Court Opinion

ID: 3026774
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:36:40.42149+00
Date Added: 2024-06-11T18:23:10.650409
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 00-3055
                                   ___________

Hormel Foods Corporation,              *
                                       *
            Plaintiff-Appellee,        *
                                       *
      v.                               *
                                       *
Chr. Hansen, Inc.,                     *
                                       *
            Defendant-Appellee,        *
                                       *
      v.                               *
                                       *
Montana Specialty Mills, L.L.C.,       *   Appeal from the United States
                                       *   District Court for the District
            Third Party Defendant -    *   of Minnesota
            Appellant,                 *
                                       *   [UNPUBLISHED]
Hoover-Hanes Rubber Corporation,       *
Belt Concepts of America, Inc.,        *
                                       *
            Third Party Defendants,    *
                                       *
      v.                               *
                                       *
Gerbers of Montana, Inc., Universal    *
Industries, Inc., Price Rubber         *
Corporation,                           *
                                       *
            Fourth Party Defendants-   *
            Appellees.                 *
                                     ___________

                               Submitted: March 12, 2001

                                    Filed: June 27, 2001
                                     ___________

Before LOKEN, MURPHY, and BYE, Circuit Judges.
                           ___________

PER CURIAM.

       On June 21, 2000, Montana Specialty Mills, L.L.C., (MSM) contacted the
National Grain & Feed Association (NGFA) to request arbitration of a dispute with
Chr. Hansen, Inc., (Hansen) over certain shipments of mustard flour. The mustard flour
contained pepperoni contaminated with rubber particles. At that point, MSM had been
aware of Hansen's claim for over seventeen months (the contaminated shipments had
been delivered prior to November 3, 1998). The NFGA's arbitration rules provided,
in relevant part, that a complaint requesting arbitration "must be filed with the National
Secretary within twelve (12) months after a claim arises, or within twelve (12) months
after expiration date for performance of the contract or contracts involved."

       During those seventeen months, MSM had (1) requested and received samples
and photographs of the contaminated pepperoni, as well as permission to perform
destructive testing on the rubber found in the pepperoni, (2) retained an expert to test
the mustard and rubber samples, (3) served a copy of its expert's report on Hansen
denying responsibility for the contamination, (4) answered a third-party complaint
brought against it by Hansen without asserting arbitration as a defense, (5) filed fourth-
party complaints against the five entities it alleged were responsible for the
contamination, (6) served and briefed a motion to dismiss for lack of personal
jurisdiction, (7) stipulated to an amended pretrial scheduling order to accommodate
jurisdictional discovery, and (8) participated in limited discovery, with Hansen's

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counsel incurring the expense of traveling from Minnesota to Montana to depose
MSM's corporate designee on jurisdictional issues.

        The district court1 refused to grant MSM's request to stay the district court
proceedings pending arbitration, finding that MSM was "in default in proceeding with
such arbitration," 9 U.S.C. § 3, and had waived its arbitration rights by substantially
invoking the litigation machinery before seeking arbitration. See Barker v. Golf
U.S.A., Inc., 154 F.3d 788, 793 (8th Cir. 1998) (party waives right to arbitrate when
it (1) knows of an existing right to arbitration, (2) acts inconsistently with that right, and
(3) prejudices the other party by those inconsistent acts); Ritzel Communications, Inc.
v. Mid-American Cellular Tel. Co., 989 F.2d 966, 969 (8th Cir. 1993) (party acts
inconsistently with right to arbitrate when it substantially invokes the litigation
machinery before asserting arbitration rights).

       MSM appeals, contending that the district court erred in concluding that MSM's
conduct prejudiced Hansen. Reviewing the issue de novo, see Stifel, Nicolaus & Co.,
Inc. v. Freeman, 924 F.2d 157, 158 (8th Cir. 1991), we affirm.

       We disagree with the district court's suggestion that prejudice was established,
in part, by the fact that some of the parties to this litigation were not subject to the
arbitration agreement. See Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460
U.S. 1, 20 (1983) ("[A]n arbitration agreement must be enforced notwithstanding the
presence of other persons who are parties to the underlying dispute but not to the
arbitration agreement."). We agree, however, that the overall circumstances present
in this case support the conclusion that MSM substantially invoked the litigation

       1
        The Honorable David S. Doty, Senior United States District Judge for the
District of Minnesota, affirming an order of the Honorable John M. Mason, United
States Magistrate Judge for the District of Minnesota. See Fed. R. Civ. P. 72(a).

                                             -3-
machinery before requesting arbitration, and that MSM's conduct prejudiced Hansen.
We affirm without an extended discussion. See 8th Cir. R. 47B.

      A true copy.

            Attest:

               CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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