[00:00:00] Speaker 03:
Thank you, Your Honor.

[00:00:01] Speaker 03:
May it please the court, Jason LaFawn for Aura Health and Aura Ring Incorporated.

[00:00:05] Speaker 03:
I'd like to reserve five minutes.

[00:00:07] Speaker 03:
Keep an eye on the clock, as you saw before.

[00:00:09] Speaker 03:
Yes, Your Honor.

[00:00:11] Speaker 03:
The district court conjured a rule that the mere existence of a second contract between two litigants mutates what would normally be a scope question about an arbitration agreement into a formation question.

[00:00:28] Speaker 03:
And as the Fourth Circuit's recent decision in modern perfection shows, that's not how any of this works.

[00:00:34] Speaker 03:
Did modern perfection address Coinbase?

[00:00:36] Speaker 03:
It did, very much.

[00:00:37] Speaker 03:
It talked a lot about it because it had to figure out whether or not the plaintiffs made the type of fourth order dispute that Coinbase spoke about.

[00:00:47] Speaker 03:
And so the court looked to the plaintiff's arguments, and it saw that what the plaintiffs were actually arguing is that they did not agree

[00:00:55] Speaker 03:
to arbitrary disputes under this second contract.

[00:00:59] Speaker 01:
Aren't we dealing with a fourth order dispute here?

[00:01:01] Speaker 03:
No, we are not, Your Honor, and modern perfection explains why.

[00:01:06] Speaker 03:
A fourth order dispute occurs when two contracts conflict as to who decides the question of arbitrability.

[00:01:18] Speaker 03:
Here, we have one contract

[00:01:20] Speaker 03:
that delegates arbitrability to the courts, and we have an alleged second contract.

[00:01:26] Speaker 04:
Well, a contract that you've, I believe, conceded in the district court, and the district court recognized it had to view that it did exist.

[00:01:36] Speaker 03:
No, that's not correct, Your Honor.

[00:01:38] Speaker 03:
When we were speaking- Which part is not?

[00:01:41] Speaker 04:
The district court didn't base its finding on that, or that you didn't necessarily concede that it existed for purposes of finding an agreement?

[00:01:48] Speaker 03:
both of them, Your Honor, because the district court said it did not need, it could wait till another day to reach that.

[00:01:55] Speaker 01:
Yeah, but it was based upon your concession, correct?

[00:01:59] Speaker 03:
No, that's not correct, Your Honor.

[00:02:02] Speaker 03:
Our argument was similar to a 12b6 argument, and that is, even if you take what they say about the contract as true, they still lose.

[00:02:11] Speaker 03:
That's a typical 12b6 argument.

[00:02:13] Speaker 03:
It is not the case in any sort of, in arbitration, a motion to compel is sort of like a mini trial.

[00:02:18] Speaker 03:
It is not the case in any sort of litigation that you take the plaintiff's allegation as true to see if they win.

[00:02:24] Speaker 03:
You take them if it's true to see if we win.

[00:02:28] Speaker 03:
And so the district court, and this sort of gets to my third sort of issue and an alternative argument, is that at the very least this court needs to remand for if a second contract matters, the district court first needs to decide whether a second contract exists.

[00:02:49] Speaker 03:
that's what the FAA section four demands?

[00:02:52] Speaker 04:
We don't have any, I mean, I think you're right, section four treats this as, makes available a summary trial, but we don't have any factual findings here, and I think we have case law that suggests that the proper analogous posture is rule 56, meaning that we would take the facts in the light most favorable to the non-moving party.

[00:03:15] Speaker 03:
Well, I think the district court would.

[00:03:18] Speaker 03:
The district court did not do that.

[00:03:20] Speaker 03:
And if the court wants to do that here, it will find many, many fact questions.

[00:03:27] Speaker 03:
But I think it's also important to- Well, if there are fact questions, which way does it cut?

[00:03:32] Speaker 04:
There has to be clear and unmistakable evidence of an agreement to arbitrate.

[00:03:36] Speaker 04:
So if the non-moving party, you're the moving party, so the non-moving party

[00:03:43] Speaker 04:
is a tier.

[00:03:44] Speaker 03:
That's correct, Your Honor, but we're mashing up a lot of different questions here.

[00:03:48] Speaker 03:
The clear and unmistakable rule goes to whether the parties have delegated arbitrability.

[00:03:53] Speaker 03:
That question is easy because under this Court's

[00:03:56] Speaker 02:
Precedent the things the the words that are in the arbitration clause match exactly what this court has said is clear and unmistakable But we're not really talking about whether delegating Arbitrability we're talking about whether there was an Arbitration agreement at all.

[00:04:13] Speaker 03:
No, we are not your honor the the judge found one the plaintiffs concede one there There is an there is an arbitration agreement.

[00:04:20] Speaker 03:
Nobody disputes.

[00:04:20] Speaker 02:
Well, there's an arbitration agreement in your

[00:04:24] Speaker 02:
your side of the agreement, meaning in the shareholder agreement.

[00:04:31] Speaker 02:
But I didn't find any arbitration agreement in the so-called advisor agreement.

[00:04:38] Speaker 02:
And I don't think the court found there was one either.

[00:04:42] Speaker 03:
That's correct, Your Honor.

[00:04:44] Speaker 02:
and our argument is that the arbitration agreement... Your argument is the arbitration agreement controls and there is no... there is no advisor agreement.

[00:04:53] Speaker 02:
Their argument is there is an advisor agreement and there was no arbitration ever agreed to.

[00:04:59] Speaker 03:
Your honor, our argument is that even if that second contract exists, this court still needs to reverse because... Because?

[00:05:08] Speaker 03:
Because the question of whether or not disputes under that second contract fall within

[00:05:13] Speaker 03:
The arbitration clause in the first contract is a question of scope.

[00:05:18] Speaker 03:
In that scope question, the parties clearly and unmistakably delegated.

[00:05:22] Speaker 02:
Why is it not, instead, a determination of what they agreed to?

[00:05:28] Speaker 02:
We're not talking about the scope of the agreement.

[00:05:31] Speaker 02:
We're looking at the agreements.

[00:05:33] Speaker 02:
We're talking about what was agreed to by the parties.

[00:05:37] Speaker 03:
Well, Your Honor.

[00:05:37] Speaker 02:
In my book, that's always a court question.

[00:05:40] Speaker 03:
That's not correct, Your Honor.

[00:05:42] Speaker 03:
What was agreed to by the parties, and I will point you

[00:05:45] Speaker 03:
first to this court's decision in Portland Gas and Electric.

[00:05:48] Speaker 03:
It involved multiple contracts between multiple parties.

[00:05:52] Speaker 03:
One of two of those parties went to arbitration and then they implicated Portland Gas and Electric and sureties for which Portland Gas and Electric and the sureties did not have an arbitration clause.

[00:06:06] Speaker 03:
And this court said that whether or not Portland Gas and Electric and those sureties, sorry, whether or not Portland's agreement with this other party

[00:06:15] Speaker 03:
And what that arbitration clause said included the dispute with the sureties was a question for the arbitrator.

[00:06:22] Speaker 03:
And so I think here we're honing in on an issue where the origin of the district court's mistake here.

[00:06:31] Speaker 03:
The district court framed the formation inquiry as whether these parties formed an agreement to arbitrate these claims.

[00:06:38] Speaker 03:
That's a compound question.

[00:06:41] Speaker 03:
The first sub-question is whether the parties

[00:06:43] Speaker 03:
formed any agreement to arbitrate at all.

[00:06:46] Speaker 03:
The second sub-question is if they did, do the claims fall under that arbitration clause?

[00:06:53] Speaker 04:
This question- That seems to invert the order that the Coinbase relies on us to, is reminded us to work through, right?

[00:07:03] Speaker 04:
Once there's another contract, there's another contract, and that contract reportedly covers

[00:07:09] Speaker 04:
the dispute, right?

[00:07:11] Speaker 04:
And again, we may read it differently, but the court says that this other contract exists or we're bound to at least assume that it exists.

[00:07:22] Speaker 04:
So now we've got two contracts.

[00:07:23] Speaker 04:
How would you distinguish us from the Johnson case?

[00:07:26] Speaker 03:
Johnson did not involve delegation, number one.

[00:07:30] Speaker 04:
Why would delegation, with respect to the terms of use and the online tire purchase, change the separate transaction

[00:07:41] Speaker 04:
The whole point is, you know, at the bottom of this, as we're trying to figure out, I get that it's hard to distinguish between the separate contracts and the scope, but... So, first of all, Johnson would have come out the same way if there were no second contract.

[00:07:52] Speaker 03:
If Walmart, if Johnson had been shopping at Walmart, and Walmart had accused him of shoplifting, and he had then sued them for unlawful imprisonment,

[00:08:04] Speaker 03:
And they brought the arbitration clause, because it would have technically fallen under what they said.

[00:08:08] Speaker 03:
Johnson's analysis would have been exactly the same.

[00:08:10] Speaker 03:
So the second contract doesn't matter.

[00:08:12] Speaker 03:
The other reason that what Johnson says matters is because there is one kind of formation question that is not delegable.

[00:08:22] Speaker 03:
And that is, Caremark says this, whether there is any arbitration agreement at all.

[00:08:30] Speaker 03:
That gets, because everything else is scope.

[00:08:32] Speaker 03:
If you're asking about whether or not a dispute under a second contract falls within the arbitration clause in the first, that is scope.

[00:08:40] Speaker 03:
That's what Portland Gas and Electric says.

[00:08:42] Speaker 03:
It's also what Mamet V. Mastro says.

[00:08:45] Speaker 04:
I guess to go down the scope road a little bit, I assume that your client has employment agreements with its executives.

[00:08:54] Speaker 04:
and that those officers may have shareholder agreements.

[00:08:59] Speaker 04:
So do you contend that if they are also shareholders under the adherence agreement, that those employment agreements incorporate the arbitration from the shareholder agreements?

[00:09:10] Speaker 04:
Because that seems to be the analogy here.

[00:09:13] Speaker 04:
And I guess that seems like an unlikely reading, that you're clearly dealing with an agreement to be an employee or a contractor or advisor or an officer

[00:09:25] Speaker 04:
in an agreement that all shareholders have.

[00:09:27] Speaker 03:
Yeah, and this is where the district court went wrong.

[00:09:32] Speaker 03:
The district court ignored the text of the arbitration clause.

[00:09:35] Speaker 03:
And what this court has said and what the Supreme Court has said is that the main purpose of the FAA is to enforce the terms of an arbitration agreement.

[00:09:42] Speaker 04:
But the arbitration clause says the transaction is contemplated herein.

[00:09:46] Speaker 04:
This was said in 2017 and 2018.

[00:09:50] Speaker 04:
So a general shareholder agreement, it's the position that the transactions that Mr. Attia alleges were contemplated in the same way that any other major shareholder of the company would be contemplated to transact.

[00:10:08] Speaker 03:
Yes, Your Honor, and to be clear, the district court didn't find that these transactions were not contemplated because the district court didn't look at the text, did not apply the text.

[00:10:16] Speaker 03:
The transaction here is an issuance of options.

[00:10:24] Speaker 03:
And that is covered multiple times in the shareholder.

[00:10:28] Speaker 04:
So even as to an officer, the CEO of Oura Ring, if they get options, your position is, yep, they'd be swept up with all these other shareholders in terms of it.

[00:10:39] Speaker 03:
If they've agreed to an arbitration agreement about disputes arising out of... That governs every other contract.

[00:10:45] Speaker 04:
That's your position.

[00:10:46] Speaker 04:
Sorry?

[00:10:46] Speaker 04:
That governs every other contract.

[00:10:48] Speaker 03:
It governs what the text of the arbitration clause says.

[00:10:51] Speaker 03:
And that's what Portland Gas and

[00:10:53] Speaker 03:
and electric says, and that's why that is an arbitrability dispute that goes to the arbitrator.

[00:11:01] Speaker 03:
Only one formation dispute is not delegable, and that is whether there is any arbitration agreement at all.

[00:11:09] Speaker 03:
That's what Caremark says, and that's what Granite Rock says, and importantly, Caremark relies on Granite Rock.

[00:11:17] Speaker 03:
Granite Rock says,

[00:11:19] Speaker 03:
that labels do not control.

[00:11:21] Speaker 03:
It is the substance of what is going on.

[00:11:23] Speaker 03:
And asking whether or not a contract has been formed to cover these disputes is two questions.

[00:11:28] Speaker 03:
And only the first one is not eligible.

[00:11:31] Speaker 03:
The second one is scope.

[00:11:32] Speaker 03:
Under this court's clear precedent, the second one is scope.

[00:11:36] Speaker 03:
Mr. LaFond, do you want to?

[00:11:37] Speaker 01:
Mr. LaFond, I want to go back to what I view as a concession before the district court, because I'm troubled by your answer.

[00:11:49] Speaker 01:
I'm going to read what the district court said in its opinion.

[00:11:53] Speaker 01:
Getting to the bottom of whether the advisor agreement was formed is a task for another day.

[00:11:59] Speaker 01:
At this stage in the litigation, defendants concede, as they must, that the allegations must be construed in the light most favorable to the non-moving party and argue that even if the advisor agreement did bind the parties, it also provides for arbitration.

[00:12:19] Speaker 01:
Are you suggesting to us that that concession was not made before the lower court?

[00:12:24] Speaker 01:
Is that what you're saying?

[00:12:26] Speaker 03:
Your Honor, I am saying that we conceded that taking the allegations as true, the plaintiffs still lose.

[00:12:34] Speaker 03:
But even if we did concede that, FAA Section 4 speaks to a court.

[00:12:40] Speaker 03:
It says the court shall do this.

[00:12:43] Speaker 03:
There is no waiver, and there is no invited error.

[00:12:49] Speaker 03:
But to be clear, what we said in the court was that if everything Adia says is true, he still must arbitrate.

[00:13:01] Speaker 03:
Because we said, even if this contract exists, if you look at it, and we argued below, we said, look, it refers to a shareholder agreement, and the court

[00:13:13] Speaker 03:
The court said, no, it didn't incorporate that.

[00:13:16] Speaker 03:
But the court recognized, the court said it has to wait till another day.

[00:13:21] Speaker 03:
The court didn't say that we conceded that there was a contract.

[00:13:27] Speaker 03:
And so I will reserve what little time I have left.

[00:13:29] Speaker 02:
Let me ask you one more question.

[00:13:30] Speaker 02:
We'll give you additional time, so thank you.

[00:13:32] Speaker 02:
Because the district court also said in that same sentence,

[00:13:38] Speaker 02:
Going with what Judge Christensen came up with, defendants concede as they must that the allegation must be construed in light of most favorable to the nonmoving party and argue that even if the advisor agreement did bind the parties rather than the shareholder agreement, the advisor agreement provides for arbitration.

[00:14:05] Speaker 02:
How does the advisor agreement provide for arbitration?

[00:14:09] Speaker 03:
All right.

[00:14:10] Speaker 03:
Not the way we argued it below, Your Honor.

[00:14:14] Speaker 03:
I can change your argument.

[00:14:15] Speaker 03:
Well, the argument below is just incorrect.

[00:14:19] Speaker 03:
What it should have been.

[00:14:21] Speaker 02:
I can tell you what it should have been.

[00:14:22] Speaker 02:
I mean, my worry is that as I looked at the advisor agreement, I don't find anything in there that provides for arbitration.

[00:14:28] Speaker 03:
Well, I can tell you where it is, Your Honor.

[00:14:30] Speaker 02:
Well, you can tell me where it is, but it cites an agreement which is long before your share agreement.

[00:14:36] Speaker 02:
And it talks about the transfer of shares, which is nothing to do with what your situation is here.

[00:14:43] Speaker 02:
So I'm trying to figure out what you really are doing.

[00:14:46] Speaker 03:
Well, I wasn't planning to make that argument, but I'm happy to tell you, the alleged advisor agreement says that the person who is signing it has read the plan.

[00:14:58] Speaker 03:
In the context, that is the equity

[00:15:00] Speaker 03:
That is the equity plan and as as our our declaration said.

[00:15:06] Speaker 03:
The only equity plan in existence at that time was the 2016 equity plan, and that's in the record.

[00:15:11] Speaker 02:
If you go and look at that, it says that any stock option agreement... Even though the advisor agreement does not talk about it?

[00:15:19] Speaker 03:
It says the plan, Your Honor.

[00:15:20] Speaker 02:
Oh, I see.

[00:15:21] Speaker 02:
Even though it cites 2015?

[00:15:23] Speaker 02:
That's the shareholder agreement.

[00:15:25] Speaker 03:
I'm talking about the plan, Your Honor.

[00:15:27] Speaker 03:
The plan is the equity plan, 2016, and under that it says,

[00:15:31] Speaker 03:
Anybody who enters into a stock option agreement under this plan agrees to arbitrate.

[00:15:35] Speaker 02:
All right.

[00:15:36] Speaker 02:
I see your argument now.

[00:15:41] Speaker 04:
Thank you, Mr. LaFond.

[00:15:42] Speaker 04:
Ms.

[00:15:42] Speaker 04:
Peterson?

[00:15:50] Speaker 00:
Good morning, may it please the court, Sarah Peterson with Coblins Patch, Duffy and Bass on behalf of the appellee, Dr. Peter Attia.

[00:15:57] Speaker 00:
Just to address the argument first that council was just making, it's a brand new argument

[00:16:02] Speaker 00:
never made before, not made in the papers about the advisor agreement somehow incorporating an equity plan, which according to counsel contains an arbitration provision, was never made before and this court shouldn't consider it.

[00:16:17] Speaker 00:
As to Aura's primary argument in its opening brief that the district court erred because its analysis should have begun and ended with the delegation clause in the shareholder agreement,

[00:16:29] Speaker 00:
That position is squarely inconsistent with this Court's precedent in Johnson v. Walmart and the Supreme Court's recent authority in Coinbase v. Suski, both of which say that the approach that AURA urges does not apply in the two-contract scenario presented here.

[00:16:48] Speaker 00:
that scenario, the court is required to conduct an analysis of which contract applies to the case, which is exactly what the district court did in this instance.

[00:17:02] Speaker 02:
As I understand the facts of this situation, your client entered into an agreement with the president of the defendants or with the representative of the defendants sometime in late 2016?

[00:17:17] Speaker 00:
uh... if you're talking about the advisor agreement that was entered in not in twenty sixteen but in twenty nineteen february twenty but he started nineteen's when the when the

[00:17:29] Speaker 02:
written agreement came.

[00:17:31] Speaker 02:
Correct.

[00:17:31] Speaker 02:
But they started, he had a meeting with Mr. I don't want to say his name because I'm from Idaho and I'll say it wrong, but he entered into this agreement with this guy and he started then to provide medical consulting and advisory services in exchange for stock options.

[00:17:50] Speaker 02:
That was in late 2016, correct?

[00:17:53] Speaker 00:
Correct.

[00:17:53] Speaker 00:
The engagement began in 2016.

[00:17:55] Speaker 00:
It was memorialized in February of 2019.

[00:17:59] Speaker 02:
Right.

[00:18:01] Speaker 02:
In January 2019, the defendants mailed him an agreement.

[00:18:05] Speaker 02:
He signed the agreement, right?

[00:18:07] Speaker 00:
Correct.

[00:18:08] Speaker 02:
It's my understanding then the shareholder agreement, when did that come?

[00:18:13] Speaker 00:
Dr. Attia signed an adherence agreement which bound him to the shareholder agreement.

[00:18:19] Speaker 00:
That was in 2018.

[00:18:21] Speaker 02:
So 2018, that was two years after the 2016 agreement with the representative of the defendants.

[00:18:31] Speaker 00:
That's correct that it was two years after the engagement began and the services began to be provided, but it was before the agreement is with Dr. Attia for the advisory services is signed in February 2019.

[00:18:46] Speaker 01:
Do we know from the record why there was that two year delay between the parties reaching in effect an agreement and then the actual agreement being ostensibly executed?

[00:18:59] Speaker 00:
The evidence in the record is that the parties came to this oral agreement and understanding.

[00:19:04] Speaker 00:
There was performance.

[00:19:06] Speaker 00:
Dr. Atiyah repeatedly asked that the agreement be memorialized in writing.

[00:19:11] Speaker 00:
It wasn't done so until January of 2019.

[00:19:15] Speaker 00:
So the delay is just due to delay on Aura's part.

[00:19:19] Speaker 01:
Could you address my concerns regarding what I perceived and believe to be the concession that we were talking about, please?

[00:19:27] Speaker 00:
Yes, Your Honor.

[00:19:28] Speaker 00:
We fully agree with Your Honor that there was a concession by ORA on this procedural point that it tries to make something of now on appeal.

[00:19:36] Speaker 00:
But the concession is at 3ER 262 of the record.

[00:19:41] Speaker 00:
And to set it up, Aura is claiming now on appeal for the first time that Johnson and Coinbase are distinguishable because Aura, in this case, disputes or intends to dispute the validity of the advisor agreement when this case reaches the merit stage.

[00:19:56] Speaker 00:
And Aura says that the district court shouldn't have accepted Dr. Attia's allegations that there exists this advisor agreement and that it's valid and enforceable.

[00:20:07] Speaker 00:
But in the district court, Aura merely noted for the district court that it intended to dispute the advisor agreement when the case reached the merit stage, but then went on to say, nevertheless,

[00:20:22] Speaker 00:
The district court should accept Dr. Attia's allegations about that agreement as true for purposes of this motion.

[00:20:29] Speaker 00:
So it absolutely made a concession that the district court should accept the existence and validity of the advisor agreement for purposes of resolving the motion, and that's exactly what the district court did.

[00:20:41] Speaker 04:
And Ms.

[00:20:42] Speaker 04:
Peterson, I guess then the converse of that would be that you would concede that if through the litigation it's established as to the facts determine that the contract governed the arbitration, that ORA could move to arbitrate later on, right?

[00:21:01] Speaker 04:
That's kind of the deal we make where in a section four, the summary stage, we're gonna construe it all in favor of the non-movement, but that doesn't deny

[00:21:10] Speaker 04:
the party claiming arbitration and the opportunity to move later if the facts turn up differently.

[00:21:15] Speaker 00:
And that is the key dispute in this case.

[00:21:19] Speaker 00:
If there is no advisor agreement, then we have no breach of contract claim.

[00:21:24] Speaker 00:
So there will be further proceedings on that issue.

[00:21:27] Speaker 00:
But yes, if it's established that there is no advisor agreement, then there will be further proceedings.

[00:21:34] Speaker 04:
Does anything in the shareholder agreement or the adherence agreement, the various agreements that may be subject to arbitration, does any of that, do any of those terms you concede govern the advisor relationship in terms of its compensation?

[00:21:54] Speaker 00:
No, Your Honor.

[00:21:56] Speaker 00:
ORA has been unable to point to a single term in the shareholder agreement that actually governs or affects or in any way implicates Dr. Atiya's advisor agreement for medical consulting services.

[00:22:08] Speaker 04:
So if the advisor agreement contemplates the compensation by means of options, it doesn't incorporate any of the terms of the... It just stands on its own.

[00:22:21] Speaker 04:
It doesn't incorporate any terms of the shareholder agreement.

[00:22:23] Speaker 00:
The advisor agreement does not incorporate any terms of the shareholder agreement.

[00:22:27] Speaker 04:
How do we avoid a rule in this case that would allow, I think this is what your friend on the other side is concerned about?

[00:22:41] Speaker 04:
pleading the existence of another contract and then at the motion to arbitrate saying, sorry, I've just introduced a fourth order problem.

[00:22:54] Speaker 04:
I get the court to give me full litigation contrary maybe to the broad purpose of the FAA on this new contract and then

[00:23:07] Speaker 04:
Later on, maybe it doesn't turn out that way.

[00:23:09] Speaker 04:
Should we be worried about that?

[00:23:10] Speaker 04:
I mean, the idea that this new fourth order question between contracts does seem to create some warps in the FAA's operation when a new contract is simply pleaded.

[00:23:25] Speaker 00:
I think it necessarily does, Your Honor, because the existence of a second contract that doesn't contain an arbitration provision necessarily presents the competing principle, the counterweight to the FAA's presumption in favor of arbitration is that the parties will only be made to arbitrate

[00:23:46] Speaker 00:
issues that they have formed an agreement to arbitrate.

[00:23:49] Speaker 00:
So when there's a second contract containing no arbitration provision, the presumption shouldn't apply.

[00:23:55] Speaker 00:
There shouldn't be any thumb on the scale in favor of arbitration.

[00:23:59] Speaker 00:
So I think that's the natural outcome of a two-contract case.

[00:24:06] Speaker 02:
It seems to me that one of the issues here, and I'm not sure we had Mr. LaFonde address it, but it seems to me that one of your issues is that the district court affirmed on the ground that the two contracts were not part of a single interrelated transaction.

[00:24:30] Speaker 02:
And then you suggest that Mr. LaFonde and Ora did not challenge that.

[00:24:36] Speaker 02:
That's correct, Your Honor.

[00:24:38] Speaker 02:
Would you give me more help on that argument?

[00:24:42] Speaker 00:
Yes, Your Honor.

[00:24:43] Speaker 00:
Johnson.

[00:24:44] Speaker 02:
Because it seems to me that it's mere argument that it's all one contract, not any more contracts.

[00:24:52] Speaker 02:
It's one.

[00:24:53] Speaker 02:
And everything else is just determined whether you go to arbitrability eliminates that argument to some extent.

[00:25:02] Speaker 00:
The argument that we made that the court can affirm on this alternative unchallenged ground is based in the latter part of Johnson which addresses the court's decision in international ambassador.

[00:25:16] Speaker 02:
I understand your argument but apply it then to this particular situation because

[00:25:24] Speaker 02:
My worry is that he has challenged this idea that the two contracts were not part of a single interrelated transaction.

[00:25:33] Speaker 00:
I don't think that Aura has raised any challenge to the district court's findings on that interrelatedness analysis, which were that the contracts had separate consideration, they were negotiated separately.

[00:25:47] Speaker 00:
Those are the types of considerations that go to the international ambassador ground for finding that one contract and its arbitration provision cannot apply to a second contract that doesn't contain an arbitration provision.

[00:26:01] Speaker 00:
So we see that as a separate and independent ground that the district court reached for denying the motion to compel arbitration.

[00:26:11] Speaker 00:
And as the court did, this court did in Johnson as well.

[00:26:14] Speaker 00:
It was a separate ground.

[00:26:15] Speaker 02:
Well, I understand that.

[00:26:16] Speaker 02:
But why doesn't his argument that it's all one contract

[00:26:20] Speaker 02:
and it's not two and it all comes forth in the shareholder agreement and we're bound by the shareholder agreement and everything that happens throughout this transaction is the shareholder agreement period.

[00:26:35] Speaker 02:
Why doesn't that undo that argument?

[00:26:38] Speaker 00:
I don't understand ORA to be arguing that it's all one contract.

[00:26:41] Speaker 00:
I believe what they're arguing is that there's a shareholder agreement and its arbitration provision extends to

[00:26:49] Speaker 00:
cover the advisor agreement because there are matters.

[00:26:53] Speaker 02:
I don't even think there is an advisor agreement.

[00:26:56] Speaker 00:
Right.

[00:26:57] Speaker 00:
That's also true.

[00:26:58] Speaker 00:
But I think they make an argument that even if there exists an advisor agreement, the arbitration provision in the shareholder agreement would extend to the advisor agreement.

[00:27:08] Speaker 00:
And our argument is that in addition to that, they had to challenge the district court's separate findings, which would be reviewed for clear error under these.

[00:27:20] Speaker 04:
Well, I was just about to ask, where would we find those findings?

[00:27:25] Speaker 00:
They are in the district court's order, which I don't, sorry, I don't have right in front of me the record citation, but the district court makes findings that, a specific finding that the

[00:27:41] Speaker 00:
that the contracts are not interrelated, that they were negotiated separately, that they involve separate consideration.

[00:27:49] Speaker 00:
I believe it's at the end of the discussion about the shareholder agreement right before the district court turns to the advisor.

[00:27:57] Speaker 04:
Are those, I guess this is something I've struggled with a little bit.

[00:28:01] Speaker 04:
You recite the standard review faithfully to how we've recited the standard review, but I'm not sure I understand it.

[00:28:09] Speaker 04:
We've got cases that say that when there is a section four motion for arbitration, the district court may conduct a summary trial, but otherwise we treat it as kind of a summary judgment motion against through the lights in favor of the non-moving party, which is

[00:28:29] Speaker 04:
rhymes at least with what the district court did here.

[00:28:33] Speaker 04:
And yet it sounds like you're also arguing for clear error review when typically in order to enjoy clear error review, the rules of civil procedure require some formalities to those findings.

[00:28:50] Speaker 04:
And this is in the district court's reasons.

[00:28:57] Speaker 04:
There's no separate findings of fact.

[00:29:00] Speaker 04:
Does that matter in terms of it?

[00:29:03] Speaker 04:
Because if we get into trying to diagnose clear error throughout this, and the district court has not separately made those findings as required by the rules, there's a big difference between clearer and de novo.

[00:29:15] Speaker 04:
Maybe it doesn't make a difference for you.

[00:29:17] Speaker 02:
And I appreciate his question.

[00:29:20] Speaker 02:
You can add to it.

[00:29:20] Speaker 02:
And there was no trial.

[00:29:23] Speaker 00:
That's correct.

[00:29:23] Speaker 02:
It was all on pleadings.

[00:29:25] Speaker 00:
That's correct.

[00:29:25] Speaker 00:
There was no.

[00:29:26] Speaker 02:
I like that question.

[00:29:27] Speaker 02:
I was going to ask something similar, not nearly as well done as him, but I think that's a tough question for you.

[00:29:33] Speaker 00:
Well, the point about clear error that we made only applies to this separate ground for affirming, which we believe that the statements the district court made about the consideration being separate for the two contracts negotiated separately, that those are factual findings about the transactions.

[00:29:52] Speaker 02:
How can you make that factual finding?

[00:29:54] Speaker 02:
I think that's what the question is.

[00:29:56] Speaker 02:
When you didn't have a trial, you didn't have anything except the lawyers arguing in front of you and pleadings

[00:30:03] Speaker 00:
Right, but regardless of what the standard of review would be on that issue, the main point is that ORA hasn't challenged that ground at all.

[00:30:14] Speaker 00:
So this court could affirm on that ground because it is unchallenged by ORA in its opening brief.

[00:30:22] Speaker 01:
Before you run out of time, I don't know why I keep coming back to this.

[00:30:26] Speaker 01:
Is this a fourth order dispute under Coinbase?

[00:30:31] Speaker 00:
Yes, Your Honor.

[00:30:32] Speaker 01:
And do you want to take just a minute to distinguish this modern perfection case that was cited to us?

[00:30:45] Speaker 00:
We did respond to the 28-J letter, Your Honor.

[00:30:47] Speaker 01:
I saw that you did.

[00:30:49] Speaker 00:
And the main point is that modern perfection, well, it cites Coinbase.

[00:30:54] Speaker 00:
It only does so to

[00:30:56] Speaker 00:
to say that the parties there had forfeited any reliance on Coinbase.

[00:31:02] Speaker 00:
And then its understanding of what a fourth order question might be, I think, is much more narrow than is warranted by the language in Coinbase itself and is inconsistent with this court's precedence.

[00:31:17] Speaker 00:
in Johnson versus Wal-Mart, which also confronted what Coinbase would call a fourth order dispute and is exactly the type of analysis that the district court did in this case.

[00:31:31] Speaker 04:
All right.

[00:31:32] Speaker 04:
Thank you, Ms.

[00:31:33] Speaker 04:
Peterson.

[00:31:33] Speaker 04:
Do my colleagues have any further questions?

[00:31:35] Speaker 04:
All right.

[00:31:36] Speaker 04:
Thank you very much.

[00:31:36] Speaker 04:
Mr. LaFont?

[00:31:44] Speaker 03:
Your Honor, just a few points, if I may.

[00:31:46] Speaker 03:
First, counsel's argument really focuses the issues.

[00:31:52] Speaker 03:
Her argument is that if parties have two contracts, one has a clear arbitration clause and the second one doesn't, that everything is a question of formation.

[00:32:03] Speaker 03:
You don't apply the presumption in favor of arbitrability.

[00:32:07] Speaker 03:
You don't delegate nothing.

[00:32:08] Speaker 03:
So parties could enter into a contract that says,

[00:32:11] Speaker 03:
We want to arbitrate disputes occurring out of this contract.

[00:32:15] Speaker 03:
We're going to enter it on this state, and we want to arbitrate this.

[00:32:18] Speaker 03:
And because they did that here, this one is naturally silent.

[00:32:22] Speaker 04:
Well, I think, for example, Justice Gorsuch's concurrence in Coinbase referred to that.

[00:32:28] Speaker 04:
We don't have any terms like that here.

[00:32:31] Speaker 03:
Right, we don't have any forward-looking incorporation.

[00:32:35] Speaker 03:
No, that's not correct, Your Honor.

[00:32:36] Speaker 03:
The arbitration agreement contemplates transactions happening.

[00:32:41] Speaker 02:
But that's not the shareholder agreement?

[00:32:44] Speaker 03:
Yes, Your Honor.

[00:32:45] Speaker 03:
Yes, Your Honor.

[00:32:46] Speaker 03:
And Justice Gorsuch's concurrence, while important, is not the majority opinion.

[00:32:55] Speaker 03:
And the majority opinion multiple times says, the fourth order question here

[00:33:02] Speaker 03:
is where there is a conflict.

[00:33:03] Speaker 03:
And the conflict that the court identified in Sussky was when one thing says the opposite of the other.

[00:33:11] Speaker 03:
And that's very important, especially because of what this court said in the Ninth Circuit opinion.

[00:33:17] Speaker 01:
So you don't think there can be a conflict between two agreements where one has an arbitration clause and the other has none?

[00:33:25] Speaker 03:
That's not a conflict.

[00:33:27] Speaker 03:
I would either say it's not a conflict, or it's a conflict that's been solved by the first arbitration agreement.

[00:33:35] Speaker 03:
But sort of backing up, that question under Portland Gas and Electric is the arbitrator's.

[00:33:44] Speaker 03:
It's the arbitrator's role to answer that question.

[00:33:47] Speaker 04:
I guess, I mean, that's one of the reasons I noted Justice Gorsuch's concurrence is because he had

[00:33:53] Speaker 04:
said that the Ninth Circuit had perhaps misappreciated something.

[00:33:57] Speaker 04:
So I want to make sure that I'm appreciating it here.

[00:34:01] Speaker 04:
But it seems like this formal distinction.

[00:34:03] Speaker 04:
I understand the formality of, well, we've got these different orders.

[00:34:08] Speaker 04:
And you can't ask when you've got two contracts.

[00:34:11] Speaker 04:
We're not allowed to ask the scope question to determine which contract governs.

[00:34:16] Speaker 04:
But it seems like some peak at the scope

[00:34:21] Speaker 04:
is built in to any fourth order dispute.

[00:34:25] Speaker 03:
But Your Honor, I think it's important to keep in mind what the scope is.

[00:34:29] Speaker 03:
So the scope that you're talking about is the third order question about who decides arbitrability.

[00:34:35] Speaker 03:
That's the scope.

[00:34:36] Speaker 03:
The delegation clause is its own arbitration agreement.

[00:34:40] Speaker 03:
That's what this Court has said over and over and over again.

[00:34:42] Speaker 03:
And so the issue, the dispute that you're looking at there, is arbitrability.

[00:34:47] Speaker 03:
And if I could make one point about how

[00:34:50] Speaker 03:
their argument about the interrelated contract shows that their reading of Suski and the other cases simply don't make sense.

[00:34:59] Speaker 03:
In Suski, the way that one contract supersedes another is that it is related and it covers the same subject matter.

[00:35:10] Speaker 03:
So the only way that you would ever have a supersession where you would have this conflict is when you have two contracts that are

[00:35:18] Speaker 04:
related but I think that this case would be even easier under that test because we're not dealing with succeeding contracts we're dealing with

[00:35:26] Speaker 04:
at least under the Johnson framing, we're dealing with contracts about two different subject matters.

[00:35:31] Speaker 04:
Two different sets of transactions.

[00:35:33] Speaker 03:
I agree that it's easier, Your Honor.

[00:35:35] Speaker 03:
I bet you do.

[00:35:36] Speaker 03:
There can be no supersession when the contracts.

[00:35:39] Speaker 04:
So Coinbase only applies to these kind of supersession orders.

[00:35:44] Speaker 04:
I mean, Judge Christensen's concern is mine, that what's the limiting principle on the other side that any time you have any contract that has

[00:35:54] Speaker 04:
delegation provision, which you're suggesting are the magic words here, any succeeding contract related to any other transaction, regardless of consideration of the scope of the first contract, is swept into it for purposes of arbitration.

[00:36:09] Speaker 03:
Yes, Your Honor, that's the rule of Portland Gas and Electric, and it's also the exact concern that Henry Schein got at.

[00:36:15] Speaker 03:
Your concern is a good concern.

[00:36:18] Speaker 03:
And what the court said is that arbitrable tribunals

[00:36:23] Speaker 03:
have things in place to punish people who bring frivolous claims.

[00:36:28] Speaker 03:
But that's where that goes.

[00:36:31] Speaker 03:
And so an argument, if there's a second contract, and this is what Modern Perfection says, we're also asking you to create a circuit split, says that a fourth order question asks whether or not that second contract countermands the first.

[00:36:43] Speaker 03:
And they don't argue that here.

[00:36:45] Speaker 03:
There's no supersession dispute.

[00:36:47] Speaker 03:
And whether or not a dispute over that second contract is in the first is a classic,

[00:36:52] Speaker 03:
arbitrability question that goes to the arbitrator.

[00:36:54] Speaker 03:
Thank you.

[00:36:55] Speaker 04:
Thank you, Mr. LaFond.

[00:36:56] Speaker 04:
Thanks to both counsel for your help with this case today, and it is submitted.