Washburn S. Oberwager v. McKECHNIE LTD, formerly McKechnie PLC

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_________
No. 08-1117
_________
WASHBURN S. OBERWAGER; DINESH R. DESAI; FIRST BRITANNIA
MEZZANINE CAPITAL BV; FIRST BRITANNIA MEZZANINE NV;
INTERNATIONAL MEZZANINE CAPITAL BV; and INTERNATIONAL
MEZZANINE INVESTMENT NV;
(collectively, the “Sellers”)
Appellants
v.
McKECHNIE LTD, formerly McKechnie PLC; WESTERN SKY INDUSTRIES, LLC,
successor to McKechnie US Holdings, Inc.
(collectively the “Buyers”)
___________________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
Case No. 06-cv-02685
(Honorable William H. Yohn)
___________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
June 11, 2009
Before: McKEE, HARDIMAN, and VAN ANTWERPEN, Circuit Judges
(Filed October 20, 2009)
OPINION OF THE COURT

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The district court had jurisdiction pursuant to 28 U.S.C. § 1332. We have jurisdiction1
pursuant to 28 U.S.C. § 1291. Our review of a motion to vacate a commercial arbitration award
is de novo. Dluhos v. Strasberg, 321 F.3d 365, 369 (3d Cir. 2003).
2
McKEE, Circuit Judge
Plaintiffs appeal the district court’s order granting summary judgment in favor of
the Defendants based on that court’s conclusion that Plaintiffs’ motion to vacate was
untimely. Plaintiffs argue that the district court erroneously relied on our decision in
Roadway Package System, Inc. v. Kayser, 257 F.3d 287 (3d Cir. 2001), because Roadway
Package is no longer viable following the Supreme Court’s decision in Hall Street
Associates v. Mattel, Inc., 128 S.Ct. 1396 (2008). For the reasons that follow, we will
affirm the decision of the district court.1
I.
As we write primarily for the parties, we need not recite the facts or procedural
background except insofar as they are helpful to our discussion.
This case arises from a stock purchase agreement (“SPA”) entered into by the
parties in 1999, providing for arbitration of any dispute arising from the agreement. The
SPA also contained a generic choice-of-law provision which stated that the agreement
was to be “governed by and construed in accordance with the laws of the State of
Delaware without regard to choice of law principles . . . .”
In 2004, the parties entered into arbitration to resolve a dispute that had arisen
under the SPA. The arbitrator resolved that dispute in Defendants’ favor, and Plaintiffs

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Plaintiffs initiated this action by filing a complaint and subsequently amending that2
complaint rather than by filing a motion to vacate the arbitration award as is required under the
FAA. However, the district court appropriately exercised its discretion to consider the amended
complaint as a motion to vacate the arbitration award, see O.R. Sec., Inc. v. Prof’l Planning
Assocs., 857 F.2d 742, 745 (11th Cir. 1988), and we will therefore proceed as if Plaintiffs had
initiated this action as a motion to vacate.
Plaintiffs also argue that the district court erred by failing to consider whether3
application of the FAA was inappropriate in light of Guaranty Trust Co. v. York, 326 U.S. 99,
111 (1945), and its policy against forum shopping. As Defendants note, this argument is not
relevant to the issues before us and we will therefore not address it.
3
then initiated this action under the Delaware Uniform Arbitration Act (“DUAA”) in the
Eastern District of Pennsylvania in an attempt to vacate the arbitration award.2
Defendants moved for summary judgment on the grounds that the action was
untimely under § 12 of the FAA, which requires that a motion to vacate an arbitration
award be served upon the adverse party within three months of the filing of the award. In
response, Plaintiffs argued that because of the choice-of-law provision in the SPA, the
DUAA, rather than the FAA, applied, and that the action was timely under Delaware law
as set forth in the DUAA.
II.
Plaintiffs argue that the district court erred in concluding that the FAA, rather than
the DUAA, governed their motion to vacate. They argue that the Supreme Court’s
decision in Hall Street makes Roadway inapposite by clarifying that parties may seek
judicial review of arbitration decisions under any applicable law, so long as the law is not
preempted by the FAA. Plaintiffs’ argument is without merit.3

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Hall Street resolved a split of authority among the Circuit Courts of Appeals as to4
whether parties to agreements subject to the FAA could supplement by contract the standards for
vacatur and modification of arbitration awards set forth in §§ 9, 10, and 11 of the FAA. The
Court concluded that they could not. It is therefore uncontested that Hall Street abrogates one
holding of Roadway, that parties to agreements subject to the FAA can specifically contract out
of the FAA standards of review. Plaintiffs argue, however, that certain dicta in Hall Street also
abrogate the second holding of Roadway, that a generic choice-of-law clause is insufficient to
demonstrate an intent to contract around the FAA entirely. We disagree.
4
As the district court noted, it is uncontested that the SPA falls within the broad
reach of the FAA. However, as we explained in Roadway Package, parties can contract
out of the FAA and select alternate rules to govern arbitration proceedings between them.
To do so, parties must “manifest[] a clear intent,” 257 F.3d at 293, and a generic choice-
of-law provision, standing alone, is not sufficient evidence of such intent, id. at 289.
As noted at the outset, Plaintiffs argue that Roadway has been undermined by the
Supreme Court’s intervening decision in Hall Street. According to Plaintiffs, Hall Street
effectively overruled Roadway under the circumstances here, and now allows review of4
an arbitration award pursuant to any applicable law, so long as that law is not preempted
by the FAA. Plaintiffs base this argument on the following language which they pluck
from Hall Street: “[t]he FAA is not the only way into court for parties wanting review of
arbitration awards: they may contemplate enforcement under state statutory or common
law, for example, where judicial review of different scope is arguable.” Hall Street, 128
S.Ct. at 1406.
According to Plaintiffs, these few sentences undermine the contractual intent
framework elucidated in Roadway, and usher in a new regime in which a plaintiff may

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In their Reply brief, Plaintiffs change their argument substantially, and argue that5
Roadway is inapplicable here, not because of Hall Street, but because our decision in Roadway
concerned preemption, rather than contract construction. It is, of course, inappropriate to raise an
argument for the first time in a Reply brief. Moreover, the argument is belied by our clear
assertion in Roadway that the question before us was “not one of choice-of-law or preemption”
but “simply a matter of contract construction.” 257 F.3d at 294.
5
select any cause of action, so long as it is not preempted by the FAA. Plaintiffs insist
that, after Hall Street, the essential inquiry in determining the applicable law in situations
such as these is not the parties’ intent beforehand as expressed in the arbitration
agreement. Rather, it is the plaintiff’s subsequent intent as set forth in the action to vacate
an arbitration award. Because Plaintiffs only assert claims under the DUAA, they argue
that the district court erred in relying on time limitations established in the FAA. The
argument is meritless.
The few sentences cited by Plaintiffs merely reiterate the long-standing rule that,
under certain circumstances, parties may choose to opt-out of the FAA. This language
does not, however, change the fundamental mechanism through which parties actually
express that choice. They still must express it beforehand in the applicable provisions of
their arbitration agreement. In Roadway, we held that a generic choice-of-law provision
is insufficient to evidence the clear intent necessary to opt out of the FAA’s default
regime. Hall Street does not alter that holding.5
IV.
For the reasons stated above, we will affirm the decision of the District Court.

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