Marker Volkl (International) GmbH v. Epic Sports International, Inc. et al
Filing
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OPINION AND ORDER CONFIRMING ARBITRATION AWARD. Marker Volkl's petition to confirm the arbitration award is granted, and Respondents' counterclaims are dismissed. The Clerk shall enter judgment against Respondents in the amount stated in the Final Award, mark Petitioner's motion to dismiss terminated (Doc. No. 12), and mark the case closed, and as further set forth. (Signed by Judge Alvin K. Hellerstein on 4/30/2013). (rjm)
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USDCSD~Y
DOCtIMENT
iJ:LECTRONlt.:ALLY FILED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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DOC #:--~=r--f-:~
DATE FILED:
'57//13
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MARKER YOLKL (INTERNATIONAL) GMBH,
OPINION AND ORDER
CONFIRMING ARBITRATION
AWARD
Petitioner,
.against
12 Civ. 8729 (AKH)
EPIC SPORTS INTERNATIONAL, INC. and
CAPSTONE BUSINESS CREDIT, LLC,
Respondents .
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)(
ALYIN K. HELLERSTEIN, U.S.DJ.:
Marker Ylilkl (International) GmbH ("Marker YOIkl"), a Swiss corporation,
petitions pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, as codified in 9 U.S.c. § 201, et seq., (the "New York Convention" or "Convention"),
to confirm the final arbitration award of November 6, 2012 (the "Final Award"), in its dispute
'l';1th two American companies, Epic Sports International, Inc. ("Epic") and Capstone Business
Credit, LLC ("Capstone"). Petitioner moves for entry of money judgment against Respondents in
the amount stated in the Final A ward. Respondents answer by raising various counterclaims and
requesting that judgment be stayed pending adjudication of these same counterclaims in New
York Supreme Court. Petitioner moves to dismiss Respondents' counterclaims or, alternatively,
to enter final judgment on the petition pursuant to Fed. R. Civ. P. 54(b).
On October 1, 2008, Marker Yolkl entered into a license agreement with Epic, a
Nevada corporation, to sell and distribute Marker Yolkl tennis gear (the "Agreement"). Marker
Yolkl also entered into a guarantee agreement with Capstone, a New York corporation, whereby
Capstone guaranteed Epic's financial obligations to Marker Volkl. Both agreements provided for
the arbitration of disputes in accordance with the Swiss Rules of International Arbitration.
On September 9, 2011, Marker VOlkl terminated the license Agreement with Epic
and demanded payment for outstanding royalties. Epic and Capstone refused payment. On
February 10, 2012, Marker Volkl initiated an arbitration in Switzerland before Arbitrator
Joachim Knoll. In response, Epic raised a series of counterclaims alleging that after terminating
the Agreement, Marker Volkl continued to sell and distribute tennis racquets designed and
manufactured from molds created by Epic. Epic claimed that Marker Volkl thereby
misappropriated Epic's intellectual property. Epic also filed a separate action in New York
Supreme Court based on these counterclaims (the "State Court Aetion"). Epic Sports Inn. Inc.
flk/a Klip America, Inc., et al. v. Sean Frost. et aI., Index No. 651599/2012 (Sup. Ct. N.Y.
County 2012). The Arbitrator requested clarification on his jurisdiction to hear Epic's
counterclaims and Respondents subsequently withdrew their claims from the arbitration
proceedings entirely.
On November 6,2012, the Arbitrator issued a ""Titlen award finding that Marker
Volk! had a legitimate contractual reason to terminate the Agreement. The Final Award required
Respondents to pay Marker V olkl EUR 300,000 plus interest and partial compensation for legal
and arbitration costs. Pursuant to Article 32(2) of the Swiss Rules of Arbitration and Article
190( I) of the Swiss Private International Law Act, the arbitration award is "final and binding on
the parties."
On April 22, 2013, the New York Supreme Court dismissed Epie's State Court
Action for lack of personal jurisdiction and ineffective service. Epic Sports In!'l, Index No.
65159912012 at 10 (Apr. 22, 2013). The New York Court held that Epic's claims of
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misappropriation of its intellectual property did not arise from "any action that took place in
connection with the [Agreement]." Id. at 10. The court also rejected the claim that Marker Volkl
misappropriated Epic's intellectual property, finding that "there was no protected intellectual
property." Id. at II.
This Court has jurisdiction and authority to enforce a foreign arbitration award in
a dispute between the corporations of two nations that have signed and ratified the New York
Convention. 9 U.S.C. §§ 203, 207. Switzerland ratified the Convention in 1965; the United
States in 1970. A federal court's review of an arbitration award is "severely limited so as not to
frustrate the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and
expensive litigation," Scandinavian Reinsurance Co. Ltd. v. Saint Paul Fire & Marine Ins. Co.,
668 F.3d 60,71-72 (2d Cir. 2012) (internal citations and quotation marks omitted). "The
confirmation of an arbitration award is a summary proceeding that merely makes what is already
a final arbitration award a judgment of the court." Florasynth, Inc. v. Pickholtz, 750 F.2d 171,
176 (2d Cir. 1984).
Pursuant to 9 U.S.c. § 207, this Court "shall confirm [an arbitral award falling
under the New York Convention] unless it finds one of the grounds for refusal or deferral of
recognition or enforcement of the award specified in the Convention." The New York
Convention provides only seven limited bases upon which a court may decline to "recogni[ze]
and enforce[]" an arbitration award:
I. The parties to the agreement. .. were ...under some incapacity, or the said agreement is
not valid under the law to which the parties have subjected it. .. ; or
2. The party against whom the award is invoked was not given proper notice ... ofthe
arbitration proceedings or was otherwise unable to present his case; or
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3. The award ...eontains decisions on matters beyond the scope of the submission to
arbitration... ; or
4. The composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties ... ; or
5. The award has not yet become binding on the parties, or has been set aside or
suspended ... ; [or]
6. The subject matter of the difference is not capable of settlement by arbitration under
the law of [the country where recognition and enforcement is sought]; or
7. The recognition or enforcement of the award would be contrary to the public policy
of [the country where recognition and enforcement is sought].
New York Convention art. V(I). The party opposing enforcement has the burden to prove one of
these limited defenses. Zeiler v. Deitsch, 500 F.3d 157 (2d Cir. 2007).
Respondents' counterclaims do not implicate any of the seven possible defenses
to recognition and enforcement of the arbitration award. Respondents' counterclaims involve an
alleged misappropriation of intellectual property after termination of the Agreement. As noted by
the New York Supreme Court, the alleged misappropriation does not arise from "any action ... in
connection with the [Agreement]." Epic Sports Int'l, Index No. 651599/2012 at 10 (Apr. 22,
2013), Having been dismissed by the New York court, Respondents' counterclaims have been
adjudicated and cannot constitute a sound reason to justify delay. Respondents themselves
admitted, in withdrawing these claims from the arbitration proceeding, that the counterclaims
"are not subject to [the Arbitrator's] jurisdiction" and "are not subject to the arbitration
agreement." Final Award ~ 32.
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In the absence of proof that one of the seven defenses to recognition and
enforcement of the arbitral award applies, a district court "shall confirm the award." 9 U.S.C. §
207. "Actions to confirm arbitration awards ...are straightforward proceedings in which no other
claims are to be adjudicated....[T]he court properly may consider only the statutory bases for
modifying or vacating an award and challenges to the award's clarity. Ottley v. Schwartzberg,
819 F.2d 373, 377 (2d Cir. 1987); see also Yusuf Ahmed Alghanim & Sons v. Toys nR n Us. Inc.,
126 F.3d 15,20 (2d Cir. 1997) ("the grounds for relief enumerated in Article V of the
Convention are the only grounds available for setting aside an arbitral award"); Int'l Trading &
Indus. Inv. Co. v. DynCom Aerospace Tech., 763 F. Supp. 2d 12, 28 (D.D.C. 2011) ("Under
Article V of the Convention, the Court's refusal to confirm an arbitral award is limited to only
those situations where a party furnishes proof that one of the enumerated provisions applies")
(internal quotation marks omitted); Zeiler, 500 F.3d at 169 (limiting proceedings to confirm
awards to a consideration of "the limited statutory conditions for confirmation or grounds for
refusal to co nfirm").
To allow Respondents to raise counterclaims unrelated to the statutorily
enumerated defenses and already adjudicated by the New York Supreme Court would raise
serious res judicata concerns and frustrate the goals of arbitration-to settle disputes efficiently
and avoid litigation-and the "principal purpose" of the New York Convention-"to encourage
the recognition and enforcement of commercial arbitration agreements in international
contracts." Int'l Trading, 763 F. Supp. 2d at 28. Confirmation of an arbitral award "under the
Convention is a summary proceeding in nature, which is not intended to involve complex factual
determinations, other than a determination of the limited statutory conditions for confirmation or
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grounds for refusal to confirm." Zeiler, 500 F.3d at 169. Respondents' counterclaims ought to be,
and indeed were, litigated as a separate action.
Marker Volkl's petition to confirm the arbitration award is granted, and
Respondents' counterclaims are dismissed. The Clerk shall enter judgment against Respondents
in the amount stated in the Final Award, mark Petitioner's motion to dismiss terminated (Doc.
No. 12), and mark the case closed.
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SO ORDERED
Dated:
April "." 2013
New York, New York
VIN K. HELLERSTEIN
United States District Judge
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