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

At a glance

Parties

Outokumpu Stainless USA, LLC and its insurers (Sompo Japan Insurance Company of America, Pohjola Insurance Limited, AIG Europe Limited, Tapiola General Mutual Insurance Company, AXA Corporate Solutions Assurance SA UK Branch, HDI Gerling UK Branch, MSI Corporate Capital Ltd., Royal & Sun Alliance PLC) v. GE Energy Power Conversion France SAS, Corp. (formerly Converteam SAS)

Case no.

No. 1:16-cv-00378-KD-C

Court

U.S. District Court, Southern District of Alabama, Southern Division (Magistrate Judge William E. Cassady)

Forum and rules

Removal under 9 U.S.C. § 205 (Chapter 2 of the Federal Arbitration Act, implementing the New York Convention)

Treaty

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)

Outcome

Report and Recommendation of 19 March 2019: the Motion to Remand should be granted and the action remanded to the Circuit Court of Mobile County, Alabama.

The dispute

Outokumpu Stainless USA, LLC and its insurers sued GE Energy Power Conversion France SAS, Corp. (formerly Converteam SAS) on state-law claims in the Circuit Court of Mobile County, Alabama. GE Energy removed the case to federal court in July 2016 under 9 U.S.C. § 205. It argued that the claims "related to" an arbitration agreement falling under the New York Convention. The district court refused remand and compelled arbitration. The Eleventh Circuit upheld the refusal to remand. It reversed the orders compelling arbitration because GE Energy had not signed any arbitration agreement with Outokumpu. The plaintiffs then moved to remand a second time. GE Energy argued that once jurisdiction under § 205 exists, the court must keep the case and cannot remand.

Key holdings

1. Once the Eleventh Circuit removed the arbitration defense, only state-law claims remained. Following Beiser v. Weyler (5th Cir. 2002), the court found that a case removed under § 205 should ordinarily be remanded when the arbitration clause turns out not to provide a defense. pp. 3–4
2. The Eleventh Circuit's silence on what happens to jurisdiction when arbitration is not compelled is not a rejection of Beiser's reasoning. That court followed Beiser without qualification. p. 4, n. 1
3. The case was still at the pleading stage: GE Energy had not answered and there had been no discovery. The federal issue was therefore resolved early enough to permit remand. p. 4
4. Jurisdiction under § 205 at the time of removal need not be "forever locked in". Relying on ESAB Group v. Zurich Insurance (4th Cir. 2012), the court held that the remaining state-law claims are supplemental in nature. It has inherent authority to remand them once the Convention arbitration defense is gone. pp. 5–6
5. The court did not decide whether remand is mandatory under 28 U.S.C. § 1447(c). It distinguished Reid v. Doe Run Resources (8th Cir. 2012), where an international arbitration to which the claims related was still pending. p. 6, nn. 2–3

Procedural history

1. July 2016GE Energy removes the action from the Circuit Court of Mobile County to federal court under 9 U.S.C. § 205.
2. The district court adopts a Report and Recommendation denying the first motions to remand (Docs. 50, 57). It then compels the plaintiffs to arbitrate (Docs. 68, 69).
3. August 2018The Eleventh Circuit (902 F.3d 1316) affirms the denial of remand but reverses the orders compelling arbitration, because GE Energy was not a signatory to an arbitration agreement with Outokumpu.
4. 27 February 2019Oral argument on the second Motion to Remand (Doc. 87).
5. 19 March 2019Magistrate Judge's Report and Recommendation: the motion to remand should be granted and the case returned to state court.

Tribunal, counsel and experts

Decided by

• William E. Cassady Judge, U.S. District Court, Southern District of Alabama (United States Magistrate Judge; Report and Recommendation)

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Keywords

• New York Convention
• 9 U.S.C. § 205
• removal
• remand
• relates to
• Beiser v. Weyler
• non-signatory
• compel arbitration
• supplemental jurisdiction
• 28 U.S.C. § 1367(c)
• 28 U.S.C. § 1447(c)
• ESAB Group v. Zurich
• Converteam
• stainless steel
• insurers subrogation
• Eleventh Circuit

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