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Qwest Communications Corp. v. Ansari

January 23, 2007

QWEST COMMUNICATIONS CORPORATION, PETITIONER,
v.
HAMID ANSARI, ET AL. RESPONDENTS.



The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge

MEMORANDUM OPINION

Petitioner, Qwest Communications Corporation ("Qwest"), is the defendant in a lawsuit filed by respondents, Hamid Ansari and Broadband Utility Resources, L.P. ("BUR"), in the United States District Court for the District of Colorado. That lawsuit is currently stayed pending a determination by this Court as to the arbitrability of the claims in respondents' Complaint and the outcome of any arbitration proceeding. After careful consideration of the petition, the response and reply thereto, and for the reasons stated below, this Court concludes that the parties entered into a valid and enforceable arbitration agreement, and that the agreement encompasses all of the claims asserted in Ansari's and BUR's Complaint. Accordingly, the parties are ordered to arbitrate all claims in the Complaint.

I. BACKGROUND

On June 28, 2001, BUR contracted with Qwest for the lease of an Indefeasible Right of Use ("IRU") of telecommunications network capacity. Compl. ¶¶ 2, 30, Ex. A to Pet. to Compel Arbitration. According to respondents, during negotiations on the IRU Agreement, Qwest misrepresented its intention to purchase telecommunications equipment from Ansari's then-employer Sonus, Compl. ¶¶ 10-63, and Qwest was legally barred from providing the IRU contemplated in the IRU Agreement. Compl. ¶¶ 64-94.

On October 22, 2003, Ansari and BUR filed a Complaint against Qwest in the United States District Court for the District of Colorado, alleging fraud, common law business torts, and violations of the Federal Communications Act. In response to the Complaint, Qwest moved to compel arbitration and stay the proceedings in Colorado. The district court concluded that it did not have power to compel arbitration because the IRU Agreement designated Washington, D.C. as the forum for any arbitration of disputes or disagreements "arising between Qwest and the Customer in connection with" the Agreement. IRU Agreement ¶ 20.1, Ex. 2 to Compl. The Tenth Circuit affirmed the trial court's order denying arbitration in Colorado. See Ansari v. Qwest Communications Corp., 414 F.3d 1214, 1219-20 (10th Cir. 2005) ("[W]here the parties agreed to arbitrate in a particular forum[,] only a district court in that forum has authority to compel arbitration under § 4 [of the Federal Arbitration Act].").

II. DISCUSSION

The Federal Arbitration Act ("FAA") provides that an arbitration clause in a contract is "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The question of whether a claim is arbitrable is an issue for judicial determination. AT&T Tech., Inc. v. Communications Workers of Am., 475 U.S. 643, 649 (1986). A court is not to rule on the merits of the underlying claims, rather it must only determine whether the parties have agreed to submit a particular grievance to arbitration. Id.

The FAA establishes a strong federal policy in favor of arbitration and "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). "[W]here the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." AT&T Tech. v. CWA, 475 U.S. at 650 (internal quotation marks and citation omitted). However, this Circuit has cautioned that, although courts are to be mindful of the federal policy in favor of arbitration, "it is [the court's] task nonetheless to determine what appears to be most consistent with the intent of the parties." Nat'l R.R. Passenger Corp. v. Boston and Maine Corp., 850 F.2d 756, 760-61 (D.C. Cir. 1988). Ultimately, "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT&T Tech. v. CWA, 475 U.S. at 648. In determining the intent of the parties, the Court is mindful that the "party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91 (2000).

The IRU Agreement entered into by Qwest and BUR provides that:

Any dispute or disagreement arising between Qwest and Customer in connection with this Agreement which is not settled to the mutual satisfaction of Qwest and Customer within thirty (30) days from the date that either party informs the other in writing that such dispute or disagreement exists, shall be settled by arbitration in Washington, D.C. in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect on the date that such notice is given. . . .

IRU Agreement ¶ 20.1.

Respondents do not challenge Qwest's assertion that the dispute arising between BUR and Qwest is "in connection with" the IRU Agreement. Instead, respondents argue that the Petition to Compel Arbitration should be denied because the underlying IRU Agreement is void ab initio. The respondents contend that Qwest offered, drafted, and executed a contract that it knew or should have known was impossible or illegal to perform. Specifically, respondents allege that Qwest entered into a contract to provide BUR with interLATA services at a time when Qwest was prohibited by federal law from providing all the interLATA services promised in the contract.

The Supreme Court's recent opinion in Buckeye Check Cashing, Inc. v. Cardegna, 126 S.Ct. 1204 (2006), is directly on point and governs this case. In Buckeye, customers sued a check cashing business for charging usurious interest rates in violation of state law. Id. at 1207. Respondents argued that they should not be required to adhere to the arbitration provisions in the Deferred Deposit and Disclosure Agreement because the contract as a whole was rendered illegal and invalid by the usurious finance charge. Id. at 1208. In rejecting the respondents' arguments, the Court held that "because respondents challenge the Agreement, but not specifically its arbitration provisions, those provisions are enforceable apart from the remainder of the contract. The challenge should therefore be considered by an arbitrator, not a court." Id. at 1209.

In this case, BUR and Ansari challenge the validity of the IRU Agreement as a whole and do not challenge the arbitration clause. Therefore, ...


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