DXP Enterprises, Inc. v. Goulds Pumps, Inc.
Filing
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MEMORANDUM AND ORDER entered GRANTING 9 MOTION to Dismiss Or, In The Alternative MOTION to Stay Litigation Pending Arbitration. No later than November 21, 2014, the parties are to file statements of no more than 3 pages identifying any reasons this case should not be dismissed without prejudice in favor of arbitration. (Signed by Judge Lee H Rosenthal) Parties notified.(leddins, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DXP ENTERPRISES, INC.,
Plaintiff,
v.
GOULDS PUMPS, INC.,
Defendant.
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CIVIL ACTION NO. H-14-1112
MEMORANDUM AND ORDER
Goulds Pumps, Inc. (“Goulds”) invoked the arbitration clause in the Distributor Agreement
it signed with DXP Enterprises, Inc. (“DXP”), seeking an order from an arbitrator allowing it to
terminate the Agreement. DXP sued Goulds in state court, seeking a preliminary and permanent
injunction to prevent Goulds from terminating the Distributor Agreement and to stay the arbitration.
The state court judge denied DXP’s claim for a preliminary injunction, and Goulds timely removed
to federal court.
Goulds now moves to dismiss DXP’s claim for a permanent injunction, contending that this
claim must be arbitrated. (Docket Entry No. 9). At issue is a provision within the arbitration clause
the parties signed allowing either party to apply to a court for equitable remedies “notwithstanding”
the requirement to arbitrate. The court held oral argument on the motion.
Based on the pleadings; the motion, response, reply; the arguments of counsel; and the
relevant law, this court grants Goulds’s motion to dismiss or to stay, (Docket Entry No. 9). The
reasons are explained below.
I.
Background
In July 2010, DXP, an industrial equipment dealer, and Goulds, a manufacturer of pumps,
parts, and accessories, signed a Distributor Agreement. The Agreement gave DXP the right to sell
and promote certain lines of Goulds products, including API oil and gas pumps. Section 7.C of the
Agreement prohibited DXP from selling or promoting products that competed with the Goulds
products covered by the Distributor Agreement.
(Docket Entry No. 9, Ex. 1, Distributor
Agreement).
The Distributor Agreement contained the following arbitration clause:
Any controversy or claim arising out of or related to this Agreement
or the breach thereof shall be resolved if possible by negotiations
between Manufacturer and the Distributor during a ninety (90) day
period from written notice of the claim or controversy. If such
negotiations do not resolve the controversy or claim, then the claim
or controversy shall be finally settled by conciliation or arbitration,
commenced within one hundred and twenty (120) days after the
expiration of the ninety (90) day period, in the English language.
Conciliation or arbitration shall be held in New York City, United
States of America, at an office designated by the American
Arbitration Association, conducted by a conciliator or arbitrator
knowledgeable about commercial contracts and business law
appointed under the Commercial Rules of the American Arbitration
Association who will conduct the conciliation or arbitration in
accordance with the governing law of this agreement. Judgment
upon an arbitration award may be entered in any court having
jurisdiction or application for a judicial acceptance of the arbitration
award or an order of enforcement as the case may be. Costs of
arbitration shall be borne equally by the Parties. Notwithstanding the
foregoing, either Manufacturer or Distributor may apply to a court of
competent jurisdiction for the imposition of an equitable remedy
(such as a Restraining Order or Injunction) upon a showing of the
elements necessary to sustain such a remedy.
(Distributor Agreement at Section 23).
The Distributor Agreement allowed Goulds to terminate the Agreement with or without
cause after written notice given 90 days in advance. (Distributor Agreement at Section 17). It also
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allowed Goulds to terminate the Agreement if DXP failed to comply with its obligations and did not
cure its breach within 10 days after receiving written notice of the violation. (Id.).
In 2013, Goulds informed DXP that it would begin selling its API oil and gas products
directly to customers, rather than working with distributors. (Docket Entry No. 1, Ex. B, Original
Petition at 3–4). DXP objected. DXP claims that, in response to its objections, Goulds agreed to
remove API products from the scope of the Distributor Agreement and to allow DXP to sell and
promote API products that competed with Goulds’s lines. (Id. at 4). DXP also claims that Goulds
has not consistently enforced the noncompete clause in its contracts with DXP and with other
distributors. (Id. at 8–10).
On December 9, 2013, DXP announced it would purchase B27, LLC, a company that makes
API oil and gas pumps. (Id. at 11). Goulds told DXP on December 13, 2013 that the purchase
would violate Section 7.C of the Distributor Agreement. (Original Petition, Ex. C). Despite
Goulds’s objections, DXP went forward and purchased B27 on January 2, 2014. On January 16,
2014, Goulds sent DXP a letter stating that DXP had violated Section 7.C of the Distributor
Agreement. (Id., Ex. D).
On April 8, 2014, Goulds demanded arbitration before the American Arbitration Association
(“AAA”), seeking an award declaring that it was entitled to terminate the Distributor Agreement
because DXP had breached the noncompete clause. The arbitration is pending.
On April 15, 2014, DXP sued Goulds in state court, seeking a temporary restraining order
and a preliminary and permanent injunction preventing Goulds from terminating the Distributor
Agreement. DXP claimed that Goulds’s attempt to terminate the Distributor Agreement violated
the Texas Dealers Act, which requires 180 days’ prior written notice and good cause to terminate
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a distributor agreement. TEX. BUS. & COMM. CODE, § 57.001 et seq. (Original Petition at 4).
Goulds disputes that the Texas Dealers Act applies. The state court judge held a hearing on April
22, 2014, and denied the injunction, finding that DXP faced no threat of irreparable injury because
Goulds had agreed not to terminate the Distributor Agreement until the arbitration had conclusively
resolved the contractual dispute. (Docket Entry No. 9, Ex. 2).
Goulds timely removed to federal court on the basis of diversity of citizenship. At a hearing,
the parties informed the court that Goulds had agreed not to terminate the Distributor Agreement
unless the arbitrator issued an award in its favor. Based on this stipulation, the court denied DXP’s
motion for a preliminary injunction and DXP withdrew its motion to stay the arbitration. (Docket
Entry Nos. 14, 27). DXP’s application for a permanent injunction remains. DXP argues that an
order from the arbitrator permitting Goulds to terminate the Distributor Agreement would violate
the Texas Dealers Act and cause it to suffer irreparable injury. (Docket Entry No. 24). Goulds has
moved to dismiss or alternatively to stay DXP’s claim for an injunction, arguing that it must be
resolved in arbitration. (Docket Entry No. 9).
II.
The Applicable Legal Standards
The Federal Arbitration Act (“FAA”) requires district courts to direct parties to arbitrate
issues covered by a valid arbitration agreement. 9 U.S.C. §§ 3, 4; see also Dean Witter Reynolds,
Inc. v. Byrd, 470 U.S. 213, 218 (1985). The arbitrability of disputes is a matter of contract law; a
court cannot compel a party to arbitrate unless the parties agreed to arbitrate the dispute in question.
See, e.g., Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1064 (5th Cir.
1998). A court asked to compel arbitration must first determine whether the parties agreed to
arbitrate the dispute. Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614,
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625–26 (1985); JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007).
The court must consider validity — “whether there is a valid agreement to arbitrate between the
parties” — and scope — “whether the dispute in question falls within the scope of that arbitration
agreement.” Conegie, 492 F.3d at 598. Both validity and scope are governed by the “ordinary statelaw principles that govern the formation of contracts.” First Options of Chicago Inc. v. Kaplan, 514
U.S. 938, 944 (1995).
Federal policy strongly favors enforcing arbitration agreements. Dean Witter Reynolds, 470
U.S. at 217; Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Because
of the strong presumption in favor of arbitration, “a party seeking to invalidate an arbitration
agreement bears the burden of establishing its invalidity.” Carter v. Countrywide Credit Indus., Inc.,
362 F.3d 294, 297 (5th Cir. 2004); see also Grant v. Houser, 469 F. App’x 310, 315 (5th Cir. 2012)
(per curiam) (noting the strong presumption in favor of arbitration).
A court must stay litigation of “any issue referable to arbitration under an agreement in
writing for such arbitration.” 9 U.S.C. § 3. If a mandatory stay is not available under section 3, a
court may exercise its discretion to stay litigation if it involves issues closely related to those subject
to arbitration, as a means of controlling and managing the docket and to preserve the purpose of the
arbitration. See Complaint of Hornbeck Offshore (1984) Corp., 981 F.2d 752, 755 (5th Cir. 1993)
(citing Moses H. Cone Mem’l Hosp., 460 U.S. at 20 n.23).
“The overarching purpose of the FAA, evident in the text of §§ 2, 3, and 4, is to ensure the
enforcement of arbitration agreements according to their terms . . . .” AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740, 1748 (2011). The section 3 mandatory stay provision furthers this
purpose by preventing a party from litigating a claim that it is bound to arbitrate. This typically
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arises when a plaintiff sues a defendant over a claim subject to the parties’ arbitration agreement.
See Mendez v. Puerto Rican Intern. Cos., Inc., 553 F.3d 709, 712 (3d Cir. 2009) (“Section 3 is
drafted to fit the paradigm situation in which a motion for a stay pending arbitration occurs — a
plaintiff brings suit on a claim involving an issue it is obligated to arbitrate under an agreement in
writing with a defendant and that defendant seeks to stay the litigation pending arbitration.”). If the
plaintiffs were able to litigate a claim that was subject to arbitration, “the arbitration proceedings
would be both redundant and meaningless . . . [and] thwart[] the federal policy in favor of
arbitration.” Harvey v. Joyce, 199 F.3d 790, 796 (5th Cir. 2000).
III.
Analysis
The issue is whether the provision allowing the parties to pursue an injunction permits DXP
to avoid arbitrating its claim for a permanent injunction covering the same issues that Goulds seeks
to arbitrate — whether DXP properly terminated the parties’ Agreement.1
The provision states: “[n]otwithstanding the foregoing, either Manufacturer or Distributor
may apply to a court of competent jurisdiction for the imposition of an equitable remedy (such as
a Restraining Order or Injunction) upon a showing of the elements necessary to sustain such a
remedy.” This provision is part of a broad arbitration clause stating: “[a]ny controversy or claim
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Goulds has urged this court to reject DXP’s request for a permanent injunction on the basis that
DXP cannot show irreparable injury. To obtain a permanent injunction, a party must demonstrate that (1)
it has achieved actual success on the merits; (2) it has sustained irreparable injury or there is no adequate
remedy at law; (3) considering the balance of hardships between the plaintiff and defendant, a remedy in
equity is warranted; and (4) the injunction will not disserve the public interest. See ITT Educ. Servs., Inc. v.
Arce, 533 F.3d 342, 347 (5th Cir. 2008) (quoting eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391
(2006)). Because the court finds that DXP’s request for a permanent injunction is arbitrable, it is unnecessary
to consider the merits of the claim for injunctive relief.
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arising out of or related to this Agreement or the breach thereof . . . shall be finally settled by
conciliation or arbitration.” (Distributor Agreement at Section 23).
“[C]ourts distinguish ‘narrow’ arbitration clauses that only require arbitration of disputes
‘arising out of’ the contract from broad arbitration clauses governing disputes that ‘relate to’ or ‘are
connected with’ the contract.” Pennzoil Exploration, 139 F.3d at 1067 (citing Tracer Research
Corp. v. Nat’l Envtl. Servs. Co., 42 F.3d 1292, 1295 (9th Cir. 1994) (comparing “relating to”
language with “arising out of” language)). “Broad arbitration clauses . . . are not limited to claims
that literally ‘arise under the contract,’ but rather embrace all disputes between the parties having
a significant relationship to the contract regardless of the label attached to the dispute.” Id. An
“arbitration clause that cover[s] disputes ‘arising under’ an agreement, but omit[s] reference to
claims ‘relating to’ an agreement, cover[s] only those disputes ‘relating to the interpretation and
performance of the contract itself.’”
Tracer Research Corp., 42 F.3d at 1295 (quoting
Mediterranean Enter., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1464 (9th Cir. 1983)).
The injunction provision, while stating that a party may apply to a court of competent
jurisdiction to obtain equitable relief “notwithstanding” the requirement to arbitrate, does not
explicitly except claims for equitable relief from the scope of the broad arbitration clause. In
construing these conflicting provisions of the arbitration clause, the court must respect “the parties’
contractual rights and expectations” and read the clause as a whole “to give effect to all its
provisions and to render them consistent with each other.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp., 559 U.S. 662, 682 (2010) (quoting Volt v. Bd. of Trustees of Leland Stanford Junior Univ.,
489 U.S. 468, 479 (1989); Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63 (1995).
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DXP argues that the term “notwithstanding” suggests that claims seeking an injunction in
a court are excluded from the obligation to arbitrate. The FAA does not permit such an expansive
reading. Because the FAA favors arbitration, when a broad agreement to arbitrate binds the parties,
and one party asserts that some claims are excluded from that agreement, “in the absence of any
express provision excluding a particular grievance from arbitration . . . only the most forceful
evidence of a purpose to exclude the claim from arbitration can prevail.” AT&T Tech., Inc. v.
Comms. Workers of Am., 475 U.S. 643, 650 (1986) (quoting United Steelworkers of Am. v. Warrior
& Gulf Navigation Co., 363 U.S. 574, 582–83 (1960)). “[A]n order to arbitrate the particular
grievance should not be denied unless it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted dispute.” Id. at 650 (emphasis
added).
A number of courts have concluded that language similar to that contained in the Distributor
Agreement’s arbitration clause and its injunction provision requires the parties to arbitrate claims
for permanent injunctive relief when the disputes are otherwise subject to a valid arbitration clause.
These courts have held that such language permits parties to apply to a court for temporary
injunctive relief to maintain the status quo pending arbitration, but not to request permanent
injunctive relief that would require the court to consider and decide the merits of an arbitrable claim.
See, e.g., Comedy Club, Inc. v. Improv West Assocs., 553 F.3d 1277, 1281–82, 1285 (9th Cir. 2009)
(A provision stating that “[n]otwithstanding this agreement to arbitrate, the parties, in addition to
arbitration, shall be entitled to pursue equitable remedies and agree that the state and federal courts
shall have exclusive jurisdiction for such purpose” was “intended to apply only to claims designed
to maintain the status quo between the parties.”); WMT Investors, LLC v. Visionwall Corp, No. 09-
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CIV-10509-RMB, 2010 WL 2720607, at *2–4 (S.D.N.Y. June 28, 2010) (provision stating that “in
addition to and not in lieu of any damages sustained . . . [the plaintiff] shall have the right to
equitable relief, including but not limited to the issuance of a temporary or permanent injunction or
restraining order, by any court of competent jurisdiction” allowed the plaintiff to seek a preliminary
injunction but not a permanent injunction while arbitration on the same claims was pending); Clarus
Medical, LLC v. Myelotec, Inc., No. 05-934, 2005 WL 3272139, at **3–4 (D. Minn. Nov. 30, 2005)
(examining a provision stating that “[n]otwithstanding any provision of this section to the contrary,
each party shall be entitled to seek injunctive and other equitable relief in any court or forum of
competent jurisdiction to enforce the provisions of this Agreement,” and concluding that “the
Licence does not have the ‘qualifying contractual language’ that ‘provides the Court with clear
grounds to grant relief without addressing the merits of the underlying arbitrable dispute.’”) (citing
Manion v. Nagin, 255 F.3d 535, 538–39 (8th Cir. 2001); Positive Software Solutions, Inc. v. New
Century Mortgage Corp., 259 F. Supp. 2d 531, 538–39 (N.D. Tex. 2003) (interpreting language
stipulating that “[the defendant] . . . agrees that [the plaintiff] shall have the right to apply to a court
of competent jurisdiction for specific performance and/or an order restraining and enjoining any
such further disclosure or breach and for such other relief as [the plaintiff] shall deem appropriate”
to permit the court to consider a preliminary injunction to maintain the status quo pending arbitration
but not to permit the plaintiff “to choose between a trial and an arbitration” by asking a court to
grant permanent injunctive relief addressing claims subject to arbitration); Baychar v. Frisby Tech.,
No. 01-cv-28-B-S, 2001 WL 856626 at *6–7 (D. Maine, July 26, 2001) (holding that a provision
stating that “each Party shall have the right to seek and obtain injunctive relief . . . in addition to all
of the rights and remedies available at law or in equity” permitted injunctions only to preserve the
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status quo pending arbitration); ESecuritel Holdings v. Youghigheny, No. 4-02-0302-cv, 2012 WL
6030141, at *4 (Tex. App — San Antonio Dec. 5, 2012, no pet. h.) (analyzing an arbitration clause
stating that “[n]otwithstanding anything to the contrary herein, neither Party is precluded from
seeking injunctive relief in any court of competent jurisdiction for equitable remedies,” and holding
that “the arbitration clause’s reference to injunctive relief and equitable remedies was intended not
to circumvent arbitration but to allow the parties to preserve the status quo pending arbitration”).
DXP is not requesting a preliminary injunction limited to preserving the status quo pending
arbitration. Goulds does not believe that the injunction language in the arbitration clause should be
interpreted to allow claims for preliminary but not permanent injunctive relief. Neither position is
consistent with prevailing law interpreting similar language in arbitration clauses.
The question is whether the injunction provision is “the most forceful evidence” of a purpose
to exclude the merits of a claim for a permanent injunction when the merits are properly before the
arbitrator. AT&T Tech., 475 U.S. at 650. The injunction provision here does not contain the kind
of language courts have held strongly evidences the parties’ purpose to litigate all claims for
injunctive relief, even when the merits of the underlying claims are pending in arbitration.
Examples of such language are in the following cases:
•
In Aetrex Worldwide, Inc. v. Sourcing for You Ltd., the parties’ agreement contained
an arbitration clause stating that “[e]xcept for an action seeking a temporary
restraining order or injunction . . . any dispute, claim, or controversy arising out of
[or] relating to this Agreement . . . shall be determined exclusively by final, binding
arbitration.” 555 Fed. App’x 153, 154 (3d Cir. 2014) (unpublished). The Third
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Circuit found that the clause unambiguously excluded claims for both preliminary
and permanent injunctions from the requirement to arbitrate. Id.
•
In SunCoke Energy v. MAN Ferrostaad Aktiengesellschaft, the arbitration clause
stated that “[o]ther than a claim for equitable relief, which may be brought to any
court of competent jurisdiction, all disputes arising out of this Agreement shall be
settled by arbitration.” 563 F.3d 211, 213 n. 2, 3 (6th Cir. 2009). The Sixth Circuit
allowed the plaintiff to assert its claims for injunctive relief in court. Id. at 213.
•
In Major Lindsey & Africa, LLC v. Mahn, the agreement containing the arbitration
clause stated that “[c]laims . . . seeking injunctive or declaratory relief . . . are not
covered by this Agreement (although all other aspects of such claims, including any
claims for damages, are covered by this Agreement).” No. 10-civ-4239(CM), 2010
WL 3959609, at *3 (S.D.N.Y. Sept. 7, 2010). The court held that the language
excluded claims for permanent injunctive relief from the arbitration agreement. Id.
at *4.
•
In Dickeys Barbecue Rests. v. Mathieu, a case applying the Texas General
Arbitration Act, the court analyzed a provision stating that “[n]ot withstanding the
foregoing, [the plaintiff] may bring an action . . . for injunctive relief or other
extraordinary relief . . . in a court having jurisdiction and without first submitting
such action to mediation or arbitration.” No. 3:12-cv-5119-G, 2013 WL 5268976,
at *5 (N.D. Tex. Sept. 18, 2013) (emphasis added). The court found that this
language excluded all claims for injunctive relief from the requirement to arbitrate.
Id. at **6–9.
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Arbitration agreements that lack such unambiguous language and simply state that parties
can ask courts for injunctive relief “notwithstanding” an agreement to arbitrate do not sufficiently
show that claims for permanent injunctive relief are nonarbitrable. Examples of cases reaching this
result are set out below:
•
In Lawrence v. Comprehensive Bus. Servs. Co., the court rejected a claim that a
similar “notwithstanding” injunction provision in an arbitration clause made the
arbitration agreement illusory because it conflicted with the arbitration clause, and
affirmed an order compelling the party seeking the injunction to arbitrate its claims
for declaratory and injunctive relief. 833 F.2d 1159, 1064 (5th Cir. 1987).
•
In Clarus Medical, the court held that language providing that “[n]otwithstanding
any provision of this section to the contrary, each party shall be entitled to seek
injunctive and other equitable relief in any court or forum of competent jurisdiction
to enforce the provisions of this Agreement” was “insufficient to allow the Court to
grant injunctive relief of the nature requested . . . without addressing the merits of the
underlying arbitrable dispute.” 2005 WL 3272139, at **3–4.
•
In ESecuritel Holdings, the parties’ agreement to arbitrate contained a sentence
stating that “[n]otwithstanding anything to the contrary herein, neither party is
precluded from seeking injunctive relief in any court of competent jurisdiction for
equitable remedies.” 2012 WL 6030141, at **3–4. The court held that the party’s
claims for permanent injunctive and declaratory relief were subject to arbitration.
Id.
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The language in the Distributor Agreement here does not clearly evidence an intent to allow
litigation of claims subject to arbitration by asserting them as claims for permanent injunctive relief.
The language is closer to the provisions courts have held allow litigation only of applications for
temporary restraining order or preliminary injunctions needed to preserve the status quo pending
arbitration of the merits, not attempts to displace the arbitration by allowing litigation of the merits
through a permanent injunction. The strong policy and presumption favoring arbitration weigh
heaving against such a result.
Goulds has demanded arbitration on whether DXP’s acquisition of B27 is a basis for Goulds
to terminate the Distributor Agreement. Goulds has asked the arbitrator to decide that the
acquisition violated Section 7.C and to declare that Goulds may terminate the Distributor
Agreement. DXP asks this court to decide that acquiring B27 did not violate Section 7.C and to
enjoin Goulds from terminating the Agreement on that basis. Allowing DXP to litigate these claims
would require this court to examine and decide the merits of the dispute subject to a valid arbitration
clause and pending before an arbitrator. Case law from around the country supports denying this
result. See, e.g., Haide Grp, Inc. v. Hyosung Corp., No. 10-02392, 2010 WL 4456928, at **3–4
(E.D. Pa. Nov. 8, 2010) (declining to hear claims for preliminary injunctive relief because the court
“must be mindful not to supplant the role of the arbitrator in determining whether injunctive relief
is appropriate”); H2O To Go, LLC v. Martinez, No. 05-21353, 2005 WL 2065220, at **4–5 (S.D.
Fla. Aug. 22, 2005) (the “arbitration clause alters the authority of the Court significantly in deciding
whether, and to what extent, a preliminary injunction should be entered”); Baychar, 2001 WL
856626, at *9 (declining to issue a preliminary injunction when doing so would require the court to
rule on the merits of the controversy and would “usurp the role of the arbitrator”). An order from
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this court finding that DXP had not breached Section 7.C and prohibiting Goulds from terminating
the Distributor Agreement would moot the pending arbitration and deprive Goulds of its right to
have an AAA-appointed arbitrator decide the merits of this dispute. See also Subway Equipment
Leasing Corporation v. Forte, 169 F.3d 324 (5th Cir. 1999) (it was necessary to stay litigation of
claims not subject to arbitration to protect the right of related parties to arbitrate their disputes; if one
party prevailed in the litigation on related claims against parties not subject to arbitration while the
arbitration was pending, the arbitration would be moot and the parties would be deprived of their
contractual right to resolve the dispute in arbitration).
DXP’s claims for permanent injunctive and declaratory relief must be submitted to
arbitration. Under section 3 of the Federal Arbitration Act, 9 U.S.C. § 3, “a stay is mandatory upon
a showing that the opposing party has commenced suit upon any issue referable to arbitration under
an agreement in writing for such arbitration . . . .” Alford, 975 F.2d at 1164. The Fifth Circuit has
interpreted this language to mean that the district court cannot deny a stay when one is properly
requested. Id. “This rule, however, was not intended to limit dismissal of a case in the proper
circumstances.” Id. If all of the issues raised before the district court are arbitrable, dismissal of the
case is appropriate. Id. As the Fifth Circuit explained in Alford:
Although we understand that plaintiff’s motion to compel arbitration
must be granted, we do not believe that the proper course is to stay
the action pending arbitration. Given our ruling that all issues raised
in this action are arbitrable and must be submitted to arbitration,
retaining jurisdiction and staying the action will serve no purpose.
Any post-arbitration remedies sought by the parties will not entail
renewed consideration and adjudication of the merits of the
controversy but would be circumscribed to a judicial review of the
arbitrator’s award in the limited manner prescribed by law.
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Id. (quoting Sea-Land Service, Inc. v. Sea-Land of Puerto Rico, Inc., 636 F. Supp. 750, 757 (D.
Puerto Rico 1986)).
No later than November 21, 2014, the parties are to file statements of no more than 3 pages
identifying any reasons this case should not be dismissed without prejudice in favor of arbitration.
SIGNED on November 4, 2014, at Houston, Texas.
______________________________________
Lee H. Rosenthal
United States District Judge
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