2014 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-23-2014

Aetrex Worldwide Inc v. Sourcing For You Limited

Precedential or Non-Precedential: Non-Precedential

Docket 13-3933

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2014

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2014 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Aetrex Worldwide Inc v. Sourcing For You Limited" (2014). 2014 Decisions. Paper 93.

http://digitalcommons.law.villanova.edu/thirdcircuit_2014/93
NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

________________

No. 13-3933

________________

AETREX WORLDWIDE, INC.,

v.

SOURCING FOR YOU LIMITED;

SOURCING FOR YOU CONSULTING, LTD.,

Appellants

________________

Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil Action No. 2-13-cv-01943)

District Judge: Honorable Dennis M. Cavanaugh

________________

Submitted Under Third Circuit LAR 34.1(a)

January 13, 2014

Before: AMBRO, HARDIMAN, and GREENAWAY, Jr., Circuit Judges

(Filed: January 23, 2014)

________________

OPINION 

________________

AMBRO, Circuit Judge

Plaintiff Aetrex Worldwide, Inc. (“Aetrex”) and defendants Sourcing for You, 

Limited and Sourcing for You Consulting, Ltd. (collectively, “Sourcing for You”) 

entered into a supply agreement containing a non-compete provision in March 2008. This 
2

agreement also contained a clause agreeing to arbitrate contractual disputes as follows, 

with an exception for certain actions involving injunctive relief: 

Except for an action seeking a temporary restraining order or injunction 

related to the purposes of this Agreement, a suit to compel compliance 

with this dispute resolution process, or the entry and enforcement of any 

judgment on any arbitration award, any dispute, claim or controversy 

arising out of relating to this Agreement or the breach, termination, 

enforcement, interpretation or validity thereof, including the

determination of the scope or applicability of this Agreement to arbitrate, 

shall be determined exclusively by final, binding arbitration to be held in 

a mutually convenient location within the USA.

App. at 59 (emphasis added). Aetrex filed a complaint based on Sourcing for You’s 

alleged breach of the non-compete provision in March 2013, requesting “temporary, 

preliminary, and permanent injunctive relief.” Complaint at 18-19. Sourcing for You filed 

a motion to stay the proceeding and compel arbitration, which the District Court denied 

based on the specified exception. In April 2013, after the District Court denied its request 

for a temporary restraining order, Aetrex withdrew its motion for a preliminary 

injunction. Sourcing for You again moved to stay the proceeding and compel arbitration 

in May 2013. The Court denied the motion and Sourcing for You appeals. We affirm.

The District Court had jurisdiction under 28 U.S.C. § 1332.1 We have appellate 

jurisdiction under 9 U.S.C. § 16(a)(1). “Since this appeal presents a legal question 

 

1

In its “Jurisdictional Statement,” Sourcing for You’s brief argues that the District Court 

lacked subject matter jurisdiction because, although it concedes that the parties are 

diverse, it contends the amount in controversy does not exceed $75,000. Sourcing for 

You’s Br. at 1. In particular, it argues that because Aetrex cannot restrain the Chinese 

manufacturers with whom Sourcing for You contracts, the injunction has a value of $0. 

Id. This argument is based entirely on one-sided speculation. In any case, Sourcing for 

You has not established that it is “a legal certainty that the claim is really for less than the 
3

concerning the applicability and scope of an arbitration agreement, our standard of 

review is plenary.” Harris v. Green Tree Fin. Corp., 183 F.3d 173, 176 (3d Cir. 1999) 

(citing Pritzker v. Merrill Lynch, 7 F.3d 1110, 1113 (3d Cir. 1993)). 

“[B]efore compelling arbitration pursuant to the Federal Arbitration Act, a court 

must determine that (1) a valid agreement to arbitrate exists, and (2) the particular dispute 

falls within the scope of that agreement.” Kirleis v. Dickie, McCamey & Chilcote, P.C., 

560 F.3d 156, 160 (3d Cir. 2009) (citations omitted). Here, both sides agree that the 

arbitration clause generally created a valid agreement to arbitrate, but disagree as to 

whether this dispute is within the scope of that agreement. 

Sourcing for You argues that the arbitration agreement unambiguously requires 

arbitration here. In its view, the phrase “[e]xcept for an action seeking a temporary 

restraining order or injunction related to the purposes of this Agreement” excludes only 

requests for temporary restraining orders or temporary injunctions, not requests for 

permanent injunctions, because the word “temporary” should be read to modify both 

“restraining order” and “injunction.” Aetrex counter-argues that the agreement to 

arbitrate unambiguously excepts the request for a permanent injunction, because actions 

seeking an “injunction” are not covered by the arbitration agreement. The District Court 

sided with Aetrex, terming Sourcing for You’s modifier argument as “unreasonable” and 

concluding that the exception “unambiguously covers permanent injunctions.” Op. at 3-4. 

 

jurisdictional amount,” as would be necessary to require dismissal here. St. Paul Mercury 

Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). Thus, jurisdiction was proper. 
4

Aetrex has the better of the argument. As the District Court concluded, it is both 

more intuitive and more consistent with ordinary usage to read “temporary restraining 

order” as an idiomatic phrase, meaning that the clause excepts both suits for temporary 

restraining orders and suits for injunctions (of all kinds). Because the plain meaning of 

the contract’s language is clear, the provision is not ambiguous. Neither Sourcing for 

You’s grammatical arguments, nor the tangentially related cases from outside our Court 

that Sourcing for You cites supporting these arguments, compel an alternative 

conclusion.

Sourcing for You additionally points to cases where courts have allowed motions 

for temporary or preliminary injunctions even though the parties have agreed to arbitrate 

all disputes. See, e.g., Ortho Pharm Corp. v. Amgen, Inc., 882 F.2d 806, 812 (3d Cir. 

1989). These cases actually undermine Sourcing for You’s argument. If, as our precedent 

in Ortho suggests, preliminary injunctions necessary to preserve the status quo pending 

arbitration are available even without an explicit exception to the arbitration agreement, a 

contractual provision excepting only temporary injunctions (and temporary restraining 

orders) would be superfluous, thus strongly implying that the parties instead intended to 

except injunctions of all kinds. 

In the alternative, Sourcing for You argues that, if the agreement were considered 

ambiguous, an arbitration panel, rather than the District Court, ought to have decided 

whether this action is within the scope of the arbitration agreement. The arbitration 

clause includes an agreement to submit to binding arbitration “the determination of the 

scope or applicability of this Agreement to arbitrate[.]” App. at 59. Because, as we 
5

conclude above, the contractual provision was not ambiguous, there was no meaningful 

question to refer to the arbiter concerning the scope of the agreement. Indeed, even were

we to conclude that there is some ambiguity in the provision, it does not necessarily 

follow that the ambiguity must be resolved through arbitration. See Local 827, Int’l Bhd. 

of Elec. Workers v. Verizon N.J., Inc., 458 F.3d 305, 312 (3d Cir. 2006) (“Insofar as the 

existence of contrary interpretations of the arbitration clause suggests that there may be a 

modicum of ambiguity in the language of the arbitration clause, we note that a 

compelling case for nonarbitrability should not be trumped by a flicker of interpretive 

doubt.” (quoting PaineWebber Inc. v. Hofmann, 984 F.2d 1372, 1377 (3d Cir. 1993)) 

(internal quotation marks omitted)). 

Because the District Court correctly held that the arbitration clause unambiguously 

excepted requests for permanent injunctions, it did not err in denying Sourcing for You’s 

motion to stay the proceedings and compel arbitration.2 We thus affirm. 

 

2

Sourcing for You previously moved to stay the proceedings at the District Court 

pending this appeal under the theory that the District Court lacked jurisdiction to 

determine that the appeal is frivolous. In November 2013, our Court denied this motion 

without prejudice. It is unclear whether this challenge is properly before us, but, in any 

event, given our resolution of the underlying appeal, the question is now moot. We make 

no decision as to the substantive question of law.