Orrick gets no reprieve from 9th Circuit in arbitration fight with Jones Day

Signage is seen outside of the law firm Orrick, Herrington & Sutcliffe, LLP in Washington, D.C., U.S., August 30, 2020. REUTERS/Andrew Kelly

(Reuters) - Orrick, Herrington & Sutcliffe is quickly running out of arguments to duck arbitration summonses from Jones Day in a fight involving a Paris-based partner who moved from Jones Day to Orrick.

And according to Jones Day, Orrick has only itself to blame as its options dwindle.

On Monday, the 9th U.S. Circuit Court of Appeals denied Orrick’s pitch to reconsider one piece of the appellate court’s Aug. 1 ruling that Jones Day can compel Orrick, firm chair Mitchell Zuklie and former managing partner Michael Torpey to comply with a summons to appear before the JAMS arbitrator hearing Jones Day’s dispute with former partner Michael Bühler. (More on that below.)

The 9th Circuit held in its Aug. 1 opinion that under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention), U.S. district courts have jurisdiction over petitions to enforce summonses issued by arbitrators overseeing international proceedings. The appeals court also held that San Francisco federal court was a proper venue for Jones Day’s petition to compel enforcement of its Orrick summonses because Orrick and the summoned partners reside in the district.

The 9th Circuit panel – Judges Kim Wardlaw, Sandra Ikuta and Bridget Bade – remanded the case to U.S. District Judge Jon Tigar with instructions that he order Orrick to appear before the arbitrator hearing Jones Day’s case.

Orrick and its counsel from Williams & Connolly did not ask the 9th Circuit to reconsider its venue and jurisdictional holdings. But the firm argued in an Aug. 15 rehearing petition that the appeals court should amend its instruction to Tigar to allow the firm to present the trial judge with alternative reasons for refusing to enforce compliance with the arbitrator’s summonses.

Specifically, Orrick told the 9th Circuit panel that it wanted to argue in the trial court that the Federal Arbitration Act does not permit arbitrators to summon witnesses outside of the “seat” of the arbitration. (The Jones Day arbitration is based in Washington, D.C., but the arbitrator agreed to convene a hearing in the Northern District of California to receive testimony from the Orrick witnesses.) Orrick also said it wanted to challenge the summons to the firm on the grounds that the Federal Arbitration Act only empowers arbitrators to compel appearances by people, not partnerships.

Orrick insisted in its rehearing petition that it had preserved those arguments, despite focusing its appellate brief on the incredibly thorny jurisdictional and venue questions that Jones Day presented in its opening brief at the 9th Circuit. Orrick reminded the 9th Circuit panel that its response brief concluded with a argument that Tigar – who previously held that he did not have authority to enforce the arbitrator's summonses – would still have to consider Orrick’s merits arguments if the 9th Circuit sided with Jones Day on jurisdiction and venue.

The 9th Circuit panel was at least interested enough in Orrick’s rehearing petition to order a response from Jones Day. The firm came out firing: Orrick, Jones Day said in its Aug. 23 filing, made a strategic decision to address only the jurisdiction and venue questions instead of asking the 9th Circuit to rule on all of its arguments against the arbitrator’s summonses. Orrick was apparently hoping, according to Jones Day, that even if it lost on venue and jurisdiction, it could still prolong its fight against appearing in the arbitration by raising unresolved merits arguments with Tigar – and then bringing a second appeal if it lost in the trial court.

The 9th Circuit, Jones Day said, should not countenance that gamesmanship. Orrick and the partners who received arbitration summonses “should not now be allowed to resurrect issues that they strategically left unaddressed in an effort to further delay compliance with the summonses,” Jones Day said. “This court correctly rejected that tactic when it directed the district court to compel compliance.”

The 9th Circuit agreed with Jones Day’s assessment. “Orrick declined to address the arguments it now raises in its petition for rehearing in its answering brief,” the panel said in Monday’s order. “Arguments not clearly and specifically raised by a party are waived.”

So where does the new ruling leave Orrick? The firm declined via a spokesperson to comment on the new order. Jones Day’s Craig Stewart, who argued for the firm at the 9th Circuit, did not respond to my email query. In its Aug. 23 filing, Jones Day acknowledged that the June 2021 appearance date on the original Orrick arbitration summonses has passed, but said the arbitrator can “promptly reissue the summonses with a new appearance date.”

Given the 9th Circuit’s instruction to the trial court to order Orrick to comply with the summonses, it would seem that short of a U.S. Supreme Court appeal (and a stay order from a notably unsympathetic 9th Circuit panel), Orrick will soon be required to appear before the arbitrator in Jones Day’s case against Bühler. The firm can still contest issues such as materiality and privilege but those arguments will almost surely be up to the arbitrator to decide.

The 9th Circuit has gone to considerable lengths to keep most of the facts of the underlying arbitration under seal, but I’ve previously told you about the case, based on a publicly filed opinion from a District of Columbia Superior Court judge who rejected Jones Day’s first attempt to enforce a summons for Orrick testimony and documents.

According to that opinion, onetime Jones Day partner Bühler represented a Jones Day client before an arbitration panel that included an Orrick partner in 2019, as Bühler was planning his move from Jones Day to Orrick. When Bühler’s conflict came to light, the arbitration panel replaced the Orrick partner. But Jones Day’s client sought to hold the firm responsible for the delay and additional expense. Jones Day, in turn, brought an arbitration accusing Bühler of breaching his partnership agreement. Bühler, who declined to comment on the 9th Circuit’s latest order, has asserted a counterclaim demanding nearly $2 million in allegedly unpaid earnings from his former firm.

Read more:

Jones Day clears hurdle to force Orrick into arbitration over ex-partner

In Jones Day v. Orrick, 9th Circuit will break ground on arbitration subpoenas

9th Circuit to expedite Jones Day appeal in Orrick subpoena row. But why?

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Thomson Reuters

Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin.