Plum Point Energy Associates LLC v. South Mississippi Electric Power Association

Filing 24

ORDER vacating 3 Temporary Restraining Order; denying 2 Motion to stay arbitration; and granting 11 Motion to compel arbitration. This case is referred to arbitration, stayed, and administratively terminated. Either party may move to reopen, if need be, when arbitration concludes. The Court orders the parties to file a Joint Status Report on 4 December 2015, and every six months thereafter until arbitration is concluded. Signed by Judge D. P. Marshall Jr. on 7/14/2015. (ljb)

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IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF ARKANSAS JONESBORO DIVISION PLUM POINT ENERGY ASSOCIATES, LLC v. PLAINTIFF No. 3:15-cv-70-DPM SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION DEFENDANT ORDER Plum Point Energy Associates, LLC, owns a coal-fired power plant in Osceola, Arkansas. South Mississippi Electric Power Association buys electricity produced at that plant. Like many other coal-fired plants, this one filters emissions through a lime slurry to remove sulfur dioxide. The price South Mississippi pays for electricity varies with Plum Point's operating expenses, which include the cost of lime. Plum Point Power Partners, which the parties call "P4," designed and built the plant. P4 guaranteed that the plant would use no more than 4,945 pounds of lime an hour. The plant actually uses more than 8,000 pounds of lime an hour. Plum Point and P4 settled their dispute about breach of the lime guarantee by, among other things, knocking $25,500,000 off the price of the plant. South Mississippi says the settlement has, in effect, reduced the amount that Plum Point actually pays for lime. South Mississippi claims that, by ignoring the settlement when pricing electricity, Plum Point is overcharging. Plum Point disagrees. South Mississippi and Plum Point's contract has a dispute-resolution provision, which is appended to this Order. South Mississippi started arbitration about whether the lime settlement should be factored in the price of electricity. Plum Point refused to participate. Instead, Plum Point sued South Mississippi in the Circuit Court of Mississippi County, Arkansas, seeking a declaratory judgment and moving to stay the arbitration. The Circuit Court issued a temporary restraining order staying arbitration. South Mississippi removed the case here and moved to compel arbitration. Plum Point resists the arbitration motion. The question is who- the Court or the arbitrator-decides whether the lime-payment dispute is arbitrable? The answer is the arbitrator. South Mississippi and Plum Point agreed, with some immaterial exceptions, that the "AAA Commercial Arbitration Rules" would govern arbitration under the contract. NQ 1-1 at 125. "By incorporating the AAA Rules" in the arbitration provision, South Mississippi and Plum Point "agreed to allow the arbitrator to determine threshold questions of arbitrability." Green v. SuperShuttle International, Inc., 653 F.3d -2- 766, 769 (8th Cir. 2011). They also gave the arbitrator the "authority to interpret the language" of their contract. NQ 1-1 at 125. Whether the lime dispute is arbitrable turns on the words of the Plum Point/South Mississippi power agreement. Ordinarily, a court would interpret those words. But the parties were free to hand arbitrability questions to an arbitrator. Rent-ACenter, West, Inc. v. Jackson, 561 U.S. 63, 68-69 (2010). They did. Plum Point asks the Court to resolve whether the parties' arbitration agreement is narrow or broad. But this is really just another road into the arbitrability issue, which the parties committed to the arbitrator. Fleet Tire Service ofNorth Little Rockv. Oliver Rubber Co., 118 F.3d 619,621 (8th Cir.1997). Plum Point has pointed to nothing in the contract that would prevent the arbitrator from deciding arbitrability under the AAA Rules. Compare NASDAQ OMX Group, Inc. v. UBS Securities, LLC, 770 F.3d 1010, 1031-32 (2d Cir. 2014). South Mississippi and Plum Point agreed with clarity that the arbitrator would decide the scope of their arbitration agreement. The Court must enforce the parties' contract- that's the animating principle in the precedent. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 {1995). -3- * * * Temporary Restraining Order, NQ 3, vacated. Motion to stay arbitration, NQ 2, denied. Motion to compel arbitration, NQ 11, granted. This case is referred to arbitration, stayed, and administratively terminated. Either party may move to reopen, if need be, when arbitration concludes. The Court orders the parties to file a Joint Status Report on 4 December 2015, and every six months thereafter until arbitration is concluded. So Ordered. D.P. Marshall Jr.(/ United States District Judge -4- Case 3:15-cv-00070-DPM Document 1-1 Filed 03/18/15 Page 122 of 139 CONFIDENTIAL POWER PURCHASE AGREEMENT Between P~UM POIN'f ~NERGY ASSOCIATES, LLC, aa Seller- ' And SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION as Purchaser Execution WI'IIOII ARTICLE XX DISPVTE RESOLUTION Section 20.1 Senior Officeq. (a) Bach of Soller and Purchaser shall designate in writing to the o~ Party a representative who & auUlorized to· resolve any diSpute ariSing l,lll(ler .this Asreement in an equitable liUIIIner and, unless otherwise expressly provided ~·to exercise the·authority ofsuch Paity to make dec.isions by mutual agreement. (b) lf such designated repn:sentatives are unable to resolve a dispute under tJUs Agreement, such ~utc shall be referred by each Party's repreaeatatives. respectively, to a senior officer dasipated by Seller and a senior officer designated by Purchaser for resolution upon five (S) Days' written notice ftom either Party. Bxecuticm Wriion 59 Case 3:15-cv-00070-DPM Document 1-1 Filed 03/18/15 Page 124 of 139 (c) The Parties hereto agree (i) to attempt to resolve all disputes arisiog hereunder promptly, equitably and in a &ood faitlr manner, and (ii) to provide each other with reasonable access during normal business hours to any and all non;.privileged records, .information and data pertaiDing to any such dispute. Section 20.2 Arbitration. (a) In the event that any dispute between the Parties is unible to be resolved pursuant to Seotion 20.1 within thirty (30) Days of the written notiee described in SeCtion 20.1(a) or 20.1(b). then upon notice of the c;ither Party such dispute shall be submitted to arbitration as set forth herein. (b) The Parties shall select three (3) AAA approved commercial arbitrators, unless the Parties otherwise agree in writing to select the arbitrators from anoth,er source. To select these arbitrators, the Seller shaU appoint one arbitrator and Purchaser shall appoint one arbitrator within twenty (20) Day.~ of the re~pt of the notice given in Section 20.2(a) or 20.l(b). The two arbitrators so appointed sbaU seled: the third arbitrator within ten (10) Day.~ of the appointmeilt of the second arbitrator. If any arbitrator is not appointed within the time limit provided herein, such arbitrator shall be appointed by the AAA in accordance with tho listin& striking and nnking procedure in theltu1es. · . ' (c) The arbitrators shall permit each Party to conduct reasonable discovery as promptly and expeditiouSly as possible (and .both Parties shall cooperate to this end). Discovery shall be limited to requests for the production of documents and examination upon deposition. Each Party's requests for, and responses to discovery including examination upon deposition shall bo COJD))leted within sixty (60) Days of the arbitrato~· selection. The Parties may modify the periqd for discovery by mutual agreement. The arbitr]ltors shall resolve any discovery disputes between tJte P~es that, aftec using their beat etl'orts, the Parties cannot resolve themselves. AU 4epositioos of employees of Parti_es shall take place in Mcmpbis, Tennessee or New York, NY unless oUterwise ayeed. (d) · The hcarin& shall be initiated as promptly and expeditiously as posiible (and tho_ Parties shall cooperate to this end) m.d. in no event more :than Qrirty (30) Days after the conclusion of the discovery period. The rulei of evidence of AAA shall apply to the presentation of evidence. Each Party shaJl file written direct testimony with the arbitrators aiul serve a copy on the other Party. The written tcstimQny must be received by tho arbitratom and the other Party no later than ten (I 0) Days prior to the commencement of the hearing. Bach Party shall be permitted to make opening sta~¢ments with the Party deiuanding amnration prc8cnting its opening stat~ent fii'st. Immediately after opening statements, the PQity demanding arbitration sbatl then present evidence in support of. its position. The other Party then shall present evidence in support of its position. All witnesses must testify under oath, and a stenographic record and ttanscript of the hearing shaJJ be made. .Bach Party shall have an opportunity to cross-examine the other PartY's witnesses, including the witnesses that file written direct tc;!timoliy. The Parties shoJI be petmitted to make closing statements. The Party d.emanding. arbitration shall present its statement first. The arbitrators shall conclude the Execution version 60 ... . Case 3:15-cv-00070-DPM Document 1-1 Filed 03/18/15 Page 125 of 139 •, hearing within thirty (30) calendar ·Days of ita commencement The period for concluding the hearing may be modified by mutual agreement of the Parties. (e) The Parties sh.aJl·submit briefs and/or proposed orders foiJowing the completion of the hearing unless otherwise agreed by the Parties and approved by the arbitrators. Initiaf briefs or proposed orders sboll be served on other Parties. The initial briefs or proposed orders must be received by the arbitrators and the other Party no later than fifteen (15) Days after completion of the hearing. Reply briefs shaD be submitted to the arbitrators and served on tho other Party within ten (1 0) Da~ of receipt by the arbitrators 8Jid the other Party of the initial briefs or proposed orders. The briefing schedule p~vidcd herein may be modified by mutual agreement of the Parties with tho approval of the arbitrators. (l) The determination 11~dlor award of the atbi.tors, whichever is appropriate, sbaU bo made no· later than. ·th_irty (30) Days fi'9m .the date of the compl~ion of the hearing or, if appUcable. the date the last required briefs and/or proposed orda were n:ceived by tho arbitrators aild- the Parties. Such determination and/or award shall be conCluSive, ~nat. and bindin& subject only to tho outcome ofconfhmatic>n or vacation proceedings, if any, under Applicable Law. To the extent that an award includes an BIJlount of money, iucb award shall i~cl~e interest at the Default Rate. and. such interest - --shaD-~m-the date(s)..on-which ..-ch-money-should-havc-bcen-JNli!l-to-the--- ·····- . ~----- .. prevailing Party or was incorrectly paid by that Party. ' (g) Unless the Partie$ o.theJWise agree in writing. arbitration under this Agreement shall be conducted in Memphi~ Tennessee or New York, NY. (b) Arbitration under this Agreement shall be governed by tho A,AA Commercial Arbitration Rules (or allY- successor thereto) in effect at the time of arbitration, unless the Parties mutwilly agree to another set of rules or body of, provided tl_Jat if any specific provision of this Section conflicts with the then effective AAA Commercial Arbitration llules, or other set of roles or body of Law mutually agreed to by the:parties, then tho provisions of this Section ahall govem. (i) The costs of the arbitration. procecdJDgs, other than tho Parties' own expenses, shall be paid by the non-prevailing Party. (j) The arbitrators shall have no power to amend or add to this Agreement, but shall have the authority to int~ret the language of such agreements and make findings of fact, order specific perfonnanco and provide injunctive relief as If the arbitrators were a cowt. ~ubject to such limitation, the decision of the mbitrators shall be final and binding. Judgment on an award may be enforced in any court of competent jurisdiction. -Upon request of either Party, the arbitrators may issue such orders for interim relief as may bo deemed nccessary to safeguard the property ~t is the subject of arbitration or otherwise awid irreparable harm to a Party, without prejudice to the rights of .the Parties to tho final detennination of the dispute. Either Party may, without inconsistency with this Agreement, ieek from any court of competent jurisdiction any Execution version 61 Case 3:15-cv-00070-DPM Document 1-1 Filed 03/18/15 Page 126 of 139 interim or provisi.ooal relief lhat may be necessary to protect the rishts or property of that Party. pending the establishment of the arbitration tnounal. The fiaal decision of the arbitrator must also be filed with the FERCif it affects· jurisdictional rates, terms and conditions olservice or facilities. (k) I I I 1 f

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