The opinion of the court was delivered by: CROAKE
This action involves alleged infractions of a commercial contract. Petitioners, Bartell Media Corporation (Media) and Macfadden-Bartell Corporation (Macfadden) apply to this court for an order compelling arbitration, pursuant to 9 U.S.C. § 4. They also seek to enjoin Respondent, The Fawcett Printing Corporation (Fawcett), from proceeding with the prosecution of another action, stemming from the same contract, pending in the United States District Court, Western District of Kentucky, Louisville Division (71 Civ. 7122).
Fawcett is incorporated and has its principal place of business in Louisville, Kentucky. Media and Macfadden are incorporated in Delaware and have their principal place of business in New York. The matter in controversy exceeds the sum of $10,000, exclusive of interest and costs. The court finds diversity jurisdiction. 28 U.S.C. § 1332.
Respondent opposes this motion, asserting: lack of jurisdiction, lack of standing to arbitrate, inapplicability of the Federal Arbitration Act, non-compliance with the Federal Arbitration Act, comity, no irreparable harm demonstrated, and dictates of equity.
The former Macfadden-Bartell Corporation and Fawcett-Haynes Printing Corporation entered into an agreement on March 25, 1965 (Agreement) whereby Fawcett-Haynes agreed to print certain magazines
published by Macfadden-Bartell during the period 1968 through 1980. There is no question that the Agreement contains a provision, Article XIII, to settle disputes by arbitration. Article XIII provides, in pertinent part:
Article XIII. ARBITRATION. Any dispute of fact or other arbitrable matter arising out of or relating to a claimed breach of this Agreement shall be submitted to arbitration.
During June of 1965, Macfadden-Bartell Corporation changed its name to Bartell Media Corporation and a new corporation was organized in Delaware, under the name of Macfadden-Bartell Corporation. It is alleged that the newly organized Macfadden-Bartell Corporation (Macfadden) is a wholly-owned subsidiary for the Bartell Media Corporation, and since June of 1965 has acted as agent for Bartell Media Corporation. In addition, in May of 1970, Fawcett-Haynes changed the name of the corporation to The Fawcett Printing Corporation. In spite of this corporate restructuring the parties continued to deal with one another under the terms of the 1965 agreement.
Respondent asserts that by autumn of 1971 the relationship between the parties had deteriorated when, it is alleged, Petitioners became past due in payments owing under the Agreement, and when Petitioners ceased to turn to Respondents with the printing requirements of Petitioners.
On November 17, 1971, Macfadden served upon Fawcett a notice to arbitrate by a mailing in accordance with Article XIII of the Agreement. Cf. 9 U.S.C. § 4; Fed. R. Civ. P. Rule 5(b). The notice to arbitrate alleged that Fawcett had breached the Agreement by overcharging and by costly inefficiency. After telephone notice, but allegedly before receiving written notice to arbitrate, Fawcett filed a complaint against Macfadden for monies allegedly due under the Agreement in the United States District Court for the Western District of Kentucky, asserting diversity jurisdiction. 28 U.S.C. § 1332. Thereafter, the complaint was amended to include Media and to increase the ad damnum. On December 14, 1971, Media sent a notice of arbitration parallel in content to the prior notice by Macfadden, in which Media, as the original party to the Agreement, demanded arbitration pursuant to the Agreement. Respondent has failed to comply with either notice to arbitrate. Thereafter, the instant petition was presented to this court. Notice of this petition and service thereof have been properly made.
The actual printing of the magazines in question is accomplished in Louisville, Kentucky. The paper used in printing the magazines is shipped from New Orleans, Louisiana. The type for the magazines is set in Philadelphia, Pennsylvania. The engravings used in the production of the magazines are made in Tennessee. The editorial material for the magazines is prepared, in accord with the Agreement, by Media and Macfadden in New York and sent to Fawcett in Kentucky. In addition, after the magazines are printed they are shipped by Fawcett to nine states, in accord with the contract, whereafter they are distributed throughout the United States. The court finds that the Agreement evidences a transaction involving "commerce." 9 U.S.C. §§ 1, 2.
Respondent contends that the agreement to arbitrate with Media does not extend to its alleged subsidiary, Macfadden; therefore, it asserts, Macfadden has no standing to compel arbitration. Whether or not Macfadden has standing, however, Media does have standing and thus the petition is not infirm for the aforesaid reasons. In this context it is to be noted that Article XII
of the Agreement allows for assignability of rights without the consent of Fawcett if the concern which takes over from Media demonstrates financial responsibility substantially equivalent to that of Media, and if the concern taking over assumes all of the obligations of Media, pursuant to Article XI
of the Agreement. Article XIV
of the Agreement expressly binds successors and assignees of Media, the publisher, and Fawcett, the printer.
Notwithstanding the provision in the Agreement for arbitration (as quoted above), Respondent would have this court believe that Article XV, providing "This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Kentucky;" forecloses arbitration proceedings: the court does not agree. The choice of law of the parties to the Agreement is ...