Publication
A Ninth Circuit Warning on Appeals: Just Because You Can Doesn’t Mean You Should.
The Ninth Circuit recently issued a non-published memorandum disposition that serves as a cautionary lesson to all clients and their lawyers contemplating an appeal. It also serves as a reminder of the Federal Arbitration Act’s (FAA) mandate that a district court must confirm a foreign arbitration award absent the few, exclusive, and narrowly construed reasons under Article V of the New York Convention1. The memorandum decision in Franz Haas GMBH v. Winebow Inc., case number 25-4105, can be read here.
The appeal’s origin lies in a June 2023 arbitration award Franz Haas GMBH (Haas) secured against Winebow, Inc. (Winebow). The award was issued by a panel in the International Chamber of Commerce’s International Court of Arbitration, seated in Milan, Italy. Winebow claimed that Hass failed to comply with the award and sought confirmation of the award in the U.S. District Court, Central District of California. The District Court confirmed the award under Article IV of the New York Convention. Winebow appealed.
Using fairly scathing language the Ninth Circuit not only affirmed the district court’s order confirming the foreign arbitration award, but ordered Winebow to show cause in writing within 14 days of its decision why it should not award Haas its attorneys’ fees and (notable in this instance) “why any award of attorneys’ fees should not be imposed jointly and severally on Winebow and its counsel, Akin Gump Strauss Haur & Feld LLP.”
The court first noted that Winebow wasn’t appealing on the grounds that district court erred by not applying the well-settled exclusive defenses to a foreign arbitration award under Article V of the New York Convention. Rather, in an argument the court deemed “empty formalism” and Appellant Winebow argued, “only that confirmation was improper due to an initial minor procedural violation, which was quickly cured and caused no prejudice, and a single, nonmaterial translation error [of the arbitration award].” Indeed, the court deemed Appellant’s argument that the arbitration award’s use of Latin and Italian defined terms rendered the award incomprehensible, little more than, “rhetoric, and the appeal itself, “self-indulgent”.
The lesson here is that the Ninth Circuit has reminded parties and their lawyers that advocacy and settlement strategies involving appeals need to be critically appraised to ensure that there is some identifiable factual or valid legal basis for an appeal. In other words, it must pass a Rule 11 gut check.2 Generally, courts give great deference to party autonomy and counsel’s actions in furthering a party’s interests — often at the express instruction of a party. However, the Haas decision reminds both parties and their counsel that there are limits to this deference.
Footnotes
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Convention on the Recognition and Enforcement of Foreign Arbitral Awards art. V, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 [hereinafter New York Convention] https://www.newyorkconvention.org/english
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FRCP Rule 11 provides in relevant part:
. . . (b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper — whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.
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