Haier US Appliance Solutions, Inc. v. Menard, Inc.

Filing 17

MEMORANDUM OPINION AND ORDER by Judge Greg N. Stivers on 4/3/2017 granting 7 Motion to Compel Arbitration and 7 Motion to Stay Litigation Pending Arbitration. The parties SHALL confer and attempt to select a mutually agreeable arbitrator . If the parties are unable to choose a mutually agreeable arbitrator within fourteen (14) days of the entry of this order, the parties SHALL file cross motions to appoint an arbitrator, and the Court will select an arbitrator. The Court will otherwise STAY this proceeding until the conclusion of the ordered arbitration, at which time the Court will determine whether to enter judgment approving arbitration award. cc: Counsel (CDR)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:16-CV-00761-GNS

HAIER US APPLIANCE SOLUTIONS, INC.
d/b/a GE APPLIANCES, as successor-in-interest
to the appliance business unit of
GENERAL ELECTRIC COMPANY

PLAINTIFF

v.
MENARD, INC. d/b/a MENARD’s

DEFENDANT

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendant’s Motion to Dismiss, or in the Alternative,
Motion to Compel Arbitration (DN 7). The motion is ripe for adjudication. For the reasons
outlined below, the motion is GRANTED.
I.

STATEMENT OF FACTS AND CLAIMS

Plaintiff Haier US Appliance Solutions d/b/a GE Appliances (“GE”) manufactures
appliances and provides appliance-related services. (Compl. ¶ 2, DN 1). Defendant Menard,
Inc. d/b/a Menard’s (“Menard’s”) operates a chain of home improvement retail stores. (Compl. ¶
3).

The parties entered into two separate agreements relating to Menard’s sale of GE’s

appliances in its stores. (Pl.’s Resp. Def.’s Mot. Dismiss Ex. 2, at 2, 5, DN 15-2; Pl.’s Resp.
Def.’s Mot. Dismiss Ex. 4, DN 15-4).

GE filed this action alleging various claims, inter alia, breach of contract and unjust
enrichment relating to offsets and credits that Menard’s asserts it is entitled to withhold from
payments due to GE. (Compl. ¶¶ 17-43, DN 1). In the present motion, Menard’s argues that the
parties are required to arbitrate this dispute. (Def.’s Mem. Supp. Mot. Dismiss 2-3, DN 7-1).
II.

JURISDICTION

This Court has original jurisdiction of “all civil actions where the matter in controversy
exceeds the sum or value of $75,000, exclusive of interest and costs, as is between . . . citizens of
different States . . . .” 28 U.S.C. § 1332(a)(1). Both parties are residents of different states, and
the amount in controversy exceeds the minimum jurisdictional limit of this Court. (Compl ¶¶ 24).
III.

STANDARD OF REVIEW

In ruling on a motion to compel arbitration, courts apply the summary judgment standard
in Fed. R. Civ. P. 56(c). See Arnold v. Rent-a-Center, Inc., No. 11-18-JBC, 2011 WL 1810145,
at *2 (E.D. Ky. May 12, 2011) (“This court will treat the motion to compel arbitration as one for
summary judgment . . . .”); Weddle Enters., Inc. v. Treviicos-Soletanche, J.V., No. 1:14CV00061-JHM, 2014 WL 5242904, at *2 (W.D. Ky. Oct. 15, 2014) (“A motion to dismiss based on
the existence of a valid arbitration agreement is not evaluated under the usual Fed. R. Civ. P.
12(b)(6) standard.

Instead, courts apply the standard applicable to motions for summary

judgment.” (citations omitted)). “In order to show that the validity of the agreement is in issue,
the party opposing arbitration must show a genuine issue of material fact as to the validity of the
agreement to arbitrate, a showing that mirrors the summary judgment standard.” Great Earth
Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002) (internal quotation marks omitted).

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IV.

DISCUSSION

Under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, a written agreement to
arbitrate involving a dispute arising from a contract that affects interstate commerce “shall be
valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.” Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000) (quoting 9
U.S.C. § 2). “The FAA expresses a strong public policy favoring arbitration of a wide class of
disputes.” Cooper v. MRM, Inc., 367 F.3d 493, 498 (6th Cir. 2004). Consequently, “arbitration
agreements must be read liberally to effect their purpose” with any doubts regarding arbitrability
to be resolved in favor of arbitration. Moore v. Ferrellgas, Inc., 533 F. Supp. 2d 740, 745 (W.D.
Mich. 2008) (citing Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 89-91 (2000); Moses
H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)); see also Fazio v.
Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir. 2003) (citation omitted). Furthermore, the FAA
“leaves no place for the exercise of discretion by a district court, but instead mandates that
district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration
agreement has been signed . . . absent a ground for revocation of the contractual agreement.”
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985).
From the Court’s perspective, this case is atypical because both parties—sophisticated
businesses—are in agreement that they are bound to arbitrate this dispute. (Def.’s Mem. Supp.
Mot. Dismiss 2-3, DN 7-1; Pl.’s Resp. Def. Mot. Dismiss 1, DN 15). In invoking arbitration
between the parties, Menard’s relies on an arbitration provision contained in a document entitled
“Conditions of Order” that was executed on July 15, 2009. (Def.’s Mem. Supp. Mot. Dismiss 4,
DN 7; Def.’s Mot. Dismiss Ex. A, DN 7-2). As GE has noted, however, that provision is part of
a separate defect agreement (“Defect Agreement”) between the parties relating to a “parts

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account.” (Warren Aff. ¶ 8, DN 15-3; Pl.’s Resp. Def.’s Mot. Dismiss Ex. 4). The Defect
Agreement incorporates the Conditions of Offer, which contains an arbitration provision that
provides for the arbitration of dispute pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. (Def.’s Mot. Dismiss Ex. A, at 1, DN 7-2).
GE maintains that the salient document is the Vendor Compliance Program Letter
(“VCPL”), which was executed by representatives of both parties on October 31, 2011. (Pl.’s
Resp. Def.’s Mot. Dismiss Ex. 2, at 2, 5). By its terms, the VCPL incorporates the GE Dealer
Handbook, which contains a provision requiring the arbitration of disputes in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of Business Disputes
and directing that the location for the arbitration will be in Louisville, Kentucky. (Pl.’s Resp.
Def.’s Mot. Dismiss Ex. 2, at 2; Pl.’s Resp. Def.’s Mot. Dismiss Ex. 1, at 7-8).
Based on the Court’s review of the Complaint, the Court is unable to determine upon
which agreement GE has asserted its claims. In fact, the Complaint acknowledges that the
parties entered into more than one agreement.1 (Compl. ¶ 7). More importantly, however,
neither party has challenged the validity of those arbitration provisions, which is a gateway issue
of enforceability for this Court to determine. See Rent-A-Center W., Inc. .v Jackson, 561 U.S.
63, 69 (2010).
The only dispute between the parties is which rules apply to the arbitration:

the

Commercial Arbitration Rules of the American Arbitration Association or the Center for Public
Resources Rules for Non-Administered Arbitration of Business Disputes.

This Court’s

responsibility, however, is not to determine which arbitration rules apply; rather, the Court must
determine threshold issues including whether the parties have agreed to arbitrate their dispute,
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In its response to the pending motion, GE has stated that its claims do not arise under the
Defect Agreement. (Pl.’s Resp. Def.’s Mot. Dismiss 3).
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which they unanimously agree that they have done in this case. As a sister court noted when
confronted with a similar conundrum, “the failure to specify the applicable body of arbitration
procedures to be used does not render the contract unenforceable as patently ambiguous. ‘The
question of “what kind of arbitration proceedings” are required under the arbitration clause is not
a gateway issue for a court to decide.’”2 McNeill v. Haley S. Inc., No. 3:10cv192, 2010 WL
3670547, at *5 (E.D. Va. Sept. 13, 2010) (quoting Davis v. ECPI Coll. of Tech., L.C., 227 F.
App’x 250, 253 (4th Cir. 2007)).
Accordingly, the Court will grant the motion to compel arbitration and will order the
parties to confer to select an arbitrator. If the parties are unable to do so within 14 days, the
parties shall file cross motions with the Court requesting the appointment of an arbitrator. See 9
U.S.C. § 5.
V.

CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED that Defendant’s Motion to
Compel Arbitration and Dismiss or, in the Alternative, Stay Litigation Pending Arbitration (DN
7) is GRANTED. The parties SHALL confer and attempt to select a mutually agreeable
arbitrator. If the parties are unable to choose a mutually agreeable arbitrator within fourteen
(14) days of the entry of this order, the parties SHALL file cross motions to appoint an
arbitrator, and the Court will select an arbitrator pursuant to 9 U.S.C. § 5. The Court will
otherwise STAY this proceeding until the conclusion of the ordered arbitration pursuant to 9

In its reply, Menard’s also correctly notes that forum and venue matters are considered
procedural issues to be resolved by the arbitrator. (Def.’s Reply Mot. Compel Arbitration 2, DN
16). As this Court has noted, “[when] the dispute between the parties is subject to arbitration, a
determination of the location or venue of the arbitration is a procedural matter for the arbitrator.”
Weddle Enters., 2014 WL 5242904, at *4 (citing Duran v. J. Hass Grp., LLC, No. 10-CV4539(RRM)(SMG), 2012 WL 323818, at *4 (E.D.N.Y. June 8, 2012)).
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U.S.C. § 3, at which time the Court will determine whether to enter a judgment approving any
arbitration award.

Greg N. Stivers, Judge
United States District Court
April 3, 2017

cc:

counsel of record

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