Dedon GmbH v. Janus et Cie ( 2011 )

10-4331-cv
D edon Gm bH v. Janus et Cie
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after
January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court’s
Local Rule 32.1.1. W hen citing a summary order in a document filed with this court, a party must cite either
the Federal Appendix or an electronic database (with the notation “summary order”). A party citing a
summary order must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York,
on the 6th day of January, two thousand eleven.
PRESENT:
AMALYA L. KEARSE,
RALPH K. WINTER,
PETER W. HALL,
Circuit Judges.
______________________________________________
Dedon GmbH and Dedon Inc.,
Plaintiffs-Appellees,
v. 10-4331-cv
Janus et Cie,
Defendant-Appellant.
______________________________________________
FOR PLAINTIFFS-APPELLEES: Andrew B. Bloomer (Hunter Murdock and
Jeffrey K. Lamb, on the brief), Kirkland &
Ellis LLP, New York, New York.
FOR DEFENDANT-APPELLANT: James E. Berger, Paul Hastings LLP, New
York, New York.
Appeal from a judgment of the United States District Court for the Southern District of
New York (McMahon, J.). UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED, that the judgment of the district court is AFFIRMED.
Janus et Cie (“Janus”) appeals from the district court’s decision denying its motion to
compel Dedon GmbH and Dedon Inc. (collectively “Dedon”) to arbitrate their dispute before the
International Chamber of Commerce (“ICC”) in London. Janus’s arguments on appeal fall into
two categories: (1) the district court erred in denying its motion to compel arbitration where the
parties had an agreement to arbitrate, as evidenced by the draft exclusive distribution agreement
or the standard terms and conditions that accompanied each purchase, and (2) the district court
erred in holding that Dedon had not waived its right to object to arbitration through its conduct
before the ICC. We assume the parties’ familiarity with the underlying facts and procedural
history of the case.
I. Discussion
The district court denied Janus’s motion to compel arbitration, concluding it could not
compel Dedon to arbitrate the exclusive distribution dispute without first determining whether
such an agreement actually existed and that Dedon had not waived its right to object in court to
the ICC arbitration. In addition, the district court declined to stay the proceedings during the
pendency of the ICC arbitration and also determined that the issue of contract formation would
proceed to a trial. We review a district court’s denial of a motion to compel arbitration de novo.
Specht v. Netscape Commc’ns Corp., 306 F.3d 17, 26 (2d Cir. 2002).
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A. Dispute Involving the Existence of the Contract
Janus first contends that the district court erred when it denied its motion to compel
arbitration, arguing that it is within the arbitral panel’s authority to determine its own
jurisdiction, that Dedon had actually made that request to it, and that the court should have
afforded the arbitral panel the opportunity to determine its own jurisdiction.
The Supreme Court recently reiterated that “[a]rbitration is strictly a matter of consent
and thus ‘is a way to resolve those disputes—but only those disputes—that the parties have
agreed to submit to arbitration.’” Granite Rock Co. v. Int’l Bhd. of the Teamsters, __ U.S. __,
130 S. Ct. 2847, 2857 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943
(1995)) (internal quotation marks and citation removed and emphasis omitted). Accordingly,
“courts should order arbitration of a dispute only where the court is satisfied that neither the
formation of the parties’ arbitration agreement nor . . . its enforceability or applicability to the
dispute is in issue.” Id. at 2857-58. Where a party contests the issue of contract formation,
therefore, “the court must resolve” the issue. Id. at 2858 (internal quotation marks removed).
Granite Rock reconfirms this circuit’s well-established precedent that where a party
challenges the very existence of the contract containing an arbitration clause, a court cannot
compel arbitration without first resolving the issue of the contract’s existence. See, e.g.,
Interocean Shipping Co. v. Nat’l Shipping & Trading Corp., 462 F.2d 673, 676 (2d Cir. 1972)
(holding that, where the party resisting arbitration denied the very existence of the agreement
setting out the arbitration provision, the district court could not compel arbitration without
holding a trial on the issue of the contract’s formation). “If the making of the agreement to
arbitrate is placed in issue—as [the party resisting arbitration] attempts to do by alleging that the
contracts in which the arbitration provisions are found never came into existence—the court
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must set the issue for trial.” Sphere Drake Ins. Ltd v. Clarendon Nat’l Ins. Co., 263 F.3d 26, 30
(2d Cir. 2001). See also Denney v. BDO Seidman LLP, 412 F.3d 58, 68 (2d Cir. 2005) (noting
that the Second Circuit rule in Sphere Drake “protect[s] parties from arbitration only in those
narrowly-limited circumstances where the very existence of a contract is in doubt”); Opals on
Ice Lingerie v. Body Lines Inc., 320 F.3d 362, 369 (2d Cir. 2003) (“[T]hough the presumption in
favor of arbitration is strong, the law still requires that parties actually agree to arbitration before
it will order them to arbitrate a dispute.”); Specht, 306 F.3d at 26 (“It is well settled that a court
may not compel arbitration until it has resolved ‘the question of the very existence’ of the
contract embodying the arbitration clause.”) (quoting Interocean, 462 F.2d at 676). We agree
with the district court, therefore, that because the existence of the agreement containing an
arbitration provision is in dispute, Dedon cannot be compelled to arbitration without first
resolving that issue.
B. Waiver
Although Janus raises multiple waiver “issues,” they can be summarized as a single
argument: that Dedon waived its right to object to arbitration—and waived its right to have the
arbitrability issue decided by a court—when it made a voluntary request to the ICC to determine
“that it is not prima facie satisfied that an arbitration agreement exists.”
We agree with the district court that Dedon has not waived its right to object to
arbitration of the dispute through its conduct before the ICC. Where a party repeatedly objects
to arbitration, “[t]hese objections prevent a finding of waiver.” Opals on Ice, 320 F.3d at 368.
Furthermore, to the extent a party participates in an arbitration “in order to resolve the question
of arbitrability itself, such participation does not constitute waiver.” Id. at 369. “‘[M]erely
arguing the arbitrability issue to an arbitrator does not indicate a clear willingness to arbitrate
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that issue.’” Id. (quoting First Options, 514 U.S. at 946). See also Sarhank Group v. Oracle
Corp., 404 F.3d 657, 662 (2d Cir. 2005).
Nor did Dedon’s request that the ICC’s administrative arm decide that the dispute was
non-arbitrable—for lack of an agreement between the parties to arbitrate—constitute a waiver by
Dedon of the right to have that question decided by a court. Dedon’s submissions to the ICC
were replete with statements that Dedon disputed the ICC’s jurisdiction; such repeated
objections to ICC jurisdiction prevent a finding of waiver, see First Options and Opals on Ice.
In re Arbitration Between Halcot Navigation Limited Partnership & Stolt-Nielsen
Transportation Group (“Halcot”), 491 F. Supp. 2d 413, 418-19 (S.D.N.Y. 2007), holding that a
party had waived its right to object to an arbitration after it had submitted the question of
arbitrability to the arbitration panel, does not persuade us to reach a different result. The facts of
that case differ from those in the present case in several respects; and even if they did not,
Halcot, as a district court decision, would not be binding on this Court.
C. Terms & Conditions in Purchase Orders
Janus argues that an alternative basis for arbitrating the exclusive distribution dispute
may be found in the terms and conditions that accompanied each purchase order between Dedon
and Janus. That argument is not persuasive. On their face, the terms and conditions in those
purchase orders govern the particular exchange of goods occurring with that purchase
order—“[a]ll contractual and extra-contractual disputes arising out of or in connection with
contracts to which these International Terms and Conditions apply, shall be finally resolved by
arbitration” (emphasis added)—and do not purport to create or refer to any exclusive distribution
relationship between the parties, which is the sole focus of the present suit.
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Janus also argues that the exclusive distribution agreement should be encompassed
within the meaning of “pre-contractual and collateral obligations” to the purchase orders. Janus
would thus have this court find that “any dispute related to any obligation arising prior to or
outside of the contract formed by each shipment of goods” is governed by the purchase orders’
terms and conditions. (emphasis in original) We decline to adopt Janus’s broad reading of that
contractual language, as it ignores the plain language of the purchase order, and we agree with
the district court that the terms and conditions do not provide an alternative basis for compelling
arbitration.
D. Kahn Lucas
Dedon argues that the district court did not go far enough in denying Janus’s motion to
compel without prejudice. It contends that, pursuant to Kahn Lucas Lancaster, Inc. v. Lark
International Ltd., 186 F.3d 210, 218 (2d Cir. 1999), partially abrogated on other grounds by
Sarhank, 404 F.3d at 660 n.2, the district court should have denied the motion to compel with
prejudice because it is undisputed that the contract containing the arbitration provision was never
signed.
In Kahn Lucas, this court held that to be valid and enforceable, arbitration agreements
governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,
June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (the “New York Convention”), which is
enforceable under Chapter 2 of the Federal Arbitration Act, 9 U.S.C. §§ 201-208, must be
“signed by the parties or contained in an exchange of letters or telegrams.” 186 F.3d at 218(quoting Article II of the New York Convention). As this argument was not raised before the
district court, the parties will have the opportunity to argue this issue at the trial on the existence
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of a contract. The district court may, of course, consider what effect, if any, our holding in Kahn
Lucas has on any renewed motion to compel.
II. Conclusion
We have considered all of Janus’s contentions on this appeal and have found
them to be without merit. The judgment of the district court is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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