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No. ALB-14-01

SUPREME COURT OF THE UNITED STATES

B-613 REINSURANCE CONSORTIUM, INC.,



Petitioner

v.

OLIVIA POPE & ASSOCIATES INSURANCE, INC. ET AL.,


Respondents

On Writ of Certiorari to the

United States Court of Appeals

for the Fourteenth Circuit

BRIEF FOR petiitioner
ALB-14-01-P2


QUESTIONS PRESENTED


  1. Whether the Court of Appeals correctly affirmed the District Court’s decision not to compel arbitration, where the parties had a valid arbitration agreement subject the New York Convention Article II, which directs courts, not the legislature, to enforce arbitration agreements.

  2. Whether the Court of Appeals correctly reversed the District Court’s grant of summary judgment when Petitioner’s conduct did not cause an immediate consequence in the United States, and therefore did not fall within the scope of the Sherman Antitrust Act.


TABLE OF CONTENTS
Questions Presented . . . . . . . . . . . . . . . . . . . . . i

Table of Contents . . . . . . . . . . . . . . . . . . . . . . ii

Table of Authorities . . . . . . . . . . . . . . . . . . . . . v

Proceedings Below . . . . . . . . . . . . . . . . . . . . . . 1

Constitutional Provisions . . . . . . . . . . . . . . . . . . 3

Statutory Provisions . . . . . . . . . . . . . . . . . . . . . 4

Treaties . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Statement of the Facts . . . . . . . . . . . . . . . . . . . . 7

Summary of the Argument . . . . . . . . . . . . . . . . . . 10

Argument . . . . . . . . . . . . . . . . . . . . . . . . . . 12




  1. THE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE DISTRICT COURT’S DECISION NOT TO COMPEL ARBITRATION BECAUSE ARTICLE II OF THE NEW YORK CONVENTION IS SELF-EXECUTING, AND BECAUSE THE MCCARRAN-FERGUSON ACT APPLIES ONLY TO DOMESTIC COMMERCIAL ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . 12




  1. Principles of treaty interpretation and Congress’ legislative intent reveal that Article II of the New York Convention is self-executing . . . . . . . . . 13




  1. The New York Convention’s Article II language indicates that Article II is a self-executing provision . . . . . . . . . . . . . . . . . . . . 14




  1. To the extent that the Convention Act affects Article II, Congress only intended that the Convention Act prescribe the procedural rules by which a private citizens can enforce their arbitration rights . . . . . . . . . . . . . . . 18




  1. Alternatively, the New York Convention’s status as a treaty does not make it an “act of congress” within the meaning of the McCarran-Ferguson Act, such that the AUAA does not reverse-preempt the New York Convention . . . . . . . . . . . . . . . . . . 20


  1. The McCarran-Ferguson Act applies only to domestic commercial arbitration, therefore, the MF Act does not implicate the parties’ arbitration agreement. . . . 21




  1. The McCarran-Ferguson Act’s purpose is to restore state control of domestic insurance regulation. 21




  1. This Court’s precedent reveals that the McCarran-Ferguson Act applies narrowly and therefore does not reach the New York Convention . . . . . . . 22




  1. Interpreting the McCarran-Ferguson Act narrowly is consistent with the strong international policy favoring arbitration . . . . . . . . . . . . . . 23

II. THE COURT OF APPEALS ERRED WHEN IT REVERSED PETITIONER’S GRANT OF SUMMARY JUDGMENT BECAUSE CONGRESS INTENDED THE TERM “DIRECT” IN § 6A OF THE FTAIA TO MEAN “IMMEDIATE CONSEQUENCE,” AND THREFORE PETITIONER’S CONDUCT FALLS OUTSIDE THE SCOPE OF THE SHERMAN ANTITRUST ACT.. . . . . . . . . . . . . . . . . . . . . . . . . . 24


A. Textual cannons of statutory interpretation dictate that courts interpret “direct” in § 6a of the FTAIA to mean “immediate consequence.” . . . . . . . . . . . 26


  1. Courts should interpret “direct” to mean “immediate consequence” because textual cannons of statutory interpretation dictate that courts give ambiguous terms their plain, ordinary meaning. . . . . . . 27

2. Courts should interpret “direct” to mean “immediate consequence” because textual cannons of statutory interpretation allow the meaning of ambiguous terms to be inferred from other statutes governing similar issues. . . . . . . . . . . . . . . . . 28
B. Interpreting “direct” to mean “immediate consequence” comports best with Congress’s intent to mitigate concerns of foreign trading partners regarding perceived overreaching by American antitrust courts

. . . . . . . . . . . . . . . . . . . . . . . . . . 30

C. Defining “direct” as “immediate consequence” allows courts to apply the FTAIA’s three-prong test most consistently. . . . . . . . . . . . . . . . . . . .33
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . 36

TABLE OF AUTHORITIES
United States Supreme Court Cases
Air France v. Saks,

470 U.S. 392 (1985). . . . . . . . . . . . . . . . . . . . . 15


BedRoc Ltd., LLC v. United States,

541 U.S. 176 (2004). . . . . . . . . . . . . . . . . . . . . 26


Am. Ins. Ass'n v. Garamendi,

539 U.S. 396 (2003) . . . . . . . . . . . . . . . . . . . . . 22


Choctaw Nation of Indians v. United States,

318 U.S. 423 (1943). . . . . . . . . . . . . . . . . . . . . 18


Cook v. United,

288 U.S. 102 (1933). . . . . . . . . . . . . . . . . . . . . 18


Edye v. Robertson,

112 U.S. 580 (1884) . . . . . . . . . . . . . . . . . . . . . 14


Factor v. Laubenheimer,

290 U.S. 276 (1933). . . . . . . . . . . . . . . . . . . . . 18


F. Hoffmann-La Roche Ltd. v. Empagran S.A.,

542 U.S. 155 (2004). . . . . . . . . . . . . . . . . . . . . 32


Foster v. Neilson,

27 U.S. 253 (1829) . . . . . . . . . . . . . . . . . . . 14, 15


F.T.C. v. Travelers Health Ass'n,

362 U.S. 293 (1960). . . . . . . . . . . . . . . . . . . . . 22


Medellin v. Texas,

552 U.S. 491 (2008). . . . . . . . . . . . . . . . . 15, 16, 17


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

473 U.S. 614 (1985). . . . . . . . . . . . . . . . . . . . 23


Muscarello v. United States,

524 U.S. 125 (1998). . . . . . . . . . . . . . . . . . . 27, 28


Perrin v. United States,

444 U.S. 37 (1979). . . . . . . . . . . . . . . . . . . . 26, 27



Republic of Argentina v. Weltover, Inc.,

504 U.S. 607 (1992) . . . . . . . . . . . . . . . . . . . . . 29


State of Missouri v. Holland,

252 U.S. 416 (1920). . . . . . . . . . . . . . . . . . . . . 20


Trans World Airlines, Inc. v. Franklin Mint Corp.,

466 U.S. 243 (1984). . . . . . . . . . . . . . . . . . . . . 15


U.S. Dep't of Treasury v. Fabe,

508 U.S. 491 (1993). . . . . . . . . . . . . . . . . . . . . 21


United States v. Stewart,

311 U.S. 60 (1940). . . . . . . . . . . . . . . . . . . . . . 26


Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer,

515 U.S. 528 (1995) . . . . . . . . . . . . . . . . . . . . 22


Other Federal Cases
Animal Sci. Prods., Inc. v. China Minmetals Corp.,

654 F.3d 462 (3d Cir. 2001). . . . . . . . . . . . . . . . . 25


ESAB Grp., Inc. v. Zurich Ins. PLC,

685 F.3d 376 (4th Cir. 2012). . . . . . . . . . . . 21, 22, 23


Indus. Inv. Dev. Corp. v. Mitsui & Co.,

671 F.2d 876 (5th Cir. 1982). . . . . . . . . . . . . . . . . 34


In re Uranium Antitrust Litig.,

617 F.2d 1248 (7th Cir. 1980). . . . . . . . . . . . . . . . 34


Mannington Mills, Inc. v. Congoleum Corp.,

595 F.2d 1287 (3d Cir. 1979). . . . . . . . . . . . . . . . . 33


Safety Nat. Cas. Corp. v. Certain Underwriters At Lloyd's, London, 587 F.3d 714 (5th Cir. 2009). . . . . . . . . 16, 17, 20
Smith v. City of Jackson,

544 U.S. 228 (2005). . . . . . . . . . . . . . . . . . . . . 28


Stone v. Instrumentation Lab. Co.,

591 F.3d 239 (4th Cir. 2009). . . . . . . . . . . . . . . . . 13


United States v. LSL Biotechs.,

379 F.3d 672 (9th Cir. 2004). . . . . . . . . . . . . . . 27, 28


United States v. Nippon Paper Indus. Co., Ltd.,

109 F.3d 1 (1st Cir. 1997). . . . . . . . . . . . . . . . . . 25


Constitutional Provision
U.S. Const. art. VI, cl. 2. . . . . . . . . . . . . . . . . . 13
Federal Statutory Provision
9 U.S.C. §§ 201-208 (2012). . . . . . . . . . . . . . . . 10, 14
15 U.S.C. § 1 (2012). . . . . . . . . . . . . . . . . . . 1, 24
15 U.S.C § 6a (2012). . . . . . . . . . . . . . . . . 1, 11, 25
15 U.S.C. § 1012(b) (2012). . . . . . . . . . 12, 13, 21, 22, 24
28 U.S.C. § 1605(a)(2) (2012). . . . . . . . . . . . . . . 1, 29
Fed. R. Civ. P. 56(a) . . . . . . . . . . . . . . . . . . . . 25
State Statutory Provision
Albers Rev. Stat. ch. 787 § 1. . . . . . . . . . . . . . 12, 13
Treaties
Convention on the Recognition and Enforcement of Foreign Arbitral Awards. . . . . . . . . . . . . . . 12, 13, 15, 16, 17
Convention for the Unification of Certain Rules Relating to International Carriage by Air. . . . . . . . . . . . . . . . 16
Legislative Materials
S. Rep. No. 79-20 (1945). . . . . . . . . . . . . . . . . . . 21
S. Rep. No. 90-10 (1968) (Exec. Rep.). . . . . . . . . . . . 19
H. Rep. No. 91-1181 (1970). . . . . . . . . . . . . . . . . . 19
S. Rep. No. 91-702 (1970). . . . . . . . . . . . . . . . . 19

Foreign Trade Antitrust Improvements Act: Hearings on H.R. 2326 Before the Subcomm. on Monopolies and Commercial Law of the H. Comm. on the Judiciary, 97th Cong. 79 (1981). . . . . . . . . 30



Secondary Sources
Restatement (Third) of Foreign Relations Law § 111 cmt. h (1987). . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
W.T.M Beale, Chairman of the Delegation, Official Report of the United States Delegation to the United Nations Conference on International Commercial Arbitration, 1958, reprinted in 19 Am. Rev. of Int’l. Arb. 91-120 (2008). . . . . . . . . . . . . . 18
Max Huffman, A Retrospective on Twenty-Five Years of the Foreign Trade Antitrust Improvements Act, 44 Hous. L. Rev. 285, 308-09 (2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . 30


Carlos Manuel Vasquez, The Four Doctrines of Self-Executing Treaties, 8 Am. J. Int’l L. 695 (1995). . . . . . . . . . . . 15


PROCEEDINGS BELOW
On September 23, 2009, Respondents Olivia Pope & Associates, Inc. et al. brought suit against Petitioner B-613 Reinsurance Consortium for alleged violations of Section 1 of the Sherman Antitrust Act (“Sherman Act”), 15 U.S.C. § 1 (2012). [R. 1, 7]. Petitioner immediately moved to compel arbitration, as per an arbitration clause in Petitioner’s reinsurance agreement with Respondents’ parent insurers. Id. at 7. The District Court denied Petitioner’s motion, holding that under the McCarran-Ferguson Act (“MF Act”) and the Albers Uniform Arbitration Act (“AUAA”), the clause was not enforceable. Id. Pursuant to 28 U.S.C. § 1292(b), the District Court certified its order denying Petitioner’s motion for an interlocutory appeal. Id. Petitioner appealed the District Court’s order. Id.

Following its appeal, Petitioner moved for summary judgment, on the ground that the Foreign Trade Antitrust Improvements Act (“FTAIA”), 15 U.S.C. §6a, prohibited claims of anti-competitive conduct to be brought under the Sherman Act. Id. at 7-8. While the interlocutory appeal was pending, the District Court granted Petitioner’s motion for summary judgment. Id. at 8. Respondents appealed the grant of summary judgment, arguing that Petitioner’s anti-competitive behavior was not protected by the FTAIA because it directly affected United States commerce. Id. at 2.

On appeal, the Court of Appeals for the Fourteenth Circuit affirmed the District Court’s decision to deny Petitioner’s motion to compel arbitration, and reversed the District Court’s grant of summary judgment. Id.

On January 21, 2014, the Supreme Court granted Petitioner’s Petition for Writ of Certiorari to consider all issues raised in the court below. Id. at 25.



CONSTITUTIONAL PROVISIONS

U.S. Const. art. VI, cl. 2

This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.




STATUTORY PROVISIONS
9 U.S.C. §§ 201-208
§ 201. Enforcement of Convention
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, shall be enforced in United States courts in accordance with this chapter.
§ 202. Agreement or award falling under the Convention
An arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states. For the purpose of this section a corporation is a citizen of the United States if it is incorporated or has its principal place of business in the United States.
15 U.S.C. § 1 (2012)

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.


15 U.S.C. § 6a (2012)

Sections 1 to 7 of this title shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless--




  1. such conduct has a direct, substantial, and reasonably foreseeable effect--



  1. on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations; or




  1. on export trade or export commerce with foreign nations, of a person engaged in such trade or commerce in the United States; and

such effect gives rise to a claim under the provisions of sections 1 to 7 of this title, other than this section.


15 U.S.C. § 1012(b) (2012)

(b) Federal regulation


No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended [15 U.S.C.A. 41 et seq.], shall be applicable to the business of insurance to the extent that such business is not regulated by State law.


Albers Rev. Stat. ch. 787 § 1

(a) General rule. Unless otherwise provided in the agreement, a written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties creates a duty to arbitrate, and is valid, enforceable and irrevocable, except upon such grounds as exist for the revocation of a contract.


(b) Exception with respect to insurance contracts. However, this section shall not apply to arbitration agreements contained in contracts of insurance.

TREATIES

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)
Article II (Jun. 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38)

1. Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

2. The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.


Article III
Each Contracting State shall recognize arbitral awards as

binding and enforce them in accordance with the rules of

procedure of the territory where the award is relied upon, under

the conditions laid down in the following articles. There shall

not be imposed substantially more onerous conditions or higher

fees or charges on the recognition or enforcement of arbitral

awards to which this Convention applies than are imposed on the

recognition or enforcement of domestic arbitral awards,


Convention for the Unification of Certain Rules Relating to International Carriage by Air (Warsaw Convention)
Article 17 (Oct. 12, 1929, 478 U.N.T.S. 371)
The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking.
Statement of the Facts

Petitioner B-613 Reinsurance Consortium represents a group of fifteen European reinsurers. [R. 3]. Petitioner entered into a standardized reinsurance agreement (“Agreement”) with two Australian general liability insurers, Defiance Insurers Group Limited and Remington Insurance Limited (“Parent Insurers”), to help Parent Insurers mitigate risks arising from its policy portfolio. Id. The Agreement applied to all Parent Insurers’ subsidiaries, including Albers-based Respondents Olivia Pope & Associates Insurance, Inc. et al., and contained a broad arbitration clause. Id. Under the clause, Petitioner and the Parent Insurers or their subsidiaries agreed to arbitrate any disputes “under the Rules of Arbitration of the International Chamber of Commerce.” Id. at 3-4.

Between August 1970 and December 1986, Parent Insurers issued “standard form” global general liability insurance policies to Wonderland Mining Limited (“Wonderland”), a Sydney-based multinational corporation which mined and sold raw asbestos fiber. Id. at 2-3. Under the standard form, insurance was sold on an “occurrence” basis, thus requiring Parent Insurers to defend claims that arose from work-related accidents that occurred while the insurance policy was in effect. Id. at 3.

In April 2001, Wonderland demanded indemnification from Parent Insurers for thousands of asbestos-related personal injury claims. Id. at 2. In turn, Parent Insurers demanded Petitioner to defend or pay damages for the asbestos claims. Id. at 4. Payment of the asbestos claims was governed by Parent Insurers’ occurrence-based, standard policy form. Id.

In February 2003, after paying for initial claims, Petitioner requested that Parent Insurers change their standard general liability insurance form from “occurrence based” to “claims-made based.” Id. Petitioner also requested that Parent Insurers modify their standard form to include a retroactive date provision, such that only claims occurring after the policy went into effect would be covered. Id. Parent Insurers refused to make any changes. Id. at 5.

Between October 2005 and March 2007, Petitioner informed Parent Insurers it intended to stop its insurance coverage. Id. Specifically, Petitioner did not renew Parent Insurers’ expiring reinsurance nor did it cover Parent Insurers’ claims for coverage under insurance policies still in effect. Id. Further, Petitioner informed other reinsurers of Parent Insurers’ preference for “occurrence-based” standard policy forms. Id. Parent Insurers did not obtain alternative coverage. Id.

Respondents, a group of wholly-owned subsidiaries authorized in the state of Albers to sell general liability insurance, used the same standard general liability insurance form as Parent Insurers in order to benefit from Parent Insurers’ reinsurance policy with Petitioner. Id. at 1, 6. Respondents claimed that, as a result of Petitioner’s direct actions against Parent Insurers and Parent Insurers’ failure to obtain alternative coverage, the price of their insurance policies increased sixty percent. Id. Respondents further alleged that they suffered a substantial loss of income when their brokers and agents were unable to find policies for their consumers. Id. As a result, Respondents brought suit against Petitioner, alleging violations of Section 1 of the Sherman Act. Id. at 7.

SUMMARY OF THE ARGUMENT
This Court should reverse the Court of Appeals’ holding and enforce the arbitration clause in Petitioner’s international reinsurance agreement. The Court of Appeals incorrectly refused to compel arbitration because Article II of the New York Convention’s court mandate has independent, domestic legal force, and further because the McCarran-Ferguson Act only applies to domestic commercial arbitration.

First, the plain language of Article II dictates that the provision is self-executing, such that state law cannot reverse-preempt Article II. Further, to the extent that Chapter 2 of the Federal Arbitration Act (“Convention Act”) affects Article II, Congress intended only that the Convention Act prescribe the established procedural rules by which private citizens can enforce their arbitration rights under Article II. 9 U.S.C. §§ 201-208. Alternatively, despite the Convention Act, the New York Convention remains a treaty, and a treaty is not an “act of Congress” within the meaning of the McCarran-Ferguson Act.

Second, the McCarran-Ferguson Act may not bar enforcement of an international arbitration clause because it applies only to state regulation of domestic insurance matters. Further, the McCarran-Ferguson Act’s potential to disrupt the United States’ obligations under the New York Convention warrants interpreting the McCarran-Ferguson Act narrowly.

This Court also should reverse the Court of Appeals’ holding which denied Petitioner’s summary judgment on Respondents’ antitrust claim because the word “direct” in § 6a of the Foreign Trade Antitrust Improvements Act (FTAIA) means “immediate consequence.” Under this definition, Petitioner’s conduct falls outside the scope of the Sherman Antitrust Act (“Sherman Act”), thereby leaving no evidence that a dispute of material facts exists. This Court should interpret “direct” to mean “immediate consequence” because textual cannons of statutory interpretation dictate that ambiguous terms be given their plain ordinary meaning. Additionally, “direct” has been interpreted to mean “immediate consequence” in another statute also dealing with issues of extraterritoriality, and inferring the meaning of ambiguous terms across statutes is permitted under cannons of statutory interpretation. Second, interpreting “direct” to mean “immediate consequence” comports best with Congress’s intent to mitigate concerns of foreign trading partners regarding perceived overreaching by American antitrust courts. Finally, interpreting “direct” to mean “immediate consequence” allows courts to apply the FTAIA’s three-prong test most consistently.




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