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Marker Volkl Gmbh v. Epic Sports International, Inc.

United States District Court, Second Circuit

April 30, 2013

MARKER VOLKL (INTERNATIONAL) GMBH, Petitioner,
v.
EPIC SPORTS INTERNATIONAL, INC. and CAPSTONE BUSINESS CREDIT, LLC, Respondents.

OPINION AND ORDER CONFIRMING ARBITRATION AWARD

ALVIN K. HELLERSTEIN, District Judge.

Marker V§lkl (International) GmbH ("Marker V§lkl"), a Swiss corporation, petitions pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, as codified in 9 U.S.C. § 201, et seq., (the "New York Convention" or "Convention"), to confirm the final arbitration award of November 6, 2012 (the "Final Award"), in its dispute with two American companies, Epic Sports International, Inc. ("Epic") and Capstone Business Credit, LLC ("Capstone"). Petitioner moves for entry of money judgment against Respondents in the amount stated in the Final Award, Respondents answer by raising various counterclaims and requesting that judgment be stayed pending adjudication of these same counterclaims in New York Supreme Court. Petitioner moves to dismiss Respondents' counterclaims or, alternatively, to enter final judgment on the petition pursuant to Fed.R.Civ.P. 54(b).

On October 1, 2008, Marker V§lkl entered into a license agreement with Epic, a Nevada corporation, to sell and distribute Marker V§lkl tennis gear (the "Agreement"). Marker V§lkl also entered into a guarantee agreement with Capstone, a New York corporation, whereby Capstone guaranteed Epic's financial obligations to Marker V§lkl. Both agreements provided for the arbitration of disputes in accordance with the Swiss Rules of International Arbitration.

On September 9, 2011 Marker V§lkl terminated the license Agreement with Epic and demanded payment for outstanding royalties, Epic and Capstone refused payment. On February 10, 2012, Marker V§l; initiated an arbitration in Switzerland before Arbitrator Joachim Knoll. In response, Epic raised a series of counterclaims alleging that after terminating the Agreement, Marker V§lkl continued to sell and distribute tennis racquets designed and manufactured from molds created by Epic. Epic claimed that Marker V§lkl thereby misappropriated Epic's intellectual property. Epic also filed a separate action in New York Supreme Court based on these counterclaims (the "State Court Action"). Epic Sports Int'l, Inc. f/k/a Klip America, Inc., et al. v. Sean Frost, et al., Index No. 651599/2012 (Sup.Ct. N.Y. County 2012). The Arbitrator requested clarification on his jurisdiction to hear Epic's counterclaims and Respondents subsequently withdrew their claims from the arbitration proceedings entirely.

On November 6, 2012, the Arbitrator issued a written award finding that Marker V§lkl had a legitimate contractual reason to terminate the Agreement. The Final Award required Respondents to pay Marker V§lkl EUR 300, 000 plus interest and partial compensation for legal and arbitration costs. Pursuant to Article 32(2) of the Swiss Rules of Arbitration and Article 190(1) of the Swiss Private International Law Act, the arbitration award is "final and binding on the parties."

On April 22, 2013, the New York Supreme Court dismissed Epic's State Court Action for lack of personal jurisdiction and ineffective service. Epic Sports Int'l, Index No. 651599/2012 at 10 (Apr. 22, 2013). The New York Court held that Epic's claims of misappropriation of its intellectual property did not arise from "any action that took place in connection with the [Agreement]." Id. at 10. The court also rejected the claim that Marker Wild misappropriated Epic's intellectual property, finding that "there was no protected intellectual property." Id. at 11.

This Court has jurisdiction and authority to enforce a foreign arbitration award in a dispute between the corporations of two nations that have signed and ratified the New York Convention. 9 U.S.C. §§ 203, 207. Switzerland ratified the Convention in 1965; the United States in 1970. A federal court's review of an arbitration award is "severely limited so as not to frustrate the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation, " Scandinavian Reinsurance Co. Ltd. v. Saint Paul Fire & Marine Ins. Co. , 668 F.3d 60, 71-72 (2d Cir. 2012) (internal citations and quotation marks omitted). "The confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court." Florasynth, Inc. v. Pickholtz , 750 F.2d 171, 176 (2d Cir. 1984).

Pursuant to 9 U.S.C. § 207, this Court "shall confirm [an arbitral award falling under the New York Convention] unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the Convention." The New York Convention provides only seven limited bases upon which a court may decline to "recogni[ze] and enforce[]" an arbitration award:

1. The parties to the agreement... were... under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it...; or
2. The party against whom the award is invoked was not given proper notice... of the arbitration proceedings or was otherwise unable to present his case; or
3. The award...contains decisions on matters beyond the scope of the submission to arbitration...; or
4. The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties...; or
5. The award has not yet become binding on the parties, or has been set aside or suspended...; [or]
6. The subject matter of the difference is not capable of settlement by arbitration under the law of [the country where ...

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