United Communications Hub, Inc. v. Qwest Communications, Inc.
Docket: No. 01-56742; D.C. No. CV-01-04371-ABC
Court: Court of Appeals for the Ninth Circuit; August 23, 2002; Federal Appellate Court
Qwest Communications, Inc. (Qwest) appeals the district court’s denial of its motion to compel arbitration and the grant of a preliminary injunction to United Communications Hub, Inc. (UCHub). The district court determined that Qwest’s allegations did not pertain to invoices or balances, which would necessitate arbitration under their Wholesale Services Agreement. However, it was concluded that nine of Qwest’s allegations are indeed related to invoices or balances and should be arbitrated, prompting a reversal of the district court's decision.
The appeal is reviewed de novo, including the interpretation of the arbitration agreement, while the district court's injunction is reviewed for abuse of discretion, with legal issues assessed de novo. The court rejects UCHub’s narrow interpretation of the arbitration clause, emphasizing that the clause's language, particularly the phrase "relating to," indicates a broader application. The court asserts that matters requiring arbitration are not limited to trivial disputes but encompass significant issues that cannot be resolved amicably.
Qwest’s allegations against UCHub are categorized into two groups: (1) allegations (a) through (f), which arise under the Agreement and relate to billing or invoices, and therefore must be arbitrated; and (2) allegations (g) through (l), which do not arise under the Agreement or do not relate to billing or invoices, and thus need not be arbitrated.
Allegations (a) through (f) pertain to invoices and billing issues, including claims of over-billing, inaccurate invoices, and failure to correct billing errors, all of which are deemed arbitrable under the mandatory arbitration clause. Allegation (g) involves delayed processing of service orders and falls outside the arbitration scope. Allegation (h) addresses Qwest billing UCHub’s customers, which, while related to invoices, does not arise under the Agreement, thus also falling outside the arbitration clause. Allegations (j) and (l) concern Qwest's interference with UCHub's third-party relationships, which do not relate to the Agreement and are not arbitrable. Allegations (i) and (k) address service-related issues, including termination of services without notice and provision of inferior service, which are also non-arbitrable. The court must reverse the district court's decision and stay the litigation on arbitrable issues, while also retaining discretion to manage non-arbitrable claims. The guidance from Simitar Entertainment, Inc. v. Silva Entertainment, Inc. suggests that a stay on non-arbitrable claims is appropriate only if arbitrable claims predominate or their resolution depends on the arbitrator's findings. The decision mandates a stay pending arbitration for the arbitrable claims and allows the district court to determine the handling of non-arbitrable claims.
The disposition is designated as not suitable for publication and cannot be cited in this circuit's courts, except as permitted by Ninth Circuit Rule 36-3. UCHub alleged that Qwest fraudulently induced their Agreement by misrepresenting its billing accuracy and service capabilities, but UCHub did not pursue this claim on appeal and seems to have abandoned it during the district court proceedings; thus, it will not be addressed. The excerpt references 9 U.S.C. § 3, alongside key case law such as Dean Witter Reynolds, Inc. v. Byrd, which emphasizes the importance of enforcing arbitration agreements as mandated by the Federal Arbitration Act, even in cases where arbitration issues are intertwined with nonarbitrable matters. The Supreme Court has reiterated the necessity for arbitration agreements to be upheld rigorously, even if it results in fragmented litigation, as seen in cases like Moses H. Cone Memorial Hospital v. Mercury Construction Corp. and Dean Witter Reynolds, which advocate for the simultaneous progression of arbitration and litigation.
