CD & L Realty LLC v. Owens Illinois, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-4094
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CD&L REALTY LLC,
Appellant.
v.
OWENS ILLINOIS, INC.; OWENS-BROCKWAY GLASS CONTAINER INC.
On Appeal from the United States District Court
for the District of New Jersey
(District Court No. 1-11-cv-07248)
District Judge: Honorable Renee M. Bumb
Submitted under Third Circuit LAR 34.1 (a)
on July 15, 2013
(Filed: August 20, 2013)
Before: RENDELL, SMITH and ROTH, Circuit Judges
OPINION
RENDELL, Circuit Judge:
1
Appellant CD&L Realty LLC appeals the District Court’s order confirming an
arbitration award dismissing CD&L’s claims against Appellee Owens-Brockway Glass
Container, Inc. For the reasons discussed below, we will affirm.
I.
In June 2000, CD&L entered into a Purchase Sale Agreement (“PSA”) with
Owens-Brockway Glass Container, Inc. (“Owens-Brockway”) to purchase a former glass
manufacturing property in New Jersey. The PSA contained an arbitration clause that
required the parties to arbitrate any dispute arising out of the transaction, and provided
that any arbitration award would be final and binding on the parties.
On August 6, 2010, CD&L filed a citizen suit notice under the New Jersey
Environmental Rights Act (“ERA”) and a demand for arbitration against Owens-
Brockway for a “[c]ommercial dispute arising from a Sale Agreement and the Breach
thereof.” (J.A. 548.) On February 15, 2011, CD&L amended its demand, asserting that
Owens-Brockway concealed certain facts about the condition of the property before the
parties executed the PSA and that since signing the PSA, Owens-Brockway had not
fulfilled its obligations to remediate the property.
On April 14, 2011—eight months after CD&L filed its arbitration demand—
CD&L filed a motion claiming that its New Jersey statutory claims were not properly part
of the arbitration proceedings. In response, the Arbitrator asked CD&L to re-plead its
claims with more specificity. CD&L complied, and on May 16, 2011 amended its
demand a second time, advancing claims under the New Jersey Industrial Site Recovery
Act (“IRSA”), the ERA, and the New Jersey Consumer Fraud Act. In addition, CD&L
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contended that Owens-Brockway fraudulently induced it to sign the PSA. CD&L argued
that each of these claims rendered the PSA either void or voidable. Following CD&L’s
May 16 filing, the parties briefed the Arbitrator’s jurisdiction over CD&L’s statutory
claims. On June 8, 2011, the Arbitrator held that it had jurisdiction over CD&L’s claims,
and on November 9, 2011, after fact and expert discovery, pre-hearing briefing, a two-
day arbitration hearing, and post-hearing briefing, the Arbitrator issued a final award
dismissing all claims with prejudice.
On November 15, 2011, CD&L filed a complaint and order to show cause in New
Jersey Superior Court requesting the court to modify and vacate in part the arbitration
award and declare the PSA void.1 Appellants removed the case to the United States
District Court for the District of New Jersey and filed a motion to confirm the arbitration
award. The District Court rejected the reasons that CD&L advanced in support of
vacating the award, and granted Defendants’ motion. CD&L now appeals.
II.2
We review a district court’s confirmation of an arbitration award de novo. China
Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d 274, 278–79 (3d Cir.
2003). We afford deference to the arbitrator’s decision and do not review its decision for
1
In its complaint, CD&L named both Owens-Brockway and Owens-Illinois, even though
Owens-Illinois was not a party to the contract or to the arbitration.
2
The District Court had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction under
28 U.S.C. § 1291.
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factual or legal error. Brentwood Med. Assocs. v. United Mine Workers of Am., 396 F.3d
237, 240 (3d Cir. 2005); China Minmetals Materials Imp. & Exp. Co., 334 F.3d at 278-
79. If we find that the arbitrator “makes a good faith attempt to [interpret and enforce the
contract], even serious errors of law or fact will not subject his award to vacatur.” Sutter
v. Oxford Health Plans LLC, 675 F.3d 215, 220 (3d Cir. 2012), aff’d, 133 S. Ct. 2064(2013). Arbitration awards will be vacated “where the arbitrators exceeded their powers,
or so imperfectly executed them that a mutual, final, and definite award upon the subject
matter submitted was not made.” 9 U.S.C. § 10(a)(4). “[T]here must be absolutely no
support at all in the record justifying the arbitrator’s determinations for a court to deny
enforcement of an award.” Ario v. Underwriting Members of Synd. 53 At Lloyds, 618
F.3d 277, 295-96 (3d Cir. 2010) (quoting United Transp. Union Local 1589 v. Suburban
Transit Corp., 51 F.3d 367, 379 (3d Cir. 1995)).
III.
CD&L raises three issues on appeal. First, it argues that the PSA was void
because Owens-Brockway did not have the approval of the New Jersey Department of
Environmental Protection (NJDEP) to sell the property, and because this implicated the
existence of the contract, the District Court, not the Arbitrator had the authority to rule on
this issue. Second, CD&L argues that because the parties elected to arbitrate in New
Jersey, they intended the exclusive enforcement mechanisms of the New Jersey
Arbitration Act to apply. Finally, it maintains that the Arbitrator’s decision ignored the
remediation requirements for the property, and as a result, should have been vacated on
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the grounds that it was in manifest disregard of New Jersey environmental laws and is
contrary to public policy. We find that none of these arguments have merit.
a. The Arbitrator’s Jurisdiction
CD&L contends that under Sandvik AB v. Advent Int’l Corp, 220 F.3d 99 (3d Cir.
2000), the District Court, not the Arbitrator, had the authority to address CD&L’s
argument that the PSA was void—and therefore non-existent—because Owens-
Brockway did not obtain NJDEP’s approval to sell the property. We disagree with
CD&L’s premise that the failure to obtain NJDEP’s approval rendered the PSA void.
N.J.S.A. 13:1k-13 states that “[f]ailure of the transferor to perform a remediation and
obtain department approval thereof as required pursuant to the provision of this act is
grounds for voiding the sale. . . .” (emphasis added). By the statute’s own terms, failure
to obtain NJDEP’s approval is simply grounds for CD&L’s declaring the PSA
unenforceable—it does not implicate its formation. It merely provided a grounds for
CD&L to avoid its obligations if it so desired. Thus, we agree with the Arbitrator that
because the issue presented did not go to the existence of the contract, but, rather its
validity or enforceability, that the Arbitrator had the authority to resolve the dispute. See
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445-46 (2006); see also
SBRMCOA, LLC v. Bayside Resort, Inc., 707 F.3d 267, 274 (3d Cir. 2013).
With respect to its enforceability, the Arbitrator determined that CD&L’s “belated
presentation of [its ISRA] argument [was] . . . time barred because [CD&L] clearly knew
of the situation at closing and waived any objection then and through years of failure to
raise it until presenting that argument in this proceeding.” (J.A. 63.) CD&L had the
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opportunity to declare the PSA unenforceable early on but did not do so. Thus, we agree
with the Arbitrator that N.J.S.A. 13:1k-13 was not a bar to the enforcement of the PSA.
b. The FAA
CD&L argues that the District Court erred in reviewing the arbitration award
under the FAA because the New Jersey Arbitration Act applies. Although the PSA does
not mention the New Jersey Arbitration Act, CD&L contends that the PSA’s selection of
New Jersey as the arbitration venue indicates the parties’ intent for the Act to apply. We
disagree. It is well established that absent clear intent to apply a non-FAA standard, the
FAA standard is to be applied. Ario, 618 F.3d at 295. Thus, we will affirm the District
Court’s decision to apply the FAA.
c. Manifest Disregard of the Law & Public Policy
CD&L’s final argument is that the Arbitrator’s award is in manifest disregard of
New Jersey environmental laws and violates public policy. Both of these contentions are
based on CD&L’s assertion that Defendants violated the ISRA by not sufficiently
remediating the property.
We agree with the District Court that the Arbitrator’s award did not disregard the
law or violate public policy because it resolved only the parties’ private rights under the
contract. The arbitration award does not excuse Defendants from complying with any
environmental laws, and NJDEP still has the power to pursue various remedies against
either party pursuant to its obligations under New Jersey environmental law. As the
arbitration award did not run afoul of any New Jersey environmental policy or manifestly
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disregard any law, we will affirm the District Court’s order affirming the arbitration
award. 3
IV.
For the reasons stated above, we will affirm the order of the District Court.
3
We assume, without deciding, that the “violation of public policy” and the “manifest
disregard of law” grounds for vacatur survive Hall St. Assocs., LLC v. Mattel, Inc., 552
U.S. 576 (2008).
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