10 F.3d 753 (11th Cir. 1993), 91-9153, Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc.

Docket Nº:91-9153.
Citation:10 F.3d 753
Party Name:SUNKIST SOFT DRINKS, INC., Plaintiff, Del Monte Corporation, Nabisco Brands, Inc., Plaintiffs-Appellees, v. SUNKIST GROWERS, INC., Defendant-Appellant.
Case Date:December 30, 1993
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit

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10 F.3d 753 (11th Cir. 1993)


Del Monte Corporation, Nabisco Brands, Inc., Plaintiffs-Appellees,


SUNKIST GROWERS, INC., Defendant-Appellant.

No. 91-9153.

United States Court of Appeals, Eleventh Circuit

December 30, 1993

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Emmet J. Bondurant, II, Edward Bryan Krugman, Bondurant Mixson & Elmore, Atlanta, GA, Deseriee A. Kennedy, Robert G. Badal, Wayne M. Smith, Jill F. Cooper, Pepper Hamilton & Scheetz, Martin J. Trupiano, Les J. Weinstein, Graham & James, Los Angeles, CA, for defendant-appellant.

David R. Aufdenspring, Powell Goldstein Frazer & Murphy, P.C., Atlanta, GA, Virginia S. Taylor, Kilpatrick & Cody, Atlanta, GA, George L. Little, Jr., Rodrick J. Enns, J. David Mayberry, Petree Stockton & Robinson, Winston Salem, NC, for plaintiffs-appellees.

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Appeal from the United States District Court for the Northern District of Georgia.

Before ANDERSON, Circuit Judge and MORGAN and JOHNSON, Senior Circuit Judges.

MORGAN, Senior Circuit Judge:

The appellant appeals the district court's order granting the appellees' motion to compel arbitration pursuant to the Federal Arbitration Act and the denial of appellant's subsequent motion to vacate the arbitration award. We must decide whether a nonsignatory to a contract may invoke an arbitration provision contained therein, and if so, whether appellees' party-appointed arbitrator acted improperly. We AFFIRM the district court's judgment.


The defendant-appellant, Sunkist Growers, Inc. (hereinafter "Sunkist") is the exclusive owner and licensor of the "Sunkist" trademark. General Cinema Corporation ("GCC") obtained the contractual right from Sunkist to market and sell an orange soda under the "Sunkist" brand name. To produce and market this soft drink, GCC created a wholly owned subsidiary known as Sunkist Soft Drinks ("SSD"). Subsequently, Sunkist and SSD entered into a license agreement which provided a detailed framework for the marketing and sale of "Sunkist" soft drinks. The license agreement included the following arbitration clause:

Except for any claim with respect to the ownership rights in Licensed Trademarks, any controversy or claim arising out of or relating to this Agreement or the breach thereof, including those regarding termination or failure to renew this Agreement, shall be settled by arbitration in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrators may be entered in any Court having jurisdiction thereof. The Arbitration Tribunal shall be comprised of two party-designated arbitrators, one selected by Sunkist and one selected by SSD, and a third neutral arbitrator selected by the parties in accordance with the Rules of the American Arbitration Association. (emphasis added).

In November 1984, Del Monte Corporation ("Del Monte") acquired the stock of SSD from GCC. After acquiring the stock, Del Monte absorbed SSD into its own beverage products division, known as Del Monte Franchised Beverage Products. By placing the "Sunkist" brand under a single administration with its own soft drink brands, Del Monte effectively stripped SSD of its employees and management and any other separate operating status.

On July 18, 1986, Del Monte and its wholly owned subsidiary, SSD, filed a declaratory relief action against Sunkist in the District Court for the Northern District of Georgia seeking a declaration that the controversy relating to SSD's performance under the license agreement was subject to arbitration. Shortly after the original complaint was filed, SSD was sold to a third party, Cadbury Schweppes, Inc., a fact that was reflected in Del Monte's amended complaint, which also added Nabisco Brands, Inc., Del Monte's sister company, as a party plaintiff.

On February 2, 1987, Sunkist filed a separate complaint against Del Monte and SSD in the District Court for the Central District of California. Sunkist asserted ten claims against Del Monte and SSD, some sounding in tort and some in contract, arising out of Del Monte's alleged interference with the Sunkist-SSD license agreement.

On March 12, 1987, the district court approved SSD's dismissal of its claims against Sunkist in the Georgia action, and Sunkist voluntarily dismissed SSD from the California action. On November 20, 1987, Sunkist filed counterclaims against Del Monte in the Georgia action alleging essentially the same ten claims that were then pending in the California action, plus an eleventh claim for abuse of process. Sometime thereafter, the California action was transferred to the Northern District of Georgia and became a companion to this case.

On October 5, 1987, Del Monte filed a motion to compel arbitration on the grounds that Sunkist was contractually obligated to

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arbitrate its claims under the terms of the license agreement. The district court granted Del Monte's motion to compel arbitration. Sunkist filed an interlocutory appeal from that order which this court dismissed, sua sponte, for lack of jurisdiction following the 1988 amendment of 9 U.S.C. Sec. 16 (formerly Sec. 15, renumbered by amend. 1990).

Each party designated an arbitrator and then mutually agreed upon a third, neutral arbitrator pursuant to the license agreement and the Rules of the American Arbitration Association ("AAA"). Del Monte designated Jessie Meyers as its party-appointed arbitrator.

During the time leading up to the arbitration hearing, Mr. Meyers met with counsel and other representatives of Del Monte to prepare for the hearing. Mr. Meyers met with six individuals identified by Sunkist: Argabright, Mullin, Murray, Watson, Antle, and O'Reilly. Argabright, Mullin, and Murray, were all former Del Monte employees and officers who were responsible for Del Monte's conduct during the relevant time period. Watson and Antle were consultants retained by Del Monte. Mr. O'Reilly was a third party witness interviewed by Del Monte's counsel in Mr. Meyers' presence. After being designated as an arbitrator, Mr. Meyers made a written disclosure to the AAA pursuant to Cannon VII of the AAA's Code of Ethics for Arbitrators in Commercial Disputes. 1 Prior to the arbitration hearing, Sunkist filed a motion with the AAA requesting that the AAA refrain from confirming Mr. Meyers appointment to the arbitration panel based on his prehearing contact with potential witnesses. The AAA refused to withdraw the appointment, and Sunkist raised the matter with the district court. The...

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