Opinion
01 CIV. 8552
December 21, 2001
John R. Garber (Donna A. Tobin, on the brief), Cooper Dunham LLP, New York, NY, for Plaintiff.
Seth Natter, Natter Natter, New York, N Y (Bruce Tittle, Wood, Herron Evans LLP, Cincinnati, OH on the brief), for Defendant.
OPINION AND ORDER
Plaintiff ITT Industries, Inc. ("ITT"), an Indiana corporation with its principal place of business in New York, brings this action against Defendant Werner Pump Co. ("Werner"), an Ohio corporation with its principal place of business in Cincinnati that, from 1989 until 1999, was an authorized dealer of pumps and pump parts manufactured by ITT or its predecessors-in-interest. The relationship between ITT and Werner is governed by three agreements: first, a 1989 Distributor Agreement that was silent as to the question of arbitration; second, a superseding, 1998 Distributor Agreement that required arbitration of"[a]ny dispute arising out of [sic] relating to this Agreement"; and finally, a 1999 Settlement and Release Agreement (or "Termination Agreement") that terminated the distribution relationship between the parties and mandated arbitration of "[a]ny dispute arising out of or relating to this Agreement, and any actions described in this Agreement."
In this action, ITT challenges Werner's alleged use of ITT's trademarks, along with descriptions and drawings of ITT's products, during the period since termination of the parties' distribution relationship. ITT suggests that Werner either is making equipment according to ITT's specifications, in violation of ITT's trade secrets, or has acquired ITT equipment for resale from an authorized ITT distributor. In its complaint, ITT asserts seven claims: (1) federal trademark dilution; (2) federal trademark infringement; (3) federal unfair competition; (4) injury to business reputation under New York law; (5) unfair competition under New York common law; (6) breach of contract; and (7) specific performance.
Werner now moves to compel arbitration and stay all proceedings in this action pending arbitration, arguing that all of the claims asserted in ITT's complaint are subject to arbitration under either the 1998 Distributor Agreement or the 1999 Termination Agreement. ITT concedes that claims six and seven, which are claims for breach of the very agreements containing the arbitration clauses, are "likely arbitrable" (P. Opp. Mem. at 2 n. 1), and argues against the motion only as to claims one through five. Accordingly, there is no dispute that Werner's motion to compel arbitration should be granted as to claims six and seven, which allege that Werner continued to use ITT trademarks and failed to return information to ITT in violation of certain provisions in the 1998 Distributor Agreement.
The only contested issue, therefore, concerns whether the remaining claims, 1 through 5, are also subject to mandatory arbitration. ITT contends that those tort claims only concern Werner's alleged trademark infringement after termination of the distribution relationship and, therefore, are not subject to arbitration under either of the parties' arbitration agreements. Essentially, ITT argues that since the distribution relationship has been terminated, Werner has been placed in the same position that it was in prior to the commencement of that relationship — indeed, the same position as it would have been had there been no distribution relationship at all.
The Court disagrees. Deciding whether a particular claim falls within the scope of the parties' arbitration agreement requires the Court to "focus on the factual allegations in the complaint rather than the legal causes of action asserted." Genesco, Inc. v. T. Kakiuchi Co., Ltd., 815 F.2d 840, 846 (2d Cir. 1987). Allegations that "`touch matters'" covered by the arbitration agreement "must be arbitrated, whatever the legal labels attached to them." Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth. Inc., 473 U.S. 614, 625 n. 13 (1985)).
We need not confront the outer limits of this standard in this case, for ITT's claims against Werner for trademark infringement, trademark dilution, unfair competition, and injury to ITT's business reputation do not simply rest upon factual allegations that "touch matters" covered by the various agreements. Rather, the claims themselves have been incorporated as contractual obligations, since the parties explicitly have agreed, in paragraph 14(D) of the 1998 Distributor Agreement, that upon termination of that Agreement,
the Distributor shall remove from his place of business, listings, letterheads, catalogs, and advertising, any and all reference to the Company, and shall not thereafter use any name, symbol trademark, service mark or trade name tending to give the impression that the relationship between the Company and the Distributor under this Agreement still exists, or do any other acts tending to impair trademarks, trade names, service marks, or confidential material belonging to the Company.
Werner therefore is not in the same position as it would have been had there been no distribution relationship in the first place. While it may well be the case that ITT would be able to assert the same tort claims, based on virtually identical factual allegations, against some hypothetical defendant that had never been an authorized ITT distributor, the language of paragraph 14(D) makes clear that Werner labors under additional contractual obligations that encompass the tort claims asserted by ITT. The existence of that contractual obligation is unsurprising, for a pump dealer that once had served as an authorized ITT dealer — having already used ITT's marks and potentially having cultivated some association with ITT in the minds of its consumers as a result of that use — certainly would be in a better position to mislead the public as to its relationship with ITT than an ordinary, hypothetical pump dealer that infringed on ITT's marks but never had been an authorized dealer. In that context, it hardly is surprising that the post-termination obligations just recited would appear in the parties' Distribution Agreement.
Neither party has addressed the effect of the 1999 Settlement and Release Agreement upon Werner's post-termination obligations under paragraph 14(D) of the 1998 Distributor Agreement. Having examined the agreement, the Court concludes that the 1999 Settlement Agreement has no effect upon those obligations, which are not modified, released, or waived by any provision of the settlement.
Accordingly, the defendant's motion to compel arbitration is granted as to all of the claims in ITT's complaint. Because "all issues raised in this action are arbitrable and must be submitted to arbitration, retaining jurisdiction and staying the action will serve no purpose,"Sea-Land Service, Inc. v. Sea-Land of Puerto Rico, Inc., 636 F. Supp. 750, 757 (D.P.R. 1986), the action is dismissed. See also Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992); Mahant v. Lehman Bros., No. 99 Civ. 4421, 2000 WL 1738399, at *3-4 (S.D.N.Y. Nov. 22, 2000); Eastern Fish Co. v. Pacific Shipping Co., Ltd., 105 F. Supp.2d 234, 241-42 n. 10 (S.D.N.Y. 2000); Aerotel, Ltd. v. RSL Communications, Ltd., 99 F. Supp.2d 368, 373-74 (S.D.N.Y. 2000); Berger v. Cantor Fitzgerald Secs., 967 F. Supp. 91, 96 (S.D.N.Y. 1997).
Conclusion
Defendant's motion to compel arbitration is granted and the complaint is dismissed.