Boston Telecommunications Group, Inc. v. Deloitte Touche Tohmatsu
Docket: No. 04-15983
Court: Court of Appeals for the Ninth Circuit; September 27, 2007; Federal Appellate Court
Boston Telecommunications Group, Inc. (BTG) and Roderick Marshall appeal the district court's dismissal of their claims against Robert Wood, Deloitte Touche Slovakia, Deloitte Touche Central Europe, Deloitte Touche Tohmatsu, George Mainas, and Consolidated Global Cable Systems, Inc. (CGCS). The court dismissed claims against Wood and Deloitte entities due to lack of personal jurisdiction and dismissed claims against Mainas and CGCS in favor of arbitration. The appellate court reverses in part and affirms in part.
The court reviews dismissals for lack of personal jurisdiction and denial of arbitration de novo. Under the Due Process Clause, a court must have meaningful contacts with a defendant to exercise personal jurisdiction. A defendant can waive the personal jurisdiction defense if not timely raised. Wood argued he preserved his defense through a memorandum accompanying his motion to dismiss for insufficient service of process, which he claimed included a reservation of rights regarding personal jurisdiction. However, the court emphasized that under Federal Rules of Civil Procedure, a defense must be raised at the first available opportunity, or it is waived. Consequently, because Wood did not include the personal jurisdiction defense in his initial motion, he waived it, and the court found his argument regarding imperfect service unpersuasive.
Appellants initiated their complaint on December 31, 2002, and attempted to serve Wood at his business address in Bratislava. In February 2003, Wood retained California counsel who indicated that he would not waive service and insisted on service under the Hague Convention. This action implied that Wood was aware of the Appellants’ jurisdictional claims, warranting a potential Rule 12(b)(2) defense. On April 4, 2003, Appellants attempted service at Wood’s former residence in North Carolina, where Wood's ex-wife confirmed she informed him about the complaint. Subsequently, Wood filed a Rule 12(b)(5) motion for insufficient service on April 23, 2003, and Appellants sent an amended complaint to his counsel on May 20, 2003. The district court heard arguments on Wood’s motion to dismiss on July 18, 2003. The court noted that Wood and his attorneys were aware of the complaint, and despite having the amended complaint for two months, Wood did not amend his motion to include a Rule 12(b)(2) defense. Thus, the court reversed the district court's ruling on Wood waiving his Rule 12(b)(2) defense and allowing him to join the Deloitte defendants' motion to dismiss for lack of personal jurisdiction.
Regarding personal jurisdiction over the Deloitte defendants, Appellants claimed jurisdiction based on Wood's role as an agent. It was established that the actions of an agent can be attributed to the principal, but Appellants failed to provide sufficient evidence that Wood's authority included his actions during the California meetings. Consequently, the court affirmed the district court's finding that Wood was not an agent of the Deloitte defendants and upheld the dismissal of Appellants’ claims against them for lack of personal jurisdiction.
In terms of arbitration, the court must first determine whether the parties agreed to arbitrate the dispute. Arbitration is fundamentally a contractual matter, and a party cannot be compelled to arbitrate disputes not agreed upon.
The standard for establishing arbitrability is low, with courts favoring arbitration in case of doubt regarding the scope of arbitrable issues. A minimal indication of intent to arbitrate should be fully recognized. In the case of the partnership agreement between Global Satellite Transmission Systems, Inc. (GSTS) and BTG, Article 11 mandates arbitration for disputes related to the agreement's interpretation or partnership business conduct, indicating a broad scope intended by the parties.
Appellants argue that Mainas and CGCS lack standing to enforce the arbitration clause since the agreement specifies no third-party beneficiaries outside the “Partners.” However, the agreement also states that it binds the heirs, representatives, successors, and assigns of the Partners, suggesting that CGCS, although not a partner, holds responsibilities and authority within the joint venture. CGCS's obligations, including guaranteeing GSTS’s debt and providing management services, imply that the arbitration clause was intended to benefit CGCS.
Mainas, being a nonsignatory but an agent of CGCS, also has standing to compel arbitration based on ordinary contract and agency principles. The court affirms the district court's decision to grant Mainas and CGCS's motion to dismiss in favor of arbitration and reverses the dismissal of Wood, remanding for further proceedings. The judgment dismissing the Deloitte defendants for lack of personal jurisdiction is also affirmed, with each party bearing its own costs on appeal. The decision is not for publication and does not serve as precedent except as specified by 9th Cir. R. 36-3.
