Argued
and Submitted March 5, 2019 Seattle, Washington
Appeal
from the United States District Court for the Eastern
District of Washington No. 2:12-cv-03110-TOR Thomas O. Rice,
Chief District Judge, Presiding
Shannon Gallagher (argued), Law Office of Shannon Gallagher,
Irvine, California; Joshua E. Austin, NTCH-WA Inc., Columbia,
South Carolina; for Plaintiff-Appellant.
Laura
Eve Besvinick (argued), Stroock & Stroock & Lavan
LLP, Miami, Florida; Michael J. Kapaun, Witherspoon Kelley,
Spokane, Washington; Frank T. Spano, Polsinelli PC, New York,
New York; for Defendant-Appellee.
Before: Ronald M. Gould and Richard A. Paez, Circuit Judges,
and Dean D. Pregerson, [*] District Judge.
SUMMARY[**]
Arbitration
/ Claim Preclusion
The
panel affirmed the district court's judgment in favor of
ZTE Corp. because claim preclusion barred plaintiff's
claims in this diversity action.
Plaintiff
previously arbitrated breach of contract and related claims
against ZTE USA, a wholly-owned subsidiary of defendant ZTE
Corp. ZTE Corp. was not a party to that arbitration. The
arbitrator denied plaintiff's claims, a federal district
court affirmed the award, and the Eleventh Circuit affirmed
the district court judgment.
The
panel held that the arbitration award and its confirmation by
a district court together barred plaintiff from pursuing its
current claims against ZTE Corp., under the doctrine of claim
preclusion.
In an
issue of first impression in this circuit, the panel held
that in a diversity judgment case, the preclusion law of the
state where the federal court, confirming an arbitration
award, sat determined the preclusive effect of the award. The
panel held that Florida law applied because a district court
in Florida confirmed the award.
The
panel held that under Florida law, claim preclusion barred
plaintiff's claims because plaintiff was seeking the same
remedy it sought in arbitration, the evidence needed to prove
plaintiff's claims here was the same, ZTE Corp. was in
privity with its wholly-owned subsidiary ZTE USA, and the
parties were suing in the same capacity as in the
arbitration.
OPINION
GOULD,
CIRCUIT JUDGE.
Plaintiff-Appellant
NTCH-WA, Inc. previously arbitrated breach of contract and
related claims against ZTE USA, a wholly-owned subsidiary of
Defendant-Appellee ZTE Corp. ZTE Corp. was not a party to
that arbitration. The arbitrator denied NTCH-WA's claims,
the District Court for the Middle District of Florida
confirmed the award under the Federal Arbitration Act, 9
U.S.C. § 9, and the Eleventh Circuit affirmed the
district court's judgment.
The
question before us is whether the arbitration award and its
confirmation by a district court together bar NTCH-WA from
pursuing its current claims against ZTE Corp., under the
doctrine of claim preclusion.[1] We hold that it does.
When a
federal court sitting in diversity confirms an arbitration
award, the preclusion law of the state where that court sits
determines the preclusive effect of the award. Because a
district court in Florida confirmed the award here, Florida
law applies. Under Florida law, claim preclusion bars
NTCH-WA's claims because NTCH-WA is seeking the same
remedy it sought in arbitration, the evidence needed to prove
NTCH-WA's claims here is the same, ZTE Corp. is in
privity with its wholly-owned subsidiary ZTE USA, and the
parties are suing in the same capacity as in the arbitration.
For these reasons, we affirm the district court's
dismissal of NTCH-WA's claims.
I
The
background to the current controversy involves several
related parties and suits: NTCH-WA is an entity- along with
PTA-FLA, Inc.; Daredevil, Inc.; and NTCH-West Tenn.,
Inc.-"owned and controlled by Eric Steinmann."
PTA-FLA, Inc. v. ZTE USA, Inc., 844 F.3d 1299, 1302
(11th Cir. 2016). "[T]hey operate together under the
name 'ClearTalk.'" Id. ClearTalk
"offer[s] prepaid and flat-rate cell phone service to
customers with poor credit or who otherwise cannot open
accounts with major cell phone providers." Id.
The
ClearTalk entities filed suit against ZTE USA in 2011,
asserting breach of contract and related claims. Daredevil
sued ZTE USA in Missouri; PTA-FLA sued ZTE USA in South
Carolina; and NTCH-West Tenn. sued ZTE USA in Tennessee.
Steinmann sued ZTE USA and ZTE Corp. in California.
ZTE USA moved to compel arbitration, and the parties
eventually stipulated to a consolidated arbitration. From
that point, the arbitration "went forward as a single
...