True North Communica v. Publicis Communicati , 206 F.3d 725 ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 99-1199 & 99-3424
PUBLICIS COMMUNICATION,
Plaintiff-Counterclaim Defendant-Appellant,
and
PUBLICIS S.A., a French corporation,
Counterclaim Defendant-Appellant,
v.
TRUE NORTH COMMUNICATIONS INC.,
Defendant-Counterclaim Plaintiff-Appellee.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 C 8263--Joan B. Gottschall, Judge.
Argued February 14, 2000--Decided March 14, 2000
Before BAUER, FLAUM, and EVANS, Circuit Judges.
EVANS, Circuit Judge. Arbitration can be an
effective way to resolve a dispute in less time,
at less expense, and with less rancor than
litigating in the courts. Arbitration loses some
of its luster, though, when one party refuses to
abide by the outcome and the courts are called in
after all for enforcement. This is one of those
situations.
A joint venture between two advertising
companies, Chicago-based True North
Communications Inc. and Paris-based Publicis
Communication (whose French corporate parent is
Publicis S.A.), that had begun in 1989 came apart
in May 1997. With one exception that is
irrelevant to this case,/1 True North and
Publicis agreed to arbitrate any disputes arising
from their divorce before the London Court of
International Arbitration under the arbitration
rules of the United Nations Commission on
International Trade Law. Needless to say,
disagreements popped up, including whether
Publicis had to turn over tax records that True
North said it needed to file with the Internal
Revenue Service and the Securities and Exchange
Commission.
Danish attorney Allan Philip, French law
professor Alain Viandier, and former U.S.
Attorney General Nicholas Katzenbach were
appointed to handle the arbitration, with Philip
serving as chairman of the tribunal. In an
October 30, 1998, "order" signed by Philip "for
and on behalf of the Arbitrators," the tribunal
told Publicis to provide True North with the tax
information for 1994 to 1996 by November 23,
1998. When Publicis failed to comply, True North
went to the Northern District of Illinois to try
to confirm the arbitration decision, the first
step toward federal court enforcement of an
arbitration ruling. Judge Joan Gottschall
confirmed the arbitration ruling and later
rejected Publicis’ Rule 60(b) motion to revisit
her decision.
We are tempted to throw out this case as moot.
True North has received from Publicis all the tax
records it wanted,/2 a fact neither side
bothered to disclose to us until prompted by our
questions during the oral argument. As the
parties might be aware, deciding live disputes
keeps us busy enough and we feel no need to
moonlight by rendering advisory opinions.
Publicis insists, however, that although True
North now says it is satisfied, the case is not
moot because Publicis still has not turned over
all of the records literally called for by the
tribunal’s broad order and thus still is not in
full compliance with Judge Gottschall’s ruling.
Given the history of bickering between these
litigants and the possibility they might find a
way to return to court another day if we brand
their current squabble moot, deciding this case
on the merits seems prudent.
In reviewing the district court’s confirmation
of the arbitration decision, we review findings
of fact for clear error and decide questions of
law de novo. Geneva Sec., Inc. v. Johnson, 138
F.3d 688, 691 (7th Cir. 1998).
The Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, commonly
known as the New York Convention and incorporated
into American law at 9 U.S.C. sec. 201 et seq.,
governs judicial confirmation of arbitration
decisions like this that arise out of agreements
between a U.S. citizen (True North) and a citizen
of a foreign nation such as France that signed
the convention (Publicis). "The court shall
confirm the award unless it finds one of the
grounds for refusal or deferral of recognition or
enforcement of the award specified in the said
Convention." 9 U.S.C. sec. 207. Article V(1)(e)
of the convention specifies several exceptions to
judicial enforcement, including awards that have
not yet become binding on the parties.
Publicis says the tribunal’s decision was an
interim order and, under the convention, only
arbitral "awards" are final and subject to
confirmation. Publicis insists that until the
order was final, True North was confined to
seeking relief from the tribunal itself or the
courts of England, the site of the arbitration.
True North says the convention allows judicial
confirmation of final rulings, whether they are
termed "awards" or "orders," and insists that the
tribunal’s October 30 opinion was final. Although
Publicis suggests that our ruling will cause the
international arbitration earth to quake and
mountains to crumble, resolving this case
actually requires determining only whether or not
this particular order by this particular
arbitration tribunal regarding these particular
tax records was final. If the arbitration
tribunal’s October 30, 1998, decision was final,
then Judge Gottschall had the authority to
confirm it. If the arbitrators’ decision was not
final, then the district court jumped the gun.
Publicis places great importance on the
difference between an award and an order. True
North requested an "award" from the arbitration
tribunal on the tax records issue, but the
tribunal called its decision an "order." The
arbitration rules the parties agreed upon refer
to final decisions as "awards." UNCITRAL
Arbitration Rules, Articles 31-37 (1977). The law
governing judicial enforcement of arbitral
decisions is called the United Nations Convention
on the Recognition and Enforcement of Foreign
Arbitral "Awards." 9 U.S.C. sec. 201. The
convention speaks only of recognizing and
enforcing an arbitral "award"; it does not refer
to an arbitral order or any other comparable
term. Commentators describe "awards" as final and
enforceable. See Alan Redfern & Martin Hunter,
Law and Practice of International Commercial
Arbitration 360, (1991); Mauro Rubino-Sammartano,
International Arbitration Law 410 (1989); Douglas
D. Reichert, Provisional Remedies in the Context
of International Commercial Arbitration, 3 Int’l
Tax & Bus. Lawyer 368, 395 (1986).
Publicis’ position is that an arbitral ruling
can be final in every respect, but unless the
document bears the word "award" it is not final
and is unenforceable. This is extreme and
untenable formalism. The New York Convention, the
United Nations arbitration rules, and the
commentators’ consistent use of the label "award"
when discussing final arbitral decisions does not
bestow transcendental significance on the term.
Their treatment of "award" as interchangeable
with final does not necessarily mean that
synonyms such as decision, opinion, order, or
ruling could not also be final. The content of a
decision-- not its nomenclature--determines
finality.
The Federal Arbitration Act also uses "award"
in conjunction with finality, 9 U.S.C. sec.sec.
9 and 10, but this circuit and others have found
arbitration decisions lacking the "award" tag to
be final. In Yasuda Fire & Marine Insurance
Company of Europe v. Continental Casualty
Company, 37 F.3d 345 (7th Cir. 1994), we
considered whether "an interim order of security"
constituted a final award and thus was subject to
being judicially vacated under 9 U.S.C. sec.
10(a)(4). Because the order was necessary to
prevent the final award from becoming
meaningless, we decided that the order was final
and thus could be immediately challenged. 37 F.3d
at 347-48. Other decisions cited in Yasuda reach
similar results. See Pacific Reinsurance
Management Corp. v. Ohio Reinsurance Corp., 935
F.2d 1019, 1022-23 (9th Cir. 1991) (arbitral
"interim final order" providing temporary
equitable relief necessary to make potential
final award meaningful found to be final and
subject to confirmation); Island Creek Coal Sales
Co. v. City of Gainesville, 729 F.2d 1046, 1049
(6th Cir. 1984) (arbitral "interim order" that
finally and definitively disposed of separate,
discrete, self-contained issue found to be final
and subject to confirmation); Sperry Int’l Trade
v. Israel, 689 F.2d 301, 304 n.3 (2d Cir. 1982)
(appeals court itself did not consider, but noted
that district court found arbitral "award" that
was final as to severable issues was final and
subject to confirmation).
These cases show that although the Federal
Arbitration Act uses the word award in
conjunction with finality, courts go beyond a
document’s heading and delve into its substance
and impact to determine whether the decision is
final. Publicis and True North’s arbitration is
controlled by the New York Convention, not the
Federal Arbitration Act. But the New York
Convention supplements the Federal Arbitration
Act, and the logic of decisions applied to the
latter may guide the interpretation of the
former.
As to whether Publicis had to turn over to True
North tax records from 1994 to 1996, the
arbitration tribunal’s October 30 order appears
final. The tribunal summarized True North’s
position that its claim "is extremely urgent" and
Publicis’ contention that "no urgency exists and
that the matter . . . may be decided . . .
together with the other claims." The tribunal
concluded that True North’s claim "is well
founded," said that interim measures were
necessary, and directed Publicis to provide the
1994-1996 tax records to True North by November
23, 1998. Publicis argues that the deadline does
not make this decision any more final and
immediately enforceable than a discovery order
setting a specific date for compliance. This
analogy is inapt. Discovery involves compiling
information needed to reach a resolution; it is
an early step in moving toward the end result. In
the situation at hand, whether or not Publicis
had to turn over the tax records is the whole
ball of wax. The tribunal’s order resolved the
dispute, or was supposed to, at any rate.
Producing the documents wasn’t just some
procedural matter--it was the very issue True
North wanted arbitrated. The finality of the
tribunal’s ruling is demonstrated by the
deadline. The tribunal explicitly carved out the
tax records issue for immediate action from the
bulk of the matters still pending, stating that
"[t]he delivery of the documents should not await
final confirmation in the Final Award." Requiring
the unrelated issues to be arbitrated to finality
before allowing True North to enforce a decision
the tribunal called urgent would defeat the
purpose of the tribunal’s order. A ruling on a
discrete, time-sensitive issue may be final and
ripe for confirmation even though other claims
remain to be addressed by arbitrators.
Like its formalistic argument over the
difference between an award and an order,
Publicis fusses that the tribunal’s October 30
decision cannot be final because it was signed
only by Philip. Under the United Nations
arbitration rules, final awards are supposed to
be signed by all three arbitrators and, if not,
should explain any missing signature. UNCITRAL
Arbitration Rules, Article 32(4). This argument
goes nowhere. In the first place, the tribunal
chairman Philip signed the decision "for and on
behalf" of the other arbitrators. At Judge
Gottschall’s prompting, arbitrators Viandier and
Katzenbach later signed off on the decision as
well.
A closely related argument gives us greater
pause. The boilerplate United Nations rules allow
the presiding arbitrator to decide procedural
matters on his own. UNCITRAL Arbitration Rules,
Article 31(2). The ground rules for this
arbitration made an exception: "The arbitrators
will consult on any procedural decision to be
made or any procedural directions to be given.
They may be signed by the Chairman alone."
Publicis says the "for and on behalf" language of
the October 30 order indicates that this was a
procedural decision on which Philip consulted the
others but which did not require Viandier’s and
Katzenbach’s signatures. True North says that
because the ground rules allow procedural
decisions to be signed by the chairman only, the
"for and on behalf" clause would be superfluous
if this decision were procedural, and therefore
the language signifies that this was a
substantive holding. Either interpretation seems
credible, which only confirms our belief that
finality should be judged by substance and
effect, not by superficial technicalities.
At the very least, Publicis says the
arbitration award was ambiguous and that instead
of confirming it Judge Gottschall should have
remanded it to the tribunal for clarification. In
the context of the Federal Arbitration Act, "[a]
district court should not interpret an ambiguous
arbitration award. If an award is unclear, the
court should send it back to the arbitrator for
clarification. When possible, however, a court
should avoid remanding a decision to the
arbitrator because of the interest in prompt and
final arbitration." Teamsters Local No. 579 v. B
& M Transit, Inc., 882 F.2d 274, 278 (7th Cir.
1989) (citations omitted). Again using Federal
Arbitration Act case law as a guide, we think
Judge Gottschall legitimately found the
arbitrator’s decision unambiguous. Sending the
matter back to the tribunal would have defeated
the swift resolution that True North sought and
that the arbitrators thought was justified.
Publicis also appeals Judge Gottschall’s denial
of its Federal Rule of Civil Procedure 60(b)(2)
motion to reverse her ruling because of newly
discovered evidence that by due diligence could
not previously have been discovered. We review
the denial of such a motion for abuse of
discretion. Jones v. Lincoln Elec. Co., 188 F.3d
709, 735 (7th Cir. 1999). During her initial oral
ruling Judge Gottschall remarked that the
arbitration "panel has not--appears not to have
consulted the rules to do this . . . . It’s
simply that they haven’t done everything they
could do to make it totally incontrovertible
under the rules what they were intending."
Publicis’ "newly discovered evidence" consists of
statements made by the arbitrators during a
subsequent February 1999 hearing that Publicis
contends demonstrate that the distinguished
tribunal did know what it was doing, had
consulted the rules, and believed that the term
"award" should be reserved for final decisions.
A party needs awfully good stuff to win a Rule
60(b)(2) motion. A few isolated comments culled
from over 500 pages of transcript from the
February 1999 hearing that might contradict an
off-the-cuff remark by the district court does
not suffice. Judge Gottschall’s rumination about
the arbitrators not knowing the rules might well
have been mistaken, but it was a stray comment
made during a ruling from the bench and was not
the basis for her decision. Rather, Judge
Gottschall’s conclusion that the tribunal’s
October 30 order was final was grounded on the
decision’s substantive intent to create immediate
action.
If the tribunal’s decision wasn’t final, if the
tribunal didn’t really intend to finalize it
until eons later, if True North had to wait to
enforce this urgent matter until all the other
issues were arbitrated to finality, then the
October 30 decision was a meaningless waste of
time. Despite some possible superficial technical
flaws, and despite its designation as an "order"
instead of an "award," the arbitration tribunal’s
decision--as to this chunk of the case--was
final. And this is our final judgment.
AFFIRMED.
/1 That exception was the issue in an earlier
decision, Publicis Communication v. True North
Communications Inc., 132 F.3d 363 (7th Cir.
1997).
/2 True North’s counsel said during oral argument:
"All of the records that we need for the tax
purposes for the ’94 through ’96 tax years have
been turned over and they were turned over within
the last 2 weeks . . . . We have got what we
wanted. The order did serve its purpose . . . .
In my judgment, your honor, nothing remains
because we have received the relief . . . that
the tribunal ordered and that Judge Gottschall
enforced."