Lwr Time, Ltd. v. Fortis Watches, Ltd.
| Decision Date | 16 July 2012 |
| Docket Number | 3:10-cv-1923 |
| Parties | LWR TIME, LTD. Plaintiff v. FORTIS WATCHES, LTD. Defendant |
| Court | U.S. District Court — Middle District of Pennsylvania |
(JUDGE MARIAN I)
This matter is before the Court upon Defendant Fortis Watches, LTD's ("Defendant"), motion to dismiss Plaintiff LWR Time, LTD.'s ("Plaintiff") Complaint (Doc. 1). Defendant's motion sets forth three reasons in favor of its request for dismissal: (1) the existence of a mandatory arbitration provision in an underlying contract; (2) improper venue; and (3) forum non-conveniens. For the reasons set forth below, Defendant's motion will be denied.
On April 1,2004, Plaintiff entered into a written five-year contract with Defendant to become an exclusive distributor of Defendant's watches in the United States, Mexico, the Caribbean, and Duty Free locations ("Written Contract"). (See Pl.'s Compl. at ¶ 9, ECF Dkt. 1.) In or around September of 2006, Defendant "terminated the aforementioned written agreement, but elected to continue the business relationship with [Plaintiff] by orally engaging [Plaintiff] in Wilkes-Barre, Pennsylvania to serve as [Defendant's] exclusive distributor." (See Pl.'s Compl. at ¶ 10.) Plaintiff's Complaint avers that the partiescontinued to operate under an oral agreement ("Oral Agreement") that, "among other things, provided that [Plaintiff] would act on [Defendant's] behalf in the sale of its watches and related goods, and in representing its interests with its retailer customers and the consumer and purchaser." (See Pl.'s Compl, at ¶ 11.) In addition, [Plaintiff] committed to the terms of a restrictive covenant which precluded [Plaintiff] from distributing or serving as an agent for, any watch manufacturer of watches within the same or similar price range of the [Defendant's] watches and products." (See Pl.'s Compl. at ¶ 11.) Plaintiff further avers that "[p]ursuant to this oral agreement, [Defendant] would regularly communicate with [Plaintiff] in Wilkes-Barre, Pennsylvania through electronic mail, phone calls, and written correspondence for the purpose of advancing their business relationship." (See Pl.'s Compl. at ¶ 12.) Plaintiff's Complaint further avers that "[i]n accordance with the terms of the oral agreement, [Defendant] expressly represented and promised to perform certain obligations with respect to the business relationship, including but not limited to: (1) supplying watches to [Plaintiff] in Wilkes-Barre, Pennsylvania for distribution to retail sellers; (2) assisting [Plaintiff] with the marketing and advertising of its watches through financial subsidies that were sent to [Plaintiff] in Wilkes-Barre, Pennsylvania and the discounting of pricing on the watches; and (3) reimbursing [Plaintiff] for performing or causing to be performed the necessary repairs to defective watches manufactured by [Defendant] and sold by [Plaintiff] as required under the applicable warranty by sending monetary payments to [Plaintiff] in Wilkes-Barre, Pennsylvania." (See Pl.'s Compl. at ¶ 13.)
Plaintiff further alleges that between September of 2006 and October of 2009, Defendant's "conduct confirmed the terms" of this alleged oral agreement. (See Pl.'s Compl. at ¶ 14.) Plaintiff asserts that without notice, and in contrast to their prior conduct, Defendant "breached its contractual obligations to [Plaintiff] by failing to supply the requisite watches to [Plaintiff] to fill customer orders during the crucial Holiday season in 2009, thereby causing [Plaintiff] to suffer severe damage in the form of lost profits and loss of goodwill with customers." (See Pl.'s Compl. at ¶ 15.) Plaintiff further asserts that "beginning in September of 2009 and until the oral agreement was terminated by [Plaintiff] on February 1, 2010, [Defendant] breached its contractual obligations by failing to provide [Plaintiff] with the promised advertising and marketing assistance through financial subsidies and price discounts, thereby severely restricting [Plaintiff's] ability to sell and distribute [Defendant's] watches to retailers in its distribution territory. . . ." (See Pl.'s Compl. at ¶ 16.) Plaintiff avers that it incurred substantial advertising and marketing costs as a result of its reliance on Defendant's "promise to assist with the advertising of the watches." (See Pl.'s Compl. at ¶ 17.)
Defendant has moved to dismiss Plaintiff's Complaint on the basis that its claims are subject to arbitration under the arbitration provisions of the Written Contract, which Plaintiff has alleged was terminated by Defendant in 2006. Defendant does not dispute its termination of the Written Contract, although it argues that the parties' relationshipcontinued thereafter in accordance with its terms. Motions to compel arbitration or to dismiss proceedings under the Federal Arbitration Act ("FAA") require district courts to apply the standard of review employed in evaluating motions for summary judgment pursuant to Fed. R. Civ. P. 56(c). See Schwartz v. Comcast Corp., 256 F. App'x 515,518 (3d Cir. 2007)(citing Par-Knit Mills, Inc. v. Stockbridge Farms Co., Ltd., 636 F.2d 51,54 (3d Cir. 1980)). "Only when there is no genuine issue of fact concerning the formation of the agreement should the court decide as a matter of law that the parties did or did not enter into such an agreement." Id. The opposing party receives "the benefit of all reasonable doubts and inferences that may arise." Id. If there is a genuine issue of fact, the FAA directs the District Court to hold a trial to determine whether an arbitration agreement exists." Id. (citing 9 U.S.C. § 4).
This matter is presented to the district court, in part, as a motion to dismiss for improper venue pursuant to Fed. R. Civ. P. 12(b)(3). Motions to dismiss for "improper venue generally require the court to accept as true the allegations of the pleadings." Heft v. AAI Corp., 355 F. Supp. 2d 757, 762 (M.D. Pa. 2005) (citing Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002); Myers v. Am. Dental Ass'n, 695 F.2d 716, 724 (3d Cir. 1982)). "The parties may submit affidavits in support of their positions, and may stipulate as to certain facts, but the plaintiff is entitled to rely on the allegations of the complaint absent evidentiary challenge." Heft, 335 F. Supp. 2d at 762 (citing Carteret Sav. Bank, F.A. v. Shushan, 954 F.2d 141,142 & n.1 (3d Cir. 1992); Myers, 695 F.2d at 724. "Whatever thenature of the parties' submissions, the court is bound to view the facts in the light most favorable to the plaintiff." Id. (citing Carteret, 954 F.2d at 142 & n.1; Myers, 695 F.2d at 724).
Defendant's Motion sets forth three separate grounds upon which it believes dismissal is appropriate: (1) a mandatory arbitration provision; (2) improper venue; and (3) forum non-conveniens.
"In determining whether a matter is arbitrable, courts are bound by the principle that arbitration is a creature of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit." The Basketball Marketing Co., Inc. v. Urbanworks Entertainment, No. 04-3179, 2004 WL 2590506, at * 4 (E.D. Pa. Nov. 10, 2004)(citing United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)).1 A district court must submit a case to arbitration"when (1) there is a valid agreement to arbitrate and (2) the specific dispute falls within the • substantive scope of the agreement." Id. (citing Medtronic Ave., Inc. v. Advanced Cardiovascular Sys., Inc., 247 F.3d 44, 54 (3d Cir. 2001)). To determine whether an action is arbitrable, "the parties' intentions control." See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,626,105 S.Ct. 3346,87 LEd.2d 444 (1985). "Furthermore, although doubts about the scope of an arbitration agreement must be resolved in favor of arbitration, the validity of an arbitration agreement and the issues that must be arbitrated are matters to be determined by the Court." See Urbanworks Entertainment, 2004 WL 2590506, at * 4 (citing Medtronic Ave., Inc., 274 F.3d at 55). Courts, not arbitrators, decide the substantive arbitrability question. See AT&T Technologies, Inc. v. Comm's Workers, 475 U.S. 643, 651,106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).
Arbitration clauses do not generally survive the termination of a contract. See Durham Life Ins. Co. v. Evans, 166 F.3d 139, 159 n. 15 (3d Cir. 1999). Nevertheless, in certain limited circumstances, an arbitration provision may survive the expiration or termination of an agreement. See Litton Fin. Printing Div. v. NLRB, 501 U.S. 190,208,111 S.Ct. 2215,115 L.Ed.2d 177 (1991). In Litton, the Supreme Court examined whether grievances that arose following the expiration of a collective bargaining agreement weresubject to an arbitration clause contained within the expired agreement. See id. at 205. In clarifying its earlier decision in Nolde Bros., inc. v. Bakery & Confectionary Workers Union, 430 U.S. 243,97 S.Ct. 1067, 51 L.Ed.2d 300 (1977), the Supreme Court in Litton held that only a post-termination grievance that "arises-under [a] contract" is subject to arbitration. See Litton Fin. Printing Div., 501 U.S. at 205. "A post-termination dispute arises under the contract (i) when it involves facts and occurrences that arose before expiration; (ii) where an action taken after expiration infringes a right that occurred or vested under the agreement; or (iii) where, under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement." Urbanworks Entertainment, 2004 WL 2590506, at *4 (citing Litton Fin. Printing Div., 501 U.S. at 205-206). Thus, a finding of arbitrability requires "a nexus between the post-termination conduct and the content of the collective bargaining agreement in which the arbitration clause is embedded." Id. As several courts have...
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