Traxys North America LLC v. Evraz Claymont Steel Inc. et al
Filing
97
MEMORANDUM OPINION regarding Defendant's motion to limit the scope of trial. Signed by Judge Harvey Bartle, III on 5/10/2011. (dlk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
TRAXYS NORTH AMERICA LLC
v.
EVRAZ CLAYMONT STEEL, INC.,
et al.
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:
:
:
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CIVIL ACTION
NO. 09-684
MEMORANDUM
Bartle, C.J.
May 10, 2011
Plaintiff Traxys North America LLC ("Traxys") brings
this diversity action for damages for breach of contract against
defendants Evraz Claymont Steel, Inc. and Evraz Inc., NA.
Before
the court is the motion of defendants to limit the scope of trial
to the issue of whether a contract existed between the parties.
Traxys initially filed its complaint on September 16,
2009.
Fact discovery was completed on December 3, 2010.
thereafter, defendants moved for summary judgment.
Shortly
In support of
their motion for summary judgment, defendants argued that no
written contract existed and that any evidence of an oral
agreement was barred by the statute of frauds.
motion.
We denied the
In doing so, we found that Traxys raised a genuine issue
of material fact with regard to whether defendants are merchants
who entered into a contract through an oral agreement followed by
a confirmatory memorandum, as provided for under the Delaware
Uniform Commercial Code.
See Traxys v. Evraz Claymont Steel, et
al., No. 09-684, 2011 WL 1322780, at *3-4 (E.D. Pa. Apr. 4, 2011)
(citing Del. Code Ann. tit. 6, ยง 2-201(2)).
In support of the pending motion, defendants assert
that the confirmatory letter on which Traxys relies states that
"[a]ll disputes relating to this transaction shall be submitted
to arbitration in New York City under the American Arbitration
Association."
Accordingly, defendants maintain that if a jury
determines that a contract in fact existed, this court must
compel arbitration to determine the issue of breach and damages.
Traxys counters that defendants have waived any right
to seek arbitration by engaging in extensive litigation in this
court.
In Nino v. Jewelry Exchange, Inc., our Court of Appeals
identified a six-factor test to determine whether waiver has
occurred:
"[1] the timeliness or lack thereof of a
motion to arbitrate ... [;2] the degree to
which the party seeking to compel arbitration
has contested the merits of its opponent's
claims; [3] whether that party has informed
its adversary of the intention to seek
arbitration even if it has not yet filed a
motion to stay the district court
proceedings; [4] the extent of its non-merits
motion practice; [5] its assent to the
court's pretrial orders; and [6] the extent
to which both parties have engaged in
discovery."
609 F.3d 191, 208-09 (3d Cir. 2010) (quoting Hoxworth v. Blinder,
Robinson & Co., Inc., 980 F.2d 912, 926-27 (3d Cir. 1992)).
All six of the Nino factors weigh in favor of a finding
that defendants waived the right to seek arbitration.
First,
defendants raised the issue of arbitration more than nineteen
months after Traxys filed its complaint and less than two weeks
before trial.
Our Court of Appeals has recognized that while a
-2-
time lapse of one to two months in seeking arbitration is
reasonable, lapses greater than eleven months weigh in favor of
finding waiver.
Id. at 210.
Secondly, defendants have
vigorously contested the merits of Traxys' claim by denying the
very existence of the confirmatory letter on which they now rely
and by filing a motion for summary judgment.
Third, defendants did not inform Traxys of its intent
to seek arbitration until the morning that it filed the instant
motion to limit the scope of trial.
Defendants did not include
the purported arbitration provision as an affirmative defense in
their answer to the complaint and never referenced it in any
other filing with this court.
Indeed, defendants previously
filed a complaint in the Chancery Court of Delaware to enjoin an
action instituted by Traxys before the American Arbitration
Association.
See Evraz Claymont Steel, Inc. v. Traxys N. Am.
LLC, No. 4830 (Del. Ch. Aug. 24, 2009).
As to the fourth Nino factor, defendants engaged in
significant motion practice.
Id. at 212.
Defendants filed
several motions to appear pro hac vice, a proposed stipulation
regarding confidential material (Docket No. 34), and a motion for
an extension of time to complete discovery (Docket No. 54).
After this court denied their motion for summary judgment,
defendants also filed a motion for leave to submit expert reports
(Docket No. 83).
Defendants even engaged in an unsuccessful
settlement conference in front of Magistrate Judge Elizabeth Hey.
Because defendants assented to the orders of this court without
-3-
objection, including five scheduling orders and our order denying
their motion for summary judgment, the fifth Nino factor also
supports a finding of waiver.
Finally, the parties completed discovery in January
2011.
During the discovery period, the parties propounded
interrogatories, produced documents, and noticed sixteen
depositions.
In addition, the parties sought three separate
extensions of time to complete discovery.
This extensive
discovery, which lasted longer than a year, governs in favor of a
finding that any claim to arbitration was waived.
See Nino, 609
F.3d at 213.
As our Court of Appeals has recognized, "prejudice is
the touchstone for determining whether the right to arbitrate has
been waived" by litigation conduct.
Hoxworth, 980 F.2d at 925.
Both parties have already invested significant time and resources
in the litigation of this action.
See Nino, 609 F.3d at 209.
Arbitration is intended to "streamline the proceedings, lower
costs, and conserve private and judicial resources."
Id.
Raising the issue of arbitration less than two weeks
before trial is inconsistent with these goals.
The defendants
have waived the right to seek arbitration, and the trial will
proceed on all issues alleged in the complaint without regard to
any arbitration agreement of the parties.
Accordingly, the motion of defendants to limit the
scope of trial will be denied.
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