Outokumpu Stainless USA, LLC, et al. v. Converteam SAS, now known as GE Energy Power Conversion France SAS, Corp.

At a glance

Parties

Outokumpu Stainless USA, LLC, Sompo Japan Insurance Company of America and seven insurers (subrogees of OTK Oyj) v. Converteam SAS, now known as GE Energy Power Conversion France SAS, Corp.

Case no.

Civil Action No. 16-0378-KD-C (S.D. Ala.)

Court

U.S. District Court for the Southern District of Alabama, Southern Division

Treaty

New York Convention, as implemented by 9 U.S.C. § 201 et seq.

Tribunal

Magistrate Judge William E. Cassady (order of 10 August 2016); Chief Judge Kristi K. DuBose (order of 18 April 2019)

Sector

Steel production; industrial motors

Outcome

Motion to remand granted. The action was sent back to the Circuit Court of Mobile County, Alabama, because GE Energy had no non-frivolous basis for jurisdiction under 9 U.S.C. § 205.

The dispute

Outokumpu Stainless USA and its insurers sued GE Energy in Alabama state court. They alleged that the motors GE Energy supplied for Outokumpu's plant were defective. GE Energy removed the case to federal court on two grounds. First, it relied on 9 U.S.C. § 205, saying the case related to arbitration agreements falling under the New York Convention in the contracts between Outokumpu and Fives. Second, it relied on diversity jurisdiction, arguing that the OTK Oyj subrogee insurers had been fraudulently joined. GE Energy then moved to compel arbitration and to dismiss the subrogees' claims, and the plaintiffs sought remand to state court.

Key holdings

1. The magistrate judge refused to stay briefing on GE Energy's motions to compel arbitration and to dismiss until jurisdiction was decided. He held that the planned remand motions were inextricably intertwined with those motions. The plaintiffs could fold their arguments on the motions into their remand motions, and briefing was to close on 8 September 2016. Order of 10 August 2016, pp. 2–4
2. The Court restated the Eleventh Circuit's two-step test for removal under § 205. Step one asks whether there is a non-frivolous basis for the Bautista factors, including an agreement in writing signed by the parties. Step two asks whether the agreement 'relates to' the case so that it could conceivably affect the outcome. The Eleventh Circuit had found both steps satisfied on the pleadings. On a more rigorous review, however, it held that GE Energy could not compel arbitration because there was no agreement in writing within the meaning of the Convention. Order of 18 April 2019, p. 2
3. The Court refused GE Energy's request to set aside the Eleventh Circuit's finding that no agreement in writing existed and to rely on its pleadings instead. That finding made GE Energy's contrary assertion frivolous, so GE Energy could not meet the Bautista factors. The Court therefore did not need to decide whether the agreement 'relates to' the case. Order of 18 April 2019, p. 3
4. After de novo review, the Court adopted the magistrate judge's Report and Recommendation of 19 March 2019, granted the motion to remand, and remanded the action to the Circuit Court of Mobile County, Alabama. Order of 18 April 2019, p. 3

Procedural history

1. GE Energy removed the action from Alabama state court. It moved to compel arbitration and to dismiss (Doc. 6), and separately moved to dismiss the claims of the OTK Oyj subrogees (Doc. 7).
2. 10 August 2016The magistrate judge denied the plaintiffs' motion to stay briefing and set a combined briefing schedule for the remand motions and GE Energy's motions.
3. The Eleventh Circuit (Doc. 83) held that the district court had properly asserted jurisdiction. It also held that GE Energy could not compel arbitration because there was no agreement in writing within the meaning of the Convention.
4. 19 March 2019The magistrate judge's Report and Recommendation recommended remand to the Circuit Court of Mobile County.
5. 18 April 2019The district court overruled GE Energy's objection, adopted the Report and Recommendation, and remanded the action.

Tribunal, counsel and experts

Decided by

• William E. Cassady Judge, U.S. District Court, Southern District of Alabama (Magistrate Judge)
• Kristi K. DuBose Judge, U.S. District Court, Southern District of Alabama (Chief United States District Judge)

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Keywords

• New York Convention
• 9 U.S.C. § 205
• removal
• remand
• motion to compel arbitration
• agreement in writing
• Bautista v. Star Cruises
• relates to
• non-signatory
• fraudulent joinder
• subrogation
• Outokumpu
• GE Energy
• Fives
• Eleventh Circuit
• defective motors

Summary generated with AI from the published documents — refer to the award for the authoritative text.