GMBH v. Eco-Terr Distrib., Inc., CASE NO. C18-0277JLR

• Decision Date: 21 June 2018
• Docket Number: CASE NO. C18-0277JLR
• Court: U.S. District Court — Western District of Washington
• Parties: PURUS PLASTICS GMBH, Petitioner, v. ECO-TERR DISTRIBUTING, INC., Respondent.

PURUS PLASTICS GMBH, Petitioner, v. ECO-TERR DISTRIBUTING, INC., Respondent.

CASE NO. C18-0277JLR

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

June 21, 2018

ORDER DENYING MOTION TO DISMISS AND CONFIRMING FOREIGN ARBITRATION AWARDS

I. INTRODUCTION

Before the court is Respondent Eco-Terr Distributing, Inc.'s ("Eco-Terr") motion to dismiss. (MTD (Dkt. # 8).) Petitioner Purus Plastics GmbH ("Purus") opposes the motion and requests that the court confirm the foreign arbitration awards, enter judgment in Purus's favor, and award prejudgment interest and attorneys' fees. (Resp. (Dkt. # 16).) The court has considered the parties' submissions in support of and in opposition to the

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// motion, the relevant portions of the record, and the applicable law. Being fully advised,¹ the court denies the motion, confirms the arbitration awards, and grants in part and denies in part the request for interest and fees for the reasons set forth below.

II. BACKGROUND

This is an action to recognize and enforce two foreign arbitration awards ("the Awards") in Purus's favor. (See Pet. (Dkt. # 1).) Both parties sell plastic interlocking grid products, which are "used to reinforce and stabilize surfaces such as grass, gravel, and soil to improve the stability and drainage of those surfaces for humans, animals, and vehicles."² (Baker Decl. (Dkt. # 10) ¶ 3.) On August 9, 2008, the parties entered into a distributorship agreement ("the Agreement"). (Pet. ¶ 7; see also 1st Helkenberg Decl. (Dkt. # 1-1) ¶ 3, Ex. A ("Agreement").)³

Pursuant to the Agreement, Purus transferred "distribution of the flooring system ECOGRID ('the Product')" to Eco-Terr, which assumed a duty to "actively promotedistribution of the Product and to use its best efforts to safeguard the interests of [P]urus." (Agreement § A.1.) The Agreement extended to Eco-Terr's distribution efforts in Canada and the United States. (Id. § A.2.) The Agreement further granted Eco-Terr the exclusive right to distribute the Product under the designations HOOFGRID, STABILIGRID, and HOMEGRID. (Id. § H.6.)

Within six months of executing the Agreement, Eco-Terr was required to "apply for registration of the designations HOOFGRID, STABILIGRID[,] and HOMEGRID as trademarks solely for the Product (the 'Trademarks') with the United States Patent and Trademark Office ["the USPTO"] and with the Canadian Intellectual Property Office." (Id. § H.7.) Eco-Terr was to "take all necessary steps to have the Trademarks registered to it without undue delay and bear any costs related to the registration." (Id.) The Agreement provided that Eco-Terr would transfer the Trademarks to Purus effective from the expiration date of the Agreement. (Id. § H.8.) Eco-Terr, however, did not register the Trademarks while the Agreement was in effect. (See Pet. ¶ 13.)

The Agreement also contained an arbitration clause. (See Agreement § N.5.) That clause specified that the parties would first attempt to resolve any "differences of opinion over the performance or termination of this Agreement" by mediation. (Id.) But the Agreement further provided that if the parties could not reach a resolution through mediation, they could "require that arbitration proceedings be instituted—to the exclusion of ordinary courts—on the basis of the rules of arbitration for the standing arbitral tribunal of the Nuremberg Chamber of Industry and Commerce for Central Franconia." (Id.) The arbitral tribunal's decision would be "final and binding." (Id.)

On June 22, 2011, Purus informed Eco-Terr that Purus intended to terminate the Agreement on December 31, 2011. (Pet. ¶ 14; see also Christian Decl. (Dkt. # 9) ¶ 10.) The day after the Agreement terminated, Eco-Terr filed applications with the USPTO for the HOOFGRID and STABILIGRID marks. (Pet. ¶ 15.) In January 2012, Purus first learned of Eco-Terr's attempts to register the marks. (Id. ¶ 18.) The United States registration of the HOOFGRID mark became effective on December 11, 2012, followed by the United States registration of the STABILIGRID mark on January 1, 2013. (Id. ¶ 16; see also Christian Decl. ¶¶ 11-15.) Eco-Terr's registration of those marks with the Canadian Trademark Office became effective on February 5, 2013. (Pet. ¶ 17.) Purus demanded that Eco-Terr transfer the marks as called for by the Agreement, and when Eco-Terr refused, Purus filed an arbitration action. (Id. ¶¶ 18-19.)

The arbitration commenced on May 7, 2013, with Purus's submission of an arbitration statement. (Id. ¶ 19.) A three-member arbitral panel in Nuremberg, Germany presided over the arbitration (id. ¶ 21), and issued the first award on September 8, 2015 (id. ¶ 22). The unanimous panel (1) ordered Eco-Terr to transfer the United States and Canadian trademarks to Purus; (2) enjoined Eco-Terr from further using those marks in the United States and Canada; (3) ordered Eco-Terr to turn over to Purus "information regarding the sales and distribution channels of the subject products"; (4) ordered Eco-Terr to pay compensatory damages of €20,000.00; (5) ordered Eco-Terr to compensate Purus for all past and future damages arising from its failure to register the marks pursuant to the Agreement and its use of the marks; and (6) ordered Eco-Terr to reimburse Purus for its arbitration costs. (Id. ¶ 23; see also Christian Decl. ¶ 19, Ex. 12("9/8/15 Award").) On October 24, 2015, the panel issued a second award that detailed the amount Eco-Terr was to reimburse Purus for bringing the arbitral action. (Pet. ¶ 24; see also Christian Decl. ¶ 20, Ex. 13 ("10/14/15 Award").)

According to Purus, since the panel issued the Awards, Purus has "repeatedly demanded that Eco-Terr comply" with the terms of the Awards. (Pet. ¶ 25.) Specifically, Purus contends that on May 23, 2016, its counsel demanded compliance with the Awards and that Eco-Terr cease and desist from continuing to use the marks. (Id. ¶ 28.) Purus further contends that Eco-Terr continues to the use the marks in the United States and Canada. (Id. ¶ 29.)

On February 22, 2018, Purus filed a petition for recognition and enforcement of the Awards. (See generally id.) Eco-Terr moves to dismiss the petition, contending that certain exceptions in the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the Convention"), June 10, 1958, 21 U.N.T.S. 2517, permit the court to deny Purus's petition (see MTD). In response, Purus requests that the court deny Eco-Terr's motion, enter judgment confirming the Awards, and award Purus attorneys' fees and costs and post-award, prejudgment interest. (Resp. at 8, 28.) The court now addresses the petition and motion to dismiss.

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III. ANALYSIS

A. Legal Standard⁴

The Convention governs the "recognition and enforcement" of foreign arbitration awards in United States courts.⁵ See 9 U.S.C. § 201. "The goal of the Convention, and the principal purpose underlying American adoption and implementation of it, was to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries." Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974).

When a party seeks confirmation of an award under the Convention, the court "shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention." See 9 U.S.C. § 207. Those seven grounds are:

[1] The parties to the agreement . . . were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

[2] The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

[3] The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

[4] The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

[5] The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made[; or] . . .

[6] The subject matter of the difference is not capable of settlement by arbitration under the law of [the country where enforcement is sought]; or

[7] The recognition or enforcement of the award would be contrary to the public policy of [the country where enforcement is sought].

Admart AG v. Stephen & Mary Birch Found., Inc., 457 F.3d 302, 307-08 (3d Cir. 2006) (internal quotation marks omitted). The party defending against enforcement of the award must prove one of the Convention's enumerated defenses, which the courtinterprets narrowly. Polimaster Ltd. v. RAE Sys., Inc., 623 F.3d 832, 836 (9th Cir. 2010). The "burden is substantial because the public policy in favor of international arbitration is strong." Id.

"Under the Convention, a district court's role is limited—it must confirm the award unless one of the grounds for refusal specified in the Convention applies to the underlying award." Admart AG, 457 F.3d at 307; see also Ministry of Def. of the Islamic Republic of Iran v. Gould, Inc., 969 F.3d 764, 770 (9th Cir. 1992). Accordingly, confirmation proceedings are...