Deutschland GmbH

Harman Enterprises, Inc.

Harman France SNC

Harman Holding Europe A/S

Harman Interactive, Inc.

Harman International Foreign Sales Corporation

Harman International Industries Limited

Harman International Japan Co., Limited

Harman International Singapore Pte. Ltd.

Harman-Kardon, Incorporated

Harman Marketing Europe A/S

Harman-Motive, Inc.

Harman Motive Limited

Harman Music Group, Incorporated

Harman Pro France SNC

Harman Pro North America, Inc.

Harman Residential Group, Inc.

Harman UK Limited

Infinity Systems A/S

Infinity Systems, Inc.

JBL Europe A/S

Lexicon, Incorporated

Lydig of Scandinavia A/S

Madrigal Audio Laboratories, Inc.

MBI Broadcast Systems Limited

Orban, Inc.

Precision Devices, Lid

Revel Corp.

SCJ + AKG Lid.

Sescord Limited

Son-Audax Loudspeakers Limited

Soundcraft Electronics Limited

Soundcraft Magnetics Limited

Spirit by Soundcraft, Inc.

Studer Deutschland GMBH

Studer Editech Corp.

Studer Canada Limited

Studer Japan Ltd.

Studer Professional Audio AG

Studer U.K. Limited

Studer Wien Ges.Mbh

Studer Digitec, S.A.

Total Audio Concepts Ltd.

TurboSound Ltd.

TABLE OF CONTENTS

Page

ReeP Cee DD oc kc 6 CRowe ceed oe ees i

PARTIES TO THE PROCEEDINGS ............... ii

TABLE OF AUTHORITIES .......00.... big ae ae

SEE cv dreds tt cence eeseee i banawe l

REASONS FOR DENYING THE WRIT ........... 5

TABLE OF AUTHORITIES

Page

Case

American Safety Equipment Corp. v. J.P. Maguire & Co.,

oem Fig Be A = ey 3,8

Cobb v. Lewis, 488 F.2d 41 (Sth Cir. 1974), overruled

by Kotam Elecs., Inc. v. JBL Prods., Inc., 93 F.3d

Fait Ge. TD ccctcvsedeubecssadevers 2

Dean Witter Reynolds Inc. v. Byrd, 470 U.S.

293 CHRD. wc cccvccsesethaevens ceesevena 5

Gilmer v. Interstate Johnson Lane Corp.,

TOUS. DOGG cv ccsvdvwerdeotivear . 4,6, 11

Hough v. Merrill Lynch, 946 F.2d 883

6 Cis. TI ccccvcevccvctevsvctsuveneees 5

Hough v. Merrill Lynch, 757 F. Supp. 283

(S.D.N.Y.), aff'd without op., 946 F.2d 883

O46 Sis. TD oc ccccctévevtesewesreeeis cess 12

Kotam Electronics, Inc. v. JBL Consumer Products, !c.,

69 F.3d 1097 (11th Cir. 1995) (en banc) (per curiam) .. 3

Kotam Electronics Inc. v. JBL Consumer Products, Inc. ,

93 F.3d 724 (11th Cir. 1996) (en banc) ........... 3

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Rac.. S73 U.S. GAG CIGD cc ccc cccsersscess passim

Moses H. Cone Memorial Hospital v. Mercury

Construction Corp., 460 U.S. 1 (1983)... 2.2.2.5... 5

National Union Fire Ins. Co. v. Belco Petroleum

Corp., 88 F.3d 129, 133 (2d Cir. 1996) .......... 11

Neghiem v. NEC Electronic, Inc., 25 F.3d 1437 (9th Cir.),

cert. denied, 115 S. Ct. 638 (1994) ........ 5, 7, 10, 12

Rodriguez de Quijas v. Shearson/American Express,

ine. 409 Gib. Gee Ge «ake ekeeie ee ceeean 6

Sanjuan v. American Board of Psychiatry and

Neurology, Inc., 40 F.3d 247 (7th Cir. 1994),

cert. denied, 116 S. Ct. 1044 (1996) ........ ~~

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1984) ..... 4,5

Vii

TABLE OF AUTHORITIES (Cont'd)

Shearson/American Express, Inc. v. McMahon,

AS a bn dl o's reed ole 0 #06 4,6, 8,9

Smoky Greenhaw Cotton Co., Inc. v. Merrill

Lynch, Pierce, Fenner and Smith, Inc.,

785 F.2d 1274 (Sth Cir. 1986) (per curiam),

cert. denied, 482 U.S. 928 (1987) ............. 5, 12

Todorov v. DCH Healthcare Authority, 921 F.2d

ec re ona ea ee babe a 6 o's 0 6 0 o's 8

United States Fire Insurance Co. v. National

Gypsum Co., No. 95-7806, 1996 U S. App. LEXIS

ee ae Gas Gee a UE tccwecocccusecbuece 11

Statutes

Federal Arbitration Act, 9 U.S.C. §§ 1-16 (1994)....... 2

IE oti a e's i aa > Gord alae eee ak ere 6

EE on. wa Wa bse 6 Ow 6 ee 0's oe Oe ON 2

Robinson-Patman Act, 15 U.S.C. § 13(a) (1994) ....... 2

Miscellaneous Authority

G. Richard Schell, Res Judicata and Collateral

Estoppel Effects of Commercial Arbitration,

ee Ds BE POU. Sree we dec et wwenes 11

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1996

No. 96-800

KOTAM ELECTRONICS INC.,

Petitioner,

Vv.

JBL CONSUMER PRODUCTS, INC.,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eleventh Circuit

RESPONDENT’S OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

The petition for writ of certiorari should be denied because it

asks the Court to consider an issue concerning which it has

already provided sufficient guidance and as to which no split of

authority exists among the circuit courts. Although decided on its

own facts in the context of an international dispute, Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614

(1985), and its progeny make clear that, under the Federal

Arbitration Act and the federal policy favoring arbitration

embodied therein, agreements to arbitrate antitrust claims —

including domestic claims — are enforceable. Every circuit court

to consider the issue since Mitsubishi has reached that conclusion

based on this Court’s existing authority.

STATEMENT

From approximately 1984 to 1992, petitioner Kotam

Electronics, Inc. (“Kotam”), a dealer and distributor of consumer

electronic products, entered into annual dealer and distributor

contracts with Respondent JBL Consumer Products, Inc. (“JBL”).

Each contract contained an identical arbitration clause explicitly

requiring the parties to submit claims arising out of their

contractual relationship, including claims asserting violations of

the antitrust laws, to binding arbitration:

22. GOVERNING LAW AND ARBITRATION

b. Any controversy or claim arising out of or relating to this

Agreement, or the breach or validity thereof, whether at

common law or under statute, including without limitation

claims asserting violation of the antitrust laws, shall be settled

by final and binding arbitration in accordance with the Rules

for Commercial Arbitration of the American Arbitration

Association (“AAA”) in effect at the time of the execution of

this Agreement.

Pet. 6 (emphasis added in petition). Despite its contractual

promise to arbitrate such disputes, Kotam filed a one-count

complaint against JBL on April 21, 1994, in the United States

District Court for the Southern District of Florida, alleging price

discrimination in violation of the Robinson-Patman Act, 15

U.S.C. § 13¢(a).'

On May 23, 1994, JBL moved to dismiss the complaint or, in

the alternative, to stay judicial proceedings pending arbitration

pursuant to Section 3 of the Federal Arbitration Act, 9 U.S.C.

§ 3. The District Court denied JBL’s motion to dismiss on

September 8, 1994, believing it was bound to apply the former

Fifth Circuit’s broad holding in Cobb v. Lewis, 488 F.2d 41, 47

(Sth Cir. 1974), overruled by Kotam Elec., Inc. v. JBL Prods.,

Inc., 93 F.3d 724 (1ith Cir. 1996), that “... as a general

matter, antitrust claims are not appropriate subjects of arbitration”

despite intervening Supreme Court authority rejecting each of the

premises for Cobb's non-arbitration rule. A divided panel of the

Eleventh Circuit affirmed the District Court’s decision. On

November 8, 1995, however, the Eleventh Circuit granted JBL’s

' There has never been any dispute that Kotam’s single claim for price

discrimination falls squarely within the terms of the parties’ agreement

to arbitrate “claims asserting violation of the antitrust laws.”

request for a rehearing en banc, thereby vacating the panel’s

decision. 69 F.3d 1097.

On August 19, 1996, the Eleventh Circuit sitting en banc held

that Supreme Court precedent developed since Cobb and

beginning with Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614, compels the conclusion that “. . .

arbitration agreements concerning domestic antitrust claims are

enforceable.” Kotam Elec. Inc. v. JBL Consumer Products, Inc.,

93 F.3d 724, 728 (11th Cir. 1996) (en banc) (reprinted at Pet.

App. 1-11). As the full court recognized, the Cobb panel had

expressly followed the reasoning of the Second Circuit in

American Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d

821, 827-28 (2d. Cir. 1968), to support its view that, as a matter

of public policy, antitrust claims should not be submitted to

arbitration (the “American Safety doctrine”). As the Eleventh

Circuit observed, in Mitsubishi this Court rejected each element

of the American Safety doctrine upon which Cobb was based,

thereby undercutting the argument that the rule against arbitration

of domestic antitrust claims remains viable. Pet. App. 5-8.

First, in Mitsubishi the Supreme Court rejected the contention

that antitrust claims must be resolved in the courts to preserve the

role of private litigants in aiding the enforcement of the antitrust

laws. 473 U.S. at 635-37. Second, this Court concluded that

“[tjhe mere appearance of an antitrust dispute does not alone

warrant invalidation of the selected forum on the undemonstrated

assumption that the arbitration clause is tainted.” Jd. at 632.

Third, this Court rejected the notion that the issues and evidence

in antitrust cases are better suited to judicial procedures. /d. at

633. Finally, this Court “... decline{d] to indulge the

presumption that the parties and arbitral body conducting a

proceeding will be unable or unwilling to retain competent,

conscientious, and impartial arbitrators.” /d. at 634.

Acknowledging that Mitsubishi involved the enforcement of an

agreement to arbitrate an antitrust dispute in the international

context, the Eleventh Circuit nevertheless concluded that its

rationale compels enforcement of agreements to arbitrate domestic

antitrust claims as well. Pet. App. 8-9. Since the Supreme Court

rejected each of the premises of the judicially-created rule against

arbitration of antitrust claims, the Eleventh Circuit held, no basis

remains for refusing to enforce bargains to arbitrate domestic

antitrust claims. Pet. App. 7-10. In light of the “federal policy

favoring arbitration” embodied in the Federal Arbitration Act, a

party, having agreed to arbitrate, should be held to that bargain

unless Congress itself has “. . . evinced an intention to preclude

a waiver of judicial remedies for the statutory rights at issue.”

Pet. App. 8 (quoting Mitsubishi, 473 U.S. at 628, 105 S.Ct. at

3354-55). The Supreme Court in Mitsubishi could find no such

evidence in the legislative history of either the Sherman Act or

the Federal Arbitration Act. Pet. App. 7-8. (citing Mitsubishi,

473 U.S. at 628-29). Thus, the Eleventh Circuit held, Mitsubishi

applies equally in the domestic arena.

The Eleventh Circuit also relied on the fact that the Supreme

Court itself has repeatedly abandoned the American Safety

doctrine in the domestic context. Pet. App. 8-10. Indeed, in

Shearson/American Express, Inc. v. McMahon, 482 U.S. 220

(1987), the Court rejected a Second Circuit opinion that its

American Safety doctrine was still good law despite Mitsubishi,

and in part on that basis discarded the distinction between

domestic and international transactions with respect to arbitration

of claims under § 10(b) of the Securities Exchange Act of 1934

and RICO. See also id., 482 U.S. at 232 (declining to limit

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974), involving the

arbitrability of § 10(b) claims, to cases involving international

transactions). This Court has also cited Mitsubishi for the genezal

proposition that antitrust claims are arbitrable, making no

distinction between those that arise from international transactions

and those that arise in the domestic context. Gilmer v. Interstate/

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

Finally, the Eleventh Circuit relied on the fact that, as

discussed more fully below, four other circuits have decided or

expressed the view that, in light of Mitsubishi and its progeny,

domestic antitrust claims are arbitrable. Pet. App. 10-11 (citing

Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40

F.3d 247, 250 (7th Cir. 1994), cert. denied, 116 S.Ct. 1044

(1996); Nghiem v. NEC Elec., Inc., 25 F.3d 1437, 1441-42 (9th

Cir.), cert. denied, 115 S.Ct. 638 (1994); Hough v. Merrill

Lynch, 946 F.2d 883 (2d Cir. 1991) (affirming without op., 757

F.Supp. 283, 286 (S.D.N.Y. 1991)); Smoky Greenhaw Cotton

Co., Inc. v. Merrill Lynch, Pierce, Fenner and Smith, Inc., 785

F.2d 1274, 1282 (Sth Cir. 1986) (per curiam), cert. denied, 482

U.S. 928 (1987)).

REASONS FOR DENYING THE WRIT

The Court need not revisit the arbitrability of domestic antitrust

claims. As the Eleventh Circuit held below, existing Supreme

Court authority already provides sufficient guidance to conclude

that agreements to arbitrate domestic antitrust claims are

enforceable under the Federal Arbitration Act. Indeed, since

Mitsubishi was decided, every circuit to consider the issue has

reached this conclusion.

Beginning even before Mitsubishi, the Supreme Court has

consistently recognized a “‘liberal federal policy favoring

arbitration agreements.’” Mitsubishi, 473 U.S. at 625 (quoting

Moses H. Cone Memorial Hospital v. Mercury Construction

Corp., 460 U.S. 1, 24 (1983). This policy is embodied in the

Federal Arbitration Act, which was “designed to overcome an

anachronistic judicial hostility to agreements to arbitrate.” /d. at

625 n.14 (citing Dean Witter Reynolds Inc. v Byrd, 470 US.

213, 219-221 and n.6 (1985); Scherk v. Alberto-Culver Co., 417

U.S. at 510 & n.4). Congress’ “‘preeminent concern [in passing

the Act] was to enforce private agreements into which parties had

entered,” a concern which ‘requires that [courts] rigorously

enforce agreements to arbitrate.’” Mitsubishi, 473 U.S. at 625-26

(quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. at 221).

In view of that concern, “. . . any doubts concerning the scope

of arbitrable issues should be resolved in favor of arbitration.”

Id. at 626 (quoting Moses H. Cone, 460 U.S. at 24-25).

Notwithstanding Kotam’s arguments to the contrary, Mitsubishi

and its progeny make clear that the federal policy favoring

enforcement of arbitration agreements applies to domestic (as well

as international) antitrust claims. The core holding in Mitsubishi

(though the case arose in an international context) is that, because

Congress has evinced no intention to the contrary, the Federal

Arbitration Act authorizes enforcement of agreements to arbitrate

claims under the antitrust statutes, 473 U.S. at 628, 632-37, a

holding that applies equally to domestic disputes.

As explained in Mitsubishi, the “centerpiece provision” of the

Arbitration Act “makes a written agreement to arbitrate ‘in any

. . . Contract evidencing a transaction involving commerce .. .

valid, irrevocable, and enforceable, save upon such grounds as

exist at law or in equity for the revocation of any contract.’” 473

U.S. at 625 (quoting 9 U.S.C. § 2). In view of this Congres-

sional mandate, the Supreme Court has already held that federal

Statutory claims are presumptively arbitrable “... unless

Congress itself has evinced an intention to preclude a waiver of

judicial remedies for the statutory rights at issue.” /d. at 628.’

Thus, the party resisting enforcement of an arbitration agree-

ment bears the burden of demonstrating that Congress intended to

exempt the particular statutory rights at issue from arbitration.

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. at 26 (citing

Shearson/American Express Inc. v. McMahon, 482 U.S. at 227;

Rodriguez de Quijas v. Shearson/American Express, Inc., 490

U.S. 477 (1989). This intent may only be gleaned from the text

of the statute at issue, from its legislative history, or from an

“inherent conflict” between the purposes of the statute and

arbitration. Gilmer, 500 U.S. at 26 (citing McMahon, 482 U.S.

at 227; Mitsubishi, 473 U.S. at 628).

? See also Mitsubishi, 473 U.S. at 627 (“Just as it is the congressional

policy manifested in the Federal Arbitration Act that requires courts

liberally to construe the scope of arbitration agreements covered by that

Act, it is the congressional intention expressed in some other statute on

which the courts must rely to identify any category of claims as to which

agreements to arbitrate will be held unenforceable.”).

In Mitsubishi the Court examined both the Sherman and

Federal Arbitration Acts and their legislative histories, but found

no evidence that Congress intended to preclude arbitration of

antitrust claims, domestic or otherwise. 473 U.S. at 628-29,

635-36. The Court found, moreover, no “inherent conflict”

between the antitrust laws and arbitration. Instead, it identified

and considered each of the relevant policy considerations

(effectively addressing each of the concerns raised by Kotam at

pages 18-19 of the Petition), but concluded that these

considerations provide no basis for exempting claims under the

antitrust statutes. /d. at 632-37. This analysis leaves no room for

debate about the “wisdom” of enforcing agreements to arbitrate

claims under the antitrust laws. See Nghiem v. NEC Elec., Inc.,

25 F.3d at 1441-42; accord Pet. App. 6-8.

Petitioner Kotam, nevertheless, argues that the Court should

grant its petition to reconsider whether domestic antitrust claims

ought to be submitted to arbitration, simply reiterating policy

concerns already rejected in Mitsubishi. Principally, it argues that

the Court should consider whether enforcing agreements to

arbitrate antitrust disputes would undermine the role of private

litigants in enforcing the antitrust statutes. Pet. 18-19. The

Court, however, has already rejected that argument, concluding:

{SJo long as the prospective litigant effectively may vindicate

its statutory cause of action in the arbitral forum, the statute

will continue to serve both its remedial and deterrent function.

Mitsubishi, 473 U.S. at 637. The Court reasoned that, despite

> See also Gilmer, 500 U.S. at 27-28 (citation omutted):

It is true that arbitration focuses on specific disputes between the

parties involved. The same can be said, however, of judicial

resolution of claims. Both of these dispute resolution mechanisms

nevertheless also can further broader social purposes. The Sherman

Act, the Securities Exchange Act of 1934, RICO, and the Securities

Act of 1933 all are designed to advance important public policies,

but, as noted above, claims under these statutes are appropriate for

the “important incidental policing function” of the treble-damages

cause of action, Congress’ primary purpose was to provide a

remedy, in a proper case, to an injured competitor.‘ /d. at

635-37. See also McMahon, 482 U.S. at 240. It went on to find,

moreover, no basis for assuming that arbitration will be an

inadequate mechanism for enforcement of the antitrust laws, since

arbitrators are bound, as are judges, to apply the antitrust laws.

Mitsubishi, 473 U.S. at 636-37. Notwithstanding Kotam’s

arguments to the contrary, the Supreme Court has already found

no conflict between the use of arbitration and the broader social

purposes of the antitrust statutes.

Petitioner Kotam also argues that the Court should consider

whether arbitration procedures are ill-suited for the resolution of

antitrust claims, speculating that parties to antitrust arbitration will

have inadequate discovery and will be prejudiced if arbitrators do

not produce written opinions. Pet. 19. In Mitsubishi, however,

the Court rejected the premise that aspects of the arbitral process

inciuding ~* eagedition, minimal requirements of written

rationale, simplicity, [and] resort to basic concepts of common

sense and simple equity’™ are ill-adapted to potentially complex

arititrust cases. Mitsubishi, 473 U.S. at 632, 634-35 (quoting

American Safety, 391 F.2d at 826). As the Court observed, “. . .

it is often a judgment that streamlined proceedings and

expeditious results will best serve their needs that causes parties

to agree to arbitrate their disputes.” /d. at 633.

arbitration.

* The same rationale applies whether a party is seeking injunctive relief,

damages, or both. See Pet. at 18-19. This is not, in any event, a case

in which the arbitrator may be asked to impose injunctive relief since

Kotam is no longer a distributor or dealer of JBL products and cannot

be affected in any way by JBL’s future pricing practices. See, e.g.

Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1452 (11th Cir.

1991) (“[{A] plaintiff, in order to have standing under section 16 [to

pursue injunctive relief], must allege threatened injury that would

constitute antitrust injury if inflicted upon the plaintiff.”).

Kotam further asserts a need for the Court to consider whether

antitrust issues should be kept from commercial arbitrators

because of the relatively limited opportunity for review of

“erroneous award{s].” Pet. 18. The Court in Mitsubishi,

however, “. . . decline[d] to indulge the presumption that the

parties and arbitral body conducting a proceeding will be unable

or unwilling to retain competent, conscientious, and impartial

arbitrators.” 473 U.S. at 634. As the Court later observed in

McMahon, it expressed this confidence in arbitral tribunals even

assuming the absence of judicial oversight:

In Mitsubishi, for example, we recognized that arbitral

tribunals are readily capable of handling the factual and legal

complexities of antitrust claims, notwithstanding the absence of

judicial instruction and supervision. See 473 U.S., at 633-34.

McMahon, 482 U.S. at 232.

Kotam finally argues that Supreme Court review is necessary

to determine whether arbitration of antitrust claims should be

precluded because of the speculative danger that manufacturers

may impose “unfair” arbitration provisions on what Kotam

casually assumés to be relatively weak distributors. Pet. 19. In

so doing, Kotam attempts to resuscitate yet another concern that

Mitsubishi addressed: “The mere appearance of an antitrust

dispute does not alone warrant invalidation of the selected forum

on the undemonstrated assumption that the arbitration award is

tainted.” Mitsubishi, 473 U.S. at 632. Under Mitsubishi, in a

proper case, a party may avoid an “unfair” arbitration provision

by presenting a “. . . well-supported claim[ ] that the agreement

to arbitrate resulted from the sort of fraud or overwhelming

economic power that would provide grounds ‘for the revocation

of any contract.’” id. at 627.

Petitioner Kotam is simply incorrect when it claims that

“{t}here is real conflict and confusion among various circuits

regarding the scope and effect of Mitsubishi.” Pet. 20. The

cases Kotam cites as conflicting with the Eleventh Circuit’s en

banc opinion say nothing about the scope and effect of Mitsubishi

because each pre-dates the Mitsubishi decision. Indeed, as the

court below recognized, every Circuit that has addressed the issue

since Mitsubishi has concluded that the rule against arbitration of

domestic antitrust disputes is incompatible with Mitsubishi and its

progeny and that domestic antitrust claims are therefore

arbitrable.

In Nghiem v. NEC Electronic, Inc. , the Ninth Circuit overruled

its own otherwise controiling authority to the contrary and held

that under Mitsubishi and its progeny, domestic antitrust claims

may be submitted to arbitration. Like the Eleventh Circuit in this

case, it was “. . . persuaded that Mitsubishi is not restricted to the

international context” :

Given the Court’s meticulous step-by-step disembowelment of

the American Safety doctrine, this circuit will no longer follow

American Safety. We hold that Mitsubishi effectively overruled

American Safety and its progeny.

Nghiem, 25 F.3d 1441-42. It also relied, as did the Eleventh

Circuit, on the fact that the Supreme Court has cited Mitsubishi

for the general proposition that antitrust claims can be submitted

to arbitration- /d. at 1441 (citing Gilmer, 500 U.S. at 26-27).

Finally, it, like the Eleventh Circuit, relied on the “‘the reasoning

used by the [Supreme] Court in McMahon to support its holding

regarding the arbitrability of 1934 Act and RICO claims’”:

“The McMahon Court made no distinction between the

international and domestic arbitral forums, but rather stated

that domestic and international arbitrators are equally able to

handle complex statutory schemes involving treble damage

remedies. Such reasoning, in combination with the FAA can

only mean the judicially implied antitrust exemption to the FAA

no longer exists.”

Id. (quoting G. Richard Shell, Res Judicata and Collateral

Estoppel Effects of Commercial Arbitration, 35 UCLA L. Rev.

623, 624 n.7 (1988)).°

The Second Circuit itself has disavowed its prior decision in

American Safety, affirming a district court’s holding that “. . . the

reasoning of Mitsubishi should apply with equal force to domestic

claims” and that “‘. . . none of the justifications for the American

Safety doctrine retain their vigor.’*” Hough v. Merrill Lynch, 757

F.Supp. 283, 286 (S.D.N.Y.), aff'd without op., 946 F.2d 883

(2d Cir. 1991) (citations omitted). More recently, it cited

Mitsubishi for the proposition that “[t}he policy in favor of

arbitration extends ... to... arbitrations of claims based on

federal statutory rights [including antitrust claims],” drawing no

distinction between international and domestic disputes. National

Union Fire Ins. Co. v. Belco Petroleum Corp. , 88 F.3d 129, 133

(2d Cir. 1996). See also United States Fire Ins. Co. v. National

Gypsum Co., No. 95-7806 1996 U.S. App. LEXIS 29159 at * 7

(2d Cir. Nov. 4, 1996) (citing Mitsubishi for the general

proposition that “antitrust claims are arbitrable”).

Likewise, the Seventh Circwit stated in dicta that companies

“|. . May agree to arbitrate their antitrust disputes — certainly so

for international transactions, ... and likely so for domestic

transactions.” Sanjuan v. American Bd. of Psychiatry and

Neurology, Inc., 40 F.3d at 250. The Fifth Circuit stated in a

non-antitrust case that “... although Mitsubishi arose in an

international antitrust dispute and its holding purports to be

limited to that context, we believe that its broad language may

> In light of this analysis and the careful opinion of the Eleventh Circuit

below, there is no merit to Kotam’s assertion that the Ninth and

Eleventh Circuits simply “jumped to the conclusion that the policies

underlying domestic and international antitrust disputes are indistin-

guishable.” Pet. 20. Both the Eleventh and Ninth Circuits examined

existing Supreme Court authority and concluded that this Court has

already rejected each of the policy arguments against permitting

arbitration of domestic antitrust disputes.

carry significance for domestic disputes as well.” Smoky

Greenhaw Cotton Co., Inc. v. Merrill Lynch, Pierce, Fenner and

Smith, Inc., 785 F.2d at 1282. In short, no confusion, let alone

conflict, exists among the circuits concerning the implications of

Mitsubishi and its progeny.

CONCLUSION

For the reasons stated above, the petition for writ of certiorari

should be denied.

Respectfully submitted,

ROBERT H. RAWSON, JR., Esq.