Opinion
Case No. 00-4100-RDR
October 23, 2000
MEMORANDUM AND ORDER
This case is before the court by virtue of diversity jurisdiction. 28 U.S.C. § 1332. Plaintiff asserts in the complaint that he had a dealership contract to sell and distribute defendant's line of construction machinery. The contract itself is labeled "Halla Dealer Agreement." Plaintiff alleges that defendant failed to pay money due pursuant to a sales incentive program. Plaintiff asserts that defendant failed to reimburse plaintiff for warranty expenses and failed to provide plaintiff with parts or service manuals or training for plaintiff's mechanics. Plaintiff claims that due to fraud and misrepresentation by defendant, plaintiff cancelled the dealership contract on January 12, 2000.
Plaintiff contends that under the Kansas Outdoor Power Equipment Dealership Act ("KOPED"), K.S.A. 16-1301, et seq., defendant had until April 12, 2000 to pay plaintiff 90% of the net cost of all new, unused, undamaged and complete outdoor power equipment, including transportation charges paid by plaintiff, as well as reimbursement for repair parts. KOPED provides in part:
Whenever any retailer enters into a contract with a supplier and such supplier or retailer terminates . . . such contract, such supplier shall pay to such retailer . . . a sum equal to 90% of the net cost of all new, unused, undamaged and complete outdoor equipment, including transportation charges . . . and 90% of the current net prices of new, unused and undamaged repair parts which had previously been purchased from such supplier . . . All payments required to be made under the provisions of this section must be made within 90 days after the return of the outdoor power equipment, repair parts, or other equipment. . . .
K.S.A. 16-1303. If payment is not made within 90 days after return of the equipment, then reimbursement of 100% of the net cost of machinery and 100% of the current net price of repair parts may be obtained in a civil action under KOPED. K.S.A. 16-1305.
Plaintiff states that defendant has refused to comply with the requirements of KOPED and asks for relief under its terms. In addition, plaintiff asks for this court to order a cancellation of the dealer agreement.
This case is now before the court upon defendant's motion to dismiss the complaint and compel arbitration.
Obviously, a key to the instant motion is the arbitration clause in the dealer agreement between the parties. The clause reads as follows:
Disputes
8.1 Any and all disputes or controversies arising out of or relating to this Agreement or breach hereof shall be settled by arbitration in Newark, New Jersey by a panel of three (3) arbitrators in accordance with the rules then pertaining of the American Arbitration Association, and judgment upon the decision rendered may be enforced in any court of competent jurisdiction. Except as provided below, the cost of such arbitration proceedings shall be borne equally by the parties, each of whom shall bear its own attorney's fees.
Under federal law, 9 U.S.C. § 3, if this suit is "upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which the suit is pending . . . shall upon application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, proving the applicant for the stay is not in default in proceeding with such arbitration."
The Tenth Circuit has recognized that "`[t]here is a strong federal policy favoring arbitration for dispute resolution.'" Coors Brewing Co. v. Molson Breweries, 51 F.3d 1511, 1514 (10th Cir. 1995) (quoting Peterson v. Shearson/American Express, Inc., 849 F.2d 464, 465 (10th Cir. 1988)). "All `doubts are to be resolved in favor of arbitrability.'" Id., quoting Oil, Chem., Atomic Workers Int'l Union, Local 2-124 v. American Oil Co., 528 F.2d 252, 254 (10th Cir. 1976).
The arbitration clause in this case is very broad. It covers "all disputes or controversies arising out of or relating to" the dealer agreement. But, plaintiff's position is that its claims do not arise from the dealer agreement. Plaintiff contends its claims arise from the KOPED provisions, governing the relations of the parties after the termination of the dealer agreement. It should be noted that the dealer agreement also contains provisions covering the rights of the parties upon termination.
7.3 Upon the termination or expiration of this Agreement, Halla shall have the right, but not the obligation, in its sole discretion, to (1) cancel any and all shipments of the Products to Dealer scheduled for delivery prior to the termination date; and (2) repurchase any new and unused Product or parts that Dealer owns at the time of termination at a price originally purchased by Dealer, less any allowances or refunds made to dealer. . . .
7.4 Upon the termination or expiration of this Agreement, the Dealer shall return all new and unused Products delivered to Dealer, which have not been paid for in full. If Dealer fails to return said Products, Halla shall, in addition to all its rights and remedies, have the right to retake such Products or offset any of Halla's payment obligations for repurchase of Products.
The mere fact that a claim is being brought pursuant to a statute does not bar arbitration. Several cases cited by defendant have held that statutory claims are subject to arbitration pursuant to a contractual agreement. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (ADEA); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1985) (Securities Exchange Act and RICO); Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (antitrust); Coors Brewing, supra (some antitrust claims covered by arbitration agreement, other antitrust claims not covered); see also, S+L+H S.P.A. v. Miller-St. Nazianz, Inc., 988 F.2d 1518 (7th Cir. 1993) (dispute under Wisconsin Fair Dealership Law is arbitrable); Ommani v. Doctor's Associates, Inc., 789 F.2d 298 (5th Cir. 1986) (claim under Texas Deceptive Trade Practices Act is arbitrable).
The critical issue is whether plaintiff's KOPED claims fall under the scope of the arbitration agreement, given that the dealer agreement which contains the arbitration clause appears to have been terminated. The Tenth Circuit has stated:
Under the federal common law of arbitrability, an arbitration provision in a contract is presumed to survive the expiration of that contract unless there is some express or implied evidence that the parties intend to override this presumption: "In short, where the dispute is over a provision of the expired agreement, the presumptions favoring arbitrability must be negated expressly or by clear implication." Nolde Bros., Inc. v. Local No. 358, Bakery Confectionery Workers Union, 430 U.S. 243, 255, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977). Thus, when a dispute arises under an expired contract that contained a broad arbitration provision, court must presume that the parties intended to arbitrate their dispute. This is so even if the facts of the dispute occurred after the contract expired. . . . The presumption in favor of continuing arbitrability, however, disappears in either of two situations: first, if the parties express or clearly imply an intent to repudiate post-expiration arbitrability, and second, if the dispute cannot be said to arise under the previous contract. See id. at 254-55, 97 S.Ct. 1067; United Food Commercial Workers Int'l Union v. Gold Star Sausage Co., 897 F.2d 1022, 1026 (10th Cir. 1990) [additional citation omitted]. In United Food, we defined the concept of whether a dispute "arises under" a previous contract as follows: "a dispute must either involve rights which to some degree have vested or accrued during the life of the contract and merely ripened after termination, or relate to events which have occurred at least in part while the agreement was still in effect." United Food, 897 F.2d at 1024-25 (quotation omitted).
Riley Mfg. Co. v. Anchor Glass Container Corp., 157 F.3d 775, 781 (10th Cir. 1998).
In the case at bar, we have no evidence or claim that the parties expressly or impliedly intended to repudiate post-expiration arbitrability. It also seems clear to this court that the dispute involves rights which to some degree vested during the life of the dealer agreement. Accordingly, we believe the presumption of arbitration survives and controls the current controversy.
The final issue to decide is whether to stay this action or dismiss it. Defendant contends that dismissal is appropriate because the arbitration clause covers all of the claims in this case. The court finds no legitimate dispute on this point. Accordingly, the court shall order this case dismissed. See Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161 (5th Cir. 1992).
In conclusion, defendant's motion to dismiss shall be granted.
IT IS SO ORDERED.
220 F.3d 1180, 1184-Brown v. Coleman Company 10th-2000.
When a contract contains a broad arbitration clause, matters that touch the underlying contract should be arbitrated. See Mitsubishi Motors v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 624 n. 14, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985); Gateway Coal Co. v. United Mine Workers, 414 U.S. 368, 376, 94 S.Ct. 629, 38 L.Ed.2d 583 (1974). The arbitration clause before us today is the very definition of a broad arbitration clause as it covers not only those issues arising under the employment contract, but even those issues with any connection to the contract. Because arbitration is only required where the parties have contracted for it, "the exact content of the allegedly defamatory statement must be closely examined to see whether it extends to matters beyond the parties' contractual relationship." Leadertex, Inc. v. Morganton Dyeing Finishing Corp., 67 F.3d 20, 28 (2d Cir. 1995). When a contract's arbitration clause is broad, the strong presumption is in favor of issues being subject to arbitration. See id.