UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

KWASNY COMPANY,

Plaintiff,

Case No. 09-13357

v. Hon. Gerald E. Rosen

ACRYLICON INTERNATIONAL LTD.,

Defendant.

_________________________________/

OPINION AND ORDER REGARDING PLAINTIFF’S

MOTION TO DISMISS BASED ON ARBITRATION PROVISION

At a session of said Court, held in

the U.S. Courthouse, Detroit, Michigan

on June 11, 2010 

PRESENT: Honorable Gerald E. Rosen

Chief Judge, United States District Court

I. INTRODUCTION

Plaintiff Kwasny Company commenced this suit in this Court on August 25, 2009,

seeking a declaration that it does not owe Defendant AcryliCon International Ltd. under

invoices issued by Defendant to Plaintiff in December of 2007. According to Plaintiff’s

complaint, Defendant issued substantially the same invoices to another entity, Industrial

Flooring Solutions, Inc., in the summer of 2006, and reissued these invoices to Plaintiff

only after it was unable to collect from this third party. In addition to answering the

complaint, Defendant has filed a number of counterclaims, supported principally by

allegations that the invoices it issued to Plaintiff arose under an exclusive license
2

agreement executed by the parties in January of 2007. Accordingly, in its counterclaims,

Defendant seeks payment on these invoices, and also asserts that Plaintiff has breached

other obligations allegedly owed under the exclusive license agreement. The Court’s

subject matter jurisdiction over both Plaintiff’s claim and Defendant’s counterclaims rests

upon diversity of citizenship, with Plaintiff a Michigan corporation and Defendant a

corporation organized under the laws of the United Kingdom with its principal place of

business in Norway. See 28 U.S.C. § 1332(a)(2).

By motion filed on October 6, 2009, Plaintiff seeks the dismissal of three of

Defendant’s counterclaims as subject to a binding arbitration agreement. Specifically, the

exclusive license agreement entered into by the parties in January of 2007 includes an

arbitration clause requiring that “[a]ny controversy or claim arising out of or relating to

this Agreement . . . shall be finally settled by arbitration.” (Complaint, Ex. A, Exclusive

License Agreement at ¶ 16.15.) In Plaintiff’s view, this clause dictates that the three

counterclaims resting upon alleged breaches of this agreement must be arbitrated. In

response, Defendant argues that Plaintiff has waived its right to arbitration by

commencing this suit and invoking the jurisdiction of this Court to resolve the parties’

disputes. Defendant further contends that Plaintiff’s demand for arbitration is defeated by

Defendant’s plea for injunctive relief, and by a mutual mistake in a purportedly material

term of the agreement’s arbitration clause.

Plaintiff’s motion has been fully briefed by the parties. Having reviewed the

parties’ written submissions in support of and opposition to this motion, as well as the
3

remainder of the record, the Court finds that the pertinent facts, allegations, and legal

issues are sufficiently presented in these materials, and that oral argument would not

assist in the resolution of this motion. Accordingly, the Court will decide Plaintiff’s

motion “on the briefs.” See Local Rule 7.1(e)(2), U.S. District Court, Eastern District of

Michigan. This opinion and order sets forth the Court’s rulings on this motion.

II. FACTUAL BACKGROUND

For present purposes, the pertinent factual background of this case is quite

straightforward, and rests exclusively on the allegations of Plaintiff’s complaint and

Defendant’s counter-complaint. Plaintiff Kwasny Company is a Michigan corporation

that installs industrial flooring and lining systems. Defendant AcryliCon International

Ltd. is a corporation organized under the laws of the United Kingdom that markets and

sells industrial flooring systems.

On January 24, 2007, the parties entered into an Exclusive License Agreement (the

“Agreement”), under which Plaintiff agreed to pay certain amounts to Defendant in

exchange for the right to use certain of Defendant’s products. (Complaint, Ex. A.) The

Agreement includes an arbitration clause, which provides in pertinent part:

Any controversy or claim arising out of or relating to this

Agreement, including any controversy or claim relating to the validity,

interpretation or performance of this Agreement, shall be finally settled by

arbitration in accordance with the rules of the Conciliation and Arbitration

of the International Chamber of Commerce, as then in effect. The

appointing and administrating body will be the English Centre for

International Commercial Arbitration. All arbitral proceedings conducted

pursuant to this provision shall be in strict accordance with the following

conditions:
4

(a) All arbitral proceedings shall be conducted in the State of Michigan,

in the United States if the proceeding is initiated by [Defendant], and

in London, United Kingdom if the proceeding is initiated by

[Plaintiff], and in each case under the substantive law applying in the

country, county, or state where the actual dispute or breach of this

Agreement occurred.

* * * *

(c) All arbitral proceedings hereunder shall be conducted before a panel

of three arbitrators. [Defendant] and [Plaintiff] shall each appoint

one member to the arbitral panel within 30 days after receipt of

notice that arbitration will be conducted pursuant hereto. The third

member of the arbitral panel shall be appointed by the two members

originally appointed within 30 days after their appointment. If an

appointment to the arbitral panel is not made within the time periods

set forth herein, such appointment shall be made in accordance with

the rules of the Conciliation and Arbitration of the International

Chamber of Commerce currently in effect.

* * * *

Nothing in this Clause 16.15 shall restrict either party from pursuing

injunctive relief where appropriate in any court of competent jurisdiction.

(Id. at ¶ 16.15.)

In December of 2007, Defendant sent invoices to Plaintiff totaling $196,216.52 for

materials and services allegedly provided by Defendant to Plaintiff. (See Complaint, Ex.

B.) According to Plaintiff’s complaint, however, these invoices actually stemmed from

services rendered by Defendant on behalf of a third party, Industrial Flooring Solutions,

Inc. Plaintiff further alleges that Defendant issued substantially the same invoices to

Industrial Flooring between June and August of 2006, and that these invoices were altered

and reissued to Plaintiff “[o]nly after [Defendant] was unable to collect from Industrial
5

Flooring.” (Complaint at ¶ 15.) In Plaintiff’s view, Defendant took this course of action

in an attempt to bring the Industrial Flooring invoices within the ambit of the parties’

Agreement and its arbitration provision, when in fact these invoices “are not related to the

Agreement and do not serve as a basis to invoke the arbitration clause of the Agreement.” 

(Id. at ¶¶ 15, 20.) Accordingly, in its complaint, Plaintiff seeks a declaration that the

invoices “are not related to the Agreement and do not serve as a basis to invoke the

arbitration clause of the Agreement,” (id. at 20), as well as a declaration that it does not

owe any amount to Defendant under these invoices. 

Not surprisingly, Defendant’s counter-complaint rests upon a significantly

different set of allegations. According to Defendant, the invoices at issue reflect

materials received by Plaintiff from Defendant, and Plaintiff therefore was obligated

under the Agreement to pay the invoiced amounts within 30 days. (See CounterComplaint at ¶¶ 7, 11.) Defendant further alleges that Plaintiff breached other terms of

the Agreement, including a non-compete provision and a minimum purchase requirement. 

Based on these allegations, Defendant has asserted six counterclaims against Plaintiff,

three of which expressly rest upon purported breaches of the Agreement, and the

remainder of which assert alternative legal theories for recovery of the $196,216.52 that is

allegedly due and owing under the invoices issued to Plaintiff in December of 2007.

III. ANALYSIS

A. The Standards Governing Plaintiff’s Motion

Through the present motion, Plaintiff seeks the dismissal of three of the six claims
6

asserted in Defendant’s counter-complaint, on the ground that these claims are subject to

arbitration under the terms of the Exclusive License Agreement entered into by the

parties. Under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., an arbitration

clause in a commercial contract — such as the arbitration provision found in the parties’

Agreement here — “shall be valid, irrevocable, and enforceable, save upon such grounds

as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. In addition,

the FAA authorizes “[a] party aggrieved by the alleged failure, neglect, or refusal of

another to arbitrate under a written agreement for arbitration” to petition a federal district

court “for an order directing that such arbitration proceed in the manner provided for in

such agreement.” 9 U.S.C. § 4.

Thus, the threshold question before the Court is whether the arbitration clause in

the parties’ Agreement calls for Defendant’s counterclaims to be resolved through

arbitration. See Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000). The Sixth

Circuit has identified four components to this inquiry:

When considering a motion to stay proceedings and compel

arbitration under the [FAA], a court has four tasks: first, it must determine

whether the parties agreed to arbitrate; second, it must determine the scope

of that agreement; third, if federal statutory claims are asserted, it must

consider whether Congress intended those claims to be nonarbitrable; and

fourth, if the court concludes that some, but not all, of the claims in the

action are subject to arbitration, it must determine whether to stay the

remainder of the proceedings pending arbitration.

Stout, 228 F.3d at 714. In determining the existence and scope of an agreement to
1

Under the parties’ Agreement, the arbitration clause and the other provisions of the

Agreement are to be construed “in accordance with English Law.” (Agreement at ¶ 16.6.) As

will become clear, however, the interpretative task before the Court is entirely straightforward

and does not turn upon any possible idiosyncracies of English contract law. Indeed, Defendant

has cited only a single English decision in its submission to the Court, in order to establish the

“ancient canon of contract law” that “agreements may be voided on mutual mistake by the

parties.” (Defendant’s Response Br. at 10.) Defendant then goes on to recite the three-part test

for mutual mistake set forth in the Restatement (Second) of Contracts. Evidently, then,

Defendant does not believe it necessary to make the Court aware of any unique features of

English law in order to resolve its claim of mutual mistake.

7

arbitrate, the Court is guided by ordinary contract law principles,1 but “any doubts

regarding arbitrability should be resolved in favor of arbitration.” Fazio v. Lehman

Brothers, Inc., 340 F.3d 386, 392-93 (6th Cir. 2003).

B. Defendant’s Counterclaims Based on Alleged Breaches of the Parties’

Agreement Are Clearly Subject to Arbitration Under the Agreement’s

Arbitration Clause, and This Obligation To Arbitrate Is Not Overcome by

Waiver, Mutual Mistake, or Defendant’s Plea for Injunctive Relief.

Counts One, Two, and Three of Defendant’s counter-complaint expressly rest

upon alleged breaches of obligations owed by Plaintiff under the terms of the parties’

Agreement. In Plaintiff’s view, these claims fall squarely within the scope of the

arbitration clause of the Agreement, which broadly mandates arbitration of “[a]ny

controversy or claim arising out of or relating to this Agreement, including any

controversy or claim relating to the validity, interpretation or performance of this

Agreement.” (Agreement at ¶ 16.15.) Defendant, in turn, does not dispute that this

arbitration provision, read in isolation, would compel the arbitration of its claims that

Plaintiff has failed to perform under the Agreement and has breached certain of its terms. 

Nonetheless, in opposing Plaintiff’s demand for arbitration of these claims, Defendant
8

advances three reasons why, in its view, the Agreement’s arbitration clause should not be

enforced under the circumstances of this case: (i) Plaintiff’s purported waiver of its

contractual right to arbitrate by commencing this litigation; (ii) the parties’ mutual

mistake in identifying a non-existent organization to oversee the arbitration process; and

(iii) Defendant’s exercise of its contractual right to pursue injunctive relief before this

Court. As discussed below, the Court finds that none of the challenges advanced by

Defendant provides a basis for declining to hold the parties to their clearly stated, mutual

promise to arbitrate any disputes arising from their Agreement.

In seeking to avoid the resolution of its counterclaims through arbitration,

Defendant first contends that Plaintiff has waived its right to invoke the arbitration clause

of the parties’ Agreement by eschewing the arbitration of its own claims, and instead

electing to pursue these claims before this Court. As Defendant correctly observes, “[a]n

agreement to arbitrate may be waived by the actions of a party which are completely

inconsistent with any reliance thereon.” General Star National Insurance Co. v.

Administratia Asigurarilor de Stat, 289 F.3d 434, 438 (6th Cir. 2002) (internal quotation

marks and citation omitted). One such action that the courts have deemed inconsistent

with reliance on a contractual agreement to arbitrate is a party’s “election to proceed

before a nonarbitral tribunal for the resolution of a contractual dispute.” Cabinetree of

Wisconsin, Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 390 (7th Cir. 1995). Such a

course of action “manifest[s] an intention to resolve the dispute through the processes of

the federal court,” and thus is deemed a “presumptive waiver of the right to arbitrate.” 
9

Cabinetree, 50 F.3d at 390. In Defendant’s view, this sort of presumptive waiver

occurred here when Plaintiff commenced this litigation, seeking judicial declarations (i)

that the invoices issued by Defendant in December of 2007 do not rest upon any

obligations arising under the parties’ January 24, 2007 Agreement, and (ii) that Plaintiff

does not owe any amount under these invoices.

Yet, in order to view this litigation as Plaintiff’s “election to proceed before a

nonarbitral tribunal for the resolution of a contractual dispute,” Cabinetree, 50 F.3d at

390, the Court would have to conclude as a threshold matter that Plaintiff’s complaint

calls for the judicial resolution of a “contractual dispute.” Such a conclusion, however,

would be manifestly contrary to the express allegations of Plaintiff’s complaint: namely,

that the invoices at issue do not arise from or relate to the parties’ Agreement, but instead

reflect a debt that is owed by an altogether separate entity, Industrial Flooring Solutions,

and that pre-dates the existence of the parties’ Agreement. (See Complaint at ¶¶ 13-17.) 

Accepting these allegations as true — as the Court must at the present stage of this

litigation, before the parties have conducted any significant discovery, and without

Defendant having even suggested any evidentiary basis for the Court to reject these

allegations — Plaintiff’s complaint does not call for the judicial resolution of any

“contractual dispute” that might be subject to the Agreement’s arbitration clause. Rather,

Plaintiff has brought before the Court a dispute which, according to the complaint, is

wholly separate from (and antecedent to) the Agreement and its arbitration provision. 

Because Plaintiff had no contractual right to demand arbitration of this dispute, it cannot
10

have waived any such right by electing to resolve this dispute in a judicial forum. 

Next, Defendant seeks to defeat the enforcement of the Agreement’s arbitration

clause by citing a “mutual mistake” in this provision: namely, the identification of a nonexistent entity, the “English Centre for International Commercial Arbitration,” as the

“appointing and administrating body” for any arbitration conducted under the

Agreement’s arbitration clause. (Agreement at ¶ 16.15.) Because this entity evidently

does not exist, and because the parties shared a mistaken belief on this point, Defendant

contends that the parties “fail[ed] to reach a meeting of the minds on a material aspect of

the parties’ arbitration clause,” and that their arbitration agreement therefore “is void and

unenforceable.” (Defendant’s Response Br. at 11.)

As Defendant recognizes, a mutual mistake voids a contractual provision only if

mistake is material — that is, if “the mistaken belief relates to a basic assumption of the

parties upon which the contract is made, and which materially affects the agreed

performances of the parties.” Bratt Enterprises, Inc. v. Noble International, Ltd., No. 05-

3701, 182 F. App’x 435, 437 (6th Cir. May 12, 2006) (internal quotation marks and

citation omitted). In the specific context of mistakes in arbitration clauses, the courts

have framed the pertinent inquiry as whether the parties’ overarching intent to arbitrate a

dispute, as evidenced by the language of their arbitration agreement and any relevant

surrounding circumstances, survives and is severable from a particular infirmity or

ambiguity within this agreement. See, e.g., Great Earth Companies, Inc. v. Simons, 288

F.3d 878, 890 (6th Cir. 2002); National Iranian Oil Co. v. Ashland Oil, Inc., 817 F.2d
11

326, 333 (5th Cir. 1987). Applying this principle, the courts have enforced arbitration

agreements despite (i) an illegal forum selection clause within the arbitration agreement,

Great Earth Companies, 288 F.3d at 890-92; (ii) references in the parties’ agreement to

arbitration procedures that were “no longer in existence” and thus “no longer workable,”

Chattanooga Mailers Union, Local No. 92 v. Chattanooga News-Free Press Co., 524

F.2d 1305, 1315 (6th Cir. 1975), overruled on other grounds as recognized by

Bacashihua v. United States Postal Service, 859 F.2d 402, 404 (6th Cir. 1988); (iii) a

forum selection clause stating that the arbitration was to be held either in Peking, China,

or in a second location that was left blank in the parties’ agreement, Bauhinia Corp. v.

China National Machinery & Equipment Import & Export Corp., 819 F.2d 247, 249-50

(9th Cir. 1987); (iv) an arbitration clause that failed to specify which of nearly 200

arbitration commissions in China was to conduct the parties’ arbitration, Apple & Eve,

LLC v. Yantai North Andre Juice Co., 499 F. Supp.2d 245, 250-53 (E.D.N.Y. 2007); (v)

contract language in which the parties agreed to submit their disputes to “the International

Arbitration in the Hague,” a non-existent entity, Rosgoscirc v. Circus Show Corp., No.

92-Civ-8498, 1993 WL 277333, at *3, *5-*6 (S.D.N.Y. July 16, 1993); (vi) an arbitration

clause that failed to specify “the method for choosing arbitrators, the governing

arbitration association, or the governing laws for the arbitration,” Euro-Mec Import, Inc.

v. Pantrem & C., S.p.A., No. 92-2624, 1992 WL 350211, at *4-*5 (E.D. Pa. Nov. 16,

1992); and (vii) the parties’ adoption of arbitration rules that conferred a role upon the

Michigan courts in violation of a Michigan statute and court rule governing the arbitration
12

process, Brucker v. McKinlay Transport, Inc., 454 Mich. 8, 557 N.W.2d 536, 540-41

(1997).

In this case, Defendant has failed to identify any basis for the Court to conclude

that the parties’ mistaken reference to a non-existent arbitration body in their Agreement

should be viewed as integral to, and not severable from, the parties’ expressly stated

intent to arbitrate “[a]ny controversy or claim arising out of or relating to” the Agreement. 

This arbitration clause is quite broad, reflecting the parties’ shared intent to arbitrate any

dispute “relating to” the Agreement, and it specifies a number of details about how this

arbitration is to be conducted, including the rules governing the arbitration process, the

forum for the arbitration proceedings, and the method for selecting arbitrators. Indeed,

the clause itself mitigates, to a significant extent, the parties’ mistaken reference to a nonexistent administrative entity, by virtue of the parties’ stipulation to arbitrate in

accordance with the International Chamber of Commerce (“ICC”) Rules of Arbitration. 

(Agreement at ¶ 16.15.) These rules, in turn, expressly identify the International Court of

Arbitration as “the arbitration body attached to the ICC” that is responsible for

administering the ICC rules, ICC Rules of Arbitration, art. I, ¶¶ 1-2, available at

http://www.iccwbo.org/uploadedFiles/Court/Arbitration/other/rules_arb_english.pdf,

thereby suggesting the identity of the agency the parties might have had in mind with

their mistaken reference to the “English Centre for International Commercial
2

In fact, in the e-mail correspondence through which Defendant’s counsel learned that

this institution did not exist, he was advised that the ICC “does have a centre in London” that

might be able to process the parties’ request for arbitration under the ICC rules. (Defendant’s

Response, Ex. A.)

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Arbitration.”2

More generally, the Agreement makes it clear that any infirmity in one of its

provisions does not provide a basis for invalidating its remaining terms. The Agreement

states that any provision that is determined to be “invalid or unenforceable as written . . .

shall be deemed to be modified to such extent [and] in such manner as necessary for such

provision[] to be valid and enforceable to the greatest extent possible.” (Agreement at ¶

16.4.) If a provision remains invalid or unenforceable despite this attempted reformation,

“the remainder of this Agreement . . . shall be unaffected thereby and each term or

provision of this Agreement shall be valid and be enforced to the fullest extent permitted

by law,” with the parties under a duty to “consult in good faith to agree upon an

amendment to this Agreement which shall, so far as possible, re-establish the commercial

and legal effect of the severed provision.” (Id. at ¶ 16.5.) The Sixth Circuit has construed

similar language as “evinc[ing] a clear intention that the failure of a distinct part of [an

arbitration clause] . . . should not infect other parts of the arbitration provision.” Great

Earth Companies, 288 F.3d at 891.

Turning to the extrinsic evidence, the parties’ conduct after their dispute arose

does not suggest that their mistaken belief in the existence of the “English Centre for

International Commercial Arbitration” was material to their willingness to arbitrate
3

In its reply brief, Plaintiff suggests that the parties have “already agreed that,

notwithstanding the language of the arbitration provision, any arbitration would be decided

under the rules of the American Arbitration Association in front of Barry Howard.” (Plaintiff’s

Reply Br. at 5.) Unfortunately, Plaintiff has failed to cite any evidentiary support for this

statement, and the Court cannot accept as true the bare assertions of counsel in a brief. 

14

disputes arising from their Agreement. As an exhibit to its response brief, Defendant has

provided e-mail correspondence indicating that its counsel learned of this mistake on or

around June 4, 2009. (See Defendant’s Response, Ex. A.) Yet, later that month, on June

24, 2009, Defendant’s counsel sent a letter to Plaintiff invoking the Agreement’s

arbitration clause and demanding arbitration of the parties’ dispute, without in any way

indicating that the parties’ arbitration agreement might be unenforceable due to a mutual

mistake in the designation of an arbitral body. (See Defendant’s Response, Ex. B.) 

Likewise, both parties have referred in their briefs to ongoing negotiations about the

terms and conditions that would govern the arbitration process. (See Defendant’s

Response Br. at 4-5; Plaintiff’s Reply Br. at 5.)3

 Throughout the record, then, there is

nary a suggestion that either party — whether Defendant, the apparent drafter of the

Agreement, or Plaintiff — has ever claimed that its willingness to arbitrate hinged upon

the participation of the entity mistakenly referred to in the Agreement as the “English

Centre for International Commercial Arbitration.” Under these circumstances, the Court

readily concludes that this mistaken reference is severable from, and does not render

unenforceable, the parties’ broad and overarching agreement to arbitrate any disputes

arising out of or relating to the Agreement.

As its final challenge to Plaintiff’s motion to compel arbitration, Defendant notes
15

that it is expressly permitted under the Agreement’s arbitration clause to “pursu[e]

injunctive relief where appropriate in any court of competent jurisdiction,” (Agreement at

¶ 16.15), and it points to its plea for injunctive relief in Count One of its countercomplaint as an exercise of this contractual authority. It follows, in Defendant’s view,

that the referral of this counterclaim to an arbitrator will result in piecemeal litigation,

with the injunctive aspect of this claim remaining before this Court pursuant to the

parties’ Agreement. Yet, as Plaintiff points out, the courts generally construe their

authority to grant injunctive relief in connection with an arbitrable dispute as limited to

such relief as is necessary to avoid “render[ing] the process of arbitration meaningless or

a hollow formality.” Performance Unlimited, Inc. v. Questar Publishers, Inc., 52 F.3d

1373, 1380 (6th Cir. 1995); see also Merrill Lynch, Pierce, Fenner & Smith, Inc. v.

Salvano, 999 F.2d 211, 214-15 (7th Cir. 1993); Blumenthal v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 910 F.2d 1049, 1053-54 (2d Cir. 1990). In this case, Defendant has

not moved for a preliminary award of the injunctive relief sought under Count One of its

counter-complaint, nor is there otherwise any indication in the record that such relief is

necessary to preserve the viability of the parties’ chosen method of dispute resolution, the

arbitration process. Under these circumstances, the language in the Agreement

preserving the parties’ opportunity to seek injunctive relief cannot be viewed as

overriding the parties’ stated intent to arbitrate any disputes arising from the Agreement,

but rather as supportive of this agreement to arbitrate.

In any event, Defendant’s professed concern with piecemeal litigation ignores the
16

brute fact that Plaintiff seeks to compel the arbitration of only some, but not all, of

Defendant’s counterclaims, and that Plaintiff’s claims likewise are not subject to

arbitration. Consequently, some portions of this litigation will remain in this Court,

thereby preserving Defendant’s opportunity to seek injunctive relief at an appropriate

time and under the proper circumstances. The courts have emphasized that such concerns

of piecemeal litigation do not overcome the obligation of contracting parties to arbitrate

those disputes within the scope of their arbitration agreement. See Dean Witter Reynolds

Inc. v. Byrd, 470 U.S. 213, 217, 105 S. Ct. 1238, 1241 (1985) (holding that the Federal

“Arbitration Act requires district courts to compel arbitration of pendent arbitrable claims

when one of the parties files a motion to compel, even where the result would be the

possibly inefficient maintenance of separate proceedings in different forums”); Bratt

Enterprises, Inc. v. Noble International Ltd., 338 F.3d 609, 613 (6th Cir. 2003)

(“Congress’s preeminent concern in enacting the FAA — the enforcement of private

agreements to arbitrate as entered into by the parties — requires that the parties only be

compelled to arbitrate matters within the scope of their agreement, and this is so even

when the result may be piecemeal litigation.”).

This is not to say, however, that the Court is powerless to ameliorate the potential

duplication of efforts and waste of the parties’ and judicial resources that might result

from the referral of only some of Defendant’s counterclaims (and none of Plaintiff’s

claims) to arbitration. There is an undeniable overlap between the counterclaims that are

subject to arbitration and those that will remain before the Court. In particular, if
17

Defendant prevails in arbitration on its claim that Plaintiff breached the parties’

Agreement by failing to pay the amounts set forth in the December 2007 invoices, this

presumably would provide all of the relief sought under the three counterclaims that

remain pending before the Court. Likewise, such an arbitral ruling in Defendant’s favor

would entail the rejection of Plaintiff’s sole claim before this Court, which rests upon

allegations that the December 2007 invoices do not arise from any products or services

provided under the Agreement.

Under these circumstances, the Court is inclined to stay any further proceedings in

this case until the arbitration has concluded. The Sixth Circuit has identified this question

“whether to stay the remainder of the proceedings pending arbitration” as the fourth and

final step in a court’s consideration of a motion to compel arbitration. Stout, 228 F.3d at

714. Because Plaintiff has affirmatively moved for an order compelling arbitration of

certain of Defendant’s counterclaims, it seems only fair to stay any further proceedings on

Plaintiff’s own claim until the requested arbitration has concluded. Moreover, and as

explained above, the arbitrator will likely be presented with the mirror image of the

contention advanced in support of Plaintiff’s claim — one of Defendant’s counterclaims

that is subject to arbitration rests upon the premise that the December 2007 invoices arise

from the parties’ Agreement, while Plaintiff’s claim rests upon the denial of this premise. 

Finally, an arbitration award in Defendant’s favor promises to obviate the need for

Defendant to seek any further relief under the counterclaims that remain before the Court. 

Consequently, if either party believes that the Court should not stay all proceedings in this
18

case pending the completion of arbitration, it must file a written statement in opposition to

a stay within fourteen (14) days of the date of the present opinion.

IV. CONCLUSION

For the reasons set forth above, 

NOW, THEREFORE, IT IS HEREBY ORDERED that Plaintiff’s October 6, 2009

motion to dismiss based on a binding arbitration provision (docket #7) is GRANTED. IT

IS FURTHER ORDERED that the parties are directed to proceed with the arbitration of

Counts One, Two, and Three of Defendant’s counter-complaint in accordance with the

terms of their Exclusive License Agreement and the rulings in this opinion and order. IT

IS FURTHER ORDERED that these three counterclaims are DISMISSED, without

prejudice to either party’s opportunity to file a motion seeking to confirm, vacate, or

modify any eventual arbitration award with respect to these counterclaims, or seeking any

other relief to which either party may be entitled with respect to these counterclaims.

Finally, IT IS FURTHER ORDERED that any party opposing a stay of these

proceedings pending the completion of the above-ordered arbitration must file and serve a

statement of its opposition within fourteen (14) days of the date of this opinion and order,

with this statement setting forth the specific grounds for the party’s belief that a stay of
19

proceedings would be inappropriate.

SO ORDERED. 

s/Gerald E. Rosen 

Chief Judge, United States District Court

Dated: June 11, 2010

I hereby certify that a copy of the foregoing document was served upon counsel of record

on June 13, 2010, by electronic and/or ordinary mail.

s/Ruth A. Gunther 

Case Manager