OLIVER STORES v. JCB INC

Filing 21

ORDER ON PLAINTIFFS MOTION TO DISMISS granting 18 Motion to Dismiss; granting 18 Motion to Lift Stay 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 ON PLAINTIFF’S MOTION TO DISMISS
Before the Court is Plaintiff’s motion to dismiss Count III of its Complaint
and to lift the stay currently in effect for Counts I and II. The stay was imposed
pending the resolution of Count III in arbitration. For the reasons that follow, the
Court GRANTS Plaintiff’s motion.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of the breakdown of the parties’ business relationship.
Defendant is a manufacturer of heavy machinery and farm equipment such as
tractors, load-alls, and forklifts. Plaintiff had been a distributor of Defendant’s
machinery prior to Defendant’s termination of the relationship on June 21, 2011.
On September 20, 2011, the Plaintiff filed a three-count Complaint against
Defendant for violations of Maine’s Franchise Law, 10 M.R.S.A. §§ 1361 — 1370
(Count I), violations of Maine’s Unfair Trade Practices Act, 5 M.R.S.A. §§ 205-A —
214, (“UTPA”) (Count II), and breach of contract (Count III). On September 21,
2011, Defendant JCB, Inc. (“Defendant”) filed an answer along with a motion to
dismiss the case or stay and compel arbitration of it.

The motion to dismiss or stay and compel arbitration was predicated on an
arbitration clause in the parties’ distributorship agreement, which requires
submission of all disputes to binding arbitration. On December 28, 2011, the United
States Magistrate Judge (Rich, J.) filed a Report and Recommended Decision that
recommended granting Defendant’s motion in part and denying it in part. The
Magistrate Judge recommended that the Court retain jurisdiction of Plaintiff’s
claim for violation of Maine’s Franchise Law but stay resolution of this claim
pending arbitration of Plaintiff’s claims for violation of the UTPA and breach of
contract. See Doc. #12. On March 22, 2012, the Court adopted this recommendation,
altering only the recommendation to submit the UTPA claim to arbitration. See Doc.
#17. The Court instead retained jurisdiction of this claim along with the Franchise
Act claim, referring only the breach of contract claim to arbitration.
Central to the Court’s determination that Plaintiff’s statutory claims are not
subject to arbitration is a clause in the parties’ agreement that states:
If any provision herein contravenes the laws or regulations of any state
or other jurisdiction wherein this Agreement is to be performed, or
denies access to the procedures, forums or remedies provided for
by such laws or regulations, such provisions shall be deemed to be
modified to conform to such laws or regulations, and all other terms
and provisions shall remain in full force and effect.
JCB Dealership Agreement, ¶ 21 (Doc. # 2-1) (emphasis added.) The Court found
that the arbitration clause denies Plaintiff access to the procedures and forums
provided by Maine’s Franchise Law and UTPA, and found that, by its own terms,
the parties’ agreement allows the plaintiff to proceed in court with its statutory
claims.

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Although the parties have resolved certain issues they have not yet engaged
in arbitration of the breach of contract claim. Plaintiff now requests that the Court
dismiss its breach of contract claim with prejudice and allow it to move forward in
this forum solely on its statutory claims. Defendant opposes dismissal.
DISCUSSION
Under Federal Rule of Civil Procedure 41(a), a plaintiff may voluntarily
dismiss an action following the defendant’s answer only if (1) the parties stipulate
to dismissal, or (2) the Court orders dismissal “on terms that the court considers
proper.”
The purpose of requiring Court approval of dismissal is to ensure that
“‘no other party will be prejudiced.’” Accordingly, in ruling on a motion
for voluntary dismissal, “the district court is responsible . . . for
exercising its discretion to ensure that such prejudice will not occur.”
In exercising that discretion, “courts typically look to ‘the
defendant’s effort and expense of preparation for trial, excessive delay
and lack of diligence on the part of the plaintiff in prosecuting the
action, insufficient explanation for the need to take a dismissal, and
the fact that a motion for summary judgment has been filed by the
defendant.’” Although “courts need not analyze each factor or limit
their consideration to these facts,” they serve as “a guide for the trial
judge, in whom the discretion ultimately rests.”
JRA Architects & Project Managers, P.S.C. v. First Fin. Group, 375 Fed. Appx. 42,
42-43 (1st Cir. 2010) (internal citations omitted.) The Court perceives no prejudice to
Defendant in allowing the Plaintiff to dismiss Count III with prejudice. No
discovery has taken place in this case, nor has there been excessive delay in
Plaintiff’s decision to request dismissal. In the three months since the case was
stayed, the parties have been in communication about Plaintiff’s claims, but they
have not yet even scheduled arbitration. Because Plaintiff is requesting dismissal of

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Count III with prejudice, there is no chance that Plaintiff may harass Defendant by
bringing this claim again.1 For these reasons, the Court finds voluntary dismissal of
this count appropriate, over Defendant’s objection.
Defendant also requests that, should Count III be dismissed and Plaintiff be
allowed to move forward on its statutory claims, Plaintiff be precluded “from
predicating any remaining claims on conduct within the scope of the parties’
contractual relationship,” because contract-related issues and defenses must be
decided by the arbitrator. Defendant’s Opposition to Plaintiff’s Motion to Dismiss
Count III, pp. 1 and 3 (Doc. # 19).
Standing alone, the arbitration clause appears to require decision of all such
issues by the arbitrator. However, paragraph 21 of the agreement requires that
Plaintiff have access to the procedures and forums provided for under its statutory
claims. This paragraph effectively gives the Court jurisdiction to decide any
contract-related issues and defenses that are relevant to Plaintiff’s statutory claims.
As Defendant notes, the facts and issues material to Plaintiff’s breach of contract
claim and its statutory claims largely overlap. The Complaint is drafted so as to
incorporate all factual allegations asserted therein within each count for relief. If
Plaintiff were deprived of the ability to introduce evidence relating to the parties’
contractual relationship, paragraph 21 would be rendered a nullity. Plaintiff would
have access to forums and procedures for its statutory claims, but no content to
In Stroklund v. Nabors Drilling USA, LP, Doc. No. 4:10-cv-005, 2010 WeL 3618635 (D.N.D.
2010), a case cited by the Defendant, the plaintiff was seeking to dismiss a count without prejudice
and it offered no explanation for its desire to dismiss. The Plaintiff here is seeking to dismiss its
breach of contract claim with prejudice and it offers as a reason for doing so the fact that arbitration
costs will exceed the value of the claim.
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introduce to support these claims. See Homelife Communities Group, Inc. v.
Rosebud Park, LLC, 633 S.E.2d 423, 425 (Ga. App. 2006) (“a court should avoid an
interpretation of a contract which renders portions of the language of the contract
meaningless.”)2
The Plaintiff candidly seeks to dismiss Count III to avoid arbitration.
However, the Plaintiff’s ability to do so is a consequence of the language of the
parties’ contract. See Dialysis Access Center, LLC v. RMS Lifeline, Inc., 638 F.3d
367, 376 (1st Cir. 2011) (“the first principle that underscores all of the Supreme
Court’s arbitration decisions is that ‘arbitration is strictly a matter of consent, and
thus is a way to resolve those disputes—but only those disputes—that the parties
have agreed to submit to arbitration.’”) Plaintiff has determined that, to avoid
arbitration, it is willing to forego whatever unique relief may be afforded to it under
its breach of contract claim. It is entitled to do so.
CONCLUSION
It is therefore ORDERED that Count III of the Complaint, for breach of
contract, is DISMISSED WITH PREJUDICE. It is further ORDERED that the
stay imposed on Counts I and II of the Complaint is lifted. A scheduling order shall
issue forthwith.
SO ORDERED.
/s/ Nancy Torresen
United States District Judge
Dated this 2nd day of July, 2012.

Paragraph 17 of the Distributorship Agreement requires the Agreement to “be construed and
interpreted in accordance with the laws of the State of Georgia.”
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