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Dedon Gmbh and Dedon Inc v. Janus Et Cie

January 6, 2011

DEDON GMBH AND DEDON INC., PLAINTIFFS-APPELLEES,
v.
JANUS ET CIE, DEFENDANT-APPELLANT.



Appeal from a judgment of the United States District Court for the Southern District of New York (McMahon, J.).

10-4331-cv

Dedon Gm bH v. Janus et Cie

SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court's Local Rule 32.1.1. When citing a summary order in a document filed with this court, a party must cite either the Federal Appendix or an electronic database (with the notation "summary order"). A party citing a summary order must serve a copy of it on any party not represented by counsel.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on the 6th day of January, two thousand eleven.

PRESENT: AMALYA L. KEARSE, RALPH K. WINTER, PETER W. HALL, Circuit Judges.

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that the judgment of the district court is AFFIRMED.

Janus et Cie ("Janus") appeals from the district court's decision denying its motion to compel Dedon GmbH and Dedon Inc. (collectively "Dedon") to arbitrate their dispute before the International Chamber of Commerce ("ICC") in London. Janus's arguments on appeal fall into two categories: (1) the district court erred in denying its motion to compel arbitration where the parties had an agreement to arbitrate, as evidenced by the draft exclusive distribution agreement or the standard terms and conditions that accompanied each purchase, and (2) the district court erred in holding that Dedon had not waived its right to object to arbitration through its conduct before the ICC. We assume the parties' familiarity with the underlying facts and procedural history of the case.

I. Discussion

The district court denied Janus's motion to compel arbitration, concluding it could not compel Dedon to arbitrate the exclusive distribution dispute without first determining whether such an agreement actually existed and that Dedon had not waived its right to object in court to the ICC arbitration. In addition, the district court declined to stay the proceedings during the pendency of the ICC arbitration and also determined that the issue of contract formation would proceed to a trial. We review a district court's denial of a motion to compel arbitration de novo. Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 26 (2d Cir. 2002).

A. Dispute Involving the Existence of the Contract Janus first contends that the district court erred when it denied its motion to compel arbitration, arguing that it is within the arbitral panel's authority to determine its own jurisdiction, that Dedon had actually made that request to it, and that the court should have afforded the arbitral panel the opportunity to determine its own jurisdiction.

The Supreme Court recently reiterated that "[a]rbitration is strictly a matter of consent and thus 'is a way to resolve those disputes-but only those disputes-that the parties have agreed to submit to arbitration.'" Granite Rock Co. v. Int'l Bhd. of the Teamsters, __ U.S. __, 130 S. Ct. 2847, 2857 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)) (internal quotation marks and citation removed and emphasis omitted). Accordingly, "courts should order arbitration of a dispute only where the court is satisfied that neither the formation of the parties' arbitration agreement nor . . . its enforceability or applicability to the dispute is in issue." Id. at 2857-58. Where a party contests the issue of contract formation, therefore, "the court must resolve" the issue. Id. at 2858 (internal quotation marks removed).

Granite Rock reconfirms this circuit's well-established precedent that where a party challenges the very existence of the contract containing an arbitration clause, a court cannot compel arbitration without first resolving the issue of the contract's existence. See, e.g., Interocean Shipping Co. v. Nat'l Shipping & Trading Corp., 462 F.2d 673, 676 (2d Cir. 1972) (holding that, where the party resisting arbitration denied the very existence of the agreement setting out the arbitration provision, the district court could not compel arbitration without holding a trial on the issue of the contract's formation). "If the making of the agreement to arbitrate is placed in issue-as [the party resisting arbitration] attempts to do by alleging that the contracts in which the arbitration provisions are found never came into existence-the court must set the issue for trial." Sphere Drake Ins. Ltd v. Clarendon Nat'l Ins. Co., 263 F.3d 26, 30 (2d Cir. 2001). See also Denney v. BDO Seidman LLP, 412 F.3d 58, 68 (2d Cir. 2005) (noting that the Second Circuit rule in Sphere Drake "protect[s] parties from arbitration only in those narrowly-limited circumstances where the very existence of a contract is in doubt"); Opals on Ice Lingerie v. Body Lines Inc., 320 F.3d 362, 369 (2d Cir. 2003) ("[T]hough the presumption in favor of arbitration is strong, the law still requires that parties actually agree to arbitration before it will order them to arbitrate a dispute."); Specht, 306 F.3d at 26 ("It is well settled that a court may not ...


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