Court Opinion

ID: 182322
Source: CourtListenerOpinion
Date Created: 2011-01-06 15:37:13+00
Date Added: 2024-06-11T12:37:54.548015
License: Public Domain

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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