Mallinckrodt US LLC v. Liberty Mutual Insurance Company

Filing 21

MEMORANDUM AND ORDER. (see order for details) IT IS HEREBY ORDERED that defendant's motion to dismiss and compel arbitration [# 10 ] is denied without prejudice as stated above. IT IS FURTHER ORDERED that plaintiff's motion for oral argument [# 16 ] is denied as moot. Signed by District Judge Catherine D. Perry on 10/02/2012. (CBL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MALLINCKRODT US LLC,
Plaintiff,
vs.
LIBERTY MUTUAL INS. CO.,
Defendant.

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Case No. 4:12CV1340 CDP

MEMORANDUM AND ORDER
Mallinckrodt is a defendant in multiple actions filed by third parties seeking
damages for exposure to asbestos-containing products. Mallinckrodt alleges that
the claims brought against it are covered by an insurance policy issued by Liberty
Mutual. Mallinckrodt also claims that Liberty Mutual entered into a cost sharing
agreement with its predecessor in interest1 and other insurers to allocate defense
and indemnity costs for these types of asbestos suits. In this action, Mallinckrodt
seeks a declaration that Liberty Mutual has a duty to defend and indemnify it in
the third party asbestos lawsuits. Mallinckrodt also brings claims for breach of

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Mallinckrodt is not a signatory to the cost sharing agreement. Instead it alleges that,
through a complex series of corporate mergers, it is a successor in interest to IMCERA Group,
Inc., one of the signatories to the agreement. In 1966, IMCERA purchased assets of E.J. Lavino
and Company, which produced two products containing asbestos. Mallinckodt claims that the
mergers and resulting transfers of rights gave it the rights to coverage under the Liberty Mutual
policies and the cost sharing agreement for these asbestos lawsuits.

both the insurance policy and the cost sharing agreement, vexatious refusal to pay,
and bad faith failure to settle.
Liberty Mutual moves to compel arbitration and dismiss this action under §
4 of the Federal Arbitration Act, 9 U.S.C. § 1, et seq. Liberty Mutual first claims
that Mallinckrodt is obligated to arbitrate its dispute under an arbitration clause in
the cost sharing agreement. It then argues that an arbitrator, not this Court, must
decide whether Mallinckrodt, as a non-signatory to the cost sharing agreement, is
entitled to enforce any of its provisions when assignment is prohibited under the
contract. Mallinckrodt responds that whether it is bound by the arbitration
provision in the cost sharing agreement is an issue of arbitrability reserved for this
court.
I agree with Mallinckrodt that the question of whether it is obligated to
arbitrate this dispute must be decided by this court, and is not an issue left for
arbitration. “‘[A]rbitration is a matter of contract and a party cannot be required to
submit to arbitration any dispute which he has not agreed so to submit.’” AT & T
Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648
(1986) (quoting United Steelworkers of America v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 582 (1960)). “Thus, when deciding whether to compel
arbitration, a court asks whether a valid agreement to arbitrate exists, and if so,
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whether the dispute falls within the scope of that agreement.” Newspaper Guild of
St. Louis, Local 36047, TNG-CWA v. St. Louis Post Dispatch, LLC, 641 F.3d
263, 266 (8th Cir. 2011) (citation omitted). Ordinary state law contract principles
are applied to decide whether parties have agreed to arbitrate a particular matter.
Keymer v. Management Recruiters Intern., Inc., 169 F.3d 501, 504 (8th Cir. 1999).
I must look to state law to determine whether the parties are required to
arbitrate this dispute. But the moving party – Liberty Mutual – has not bothered to
inform the court which state’s law should be applied. Instead, it simply argues in a
footnote to its reply brief that it is “unlikely” that Missouri law applies. The court
cannot determine the scope and applicability of the arbitration clause in the cost
sharing agreement if it does not even know what law to apply. The briefs now
before me focus on the preliminary issue of whether the court or the arbitrators
should decide the arbitrability question, and have not provided me with any basis
for determining the actual question of arbitrability. Therefore, the motion will be
denied without prejudice to Liberty Mutual’s filing a properly supported motion to
compel arbitration.
Mallinckrodt and Liberty Mutual obviously have had many years of dealing
with one another as the underlying asbestos litigation has wound its way through
various courts. Their failure to resolve this dispute, including their failure to agree
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even on whether arbitration is required, smacks of gamesmanship. I strongly urge
them both to reconsider their current posture and attempt to resolve this dispute to
avoid further unnecessary expense and delay.
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion to dismiss and
compel arbitration [#10] is denied without prejudice as stated above.
IT IS FURTHER ORDERED that plaintiff’s motion for oral argument
[#16] is denied as moot.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE

Dated this 2nd day of October, 2012.

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