Toyo Tire Holdings Of Am.S Inc v. Cont'l Tire North Am. Inc

• Decision Date: 17 June 2010
• Docket Number: No. 10-55145.,10-55145.
• Citation: 609 F.3d 975
• Parties: TOYO TIRE HOLDINGS OF AMERICAS INC., as successor in interest to Toyo Tire International, Inc., Plaintiff-Appellant,v.CONTINENTAL TIRE NORTH AMERICA, INC., as successor in interest to General Tire Inc.; Yokohama Corporation of America; GTY Tire Co.; and Does 1-100, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

609 F.3d 975

TOYO TIRE HOLDINGS OF AMERICAS INC., as successor in interest to Toyo Tire International, Inc., Plaintiff-Appellant,v.CONTINENTAL TIRE NORTH AMERICA, INC., as successor in interest to General Tire Inc.; Yokohama Corporation of America; GTY Tire Co.; and Does 1-100, Defendants-Appellees.

No. 10-55145.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 10, 2010.

Filed June 17, 2010.

Steven B. Kinnaird and Joseph R. Profaizer, Paul, Hastings, Janofsky & Walker LLP, Washington, DC, and Donna M. D'Angelo Melby and Daniel Prince, Paul, Hastings, Janofsky & Walker LLP, Los Angeles, CA, for the plaintiff-appellant.

Leslie M. Werlin and Sidney K. Kanazawa, McGuire Woods LLP, Los Angeles, CA, and Mitchell G. Blair and Maura L. Hughes, Calfee Halter & Griswold LLP, Cleveland, OH, for defendant-appellee Continental Tire North America, Inc.

Richard W. Lasater II, Leila Nourani, and Michael B. McCollum, Foley & Lardner LLP, Los Angeles, CA, for defendant-appellee Yokohama Corporation of America.

Appeal from the United States District Court for the Central District of California, James V. Selna, District Judge, Presiding. D.C. No. 8:10-CV-00052-JVS.

Before DOROTHY W. NELSON and RONALD M. GOULD, Circuit Judges, and JAMES S. GWIN ^*District Judge.

GWIN, District Judge:

Appellant Toyo Tire Holdings of Americas, Inc. (“Toyo”) appeals the district court's denial of its motion to enjoin Appellees Continental Tire North America, Inc. (“Continental”) and Yokohama Corporation of America (“Yokohama”) from dissolving the parties' joint venture and from distributing the partnership assets until an arbitration panel can consider Toyo's claims. In denying Toyo's motion for a preliminary injunction, the district court reasoned that our holding in Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir.1999), precluded granting injunctive relief when the parties have agreed to arbitrate and the arbitration panel has the power to issue injunctive relief. Because we believe that the district court incorrectly concluded that Simula controls in the present circumstances, we reverse and remand for the district court to consider the merits of Toyo's request for a preliminary injunction.

I

Toyo, Continental, and Yokohama all manufacture and distribute tires. In 1988, Continental's predecessor General Tire, Inc., Toyo, and Yokohama formed a general partnership, Appellee GTY Tire Co. (“GTY”). GTY manufactures truck and bus radial tires (“TBR tires”) for each of the partners to distribute.

The 1998 Partnership Agreement contains an arbitration clause that says in pertinent part: “Failing ... amicable resolution all disputes arising in connection with this Partnership Agreement or any other Basic Document shall be finally settled by arbitration.... All arbitration shall be conducted ... in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with such Rules.” As hereafter described, those International Chamber of Commerce Rules allow judicially imposed interim relief, including injunctive relief.

On December 22, 2009, Continental and Yokohama sent Toyo a letter saying they would dissolve the partnership at the end of 2009. In the letter, Continental and Yokohama said that Toyo had agreed to a collaboration agreement with Bridgestone Corporation, a competitor. Continental and Yokohama said Toyo's relationship with Bridgestone gave them the right to dissolve the joint venture under the Partnership Agreement and a 1990 Amendment thereto. Continental and Yokohama indicated that, pursuant to the Partnership Agreement, they could acquire Toyo's 2010 share of TBR tires and could enforce a non-competition clause that would prohibit Toyo from selling non-GTY TBR tires in North America for five years.

At Toyo's request, Continental and Yokohama agreed to a January 8, 2010, meeting of the general partners and temporarily suspended the notice of dissolution. At the meeting, Continental and Yokohama said they intended to dissolve the partnership, effective January 13, 2010, and that they planned to take Toyo's entire allocation of GTY tires. On January 9, 2010, Toyo wrote to Continental and Yokohama, stating that it believed it had a right to purchase TBR tries from GTY for the current and two following fiscal years, even if the partnership was dissolved. Neither Continental nor Yokohama responded.

On January 11, 2010, Toyo requested arbitration with the International Chamber of Commerce (“ICC”) International Court of Arbitration. Within its Request for Arbitration, Toyo requested interim injunctive relief.

On the same day, Toyo sued Continental, Yokohama, and GTY.¹ With its Complaint, Toyo brings claims for breach of contract, breach of fiduciary duty, breach of the duty of loyalty, breach of the covenant of good faith and fair dealing, violation of California's fair business practices law, tortious interference with business relations, and slander.

On January 14, 2010, Toyo asked the district court for a preliminary injunction to prevent the Appellees from: (1) terminating Toyo's status as a partner in GTY, (2) disrupting GTY's supply of TBR tires to Toyo, and (3) making false, disparaging, inflammatory, or other defamatory statements to Toyo's customers or other third parties regarding Toyo's assets, the partnership, or Toyo's ability to supply tires. Toyo also moved for a temporary restraining order.

On January 25, 2010, the district court heard argument and orally denied Toyo's motion for a preliminary injunction. At that hearing, the district court gave clear indication that injunctive relief should be given unless Simula foreclosed such relief.² The district court concluded that our opinion in Simula created a “blanket judgment” that a district court may not grant a preliminary injunction when the parties have agreed to arbitrate and the arbitrator has the power to grant interim injunctive relief. Finding that Simula controlled this case, the district court denied Toyo's motion.

Toyo now appeals that denial. We have jurisdiction under 28 U.S.C. § 1292(a)(1) and we reverse.

II

We review the district court's denial of a preliminary injunction for an abuse of discretion. N.D. ex rel. parents acting as guardians ad litem v. Hawaii Dep't of Educ., 600 F.3d 1104, 1111 (9th Cir.2010). Under this standard, we first determine de novo whether the trial court identified the correct legal rule to apply to the relief requested. United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir.2009) (en banc). If the trial court applied an incorrect legal standard, we must conclude that it abused its discretion. Id. at 1262. If the trial court applied the correct legal standard, we reverse only when the district court reaches a result that is illogical, implausible, or without support in the record. N.D., 600 F.3d at 1111.

Because we find that the district court incorrectly applied Simula, we conclude that the district court abused its discretion in denying the Appellant's motion for a preliminary injunction, and we reverse and remand.

III

The Appellant argues that the district court abused its discretion by erroneously reading our decision in Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir.1999), to deprive it of the authority to grant injunctive relief to maintain the status quo pending arbitration. We agree.

In both Simula and in the case before us, the parties agreed to arbitrate in accordance with the Rules of Arbitration of the International Chamber of Commerce (“ICC Rules”). The ICC Rules provide in relevant part:

Article 23 Conservatory and Interim Measures

(1) Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the Arbitral Tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate....

(2) Before the file is transmitted to the Arbitral Tribunal, and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measures or for the implementation of any such measures ordered by an Arbitral Tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the Arbitral Tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the Arbitral Tribunal thereof.

ICC Rules Article 23 (emphasis added). On its face, Article 23 of the ICC Rules provides that (1) once the file has been transmitted to it, an arbitral panel may order interim injunctive relief at the request of a party and (2) “any competent judicial authority” may order interim injunctive relief before the file is transmitted to the panel and “in appropriate circumstances even thereafter.”

Despite Article 23(2) of the ICC Rules, the district court concluded that Simula foreclosed its ability to grant injunctive relief in this case. However, in Simula we did not discuss whether a court may grant interim relief to maintain the status quo while the parties are waiting for the arbitration panel to be formed and for the arbitration panel to consider whether to grant interim relief. Instead, in Simula, the appellant argued that the arbitral forum would be unable to provide it meaningful relief and attempted to avoid arbitration by seeking injunctive relief in the district court. After considering Article 23(1) of the ICC Rules, we determined that Simula was wrong when it argued that the arbitrators could not grant preliminary relief. We thus concluded that the district court did not abuse its discretion when it denied preliminary injunctive relief after finding that all of Simula's claims were arbitrable and the arbitral tribunal had the power to grant the injunctive relief that Simula sought. 175 F.3d...