N.A. Rugby Union LLC v. United States Rugby Football Union

Douglas Schoninger, a New York financier, formed N.A. Rugby Union LLC d/b/a Professional Rugby Organization (PRO Rugby) (plaintiffs) to establish a rugby league in the United States. PRO Rugby approached United States of America Rugby Football Union (USAR) (defendant), the national governing body for rugby in the United States. PRO Rugby and USAR entered into a sanction agreement under which PRO Rugby was authorized to establish a rugby league in the United States. The sanction agreement provided that PRO Rugby agreed to appoint Rugby International Marketing (RIM) as its exclusive player-representative agency. The sanction agreement noted that this agency would come to be upon the signing of an agency agreement and would not be effective until such an agency agreement was formed by PRO Rugby and RIM. It was undisputed that as of the date of signing the sanction agreement, RIM did not yet exist. The sanction agreement contained an arbitration provision that required that any claim or dispute between PRO Rugby and USAR be subject to binding arbitration, including arbitrability. RIM was not a party to the sanction agreement. RIM also did not sign the agency agreement with PRO Rugby referenced in the sanction agreement. Schoninger folded the league after one season and had PRO Rugby file a suit in Boulder County district court against many parties, including USAR and RIM. PRO Rugby alleged an array of tort and contract claims, including breach of the sanction agreement. RIM moved to dismiss claims against it on grounds it was not a party to the sanction agreement. PRO Rugby countered that it was. The district court granted RIM’s motion. After pre-trial proceedings, arbitration was compelled as to some parties, while claims against others were dismissed, leaving Pro Rugby and RIM the only parties in the lawsuit. PRO Rugby then moved to stay proceedings against RIM to allow Schoninger and Pro Rugby to arbitrate their claims against RIM. PRO Rugby cited the sanction agreement as mandating this outcome. RIM opposed the motion on grounds that it was not a party to the sanction agreement and that it never agreed to be bound by the sanction agreement’s arbitration provision. The district court granted PRO Rugby’s motion to stay. The court based its decision on RIM’s agency relationship with USAR. RIM filed a Colorado Appellate Rule 21 petition, which resulted in a rule to show cause.