Opinion
No. C5-00-2010.
Filed August 21, 2001.
Appeal from the District Court, Hennepin County, File No. 99-14-111.
Joseph W. Anthony, Norman J. Baer, Nathan P. Brenna, (for respondent Dominium Austin Partners, LLC, et al.)
Elizabeth L. Wittenberg, General Mills, Inc., (for respondent General Mills, Inc.); and
Phillip L. Bosl, and Carol A. Peterson, Minnesota Mining and Manufacturing Company, and Miles N. Ruthberg, Pamela Palmer, (for respondent Minnesota Mining and Manufacturing Company)
Richard G. Morgan, (for respondent H.B. Fuller Company)
Carl Roth, Stacey Mathson, and Timothy D. Kelly, and Anthony C. Scarfone, John Lefevre, (for respondent Deluxe Corporation)
Michael W. Unger, and Mark Olthoff, Kurt D. Tilton, (for respondent KLT Investments, Inc.)
Scott Benson, and Brian R. Strange, (for appellant)
Considered and decided by Amundson, Presiding Judge, Lansing, Judge, and Shumaker, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Limited partners in a California limited partnership filed a class action lawsuit in California against some of the institutional plaintiffs in this Minnesota action. The institutional plaintiffs sought to compel the defendant, who is a limited partner and investor in one of the institutional partnerships, to arbitrate the claims he has asserted in the California state action, and to enjoin him from proceeding with the California state action. The district court granted the institutional plaintiffs' motions. It denied defendant's motion to dismiss for failure to join indispensable parties and to allow him to arbitrate his claim on behalf of a purported class of plaintiffs. The defendant appeals these decisions. We affirm.
FACTS The Parties
Joel Lindquist is a Minnesota resident and a limited partner of the Dominium Dakota Two limited partnership (the Dominium Dakota partnership). Dominium Dakota Two, L.L.C. (DDT) is the general partner of the Dominium Dakota partnership. Dominium Management Services (DMS) provides property management services for the Dominium Dakota partnership. Dominium Austin Partners, L.L.C. (DAP) is the general partner of the Dominium Austin Partners limited partnership (DAP partnership), which is headquartered in Minneapolis. The remaining parties (General Mills, Inc., Minnesota Mining Manufacturing Company, H.B. Fuller Company, Deluxe Corporation, and KLT Investments, Inc.) are investors, through an institutional fund, in limited partnerships similar to DDT, who Lindquist claims acted as the "de facto" general partners of limited partnerships that include the Dominium Dakota partnership.
The Agreement
In 1994, Lindquist signed the Dominium Dakota partnership "Limited Partnership Agreement" (the original agreement), which included an arbitration clause requiring the parties to arbitrate "any controversy or dispute" arising "under, out of, or in relation to any provision" of the partnership agreement. The original agreement provides that the agreement may be modified by a vote of 51% of the limited partners. In 1997, the partnership agreement was amended with those amendments being incorporated into the Amended and Restated Limited Partnership Agreement (the revised agreement). The arbitration clause of the revised agreement contained a forum selection clause providing that all arbitration hearings would be held in Minneapolis and under "the laws relating to arbitration then in effect in the State of Minnesota."
The California Action
M.J. and Nancy Emerson and Richard and Susan Triplett are Iowa residents and limited partners in various California limited partnerships related to this dispute. On June 11, 1999, they filed a class action complaint in the Superior Court of California alleging, among other things, that defendants there, who consist mainly of respondents here, participated in a scheme to dilute the limited partners' interests for their own economic benefit that occurred as a result of the limited partners' approval of the 1997 amendments to the original agreement (the California action). The Emersons and Tripletts stated claims in the California action for violations of California law, including breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of contract, wrongful interference with contract, and unfair business practices. After respondents filed an action in federal court similar to the instant case, Lindquist joined the California action as a plaintiff. On September 30, 1999, respondents here filed a motion to stay the California action pending the outcome of this case and the federal action. This motion was granted on October 29, 1999. The California action remains stayed.
The Federal Action
Before responding to the complaint in the California action, respondents, on July 29, 1999, filed an action in federal court in the district of Minnesota seeking to compel arbitration and enjoin the Emersons and Tripletts from proceeding with the California class action (the federal action). Lindquist could not be joined in the federal action without defeating diversity jurisdiction. After Lindquist was added as an additional plaintiff in the California action, the Emersons and Tripletts filed a motion to dismiss the federal action based in part on the failure to join indispensable parties, including Lindquist. However, the federal district court, on April 4, 2000, granted respondents' motions to compel arbitration, preclude arbitration on behalf of a class, and enjoin the Emersons and Tripletts from pursuing the California action. That order was appealed to the Eighth Circuit Court of Appeals. The eighth circuit recently affirmed the district court's decision. Dominium Austin Partners, L.L.C., et al., v. Emerson, 248 F.3d 720 (8th Cir. 2001).
This Action
On September 30, 1999, respondents brought this declaratory judgment action seeking to compel arbitration, preclude arbitration on behalf of a class, and enjoin Lindquist from proceeding with the California action. On November 19, 1999, Lindquist filed a motion to dismiss this action. This motion was denied on April 13, 2000 in an order adopting the federal district court's order as presenting "the exact same issues." On September 13, 2000, the district court granted respondents' motion to compel arbitration, preclude arbitration on behalf of a purported class, and enjoin Lindquist from pursuing the California class action, again adopting the federal court's conclusions as presenting "identical" issues. This appeal, challenging both orders, followed.
DECISION I.
Lindquist first argues that the district court erred by failing to dismiss this declaratory judgment action for failure to state a claim. Whether a complaint states a legally viable claim is a question of law that we review de novo. Anderson v. Minnesota Ins. Guar. Ass'n, 534 N.W.2d 706, 709 (Minn. 1995). A pleading will be dismissed for failure to state a claim
[o]nly if it appears to a certainty that no facts, which could be introduced consistent with the pleading, exist which would support granting the relief demanded.
Doyle v. Kuch, 611 N.W.2d 28, 31 (Minn.App. 2000) (quoting Northern States Power Co v. Franklin, 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963)). It is immaterial to our consideration whether the facts alleged can be proven. Id.
A.
Lindquist argues that this case should have been dismissed for failure to join indispensable parties. The Minnesota Rules of Civil Procedure provide that
[a] person who is subject to service of process shall be joined as a party in the action if (a) in the person's absence complete relief cannot be accorded among those already parties, or (b) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (1) as a practical matter impair or impede the person's ability to protect that interest or (2) leave any one already a party subject to a substantial risk or incurring double, multiple, or otherwise inconsistent obligations by reason of the person's claimed interest.
Minn.R.Civ.P. 19.01. Thus, the first step is to determine whether the person should be made a party, that is to say, that the party is "necessary." Southern Co. Energy Marketing, L.P. v. Virginia Elec. and Power Co., 190 F.R.D. 182, 185 (E.D.Va. 1999);Here, there is no allegation that any party's absence will prevent complete relief from being accorded to those already parties.
But Lindquist nevertheless argues that the Tripletts, the Emersons, and the California class action class members must be joined because they claim an interest relating to the subject of the action and that disposition of this action will impair or impede their ability to protect that interest. In so doing, Lindquist relies on his construction of vague language on the complaint. As discussed in greater detail below, this language need not be construed as a request for action potentially affecting the rights of anybody other than Lindquist himself.
Furthermore, even if the court finds that these parties are "necessary" under Minn. R. Civ. P 19.01 and they cannot be made a party, the court must determine whether "in equity and good conscience" the action should proceed without the person, or whether the person is "indispensable." Minn.R.Civ.P. 19.02. In determining whether the person is an indispensable party, this court considers (a) how prejudicial a judgment rendered in the person's absence might be to the excluded person; (b) to what extent such prejudice can be lessened or avoided by protective provisions in the judgment, by the shaping of relief, or other measures, (c) whether such a judgment will be adequate, and (d) whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder. Id. Rule 19 pragmatically ensures that any judgment rendered will provide meaningful relief to the parties. Smith v. United Bhd. of Carpenters and Joiners of Am., 685 F.2d 164, 166 (6th Cir. 1982).
Rule 19 of the Minnesota Rules of Civil Procedure is substantially similar to Rule 19 of the Federal Rules of Civil Procedure. 1 David F. Herr Roger S. Haydock, Minnesota Practice, § 19.2 (1998); Kisch v. Skow, 305 Minn. 328, 330, n. 4, 233 N.W.2d 732, 733-34 n. 4 (1975) ("The 1968 Advisory Committee Note to our Rule 19 is intended to be `substantially identical' to Federal Rule 19."). Federal authority is therefore instructive in interpreting the Minnesota Rule.
Lindquist argues these parties are indispensable because a judgment rendered in their absence precludes them from participating in a class action. But this action does not seek to prevent the class action, only Lindquist's participation in any such class of litigants. Lindquist argues that Owens-Illinois, Inc. v. Meade, 186 F.3d 435 (4th Cir. 1999), suggests otherwise. In Owens, the attorneys for a group of asbestos plaintiffs from both West Virginia and Ohio entered into a settlement agreement with Owens-Illinois (an Ohio manufacturer) for the expeditious settlement of asbestos claims. Id. at 438. After one of the attorneys terminated the agreement because Owens-Illinois allegedly failed to satisfy its obligations under it, several West Virginia plaintiffs filed suit in West Virginia state court. Id. Owens-Illinois filed a petition in federal district court to compel arbitration, but only included the West Virginia plaintiffs. Id. at 438-39. Eventually, the fourth circuit ruled that the district court properly found that the non-diverse, Ohio parties were necessary and indispensable parties whose absence required dismissal. Id.at 439.
Lindquist suggests that Owens-Illinois stands for the proposition that foreign parties are always necessary and indispensable parties. But in Owens-Illinois, before reaching the question of indispensability, the court determined that the parties were necessary because adjudication without the Ohio parties could lead to conflicting legal obligations. Id. at 441. This was so because multiple lawsuits involving the same agreement might lead to inconsistent judgments. Id. The indispensability analysis focused on this fear of inconsistency. Id. at 441-42. That case cannot be read to suggest foreign parties are always necessary and indispensable.
A similar analysis applies to Lindquist's citation of Ranger Fuel Corp. v. Youghiogheny Ohio Coal Co., 677 F.2d 378 (4th Cir. 1982). Lindquist cites this case for the broad proposition that a case must be dismissed if a party cannot be joined without destroying diversity. However, this question is not reached without first concluding that a party is necessary. See id.at 379 (the parties "satisfying in every respect the requirements of [federal] Rule of Civil Procedure 19(a) for feasible joinder." In Ranger Fuel, necessity arose because the absent party was a joint owner of some of the mineral rights at issue in the dispute. Id.at 379. Here, none of the absent parties shares a common source of rights or obligations with Lindquist.
Here, there is no such potential for inconsistency because the issue involved an arbitration agreement applicable to Lindquist only. Neither the Emersons, nor the Tripletts, nor the other California class members were parties to this agreement. And even if the arbitration agreements are substantially similar or identical, dismissal would still not be required because the potential would then be for inconsistent adjudications or results, and not "inconsistent obligations." Inconsistent obligations result when a party is unable to comply with one court's order without breaching another court's order concerning the same incident. Delgado v. Plaza Las Americas, Inc., 139 F.3d 1, 3 (1st Cir. 1998). In contrast, inconsistent adjudications or results arise when a defendant successfully defends a claim in one forum, but loses on another claim arising from the same incident in another forum. Id. This potential, unlike that of inconsistent obligations, does not necessitate joinder of all of the parties into one action pursuant to Minn. R. 19. See id. (applying parallel federal rule).
B.
In declaratory judgment actions such as that before this court, the joinder requirement is broader than Rule 19 in that it compels joinder of all parties
who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding.
Minn. Stat. § 555.11 (2000) (emphasis added). Lindquist argues that the complaint requests relief that would affect non-parties, namely the other California action class members. The complaint seeks to compel arbitration for "all of the claims asserted in the California Litigation" and to enjoin "Lindquist and all those acting in concert with Lindquist" from pursuing that litigation (emphasis added).
Respondents argue in response that it is not clear that this language affects any other party. First, respondents suggest that the relief sought is clearly directed at Lindquist, and not any other parties, as evidenced by the fact that Lindquist was named as the only defendant. If the necessity of joinder were premised on whether an individual was made a defendant in the first place, joinder would never be required. A narrow construction of the meaning of respondents' complaint alleviates this problem. The phrases "all of the claims in the California Litigation" and "and all of those acting in concert with Lindquist" need only imply Lindquist and Lindquist's agents and employees and their claims in the California action. Indeed, this construction is reinforced by the fact that the relief actually granted by the district court only affected Lindquist himself. The language of the complaint is therefore irrelevant, and the complained-of error is harmless. Even if the respondents did not satisfy the affected party joinder requirement in section 555.11, the district court's order satisfied that statute's parallel requirement that "no declaration shall prejudice the rights of persons not parties to the proceeding." Id.
Lindquist next argues that, because the California action is a class action for which Lindquist serves as representative, the class members are per se "affected" parties and therefore "required" by Minn. Stat. § 555.11. But as this declaratory judgment action only seeks to enjoin and compel Lindquist and not any absent class member; Lindquist fails to show how other members of the class might be affected. Lindquist suggests that the potential effect results from his fiduciary duties as class representative. But while Lindquist's fiduciary duties may require him to undertake certain actions on behalf of the class, these duties do not impose a legal obligation on the court to facilitate the most effective litigation strategy for the class. Lindquist complains that respondents' strategy is to force any potential class member to arbitrate. But this problem stems directly from Lindquist's apparent agreement to arbitrate his Dominium Dakota partnership disputes. Does this not illustrate exactly why he may not be a good class representative? See Caudle v. American Arbitration Ass'n, 230 F.3d 920, 921 (7th Cir. 2000) ("A procedural device aggregating multiple persons' claims in litigation does not entitle anyone to be in litigation; a contract promising to arbitrate the dispute removes the person from those eligible to represent a class of litigants.") (emphasis omitted).
Finally, consideration of other class members' potentially affected interests is improper because what affects Lindquist does not yet "affect" the class. Lindquist suggests that legal support exists for the proposition that we must treat the California action plaintiffs as a class here. Although ample law exists demonstrating that, until deemed inappropriate, an action on behalf of a class must be treated as a class action, this is not an action on behalf of a class. It is a declaratory judgment action by several plaintiffs against an individual defendant. Even if the California courts are required to, at this early stage, treat the plaintiffs there as a class, Lindquist cites no authority to indicate that that obligation extends to this court. To the contrary, Lindquist cannot fully represent the prospective California class action class members until, at a minimum it is determined that (1) there will be a class, see Tedesco v. Mishkin, 629 F. Supp. 1474, 1483 (S.D.N.Y. 1986), and (2) Lindquist will be a member of that class. Lindquist cannot possibly be a class representative if he is precluded from litigating by virtue of an arbitration agreement.
See, e.g., Holisak v. Northwestern Nat'l Bank, 297 Minn. 248, 251, 210 N.W.2d 413, 415 (1973) ("until there is a final determination that a class action is not appropriate, an action by an individual plaintiff on behalf of a class must be treated as a class action for purposes of dismissal, compromise, or pretrial discovery and summary proceedings.") (citations omitted); Knauer v. Ohio State Life Ins. Co., 102 F. Supp.2d 443, 446 (N.D.Ohio. 2000) ("[A] putative class action should ordinarily be treated as a class action for the purpose of determining federal diversity jurisdiction despite the fact that a class has not yet been certified.")
II.
Lindquist argues that the district court erred when it enjoined Lindquist from pursuing the California action. We review the district court's decision to enjoin a party from pursuing litigation in another court under an abuse-of-discretion standard. St. Paul Surplus Lines Ins. Co. v. Mentor Corp., 503 N.W.2d 511, 516 (Minn.App. 1993). While Minnesota courts retain this power so that they may protect jurisdiction to enforce judgments, this power is to be used sparingly. Id. Exercise of this power is dependent on the similarities between the two litigations. Id. Courts consider several factors, among which are whether the parties and issues are common to both actions and whether one action will be dispositive of the other. Id. We also consider whether the other state's courts can "do justice in the matter before it." Id. (citation omitted).
Lindquist argues that the parties and issues here are not common to both actions because this action does not involve any California action plaintiffs other than Lindquist himself. But perfect identity of parties and issues is not required between the two actions. Here, Lindquist is common to both proceedings, and the arbitration issue in this action is a preliminary matter to the more substantive issues raised in the California action. The mere existence of other parties in the California litigation is irrelevant to the question of whether or not Lindquist himself may pursue it.
Lindquist argues that this case is similar to St. Paul Surplus Lines, where it was determined that the district court abused its discretion in enjoining the parties from pursuing litigation in the California courts. In that case, we were presented with a declaratory judgment action that duplicated a parallel California action in that the California and Minnesota cases both sought to establish the rights and responsibilities of the parties to the Minnesota action, namely the insured and the insured's primary insurers. Id. at 514. But in St. Paul Surplus Lines, the foreign case also involved questions regarding the insured's rights relative to other "excess" insurance carriers as well. Id. at 516. In holding that the existence of the California case did not preclude the Minnesota case from proceeding, we concluded that the district court abused its discretion in enjoining the insured from litigating the same issues in the California case. Id. Significant to our holding was that the California litigation involved the insured's rights relative to the excess carriers. Id. There is no similar concern here. In St. Paul Surplus Lines, if the Minnesota action established the rights of the insured with respect to the primary insurer, the insured would still need the California case to establish its rights with respect to the excess carriers. Here, the arbitration question may well remove Lindquist from the California action altogether.
Another factor to consider is whether one action will dispose of the other. As noted, in St. Paul Surplus Lines, we found it important that the Minnesota action could not dispose of the entire California litigation. Id. Lindquist argues that this action, like that in St. Paul Surplus Lines, cannot be dispositive of the California class action. But resolution of the Minnesota action can be dispositive of the California class action for Lindquist. In fact, Lindquist admits as much when he says, "the [Minnesota] district court's order enjoining Mr. Lindquist will likely have the effect of * * * `dismissing' the California class action."
Finally, even if the California courts may be able to adequately resolve the arbitration questions, the adequacy of another court to decide issues already decided by Minnesota is an insubstantial factor.
III.
The district court granted respondents' motion to compel arbitration by adopting the federal district court's decision in the parallel federal action. The eighth circuit has recently affirmed this decision. Emerson, 248 F.3d at 729.
The Minnesota Universal Arbitration Act (MUAA)
Under Minnesota Law, determinations of arbitrability are reviewed de novo. Independent Sch. Dist. No. 88 v. School Serv. Employees Union Local 284, 503 N.W.2d 104, 106 (Minn. 1993). Lindquist argues that, under Prestressed Concrete, Inc. v. Adolfson Peterson, Inc., 308 Minn. 20, 240 N.W.2d 551 (Minn. 1976), denial of a motion to compel arbitration is appropriate where many of the interested parties involved cannot be compelled to arbitrate. But Prestressed Concrete has been superceded by the Federal Arbitration Act (FAA). Mears Park Holding Corp. v. Morse/Diesel, Inc., 426 N.W.2d 214, 219 (Minn.App. 1988) (citing Fairview Cemetery Assn. v. Eckberg, 385 N.W.2d 812 (Minn. 1986)).
The Federal Arbitration Act
Under federal law, determinations of arbitrability are reviewed de novo to the extent that they depend on contract interpretation, but findings of fact are reviewed for clear error. Emerson, 248 F.3d at 727. Congress, in enacting the FAA, demonstrated a strong national policy in favor of arbitration. Id. Courts are directed to enforce agreements to arbitrate rigorously, Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 1242-43 (1985), and all doubts must be resolved in favor of arbitration. United States Steelworkers of Am., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1353 (1960).
In considering a motion to compel arbitration, courts ask (1) whether a valid arbitration agreement exists and (2) whether the dispute falls within the scope of that agreement. Houlihan v. Offerman Co., 31 F.3d 692, 694-95 (8th Cir. 1994).
1. Validity of Arbitration Agreement
Lindquist argues that the arbitration agreement is invalid as procured by fraudulent inducement. But as the Emerson court recently held in the parallel federal action, these questions are for the arbitrator. Emerson, 248 F.3d at 728. Lindquist's claim of unclean hands suffers a similar fate. See Laborers' Int'l Union of N. Am. v. Foster WheelerCorp., 26 F.3d 375, 400-01 (3d Cir. 1994) (party's unclean hands defense was matter for the determination of the arbitrator).
2. Scope of Arbitration Agreement
Lindquist first argues that this dispute falls outside the scope of the arbitration because the disputes allegedly arise from the original agreement, not from the revised partnership agreement, and that the earlier agreement provided for arbitration in California. In his view, the claim is that the reorganization of the partnerships itself violated the original partnership agreement. But his claims nevertheless arise "in relation to" the revised agreement because the claims relate to actions taken pursuant to it; a mere allegation of impropriety is insufficient to remove this issue from the arbitrator.
Lindquist next argues that the claim does not fall within the scope of the agreement because many of the respondents did not sign the arbitration agreements. But, in the California class action, Lindquist alleged that these parties should be treated as signatories because of fiduciary duties owed to the class. As the Emerson court noted:
It would be inequitable to allow appellants to claim that these parties are liable for failure to perform under a contract and at the same time to deny that they are contractual parties in order to avoid enforcement of the arbitration clause.
Emerson, 248 F.3d at 728 (citations omitted). This "equitable estoppel" rule may compel arbitration for non-signatories when (a) a signatory's claim "makes reference to or presumes the existence of the written agreement" containing the arbitration clause; or (b) the claim involves a close relationship between signatory and non-signatory parties, raising "allegations of substantially interdependent and concerted misconduct." Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 527 (5th Cir. 2000) (emphasis omitted) (quoting MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999)), cert. denied, 121 S.Ct. 570 (2000). As noted, Lindquist's claims are premised on contractual relationships and obligations that exist because of, and pursuant to, the agreements, and that the non-signatories are de facto general partners of the limited partnerships. Accordingly, these claims are properly considered within the scope of the agreement.
IV.
The district court denied Lindquist's alternative motion requesting class treatment of the arbitration should such arbitration be ordered. This issue relates directly to the issue of arbitrability and involves questions regarding the interpretation of statutes and the arbitration agreement, which are all reviewed de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998) (interpretation of statutes); Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984) (legal issues); Manson v. Dain Bosworth, Inc., 623 N.W.2d 610, 612 (Minn.App. 1998), review denied (Minn. Oct. 20, 1998) (interpretation of arbitration contracts); See Minnesota Cmty. Coll. Faculty Assoc. v. State of Minn., 562 N.W.2d 685, 688 (Minn.App. 1997) (arbitrability).
The rule in the eighth circuit is clearly that, under the FAA, a district court is without power to consolidate arbitration proceedings absent express language in an arbitration agreement authorizing consolidation of arbitration. Baesler v. Continental Grain Co., 900 F.2d 1193, 1195 (8th Cir. 1990). Although Lindquist cites contrary federal authority on this issue, this is a settled question in the eighth circuit. See Emerson, 248 F.3d at 728-29 (applying Baesler to parallel federal proceeding). There is no question that the arbitration agreement at issue is silent as to consolidation of arbitration.
But Lindquist points out that in Grover-Dimond Assocs. v. American Arbitration Ass'n, 297 Minn. 324, 329-30, 211 N.W.2d 787, 790 (Minn. 1973), the Minnesota Supreme Court held that joint arbitration was appropriate under the Minnesota arbitration statute in the absence of any relevant provision in the arbitration agreement, where it would not be prejudicial. Because the arbitration clause in the revised partnership agreement contains a Minnesota law provision, Lindquist argues that Grover-Dimond, and not the applicable federal rules, applies. But the arbitration clause does not specify that only Minnesota law is applicable. Rather, it states that "laws relating to arbitration then in effect in the state of Minnesota" govern the agreements. This includes applicable federal law.
Regardless, the importance of Grover-Dimond should not be overstated. When the Grover-Dimond court surveyed the few jurisdictions that had reviewed this issue, it noted the lack of available authority and approvingly cited the second circuit's resolution of this question. Id. at 327-29, 211 N.W.2d at 789-90 (citing Columbia Broad. Sys., Inc. v. American Recording Broad. Ass'n, 414 F.2d 1326, 1329 (2nd Cir. 1969) (relying on section 301 of the Labor Management Relations Act, 1947 to conclude that the district court had power to consolidate arbitration proceedings)). When the eighth circuit recently drew its contrary conclusion, it specifically noted that the second circuit was in the minority position in finding that district courts have the power to order consolidation under the FAA. Baesler, 900 F.2d at 1194-95. We see no reason why this court should be bound by a 26-year-old anachronism. Furthermore, not only has time shown the second circuit's position to be a minority position, but also the specific case relied on by the Minnesota Supreme Court in Grover-Dimond interpreted a statute that was substantially less similar to the MUAA than is the FAA. See Columbia Broad. Sys., Inc., 414 F.2d at 1327 (interpreting the Labor Management Relations Act).
Finally, a close reading of Grover-Dimond reveals that the decision was very narrow. In Grover-Dimond, a dispute arose over the construction of a building. 297 Minn. at 325, 211 N.W.2d at 788. The building owner had separate arbitration agreements with the architect and the contractor. Id. at 325-2 6, 211 N.W.2d at 788. In reaching its conclusion that the silence in the parties' agreements regarding joint arbitration effectively permitted a joint arbitration, the supreme court specifically found there to be no prejudice where the parties had already agreed to use the same arbitrators and that the architect and contractor were not obligated to arbitrate their dispute. Id. at 329-30, 211 N.W.2d at 790. Here, there is no similar posture.
Affirmed.