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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1997
- **Citation:** 519 U.S. 1110

## Text

Supreme Court, U S.
ee op
ov DFC 23 1996
No. 96-800
2
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.

ii
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

iV

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.

v

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

2

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.”

3

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

4

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

5

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

6

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.”).

7

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

8

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.”).

9

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

10

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.”

il

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.

12

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.
(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) 579-0500

December 23, 1996 Counsel for Respondent

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1820%3A2. Public record. Not legal advice.