ROHM Semiconductor loses appeal at CAFC

The outcome

ROHM Semiconductor USA, LLC (“ROHM USA”) appeals from the U.S. District Court for the Northern District of California’s decision compelling arbitration and dismissing ROHM USA’s declaratory judgment action without prejudice. ROHM Semiconductor USA, LLC v. MaxPower Semiconductor, Inc., No. 20-CV-06686-VC, 2021 WL 822932, at *1 (N.D. Cal. Feb. 4, 2021). Because we agree that an arbitrator must determine arbitrability of the dispute between ROHM USA and MaxPower Semiconductor, Inc. (“MaxPower”), we affirm

The issue

The Ninth Circuit reviews a district court’s order compelling arbitration de novo and reviews underlying findings of fact for clear error. Bradley v. Harris Rsch., Inc., 275 F.3d 884, 888 (9th Cir. 2001), abrogated in part on other grounds by Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015). The district court decision on appeal here rested entirely on legal determinations concerning whether the parties agreed to arbitrate arbitrability. We, therefore, review the entirety of that decision de novo.

(...)ROHM USA argues that its TLA with MaxPower lacks clear and unmistakable evidence of an agreement to arbitrate arbitrability. None of its arguments are convincing.1 Indeed, some border on the frivolous.



ROHM USA argues that its TLA with MaxPower lacks clear and unmistakable evidence of an agreement to arbitrate arbitrability. None of its arguments are convincing.1 Indeed, some border on the frivolous.

(...)

No matter how ROHM USA tries to pigeonhole this action into its “domestic action” moniker, moreover, this case is merely one aspect of a sprawling international dispute. MaxPower first raised its concerns about royalties allegedly owed under the TLA with ROHM Japan, ROHM USA’s parent company. It was only after MaxPower told ROHM Japan of its intent to take the dispute to arbitration under the very TLA at issue before us that ROHM USA brought this declaratory judgment action seeking a declaration of noninfringement for the products on which MaxPower seeks royalties from ROHM Japan. And ROHM USA has also challenged MaxPower patents in Korea and China.

(...)

Virtually all courts to consider the question, including this court, have concluded that, in contracts between sophisticated parties, incorporation of rules with a provision on the subject is normally sufficient “clear and unmistakable” evidence of the parties’ intent to delegate arbitrability to an arbitrator. See, e.g., id. at 1075 (interpreting a contract incorporating the 2010 UNCITRAL rules); Republic of Argentina, 665 F.3d at 1371 (1976 UNCITRAL rules); Schneider, 688 F.3d at 73–74 (1976 UNCITRAL rules); Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir. 2012) (AAA rules); Fallo v. HighTech Inst., 559 F.3d 874, 878 (8th Cir. 2009) (AAA rules); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1373 (Fed. Cir. 2006) (applying Ninth Circuit law and interpreting a contract incorporating the AAA rules), abrogated on other grounds by Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019); Terminix Int’l Co., LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327, 1332 (11th Cir. 2005) (AAA rules).

Florida court gets roasted

The only case ROHM USA has located that has held to the contrary in the context of bilateral arbitration is a Florida state court decision, Doe v. Natt, 299 So. 3d 599 (Fla. Dist. Ct. App. 2020), review granted sub nom. Airbnb, Inc. v. Doe, No. SC20-1167, 2021 WL 798838 (Fla. Mar. 2, 2021). The state court criticized Oracle and other circuit court decisions we have identified, stating that: “none of these cases have ever examined how or why the mere ‘incorporation’ of an arbitration rule such as the one before us . . . satisfies the heightened standard the Supreme Court set in First Options, nor how it overcomes the ‘strong procourt presumption’ that is supposed to attend this inquiry.” Id. at 608. We decline to adopt the view of a single Florida state court, which itself is currently under review by the Florida Supreme Court, and reaffirm our agreement with the prevailing view of our sister circuits. See Qualcomm, 466 F.3d at 1373.