O.J. Distributing v. Hornell Brewing Co.
| Decision Date | 14 August 2003 |
| Docket Number | No. 01-1583.,01-1583. |
| Citation | 340 F.3d 345 |
| Parties | O.J. DISTRIBUTING, INC., a/k/a Great State Beverage, Plaintiff-Appellant, v. HORNELL BREWING COMPANY, INC., d/b/a Ferolito, Vultaggio & Sons, a/k/a AriZona Beverages, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Matthew A. Gibb, GIBB LAW FIRM, Shelby Township, Michigan, for Appellant. John A. Ruemenapp, WEISMAN, YOUNG, SCHLOSS & RUEMENAPP, Bingham Farms, Michigan, for Appellee.
ON BRIEF:
Matthew A. Gibb, GIBB LAW FIRM, Shelby Township, Michigan, for Appellant.
John A. Ruemenapp, WEISMAN, YOUNG, SCHLOSS & RUEMENAPP, Bingham Farms, Michigan, for Appellee.
Before: BATCHELDER, MOORE, and CLAY, Circuit Judges.
CLAY, J., delivered the opinion of the court, in which MOORE, J., joined. BATCHELDER, J. (pp. 360-361), delivered a separate opinion concurring in part and dissenting in part.
Plaintiff, O.J. Distributing, Inc., a/k/a Great State Beverage, appeals from the district court's order entered on March 29, 2001 granting the motion brought by Defendant, Hornell Brewing Company, Inc., d/b/a Ferolito, Vultaggio & Sons, a/k/a AriZona Beverages, to confirm an arbitration award, while dismissing Defendant's motion to dismiss Plaintiff's amended complaint as moot, and dismissing Plaintiff's motion for summary judgment as moot. For the reasons set forth below, we VACATE the district court's order confirming the arbitration award, and REMAND the case to the district court with instructions that the case should proceed on the merits of Plaintiff's claims inasmuch as Defendant waived its right to arbitrate under the Agreement.
Plaintiff, a Michigan corporation, filed suit against Defendant, a New York corporation, in the Eastern District of Michigan on May 11, 1998, on the basis of diversity of citizenship and the amount in controversy being over $75,000, claiming that in May of 1997, Defendant breached the provisions of the "Distributing Agreement" ("the Agreement") held between the parties for the distribution of AriZona beverage products. Plaintiff mailed the complaint to Defendant's corporate counsel along with a request for waiver of service in May of 1998. The waiver had not been returned as of July of 1998, so Plaintiff sent an additional copy of the complaint to Defendant's corporate counsel via overnight courier.
On or about August 4 and 5, 1998, Defendant sent two letters to counsel for Plaintiff demanding arbitration. Defendant based its demand on a provision of the Agreement that provided for arbitration of any dispute that arose between the parties and that the arbitration must be commenced within 180 days following the event giving rise to the claim, and further provided that "the failure to abide by such time requirement shall constitute a waiver by the Distributor [Plaintiff] of any rights in respect of, and shall constitute a bar on, any claims by Distributor on the basis of such event or circumstance." (J.A. at 52-53.) Defendant's letters advised counsel for Plaintiff of this provision in the Agreement requiring arbitration of all disputes.
On September 4, 1998, via "telecopier and mail," Defendant restated its objections to Plaintiff's attempted service by overnight courier and reiterated that Plaintiff's claims were subject to "mandatory arbitration." The letter also advised Plaintiff that Defendant (J.A. at 115.) Plaintiff arranged for an entry of default on September 30, 1998, with the Clerk of the United States District Court for the Eastern District of Michigan, and on October 2, 1998, Plaintiff filed a motion for Entry of Default Judgment.
Defendant claims that it was not served with any papers regarding Plaintiff's actions with respect to the entry of default, but learned of Plaintiff's actions by way of a voice-mail message from Plaintiff's attorney to Defendant's counsel. Defendant responded by sending a letter to the district court "Via Facsimile" with a copy to Plaintiff's counsel wherein Defendant explained that entry of default was inappropriate because Defendant had not been served in the action, and that Defendant had served Plaintiff with a demand for arbitration as required under the Agreement. At that time, Defendant also filed a cross-motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(5) for insufficiency of service of process, and moved to dismiss or stay the action pending arbitration.
On October 5, 1998, Defendant initiated arbitration proceedings before the American Arbitration Association ("AAA") in New York City, New York and, in accordance with the AAA rules, Defendant served the arbitration papers on Plaintiff via certified mail, return receipt requested. By letter dated October 20, 1998, the AAA acknowledged receipt of Defendant's arbitration demand and requested Plaintiff's responses thereto. The AAA also scheduled an administrative conference regarding the matter for October 27, 1998, and provided information and papers with which the parties were to begin the process of selecting arbitrators and hearing dates.
Plaintiff filed a motion on October 28, 1998, seeking a temporary restraining order preventing Defendant from arbitrating the matter. On November 3, 1998, the district court denied Plaintiff's motion for a temporary restraining order, and scheduled a hearing for the various other motions. Thereafter, the district court entered an order on April 2, 1999, denying Defendant's motion to dismiss, while also denying Plaintiff's motion for entry of a default judgment, but granted Defendant's motion to stay the proceedings pending arbitration.
In the meanwhile, the arbitration set in New York City was going forward. On April 19, 1999, Plaintiff filed its arbitration summary and statement of issues with the AAA setting forth a claim for damages under the Agreement. Defendant, upon consent of the arbitrators, filed a motion to enforce the 180-day contractual time limitations as set forth in the Agreement, and thereby requested a dismissal of Plaintiff's claims as time-barred. Defendant argued that the 180-day time limit barred Plaintiff's claim and that "[u]nder New York law (which governs this dispute as per ¶ 20.2 of the Agreement), it is well established that only the arbitrators (and not the Courts) are charged with enforcing a contractual time limitation." (J.A. at 531-32 (citation omitted).) Plaintiff responded by claiming that the 180-day period did not begin to run until April 8, 1998, and that Defendant's filing of its demand for arbitration on October 5, 1998 satisfied the time limitation period. In the alternative, Plaintiff argued that because of Defendant's alleged false and deceptive acts throughout the arbitration process, the limitations period should be tolled under the doctrine of equitable tolling. A hearing before the arbitrators was held on March 13, 2000, regarding Defendant's motion to dismiss Plaintiff's claim as untimely.1 Thereafter, on or about March 30, 2000, the arbitrators issued their award dismissing Plaintiff's claims in their entirety.
On May 5, 2000, Plaintiff, filed an amended complaint in the district court. Defendant filed a motion on May 22, 2000, seeking to confirm the arbitration award and to dismiss Plaintiff's amended complaint. (J.A. at 216.) Plaintiff, in turn, filed a motion for summary judgment. The district court held a hearing on the various motions on August 11, 2000, and then entered a memorandum opinion and order on March 29, 2001, confirming the arbitration award and finding the remaining motions moot.
Plaintiff timely appealed from the district court's March 29, 2001, memorandum opinion and order confirming the arbitration award and denying Plaintiff's motion for summary judgment as moot. Oral argument was heard on January 28, 2003, after which Defendant moved to file a supplemental brief as to a case raised by the panel at oral argument, General Star National Insurance Co. v. Administratia Asigurarilor de Stat, 289 F.3d 434 (6th Cir.2002). Defendant's motion was granted and its supplemental brief has been considered by this Court.
Defendant is a supplier of certain alcoholic and non-alcoholic beverages including AriZona brand teas and soft drinks.2 Plaintiff is a distributor of non-alcoholic beverage products in the greater Detroit, Michigan area. In April of 1995, Defendant began supplying AriZona beverage products to Plaintiff for distribution in three Michigan counties: Wayne, Oakland, and Macomb. About two months later, on June 16, 1995, Plaintiff entered into a sales agreement ("the Sales Agreement") with a third party for the purchase price of $70,000, for purposes of securing the rights to distribute AriZona products in two additional Michigan counties, Livingston and Washtenaw. According to Plaintiff, Defendant had to consent to Plaintiff purchasing the rights to distribute AriZona products in these two additional counties. Thereafter, on September 16, 1995, Plaintiff and Defendant entered into the Agreement now at issue for the purpose of providing the terms under which Defendant would supply and Plaintiff would distribute AriZona products.
Each party not only performed under the Agreement, but Plaintiff allegedly met and exceeded the set sales goals and expended considerable time and resources in exceeding the expected market growth for AriZona products. Plaintiff claims that its efforts resulted in a large and profitable customer list for AriZona products. The performance continued until April of 1997, when AriZona informed Plaintiff that it was terminating the relationship.
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