STUART, Justice.
IBI Group, Michigan, LLC, f/k/a Giffels, LLC ("Giffels"), appeals the order of the Mobile Circuit Court ordering it to arbitrate its claims against Outokumpu Stainless USA, LLC, f/k/a ThyssenKrupp Stainless USA, LLC ("OTK"), and ThyssenKrupp Steel USA, LLC, f/k/a ThyssenKrupp Steel and Stainless USA, LLC ("TK Steel") (OTK and TK Steel are hereinafter referred to collectively as "the steel companies"), pursuant to an arbitration provision in the contracts at the center of this dispute. We affirm.
On September 5, 2007, Giffels and TK Steel entered into a contract pursuant to which Giffels agreed to provide architectural and engineering services to TK Steel in association with the construction of the cold rolling mill at a steel-processing facility in Calvert. Approximately 10 months later, on June 27, 2008, Giffels entered into another contract with OTK's predecessor to provide similar services in association with the construction of a melt shop at the same facility. Both contracts contained identical provisions regarding the resolution of any disputes that might arise from the contracts, which stated: "Any dispute arising out of or related to the contract[s] shall be subject to mediation, arbitration or the institution of legal or equitable proceedings at the sole discretion of [the steel companies]." The contracts contained further provisions outlining certain guidelines that would apply to mediation, arbitration, and legal proceedings, including the following
Thereafter, disputes arose between Giffels and the steel companies regarding the work performed by Giffels under both contracts, and, on March 14, 2012, the steel companies sued Giffels in the United States District Court for the Southern District of Alabama ("the federal district court") alleging two counts of breach of contract and seeking compensatory damages in excess of $7.5 million. On March 29, 2012, and June 13, 2012, the steel companies filed amended complaints asserting additional claims. Giffels subsequently filed its answer to the steel companies' complaint and asserted its own counterclaims alleging that the steel companies owed it money for work performed under the two contracts. Giffels also moved to strike the steel companies' jury demand on the basis of a provision in the contracts expressly waiving the right to a jury trial in any litigation stemming from the contracts. Thereafter, the steel companies filed an answer to Giffels's counterclaims and withdrew their jury demand.
On August 24, 2012, the steel companies and Giffels held the discovery-planning conference required by Rule 26(f), Fed. R.Civ.P. On September 10, 2012, the federal district court conducted a scheduling conference, and the parties then commenced discovery, with each party serving discovery requests upon the other. Giffels asserts that it incurred over $80,000 in expenses just in preparing the initial disclosures required by Rule 26(a)(1), Fed. R.Civ.P.
On June 4, 2013, the federal district court, sua sponte, entered an order questioning whether federal jurisdiction was proper in this case. The steel companies responded by filing an amended complaint in which they further described their basis for claiming that federal jurisdiction was appropriate under 28 U.S.C. § 1332 based on the parties' alleged complete diversity of citizenship; Giffels subsequently filed an amended answer in which it asserted that both its sole member and the sole member of OTK's predecessor were incorporated in Delaware, which fact, if true, would defeat diversity jurisdiction.
On July 31, 2013, the steel companies moved the federal district court to stay the litigation, noting that it had initiated arbitration proceedings with the American Arbitration Association that same day pursuant to the provisions in the contracts
Thereafter, Giffels notified the trial court that it opposed the steel companies' attempt to compel arbitration, arguing that the contracts afforded the steel companies no right to select arbitration once they had made an initial choice to attempt to resolve their claims via litigation or, in the alternative, that the steel companies had substantially invoked the litigation process to the prejudice of Giffels, thus waiving any right they may have had to arbitration under the contracts. The parties subsequently filed multiple additional briefs with the trial court regarding those issues, and, on September 20, 2013, the trial court conducted a hearing on the issues. The parties continued to file briefs on the issues following the hearing, and it was not until July 7, 2014, that the trial court entered an order granting the steel companies' motion to compel arbitration and ordering the parties to complete arbitration by May 1, 2015. The parties then jointly moved the trial court to alter, amend, or vacate its order only to the extent it set a deadline for the completion of arbitration inasmuch as they were continuing to negotiate regarding ongoing operational difficulties at the Calvert facility and it was possible those negotiations might eventually lead to the resolution of some of the claims asserted in this action.
The trial court's order granting the steel companies' motion to stay the state-court litigation pending the completion of arbitration effectively compelled Giffels to resolve its claims against the steel companies, and the steel companies' counterclaims against it, in arbitration as opposed to state court. The standard of review we apply to an order granting a motion to compel arbitration is well settled:
Ritter v. Grady Auto. Grp., Inc., 973 So.2d 1058, 1060-61 (Ala.2007). All parties
Giffels's first argument is that, although its contracts with the steel companies allowed the steel companies to unilaterally decide whether any dispute between them and Giffels would be resolved via arbitration or litigation, once the steel companies made that decision, the decision was irrevocable. We note that Giffels is not arguing that any time a party initiates litigation that party is barred from thereafter exercising a contractual right to arbitrate, as this Court has previously indicated otherwise. See, e.g., Conseco Fin. Corp.-Alabama v. Salter, 846 So.2d 1077, 1081 (Ala.2002) ("Conseco initiated this action; however, the mere filing of a pleading does not constitute a waiver of the right to compel arbitration."). Rather, Giffels is arguing that the specific terms of the arbitration provisions in this case prevent the steel companies from selecting arbitration after initially selecting litigation as a means of resolving a dispute. Giffels articulates this argument as follows in its brief:
Giffels's brief, p. 16. The steel companies argue that the language of the arbitration provisions does not limit their right to select how disputes will be resolved and that, in fact, the clear language of the provisions indicates that they might utilize more than one of the three listed methods to resolve any dispute.
In resolving a dispute regarding the meaning of an arbitration provision, "this Court applies the ordinary state-law principles governing contracts." Title Max of Birmingham, Inc. v. Edwards, 973 So.2d 1050, 1054 (Ala.2007). Accordingly, we must interpret the terms of the provisions according to their clear and plain meaning. Id. The arbitration provisions at issue in this case provide that "[a]ny dispute arising out of or related to the contract[s] shall be subject to mediation, arbitration or the institution of legal or equitable proceedings at the sole discretion of [the steel companies]." Giffels argues that the use of the disjunctive "or" in the provisions indicates that the steel companies' choice is mutually exclusive, that is, the steel companies can choose either arbitration or litigation and once they choose one the other is no longer an option. The steel companies, however, argue that "or" is not always used as a disjunctive, but is sometimes used as a conjunctive as well, and that Giffels is effectively reading the word "either" into the arbitration provisions when that word does not appear in those provisions. In Smith v. Hutson, 262
262 Ala. at 352, 78 So.2d at 923-24 (emphasis added). In this case, it is apparent from the context that the term "or" was not intended as a disjunctive, but rather as a conjunctive. Importantly, the arbitration provisions here authorized the steel companies to choose between three options: "mediation, arbitration or the institution of legal ... proceedings." As the steel companies explain in their brief, the inclusion of mediation as an option is meaningful:
The steel companies' brief, pp. 31-32.
We agree that the language of the arbitration provisions does not preclude the steel companies from now seeking to resolve their dispute with Giffels in arbitration. That language contemplates the availability of multiple dispute-resolution methods, and, when the steel companies' initial choice for resolving this dispute failed, they were permitted to make another choice. Certainly, no one would argue that, had the steel companies initially selected mediation and had mediation failed, the parties would be required to commence new mediation proceedings in a different forum ad infinitum until mediation was successful, and the arbitration provisions provide no basis upon which to treat arbitration or litigation differently from mediation. Thus, this case is distinguishable from Triarch Industries, Inc. v. Crabtree, 158 S.W.3d 772, 777 (Mo.2005), the case Giffels primarily relies upon, in which the Supreme Court of Missouri concluded that, "[h]aving elected to commence litigation, [a party] no longer had a contractual right to compel arbitration." The arbitration provision in Crabtree provided:
158 S.W.3d at 773. This provision expressly stated that, when mediation was not pursued (and it was not in that case), the seller could choose to refer the dispute to arbitration "or" to commence litigation. Presented with this simple binary choice, the Missouri court correctly held "or" to be disjunctive.
The other cases cited by Giffels in support of its argument that the steel companies had no right to select arbitration once they initiated litigation are also distinguishable based on the specific language used in the arbitration provisions in those cases. In DVI Capital Co. v. Zelch (No. 232732, July 22, 2003) (Mich.Ct.App.2003) (not selected for publication in the Northwestern Reporter), the Court of Appeals of Michigan held that a plaintiff could not select arbitration after initiating litigation, reasoning:
(Footnotes omitted.) The inclusion of the word "either" in the arbitration provision was crucial to the Michigan court's analysis, and it cited the following definition of that term from Random House Webster's College Dictionary (1995): "`Either' is defined as `one or the other of two.' It is also defined as `a coordinating conjunction that, when used with or, indicates a choice.'" (Note 7.) Of course, the word "either" is absent from the arbitration provisions agreed upon by the steel companies and Giffels.
Moreover, in Satcom International Group PLC v. Orbcomm International Partners, L.P., 49 F.Supp.2d 331, 338 (S.D.N.Y.1999), the other case cited by Giffels, the United States District Court for the Southern District of New York held that a plaintiff could not move a dispute to arbitration after commencing litigation because the contract did not "permit a party to make the choice between litigation and arbitration a second time for the same dispute, or to jump back and forth between the two options for dispute resolution at its whim or when it meets with an adverse ruling." However, the arbitration provision in Satcom was structured differently from the ones in this case, and it lacked any context that might allow such a choice. Moreover, it bears repeating that the steel companies are not attempting to remove a case to arbitration on a whim or after receiving an adverse ruling in a court action; rather, the steel companies are now seeking to resolve their dispute with Giffels in arbitration only after the federal district court indicated that it would not decide the matter because it lacked subject-matter jurisdiction — the dispute must move to a new forum regardless of anything the steel companies did.
Giffels next argues that, even if its contracts with the steel companies gave the steel companies the right to select arbitration following the dismissal of its action by the federal district court, they nevertheless have waived that right by substantially invoking the litigation process and thereby prejudicing Giffels. This Court has stated:
Anderton v. Practice-Monroeville, P.C., 164 So.3d 1094, 1099 (Ala.2014). As an initial matter, we note that the parties disagree with regard to what extent the steel companies actually invoked the litigation process. Giffels argues that all the actions taken by the steel companies in the federal-district-court action are relevant; the steel companies argue that the instant state-court action is a different proceeding entirely and that in this action they have filed only pleadings and motions regarding their right to arbitrate the underlying dispute. However, it is ultimately unnecessary for us to address this issue because Giffels, as the party attempting to establish waiver, has the burden of establishing both that the steel companies substantially invoked the litigation process and that Giffels would be substantially prejudiced by now being required to submit to arbitration. As explained below, Giffels has not demonstrated the required prejudice, and we accordingly hold, on that basis, that there has been no waiver of the right to arbitrate even if we were to assume that the steel companies had substantially invoked the litigation process.
In its brief to this Court, Giffels summarized its argument that it would be substantially prejudiced if it were now required to submit to arbitration:
Giffels's brief, p. 40. Thus, Giffels argues generally that it expended a great deal of time and money with regard to the pleadings filed in the federal district court and additional filings necessary to address the jurisdictional issue raised by that court, as well as additional time and money in association with the ongoing arbitration and the dispute over whether arbitration was proper. It further specifically argues that it expended over $80,000 in order to comply with the initial discovery requirements applicable in federal court by virtue of Fed.R.Civ.P. 26(a)(1).
In Aurora Healthcare, Inc. v. Ramsey, 83 So.3d 495, 500-02 (Ala.2011), this Court considered similar arguments made by a party attempting to establish the substantial-prejudice prong of the arbitration-waiver test:
(Footnotes omitted.) Like the appellee in Aurora Healthcare, Giffels has made general assertions that it expended time and money on litigation activities; however, with one exception, it has failed to quantify or submit specific evidence of that time and expense. "Alabama caselaw shows that a party alleging prejudice is unlikely to prevail without presenting supporting evidence." 83 So.3d at 501. Moreover, to the extent Giffels urges us to consider as evidence of prejudice the time and expense that were presumably spent litigating the
The only specific evidence submitted by Giffels to support its claim of prejudice is an affidavit and invoices establishing that Giffels incurred approximately $80,000 in expenses to digitize and copy records that were part of its initial disclosure to the steel companies in the federal action pursuant to Rule 26(a)(1), Fed.R.Civ.P. Indeed, it is apparent that Giffels's claim of prejudice relies almost entirely on this evidence.
In its reply brief filed with this Court, Giffels also referred to this $80,000 expense as "the one overwhelming cost to Giffels that occurred in this case [that] cannot be minimized." Giffels's reply brief, p. 32. However, while $80,000 may be a substantial expense, it is not clear that Giffels would be prejudiced in any way if now forced to submit to arbitration, because the disclosures required by the Federal Rules of Civil Procedure would presumably still be required in arbitration based on the provision in the contracts stating that, "[u]nless otherwise agreed by the parties, during the arbitration proceedings discovery shall be available and shall be conducted in accordance with the rules of discovery set forth in the U.S. Federal Rules of Civil Procedure in effect at such time." Aurora Healthcare, 83 So.3d at 501, and Ryan's Family Steakhouse, Inc. v. Kilpatric, 966 So.2d 273, 284 (Ala.Civ. App.2006), clearly indicate that time and money expended on discovery while in litigation will not be considered evidence of prejudice if that same discovery would be permitted in arbitration based on rules specified in the relevant arbitration provision. That is precisely the case here — discovery completed in both the federal-district-court action and the arbitration proceedings was/is governed by the Federal Rules of Civil Procedure.
Citing Paw Paw's Camper City, Inc. v. Hayman, 973 So.2d 344 (Ala.2007), Giffels nevertheless argues that it is possible that an arbitrator would have modified the discovery requirements and that its expenses
973 So.2d at 349. Thus, the Paw Paw's Camper City Court declined to speculate that an arbitrator would allow the same discovery the trial court had allowed, and Giffels urges us to do the same now. However, Giffels fails to recognize a crucial difference in the instant case; namely, that the arbitrator is required by the terms of the arbitration provisions to manage discovery pursuant to the Federal Rules of Civil Procedure — just as was the federal district court in the previous litigation. Indeed, the contracts agreed to by Giffels and the steel companies provide that "[a]ny refusal to allow such discovery [i.e., discovery permitted by the Federal Rules of Civil Procedure,] shall be specifically enforceable in court by the aggrieved party, and the arbitration proceeding shall be stayed pending resolution of the court proceeding." Thus, we do not need to speculate whether the arbitrator in this case would have required the initial disclosures as the federal district court did because the Federal Rules of Civil Procedure that required those disclosures would guide the process in both forums, in marked contrast to the arbitrator in Paw Paw's Camper City, who apparently was not bound by any guidelines and accordingly had discretion to declare there would be no discovery at all. This case is therefore clearly more akin to Aurora Healthcare, 83 So.3d at 501, in which the discovery conducted in pre-arbitration litigation was essentially the same as would be permitted by the applicable National Arbitration Forum's Code of Procedure, and Ryan's Family Steakhouse, 966 So.2d at 284, in which the discovery conducted in pre-arbitration litigation was also specifically allowed under rules set forth in the arbitration agreement. In sum, it is clear that the steel companies have not taken advantage of discovery procedures in litigation that would not have been available to them in arbitration and that Giffels's expenses related to the initial disclosures are not the type of litigation expenses that arbitration would have alleviated. See Hales v. ProEquities, Inc., 885 So.2d 100, 105-06 (Ala.2003) (noting that sufficient prejudice to infer waiver has been found when parties avail themselves of judicial discovery procedures not available in arbitration or when opposing parties have been forced to incur litigation expenses that arbitration was designed to avoid).
This Court has previously stated that "[i]n interpreting an arbitration provision, `any doubts concerning the scope of arbitrable
Giffels initiated this action in the trial court after the steel companies commenced arbitration proceedings once it became apparent that the action the steel companies had initiated in the federal district court involving the same contractual dispute would be dismissed for lack of subject-matter jurisdiction. The trial court thereafter granted the steel companies' motion to stay the action pending the completion of arbitration, and Giffels appealed, arguing that, under the circumstances, the steel companies either had no right to compel arbitration or had waived that right. However, the language of the arbitration provisions in the contracts executed by the parties gave the steel companies the broad right to select arbitration as a method to resolve any disputes based on those contracts, and, because Giffels has failed to demonstrate substantial prejudice as a result of the steel companies' actions, we hold that the steel companies did not waive their right to proceed in arbitration. Accordingly, the order of the trial court sending the case to arbitration and staying all proceedings pending the completion of the arbitration of the claims presented in this action is affirmed.
AFFIRMED.
BOLIN, PARKER, MAIN, WISE, and BRYAN, JJ., concur.
MURDOCK and SHAW, JJ., concur in the result.
MOORE, C.J., dissents.
MURDOCK, Justice (concurring in the result).
I cannot agree that the term "or" was not intended to have its plain and ordinary meaning as a disjunctive. The steel companies could select only one method of resolving a dispute at a time.
Nonetheless, I concur in the result simply because nothing in the arbitration provisions prevented the steel companies from altering their choice of dispute resolution, provided that their previous choice and actions had not constituted a waiver of their right to do so. No such waiver occurred in this case. As the main opinion notes, the standard for such a waiver is "`"whether the participation bespeaks an intention to abandon the right in favor of the judicial process, and, if so, whether the opposing party would be prejudiced by a subsequent order requiring it to submit to arbitration."'" 180 So.3d at 9 (quoting Anderton v. Practice-Monroeville, P.C., 164 So.3d 1094, 1099 (Ala.2014), quoting in turn Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So.2d 897, 899 (Ala.1995)). Particularly in light of the contractual