Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

This case stemmed from an asset purchase transaction where defendants and plaintiff entered into an allocation agreement that included an arbitration clause. Defendants appealed from the district court's order enjoining arbitration and denying their motion to stay judicial proceedings under section 3 of the Federal Arbitration Act ("FAA"), 9 U.S.C. 3. Defendants contended that the arbitration clause reserved the question of arbitrability for the arbitrators, and that the district court erred in determining that the dispute was not subject to arbitration. The court held that the arbitration clause in the agreement clearly and unmistakably expressed the parties' intent that the arbitrators determine questions of arbitrability, and that the district court therefore erred in permanently enjoining the arbitration and failing to stay judicial proceedings under section 3 of the FAA. Accordingly, the court reversed and remanded with instructions to grant the motion to stay proceedings under section 3 and dissolve the permanent injunction.

This case arose from the parties' insurance agreement where appellant insured appellees against borrower defaults on appellees' loans. Appellant appealed the district court's decision to remand the case back to state court pursuant to its discretion under the Declaratory Judgment Act ("DJA"), 28 U.S.C. 2201-2202. At issue was whether the district court was required to consider appellant's motion under the Federal Arbitration Act ("FAA"), 9 U.S.C. 3, before exercising its discretion under the DJA. The court held that, because the federal court's jurisdiction was proper, it was required under the mandatory terms of the FAA to consider appellant's motion before it remanded the case pursuant to its discretion under the DJA. Accordingly, the court reversed the district court's order of remand and remanded for its consideration of appellant's FAA motion.

The court issued an order and amended the opinion replacing [The district court excluded this evidence under its Alternative Dispute Resolution (ADR) Local Rule 6-11, which it read to create a "privilege" for "evidence regarding the details of the parties' negotiations in their mediation."] in lines 20-24, page 4909, with [The district court excluded this evidence under its Alternative Dispute Resolution (ADR) local rule on "confidential information," which it read to create a "privilege" for "evidence regarding the details of the parties' negotiations in their mediation." A local rule, like any court order, can impose a duty of confidentiality as to any aspect of litigation, including mediation. See N.D. Cal. ADR L.R. 6-12(a); see also 28 U.S.C. 652(d).] The petition for rehearing en banc was denied and no further petitions for rehearing or rehearing en banc may be filed.

Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra ("Winklevosses") sought to intervene after a district court entered judgment enforcing the Term Sheet and Settlement Agreement ("Settlement Agreement") signed by Facebook, the Winklevosses, and the Winklevosses' competing social network site, ConnectU, where the Settlement Agreement envisioned that Facebook would acquire all of ConnectU's shares in exchange for cash and a percentage of Facebook's common stock. At issue was whether the Settlement Agreement was enforceable where the Winklevosses claimed that they did not discover the facts that gave rise to their Rule 10b-5 claims under the Securities and Exchange Act of 1934 ("Act") until after they signed the Settlement Agreement's release of claims and whether the releases foreclosed their challenge to the Settlement Agreement where section 29(a) of the Act precluded a mutual release of unknown securities fraud claims arising out of negotiations to settle a pending lawsuit. The court held that the district court correctly concluded that the Settlement Agreement was enforceable and intended to release claims arising out of the settlement negotiations where the release was valid under section 29(a) when the Settlement Agreement was meant to end a dispute between sophisticated parties acting in an adversarial setting that was characteristic of litigation and could not be interpreted as leaving open the door to litigation about the settlement process.