OLIVER STORES v. JCB INC

Filing 17

ORDER AFFIRMING IN PART THE RECOMMENDED DECISION 12 OF THE MAGISTRATE JUDGE denying 8 Motion to Dismiss; granting 8 Motion to Compel as to Count III; granting 8 Motion to Stay as to Counts I and II; By JUDGE NANCY TORRESEN. (dfr)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
THE OLIVER STORES,
Plaintiff,
v.
JCB, INC.,
Defendant.

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) Docket no. 1:11-cv-353-NT
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ORDER AFFIRMING IN PART THE RECOMMENDED
DECISION OF THE MAGISTRATE JUDGE
On December 28, 2011, the United States Magistrate Judge filed with the
Court, with copies to counsel, his Report and Recommended Decision. The
Defendant filed its limited objection to the Magistrate Judge’s Recommended
Decision on January 11, 2012 and the Plaintiff filed its objection on January 12,
2012. I have reviewed and considered the Recommended Decision together with the
entire record. I have made a de novo determination of all matters adjudicated by the
Recommended Decision. I concur with the recommendations of the United States
Magistrate Judge for the reasons set forth in the Recommended Decision, except I
find that Count II of the Complaint, for violations of Maine’s Unfair Trade Practices
Act (“UTPA”), should not be presented to the arbitrator but should, like Count I, be
stayed pending arbitration of the parties’ contract dispute.
The Defendant limited its motion to dismiss to the arbitration-related issues,
and indicated that it expects “to ultimately seek dismissal of Count II” for failure to

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state a claim. (Reply to Response to Motion to Dismis at p. 2, n.1 (Doc. # 11)). While
the magistrate judge may well be right that the UTPA does not provide a cause of
action, I find that it is premature to reach that conclusion without a Rule 12(b)(6)
motion to dismiss Count II and thorough briefing by the parties. Whether the UTPA
provides a cause of action or not, I do not believe it is appropriate to compel the
parties to arbitrate Count II. If the UTPA does provide a cause of action, then Count
II should not be sent to the arbitrator because it falls within Paragraph 29 of the
parties’ contract. If the UTPA does not provide a cause of action, as the magistrate
judge concluded, it should be dismissed for failure to state a claim, not sent to
arbitration.1
It is therefore ORDERED that the Recommended Decision of the Magistrate
Judge is hereby ADOPTED in PART and VACATED in PART. The Defendant’s
motion to compel arbitration is GRANTED as to Count III. The Defendant’s motion
to stay pending arbitration of Count III is GRANTED as to Counts I and II. The

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Under 9 U.S.C. § 10, (the Federal Arbitration Act), a federal district court’s review of an
arbitral award is “extremely narrow and exceedingly deferential.” Bull HN Information Systems,
Inc. v. Hutson, 229 F.3d 321, 330 (1st Cir. 2000) (citing Wheelabrator Envirotech Operating Services
Inc. v. Mass. Laborers Dist. Council Local 1144, 88 F.3d 40, 43 (1st Cir.1996)). District courts “do not
sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing
decisions of lower courts.” Id. If the arbitrator errs, “[e]ven where such error is painfully clear, courts
are not authorized to reconsider the merits of arbitration awards.” Advest, Inc. v. McCarthy, 914 F.2d
6, 8 (1st Cir.1990). Once the UTPA claim is sent to arbitration, the arbitrator is free to determine
that it does state a cause of action and to award relief thereunder, even though the claim was only
sent to arbitration on the determination that it was not viable. Any mere error of law in this regard
would then be unreviewable by the Court.

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Defendant’s motion to dismiss is DENIED.

SO ORDERED.
/s/ Nancy Torresen
United States District Judge
Dated this 22nd day of March, 2012.

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