California appeals court affirms denial of motion to compel arbitration of contractual dispute concerning Fast and the Furious spinoff film, Hobbs & Shaw, holding arbitration provisions in prior production contracts for franchise did not cover spinoff.
Neal Moritz produced eight films in the Fast and the Furious franchise for Universal City Studios LLC and its subsidiary FFSO Productions LLC. For seven of these eight films, Moritz and Universal entered into producer contracts setting forth terms under which Moritz rendered services as a producer on these films. Six of the seven contracts contain arbitration provisions. The seventh contract subjects films produced as “sequels” or “remakes” to the arbitration clause in the sixth contract.
During work on the eighth movie in the franchise, Moritz and Universal began discussing a spinoff film called Hobbs & Shaw based on characters from prior films in the franchise. Moritz and Universal exchanged written drafts of a producer contract for Hobbs & Shaw, which included a proposed arbitration agreement, but the parties never finalized or signed any written contract agreement for Moritz’s work on the film. Shortly before the filming of Hobbs & Shaw was set to begin, Universal informed Moritz that it was “under no obligation to involve … Moritz in the production [of Hobbs & Shaw], nor to compensate [him] in connection with it,” and instructed Moritz not to “render any services in connection with the [p]icture or be involved with the production in any capacity … until an agreement was reached.”
Moritz sued Universal, alleging that they had in fact reached a binding oral agreement regarding Moritz’s work on the film and that Universal had breached it. Universal then moved to compel arbitration based on the arbitration clauses in the prior Fast and the Furious contracts. Universal argued both that the question of arbitrability is for the arbitrator and, in the alternative, that the court should compel arbitration of the parties’ dispute because it “related to” one or more of the Fast and the Furious contracts.
The lower court rejected Universal’s argument as to arbitrability, explaining, “‘Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator,’” and that “the parties [here] did not clearly and unmistakably provide otherwise.” The court also noted that even if the arbitration agreement did clearly delegate the arbitrability issue to the arbitrator, that agreement would not apply to the Hobbs & Shaw dispute at issue, because “the parties agree … [Hobbs & Shaw] is not a [remake or sequel] within the meaning of the [seventh Fast and the Furious contract].” (Read our summary of the superior court’s decision here.)
The Court of Appeal agreed, holding that is it not clear and unmistakable that the parties agreed to delegate arbitrability questions concerning Hobbs & Shaw to an arbitrator. It also noted that “whether parties have agreed to ‘submi[t] a particular dispute to arbitration’ is typically an ‘issue for judicial determination,’” and that where, as here, “the dispute at issue concerns contract formation, the dispute is generally for courts to decide.”
The court also rejected Universal’s assertion that the dispute was subject to the arbitration clauses in the prior Fast and the Furious contracts. Agreeing with the lower court’s reasoning, the court held that the terms of the prior Fast and the Furious contracts did not subject the Hobbs & Shaw dispute to arbitration because Hobbs & Shaw was not a sequel or remake of the prior franchise films. The court explained that arbitration of a claim is appropriate “only where the court is satisfied that the parties agreed to arbitrate that dispute,” and because the parties had not agreed to arbitrate disputes in connection with that specific film, the disputes are not subject to arbitration.
The court also rejected Universal’s reliance on the U.S. Supreme Court’s 2019 decision in Henry Schein, Inc. v. Archer & White Sales, Inc., holding that Schein presupposes a dispute arising out of the contract or transaction — that is, some minimal connection between the contract and the dispute — because under the Federal Arbitration Act, contractual arbitration clauses are “valid, irrevocable, and enforceable” if they purport to require arbitration of any “controversy thereafter arising out of such contract.” Schein expressly understood that the Act requires enforcement of arbitration clauses with respect to disputes “‘thereafter arising out of such contract.’” Because the Court held that the disputes concerning Hobbs & Shaw are unrelated to the prior franchise contracts, it also held that Schein did not apply, as there could be no enforcement of an arbitration provision with respect to disputes unrelated to the contract in which the provision appears.