United States District Court, D. Maine
For VISIONMASTER INC, Plaintiff: ALFRED C. FRAWLEY, III, EATON PEABODY, PORTLAND, ME.
For ASC INTERNATIONAL, Defendant: JOHN F. LAMBERT, JR., ABIGAIL C. VARGA, LAMBERT COFFIN, PORTLAND, ME.
RECOMMENDED DECISION ON DEFENDANT'S MOTION TO DISMISS
John H. Rich III, United States Magistrate Judge.
The defendant, ASC International, Inc., moves to dismiss this action in favor of arbitration pursuant to the terms of contracts between it and two of the plaintiff's predecessors in interest. I recommend that the court grant the motion.
I. Factual Background
The plaintiff, VisionMaster, Inc., began operations under that name in 2011. Exh. A to Declaration of Joy R. Anderson (" Anderson Decl.) (ECF No. 8-3), at 1. It alleges that it is a successor to the rights of Crescent Technologies, Inc., which originally claimed ownership of the VisionMaster mark. Complaint (ECF No. 1-1) ¶ 9; Declaration of Jon Arneson (" Arneson Decl.") (ECF No. 8-2) ¶ 3. The defendant and Crescent entered into a Design, Development and Distribution Agreement in 2001. Design, Development and Distribution Agreement (" Crescent Agreement") (Exh. B to Anderson Decl.) (ECF No. 8-4).
Also in 2001, the principals of Crescent started Delta Indus Systems. Arneson Decl. ¶ 3. Delta later asserted that it had succeeded to the rights in the VisionMaster mark. Exh. E to Anderson Decl. Shahzad F. Kirmani was a principal of all three of these companies. Exhs. A, B & F to Anderson Decl.
The Crescent Agreement gave ASC the exclusive right to purchase sensors from Crescent for integration into ASC's products for distribution. Crescent Agreement § 2.1. The Crescent Agreement contains an article regarding dispute resolution, which includes the provision that " the sole and exclusive procedure for the resolution of disputes between the Parties arising out of or relating to this Agreement" is a 60-day negotiation period followed by mediation upon written request, followed by arbitration. Id. § § 9.1-9.3. The Crescent Agreement states that it is to be governed by and construed in accordance with Minnesota law, in the state and federal courts in Minnesota. Id. § 10.4. The Crescent Agreement was signed by Kirmani as president of Crescent. Id. at 13.
On the same day that the Crescent Agreement took effect, the defendant and Delta entered into a Design, Development, and Distribution Agreement (the " Delta Agreement") (Exh. C to Anderson Decl.) (ECF No. 8-4). The Delta Agreement is similar to the Crescent Agreement in all pertinent respects. In August 2001, Crescent ceased operations and granted the defendant the right to manufacture " any and all hardware manufactured by Crescent Technologies, Inc. in the past." Letter Agreement, dated August 27, 2001, Exh. D to Anderson Decl. The defendant continued to manufacture and sell its solder paste inspection systems under the VisionMaster mark pursuant to this agreement. Anderson Decl. ¶ 4.
The parties added an addendum to the Delta Agreement in 2007. Addendum B to Delta Agreement (Exh. E to Anderson Decl.) (ECF No. 8-4). In October 2010, Delta Indus announced that it was unilaterally ending the defendant's exclusivity but would continue to work with the defendant as usual. Email from Shahzad F. Kirmani to Jon Carl Arneson, dated October 11, 2010, Exh. F to Anderson Decl. The defendant continued to distribute products under the VisionMaster mark until Delta Indus stopped contacting the defendant after the defendant began to request warranty service on certain Delta Indus products. Arneson Decl ¶ ¶ 6-7. The defendant now sells its solder paste inspection systems under its trademark VISIONPRO. Id. ¶ 8. The plaintiff filed this action in Maine Superior Court (Cumberland County) by complaint dated March 21, 2014, alleging that the defendant was improperly selling solder paste inspection machines using the plaintiff's trademarks, trade dress, and copyrighted software. ECF No. 1; Complaint.
II. Applicable Legal Standard
The Federal Arbitration Act (" FAA") establishes a federal policy favoring arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The First Circuit has held that a party that attempts to compel arbitration pursuant to the FAA must show that (1) a valid agreement to arbitrate exists, (2) that the movant is entitled to invoke the arbitration clause, (3) that the other party is bound by that clause, and (4) that the claim asserted comes within the clause's scope. Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir. 2011). Arbitration is a matter of contract, and " a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Large v. Conseco Fin. Serv. Corp., 292 F.3d 49, 52 (1st Cir. 2002).
The First Circuit has recently reminded trial courts that they must " ordinarily honor" the choice of contracting parties to arbitrate. Joca-Roca Real Estate, LLC, v. Brennan, No. ...