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NETWORK CINEMA CORP. v. GLASSBURN

March 21, 1973

In the Matter of the Arbitration between NETWORK CINEMA CORPORATION, Petitioner,
v.
Larry E. GLASSBURN, Respondent


Robert L. Carter, District Judge.


The opinion of the court was delivered by: CARTER

MEMORANDUM DECISION

Robert L. Carter, District Judge.

 The petitioner seeks orders compelling arbitration of disputes arising in connection with a franchising agreement and staying a Kansas State Court proceeding in which respondent seeks to litigate the same and other disputes. The agreement provides that:

 
"Any controversy, dispute or question arising out of, in connection with, or in relation to this agreement or its interpretation, performance or non performance of any breach thereof shall be determined by arbitration conducted in New York City in accordance with the then existing rules of the American Arbitration Association. . . ." (Exhibit A of the Petition.)

 The Federal Arbitration Act provides, at § 2, that:

 
"A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (9 U.S.C. § 2)

 Petitioner is a Delaware corporation and its principal place of business is in New York. It is engaged in "franchising motion picture theatres and distributing films and supplying equipment to motion picture theatres, in the United States, Canada and Europe" (Petition, P 2). Respondent is a citizen and resident of Missouri (Answer to Petition, P 1). Petitioner's agreement to franchise and supply respondent's theatre in Kansas clearly involved "commerce among the several States" (9 U.S.C. § 1) and thus falls within the provisions of the federal arbitration act.

 The Supreme Court held in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270, that

 
". . . it is clear beyond dispute that the federal arbitration statute is based upon and confined to the incontestable federal foundations of 'control over interstate commerce. . .'." (at p. 405, 87 S. Ct. at p. 1806)

 and that

 
"Federal courts are bound to apply rules enacted by Congress with respect to matters -- here, a contract involving commerce -- over which it has legislative power." (at p. 406, 87 S. Ct. at p. 1807)

 Congress has provided in § 4 of Title 9 U.S.C. that

 
"A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action . . . of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement * * The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement."

 There is no question here as to the making of the agreement or the failure to comply therewith. It is equally clear that this court would have diversity jurisdiction over the ...


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