337 F. Supp. 3d 156
D. Conn.2018Background
- Armor All/STP (Plaintiff) sells DIY vehicle A/C refrigerant kits under marks including HIGH MILEAGE, A/C PRO, ARCTIC FREEZE, BIG CHILL; asserts federal trademark and copyright registrations and trade dress/label designs.
- Former EF/IDQ executives William and Michael Quest later co-founded TSI/Avalanche, which launched competing refrigerant products with similar marks/trade dress; Plaintiff alleges deliberate copying and willful infringement.
- Michael Quest was a consultant to Plaintiff's predecessor under a 2009 Consulting Agreement containing (1) confidentiality, non‑compete and injunctive‑relief provisions (Article IV & Section 7.1) and (2) a broad arbitration clause incorporating AAA rules (Section 7.2), but subject to Section 7.1.
- Defendants moved to compel arbitration under the FAA, arguing (a) the parties delegated arbitrability to the arbitrator via incorporation of AAA rules and (b) the arbitration clause covers the instant IP and unfair competition claims.
- The Court denied the motion, holding that the arbitration question was for the court (no clear and unmistakable delegation) and that, on the pleadings, the asserted IP, unfair competition, false advertising, false patent marking, and unjust enrichment claims are not arbitrable because they do not require construction or application of the Consulting Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability (court vs arbitrator)? | Parties did not clearly and unmistakably delegate arbitrability to arbitrator. | Incorporation of AAA rules (which empower arbitrator to decide jurisdiction) delegates arbitrability. | Held: Court decides; incorporation insufficient because arbitration clause is expressly subject to Section 7.1 (carve‑out for court injunctive relief) and complaint "arguably" raises that carve‑out. |
| Is the arbitration clause broad or narrow? | Clause is subject to carve‑out but on its face is broad ("arising out of or relating to"). | Clause is broad and, with AAA rules, covers all disputes. | Held: Clause is broad, but subject to a judicially‑reserved injunctive carve‑out. |
| Are Plaintiff's Lanham Act, copyright, trade dress, and counterfeiting claims arbitrable? | Claims arise from IP misuse and do not depend on construing the Consulting Agreement; proof does not require contract interpretation. | Claims relate to the Consulting Agreement (knowledge/use by Quest) and thus fall within "relating to" language and must be arbitrated. | Held: Not arbitrable on present pleadings; adjudication does not require construction or application of the Consulting Agreement, even though Quest's prior relationship is a factual predicate. |
| Are Plaintiff's unfair competition, false advertising, false patent marking, and unjust enrichment claims arbitrable? | These claims are independent tort/statutory claims not dependent on the Consulting Agreement. | Defendants argued they are "related to" the Agreement and thus arbitrable. | Held: Not arbitrable; claims do not implicate rights/obligations under the Consulting Agreement and so fall outside arbitration. |
Key Cases Cited
- Preston v. Ferrer, 552 U.S. 346 (U.S. 2008) (FAA establishes national policy favoring arbitration)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (questions of procedural arbitrability are for arbitrator unless parties clearly assign to court)
- Contec Corp. v. Remote Solution Co., Ltd., 398 F.3d 205 (2d Cir. 2005) (incorporation of AAA rules can be clear and unmistakable delegation of arbitrability)
- NASDAQ OMX Grp., Inc. v. UBS Secs., LLC, 770 F.3d 1010 (2d Cir. 2014) (incorporation of AAA rules does not overcome carve‑out ambiguity; court decides arbitrability if carve‑out arguably applies)
- Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218 (2d Cir. 2001) (two‑part test: valid arbitration agreement and whether dispute falls within its scope)
- Collins v. Aikman Prods. Co., 58 F.3d 16 (2d Cir. 1995) (distinguish collateral claims; arbitration of collateral matters depends on whether resolution requires contract construction)
- Specht v. Netscape Comm. Corp., 306 F.3d 17 (2d Cir. 2002) (focus on factual allegations to determine whether claims touch matters covered by agreement)