Filed: Apr. 23, 2019
Latest Update: Mar. 03, 2020
Summary: Case: 16-17623 Date Filed: 04/23/2019 Page: 1 of 30 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ Nos. 16-17623; 17-12163 _ D.C. Docket No. 1:16-cv-24275-FAM INVERSIONES Y PROCESADORA TROPICAL INPROTSA, S.A., a Costa Rican Corporation, Plaintiff-Appellant, versus DEL MONTE INTERNATIONAL GMBH, a Swiss Corporation, Defendant-Appellee. _ Appeals from the United States District Court for the Southern District of Florida _ (April 23, 2019) Case: 16-17623 Date Filed: 04/
Summary: Case: 16-17623 Date Filed: 04/23/2019 Page: 1 of 30 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ Nos. 16-17623; 17-12163 _ D.C. Docket No. 1:16-cv-24275-FAM INVERSIONES Y PROCESADORA TROPICAL INPROTSA, S.A., a Costa Rican Corporation, Plaintiff-Appellant, versus DEL MONTE INTERNATIONAL GMBH, a Swiss Corporation, Defendant-Appellee. _ Appeals from the United States District Court for the Southern District of Florida _ (April 23, 2019) Case: 16-17623 Date Filed: 04/2..
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Case: 16-17623 Date Filed: 04/23/2019 Page: 1 of 30
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 16-17623; 17-12163
________________________
D.C. Docket No. 1:16-cv-24275-FAM
INVERSIONES Y PROCESADORA TROPICAL INPROTSA, S.A.,
a Costa Rican Corporation,
Plaintiff-Appellant,
versus
DEL MONTE INTERNATIONAL GMBH,
a Swiss Corporation,
Defendant-Appellee.
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(April 23, 2019)
Case: 16-17623 Date Filed: 04/23/2019 Page: 2 of 30
Before MARCUS, BLACK and WALKER, * Circuit Judges.
BLACK, Circuit Judge:
Appellant Inversiones y Procesadora Tropical INPROTSA, S.A.
(INPROTSA) appeals from the district court’s orders denying its petition to vacate
and confirming an international arbitral award issued in favor of Appellee Del
Monte International GmbH (Del Monte). INPROTSA contends the district court
lacked subject-matter jurisdiction over its petition to vacate the arbitral award,
which Del Monte removed from state court. It further contends that, even if the
district court had jurisdiction, the petition to vacate should not have been dismissed
on the ground that INPROTSA failed to assert a valid defense under the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the
Convention). Finally, INPROTSA contends the district court erred by granting Del
Monte’s motion to confirm the award. We affirm the district court.
I. BACKGROUND
The MD-2 pineapple variety was developed by the Pineapple Research
Institute of Hawaii (the Institute), an agricultural research organization that at one
point was run jointly by Del Monte, the Dole Fruit Company (Dole), and the Maui
Pineapple Company (Maui). Dole withdrew from the Institute before the MD-2
*
Honorable John M. Walker, Jr., Circuit Judge for the United States Court of Appeals for
the Second Circuit, sitting by designation.
2
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was created. And Maui, for its part, played little to no role in developing the MD-
2. Instead, the MD-2’s commercial development was driven largely (if not solely)
by Del Monte. Del Monte initiated tests on the variety in 1980, released the
variety to its Hawaiian operations in 1981, began selling the MD-2 in North
America and Europe in 1987, and introduced the variety to Costa Rica in 1994,
where it worked to adapt the MD-2 to that country’s climate and conditions.
According to Del Monte, through its efforts, the MD-2 became the most popular
pineapple variety in the world.
Del Monte did not, however, hold a patent on the MD-2. And given the
MD-2’s commercial success, Del Monte was not the only pineapple producer
interested in selling the variety. Indeed, Dole commercialized the MD-2 in 2000,
which prompted a federal lawsuit from Del Monte (the Dole Litigation). Del
Monte asserted claims for unfair competition, trade-secret violations, and
conversion of vegetative material, alleging that Dole infringed its rights by—
among other things—misappropriating knowledge and materials Del Monte
developed in Costa Rica.
The Dole Litigation eventually settled in 2002 and, as a result, Del Monte
acknowledged it did not have the exclusive right to sell the MD-2. But before that
settlement, while the Dole Litigation was pending, INPROTSA weighed offers
from both Dole and Del Monte to begin producing the MD-2 at its Costa Rican
3
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plantation. In the end, INPROTSA chose to go with Del Monte, noting among
other factors that a ruling against Dole in the Dole Litigation might leave
INPROTSA without a market for its pineapples.
In May 2001, against that backdrop, INPROTSA and Del Monte entered into
an agreement (the Agreement) for the production, packaging, and sale of MD-2
pineapples. Under the Agreement, Del Monte agreed to provide INPROTSA with
MD-2 seeds 1 at no cost. INPROTSA, in turn, acknowledged that Del Monte
maintained ownership of all MD-2 seeds used on INPROTSA’s plantation.
INPROTSA further agreed to grow, sell, package, and deliver MD-2 pineapples
exclusively to Del Monte. The parties also stipulated that Del Monte was “the
exclusive owner of the variety known as MD-2,” and they agreed that if the
Agreement were terminated for any reason, including its expiration, INPROTSA
would cease producing the MD-2 and either destroy its plant stock or return it to
Del Monte.
During the 12-year term of the Agreement, Del Monte provided tens of
millions of MD-2 seeds at no cost, and Del Monte purchased more than $200
million in pineapples from INPROTSA. After the Agreement expired in 2013,
1
Commercial pineapples are not grown from “seeds” in the ordinary sense of the word.
They are grown by planting the leaves from the crown of the pineapple fruit or by planting
seedlings that grow out of the pineapple plant’s stem. The term “pineapple seeds” thus refers
collectively to crowns or seedlings that can be planted in the soil to produce new plants. It is in
this sense we use the term “seeds” in this Opinion.
4
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however, INPROTSA neither destroyed nor returned its MD-2 plant stock to Del
Monte. Instead, it sold the MD-2 pineapples to third parties.
Del Monte initiated an arbitration against INPROTSA in the International
Court of Arbitration of the International Chamber of Commerce (ICC) in Miami.
Del Monte alleged that INPROTSA breached the Agreement and converted its
plant stock, for which Del Monte sought specific performance, injunctive relief,
and damages. INPROTSA responded by arguing—among other things—that
because Del Monte did not exclusively own the MD-2 variety, which INPROTSA
contended was a condition precedent to its obligations under the Agreement,
INPROTSA was not obligated to sell exclusively to Del Monte or return its MD-2
plant stock. INPROTSA also contended it was fraudulently induced to enter the
Agreement by Del Monte’s false representation that it had exclusive ownership of
the MD-2 variety.
The arbitration tribunal issued its award (the Award) on June 10, 2016. In a
thorough opinion, to which there was a dissent,2 the tribunal ruled in favor of Del
Monte on its claim that INPROTSA breached the Agreement. Specifically, the
tribunal concluded that Del Monte’s exclusive ownership of the MD-2 variety (as
2
The dissenting arbitrator would have ruled that INPROTSA was no longer obligated to
sell exclusively to Del Monte or cease its MD-2 production once Del Monte relinquished its
claim to exclusive ownership of the MD-2 pineapple as part of the settlement in the Dole
Litigation. The dissenting arbitrator also did not agree with either the majority’s damages award
or its grant of injunctive relief.
5
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against third parties) was not a condition precedent to INPROTSA’s contractual
obligation to return or destroy the plants derived from seeds Del Monte provided at
no cost under the Agreement. Thus, INPROTSA breached the Agreement by
selling, rather than returning or destroying, the pineapples it derived from Del
Monte’s seeds.
Further, the tribunal rejected INPROTSA’s contention that it was
fraudulently induced to enter into the Agreement. After considering the evidence
provided by the parties, the tribunal first determined that Del Monte’s claim to
exclusive ownership of the MD-2 was not fraudulent, because it was based on Del
Monte’s reasonable belief at the time that it had a proprietary interest grounded in
its commercial development of the MD-2—regardless of whether it held a patent
on the variety. 3 The fact that Del Monte subsequently renounced any broader
rights to exclusive ownership of the MD-2 as against third parties did not render
any prior representations knowingly false.
The tribunal also found that the Agreement’s statement regarding exclusive
ownership of the MD-2 was not a unilateral representation proffered by Del
3
INPROTSA’s arguments on appeal rely heavily on Magistrate Judge Simonton’s
conclusion, in the context of a discovery dispute in the Dole Litigation, that Del Monte sought to
mislead growers in Costa Rica by sending out threatening letters implying it held a patent on the
MD-2. See USDC Doc. 1 at 155–57. The tribunal specifically found, however, that “there is no
evidence or allegation that Del Monte represented to INPROTSA that Del Monte held a patent or
a trademark on the MD-2 hybrid.” USDC Doc. 1 at 113. INPROTSA points to no record
evidence refuting that finding.
6
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Monte; rather, it was a joint stipulation, accepted as true by sophisticated parties
with knowledge of both the pineapple industry and the contested nature of Del
Monte’s claim to a proprietary interest in the MD-2. And even if it were a false
representation, INPROTSA could not reasonably have relied on it because
INPROTSA knew Del Monte’s claim to exclusive ownership was contested when
it entered into the Agreement.
Finally, the tribunal determined INPROTSA was aware of the falsity of any
purported representation by at least 2002, after which INPROTSA ratified the
Agreement:
[INPROTSA] cannot blow cold and hot at the same time: enjoy the
benefits of the Agreement for 12 years in which it never raised Del
Monte’s supposed fraudulent conduct, particularly after the Settlement
Agreement putting an end to the [Dole] Litigation in 2002 . . . , but
then seek to liberate itself under Florida law from contractual
stipulations it freely and knowingly accepted to be bound by and
enforce[d].
USDC Doc. 1 at 119–20.
The tribunal thus awarded Del Monte specific performance, injunctive relief,
damages, interest, costs, and attorney’s fees. More specifically, it required
INPROTSA to either return or destroy 93% of the MD-2 vegetative materials on its
plantation—which the tribunal found were attributable to the seeds provided by
Del Monte. It also enjoined INPROTSA from selling 93% of its MD-2 pineapples
to third parties until it complied with its obligation to destroy or return the MD-2
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plant stock. With respect to damages, the tribunal determined that, under Florida
law, Del Monte was entitled to disgorgement of the money INPROTSA received
by selling the MD-2 pineapples to third parties in breach of the Agreement.
The tribunal recognized that the evidence on which a damages award might
be fashioned was limited. Although it had evidence concerning INPROTSA’s
gross sales in 2014, it lacked any information concerning INPROTSA’s sales in
2015. Likewise, because INPROTSA refused to provide any information about its
profits or expenses during discovery, it was impossible to calculate an award based
solely on the profits INPROTSA improperly obtained after the expiration of the
Agreement. Thus, the tribunal concluded that, under the circumstances and
evidence provided, Del Monte’s damages should be limited to $26.133 million—
93% of INPROTSA’s MD-2 sales in 2014. In other words, the tribunal refused to
speculate about either INPROTSA’s 2015 sales (which would have increased
damages) or INPROTSA’s expenses (which would have decreased damages).
INPROTSA promptly moved for correction and clarification of the Award
under Article 35 of the ICC rules governing the arbitration, ostensibly seeking “to
correct or clarify certain clerical, computational or typographical errors, or errors
of a similar nature, contained in the Award.” 4 USDC 1 at 190. INPROTSA
4
The record does not appear to contain a copy of the ICC Arbitration Rules in force at
the time. We note, however, that the current version of the ICC Arbitration Rules provides in
Article 36(1) that “the arbitral tribunal may correct a clerical, computational or typographical
8
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contended the tribunal’s damages award was erroneous as a matter of Florida law
because Del Monte did not prove the amount of INPROTSA’s profits from the
breach. According to INPROTSA, because Del Monte provided evidence of only
INPROTSA’s revenues, 5 Del Monte’s claim for damages should have been
dismissed in its entirety.
The tribunal denied the motion, concluding it lacked authority to revisit the
merits of its substantive damages award. The tribunal reasoned that Article 35 of
the governing ICC Arbitration Rules allowed only for interpretation of the Award
or correction of errors of the clerical, computational, and typographical variety.
Article 35 did not provide authority to revise an Award on the merits, based on an
alleged substantive error of law.
II. PROCEDURAL HISTORY
In September 2016, INPROTSA filed a petition to vacate the Award in
Florida’s Eleventh Judicial Circuit. Del Monte then removed the petition to the
United States District Court for the Southern District of Florida, citing 9 U.S.C.
error, or any errors of similar nature contained in an award.” ICC Arbitration Rules,
http://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/#article_36 (last
visited Feb. 13, 2019). We further note that INPROTSA later contended that the tribunal’s
power to correct the award was grounded in Article 36. See USDC Doc. 70 at 7 (“ICC Article
36(2) explicitly granted the right to seek such a correction.”).
5
INPROTSA’s motion for clarification did not address the tribunal’s finding that
INPROTSA refused to provide Del Monte with evidence of its expenses during discovery. Nor
did it explain why such a finding would not be relevant to Del Monte’s purported burden to
prove the amount of INPROTSA’s profits under Florida law.
9
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§§ 203 and 205, as well as 28 U.S.C. §§ 1331 and 1441. Soon after, Del Monte
filed a combined motion to dismiss the petition to vacate and cross-petition to
confirm the Award. INPROTSA, in turn, filed a motion to remand the proceeding
to state court, contending the district court lacked subject-matter jurisdiction.
The district court granted Del Monte’s motion to dismiss the petition to
vacate and denied INPROTSA’s motion to remand, reasoning that INPROTSA’s
petition to vacate—which was based on Florida law—failed to assert a valid
defense under the Convention, as required by our opinion in Industrial Risk
Insurers v. M.A.N. Gutehoffnungshütte GmbH,
141 F.3d 1434, 1446 (11th Cir.
1998). The district court did not, however, expressly address Del Monte’s cross-
petition to confirm the Award. As a result, there were some procedural detours
that need not be recounted in detail here. Ultimately, on limited remand from this
Court, the district court granted Del Monte’s cross-petition and confirmed the
Award in a reasoned opinion.6
The district court concluded it had subject-matter jurisdiction under 9 U.S.C.
§ 203. It then determined that INPROTSA failed to establish a valid ground for
resisting confirmation under the Convention.7 Specifically, as is relevant to the
6
Del Monte’s motion to dismiss this appeal (Doc. 19), which is premised on the district
court’s purported failure to resolve its cross-petition, is therefore DENIED as moot.
7
Alternatively, the district court ruled that INPROTSA was barred from asserting
defenses to confirmation because it did not timely serve notice of its petition to vacate, as
required under 9 U.S.C. § 12.
10
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issues on appeal, the district court rejected INPROTSA’s contention that the
Award was procured through fraud. The district court first noted there were no
arguments being raised that the arbitration process itself “was fraudulent, that the
arbitration tribunal acted fraudulently, or that the final award was procured by
fraud.” USDC Doc. 47 at 9. It continued by noting that the tribunal reviewed the
evidence submitted by INPROTSA and determined there was no fraud.
INPROTSA could not avoid the Award simply because it disagreed with the
arbitrator’s conclusion on that issue. Otherwise, “any losing party raising a fraud
defense in an international arbitration[] could relitigate the issue in federal court.”
Id. at 10. Such a result itself would violate this country’s public policy favoring
arbitration as an efficient means for resolving disputes. In the end, the district
court concluded that “[t]he arbitration panel’s consideration and ruling on the
merits of INPROTSA’s fraud defense does not violate the most basic notions of
morality and justice requiring this Court to deny confirmation of the arbitral
award.”
Id. (quotation omitted).
INPROTSA timely appealed the district court’s orders both dismissing its
petition to vacate the Award and granting Del Monte’s cross-petition to confirm
the Award.
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III. DISCUSSION
A. Jurisdiction 8
INPROTSA contends the district court lacked subject-matter jurisdiction
over its petition to vacate. Its argument is based on a narrow reading of 9 U.S.C.
§ 203, the jurisdictional provision in the statute implementing the Convention (the
Convention Act), which provides that “[a]n action or proceeding falling under the
Convention shall be deemed to arise under the laws and treaties of the United
States.” 9 U.S.C. § 203.
According to INPROTSA, we have recognized only two causes of action
under the Convention—an action to compel arbitration and an action to confirm an
arbitral award. See Escobar v. Celebration Cruise Operator, Inc.,
805 F.3d 1279,
1286 (11th Cir. 2015) (“To implement the . . . Convention, the Convention Act
provides two causes of action in federal court for a party seeking to enforce
arbitration agreements covered by the . . . Convention: (1) an action to compel
arbitration in accord with the terms of the agreement, 9 U.S.C. § 206, and (2) at a
later stage, an action to confirm an arbitral award made pursuant to an arbitration
agreement, 9 U.S.C. § 207.”); Lindo v. NCL (Bahamas), Ltd.,
652 F.3d 1257,
1262–63 (11th Cir. 2011) (same); Czarina, L.L.C. v. W.F. Poe Syndicate,
358 F.3d
8
We review de novo issues concerning federal subject-matter jurisdiction. Caron v. NCL
(Bahamas), Ltd.,
910 F.3d 1359, 1363 (11th Cir. 2018).
12
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1286, 1290–91 (11th Cir. 2004) (same). Thus, INPROTSA contends, because a
petition to vacate an arbitral award is not one of the causes of action expressly
provided by the Convention Act, it cannot be “[a]n action or proceeding falling
under the Convention.” 9 U.S.C. § 203. Consequently, a federal court cannot
exercise subject-matter jurisdiction over a petition to vacate an arbitral award, even
if the award itself falls under the Convention.
INPROTSA nevertheless concedes the district court had removal
jurisdiction, because the subject matter of its petition to vacate “relates to an
arbitration agreement or award falling under the Convention.” 9 U.S.C. § 205.
But removal jurisdiction is not necessarily coterminous with subject-matter
jurisdiction. See Cogdell v. Wyeth,
366 F.3d 1245, 1248 (11th Cir. 2004). Thus,
INPROTSA contends we must distinguish between the purportedly narrow scope
of subject-matter jurisdiction provided under § 203 and the broader scope of
removal jurisdiction provided under § 205. In other words, INPROTSA insists
that, because Congress used different language in §§ 203 and 205, we must assume
it intended to require federal courts to remand any “action[s] or proceeding[s]”
removed under § 205 that are not covered under § 203, which INPROTSA
contends is limited to those actions or proceedings expressly provided by the
Convention Act. We disagree.
13
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As an initial matter, INPROTSA incorrectly assumes that the Convention
Act provides an exhaustive list of actions and proceedings “falling under the
Convention.” 9 U.S.C. § 203. The Convention Act is merely a statute by which
the Convention has been implemented in this country. See 9 U.S.C. § 201. The
relevant inquiry under § 203 is not whether a particular action or proceeding is
provided by the Convention Act; it is whether the “action or proceeding fall[s]
under the Convention” itself. 9 U.S.C. § 203. And our observation in previous
cases cited by INPROTSA—that the Convention Act appears to expressly
recognize only two causes of action—does not resolve that inquiry. See
Escobar,
805 F.3d at 1286 9;
Lindo, 652 F.3d at 1262–63;
Czarina, 358 F.3d at 1290–91.
We note further that INPROTSA acknowledged before the district court that,
“[a]lthough the Convention does not provide grounds for vacatur, it explicitly
permits such proceedings in the countries in which an award was rendered or
whose law served as governing law for the arbitration.” USDC Doc. 15 at 8
(emphasis added) (citing the Convention art. V(1)(e)). Thus, INPROTSA must
concede the Convention, at the very least, contemplates and expressly recognizes
vacatur proceedings.
9
Escobar implicitly undermines INPROTSA’s interpretation of § 203 in this case. In
Escobar, the defendant removed an action under § 205 before filing a motion to compel the case
to
arbitration. 805 F.3d at 1282–83. Under INPROTSA’s reasoning, there would have been no
jurisdiction, because the case removed from state court was neither an action to compel
arbitration nor an action to confirm an arbitral award.
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But even if we assume vacatur proceedings are not expressly provided by
the Convention, INPROTSA’s argument fails because it incorrectly assumes an
action or proceeding cannot fall under a particular body of law unless the action or
proceeding is provided by that body of law. In other words, even if the Convention
does not expressly provide a cause of action for vacatur, an action seeking vacatur
nevertheless could fall under the Convention. Indeed, many causes of action are
provided by statutes entirely distinct from the body of law on which the action is
based. For example, a cause of action to vindicate certain constitutional rights is
provided by statute (e.g., 42 U.S.C. §§ 1981, 1983). But it would be odd to
suggest that an action or proceeding seeking to vindicate constitutional rights
would not fall under the purview of the Constitution, merely because the
Constitution itself did not expressly provide the cause of action.
In our view, an action or proceeding “fall[s] under the Convention,” for
purposes of § 203, when it involves subject matter that—at least in part—is subject
to the Convention, such that the action or proceeding implicates interests the
Convention seeks to protect. In practice, this will require that the case sufficiently
relate to an agreement or award subject to the Convention, such that the agreement
or award “could conceivably affect the outcome of the case.” Outokumpu
Stainless USA, LLC v. Converteam SAS,
902 F.3d 1316, 1324 (11th Cir. 2018).
15
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Our interpretation of § 203 is reinforced by our understanding of § 205.
Section 205 demonstrates congressional intent to provide a federal forum for
resolving issues implicating the Convention. We have explained that “[r]emoval
jurisdiction can be considered a ‘species’ of subject matter jurisdiction in that it
defines a federal court’s power to hear a particular kind of case—one that was
originally brought in a state court.”
Cogdell, 366 F.3d at 1248. We agree with
INPROTSA that removal jurisdiction is not necessarily coincident with original
subject-matter jurisdiction. See id.; see also Powerex Corp. v. Reliant Energy
Servs., Inc.,
551 U.S. 224, 232,
127 S. Ct. 2411, 2417 (2007) (“[W]hen a district
court remands a properly removed case because it nonetheless lacks subject-matter
jurisdiction, the remand is covered by [28 U.S.C.] § 1447(c) and thus shielded
from review by § 1447(d).”). But the situations in which removal and subject-
matter jurisdiction do not line up typically involve circumstances distinct from
those presented in this case.
Indeed, district courts sometimes lack removal jurisdiction, despite having
original subject-matter jurisdiction, because other requirements of the removal
statute are not satisfied. See
Cogdell, 366 F.3d at 1248. Likewise, subsequent
events might divest a district court of its subject-matter jurisdiction, even though
the case was properly removed under the applicable removal statute. See
Powerex,
551 U.S. at 232, 127 S. Ct. at 2417. For example, a case may be removed on the
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basis of diversity jurisdiction and then remanded later on the ground that diversity
jurisdiction was subsequently destroyed by the addition of a non-diverse party. See
id. at 231–32, 127 S. Ct. at 2417. But INPROTSA has provided no examples of a
circumstance in which a court had removal jurisdiction over a case for which it
lacked subject-matter jurisdiction at the time of removal.
In this case, Congress specifically authorized removal “[w]here the subject
matter of an action or proceeding pending in a State court relates to an arbitration
agreement or award falling under the Convention.” 9 U.S.C. § 205. It would make
little sense for Congress to specifically authorize removal of cases over which the
federal courts would lack subject-matter jurisdiction. It would likewise be
puzzling for Congress to provide a federal forum for a party seeking to determine
whether an international arbitral award should be enforced, while requiring the
same litigants to remain in state court to determine whether the same award should
be vacated under principles controlled largely by federal law.
It makes far more sense to conclude Congress intended § 203 to be read
consistently with § 205 as conferring subject-matter jurisdiction over actions or
proceedings sufficiently related to agreements or awards subject to the Convention.
We therefore conclude the district court had subject-matter jurisdiction over
INPROTSA’s petition to vacate the Award. 10
10
We express no opinion on whether the Convention Act implicitly permits a petition to
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B. Dismissal of the Petition to Vacate11
INPROTSA next challenges the district court’s summary dismissal of its
petition to vacate on the ground that it did not raise any of the defenses outlined by
the Convention. INPROTSA contends the district court erred by applying our
holding in Industrial Risk—that the defenses enumerated by the Convention
provide the exclusive grounds for vacating an award subject to the Convention.12
See 141 F.3d at 1446. According to INPROTSA, Industrial Risk was both wrongly
decided and abrogated by the Supreme Court’s subsequent decision in BG Group
vacate an international arbitral award filed directly in the district court. See 9 U.S.C. § 204 (“An
action or proceeding over which the district courts have jurisdiction pursuant to section 203 of
this title may be brought in any such court in which save for the arbitration agreement an action
or proceeding with respect to the controversy between the parties could be brought, or in such
court for the district and division which embraces the place designated in the agreement as the
place of arbitration if such place is within the United States.”). It is enough, in this case, to say
that the district court had subject-matter jurisdiction over INPROTSA’s petition once it was
removed from state court under § 205.
11
In reviewing denials of motions to vacate arbitration awards, we review “the district
court’s findings of fact for clear error and its legal conclusions de novo.” Bamberger Rosenheim,
Ltd., (Israel) v. OA Dev., Inc., (U.S.),
862 F.3d 1284, 1286 (11th Cir. 2017).
12
INPROTSA also argued, in a single footnote in its opening brief, that the district court
erred by “retroactively” applying our precedent to a petition removed from state court. In
support, it cited a Florida case stating that state courts are not bound to follow opinions of the
lower federal courts. Br. of Appellant. at 39 n.8 (citing Pignato v. Great W. Bank,
664 So. 2d
1011, 1015 (Fla. 4th DCA 1995)). But INPROTSA provides no argument or authority for the
counterintuitive proposition that, in a non-diversity case removed from state court, a district
court is free (much less required) to disregard the precedent of the court of appeals for the circuit
in which that district court is located, on an issue to which federal law applies. By failing to
sufficiently develop its argument on that issue in its opening brief, INPROTSA has abandoned it.
See Sapuppo v. Allstate Floridian Ins. Co.,
739 F.3d 678, 681 (11th Cir. 2014) (“We have long
held that an appellant abandons a claim when he either makes only passing references to it or
raises it in a perfunctory manner without supporting arguments and authority.”).
18
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PLC v. Republic of Argentina,
572 U.S. 25, 44–45,
134 S. Ct. 1198, 1212–13
(2014).
As an initial matter, INPROTSA’s contention that Industrial Risk was
wrongly decided is irrelevant to our analysis of whether we are bound by its
holding that the Convention provides the exclusive grounds for vacating an
international arbitral award. See United States v. Steele,
147 F.3d 1316, 1317–18
(11th Cir. 1998) (“[A] panel cannot overrule a prior one’s holding even though
convinced it is wrong.”). Under our rule concerning prior-panel precedent, “[w]e
are bound by the holdings of earlier panels unless and until they are clearly
overruled by this court en banc or by the Supreme Court.” Randall v. Scott,
610
F.3d 701, 707 (11th Cir. 2010). The relevant inquiry, then, is whether Industrial
Risk has been clearly overruled by the Supreme Court. It has not.
“To constitute an ‘overruling’ for the purposes of [the] prior panel precedent
rule, the Supreme Court decision ‘must be clearly on point.’” United States v.
Kaley,
579 F.3d 1246, 1255 (11th Cir. 2009) (quoting Garrett v. Univ. of Ala. at
Birmingham Bd. of Trs.,
344 F.3d 1288, 1292 (11th Cir. 2003)). Moreover, “the
intervening Supreme Court case [must] actually abrogate or directly conflict with,
as opposed to merely weaken, the holding of the prior panel.”
Id. (emphasis
added). Nothing in BG Group directly conflicts with Industrial Risk.
19
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In BG Group, the Supreme Court granted certiorari to address the narrow
issue of whether a particular kind of decision by an arbitrator is entitled to
deference.
See 572 U.S. at 29, 134 S. Ct. at 1203–04 (“The question before us is
whether a court of the United States, in reviewing an arbitration award made under
[an investment treaty between the United Kingdom and Argentina], should
interpret and apply the local litigation requirement de novo, or with the deference
that courts ordinarily owe arbitration decisions.”). The Court was not asked to
decide whether the Convention provides the exclusive grounds for vacating awards
subject to the Convention, the parties did not brief that issue, and the Court did not
address that issue in its opinion.
Rather, the Court was asked to vacate the award on the ground that the
arbitrators “exceeded their powers” within the meaning of 9 U.S.C. § 10(a)(4) of
the Federal Arbitration Act (FAA)—a ground not specifically provided by the
Convention. 572 U.S. at 44, 134 S. Ct. at 1212. The Court reviewed the award
and refused to vacate it, concluding the arbitrators had not “exceeded their
powers.” 572 U.S. at 44–45, 134 S. Ct. at 1212–13. The Court’s reasoning in
refusing to vacate the award—that an asserted ground for vacatur under the FAA
did not apply on the merits—does not directly conflict with Industrial Risk’s
holding that such a ground would not have warranted vacatur because the ground is
not enumerated in the Convention.
20
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At most, the Supreme Court’s analysis indirectly suggests that the
Convention does not supply the exclusive grounds for vacating an international
arbitral award. See Bamberger Rosenheim, Ltd., (Israel) v. OA Dev., Inc., (U.S.),
862 F.3d 1284, 1287 n.2 (11th Cir. 2017) (noting the tension between Industrial
Risk and BG Group). But that is not enough under our precedent to conclude
Industrial Risk has been overruled. See
Kaley, 579 F.3d at 1255. The district court
thus did not err by dismissing the petition to vacate, because INPROTSA did not
assert a valid defense under the Convention. 13
But even if we were not bound by Industrial Risk, the petition to vacate
would warrant denial. Of the original grounds cited in INPROTSA’s petition, it
asserts only three on appeal, 14 and none supports vacatur in this case.
INPROTSA first contends the tribunal exceeded its authority when it
“rewrote the parties’ agreement by reading out the ‘as long as’ language” which
INPROTSA contends “condition[ed] INPROTSA’s agreement not to sell to third-
13
INPROTSA conceded as much at oral argument, acknowledging it would lose on the
vacatur issue to the extent Industrial Risk was not overruled. See Oral Argument at 10:25–10:44.
14
INPROTSA’s petition to vacate did not purport to rely on the FAA. Nevertheless, in
response to Del Monte’s motion to dismiss the petition, INPROTSA urged the district court to
consider its arguments that the tribunal exceeded its powers both under state law and the FAA,
representing that the grounds on which they relied were the same under either body of law. See
USDC Doc. 15 at 9 (citing 9 U.S.C. § 10). We therefore conclude INPROTSA did not waive its
arguments under the FAA by failing to assert them first before the district court. See Access
Now, Inc. v. Sw. Airlines Co.,
385 F.3d 1324, 1331 (11th Cir. 2004).
21
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parties [on] Del Monte’s ‘exclusive ownership’ of the MD-2 variety.” Br. of
Appellant at 41. INPROTSA’s argument on this issue fails because the “as long
as” language to which it refers,15 found in the Agreement’s Segunda (Second)
clause, is ambiguous as to: (1) whether it modifies only INPROTSA’s obligation to
avoid selling to third parties; or (2) whether it also modifies INPROTSA’s
obligation to return or destroy the plants derived from Del Monte’s MD-2 seeds
upon termination of the Agreement. The obligation to return or destroy the plant
stock derived from Del Monte’s seeds is found in a different part of the
Agreement’s Segunda (Second) clause, and it is not immediately preceded by the
“as long as” qualifier. 16 See USDC Doc. 1 at 42–43 (Spanish), 126 (tribunal’s
interpretation), 139–40 (parties’ competing translations).
15
The tribunal based its decision on the original Agreement as written in Spanish. But
the parties submitted conflicting translations of the Agreement’s Segunda (Second) clause in
English—neither of which was adopted by the tribunal. Under INPROTSA’s version, the
language on which it bases its argument states: “[A]s long as [Del Monte is] the exclusive
owner[] of this variety, [INPROTSA] guarantees that it shall only sell the MD-2 fruit grown in
its farm to [Del Monte] or to any of its affiliates, pursuant to the terms of this agreement.”
USDC Doc. 1 at 139 (emphasis added).
16
According to INPROTSA’s translation, the Segunda (Second) clause continues:
[Del Monte] shall supply the MD-2 variety seed to [INPROTSA] in Buenos Aires
de Puntarenas and at no cost. . . . Thus, [INPROTSA] acknowledges that the seed
to be received in its farm is exclusively owned by [Del Monte], and it shall not
make any use of it or of any other vegetative material derived or obtained from
the planting to be developed, unless it has the prior written consent of [Del
Monte]. In this regard, the only purpose of this pineapple purchase and sale
agreement is the production of the MD-2 variety, for its exclusive sale to [Del
Monte], and therefore, if for any reason [INPROTSA] ceases to sell this pineapple
to [Del Monte], or in the event that the agreement is terminated for any reason and
at any time, either before or at completion of its term, [INPROTSA] shall
22
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It would make sense for Del Monte to impose these obligations
independently. For example, it would be prudent to require INPROTSA to respect
Del Monte’s (purported) exclusive rights to the MD-2 variety, as against third
parties, by requiring INPROTSA to refrain from selling MD-2 pineapples to such
parties, “as long as” Del Monte maintained exclusive rights to the variety. It
would also make perfect sense for Del Monte to impose an independent obligation
on INPROTSA to avoid selling MD-2 pineapples derived from the seeds it
provided to INPROTSA at no cost—regardless of whether it held exclusive rights
in the variety as against third parties. Interpreting these obligations as independent
would also be consistent with the tribunal’s observation that INPROTSA’s
obligation to return or destroy the plant stock was acknowledged elsewhere in the
contract without referring to Del Monte’s exclusive ownership of the MD-2
variety. See USDC Doc. 1 at 122.
It does not matter whether the tribunal’s interpretation is correct; it is enough
to note that the “as long as” language on which INPROTSA relies does not
unambiguously condition INPROTSA’s obligation to destroy or return the plant
stock derived from Del Monte’s seeds on Del Monte’s maintaining exclusive
immediately cease production of this variety, pledging to destroy or return to [Del
Monte] the vegetative material owned by it.
Id. at 139–40.
23
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ownership of the variety as against third parties. And the tribunal at least arguably
interpreted the contract. Thus, the tribunal did not exceed its authority. See
Wiregrass Metal Trades Council AFL-CIO v. Shaw Envt’l & Infrastructure, Inc.,
837 F.3d 1083, 1088 (11th Cir. 2016) (holding that an arbitrator does not exceed its
authority by incorrectly interpreting an ambiguous contractual provision);
Computer Task Grp., Inc. v. Palm Beach Cty.,
782 So. 2d 942, 943 (Fla. 4th DCA
2001) (“Under federal authority, which would apply to the contract in this case, the
test for whether an arbitrator exceeds his authority is whether the arbitrator had the
power, based on the parties’ submissions or the arbitration agreement, to reach a
certain issue, not whether the arbitrator correctly decided that issue.”).
INPROTSA next contends the tribunal “exceeded its authority by imposing
its own rough sense of justice by awarding damages far in excess of the amount
allowed by Florida law.” Br. of Appellant at 42. But the authorities on which
INPROTSA relied to establish its contention that Florida law would not permit the
award are not clearly on point—that is, they do not deal with a disgorgement award
based on revenues where the defendant’s profits could not be calculated because
the defendant refused to provide evidence of its expenses during discovery. See
USDC Doc. 1 at 33–34 (citing HCA Health Serv’s of Fla., Inc. v. Cyberknife Ctr.
of Treasure Coast, LLC,
204 So. 3d 469, 470–71 (Fla. 4th DCA 2016) (dealing
with the measure of a plaintiff’s expectation damages rather than the measure of a
24
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disgorgement award)). INPROTSA cited no authority holding that a disgorgement
award under such circumstances would require speculation about the amount of the
defendant’s expenses.
Moreover, under Florida law, an arbitrator’s mistake as to the correct
measure of damages would not warrant vacatur. See Commc’ns Workers of Am. v.
Indian River Cty. Sch. Bd.,
888 So. 2d 96, 99 (Fla. 4th DCA 2004) (“[T]he fact that
the relief was such that it could not or would not be granted by a court of law or
equity is not ground for vacating or refusing to confirm the award.” (quoting Fla.
Stat. § 682.13)); Computer Task
Grp., 782 So. 2d at 943 (“[T]he arbitrator had the
authority to award damages under the contract. Even if he made an error of law in
awarding some of the damages, a point we do not decide, we do not review his
errors of law, if any.”).
Lastly, INPROTSA contends the tribunal exceeded its authority by “refusing
to apply the procedural rules the parties’ [sic] had contracted for, i.e., ICC rules,
permitting corrections of awards.” Br. of Appellant at 42. But the tribunal,
“comparatively more expert about the meaning of [its] own rule, [is] comparatively
better able to interpret and to apply it.” Howsam v. Dean Witter Reynolds, Inc.,
537 U.S. 79, 85,
123 S. Ct. 588, 593 (2002). The tribunal did not exceed its power
by reasonably construing its own rules as barring substantive reconsideration of the
merits of its damages award.
25
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Accordingly, the district court would not have erred by denying
INPROTSA’s petition to vacate, even if our holding in Industrial Risk were not
binding.
C. Confirmation of the Award17
Finally, INPROTSA contends the Award should not have been confirmed,
because the district court failed to consider the merits of INPROTSA’s public-
policy defenses.18 Contrary to INPROTSA’s assertion on this issue, the district
court did, in fact, rule on the merits of its defenses. To the extent INPROTSA
challenges the manner in which the district court addressed its fraud defense,19 its
argument lacks merit.
INPROTSA suggests that, because it asserted a public-policy defense based
on fraud, the district court was required to disregard the arbitrator’s findings and
conduct its own inquiry into whether the agreement was fraudulently induced.
From that premise, INPROTSA contends the district court should have concluded
17
In reviewing a district court’s confirmation of an arbitral award, we review its
“findings of fact for clear error and its legal conclusions de novo.” Bamberger
Rosenheim, 862
F.3d at 1286.
18
Because we affirm the district court’s conclusions on the merits of INPROTSA’s
confirmation defenses, we need not address INPROTSA’s contention that the district court erred
by concluding INPROTSA was barred from asserting defenses to confirmation because of its
alleged failure to timely serve notice of the petition to vacate.
19
INPROTSA failed to develop arguments with respect to any of its other purported
defenses to confirmation. Thus, any challenge to the district court’s conclusions on those
defenses is abandoned. See
Sapuppo, 739 F.3d at 681.
26
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the Award was procured by fraud, based largely on a ruling Magistrate Judge
Simonton made in the Dole Litigation. 20 We disagree.
INPROTSA’s argument hinges on dicta from a footnote in the Supreme
Court’s opinion in Scherk v. Alberto-Culver Co.,
417 U.S. 506, 519 n.14,
94 S. Ct.
2449, 2457 n.14 (1974). In Scherk, the Supreme Court presumed without deciding
that “the type of fraud alleged” in that case 21 “could be raised, under Art. V of the
Convention . . . in challenging the enforcement of whatever arbitral award [was]
produced through arbitration.” The Court further noted that “Article V(2)(b) of the
Convention provides that a country may refuse recognition and enforcement of an
award if ‘recognition or enforcement of the award would be contrary to the public
policy of that country.’”
Id. (quoting the Convention art. V(2)(b)). Based on that
language, INPROTSA contends it is entitled to re-litigate its fraud claim in federal
court.
20
Magistrate Judge Simonton’s finding, in the context of a discovery dispute to which
INPROTSA was not a party, that Del Monte attempted to mislead certain Costa Rican growers
(none of whom are alleged to have been INPROTSA) by sending out letters implying that it held
a patent on the MD-2, does not establish that the Agreement between INPROTSA and Del
Monte was fraudulently induced.
21
The issue in Scherk was whether to apply the now overruled holding of Wilko v. Swan,
346 U.S. 427, 438,
74 S. Ct. 182, 188 (1953), that an agreement to arbitrate could not preclude a
lawsuit alleging a violation of the Securities Act of 1933, to a lawsuit brought against a foreign
party that alleged violations of Rule 10(b) of the Securities Exchange Act of 1934. See
Scherk,
417 U.S. at 509–510, 94 S. Ct. at 2452–53. Thus, the “type of fraud alleged,” with which the
Supreme Court was concerned in Scherk, was securities fraud. See
id. at 519 n.14, 94 S. Ct. at
2457 n.14. We do not interpret Scherk as suggesting that an ordinary claim of fraudulent
inducement, particularly one resolved through binding arbitration, would raise questions of
public policy under the Convention.
27
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Even if we, like the Supreme Court in Scherk, were to presume without
deciding that a defendant can assert a fraud-based public-policy defense to
confirmation under the Convention, it would not allow for re-litigation of a
fraudulent-inducement claim already determined through binding arbitration. If
anything, public policy would require the federal courts to enforce the parties’
agreement to arbitrate that claim. See Prima Paint Corp. v. Flood & Conklin Mfg.
Co.,
388 U.S. 395, 403–04,
87 S. Ct. 1801, 1806 (1967) (explaining that, where an
agreement to arbitrate is broad enough to encompass fraudulent-inducement
claims, an arbitrator must resolve any claim that the entire contract—rather than
just its arbitration clause—was fraudulently induced); Solymar Invs., Ltd. v. Banco
Santander S.A.,
672 F.3d 981, 995 (11th Cir. 2012) (“[S]ince the . . . allegations
are more properly characterized as relating to fraud in the inducement, the issue
becomes one properly reserved for an arbitrator.”).
Moreover, we have held in the context of the FAA that vacatur cannot be
premised on a purported fraud known at the time of the arbitration. See Scott v.
Prudential Sec., Inc.,
141 F.3d 1007, 1015 n.16 (11th Cir. 1998) (“[T]he arbitrators
had all the material information before them, a fact that precludes vacatur. . . .”),
overruled in part on other grounds by Hall Street Assocs., L.L.C. v. Mattel, Inc.,
552 U.S. 576, 585,
128 S. Ct. 1396, 1403–04 (2008); Bonar v. Dean Witter
Reynolds, Inc.,
835 F.2d 1378, 1383 (11th Cir. 1988) (holding that vacatur for
28
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fraud requires: (1) clear and convincing evidence; (2) that the fraud must not have
been discoverable with due diligence prior to or during the arbitration; and (3) that
the fraud materially relates to an issue in the arbitration); see also A.G. Edwards &
Sons, Inc. v. McCollough,
967 F.2d 1401, 1404 (9th Cir. 1992) (“[W]here the fraud
or undue means is not only discoverable, but discovered and brought to the
attention of the arbitrators, a disappointed party will not be given a second bite at
the apple.”). A fraud-based defense under the Convention could not possibly be
broader than the fraud-based ground for vacatur expressly provided by the FAA.
See 9 U.S.C. § 10(a)(1).
On the contrary, the public-policy defense under the Convention is very
narrow. It “applies only when confirmation or enforcement of a foreign arbitration
award would violate the forum state’s most basic notions of morality and justice.”
Bamberger
Rosenheim, 862 F.3d at 1289 n.4 (quoting Ministry of Def. & Support
for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc.,
665
F.3d 1091, 1096–97 (9th Cir. 2011)). INPROTSA knew about the Dole Litigation
at the time it contracted with Del Monte; therefore, enforcing the Award in this
case does not offend public policy at all, much less meet the high threshold for
such a defense to succeed under the Convention.
IV. CONCLUSION
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The district court had jurisdiction over INPROTSA’s petition to vacate the
Award after it was removed from state court. The petition was appropriately
dismissed for failing to assert a valid ground for vacatur, and the district court did
not err by confirming the Award. 22
AFFIRMED.
22
Del Monte’s motion for sanctions (Doc. 73) is DENIED because INPROTSA’s appeal
raises a number of non-frivolous challenges to the district court’s orders.
30