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In re N.A. Rugby Union LLC

Supreme Court of Colorado, En Banc

June 17, 2019

In Re N.A. Rugby Union LLC and Douglas Schoninger, Plaintiffs
v.
United States of America Rugby Football Union, Rugby International Marketing, Nigel Melville, Daniel Payne, and Robert Latham. Defendants

          Original Proceeding Pursuant to C.A.R. 21 Boulder County District Court Case No. 18CV30533 Honorable Thomas Francis Mulvahill, Judge

          Formerly Represented by Counsel (Counsel Permitted to Withdraw after Briefing Complete): N.A. Rugby Union LLC Douglas Schoninger

          Attorneys for Defendant Rugby International Marketing: Hutchinson Black and Cook, LLC Daniel D. Williams Christopher W. Ford Lauren E. Groth Boulder, Colorado

          No appearance on behalf of United States of America Rugby Football Union, Nigel Melville, Daniel Payne, or Robert Latham.

          OPINION

          GABRIEL JUSTICE

         ¶1 In this original proceeding pursuant to C.A.R. 21, we must determine whether a nonsignatory to an arbitration agreement can be required to arbitrate under that agreement by virtue of the fact that it is a purported agent of a signatory to the agreement. Specifically, we are asked to decide whether the district court erred when it entered an order requiring petitioner Rugby International Marketing ("RIM"), which is a defendant below and a nonsignatory to a Professional Rugby Sanction Agreement (the "Sanction Agreement"), to arbitrate pursuant to an arbitration provision in that Agreement that covered the parties and their agents. The court found that because RIM was an agent for United States of America Rugby Football Union ("USAR"), a signatory of the Sanction Agreement, RIM fell "squarely within the broad language of the arbitration provision."

         ¶2 We issued a rule to show cause and now make the rule absolute. Although we have not yet opined on the issue, the weight of authority nationally establishes that, subject to a number of recognized exceptions, only parties to an agreement containing an arbitration provision can compel or be subject to arbitration. Here, because RIM was not a party to the Sanction Agreement and because respondents N.A. Rugby Union LLC d/b/a Professional Rugby Organization ("PRO Rugby") and Douglas Schoninger, who are the plaintiffs below, have not established that any of the recognized exceptions apply, we conclude that the district court erred in determining that RIM is subject to arbitration under the Sanction Agreement.

         I. Facts and Procedural History

         ¶3 Schoninger, a New York financier, was interested in launching a professional rugby league in the United States. Toward that end, he formed PRO Rugby and approached USAR, which was the national governing body for rugby in the United States.

         ¶4 Ultimately, PRO Rugby and USAR entered into the Sanction Agreement, which authorized PRO Rugby to establish a professional rugby league in the United States.

         ¶5 As pertinent here, section 2.1 of the Sanction Agreement provided:

g. N.A. Rugby Union LLC agrees to appoint Rugby International Marketing as its exclusive Player Representation agency through which it will contract with all Players and Coaching staff on a to be agreed fee basis (it being understood that such agency shall be the subject of an agency agreement and shall not be effective until such agency agreement has been executed by N.A. Rugby Union LLC and Rugby International Marketing). .
h. N.A. Rugby Union LLC agrees to appoint Rugby International Marketing as a non-exclusive agency to present the commercial rights of the Competition to potential sponsors on a to be agreed fee basis (it being understood that such agency shall be the subject of an agency agreement and shall not be effective until such agency agreement has been executed by N.A. Rugby Union LLC and Rugby International Marketing).

         ¶6 Notably, it appears undisputed that as of the date of this Agreement, RIM did not yet exist (it was not established until two months later).

         ¶7 The Sanction Agreement also contained an arbitration provision that stated, in part:

[T]he parties agree that any claim or dispute between them or against any agent, employee, successor, or assign of the other, whether related to this Agreement or otherwise, and any claim or dispute related to this agreement or the relationship or duties contemplated under this Agreement, including the validity of this arbitration clause, shall be resolved by binding arbitration by ...

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