Otto Candies, LLC v. Drager Safety AG & Co., KGaA et al

Filing 53

ORDER AND REASONS granting in part 48 MOTION to Dismiss Plaintiff's Complaint or in the Alternative, Stay Proceedings Pending the Outcome of Arbitration. This case is STAYED and ADMINISTRATIVELY CLOSED. Signed by Judge Jane Triche Milazzo.(ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
OTTO CANDIES, LLC

CIVIL ACTION

VERSUS

NO. 13-447

DRAGER SAFETY AG & CO., KgaA ET AL.

SECTION "H"(5)

ORDER AND REASONS
Before the Court is Defendant Drager Safety AG & Co., KGaA's Motion to
Dismiss or, in the Alternative, Stay Proceedings Pending Arbitration (R. Doc.
48). For the following reasons, this Motion is GRANTED IN PART, and the case
is STAYED.
BACKGROUND
According to Plaintiff Otto Candies, LLC's Complaint, it entered into two
supply contracts (the "Supply Agreements") with Defendant Drager Safety AG
& Co., KgaA ("Drager") in 2010 in which Drager agreed to supply certain dive
support systems and corresponding components to be incorporated into vessels,
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which Plaintiff was constructing. Plaintiff alleges that Drager breached the
Supply Agreements in various ways, including failing to provide all of the
supplies agreed upon, supplying defective products, and failing to provide proper
quality control documentation.

Plaintiff has also sued Oceanwide, S.a.S

("Oceanwide"), the manufacturer of a hyperbaric lifeboat system supplied to it
by Drager, which allegedly contained a faulty air compressor that exploded and
rendered the lifeboat unusable.
Drager has filed the instant Motion requesting that this Court dismiss this
action for lack of subject matter jurisdiction or improper venue. Alternatively,
Drager requests that this action be stayed pending the outcome of arbitration.
Both Drager and Plaintiff agree that the Supply Agreements govern their
relationship, and each agreement contains an identical arbitration clause that
encompasses Plaintiff's complaints herein. Plaintiff does not dispute that,
pursuant to the Supply Agreements, the parties agreed to arbitrate "any dispute
arising in connection with" the Supply Agreements. Plaintiff merely requests
that this action be stayed rather than dismissed.
LAW AND ANALYSIS
Because the parties do not dispute, and the Court agrees, that Plaintiff's
claims are within the scope of a valid arbitration agreement,1 this Court need
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A two-step analysis governs whether parties should be compelled to arbitrate a
dispute. JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007). The
Court must first determine whether the parties agreed to arbitrate the dispute. Banc One
Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004). This determination involves two
separate inquiries: (1) whether there is a valid agreement to arbitrate between the parties,

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only consider whether the case should be dismissed or stayed.
9 U.S.C. § 3 expressly states that:
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.2
Accordingly, "[a] court must stay its proceedings if it is satisfied that an issue
before it is arbitrable under the agreement."3 The Fifth Circuit has stated,
however, that this rule does not prevent the district court from dismissing a case
when it has determined that all of the issues raised in the case must be
submitted to arbitration.4
In this case, less than all of the issues presented are subject to arbitration.
Specifically, Plaintiff's claim against Oceanwide is not subject to the arbitration
and, if so, (2) whether the dispute in question falls within the scope of that agreement. Sherer
v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008). If the Court finds the parties
agreed to arbitrate, it must then proceed to the second step of the analysis and consider
whether any federal statute or policy renders the claims non-arbitratable. Primerica Life Ins.
Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002).
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9 U.S.C. § 3 (West 2014) (emphasis added).

3

In re Gandy, 299 F.3d 489, 494 (5th Cir. 2002).

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Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992) ("The weight
of authority clearly supports dismissal of the case when all of the issues raised in the district
court must be submitted to arbitration."); see Apache Bohai Corp., LDC v. Texaco China, B.V.,
330 F.3d 307, 311 (5th Cir. 2003) (stating that failure to dismiss under those circumstances is
not an abuse of discretion).

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clause of the Supply Agreements to which Oceanwide was not a signatory.5
Because all of the issues presented in this case are not subject to mandatory
arbitration, this Court declines to dismiss this case and instead stays the case
in accordance with 9 U.S.C. § 3.
CONCLUSION
For the foregoing reasons, this Motion is GRANTED IN PART, and this
case is STAYED and ADMINISTRATIVELY CLOSED.
New Orleans, Louisiana, this 1st day of December, 2014.

___________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

5

See Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347, 353 (5th Cir. 2003) ("In
order to be subject to arbitral jurisdiction, a party must generally be a signatory to a contract
containing an arbitration clause.").

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