AETREX WORLDWIDE, INC. v. SOURCING FOR YOU LIMITED et al

Filing 30

OPINION. Signed by Judge Dennis M. Cavanaugh on 9/24/13. (gmd, )

NOT FOR PUBLiCATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

Hon. Dennis M. Cavanaugh
AETREX WORLDWIDE, INC.,
OPINION
Plaintiff,
Civil Action No. 13-cv-1943 (DMC)(JBC)
V.

SOURCING FOR YOU, LIMITED and
SOURCING FOR YOU CONSUl TING
LTD,
Defendants.

DENNIS M. CAVANAUGH, U.S.D.J.:
This matter comes before the Court upon the Motion of Defendants Sourcing for You,
Limited and Sourcing for You Consulting, Ltd. (collectively “Defendants”) to Stay this
Proceeding and Compel Arbitration. Pursuant to FED. R. Civ. P. 78, no oral argument was heard.
Based on the following and for the reasons expressed herein, Defendants’ Motion to Stay this
Proceeding and Compel Arbitration is denied.
L

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BACKGROUND
On March 14, 2008, Plaintiff Aetrex Worldwide, Inc. (“Plaintiff’) and Defendants entered

into a supply agreement that contained a non-compete provision. The agreement also contained a
stipulation to arbitrate certain matters, which was set out in Paragraph 14(F) as Ibliows:
Except for an action seeking a temporary restraining order or injunction related to
the purposes of this Agreement, a suit to compel compliance with this dispute
resolution process, or the entry and enforcement of any judgment on any arbitration
award, any dispute, claim or controversy arising out of or relating to this Agreement
or the breach, termination, enforcement, interpretation or validity thereof, including
‘The facts from this section are taken from the parties’ pleadings.

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the determination of the scope or applicability of this Agreement to arbitrate, shall
be determined exclusively by final, binding arbitration
.

On March 28, 2013, Plaintiff filed a Verified Complaint seeking temporary,
preliminary, and permanent relief due to Defendants’ alleged breach of the non-compete
provision (ECF No. 1). Plaintiff also tiled a Brief in Support of Order to Show Cause with
Temporary Restraints (Id.).

On April 4, 2013, Defendants filed a Motion to Stay the

Complaint and Compel Arbitration (ECF No. 7). The Court denied Defendants’ Motion on
April 16, 2013, finding that the arbitration exclusion set forth above was applicable (ECF
No. 12). Two days later, on April 18, 2013. Plaintiff withdrew its Motion for a preliminary
injunction (ECF No. 14). Defendants filed the instant Motion to Stay this Proceedinu and
Compel Arbitration on May 14. 2013 (Def.s Mot..” ECF No. 21). Plaintiff tiled a l3rief
in Opposition on .Tune 3, 2013 (“Pl.’s Opp’n,” ECF No. 25). Defendants filed a Reply Brief
on June 10, 2012 C’Def.’s Reply,” ECF No. 26).

IL

STANDARD OF REVIEW
When deciding whether a matter must be submitted to arbitration, courts must make two

determinations: “(1) that a valid agreement to arbitrate exists, and (2) that the Particular dispute
falls within the scope of that agreement.” Washington v. CentraState I-lealthcare Sys., Inc., No.
10-6279. 2011 WL 1402765. at *4 (D.N.J. Apr. 13. 2011). When a contract contains an
arbitration clause, a presumption of validity arises, which can only he overcome if the court can
determine with positive assurance that the clause does not cover the dispute at issue. AT & T
Technologies v. Communications Workers of America, 475 U.S. 643, 650 (1986). Further, if a
plaintiff “seeks relief in federal court for a claim that is subject to an arbitration agreement. the
defendant is entitled to a stay of the court proceeding pending

arbitration.

and to an order

compelling arbitration.” In re EnCap Golf Holdings. LLC, No. .08-51 78, 2009 WL 2488266, at
*2 (D.NJ. Aug. 10, 2009).
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DISCUSSION
In the instant case, neither party argues that a valid agreement to arbitrate does not exist.

Thus, the Court’s only inquiry is whether the parties’ particular dispute falls into the scope of
their arbitration agreement. The parties’ disagreement revolves around the following wording in
Paragraph 14(F) of their contract: Except for an action seeking a teinporari’

rc.1raining

o,’c/er

01’

injunction...any dispute, claim or controversy arising out of or relating to this Agreement.
shall be determined exclusively by final, binding arbitration.” Plaintiff contends that this
language includes both preliminary and permanent injunctions (Pl.’s Opp’n at 6). Defendants,
however, claim that the word lemporary” modifies both ‘restraining order” and “injunction,”
and thus argue that the world “injunction” does not include permanent injunctions (Def. ‘s Mot, at
7).
Defendants point to various case law for the proposition than “an ‘initial modiler’
adjective is deemed to modify each of the nouns or phrases it precedes” (DeL’s Reply at 3). For
example, the Sixth Circuit found that the phrase “negligent act, error or omission” covered only
negligent as opposed to intentional conduct. U.S. Fid. & Guar. Co. v. Fireman’s Fund ins. Co.,
896 1 2d 200, 203 (6th Cir 1990) See also Washmgton Educ Ass’n

‘

Nati Right to Woik

187 F App’x 681 682 (9th Cir 2006) (‘Undci geneialh acceplcd iulcs
of syntax, an initial modifier ‘will tend to

govern

all elements in the series unless it is repeated

for each element,’” (citation omitted)). In the present case, however, a plain reading of the
disputed contract provision shows that the word “temporary” is not an initial modifier adjective;
rather, it is an integral part of the phrase “temporary restraining order.” It is unreasonable to

suggest that the parties only intended the provision to cover preliminary and not permanent
injunctions, yet did not include the world “preliminary” in front of the word

‘ifljUflCtiOfl’

Therefore, this Court finds that the disputed contract provision unambiguously covers permanent
injunctions.

Accordingly. Defendants’ Motion to Stay this Proceeding and Compel Arbitration is

denied.

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CONCLUSION
For the foregoing reasons, Defendants’ Motion to Stay this Proceeding and Compel

Arbitration is denied.

Date:
cc:

September, 2013
Clerk’s Office
All Counsel of Record
Hon. Mark Falk. U.S.M.J.

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