Advantage Sales & Marketing LLC v. USG Companies Inc., 1:15-cv-01225

Advantage Sales & Marketing (Plaintiff) bought a business division from USG Companies, Lott Companies, Dalton Lott, and Robert Mann (Defendants) under a June 24, 2015 Asset Purchase Agreement that included an earn-out payment tied to "Revenue."
A dispute arose over whether revenue from Plaintiff's pre-existing contracts with overlapping customers counts as "Revenue" for the earn-out calculation.
Section 1.7 of the Agreement requires that unresolved disagreements about calculation of Revenue for the Measurement Period be "referred to the Accounting Firm ... for final determination."
Defendants moved to compel arbitration (or to dismiss/stay pending arbitration), arguing Section 1.7 is an agreement to arbitrate under the Federal Arbitration Act; the Agreement is governed by Delaware law.
Plaintiff argued the disagreement is an interpretation dispute not subject to the narrow accounting/arbitration clause and that Delaware court jurisdiction provision should control.
The court found Delaware precedent controlling and concluded the dispute falls within the arbitration/accounting provision, granting Defendants' motion and dismissing the claims without prejudice.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Arbitrability of Section 1.7	The dispute is an interpretation issue, not a calculation, so Section 1.7 doesn't apply	Section 1.7 requires referral to the Accounting Firm for final determination of Revenue calculation disputes	Court held Section 1.7 is enforceable and the dispute is subject to the agreed dispute-resolution process
Scope of arbitrable matters (interpretation vs. calculation)	Interpretation questions preclude arbitration; court resolution clause trumps arbitration clause	Arbitrators/accounting firms may decide what financial inputs and contractual terms to consider when calculating earn-outs	Court held that disputes involving calculation can require contractual interpretation and are for the arbitrator/accounting firm; specific arbitration clause controls over general forum-selection language

Viacom Int'l, Inc. v. Winshall, 72 A.3d 78 (Del. 2013) (Delaware Supreme Court: issues about what financial information should be considered in earn-out calculations are for the arbitrator)