Zetor N. Am., Inc. v. Rozeboom

• Decision Date: 03 July 2017
• Docket Number: No. 16-2249,No. 16-2125,16-2125
• Parties: ZETOR NORTH AMERICA, INC., Plaintiff-Appellee v. Brent ROZEBOOM, individually, and as Director of Alberni Enterprises doing business as Ridgeway Enterprises; Glenda Rozeboom, individually, Defendants Ridgeway Enterprises, a private trust company, Defendant-Appellant Antonie Rozeboom; Alberni Enterprises, Defendants Alan Scott Peterson, individually, and as Executive Trustee of Ridgeway Enterprises, Defendant-Appellant Zetor North America, Inc., Plaintiff-Appellee v. Brent Rozeboom, individually, and as Director of Alberni Enterprises doing business as Ridgeway Enterprises; Glenda Rozeboom, individually, Defendants-Appellants Ridgeway Enterprises, a private trust company; Antonie Rozeboom; Alberni Enterprises; Alan Scott Peterson, individually, and as Executive Trustee of Ridgeway Enterprises, Defendants
• Court: U.S. Court of Appeals — Eighth Circuit

861 F.3d 807

ZETOR NORTH AMERICA, INC., Plaintiff-Appellee

v.Brent ROZEBOOM, individually, and as Director of Alberni Enterprises doing business as Ridgeway Enterprises; Glenda Rozeboom, individually, Defendants

Ridgeway Enterprises, a private trust company, Defendant-Appellant

Antonie Rozeboom; Alberni Enterprises, Defendants

Alan Scott Peterson, individually, and as Executive Trustee of Ridgeway Enterprises, Defendant-Appellant

Zetor North America, Inc., Plaintiff-Appellee

v.Brent Rozeboom, individually, and as Director of Alberni Enterprises doing business as Ridgeway Enterprises; Glenda Rozeboom, individually, Defendants-Appellants

Ridgeway Enterprises, a private trust company; Antonie Rozeboom; Alberni Enterprises; Alan Scott Peterson, individually, and as Executive Trustee of Ridgeway Enterprises, Defendants

No. 16-2125

No. 16-2249

United States Court of Appeals, Eighth Circuit.

Submitted: February 8, 2017

Filed: July 3, 2017

Counsel who presented argument on behalf of the appellants in these appeals was William B. Putman, of Fayetteville, AR. In addition to Mr. Putman, the following attorney(s) appeared on the appellants—Ridgeway Enterprises and Alan Scott Peterson brief; Jeff Mitchell, of Fayetteville, AR. Appellants—Brent Rozeboom and Glenda Rozeboom joined in the brief of Ridgeway Enterprises and Alan Scott Peterson and were represented by Brian Lester of Fayetteville, AR.

Counsel who presented argument on behalf of the appellee in these appeals was Scott Edward Wray, of Fayetteville, AR. In addition to Mr. Wray, the following attorney(s) appeared on the appellee brief; Grace Keegan Johnson, of Fayetteville, AR.

Before SMITH,¹ BENTON and SHEPHERD, Circuit Judges.

BENTON, Circuit Judge.

Zetor North America, Inc., sued Ridgeway Enterprises and its associates for trademark infringement. Years before, Zetor settled a dispute with Ridgeway over similar infringement. The settlement agreement included an arbitration clause, which Ridgeway seeks to enforce. The district court² denied Ridgeway's motion to compel arbitration. Zetor N. Am., Inc. v. Rozeboom, 2016 WL 1611599 (W.D. Ark. April 22, 2016). Having jurisdiction under 28 U.S.C. § 1292(a)(1) and 9 U.S.C. § 16(a)(1)(c), this court affirms.

I.

Zetor was granted a license to use the Zetor mark and promotional materials in the United States. Ridgeway Enterprises³ sells tractor parts but is not an authorized Zetor dealer. According to Zetor, Ridgeway advertises, markets, sells, and distributes new and used parts using the Zetor mark without clearly distinguishing which are genuine, causing consumer confusion about the source and quality of the parts. Zetor also alleges that Ridgeway's use of Zetor photos and promotional materials infringes its copyright.

Zetor and Ridgeway had a similar dispute in 2008. Becoming aware of similar tactics, Zetor sent a cease and desist letter. The dispute was resolved by a settlement agreement with an arbitration provision. That provision stated that the parties would "attempt in good faith to resolve any controversy arising out of or relating to this Agreement." If that failed, the controversy would go to mediation "in accordance with American Arbitration Association [sic] or may proceed directly to arbitration."

Under the Agreement, "Ridgeway acknowledge[d] the validity of the mark ZETOR" and "that only Zetor and its authorized resellers and licensees may use the Zetor Mark in advertising, promotional, and sales materials." In paragraph 2, Ridgeway agreed to "permanently cease and desist the use of the ZETOR Mark, except" to describe the compatibility of its products with a Zetor product, subject to several restrictions. Ridgeway also transferred to Zetor a domain name it used, zetorusa.com. Both Zetor and Ridgeway released all claims "that occurred prior to the effective date of this Agreement."

In 2014, Zetor became aware of allegedly trademark-infringing conduct by Ridgeway. Zetor sent another cease and desist letter. Ridgeway did not respond. Zetor sued Ridgeway for trademark infringement and dilution, injury to business reputation, unfair competition, copyright infringement, deceptive trade practices, and civil conspiracy, adding claims as under Arkansas anti-dilution laws, the Arkansas Deceptive Trade Practice Act, and common law. In its answer, Ridgeway included "arbitration and award" in a list of affirmative defenses. However, Ridgeway did not move to compel arbitration until after the case progressed: The parties had completed preliminary discovery and participated in a case-management hearing and settlement conference; Zetor had added defendants and moved to compel discovery.⁴

The district court, finding the arbitration provision inapplicable to Zetor's new claims, denied Ridgeway's motion to compel arbitration. It did not address Zetor's argument that the settlement agreement was void due to fraudulent inducement in its formation. Ridgeway appeals.

II.

The contract-interpretation-based denial of a motion to compel arbitration is reviewed de novo. Unison Co. v. Juhl Energy Dev., Inc., 789 F.3d 816, 818 (8th Cir. 2015). The Federal Arbitration Act—which governs here—reflects "a liberal federal policy favoring arbitration." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal quotation marks omitted). But it is a "fundamental principle that arbitration is a matter of contract." Id. (internal quotation marks omitted). Therefore, "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). See also Unison , 789 F.3d at 818.

"[T]he liberal federal policy favoring arbitration agreements requires that a district court," faced with a broad arbitration clause "send a claim to arbitration as long as the underlying factual allegations simply touch matters covered by the arbitration provision." Unison, 789 F.3d at 818 (internal quotation marks and alterations omitted). Arbitration clauses covering claims "arising out of" or "relating to" an agreement are broad. Id. at 819.

Here, Ridgeway agreed to "permanently cease and desist" its allegedly infringing use of the Zetor mark. Thus, according to Ridgeway, Zetor's current claims "aris[e] out of or relat[e] to" the Agreement and are bound by the arbitration provision. Ridgeway concludes that "the underlying factual allegations [ ] ‘touch matters covered by’ the arbitration provision." 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193, 1199 (8th Cir. 2008), quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 625 n.13, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

Ridgeway relies on the 3M case, where this court upheld the enforcement of an arbitration clause because "[e]very claim in Amtex's original complaint fell squarely within the scope of the arbitration clause," and additional claims "include[d] factual allegations regarding" contract terms. Id. 3M had contracted with Amtex to "provid[e] various administrative, technical, and professional services." Id. at 1195. The contract "detailed the duration, scope of services, and contract price for services." Id. The parties "agreed to arbitrate any dispute regarding the existence, cause, or value of any change to the scope of services Amtex was to provide." Id. at 1196. Amtex demanded an equitable adjustment for uncompensated services outside the scope of the agreement. Id. at 1199. The arbitration agreement applied "[i]n the event [the parties] cannot agree on ... whether a variation has occurred." Id. (first and second alterations in original) (internal quotation marks omitted). This court held that "they agreed to arbitrate a very broad range of disputes regarding the existence, cause, or value of any change to the scope of services," and thus the claims were arbitrable. Id.

Unlike the 3M case, Zetor's claims have no relation to the terms of the Agreement. Despite the language obliging Ridgeway to "permanently cease and desist"...