Wajvoda v. Menards Inc
Filing
49
OPINION AND ORDER DENYING 45 MOTION to Stay MENARD'S CROSSCLAIM PENDING ARBITRATION filed by Menards Inc. The court RECOMMENDS that Menard's third-party complaint be DISMISSED WITHOUT PREJUDICE. Signed by Magistrate Judge Andrew P Rodovich on 2/3/14. (kjp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
Barbara Wajvoda
Plaintiff,
)
)
)
v.
) Case No.: 2:11-cv-393-RL-APR
)
Menard, Inc.,
)
Defendant.
)
____________________________________________________________
Menard, Inc.
)
)
Third-Party Plaintiff,
)
)
v.
)
)
Mistic, LLC,
)
)
Third-Party-Defendant.
)
OPINION AND ORDER
This matter is before the court on the Motion to Stay [DE 45] filed by the defendant,
Menard, Inc., on November 20, 2013. For the following reasons, the motion is DENIED, and
the court RECOMMENDS that Menard’s third-party complaint be DISMISSED WITHOUT
PREJUDICE.
Background
On October 16, 2013, third-party defendant, Mistic, LLC, filed a motion for summary
judgment, asking the court to grant judgment in its favor because the parties’ contract had a
binding arbitration clause. Menard subsequently agreed to arbitrate the matter on the condition
that Mistic would withdraw its motion for summary judgment and agree to stay the proceedings.
Counsel for Mistic would not agree to those terms. Menard proceeded to file the present motion
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to stay the proceedings. Mistic opposes the motion, arguing that Menard’s third-party complaint
should be dismissed.
Discussion
A court has incidental power to stay proceedings, which stems from its inherent power to
manage its docket. Landis v. North American Co., 299 U.S. 248, 254-255, 57 S.Ct. 163, 166,
81 L.Ed. 153 (1936); Walker v. Monsanto Co. Pension Plan, 472 F.Supp.2d 1053, 1054 (S.D.
Ill. 2006). The decision to grant a stay is committed to the sound discretion of the court and
must be exercised consistent with principles of fairness and judicial economy. Brooks v. Merck
& Co., 443 F.Supp. 2d 994, 997 (S.D. Ill. 2006); Rutherford v. Merck & Co., 428 F.Supp. 2d
842, 845 (S.D. Ill. 2006); George v. Kraft Foods Global, 2006 U.S. Dist. LEXIS 92886, *4
(S.D. Ill. 2006).
“Courts often consider the following factors when deciding whether to stay an action: (i)
whether a stay will unduly prejudice or tactically disadvantage the non-moving party, (ii)
whether a stay will simplify the issues in question and streamline the trial, and (iii) whether a
stay will reduce the burden of litigation on the parties and on the court.” Abbott Laboratories v.
Matrix Laboratories, Inc., 2009 WL 3719214, *2 (N.D.Ill. 2009). “The general test for
imposing a stay requires the court to ‘balance interests favoring a stay against interests frustrated
by the action’ in light of the ‘court's paramount obligation to exercise jurisdiction timely in cases
properly before it.’ ” SanDisk Corp. v. Phison Electronics Corp., 538 F.Supp.2d 1060, 1066
(W.D.Wis.2008) (citing Cherokee Nation of Oklahoma v. United States, 124 F.3d 1413, 1416
(Fed.Cir. 1997)).
The parties dispute whether the present matter should be stayed or dismissed pending
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arbitration. Title 9 U.S.C. § 3 states:
If any suit or proceeding be brought in any of the courts of the United States upon
any issue referable to arbitration under an agreement in writing for such
arbitration, the court in which such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is referable to arbitration under such an
agreement, shall on application of one of the parties stay the trial of the action
until such arbitration has been had in accordance with the terms of the agreement,
providing the applicant for the stay is not in default in proceeding with such
arbitration.
There is a split among circuits on whether §3 mandates a stay or whether it remains in the
judge’s discretion to dismiss the case. See Angelina M. Petti, Note, Judicial Enforcement of
Arbitration Agreements: The Stay-Dismissal Dichotomy of FAA Section 3, 34 Hofstra L.Rev. 565
(2005). The Seventh Circuit has not addressed this issue directly, but it stated that “the proper
course of action when a party seeks to invoke an arbitration clause is to stay the proceedings
rather than to dismiss outright.” Halim v. Great Gatsby's Auction Gallery, Inc., 516 F.3d 557,
561 (7th Cir.2008) (quoting Cont'l Cas. Co. v. Am. Nat'l Ins. Co., 417 F.3d 727, 732 n. 7 (7th
Cir.2005)). “However, in Tice v. American Airlines, Inc., the court noted that a stay is the
normal course of action but left open the option of dismissal in certain cases: ‘[D]istrict courts
should retain jurisdiction over a suit that must be interrupted for reference of an issue to another
forum rather than dismiss it if, should it be dismissed, there might later be grounds for reinstating
it.’” Waldbillig v. SSC Germantown Operating Co., LLC, 2010 WL 1688535, *10 (E.D. Wis.
April 26, 2010) (citing Tice v. American Airlines, Inc., 288 F.3d 313, 318 (7th Cir. 2002)). The
Seventh Circuit also has affirmed dismissals by district courts. See Baumann v. Finish Line,
Inc., 421 F. App'x 632, 636 (7th Cir. 2011); Am. Int'l. Specialty Lines Ins. Co. v. Elec. Data
Sys. Corp., 347 F.3d 665, 668 (7th Cir. 2003); McCaskill v. SCI Mgmt. Corp., 298 F.3d 677,
679 (7th Cir. 2002).
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Other district judges within our Circuit have held that the FAA did not limit a court’s
discretion to dismiss the case. Rather, the determinative issue was whether retaining jurisdiction
would be fruitless. Waldbillig, 2010 WL 1688535 at *10. “[I]f all of the issues raised in the
district court must be submitted to arbitration, then a court may dismiss the case without
prejudice.” Baumann v. The Finish Line, Inc., 2009 WL 2750094, *3 (citing DeGroff v.
MascoTech Forming Techs.-Fort Wayne, Inc., 179 F .Supp.2d 896, 914 n. 20 (N.D.Ind. 2001)
(citing Alford v. Dean Witter Reynolds, Inc., 975 F.3d 1161, 1164 (5th Cir. 1992)) (“[W]here all
the issues raised in the district court must be submitted to arbitration, the clear weight of
authority supports dismissal of the case.”). For example, in Waldbillig, the court dismissed the
action because the arbitrator’s decision would address all of the issues presented to the court, be
binding on both parties, and no advisory arbitration decision or appeal to a court were indicated
in the agreement. Waldbillig, 2010 WL 1688535 at *10. The court explained that arbitration
was not an interruption of the proceedings and that after arbitration there would be no grounds
for reinstating the case. Waldbillig, 2010 WL 1688535 at *10.
Menard concedes that the parties’ contract states that arbitration is “binding” and “nonappealable”. Menard has not identified any issues that would not be subject to arbitration and
would be left for the court to decide, but it argues that there are grounds on which the court may
need to intervene later, including if the award is procured by corruption, fraud, or undue means;
whether there is corruption on the part of the arbitrator; where the arbitrator refuses to hear
pertinent evidence; or where the arbitrator exceeds his power. However, “the potential grounds
for refusing enforcement [of an arbitration award] is extraordinarily narrow.” Dean v. Sullivan,
118 F.3d 1170, 1171 (7th Cir. 1997). After arbitration there will be no issues left for the court to
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resolve, except those which may potentially arise because of problems with the arbitration and
are extraneous to the matters presently before the court. Therefore the court RECOMMENDS
that Menard’s third-party complaint be DISMISSED WITHOUT PREJUDICE.
ENTERED this 3rd day of February, 2014
/s/ Andrew P. Rodovich
United States Magistrate Judge
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