Natl RR Psngr Corp v. Expresstrak LLC ( 2003 )

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 9, 2003 Decided June 6, 2003
No. 02-7163
NATIONAL RAILROAD PASSENGER CORPORATION,
APPELLANT
v.
EXPRESSTRAK, L.L.C.,
APPELLEE
Consolidated with
02–7164, 03–7058, 03–7059
Appeals from the United States District Court
for the District of Columbia
(No. 02cv01773)
(No. 02cv02012)
–————
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Jack McKay argued the cause for appellant. With him on
the briefs was Jonathan W. Gannon.
Philip A. Nacke argued the cause for appellee. With him
on the briefs were John G. DeGooyer and Steven C. Lambert.
Before: GINSBURG, Chief Judge, and ROGERS and TATEL,
Circuit Judges.
Opinion for the Court filed by Circuit Judge ROGERS.
ROGERS, Circuit Judge: In this expedited appeal, the Na-
tional Railroad Passenger Corp. (‘‘Amtrak’’) appeals orders of
the district court (1) interpreting its lease agreements with
ExpressTrak, L.L.C., to require arbitration of any disputes;
(2) enjoining the parties to continue performing under the
terms of the leases during arbitration; and (3) confirming an
interim arbitration award. Amtrak contends that the district
court failed to abide by the parties’ clearly expressed intent
to litigate disputes arising under the leases. Our jurisdiction
to review the grant of the injunction compelling continued
performance of the leases and the order confirming the
interim arbitrator’s award is clear. Under 28 U.S.C.
§ 1292(a)(1)(2002), the court has jurisdiction to review the
district court’s entry of the injunction because, although
denominated ‘‘permanent,’’ the injunction is interlocutory in
nature, as the district court has not entered a final order
winding up the parties’ litigation. Under the Federal Arbi-
tration Act (‘‘FAA’’), 9 U.S.C. § 16(a)(1)(D), the court has
jurisdiction to review the district court’s order confirming the
interim award. Although orders compelling arbitration are
usually non-appealable under FAA § 16(b), to review either
the injunction or the interim award, the court must determine
whether the parties’ dispute was properly arbitrable; hence,
the court has pendent appellant jurisdiction over that order
as well. As to arbitrability, we hold that the parties’ dispute
was not properly arbitrable. Accordingly, we reverse the
order compelling arbitration as well as the injunction and the
confirmation order, and we remand the case to the district
court for trial on Amtrak’s claim that ExpressTrak breached
the lease agreements.
3
I.
Amtrak and ExpressTrak executed three agreements pro-
viding for the transportation of perishable goods in tempera-
ture-controlled express cars attached to Amtrak passenger
trains: an Operating Agreement, a Sublease, and a Direct
Lease. Under the Operating Agreement of October 27, 1999,
ExpressTrak was to acquire express cars, have them refur-
bished, and convey the express cars to a third-party lessor.
The third-party lessor would then lease the cars to Amtrak,
which, in turn, would sublease the cars to ExpressTrak.
Operating Agreement § 1.8. Orix Financial Services, acting
as the third-party lessor, agreed to purchase 110 express
cars, and on May 15, 2001, Orix executed a Headlease with
Amtrak, which required Orix to lease the express cars to
Amtrak. On the same day, Amtrak entered a Sublease with
ExpressTrak, in which Amtrak agreed to sublease the 110
express cars to ExpressTrak. In November 2001, after
financing only fifty-five of the 110 express cars, Orix suspend-
ed its funding. Amtrak and ExpressTrak subsequently en-
tered into a letter agreement (‘‘Direct Lease’’) on November
30, 2001, whereby Amtrak agreed to purchase the fifty-five
remaining express cars from the refurbishing vendor, and
lease them to ExpressTrak. The letter agreement stated
that the parties have ‘‘substantially the same rights and
obligations with respect to the railcars made subject thereto
as each currently holds with respect to the railcars subject to
the SubleaseTTTT’’ Direct Lease ¶ 2. Although the parties
contemplated executing a more formal document, they never
did.
By letters of April 15, 2002, Amtrak informed ExpressTrak
that because ExpressTrak had failed to make its January and
April 2002 payments, it was in default under the Sublease and
the Direct Lease (collectively ‘‘the Leases’’), and Amtrak was
terminating the Leases; Amtrak also demanded return of all
express cars leased to ExpressTrak under the Leases. Ex-
pressTrak paid Amtrak the overdue amounts on April 17,
2002, and by letter of April 25 to Amtrak denied that it had
defaulted under the Leases and asserted that the April 15
notice of default was ‘‘ineffective and unenforceable,’’ that
4
Amtrak could not unilaterally ‘‘demand return of the express
cars,’’ and that Amtrak had ‘‘defaulted on numerous obli-
gations’’ under the Operating Agreement. In an attempt to
resolve their differences, the parties operated under a stand-
still agreement from May 3, 2002, to September 8, 2002,
pursuant to which Amtrak agreed not to take any steps
toward repossessing the express cars. During this period,
Amtrak continued to run the express cars with ExpressTrak
freight and make payments to Orix, as required under the
Headlease.
On September 9, 2002, Amtrak filed suit against Express-
Trak, alleging that ExpressTrak had defaulted under the
Leases when it failed to make timely payments, and seeking
declaratory relief and damages. In response, ExpressTrak
moved for a stay of the litigation pending arbitration and an
order compelling Amtrak to continue conducting business,
arguing that the Operating Agreement requires the parties to
submit their disputes to arbitration. Amtrak then moved to
enjoin the arbitration on the ground that the Leases require
the parties to settle their differences by litigation, not arbitra-
tion. On October 15, 2002, ExpressTrak filed suit against
Amtrak seeking a preliminary injunction and an order com-
pelling arbitration. The district court consolidated the law-
suits, and on December 5, 2002, ruled that the dispute
resolution provisions of the Operating Agreement, and not
those in the Leases, governed the parties’ dispute. Nat’l
R.R. Passenger Corp. v. ExpressTrak, L.L.C., 233 F. Supp. 2d
39 (D.D.C. 2002). Accordingly, the district court stayed both
cases, directed the parties to submit their disputes to arbitra-
tion, and entered a preliminary injunction ‘‘requiring the
parties to continue conducting business while such arbitration
proceedings are pending.’’ Amtrak appealed the December 5
Order and also filed a motion in the district court to set bond
pursuant to Fed. R. Civ. P. 65(c), which ExpressTrak op-
posed.
On Amtrak’s emergency motion, this court expedited its
appeal, and set oral arguments for May 9, 2003. In the
interim, the district court heard testimony on the amount of
damages Amtrak would suffer as a result of the injunction,
5
and on January 27, 2003, ordered ExpressTrak to post bond
by February 15, 2003, in the amount of $857,415, to cover the
first three months of the injunction period. By notice of
February 14, 2003, ExpressTrak informed the district court
that it was unable to post bond. Amtrak responded by filing
a motion to dissolve the preliminary injunction, and the
district court sua sponte, on March 11, 2003, ordered Ex-
pressTrak to post bond by March 14, 2003, in the amount of
$110,000 – the maximum amount ExpressTrak claimed it
could pay. ExpressTrak complied with the bond order.
The arbitration panel also convened during the interim
period to consider Amtrak’s request that it not be required
to continue contract performance pending arbitration. Fol-
lowing a hearing, the panel by Order of March 19, 2003,
denied Amtrak’s request. Order, In re Arbitration Between
ExpressTrak and Amtrak 2 (Mar. 19, 2003) (‘‘Interim Arbi-
tration Order’’). In light of the panel’s decision, Amtrak re-
newed its motion in the district court to dissolve the prelimi-
nary injunction, and ExpressTrak moved the district court to
confirm the panel’s interim award. By Order of May 1, 2003,
the district court confirmed the interim arbitration award,
declined to dissolve the preliminary injunction, and converted
the preliminary injunction into a permanent injunction. Or-
der, Nat’l R.R. Passenger Corp. v. ExpressTrak, L.L.C., at 2
(D.D.C. May 1, 2002) (‘‘May 1 Order’’).
Both parties then filed emergency motions in this court.
Amtrak moved to expedite its appeal from the district court’s
May 1 Order, consolidate the May 1 appeal with the pending
appeal of the December 5, 2002 Order, and require supple-
mental briefing. ExpressTrak, in turn, moved to dismiss
Amtrak’s appeal for lack of jurisdiction. The court granted
Amtrak’s emergency motion and deferred decision on the
motion to dismiss pending oral argument.
II.
The court’s jurisdiction to review the district court orders
enjoining the parties to continue conducting business under
the Leases and confirming the interim arbitration award is
6
clear. First, under 28 U.S.C. § 1292(a)(1), the court has
jurisdiction to review ‘‘[i]nterlocutory orders of the district
courts of the United States TTT granting, continuing, modify-
ing, refusing, or dissolving injunctions, or refusing to dissolve
or modify injunctionsTTTT’’ 28 U.S.C. § 1292(a)(1). Al-
though the provision is typically invoked to appeal prelimi-
nary injunctions, it can be invoked to appeal permanent
injunctions that are interlocutory in nature. Smith v. Vulcan
Iron Works, 165 U.S. 518 (1897); see also Ty, Inc. v. Publ’ns
Int’l Ltd., 292 F.3d 512, 516 (7th Cir. 2002), cert. denied, 123
S. Ct. 892 (2003); Cohen v. Bd. of Trs. of Univ. of Med. &
Dentistry, 867 F.2d 1455, 1464 n.7 (3d Cir. 1989); CFTC v.
Preferred Capital Inv. Co., 664 F.2d 1316, 1319 n.4 (5th Cir.
1982); 16 Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 3924 (2d ed. 1996). While the
district court characterized its May 1 injunction as ‘‘perma-
nent,’’ both parties agree that the district court has not
entered a final order winding up the litigation in the consoli-
dated cases. Inasmuch as Amtrak remains compelled to
operate ExpressTrak business for the remainder of the arbi-
tration proceedings, and there has been no ruling on the
merits of the parties’ dispute, the district court’s May 1 Order
is interlocutory. Accordingly, the court has jurisdiction, pur-
suant to 28 U.S.C. § 1292(a)(1), to review the injunction.
Second, insofar as the district court’s order confirming the
arbitration panel’s interim award was actually an order con-
tinuing the injunction, the court has jurisdiction under 28
U.S.C. § 1292(a)(1) to review that order. Insofar as the
order was ‘‘confirming TTT an [arbitration] award or partial
award,’’ 9 U.S.C. § 16(a)(1)(D), the court has jurisdiction
under the FAA, which authorizes an appeal from an order
confirming an interim arbitration award. Id.As Amtrak contends, however, the court cannot meaning-
fully review the order enjoining the parties or the order
confirming the interim arbitration award without determining
whether the parties’ dispute was properly arbitrable. Recog-
nizing that interlocutory orders compelling arbitration are not
ordinarily appealable under FAA § 16(b), Amtrak properly
urges the court to exercise pendent jurisdiction to review the
7
question of arbitrability, and hence the correctness of the
district court’s decision to confirm the interim arbitration
award and continue the injunction.
A court exercises pendent jurisdiction when, while review-
ing an order over which it has appellate jurisdiction, it
entertains an appeal from another order that, although part
of the same case or controversy, would not otherwise be
within its jurisdiction. 13 Wright & Miller, Federal Practice
and Procedure § 3523. This court does not exercise pendent
appellate jurisdiction frequently or liberally, see Gilda Marx,
Inc. v. Wildwood Exercise, Inc., 85 F.3d 675, 678 (D.C. Cir.
1996), but it generally will invoke pendent jurisdiction in two
circumstances: (1) ‘‘when substantial considerations of fair-
ness or efficiency demand it,’’ id. at 679, such as when a non-
appealable order is ‘‘inextricably intertwined’’ with an appeal-
able order, id., or (2) when review of the former decision is
‘‘necessary to ensure meaningful review of the latter.’’ Id.(quoting Swint v. Chambers County Comm’n, 514 U.S. 35, 51
(1995)). See also Jungquist v. Sheikh Sultan Bin Khalifa,
115 F.3d 1020, 1026–27 (D.C. Cir. 1997); Rendall-Speranza v.
Nassim, 107 F.3d 913, 917 (D.C. Cir. 1997); Hartman v.
Duffey, 19 F.3d 1459, 1464 (D.C. Cir. 1994); Wagner v.
Taylor, 836 F.2d 578, 586 (D.C. Cir. 1987); cf. Swint, 514 U.S.
35; McKesson Corp. v. Islamic Republic of Iran, 52 F.3d 346,
353 (D.C. Cir. 1995).
Both justifications for exercising pendent jurisdiction exist
in this case. First, the district court’s grant of the injunction
compelling continued performance was ‘‘inextricably inter-
twined’’ with, and in fact, dependent upon, its determination
that the parties’ dispute was arbitrable. After determining
that the parties’ dispute was governed by the arbitration
clause in the Operating Agreement, to wit section 6.6, rather
than the litigating clause in the Leases, to wit section 30 of
the Sublease, the district court enjoined the parties to contin-
ue business operations ‘‘as called for by [s]ection 6.6(e)’’ – a
provision found only in the arbitration clause of the Operating
Agreement. Nat’l R.R. Passenger Corp., 233 F. Supp. 2d at
52. The district court accordingly declined to engage in the
traditional four-step analysis that typically accompanies in-
8
junction orders, see, e.g., O’Hara v. Dist. No. 1–PCD, 56 F.3d
1514, 1522 (D.C. Cir. 1995), instead reasoning, based on
section 6.6(e) of the Operating Agreement, that ‘‘a form of
injunctive relief was clearly contemplated pending the sub-
mission of a dispute to the arbitration process.’’ Nat’l R.R.
Passenger Corp., 233 F. Supp. 2d at 50. Any doubt that the
injunction is inextricably bound to the order compelling arbi-
tration is allayed by the fact that the district court relied on
the Interim Arbitration Order to make the injunction perma-
nent, and reiterated that it was converting the ‘‘injunction
from a preliminary to a permanent one TTT to enforce the
bargained-for terms of [s]ection 6.6(e) of the Operating
Agreement.’’ May 1 Order, at 9. Although pendent appel-
late jurisdiction over orders compelling arbitration will not
always be appropriate where a party has appealed a prelimi-
nary injunction, the unique factual context of this case reveals
that the orders enjoining the parties and compelling arbitra-
tion were not just legally, but also factually intertwined, and
that Amtrak is not ‘‘parlay[ing] TTT collateral orders into
multi-issue interlocutory appeal tickets.’’ Swint, 514 U.S. at
49. Second, because the district court can only enforce an
arbitral award if the arbitrator had authority to grant it, 9
U.S.C. § 10(d)(4), effective review of the confirmation order
would – as ExpressTrak concedes – be detrimentally im-
paired without first determining whether the district court
properly submitted the parties’ dispute to arbitration.
Nor is FAA § 16(b), which ordinarily prevents appellate
review of arbitration orders, Green Tree Fin. Corp. v. Ran-
dolph, 531 U.S. 79, 87 n.2 (2000), a bar to the court’s exercise
of pendent jurisdiction. In its brief, ExpressTrak relied
heavily on IDS Life Insurance Co. v. SunAmerica, Inc., 103
F.3d 524 (7th Cir. 1996), in which the Seventh Circuit de-
clined to exercise pendent appellate jurisdiction over an order
staying federal court proceedings pending arbitration. Id. at
528. Observing that the ‘‘validity and scope’’ of the doctrine
of pendent appellate jurisdiction has ‘‘been thrown into doubt
by the Supreme Court’s decision in Swint,’’ id. (citing 514
U.S. 35), the court viewed the exercise of pendent jurisdiction
in that case as contrary to Congress’ ‘‘support for facilitating
9
arbitration in order to effectuate private ordering and lighten
the caseload of the federal courts.’’ Id. The Supreme Court
in Swint cautioned against ‘‘a rule loosely allowing pendent
appellate jurisdiction,’’ 514 U.S. at 49, and adhering to its
advice, this court has exercised discretion by limiting pendent
jurisdiction to the two circumstances described above. See,
e.g., Jungquist, 115 F.3d 1020; Rendall-Speranza, 107 F.3d
913; Gilda Marx, 85 F.3d 675; cf. McKesson Corp., 52 F.3d
346. But nothing in Swint, or even in IDS Life, suggests that
the Supreme Court has nullified the doctrine of pendent
jurisdiction.
Similarly, the court is unpersuaded that the ‘‘pro-
arbitration tilt’’ of FAA § 16, which promotes appeals from
orders barring arbitration and limits appeals from orders
directing arbitration, precludes – much less eliminates – the
long-standing doctrine of pendent jurisdiction. As an initial
point, even the Seventh Circuit in IDS Life acknowledges it
‘‘cannot be certain’’ that Congress ‘‘precluded the application
of the doctrine of pendent appellate jurisdiction to [orders
compelling arbitration].’’ 103 F.3d at 528. Furthermore,
since IDS Life, the Second and Ninth Circuits have exercised
pendent appellate jurisdiction to review orders compelling
arbitration, Quackenbush v. Allstate Ins. Co., 121 F.3d 1372,
1379–80 (9th Cir. 1997); Freeman v. Complex Computing Co.,
119 F.3d 1044 (2d Cir. 1997), and the Eighth Circuit has
indicated that it would invoke the doctrine if review of an
arbitration order was ‘‘necessary to ensure meaningful review
of the appealable issue.’’ Manion v. Nagin, 255 F.3d 535, 540
(8th Cir. 2001) (citation omitted). Like the Second Circuit,
we conclude that ‘‘[a]lthough the FAA clearly manifests sup-
port for [arbitration],’’ there is no indication that Congress
intended § 16 to interfere with the court’s authority to exer-
cise pendent jurisdiction. Freeman, 119 F.3d at 1050.
We therefore hold that, because the arbitrability of the
dispute is inextricably intertwined with other orders over
which we have jurisdiction, and because we must finally
resolve the arbitrability of the dispute in order to review
those orders, we have pendant appellate jurisdiction to re-
solve the issue of arbitrability.
10
III.
Turning to the issue of arbitrability, we begin by acknowl-
edging that ‘‘questions of arbitrability must be addressed with
a healthy regard for the federal policy favoring arbitration.’’
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Co., 460 U.S.
1, 24 (1983). Nonetheless, ‘‘the FAA does not require parties
to arbitrate when they have not agreed to do so.’’ Volt Info.
Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489
U.S. 468, 478 (1989) (citation omitted). The district court
interpreted section 6.6 of the Operating Agreement together
with section 30 of the Sublease to limit court litigation to
matters peripheral to arbitration or not capable of being
arbitrated, and it found that the parties’ underlying dispute is
not such an issue. Nat’l R.R. Passenger Corp., 233 F. Supp.
2d at 49–50. Amtrak contends, and we agree, that the
district court’s interpretation conflicts with the plain meaning
of section 13.2 of the Sublease, which contemplates court
litigation of a case in which Amtrak alleges a breach of
contract, as it does here. Because the Sublease came later,
section 13.2 controls, and the district court erred by applying
the arbitration clause of the Operating Agreement, rather
than the litigation clauses of the Leases, to compel the parties
to submit their dispute to arbitration.
In determining whether the parties agreed to arbitrate
their dispute, our review is de novo. AT&T Techs., Inc. v.
Communications Workers of Am., 475 U.S. 643, 649 (1986);
KenAmerican Res., Inc. v. Int’l Union, United Mine Workers
of Am., 99 F.3d 1161, 1163 (D.C. Cir. 1996). To discern the
parties’ intent, the court applies ‘‘ordinary state-law principles
that govern the formation of contracts.’’ First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); see also
Bailey v. Fed. Nat’l Mortgage Ass’n, 209 F.3d 740, 746 (D.C.
Cir. 2000). The parties’ agreements provide that they are to
be interpreted under District of Columbia law. Operating
Agreement § 6.7; Sublease § 25. Under the applicable Dis-
trict of Columbia law, a contract ‘‘containing a term inconsis-
tent with a term of an earlier contract between the same
parties regarding the same subject matter [is] interpreted to
rescind the inconsistent term in the earlier contract.’’ Chang
11
v. Louis & Alexander, Inc., 645 A.2d 1110, 1114 (D.C. 1994)
(citing Egan v. McNamara, 467 A.2d 733, 740 (D.C. 1983));
see also Hershon v. Hellman Co., 565 A.2d 282, 284 (D.C.
1989).
When the parties executed the Operating Agreement in
1999, they agreed to arbitrate their disputes ‘‘concerning the
interpretation, application, or implementation of this agree-
ment.’’ Operating Agreement § 6.6(a). Eighteen months
later, however, the parties executed the Sublease, which
bound ExpressTrak to Amtrak on substantially the same
terms that bound Amtrak to Orix under the Headlease.
Section 4.1 of the Sublease requires ExpressTrak to make
quarterly payments to Amtrak on the same date as Amtrak’s
payments to Orix, and section 5.2 of the Sublease, like section
5.2 of the Headlease, makes those payments an ‘‘absolute and
unconditional’’ obligation. The default and dispute resolution
provisions in the Sublease similarly mirror those in the
Headlease. Thus, in the event of a default by ExpressTrak,
Amtrak has the right to ‘‘proceed by appropriate court action
or actions, either at law or in equity, to enforce performance
by [ExpressTrak] TTT or to recover damages for the breach
thereof.’’ Compare Sublease § 13.2(i) with Headlease
§ 13.2(i); see also Sublease § 13.2(vii); Headlease § 13.2(viii).
Section 30 of the Sublease further provides, in relevant part,
that Amtrak and ExpressTrak:
waive all rights to a trial by jury in the event of any
litigation with respect to any matter related to this lease
or the operative documents, and [both parties] irrevoca-
bly consent to the jurisdiction of the United States
District Court for the District of Columbia TTT in connec-
tion with any action or proceeding arising out of or
relating to this lease or the [O]perative [D]ocuments.
Sublease § 30; cf. Headlease § 30. As noted, the subse-
quently executed Direct Lease gives Amtrak and Express-
Trak ‘‘substantially the same rights and obligations’’ as those
set forth in the Sublease. Direct Lease ¶ 2.
By its specific terms, section 6.6 of the Operating Agree-
ment applies to disputes ‘‘concerning the interpretation, appli-
12
cation, or implementation of this agreement.’’ Operating
Agreement § 6.6(a) (emphasis added). By contrast, section
30 of the Sublease applies to ‘‘any litigation with respect to
any matter related to this lease or the [O]perative [D]ocu-
ments.’’ Sublease § 30 (emphasis added). The Operating
Agreement is expressly included in the Sublease’s definition
of ‘‘Operative Documents.’’ Sublease § 1.1. That section 30
supplants section 6.6 of the Operating Agreement is further
evidenced by the fact that section 30 twice states that it
applies to any action arising out of ‘‘this Lease or the [O]pera-
tive [D]ocuments.’’ Sublease § 30 (emphasis added). Fur-
thermore, section 13.2(ii) of the Sublease, which provides for
cancellation or termination of the Leases upon ExpressTrak’s
default, conflicts with section 6.6(e) of the Operating Agree-
ment, which requires the parties to continue conducting busi-
ness pending resolution of their dispute. The language of the
parties’ agreements thus reflects District of Columbia law
that in this context, the later provisions, section 30 and 13.2,
rescind the earlier provision, section 6.6. See Chang, 645
A.2d at 1114; Hershon, 565 A.2d at 284; Egan, 467 A.2d at
740; see also Swensen’s Ice Cream Co. v. Corsair Corp., 942
F.2d 1307, 1309 (8th Cir. 1991); Matterhorn, Inc. v. NCR
Corp., 763 F.2d 866, 872–73 (7th Cir. 1985); Seaboard Coast
Line R.R. Co. v. Trailer Train Co., 690 F.2d 1343, 1348–49
(11th Cir. 1982).
ExpressTrak’s position that section 21.2 of the Sublease
demonstrates that the Sublease was not intended to modify or
supersede the Operating Agreement is mistaken. Section
21.2 provides that ‘‘[e]xcept for the other Operative Docu-
ments, this Lease exclusively and completely states the rights
of Lessor and Lessee with respect to the leasing of the Units
and supersedes all other agreementsTTTT’’ Sublease § 21.2.
This provision, however, does no more than preserve sections
of the Operating Agreement that set forth the parties’ rights
under the Leases and do not conflict with Sublease provi-
sions. Section 1.8 of the Operating Agreement, which among
other things, sets a cap on the amount of monthly rent
ExpressTrak must pay under the Sublease, exemplifies the
type of Operating Agreement provision section 21.2 was
13
designed to protect. Section 21.2 cannot, however, alter the
conclusion that sections 13.2 and 30 of the Sublease conflict
with the Operating Agreement and supersede it under the
governing law.
Nor can we interpret section 30 – as the district court did,
and as ExpressTrak urges – to be merely a forum selection
clause that permits litigation only when a party challenges
the validity of the arbitration clause or its application. Sec-
tion 13.2 of the Sublease specifically contemplates court litiga-
tion where Amtrak alleges breach of contract. Sublease
§§ 13.2(i) & (vii). The district court’s interpretation of sec-
tion 30 thus conflicts with the plain language of section 13.2,
which controls the dispute in this case. ExpressTrak’s con-
tention that section 13.2 is a right secondary to arbitration is
equally unpersuasive. Nothing in the Sublease supports the
assertion that the parties intended for arbitration to occur
before a lawsuit could be filed. Cf. Kvaerner v. Bank of
Tokyo–Mitsubishi, Ltd., 210 F.3d 262 (4th Cir. 2000).
In sum, arbitration ‘‘is a matter of consent, not coercion.’’
Volt, 489 U.S. at 479. While federal policy favors arbitration,
that policy cannot ‘‘override the will of the parties by giving
the arbitration clause greater coverage than the parties in-
tended.’’ Nat’l R.R. Passenger Corp. v. Boston & Maine
Corp., 850 F.2d 756, 760 (D.C. Cir. 1998). Here, the parties’
intent to litigate disputes like this one, expressed in sections
13.2 and 30 of the Sublease, is clear and supercedes section
6.6. of the Operating Agreement. Accordingly, because the
district court erred in compelling arbitration, affirming the
interim arbitration award, and granting an injunction compel-
ling continued performance, we reverse the orders of Decem-
ber 5, 2002 and May 1, 2003, and remand the case to the
district court for trial on Amtrak’s breach claims.