Let's Go Aero, Inc. v. Cequent Performance Products , 641 F. App'x 988 ( 2016 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
LET’S GO AERO, INC.,
A COLORADO CORPORATION,
Plaintiff-Appellee
v.
CEQUENT PERFORMANCE PRODUCTS, INC.,
A DELAWARE CORPORATION, FKA CEQUENT
TOWING PRODUCTS, INC.,
Defendant-Appellant
U-HAUL INTERNATIONAL INC.,
A NEVADA CORPORATION,
Defendant
______________________
2015-1308
______________________
Appeal from the United States District Court for the
District of Colorado in No. 1:14-cv-01600-RM-MEH, Judge
Raymond P. Moore.
______________________
Decided: March 3, 2016
______________________
MARTIN D. BEIER, Silver & DeBoskey, P.C., Denver,
CO, argued for plaintiff-appellee. Also represented by
2 LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS
THOMAS M. HASKINS III; J. MARK SMITH, Berg Hill Green-
leaf Ruscitti, LLP, Denver, CO.
DAVID BOGDAN CUPAR, McDonald Hopkins LLC,
Cleveland, OH, argued for defendant-appellant. Also
represented by MATTHEW JOHN CAVANAGH.
______________________
Before MOORE, TARANTO, and STOLL, Circuit Judges.
TARANTO, Circuit Judge.
A settlement agreement that resolved an earlier law-
suit between Let’s Go Aero, Inc. and Cequent Perfor-
mance Products, Inc. contains an arbitration provision
that governs certain disputes that might arise between
the parties. When Let’s Go Aero brought the present
action against Cequent, asserting patent-infringement
and other claims, Cequent invoked that arbitration provi-
sion by filing a motion to stay the litigation and to compel
arbitration under the Federal Arbitration Act, 9 U.S.C.
§§ 3, 4. The district court analyzed the twelve claims of
Let’s Go Aero’s complaint and concluded that six come
within the arbitration provision and six do not. Challeng-
ing the non-arbitrability conclusion as to the latter group
of six claims, Cequent appeals the resulting order entered
by the district court, invoking 9 U.S.C. § 16(a)(1). We
dismiss the appeal. The order does not deny the request-
ed § 3 stay and so is outside § 16(a)(1)(A). Although the
order refuses to compel arbitration, which is within
§ 16(a)(1)(B), our ruling on arbitrability would be advisory
as to that refusal, which undisputedly is compelled by an
independent ground we cannot disturb. We therefore do
not address arbitrability, which the parties now agree will
be decided de novo by another district court in a separate
action brought by Cequent under the Arbitration Act.
LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS 3
BACKGROUND
A
In 2008, Let’s Go Aero and Cequent entered into a li-
cense agreement that authorized Cequent to make and
sell certain products involving technology for which, the
agreement states, Let’s Go Aero had patent rights. The
products include cargo bins that attach to the back of a
vehicle to provide storage space, a bike rack, and a pin
that connects a vehicle to a towed object. In 2010, Ce-
quent sued Let’s Go Aero for breach of the 2008 license,
asserting, among other things, that Let’s Go Aero had let
its patents and applications expire or go abandoned, so
that the license issued to Cequent was without value.
Let’s Go Aero counterclaimed that Cequent breached the
licensing agreement by not paying required royalties and
also had infringed Let’s Go Aero’s patents.
In January 2012, Let’s Go Aero and Cequent entered
into a settlement agreement. Two provisions are note-
worthy for present purposes. First: In exchange for
paying $17,500 to Let’s Go Aero, Cequent is permitted to
continue selling some 25,792 units of a product called
Silent Hitch Pins that Cequent already had in inventory.
Second: Any disputes arising out of or relation to the
settlement agreement are to be arbitrated in Chicago,
Illinois.
In the event of any dispute, claim, question, or
disagreement arising from or relating to this
Agreement or the breach thereof . . . all disputes,
claims, questions, or differences shall be finally
settled by arbitration administered by the Ameri-
can Arbitration Association in accordance with the
provisions of its Commercial Arbitration Rules.
Venue for the arbitration proceedings shall be in
Chicago, Illinois. . . .
J.A. 394 ¶ 23.
4 LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS
B
In June 2014, Let’s Go Aero filed the present action
against Cequent in district court in Colorado. J.A. 190.
The operative Second Amended Complaint states twelve
claims, patent infringement among them. In lieu of
answering, Cequent moved for an order compelling arbi-
tration under 9 U.S.C. § 4 or, in the alternative, for a stay
of the case pending arbitration under 9 U.S.C. § 3. J.A.
219, 229. It argued that Let’s Go Aero’s claims come
within the arbitration clause of the 2012 settlement
agreement. J.A. 224.
In opposing Cequent’s motion, Let’s Go Aero raised a
venue objection under Ansari v. Qwest Communications
Corp., 414 F.3d 1214 (10th Cir. 2005). In Ansari, the
Tenth Circuit ruled that “where the parties agreed to
arbitrate in a particular forum only a district court in that
forum has authority to compel arbitration under § 4.” Id.
at 1219–20; see id. at 1220 (“a district court lacks authori-
ty to compel arbitration in other districts, or in its own
district if another has been specified for arbitration”)
(internal quotation omitted). The Ansari rule can be
waived, see Sanchez v. Nitro-Lift Techs., L.L.C., 762 F.3d
1139, 1151–52 (10th Cir. 2014); 1mage Software, Inc. v.
Reynolds & Reynolds Co., 459 F.3d 1044, 1052 (10th Cir.
2006), but here Let’s Go Aero invoked the Ansari rule.
Because the 2012 agreement specifies that arbitration is
to be conducted in Chicago, Let’s Go Aero argued that the
Colorado district court in this case lacked power under
Ansari to grant Cequent’s § 4 motion to compel arbitra-
tion.
Cequent responded by filing a new action—a Petition
to Compel Arbitration under § 4 of the Arbitration Act—in
the Northern District of Illinois (which includes Chicago).
It told the Illinois court in its Petition that “[u]nder the
Federal Arbitration Act, as interpreted by the U.S. Court
of Appeals for the 10th Circuit, the proper venue to com-
LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS 5
pel arbitration is the district court encompassing the
arbitration location required by the clause,” and that, in
its reply brief responding to Let’s Go Aero’s opposition in
Colorado, “Cequent will ask the Colorado district court to
either stay the case pending this Court’s resolution of this
petition or to dismiss [the Colorado action] for improper
venue.” Petition to Compel Arbitration, Doc. 1, ¶¶ 32, 33,
Cequent Performance Products, Inc. v. Let’s Go Aero, Inc.,
No. 1:14-CV-08457 (N.D. Ill. Oct. 27, 2014). In December
2014, however, the Illinois district court stayed its case
pending the outcome of Cequent’s motion to compel arbi-
tration in Colorado district court.
C
On January 28, 2015, the Colorado district court in
this case issued an order addressing Cequent’s motion to
compel arbitration and to stay the litigation. 1 In the
January 28 Order, the court explained that it would first
consider whether each of the claims in the complaint was
subject to the arbitration provision. “If such claim does
[arise from the settlement agreement]—that claim is
arbitrable. If such claim does not—then that claim is
non-arbitrable and subject to litigation in the Court.” J.A.
10. Proceeding claim by claim, the court concluded that
six claims (1–3, 6, 10, and 12) are subject to the 2012
arbitration provision, J.A. 12–14, 16, 18–20, and six
others (4, 5, 7–9, and 11) are not, J.A. 15–19.
The court then considered whether it could compel ar-
bitration as to the first group of claims—those it had held
arbitrable. It concluded that Ansari precludes such a § 4
order. J.A. 20. It added, however, that it would stay the
1 The court also set aside a default judgment (ECF
No. 42) and gave Cequent more time to answer or other-
wise respond to the complaint. J.A. 21–22.
6 LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS
case as to those claims pending what it said would be a
“de novo resolution of the Illinois Action.” J.A. 20–21.
Although the court had found six claims not to be ar-
bitrable (4, 5, 7–9, 11)—the ones now at issue in this
appeal—the court then considered “Whether to Stay the
Entire Litigation Pending Arbitration.” J.A. 21 (emphasis
added). The court explained: “Where a court has found
that a party’s lawsuit contains some claims that raise
arbitrable issues and others that do not, the court has
considerable discretion with respect to whether it stays
the claims that do not raise arbitrable issues or allows
them to proceed.” J.A. 21. As to whether the non-
arbitrable claims should be stayed along with the arbitra-
ble ones, the district court said: “the Court reserves ruling
on the request to stay the matter in its entirety. The
Court orders the parties to file cross briefs within thirty
(30) days of this Order as to whether a stay is appropriate
as to individual Claims Four, Five, Seven, Eight, Nine,
and Eleven.” J.A. 21.
In the Conclusion section of the January 28 Order, the
court formally disposed, in numbered paragraphs, of the
motions before it. J.A. 21–23. Three paragraphs address
claims 1–3, 6, 10, and 12. Paragraph 3 “GRANTS, in
part” the motion to compel arbitration, “to wit, the Court
finds the following claims are subject to the parties’
arbitration agreement,” listing claims 1–3, 6, 10, and 12.
J.A. 22. Paragraph 4 “DENIES, in part,” the motion to
compel arbitration, “to wit, the Court lacks jurisdiction in
which to compel the parties to arbitrate” those claims, id.,
thus referring to the Ansari ground. And paragraph 5
“GRANTS, in part, [Cequent’s] request to stay proceed-
ings” as to those claims “pending resolution of the Illinois
Action.” Id.
The final paragraph of the formal ordering portion of
the January 28 Order addresses the six claims that the
district court, in the earlier portions, had found non-
LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS 7
arbitrable. Paragraph 6 “RESERVES ruling, in part,
[Cequent’s] request to stay proceedings (ECF No. 29), to
wit the Court ORDERS the parties to file cross briefs
within thirty (30) days of this Order as to whether a stay
is appropriate to the following individual claims,” listing
claims 4, 5, 7–9, and 11. J.A. 23. We note that the Janu-
ary 28 Order includes no formal ordering clause that
expressly denies Cequent’s request to compel arbitration
under 9 U.S.C. § 4 with respect to claims 4, 5, 7–9, and 11,
but the parties agree that the district court’s order neces-
sarily does so.
D
After the district court entered its ruling, Cequent
appealed to this court and obtained from the district court
a stay pending appeal. Only claims 4, 5, 7–9, and 11—the
claims the district court found non-arbitrable—are before
us. Cequent argues principally that those claims are
subject to the arbitration provision because adjudicating
those claims will involve determining whether any of the
challenged sales were covered under a provision of the
2012 settlement agreement allowing Cequent to continue
selling certain products. Let’s Go Aero did not appeal
with respect to claims 1–3, 6, 10, and 12, whose arbitrabil-
ity the district court stated would be decided de novo by
the Illinois district court.
In this court, Cequent has acknowledged—as it told
the Illinois district court—that the Colorado district court
could not compel arbitration in Chicago under Ansari.
Appellant’s Reply Br. at 19. And the parties have broad-
ened the scope of the de novo review of arbitrability by the
Illinois district court to include all of the claims asserted
in this case by Let’s Go Aero—including the claims, at
issue on appeal, that the Colorado court found non-
arbitrable. Let’s Go Aero so stated in its brief in this
court, waiving any preclusion. At oral argument, Cequent
8 LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS
agreed. This agreement, we note, helpfully opens a path
to a single-forum definitive resolution of arbitrability.
DISCUSSION
Jurisdiction to review the January 28 Order exists, if
at all, under 28 U.S.C. § 1292(a)(1), (c); and that provision
applies to this appeal only to the extent that the district
court issued “an order” covered by 9 U.S.C. § 16(a)(1). See
Microchip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350,
1354–55 (Fed. Cir. 2004). As relevant here, section
16(a)(1) of Title 9, U.S. Code, authorizes appeal of an
order “(A) refusing a stay of any action under section 3 of
this title” and of an order “(B) denying a petition under
section 4 of this title to order arbitration to proceed.”
Those provisions address two forms of concrete action
authorized by the Arbitration Act: staying litigation; and
compelling arbitration. Cequent sought both actions in
this case. We conclude, however, that neither provision
provides us a basis to reach the merits of arbitrability on
Cequent’s appeal. We therefore dismiss the appeal.
A
We begin with the district court’s order to the extent
it denies the § 4 motion for an order to compel arbitration.
Cequent does not dispute either of two propositions: (a)
our unchallenged precedent about when we follow region-
al circuits’ law requires us to follow the Tenth Circuit’s
Ansari decision on § 4 here; and (b) with Let’s Go Aero
having invoked the venue provision of the arbitration
agreement in this case, Ansari precludes the granting of
Cequent’s § 4 motion to compel arbitration, even if Ce-
quent is right about the arbitrability of the claims at issue
before us. Based on those two premises, it is undisputed
that this court cannot set aside the district court’s refusal
to compel arbitration. Were we to rule on the arbitrabil-
ity issue, therefore, that ruling would not alter the district
court’s concrete action in refusing to compel arbitration.
LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS 9
In these circumstances, our ruling on arbitrability
would be advisory as to the denial of the § 4 motion in the
same way the Supreme Court has long recognized as
defeating jurisdiction in an analogous setting. The Court
has held that it lacks jurisdiction to review a state court’s
“judgment[ ]” under 28 U.S.C. § 1257 where that judg-
ment, even if it includes a ruling on federal law, inde-
pendently rests on a state-law ground. The Court
explained the longstanding rule and rationale in Coleman
v. Thompson, 501 U.S. 722 (1991):
In the context of direct review of a state court
judgment, the independent and adequate state
ground doctrine is jurisdictional. Because this
Court has no power to review a state law determi-
nation that is sufficient to support the judgment,
resolution of any independent federal ground for
the decision could not affect the judgment and
would therefore be advisory. See Herb v. Pitcairn,
324 U.S. 117, 125–126 (1945) (“We are not permit-
ted to render an advisory opinion, and if the same
judgment would be rendered by the state court af-
ter we corrected its views of federal laws, our re-
view could amount to nothing more than an
advisory opinion.”).
Id. at 729. The Court added: “When this Court reviews a
state court decision on direct review pursuant to 28
U.S.C. § 1257, it is reviewing the judgment; if resolution
of a federal question cannot affect the judgment, there is
nothing for the Court to do.” Id. at 730. The same logic
applies to the order denying the motion for an arbitration-
compelling order under § 4: a ruling by this court on
arbitrability of claims 4, 5, 7–9, and 11 would be imper-
missibly advisory because such a ruling would not affect
the district court’s order refusing to compel arbitration of
those claims.
10 LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS
Our conclusion is reinforced by consideration of the
Supreme Court’s decision in Electrical Fittings Corp. v.
Thomas & Betts Co., 307 U.S. 241 (1938). In that patent
case, the district court’s “decree” contained a validity
declaration along with a non-infringement determination,
even though invalidity was asserted only as a defense, not
a counterclaim. Id. at 242. When the defendant, which
had won on non-infringement, appealed to the court of
appeals for reform of the decree to eliminate the validity
declaration, the Supreme Court held that the court of
appeals had jurisdiction to do just that, but not to address
the merits of validity. The Court noted the basic principle
that “[a] party may not appeal from a judgment or decree
in his favor, for the purpose of obtaining a review of
findings he deems erroneous which are not necessary to
support the decree.” Id. (emphasis added). But in the case
before the Court, the declaration that was challenged was
in the decree itself, and what was sought was not review
of that declaration’s merits, but its simple vacatur. Id. 2
In the present case, unlike in Electrical Fittings, the
ordering portions of the district court’s ruling do not
contain a declaration of arbitrability. But even if they
2 “A party may not appeal from a judgment or de-
cree in his favor, for the purpose of obtaining a review of
findings he deems erroneous which are not necessary to
support the decree. But here the decree itself purports to
adjudge the validity of claim 1, and though the adjudica-
tion was immaterial to the disposition of the cause, it
stands as an adjudication of one of the issues litigated.
We think the petitioners were entitled to have this por-
tion of the decree eliminated, and that the Circuit Court
of Appeals had jurisdiction, as we have held this court
has, to entertain the appeal, not for the purpose of pass-
ing on the merits, but to direct the reformation of the
decree.” Id. at 242 (footnotes omitted).
LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS 11
did, all that Electrical Fittings involved and approved was
appellate vacatur of that declaration, not an appellate
decision on the merits of the issue. Cequent does not ask
us for a bare vacatur. At this point, moreover, both
parties agree that the arbitrability issue will be decided
de novo by the district court in Illinois. Even vacatur, in
the current posture of the case, would have no discernible
concrete legal effect. 3
More broadly, the parties’ agreement that the arbi-
trability conclusion of the district court in this case lacks
any preclusive effect in the Illinois case, and that arbitra-
bility is subject to de novo decision by the Illinois district
court, takes this case outside the rationale of cases in
which appeal has been allowed where “a losing party
accepts the adverse judgment and seeks review of only
one of the independently sufficient alternative grounds for
the judgment.” 15A Charles Alan Wright, Arthur R.
Miller & Edward H. Cooper, Federal Practice & Proce-
dure: Jurisdiction, § 3902 (Special Limits on Jurisdiction–
Standing), at 84 (2d. 1992). The rationale of such deci-
sions is that “most courts permit preclusion as to all such
grounds,” giving a future legal effect in other potential
proceedings to the ruling on the alternative grounds. Id.
(emphasis added); see AT&T Corp. v. F.C.C., 317 F.3d
227, 237-38 (D.C. Cir. 2003). Here, in contrast, the par-
ties have made clear, by their representations on appeal,
that arbitrability is to be decided afresh in the Illinois
case, independently of the conclusion on the issue drawn
by the district court in the present case.
3 If this dispute continues, and leads to a decision
by the Illinois district court in the action filed under the
Arbitration Act, a question will arise about whether an
appeal will come to this court or to the Seventh Circuit.
We merely note but do not address that question.
12 LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS
The language used in Coleman and its cited authori-
ties suggests that we lack jurisdiction—not because of 28
U.S.C. § 1292(a)(1), but for advisory-opinion reasons—to
review the order denying the § 4 motion. But even if we
view the issue as a matter of “ ‘federal appellate prac-
tice,’ ” Camreta v. Greene, 131 S. Ct. 2020, 2029 (2011),
the same disposition is appropriate here. We will not
entertain the appeal insofar as it involves the denial of an
order to compel arbitration under § 4.
B
A different problem undermines Cequent’s appeal re-
garding the motion under 9 U.S.C. § 3 for a stay pending
arbitration. The district court has not actually issued an
order refusing such a stay. 4 Although a refusal of a § 3
stay is separately appealable under 9 U.S.C. § 16(a)(1)(A),
we have no such basis for appeal in this case.
4 In the January 28 Order on appeal, the district
court, besides addressing Cequent’s Arbitration Act
motion seeking relief under 9 U.S.C. §§ 3, 4 (ECF No. 29),
also ruled on a separate motion, which asked that the
court set aside the default judgment or, if “the [c]ourt
believes that Cequent is in default and a response to the
second amended complaint is currently required,” give
Cequent extra time “to answer or move to dismiss the
second amended complaint” (ECF No. 42 at 2-3). The
court set aside the entry of default, but also granted
Cequent extra time “to answer or otherwise respond to
the Complaint.” J.A. 22. (Because of Cequent’s immedi-
ate appeal, no such response has been filed.) That portion
of the Order does not address the Arbitration Act motion
and does not directly order Cequent to answer, but only
grants it more time. In any event, on appeal Cequent
does not point to that clause of the Order as a refusal to
stay under § 3. For at least those reasons, we disregard
that clause of the Order.
LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS 13
Although the district court concluded that the claims
Cequent presents to us are not subject to arbitration, the
court’s January 28 Order does not deny the § 3 motion for
a stay of litigation of those claims. To the contrary, it
expressly “RESERVES ruling, in part, [on Cequent’s]
request to stay proceedings” regarding those claims. J.A.
23. And it directs the parties to file briefs “as to whether
a stay is appropriate” as to those claims. Id.
When Cequent appealed the January 28 Order, it said
in its Docketing Statement, dated February 18, 2015, that
the relief sought is “[r]eversal of portion of order denying
motion to compel arbitration” and that the “[o]rder is
immediately appealable under 9 USC 16 as it denied a
motion to compel arbitration.” Docketing Statement for
the Appellant Cequent Performance Products, Inc. at 1-2,
Let’s Go Aero, Inc. v. Cequent Performance Prods., Inc.,
No. 15-1308 (Fed. Cir. Feb. 18, 2015), ECF No. 5. Ce-
quent thus mentioned only the § 4 ruling. It did not
mention a refusal of a § 3 stay.
A few weeks later, when the district court granted
Cequent’s motion to stay district court proceedings pend-
ing the appeal, the court described its January 28 Order
regarding the claims Cequent brings to us: the court
“denied, in part, [Cequent’s] motion to compel arbitration
as to [those claims] . . . and reserved ruling on whether to
stay the entire proceedings.” J.A. 923. Noting that it had
“determined that certain of [LGA’s] claims were arbitra-
ble but that it lacked jurisdiction to compel arbitration,”
while “determin[ing] that certain of [LGA’s] claims were
not arbitrable,” the court said: “Thus, [Cequent] had a
right to immediately appeal this prior order. See 9 U.S.C.
§ 16(a)(1)(B).” J.A. 924. That statement cites only the
§ 16(a)(1) subparagraph on denials of § 4 motions, not the
subparagraph, § 16(a)(1)(A), that addresses refusals to
grant stays under § 3.
14 LET'S GO AERO, INC. v. CEQUENT PERFORMANCE PRODUCTS
In short, the district court’s January 28 Order does
not include an order refusing a stay that is appealable
under 9 U.S.C. § 16(a)(1)(A).
CONCLUSION
For the foregoing reasons, the appeal is dismissed.
No costs.
DISMISSED