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Richland Equipment Co., Inc. v. Deere & Co.

United States District Court, S.D. Mississippi, Western Division

October 19, 2017

RICHLAND EQUIPMENT COMPANY, INC. PLAINTIFF
v.
DEERE & COMPANY DEFENDANT

          MEMORANDUM OPINION AND ORDER

          KEITH STARRETT, UNITED STATES DISTRICT JUDGE.

         For the reasons below, the Court denies Plaintiff's Motion for Injunction Pending Appeal [35] and denies as moot Plaintiff's Motion for Status Conference [37].

         I. Background

         This case arises from dealer agreements between Plaintiff, a retailer in tractors and other outdoor/agricultural equipment, and Defendant, a manufacturer of such equipment. Plaintiff alleges that Defendant threatened to unlawfully terminate the dealer agreements and discontinue supplying inventory. Plaintiff alleges that termination of the dealer agreements will cause the closure of its business. Accordingly, Plaintiff filed this lawsuit, asserting a wide variety of claims.

         On July 18, 2017, the Court denied Plaintiff's Motion for a Temporary Restraining Order [3] on the basis that Plaintiff had not certified in writing his efforts to provide notice to Defendant and/or its attorney and the reasons why notice and a hearing should not be required. See Fed. R. Civ. P. 65(b)(1). But after a telephone conference with the attorneys of record, the Court set a preliminary injunction hearing for September 25, 2017. The parties agreed to maintain the status quo pending the Court's ruling on Plaintiff's request for a preliminary injunction.

         On July 31, 2017, Defendant filed a Motion to Compel Arbitration [10], based on an arbitration provision in the most recent dealer agreement, the Commercial Worksite Products Dealer Agreement (“CWP DA”). On August 11, 2017, Plaintiff filed an Amended Complaint [15] which, in its words, “omitted any claims arising under or related to” the CWP DA. Three days later, Plaintiff responded [16] to the Motion to Compel Arbitration, arguing that the Motion to Compel Arbitration should be denied because the CWP DA was no longer at issue in the case, and that the claims asserted in this case do not fall within the scope of the arbitration agreement. In reply, Defendant argued that an arbitration clause contained in a contract does not terminate merely because the contract has terminated, and that the arbitrator must determine the scope of the arbitration clause.

         On September 13, 2017, the Court granted [33] Defendant's Motion to Compel Arbitration [10]. The Court found that “an arbitration agreement contained in a contract does not terminate merely because the contract has terminated, ” Consorcio Rive v. Briggs of Cancun, Inc., 82 F. App'x 359, 363 (5th Cir. 2003) (citing Nolde Bros. v. Bakery & Confectionary Workers Union, 430 U.S. 243, 249-55, 51 L.Ed.2d 300, 97 S.Ct. 1067 (1977)), [1] and a dispute should still be referred to arbitration pursuant to an expired arbitration agreement if it falls within the scope of the agreement. Tristar Fin., 97 F. App'x at 466. Moreover, the Court found that the parties had expressly incorporated arbitration rules that indicated the parties' intent to delegate the issue of arbitrability to the arbitrator. See Kubala v. Supreme Prod. Servs., 830 F.3d 199, 204 (5th Cir. 2016); Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir. 2012). Therefore, the Court concluded that the parties had agreed to delegate all questions concerning the scope of the arbitration clause to the arbitrator. It granted Defendant's motion, ordered the parties to submit to arbitration, and dismissed the case without prejudice.

         On September 15, 2017, Plaintiff filed a Notice of Appeal [34] and a Motion for Injunction Pending Appeal [35]. The motion is ripe for the Court's review.

         II. Discussion

         The Court considers four factors when considering a request for a stay of an order or judgment pending appeal: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Planned Parenthood of Greater Tex. Surgical Health Servs. v. Abbott, 734 F.3d 406, 410 (5th Cir. 2013). “[O]n motions for stay pending appeal the movant need not always show a ‘probability' of success on the merits; instead, the movant need only present a substantial case on the merits when a serious legal question is involved and show that the balance of equities weighs heavily in favor of granting the stay.” Ruiz v. Estelle, 666 F.2d 854, 856 (5th Cir. 1982). But “likelihood of success remains a prerequisite in the usual case . . . .” Id. If the movant has not demonstrated a likelihood of success on the merits, the Court will grant a stay “[o]nly if the balance of equities (i.e. consideration of the other three factors) is . . . heavily tilted in the movant's favor . . ., and, even then, the issue must be one with patent substantial merit.” Id. at 857. The party seeking the injunction has the burden of proof. Id. at 856. “A stay is not a matter of right, even if irreparable injury might otherwise result to the applicant.” Abbot, 734 F.3d at 410.

         Among other things, Plaintiff argues that the Court erred insofar as the claims asserted in the Amended Complaint do not arise under the CWP DA, which contained the arbitration clause. Plaintiff now argues that the Court is not required to send the case to an arbitrator for a gateway determination of arbitrability because Defendant's argument that the case falls within the scope of the arbitration clause is “wholly groundless.”[2]

         As the Court noted in its previous opinion: “Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, so the question ‘who has the primary power to decide arbitrability' turns upon what the parties agreed about that matter.” Brittania-U Nig., Ltd. v. Chevron USA, Inc., 866 F.3d 709, 2017 U.S. App. LEXIS 14692, at *7 (5th Cir. 2017). The Court must determine whether the arbitration agreement contains a delegation clause, “a provision in an arbitration agreement that transfers the power to decide threshold questions of arbitrability to the arbitrator.” Reyna v. Int'l Bank of Commerce, 839 F.3d 373, 378 (5th Cir. 2016). The question is whether the agreement “evinces an intent to have the arbitrator decide whether a given claim must be arbitrated.” Brittania-U, 2017 U.S. App. LEXIS 14692 at *8. “If there is a delegation clause, the motion to compel arbitration should be granted in almost all cases.” Reyna, 839 F.3d at 378.

         But, as Plaintiff notes, “[t]he law of this circuit does not require all claims to be sent to gateway arbitration merely because there is a delegation provision.” Douglas v. Regions Bank, 757 F.3d 460, 463 (5th Cir. 2014). “If the argument that the claim at hand is within the scope of the arbitration agreement is ‘wholly groundless, '” then the Court need not subject the parties to “unnecessary and needlessly expensive arbitration.” Id. at 464. “An assertion of arbitrability is not ‘wholly groundless' if ‘there is a legitimate argument that th[e] arbitration clause covers the present dispute, and, on the other hand, that it does not.'” IQ Prods. Co. v. WD-40 Co., No. 16-20595, 2017 U.S. App. LEXIS 17744, at *10 (5th Cir. Sept. 13, 2017) (quoting Douglas, 757 F.3d at 463) (alteration original). “So long as there is a ‘plausible' ...


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