Infinity Fulfillment Group, LLC et al. v. Cenveo Corporation, et al.

Filing 37

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that movants' motion to strike and notice of objection to respondents reply memorandum (ECF #35) is DENIED. IT IS FURTHER ORDERED that movants motion to modify or, in the alternative, vacate arbitratio n award (ECF #12) is DENIED. IT IS FURTHER ORDERED that respondents motion to confirm the arbitration award (ECF #10) is GRANTED. The Court hereby confirms the arbitration panel's award. IT IS FINALLY ORDERED that judgment shall be entered in accordance with the Award of Arbitrators, dated January 6, 2014. A separate Judgment will accompany this Memorandum and Order. Signed by District Judge Stephen N. Limbaugh, Jr on 6/19/2015. (JMC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
INFINITY FULFILLMENT GROUP, LLC,
GFA DECORATIVE TRADE SERVICES, INC.,
and STEPHEN C. HANNIGAN,
Movants,
v.
CENVEO CORPORATION and
MICHAEL R. DENNY,
Respondents.

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MEMORANDUM AND ORDER
This matter is before the Court on respondents’ memorandum in opposition to
movants’ motion to modify or vacate arbitration award and cross-motion for an order
confirming the award. Respondents1 seek denial of the motion for failure to timely file
and serve the motion as required by the Federal Arbitration Act, 9 U.S.C. § 2, and request
an order confirming the award. The matter has been fully briefed and is ripe for
disposition. For the following reasons, the Court will deny the motion to modify or
vacate the arbitration award and grant the motion to confirm the award.
I.

Background
Movant Infinity Fulfillment Group, LLC (IFG) is a limited liability company

whose sole member is GFA Decorative Trade Services, Inc., a Missouri corporation with
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Although respondent Denny has not been served and there has been no waiver of
service or entry of appearance filed on his behalf, the pleadings filed by respondent
Cenveo’s counsel refer to “respondents” and appear to be filed on behalf of Cenveo and
Denny.

its principal place of business in Missouri. Movant Stephen Hannigan, President of GFA,
is a Missouri resident. Respondent Cenveo Corporation is a Delaware corporation with
its principal place of business in Connecticut. Respondent Michael Denny, who was the
General Manager of Cenveo’s Eureka, Missouri facility, was domiciled in Missouri
during the arbitration proceedings but at the time this action was filed he was domiciled
in Florida. Denny retired and moved to Florida in January 2014.
On December 30, 2010, Cenveo and IFG executed three interdependent
agreements including an Asset Purchase Agreement, Supply Agreement, and Sublease
Agreement (the Agreements). Cenveo is a printing and bindery company. IFG is a paper
bindery company, whose only customer was Cenveo. Pursuant to the Agreements,
IFG purchased bindery equipment from Cenveo, IFG subleased the bindery area space at
Cenveo’s Eureka, Missouri facility, and Cenveo was to order a minimum quantity of
bindery services from IFG. The Agreements contained mandatory arbitration clauses
governing disputes between the parties.
On August 31, 2012, Cenveo initiated arbitration proceedings against movants
regarding a contract dispute under the Agreements. Cenveo claimed a breach of contract
under the Supply and Sublease Agreements. IFG and GFA counterclaimed for breach of
contract and rescission on the Agreements. The arbitration hearing was held over a
period of seven days before an American Arbitration Association panel. On January 6,
2014, the panel issued their Award of Arbitrators in favor of Cenveo for a net sum of
$422,030 from IFG and $104,162 from GFA. The Award was e-mailed to the parties the
same day. On April 7, 2014, movants filed their motion to modify or, in the alternative,
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vacate the arbitration award pursuant to section 435.425 RSMo in the Circuit Court of St.
Louis County. Cenveo was served with the motion on May 13, 2014. Following service
of the motion, Cenveo timely filed its notice of removal in this Court on May 23, 2014,
based on diversity jurisdiction. On the same date, respondents filed their memorandum
in opposition to the motion to modify or vacate arbitration award and cross-motion for an
order confirming the award.
II.

Motion to Strike
As a preliminary matter, the Court will address movants’ motion to strike or, in the

alternative, notice of objection to respondents’ reply memorandum. Movants argue that,
as part of the reply memorandum, respondents have filed an affidavit and exhibits that
offer evidence beyond the scope of the prior briefing in an attempt to expand their
allegations and evidence after the time for doing so has expired.
“District courts enjoy broad discretion in enforcing their rules, but ‘striking a
party’s pleadings is an extreme measure and . . . [m]otions to strike . . . are viewed with
disfavor and are infrequently granted.’” Anzaldua v. Northeast Ambulance and Fire
Protection Dist., 4:13CV1257 ERW, 2014 WL 466228, at *3 (E.D. Mo. Feb. 5, 2014)
(citing and quoting Stanbury Law Firm, P.S. v. I.R.S., 221 F.3d 1059, 1063 (8th Cir.
2000)). “A ‘court may strike from a pleading an insufficient defense or any redundant,
immaterial, impertinent or scandalous matter.’” Id. (quoting Fed.R.Civ.P. 12(f)). “As is
apparent from the language of Rule 12(f), a motion to strike may only be directed to
material contained in a ‘pleading.’” Id. (citing Rule 12(f)); see also Coleman v. City of
Pagedale, 2008 WL 161897 at *4 (E.D. Mo. Jan. 15, 2008). “Pleadings are defined as:
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1) a complaint; 2) an answer to a complaint; 3) an answer to a counterclaim designated as
a counterclaim; 4) an answer to a cross claim; 5) a third-party complaint; 6) an answer to
a third-party complaint; and 7) if the court orders one, a reply to an answer.” Id. (citing
Fed.R.Civ.P. 7(a)).
“Motions, briefs, memoranda, objections, or affidavits may not be the subject of a
motion to strike.” Coleman v. City of Pagedale, 4:06CV1376 ERW, 2008 WL 161897, at
*4 (E.D. Mo. Jan. 15, 2008) (citing Williams ex rel. McIntosh v. City of Beverly Hills,
Mo, 4:07CV661 CAS, 2007 WL 2792490, at *2 (E.D. Mo. Sept. 24, 2007) (“motion to
remand is not a pleading, and therefore may not be subject to a motion to strike”)); see
also Anzaldua, at *4 (“neither a memorandum nor an affidavit is a ‘pleading’”); 2 James
W. Moore, et al., Moore’s Federal Practice § 12.37[2]. Because the motion is not
directed to a pleading, the Court will not consider it as a motion to strike. Stockdale v.
Stockdale, 4:08CV1773 CAS, 2010 WL 1329593, at *1 (E.D. Mo. Apr. 6, 2010).
In the alternative, movants object to respondents’ supporting documentation
appended to their reply memorandum and ask this Court to disregard the evidence.
Movants argue that they have been deprived of an opportunity to respond but did not seek
leave to file a sur-reply to address any new facts or evidence offered with the reply
memorandum. The reply memorandum and supporting documentation was a direct
response to movants’ briefing on the issues. Movants have not cited any relevant
authority that would preclude the supporting documentation or require the Court to
disregard it. The Court will deny the objection.

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III.

Discussion
Movants filed their motion to modify or vacate the arbitration award pursuant to

the Missouri Arbitration Act, section 435.425 RSMo. Movants argue that the Court is
required to apply Missouri rather than federal law and that under the Missouri Act, the
motion was timely filed. Respondents contend the motion is governed by the Federal
Arbitration Act and that movants did not timely challenge the award because they failed
to serve respondents with notice of their motion within three months after the award was
mailed. As a result, respondents argue that under the Federal Arbitration Act the motion
must be denied and the award must be confirmed.
The Court must decide whether the provisions of the Federal Arbitration Act or
the Missouri Arbitration Act apply in this case. “The Federal Arbitration Act is a body of
federal substantive law of arbitrability, applicable to any arbitration agreement within the
coverage of the Act.” Sanders-Midwest, Inc. v. Midwest Pipe Fabricators, Inc., 857 F.2d
1235, 1237 (8th Cir. 1983) (internal quotation marks and citations omitted). “This
substantive law controls in either state or federal court.” Id. (citations omitted). The
Missouri Supreme Court recognizes the principle that when the Federal Arbitration Act
applies to a dispute, it “is obliged to apply federal law, and may not apply state law,
substantive or procedural, [that] is in derogation of federal law.” Id. (quoting Bunge
Corp. v. Perryville Feed & Produce, Inc., 685 S.W.2d 837, 839–40 (Mo. banc 1985).
The Federal Arbitration Act provides, in relevant part, as follows:
A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction, or the refusal to perform the whole or
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any part thereof, or an agreement in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction, or refusal, shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.
9 U.S.C. § 2. “The statute further defines ‘commerce’ to include ‘commerce among the
several States.’” Hendrik Delivery Service, Inc. v. St. Louis Post-Dispatch LLC,
4:07CV1516 JCH, 2007 WL 3071827, at *3 (E.D. Mo. Oct. 19, 2007) (citing 9 U.S .C. §
1). The Supreme Court has “interpreted the term ‘involving commerce’ in the FAA as
the functional equivalent of the more familiar term ‘affecting commerce’—words of art
that ordinarily signal the broadest permissible exercise of Congress’ Commerce Clause
power.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003). Thus, “it is perfectly
clear that the FAA encompasses a wider range of transactions than those actually ‘in
commerce’—that is, ‘within the flow of interstate commerce.’” Id. (quoting Allied–
Bruce Terminix Cos. v. Dodson, 513 U.S. 265, 273 (1995)). “Transactions involving the
interstate transfer of money and diverse parties have been found to involve commerce as
required by the FAA.” Mitchell v. Career Education Corp., 4:11CV1581 TCM, 2011
WL 6009658, at *2 (E.D. Mo. Dec. 1, 2011) (citing Barker v. Golf U.S.A., 154 F.3d 788,
790–91 (8th Cir. 1998); Hendrik Delivery Serv., Inc. v. St. Louis Post–Dispatch LLC, No.
4:07CV1516 JCH, 2007 WL 3071827, *3 (E.D.Mo.2007) (finding that agreement
between parties of different states involving newspaper delivered in two states and
deriving revenue from non-Missouri sources was governed by the FAA and not Missouri
Arbitration Act); Kagan v. Master Home Products, Ltd., 193 S.W.3d 401, 405 (Mo.App.
E.D. 2006) (finding that agreement between Illinois corporation and Missouri resident

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and involving national marketing and sales affected commerce and was governed by
FAA and not the Missouri Uniform Arbitration Act)).
Movants argue that under the Agreements there was local performance of a service
in Missouri without affecting interstate commerce. Movants maintain that IFG “always,
and only, delivered finished print materials to respondent Cenveo at the Eureka facility.”
Movants claim that IFG’s personnel, equipment, and labor were all internal to the Eureka
facility. Further, movants contend that “IFG did not engage in multi-state business
activities with inter-state assets, travel or shipping.”
Movants view the issue too narrowly by focusing only on IFG and ignoring facts
related to Cenveo and whether the Agreements involve or affect commerce. When
viewed in the proper perspective, the facts show that the Agreements are between
contracting parties that are residents of different states, Cenveo distributes the materials
that IFG has a part in assembling in states other than Missouri, and Cenveo relies on
substantial amounts of paper and other raw materials from outside Missouri for the
production of those materials.
The proper analysis in this case can be found in this Court’s decision in Hendrik
Delivery Service, Inc. v. St. Louis Post-Dispatch LLC in which the Court concluded,
based on comparable facts, that the provisions of the Federal Arbitration Act governed.
See Hendrik Delivery Service, Inc. v. St. Louis Post-Dispatch LLC, 4:07CV1516 JCH,
2007 WL 3071827 (E.D. Mo. Oct. 19, 2007). In Hendrik, a dispute arose out of an
agreement between Hendrik and the Post-Dispatch under which Hendrik was
compensated for the delivery of Post-Dispatch newspapers within two designated
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delivery routes in Missouri. Hendrik, 2007 WL 3071827, at *1. The parties submitted
the matter to arbitration. Id. at *2. Following arbitration, the matter came before this
Court on a motion to confirm the arbitration award and a motion to vacate a portion of
the award. Id.
As an initial matter, in Hendrik, the Court determined the provisions of the Federal
Arbitration Act, and not the Missouri Arbitration Act, applied. Id. at *3. In making the
determination that the Agreement between Hendrik and the Post-Dispatch involved
commerce, the Court relied on a number of facts comparable to the matter before the
Court in this case. First, the Agreement was between contracting parties that were
residents of different states – Hendrik as a Missouri company and the Post-Dispatch as a
non-Missouri company comprised of other non-Missouri companies. Id. Second, the
Post-Dispatch is distributed outside of Missouri. Id. Finally, the Post-Dispatch utilized
substantial amounts of paper and other raw materials shipped into Missouri from other
States. Id.
This matter involves similarities to the key points in Hendrik. The Agreements
here are between contracting parties that are residents of different states, both the PostDispatch and Cenveo distribute their materials in states other than Missouri, and both the
Post-Dispatch and Cenveo rely on substantial amounts of paper and other raw materials
that are shipped into Missouri from other states. Consistent with Hendrik, this Court
finds that the Agreements in this matter involve interstate commerce.
In further support of their position, movants argue that the Agreements do not
permit application of the Federal Arbitration Act because the Agreements contain choice
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of law provisions dictating the application of Missouri law to all issues related to the
Agreements. Respondents argue the Agreements merely contain a general choice-of-law
clause that does not preclude application of the Federal Arbitration Act. In fact, each
Agreement contains a choice-of-law clause but it is separate from the arbitration clause
contained in each Agreement.
“Most contracts include a choice-of-law clause, and, thus if each of these clauses
were read to foreclose the application of the substantive law enacted by Congress in the
FAA, the FAA would be applicable in very few cases.” Decker v. Bookstaver,
4:09CV1361 CEJ, 2010 WL 2132284, at *3 (E.D. Mo. May 26, 2010). “Such an
interpretation of the FAA is simply not viable, as it would effectively emaciate the Act
itself.” Id. (citing Ferro Corp. v. Garrison Indus., Inc., 142 F.3d 926, 938 (6th Cir.
1998). “Before interpreting a ‘general state choice-of-law clause in a contract that also
includes an arbitration provision’ as precluding the application of the FAA, the Court
must find that ‘the parties’ intent that the agreement be so construed is abundantly
clear.’” Id. (quoting UHC Management, Co. v. Computer Sciences Corp., 148 F.3d 992,
996-97 (8th Cir. 1998)).
The Court concludes that the Agreements do not manifest a clear intention to
foreclose application of the Federal Arbitration Act. The arbitration clause, which is
separate from the choice-of-law provision, dictates the application of the rules of the
American Arbitration Association rather than the Missouri Uniform Arbitration Act. See
UHC, 148 F.3d at 997 (noting failure to cite state arbitration law in determining that the
agreement did not show intent to preclude application of the FAA). The Agreements’
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general choice-of-law provision states the agreement will be governed by the laws of
Missouri but makes no specific reference to Missouri’s Arbitration Act or Missouri
arbitration case law on the matters, which does not disclose an abundantly clear intent by
the parties to proceed under Missouri’s arbitration provisions rather than the Federal
Arbitration Act. See id.
This Court finds that the Federal Arbitration Act governs. Accordingly, under
section 12 of the Federal Arbitration Act, movants were required to give notice to
respondents of their motion to modify or vacate the arbitration award within three months
after the award was delivered to the parties by e-mail. Sanders-Midwest, 857 F.2d at
1237 (citing 9 U.S.C. § 12). “Notice of a motion to vacate, modify, or correct an award
must be served upon the adverse party or his attorney within three months after the award
is filed or delivered.” 9 U.S.C. § 12. “[T]he Federal Act has made section 12 service of
notice a precondition to judicial review of the Award.” Id. (citing 9 U.S.C. §10, 12). “A
party to an arbitration award who fails to comply with the statutory precondition of
timely service of notice forfeits the right to judicial review of the award.” Piccolo v.
Dain, Kalman & Quail, Inc., 641 F.2d 598, 600 (8th Cir. 1981) (affirming district court’s
order dismissing motion to vacate arbitration award as untimely filed because the motion
was not served within three months of the award). Under the federal law principles
governing this action, movants failed to comply with 9 U.S.C. §2 and their motion will be
denied.

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Movants suggest that an exception to strict conformance with service requirements
under the Federal Arbitration Act is warranted because of its reasonable belief that no
interstate commerce was involved and that the Missouri Act applied which would only
require filing within ninety days and, further, alleges reasonable due diligence of service.
“The Federal Arbitration Act does not provide for any statutory exceptions to the threemonth service requirement.” McClelland v. Azrilyan, 31 F.Supp.2d 707, 710 (W.D. Mo.
1998). “Furthermore, the Eighth Circuit Court of Appeals has questioned the existence
of a ‘due diligence’ exception excusing a party for failing to make a timely motion to
vacate an arbitration award.” Id. (citing Piccolo, 641 F.2d at 601 (discussing Holodnak v.
Avco Corp., 381 F.Supp. 191 (D. Conn. 1974), rev’d in part on other grounds, 514 F.2d
285 (2d Cir. 1975))). Even if there existed a “due diligence” exception, the
circumstances here do not warrant application of any such exception. Movants have
failed to show the existence of any extraordinary circumstances that prevented them from
timely serving the respondents2 or otherwise warrant an exception to the service
requirement. Instead, it appears that movants’ counsel simply overlooked or disregarded
the Federal Arbitration Act’s application to this case and its mandatory service
requirement.
Finally, respondents filed a motion requesting an order confirming the arbitration
award. Under section 9 of the Federal Arbitration Act, if a motion for an order

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It is not necessary to address any issue that might be raised as to respondent Denny’s
alleged unknown move to Florida, as there is nothing that prevented movants from timely
serving Cenveo’s registered agent, which is information that is publicly available on the
Missouri Secretary of State’s website.
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confirming an arbitration award is filed within one year after the award is made, “the
court must grant such an order unless the award is vacated, modified, or corrected” in
accordance with the Federal Arbitration Act. 9 U.S.C. § 9; UHC Management Co., Inc.
v. Computer Sciences Corp., 148 F.3d 992, 997 (8th Cir. 1998); McClelland v. Azrilyan,
31 F.Supp.2d 707, 713 (W.D. Mo. 1998). “A confirmation proceeding under 9 U.S.C. §
9 is intended to be summary: confirmation can only be denied if the award has been
corrected, vacated, or modified in accordance with the Federal Arbitration Act.”
McClelland, 31 F.Supp. at 713 (quoting Taylor v. Nelson, 788 F.2d 220, 225 (4th Cir.
1986)). “Congress did not authorize de novo review of such an award on its merits; it
commanded that when the exceptions do not apply, a federal court has no choice but to
confirm.” UHC Management Co., Inc., 148 F.3d at 997. The Court will, therefore, grant
respondents’ motion and confirm the arbitration award.
Accordingly,
IT IS HEREBY ORDERED that movants’ motion to strike and notice of
objection to respondents’ reply memorandum (ECF #35) is DENIED.
IT IS FURTHER ORDERED that movants’ motion to modify or, in the
alternative, vacate arbitration award (ECF #12) is DENIED.
IT IS FURTHER ORDERED that respondents’ motion to confirm the arbitration
award (ECF #10) is GRANTED. The Court hereby confirms the arbitration panel’s
award.

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IT IS FINALLY ORDERED that judgment shall be entered in accordance with
the Award of Arbitrators, dated January 6, 2014. A separate Judgment will accompany
this Memorandum and Order.
Dated this 19th day of June, 2015.

___________________________________
STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

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