Nice-Pak Prods., Inc. v. Univar U.S. Inc.

Decision Date12 February 2016
Docket NumberCase No. 1:15-cv-00409-TWP-DKL
CourtU.S. District Court — Southern District of Indiana

This matter is before the Court on Defendant, Univar USA Inc.'s ("Univar"), Objection to the Magistrate Judge's Report and Recommendation (Filing No. 51). On August 10, 2015, Univar filed a Motion to Dismiss for Improper Venue (Filing No. 32) arguing that the underlying contract dispute in this matter was subject to an arbitration agreement. The motion was referred to the Magistrate Judge for a Report and Recommendation (Filing No. 46). On December 1, 2015, the Magistrate Judge submitted her Report and Recommendation that the Motion to Dismiss and Motion Requesting Oral Argument (Filing No. 34) be denied. Univar filed a timely objection. For the reasons stated below, the Court overrules Univar's Objection and adopts the Magistrate Judge's Report and Recommendation.


The following facts are accepted as true for purposes of the Motion to Dismiss and all reasonable inferences are drawn in a light most favorable to the non-moving party. See Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). Univar raised only a few objections to the Magistrate Judge's recitation of the facts, and the Court repeats the uncontested facts below, noting Univar's objections and adding a few modifications for clarity.

Plaintiff, Nice-Pak Products, Inc. ("Nice-Pak"), is engaged in the business of producing pre-moistened wipe products for cleaning, sanitization, healthcare, cosmetics and personal hygiene. Plaintiff, Lonza, Inc. ("Lonza"), is in the business of supplying pharmaceutical and biotechnology industries with biopharmaceuticals. Defendant Univar is engaged in the business of distributing chemicals and chemistry related products to its customers.

The parties agree that Lonza and Univar entered into a quantity contract for various products, including propylene glycol USP ("PG"), for a term extending from November 30, 2009 to December 31, 2012. (Filing 1-1 at 19-46.) Plaintiffs assert that this quantity contract also included Lonza's Purchase Agreement Terms and Conditions ("Lonza's Terms and Conditions"). Univar disputes that Lonza's Terms and Conditions were made a part of the quantity contract but failed to file an affidavit to support its contention. Lonza's Terms and Conditions provide, in relevant part, as follows,

1. GENERAL. Each shipment received by Lonza from Seller shall be deemed to be only upon the terms, including the Standard T&Cs in this Agreement, except as they may be added to, modified, superseded, or otherwise altered by Lonza, notwithstanding any terms and conditions that may be contained in any acknowledgment, invoice or other form of Seller and notwithstanding Lonza's act of accepting or paying for any shipment or any similar act of Lonza, and Lonza hereby rejects any different or additional terms and conditions proposed by Seller.
. . .
16. MISCELLANEOUS. ... This Agreement shall be governed by and construed in accordance with the laws of the state of New York without reference to its conflicts of law principles.

(Filing No. 1-1 at 47.)

The parties agree that, on June 8, 2011, Lonza placed an order with Univar for 45,000 pounds of PG under Purchase Order 4500844047, pursuant to the quantity contract. On June 17, 2011, Lonza received 45,160 pounds of PG from Univar, for which Lonza made payment.

On June 27, 2011, ten days after the PG was delivered to Lonza, Lonza received an invoice from Univar. The invoice states, in relevant part, as follows,

Buyer agrees that all orders or purchases are subject to Univar's Standard Terms and Conditions of Sale as of the date of shipment available at All sales and orders are expressly limited to such terms, which may be updated from time to time. No other terms and conditions apply to any purchase or order unless agreed to in writing by both parties.

(Filing No. 9-1 at 1.) Univar's Standard Terms and Conditions of Sale provide, in relevant part, as follows,

1. TERMS. These Terms and Conditions of Sale are the exclusive contract between Buyer and Seller, there are no terms, understandings, agreements, other than those stated herein. Seller's ... shipment of Products ... shall constitute an acceptance of Buyer's purchase order and these Terms and Conditions without any additional or different terms. These Terms and Conditions may not be altered[sic] amended, nor waived except in writing signed by an officer of the party to be bound thereby. Acceptance of Buyer's purchase order is subject to acceptance of the express Terms and Conditions contained herein. If any provisions of Buyer's purchase order or other writings are different from or are otherwise in conflict with these Terms and Conditions, these Terms and Conditions shall govern and the terms contained in Buyer's purchase order or other writings are expressly rejected by Seller.
. . . .
17. ARBITRATION. The parties will submit any dispute related to this Agreement to arbitration in Seattle, Washington before one arbitrator under the American Arbitration Association's Commercial Arbitration Rules. ... This Agreement is governed by the laws of the state of Washington.

(Filing No. 9-1 at 2) (emphasis added).

Thereafter, Lonza added the PG it received from Univar to a preservative product that it sold to Nice-Pak for use in manufacturing baby wipes. However, following delivery, Nice-Pak discovered that the PG was contaminated. Lonza also determined that the PG it received from Univar was contaminated. As a result, both Nice-Pak and Lonza suffered damages.

Plaintiff, Federal Insurance Company ("Federal") provided insurance coverage for damages occurring at Nice-Pak's business locations. Pursuant to the insurance policy, Federal reimbursed Nice-Pak in an amount in excess of $900,000.00 and became legally, contractually, and equitably subrogated to the rights of Nice-Pak against third-parties to the extent of the payments made.

A. Review of the Magistrate Judge's Report and Recommendation

A district court may assign dispositive matters to a magistrate judge, in which case the magistrate judge may submit to the district judge only a report and recommended disposition, including any findings of fact. 28 U.S.C. § 636(b)(1)(B) (2012); Fed. R. Civ. P. 72(b)(1). See also Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 760 (7th Cir. 2009). The magistrate judge's recommendation on a dispositive matter is not a final order, and the district judge makes the ultimate decision to "accept, reject, or modify" the findings and recommendations, and the district court need not accept any portion as binding. 28 U.S.C. § 636(b)(1) (2012); Fed. R. Civ. P. 72(b)(3). See also Schur, 577 F.3d at 760-61.

After a magistrate judge makes a report and recommendation, either party may object within fourteen days of being served with a copy of the same. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2). When a party raises specific objections to findings and recommendations made within the magistrate judge's report, the district court is required to review those objections de novo, determining for itself whether the magistrate judge's decisions as to those issues are supported by substantial evidence or were the result of an error of law. 28 U.S.C. § 636(b)(1) (2012); Fed. R. Civ. P. 72(b)(3). See also Johnson v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999). The court may, however, defer to those conclusions to which timely objections have not been raisedby a party. Schur, 577 F.3d at 760-61. Further, if a party fails to object to a magistrate judge's report and recommendation, or objects on some issues and not others, the party waives appellate review of the issues to which the party has not objected. Johnson, 170 F.3d at 739.

B. 12(b)(3) Motion to Dismiss

A motion seeking dismissal based on a forum selection clause, including an arbitration clause, is properly treated as an objection to venue and properly raised under Federal Rule of Civil Procedure 12(b)(3). Auto. Mechs. Local 701 Welfare & Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740, 746 (7th Cir. 2007). Further, the Seventh Circuit has held that a Rule 12(b)(3) motion to dismiss for improper venue, rather than a motion to stay or to compel arbitration, is the proper procedure to use when an arbitration clause requires arbitration outside the confines of a federal district court's jurisdiction. Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 808 (7th Cir. 2011).

The plaintiff bears the burden of establishing that venue is proper. Carroll v. CMH Homes, Inc., 4:12-CV-23-SEB-WGH, 2013 WL 960408, *2 (S.D. Ind. Mar. 12, 2013). When deciding a Rule 12(b)(3) motion to dismiss, the court accepts the complaint's allegations as true unless contradicted by the defendant's affidavits. Nagel v. ADM Inv'r Servs., Inc., 995 F. Supp. 837, 843 (N.D. Ill. 1998). Further, the court resolves any factual conflicts in the plaintiff's favor. Carroll, 2013 WL 960408 at *2. Finally, the court is not obligated to limit its consideration to the pleadings when deciding a motion to dismiss under Rule 12(b)(3). Faulkenberg, 637 F.3d at 809-10.


The parties agree that Lonza and Univar entered into a binding contract, but do not agree as to which documents were included in the contract. Univar contends that the contract is comprised of the 28-page quantity contract, Lonza's Purchase Order Number 4500844047,Univar's invoice, and Univar's Standard Terms and Conditions of Sale. (See Filing No. 38 at 4.) The Plaintiffs agree that the contract includes the 28-page quantity contract and Lonza's Purchase Order Number 4500844047. However, Plaintiffs also assert that the contract additionally includes Lonza's Terms and Conditions, and that the contract excludes...

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