This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Scientific Learning Corporation,
Filed December 5, 2006
Charles F. Webber, Lianne C. Knych, Faegre & Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402 (for respondent)
U N P U B L I S H E D O P I N I O N
On this appeal from a judgment of dismissal, appellants
challenge the district court’s rulings granting respondent’s motion to compel
Appellant SkyTech, Inc. contracted to sell respondent
Scientific Learning Corporation’s (SLC) computer software to churches and
community organizations providing after-school tutoring services. Appellant SkyLearn, LLC was organized to be a
supplemental provider and to act as an independent contractor for SkyTech, and
appellant HEK, Inc. d/b/a SkyLearn Digital Systems (HEK) contracted with
SkyTech to be a supplemental service provider in
In May 2005, appellants submitted an arbitration claim to
the Dallas AAA office and requested a hardship waiver of fees. In June 2005, the AAA deferred the $10,000
administrative fee, but indicated that arbitrator fees could not be waived or
deferred. AAA told appellants that
failure to respond within seven days would result in the AAA returning all of
the paperwork and treating the matter as “not properly filed.” Appellants did not pursue the arbitration
claim. Instead, they brought suit in
D E C I S I O N
Respondent SLC argues that an order compelling
arbitration is not appealable.
Ordinarily, an order compelling arbitration is not appealable because it
is not final, and the issue of arbitrability must be raised on appeal from the
final judgment confirming or vacating the arbitrator’s award. See
This court reviews de novo the district court’s ruling on a
motion to compel arbitration. Johnson v. Piper Jaffray, Inc., 530 N.W.2d 790, 795 (
It is undisputed that the parties’ agreement contains an arbitration provision encompassing appellants’ claims. Both parties have attempted to pursue arbitration. The district court found that appellants’ initial demand for arbitration alleged the same claims asserted in the later district court action. Appellants’ attempt to file an arbitration demand and SLC’s filing of an arbitration demand when appellants failed to perfect their filing support the district court’s finding that the parties explicitly acknowledged the validity and applicability of the arbitration clause and the district court’s conclusion to compel arbitration.
Appellants allege multiple errors in the district court’s granting of the motion to compel: (1) appellants did not agree to file twice for arbitration; (2) appellants did not agree to arbitrate a claim when they were unable to pay the costs of arbitration; (3) it was reasonable to expect respondent to pay for the arbitration; (4) arbitration will impose “a series of burdens” on appellants; and (5) two respondents are not part of the arbitration so a separate action might be required.
Appellants provide no legal citation or authority to support
their assertion that the district court cannot “require an adverse party that
has once filed its claims in arbitration and offered to proceed in arbitration,
to subsequently file its claims in arbitration more than once.” Appellants’ claim ignores the fact that their
attempted filing was treated by the AAA as “not properly filed.” And assignment of error in a brief based on
“mere assertion” and not supported by argument or authority is waived. State
v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (
Other alleged errors are based on appellants’ claim that they
are unable to pay the costs of arbitration and that the arbitration agreement
can only be enforced if respondent pays. The parties’ agreement is silent regarding initial
payment of arbitration fees and costs in the event that one party is unable to
pay. Appellants assert that “the
United States Supreme Court and other federal and state courts have recognized
that a party cannot be required to arbitrate its claims if the party cannot
afford the higher costs of arbitration,” citing Green Tree Fin. Corp.—Ala. v. Randolph, 531 U.S. 79, 121 S. Ct. 513
(2000). In that case, the United States
Supreme Court held that the plaintiff, a consumer seeking to vindicate
statutory rights, was required to arbitrate her claims, but noted that “[i]t
may well be that the existence of large arbitration costs could preclude a
litigant such as Randolph from effectively vindicating her federal statutory
rights in the arbitral forum.”
In this case, the parties to the agreement are business entities. SkyTech is not a consumer subjected to a take-it-or-leave-it contract. Appellants could have contracted with a different provider of software but chose to work with SLC. Both parties were represented by counsel, and the contract was negotiated among the attorneys and the principals, resulting in changes requested by appellants’ counsel. These facts support the district court’s finding that this is an arms-length transaction.
Additionally, it was appellants’ burden to show
the likelihood of incurring prohibitive costs in the arbitral forum. See
Appellants also argue without citation or analysis that “numerous other errors” require that the district court order be vacated. This court declines to address issues not supported by legal citation or analysis. Ganguli v. Univ. of Minn., 512 N.W.2d 918, 919 n.1 (Minn. App. 1994).
Appellants contend that the provision in the agreement
mutually limiting the liability of the parties is unconscionable. The validity of contract terms other than the
arbitration clause, however, is for the arbitrator to decide. Buckeye
Check Cashing, Inc. v. Cardegna, 126 S. Ct. 1204, 1210 (2006) (holding that
“a challenge to the validity of the contract as a whole, and not specifically
to the arbitration clause, must go to the arbitrator”); see also Stahl v. McGenty, 486 N.W.2d 157, 159 (
The district court’s dismissal of SkyTech’s claims was silent
as to prejudice. Involuntary dismissals
under rule 41.02 are generally adjudications on the merits unless the court
specifies otherwise. 1A David F. Herr
& Roger S. Haydock,
This court has recognized that a
district court’s “designation of ‘with prejudice’ or ‘without prejudice’ must
be viewed in light of the basis for the dismissal and is not automatically
dispositive of whether a second suit is barred.” Unbank
Co. v. Merwin Drug Co., 677 N.W.2d 105, 109 (
Appellants request that this court remand to the district
court for consideration of SkyLearn and HEK’s motion for leave to amend the
complaint. After the district court
issued its final order and judgment dismissing appellants’ claims and
compelling arbitration in
The filing of a proper and timely appeal suspends the
authority of the trial court to make any order necessarily affecting the order
or judgment appealed from.
Appellant SkyTech contends on appeal that the district court improperly implied that appellants’ attorney acted unethically in representing and appearing for all plaintiffs after filing the complaint and cross-claims between the plaintiffs.
The comment regarding counsel’s possible conflict of interest followed the court’s findings regarding appellants SkyLearn and HEK’s third-party beneficiary and cross-claims against appellant SkyTech. On appeal, appellant SkyTech asserts that SkyLearn and HEK are “not pursuing the theories of third-party beneficiary claims or cross-claims” against SkyTech. Because appellants have now withdrawn the claims on which the conflict-of-interest comment was based, any challenge to the related comment is rendered moot.
Appellants claim that the district court improperly ordered SkyLearn and HEK to pay the required filing fees or face further sanctions. The claim is supported with only an affidavit filed after the final order of dismissal. No legal citations or analysis are provided. Because the order simply requires payment of “the required filing fees,” we observe no error by the district court.
Affirmed as modified.