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Cerner Middle East Ltd. v. Belbadi Enterprises LLC

United States Court of Appeals, Ninth Circuit

September 23, 2019

Cerner Middle East Limited, a Cayman Islands Exempted Company, Plaintiff-Appellant,
v.
Belbadi Enterprises LLC, a U.A.E. Limited Liability Company; Vandevco Limited, a Washington Corporation, Defendants-Appellees.

          Argued and Submitted October 12, 2018 Portland, Oregon

          Appeal from the United States District Court for the Western District of Washington Ronald B. Leighton, District Judge, Presiding D.C. No. 3:16-cv-05706-RBL

          Warren E. Gluck (argued), Samuel Spital, and Stosh Silivos, Holland & Knight LLP, New York, New York; David J. Elkanich and Garrett S. Garfield, Holland & Knight LLP, Portland, Oregon; for Plaintiff-Appellant.

          Paul H. Trinchero (argued) and Gary I. Grenley, Garvey Schubert Barer, Portland, Oregon, for Defendants-Appellees.

          Before: Richard R. Clifton and Consuelo M. Callahan, Circuit Judges, and Roger T. Benitez, [*] District Judge.

         SUMMARY[**]

         Removal / International Arbitration

         The panel reversed the district court's order denying plaintiff's motion to remand to state court an action that had been removed to federal court on the basis that it related to an international arbitration award. 9 U.S.C. § 205 authorizes the removal by a defendant of an action previously filed in state court if the action relates to an arbitration agreement or award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The panel concluded that the outcome of this case could not conceivably be affected by an arbitration award arising from a dispute concerning a contract for the development of medical information software. Specifically, the arbitration award could not have preclusive effect over whether certain entities were alter egos or over the amount of damages that certain entities owed to the plaintiff; the factual findings in the arbitration award could not affect the outcome of this case; and the possibility that the district court could find persuasive the legal analysis contained in the arbitration award was insufficient. The panel therefore held that the action did not relate to an arbitration agreement under the Convention. Accordingly, 28 U.S.C. § 205 did not authorize removal of the action to federal court or provide federal subject matter jurisdiction over this case.

         The panel reversed the district court's order and remanded with instructions to remand the case to state court.

          OPINION

          CLIFTON, Circuit Judge:

         This appeal presents questions regarding the removal from state court to federal court of an action that arguably relates to an international arbitration award. Under 9 U.S.C. § 205, a defendant is authorized to remove to federal court an action previously filed in state court that "relates to an arbitration agreement or award falling under" the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, sometimes described as the "New York Convention." Plaintiff-Appellant Cerner Middle East Limited filed an action in Washington state court against Defendants-Appellees Belbadi Enterprises, LLC and Vandevco Limited. Defendants removed the action to federal district court. Cerner moved to remand it to state court, arguing that the removal was improper and that the federal court lacked subject matter jurisdiction over the action. The district court denied that motion to remand, holding that it could exercise jurisdiction under 9 U.S.C. § 205.

         In our view, this case is not related to an international arbitration agreement or award, as that term is used in the statute, and no other basis for federal jurisdiction has been offered by Defendants. We therefore reverse the district court's denial of Cerner's motion to remand and remand the case to the district court with instructions that it be remanded to the Washington state court.

         I. Background

         This action is one of several disputes between Cerner, on one side, and Ahmed Saeed Mohammad Al Badi Al Dhaheri[1]and entities controlled by Dhaheri, on the other.[2]

         Plaintiff Cerner Middle East Limited (which will be identified in this opinion as "Cerner") is a Cayman Islands corporation with its principal place of business in Kansas City, Missouri. It is a subsidiary of Cerner Corporation, a medical services technology company based in Kansas City, whose revenue in 2018 was in excess of $5 billion and whose stock is listed on the NASDAQ exchange.

         Dhaheri, a businessman with substantial holdings, is a citizen and domiciliary of the United Arab Emirates ("UAE"). He is not a party to the current action, but Cerner alleges that Dhaheri owns and controls Defendant Belbadi Enterprises, LLC, a UAE corporation with its principal place of business in Abu Dhabi, UAE. Cerner further alleges that Belbadi is the owner of Defendant Vandevco Limited, that Vandevco is a Washington corporation with its principal place of business in Vancouver, Washington, and that Vandevco owns, through other entities, the Vancouver Center, a mixed residential and commercial development in Vancouver. Cerner alleges that Vandevco is an alter ego of Belbadi for jurisdictional and liability purposes. Other entities related to Dhaheri that are involved in the history of this dispute, ...


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