MAZUR v. MILO'S KITCHEN, LLC et al
Filing
130
AMENDED MEMORANDUM OPINION & ORDER granting 101 MOTION to Stay Action as to 3rd Party Complaint and Compel Arbitration MOTION to Compel filed by NOVA WORLD INC. Signed by Magistrate Judge Maureen P. Kelly on 12/17/2013. (bb)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
In re Milo's Kitchen Dog Treats
Consolidated Cases,
)
)
) Civil Action No. 12-1011
)
) Judge Cathy Bissoon
) Magistrate Judge Maureen P. Kelly
)
) Re: ECF No. 101
)
)
AMENDED MEMORANDUM OPINION AND ORDER
KELLY, Magistrate Judge
This consolidated action, merged solely for the purpose of pretrial proceedings, is
comprised of four cases brought against Defendants Milo’s Kitchen, LLC (“Milo’s”) and Del
Monte Corporation d/b/a Del Monte Foods (“Del Monte”) (collectively, “Defendants”), which
manufacture, market, distribute and/or sell chicken jerky dog treats. The four individual cases
have been brought by customers who purchased the treats and whose dogs became sick and/or
died after consuming the treats.1
On August 8, 2013, Defendants filed a Third Party Complaint, ECF No. 78, against Nova
World, Inc. (“Nova World”), alleging that, pursuant to a Supply Agreement entered into between
Del Monte and Nova World, Nova World was the exclusive manufacturer of the chicken jerky
dog treats sold by Del Monte and that Nova Worlds breached the Supply Agreement by failing to
manufacture the product in accordance with the terms set forth therein. Nova World filed a
Motion to Stay Action as to the Third-Party Complaint of Del Monte Corporation and Milo’s
Kitchen, LLC and Compel Arbitration Pursuant to the Federal Arbitration Act (“the Motion”),
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C.A. No. 12-1011 has been brought by Plaintiff Lisa Mazur; C.A. No. 13-518 has been brought by Plaintiff
Maxine S. Ruff; C.A. No. 13-519 has been brought by Plaintiff Mary Emily Funke; and C.A. No. 13-709 has been
brought by Plaintiff Christopher V. Langone (“Langone”).
ECF No. 101, on October 17, 2013, which is presently before the Court. For the reasons that
follow, the Motion will be granted.2
I.
STANDARD OF REVIEW
In deciding a motion to compel arbitration, the inquiry, like that in deciding a motion for
summary judgment, is whether there is a A>genuine issue of fact concerning the formation of the
agreement= to arbitrate.@ Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 159 (3d
Cir. 2009), quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir.
1980). Only where no such issue exists should the motion be granted. Id. AIn making this
determination, the party opposing arbitration is entitled to >the benefit of all reasonable doubts
and inferences that may arise.=@ Id.
II.
DISCUSSION
It is undisputed that the Supply Agreement at issue contains an arbitration clause which
provides that:
MEDIATION AND ARBITRATION: If any dispute or
disagreement arises between the parties in respect of this Agreement, they
must follow the procedures set forth herein. The party claiming that such a
dispute exists must give notice in writing (“Notice of Dispute”) to the other
party of the nature of the dispute. Within ten (10) days of issuance of the
Notice of Dispute, representatives of the parties must meet in a good faith
effort to resolve the dispute. If any dispute remains unresolved twenty (20)
days after issuance of the Notice of Dispute, then either party may demand
that such dispute be resolved by binding arbitration conducted in
accordance with the Rules for Commercial Arbitration of the American
Arbitration Association (“AAA”), as amended from time to time.
2
It is well-settled that a motion to stay is a non-dispositive matter and appropriately ruled upon by a federal
magistrate judge. See Ball v. SCI Muncy, 2012 WL 2805019, at *1 (M.D. Pa. July 10, 2012); Delta Frangible
Ammunition, LLC v. Sinterfire, Inc., 2008 WL 4540394, at *1 n. 1 (W.D. Pa.Oct.7, 2008). See also 28 U.S.C. §
636(b)(1). With respect to a motion to compel arbitration, the only federal appeals court to address the matter is the
United States Court of Appeals for the First Circuit which has found that, because the court still retains authority
after the arbitration has run its course to make orders with respect to the arbitral award, it is properly considered a
non-dispositive motion. Powershare, Inc. v. Syntel, Inc., 597 F.3d 10, 14 (1st Cir. 2010). Although the district
courts that have decided the issue are divided, see Chatman v. Pizza Hut, Inc., 2013 WL 2285804, at *2 n.1 (N.D.
Ill. May 23, 2013), this Court finds the First Circuit’s reasoning persuasive. Accordingly, this Memorandum
Opinion and Order follows.
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Arbitration shall take place before a single arbitrator mutually selected by
the parties, and the prevailing party shall be awarded its costs and
reasonable attorneys’ fees. The place for arbitration shall be San Francisco,
California. In the event the parties are unable to reach agreement on an
arbitrator within fifteen (15) days of a demand for arbitration made by one
party to the other, the AAA shall select the arbitrator upon application by
either party.
ECF No. 78-3, p. 20, ¶ 20.
Nova World contends that because the claims raised by Defendants in the Third-Party
Complaint are premised on allegations of malfeasance by Nova World under the Supply
Agreement, they are “in respect of” the Supply Agreement and covered by the arbitration clause.
Accordingly, Nova World argues that Del Monte is obligated to arbitrate its claims and should be
compelled to do so by this Court pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq.
The Federal Arbitration Act, 9 U.S.C. '' 1 et seq. (AFAA@), creates a
body of federal substantive law establishing and governing the duty to
honor agreements to arbitrate disputes. . . . In particular, the FAA provides
that as a matter of federal law A[a] written provision@ in a maritime or
commercial contract showing an agreement to settle disputes by arbitration
Ashall be valid, irrevocable, and enforceable, save upon such grounds as
exist in law or in equity for the revocation of any contract.@ 9 U.S.C. ' 2.
Century Indem. Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 522 (3d Cir.
2009) (internal citations omitted). Although there is a strong federal policy favoring arbitration,
the FAA nevertheless requires the court to first determine: (1) whether the parties entered into a
valid agreement to arbitrate; and (2) whether the dispute at issue falls within the scope of that
agreement. Id. at 523, citing Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d at 160.
In this case, Defendants do not dispute that the arbitration clause contained in the Supply
Agreement is valid and enforceable. They do dispute, however, whether the claims raised in the
Third-Party Complaint fall within the scope of the Supply Agreement and thus whether they are
subject to the arbitration clause. In particular, Defendants argue that the language requiring that
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only disagreements arising “in respect of this Agreement” be arbitrated must be narrowly
construed, and that the dispute in this case -- whether the chicken jerky treats were contaminated
or otherwise defective -- have nothing to do with the Supply Agreement. The Court disagrees.
First, Defendants have not provided the Court with any authority, nor has the Court
uncovered any, to support their position that the language “in respect of this Agreement” should
be construed any more narrowly than language typically found in arbitration clauses, i.e., that it
covers disputes “arising out of or relating to” the agreement. Rather, Defendants simply
conclude that “arising out of or relating to” reflects the parties’ intent to submit all disputes to
arbitration while “in respect of this Agreement” indicates the parties intent to arbitrate only a
limited number of disputes. Defendants’ argument appears to be based on the mere fact that the
language differs. The fact that the language is not identical, however, does not by itself require
the conclusion that “in respect of” should be construed more narrowly. Indeed, if anything, the
Court finds that “in respect of this Agreement” to be the broader language.
Second, contrary to Defendants’ argument, the Court finds that the claims raised in the
Third-Party Complaint are very much entwined in the Supply Agreement. Defendants have
alleged in the Third-Party Complaint, and review of the Supply Agreement confirms, that
pursuant to the Supply Agreement, Nova World and/or its subcontractors, agents or
representatives manufactures, processed and prepared the chicken jerky treats sold by Del
Monte; that Nova World was to provide all the required ingredients, material and equipment
necessary to manufacture the chicken jerky treats; that Nova World was required to manufacture
the treats pursuant to Del Monte’s specifications and agreed to use materials which conformed to
those specifications; that the specifications require that the products and/or materials used shall
conform in every respect to the requirements of the Federal, Food, Drug and Cosmetic Act, State
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Regulations; that Nova World was to comply with all applicable laws, rules and regulations
including those pertaining to product safety and health; and that Nova World guaranteed that no
product sold to Del Monte would be adulterated or misbranded. ECF No. 78, ¶¶ 23-30. See
ECF No. 78-3. Defendants further allege that Plaintiff’s claims, if proven, “arise (whether in
whole or part) out of Nova World’s conduct pursuant to the terms of the Supply Agreement and
engaging in other acts and omissions in violation of the Supply Agreement,” and that Nova
World’s breach of the Supply Agreement has and will cause Del Monte to incur significant
expenses. Id. at ¶¶ 31, 32. Moreover, Del Monte has alleged, and the Supply Agreement
provides, that Nova World has agreed to indemnify Del Monte against any claim, loss, damage,
liability or expense for bodily injury, death, property damage or damage to brand reputation . . .
where such injury, death or damage is caused by any Products, ingredients or materials furnished
by [Nova World] . . . not in compliance with Specifications, and by any negligence of [Nova
World], or by any act or omission on part of [Nova World] . . . in violation of this [Supply
Agreement]. Id. at ¶¶ 33, 34. See ECF No. 78-3. Accordingly, Del Monte has brought claims
against Nova World for contribution (Count I), contractual indemnification (Count II), implied
indemnification (Count III), breach of contract (Counts IV and V), breach of express warranty
(Count VI), breach of implied Warranty (Count VII), and breach of implied warranty of fitness
for a particular purpose (Count VIII).
Thus, all of the claims raised in the Third-Party Complaint are based on Nova World’s
alleged violations of the Supply Agreement. Under these circumstances it is difficult to give any
countenance to Defendants’ argument that their claims brought against Nova World, fall outside
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the scope of the Supply Agreement.3 Because the dispute between Del Monte and Nova World
clearly fall within the scope of the Supply Agreement, they are subject to the arbitration clause.
Del Monte nevertheless argues that Nova World’s Motion should be denied because
Nova World failed to comply with the provisions of the arbitration clause requiring that a Notice
of Dispute be given and a meeting be convened within ten days in an effort to resolve the issue
before a demand for arbitration may be made.
The record shows that Nova World contacted Del Monte by letter dated January 25,
2013, indicating therein that the Supply Agreement required the parties to meet and confer about
any disputes that arise out of the Supply Agreement and that Nova World would like to arrange
such a meeting in the near future.4 ECF No. 125-2, p. 2. Del Monte responded in a letter dated
January 31, 2013, stating that it recognized, and was amenable to, its obligation under the Supply
Agreement to meet and confer and invited Nova World to contact Del Monte to schedule such a
meeting. ECF No. 125-2, p. 8. Del Monte also referenced “the alternative possibility of
litigation.” Id. On February 8, 2013, Nova World responded in a letter dated February 8, 2013,
stating that it “shares Del Monte’s interest in having an open and honest discussion about the
issues . . . but continues to contend that more information is necessary in order to have that
meeting. Id. at p. 9. Nova World reiterates at the end of the letter that it wishes to invoke the
meet and confer provision contained in the Supply Agreement but “must have the entirety of the
information available to Del Monte before arranging the meeting.” Id. at pp. 10-11. The next
contact is memorialized in an e-mail from Nova World, apparently in response to an e-mail for
3
Moreover, contrary to Defendants’ argument, the fact that Nova World has a duty to produce safe dog treats under
the FDA regulations and/or tort law and would have a duty to indemnify Del Monte irrespective of the Supply
Agreement, neither negates the terms of the Supply Agreement and Nova World’s obligations thereunder nor the
fact that the claims raised by Defendants in the Third-Party Complaint are “in respect of” the Supply Agreement.
4
Contrary to Nova World’s suggestion in its Reply Brief, it did not provide available dates to meet and confer in its
January 25, 2013 letter. See ECF No. 125-1, p. 3; ECF No. 125-2, p. 4.
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Del Monte, in which counsel for Nova World indicates that he could be in San Francisco on
various dates in April and May, 2013. Id. at p. 12. It is apparent from the e-mail, however, that
Del Monte had already filed the Third-Party Complaint against Nova World. Id.
Although no document expressly entitled a “Notice of Dispute” was provided by either
party to the other, it is apparent from the above correspondence that both parties were well aware
of the nature of the dispute and were cognizant of and proceeding under the arbitration clause.
Although it is not at all clear why the requisite meeting did not take place, it appears that both
parties have been recalcitrant in arranging a specific time to meet and confer and that more than
twenty days have passed since “notice” of the dispute was given. Under these circumstances, the
Court declines to find Nova World’s demand for arbitration premature.
III.
CONCLUSION
For the foregoing reasons, Defendants’ Motion will be granted.5 Accordingly, the
following Order is entered:
AND NOW, this 17th day of December, 2013, upon consideration of Nova World’s
Motion to Stay Action as to the Third-Party Complaint of Del Monte Corporation and Milo’s
Kitchen, LLC and Compel Arbitration Pursuant to the Federal Arbitration Act, ECF No. 101,
IT IS HEREBY ORDERED that the Motion is GRANTED;
IT IS FURTHER ORDERED that the action as to the Third-Party Complaint filed by Del
Monte Corporation and Milo’s Kitchen, LLC against Nova World, Inc. and the counterclaim
filed by Third-Party Defendant Nova World, Inc. is STAYED;
5
In so finding, the Court is cognizant of the fact that Milo’s is not a signatory to the Supply Agreement and thus is
not obligated to arbitrate any claims it purports to have against Nova World. As pointed out by Nova World,
however, the Third-Party Complaint is completely devoid of any facts to support a claim by Milo’s against Nova
World. As such, notwithstanding the fact that the Third Party Complaint was brought on behalf of Del Monte and
Milo’s, it does not appear that there will be any conflict or prejudice to any party by compelling Del Monte to
arbitrate its claims against Nova World.
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IT IS FURTHER ORDERED that Defendant Del Monte Corporation and Third-Party
Defendant Nova World, Inc. are hereby COMPELLED to submit their dispute to arbitration in
accordance with the terms of the Supply Agreement;
IT IS FINALLY ORDERED that this Order shall in no way affect the action as between
Plaintiffs and Defendants Del Monte Corporation and Milo’s Kitchen, LLC, including obtaining
any appropriate discovery from Nova World, if necessary.
In accordance with the Magistrate Judges Act, 28 U.S.C. § 636(b)(1), and Rule 72.C.2 of
the Local Rules of Court, the parties are allowed fourteen (14) days from the date of this Order to
file an appeal to the District Judge which includes the basis for objection to this Order. Any
appeal is to be submitted to the Clerk of Court, United States District Court, 700 Grant Street,
Room 3110, Pittsburgh, PA 15219. Failure to file a timely appeal will constitute a waiver of any
appellate rights.
BY THE COURT:
/s/ Maureen P. Kelly
MAUREEN P. KELLY
UNITED STATES MAGISTRATE JUDGE
cc:
The Honorable Cathy Bissoon
United States District Judge
All counsel of record via CM/ECF
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