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Private Jet Services Group, Inc. v. Marquette University

United States District Court, District of New Hampshire

May 12, 2015

Private Jet Services Group, Inc.
v.
Marquette University Opinion No. 2015 DNH XXX

Clara Ann Dietel, Esq. Steven M. Gordon, Esq. Garry R. Lane, Esq. Dustin M. Lee, Esq. John B. Tuffnell, Esq.

MEMORANDUM AND ORDER

Paul Barbadoro United States District Judge

Private Jet Services Group, Inc. (“PJS”) has sued Marquette University for breaching a two-year air charter contract. Marquette, relying on an arbitration clause in an escrow agreement executed in connection with the air charter contract, moves to stay the action and compel arbitration under the Federal Arbitration Act (the “FAA”), 9 U.S.C. §§ 1-16. PJS responds by arguing that its claim against Marquette is not subject to arbitration because the claim arises from the air charter contract, which does not contain an arbitration clause. As I explain below, Marquette’s motion turns on whether a delegation clause in the escrow agreement, which leaves gateway arbitrability questions to the arbitrator, bars this court from resolving the arbitrability question.

I. BACKGROUND

PJS, a New Hampshire corporation, is a broker of private air charter services. It serves clients that include professional and college sports teams, various performing acts, and businesses. Marquette, a private research university in Wisconsin, has a men’s basketball team that competes in the NCAA Division I Big East Conference.

On August 21, 2013, PJS and Marquette entered into a two-year air charter contract, the “Air Services Agreement, ” under which PJS agreed to provide the Marquette men’s basketball team with air transportation to its away games during the 2013-2014 and 2014-2015 seasons. In exchange, Marquette agreed to pay PJS $890, 795 for the 2013-2014 season and $1, 022, 705 for the 2014-2015 season. The Air Services Agreement also required Marquette to deposit $1, 067, 390 into an escrow account before each of the two seasons to cover its required payment for that season.

To facilitate the escrow payments required by the Air Services Agreement, PJS, Marquette, and a third-party escrow agent entered into an “Escrow Agreement” on August 22, 2013. The Escrow Agreement provides for various matters related to the management of the escrow account, including the establishment of the account, the duties owed by the escrow agent to PJS and Marquette, and the compensation owed to the escrow agent for its services.

The Air Services Agreement does not contain an arbitration clause but the Escrow Agreement provides in Article 15.1 that:

Any controversy or claim arising out of or relating to this [Escrow Agreement], or the breach hereof . . . shall be settled by arbitration in accordance with commercial rules of the American Arbitration Association (“AAA”).

Doc. No. 14-4 at 8. The Escrow Agreement also contains a delegation clause in Article 15.8, which states that:

Any dispute regarding the applicability of this Article [15] to a particular claim or controversy shall be arbitrated as provided in this Article [15].

Id. at 9.

The deadline for Marquette to escrow its payment for the 2014-2015 basketball season fell on September 1, 2014.

Marquette did not meet the deadline. Instead, on September 2, 2014, it informed PJS by letter that it had “made other arrangements for its men’s basketball air charter services during the 2014-2015 academic year” and was therefore terminating the agreement. Doc. No. 1 at 3. PJS ...


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