376 F. Supp. 3d 939
S.D.N.Y.2019Background
- Weyerhaeuser contracted with Premier for electrical contractor services at its Dierks, Arkansas sawmill; that contract contains a broad mutual arbitration clause covering disputes about performance (excluding good‑faith injunctive relief).
- Graybar (a nonparty to the Weyerhaeuser–Premier contract) supplied materials at Premier’s request and recorded a materialmen’s lien against the mill after nonpayment; Graybar filed a lien‑foreclosure suit in state court, later removed to federal court.
- Weyerhaeuser demanded arbitration against Premier for alleged breach of the Weyerhaeuser–Premier contract; that arbitration is pending before the AAA and Premier has not participated in arbitration conferences.
- Weyerhaeuser moved to compel arbitration between it and Premier and to compel Graybar (a nonsignatory) to arbitrate or, alternatively, to stay Graybar’s litigation pending the contract arbitration.
- Graybar opposed compelled arbitration and a stay, arguing it is not a signatory, its statutory lien claim is independent of the owner–contractor contract, and it would be prejudiced by delay.
Issues
| Issue | Plaintiff's Argument (Graybar) | Defendant's Argument (Weyerhaeuser) | Held |
|---|---|---|---|
| Whether Weyerhaeuser and Premier must arbitrate their contract dispute | N/A (Graybar not a party to that dispute) | The Weyerhaeuser–Premier contract contains a valid, broad arbitration clause covering performance disputes | Granted: Court compelled arbitration between Weyerhaeuser and Premier |
| Whether Graybar (nonsignatory) must be compelled to arbitrate its lien claims | Graybar: not a signatory; lien foreclosure is a statutory, independent claim and Arkansas law generally bars forcing nonsignatories to arbitrate absent recognized exceptions | Weyerhaeuser: Graybar’s claims are "inextricably intertwined" with the contract dispute and rely on Premier’s contractor status created by the contract, so Graybar should be bound | Denied: Court refused to compel Graybar to arbitrate (no Arkansas authority supporting an "intertwined" estoppel theory to bind a nonsignatory) |
| Whether the court should stay Graybar’s litigation pending the Weyerhaeuser–Premier arbitration | Graybar: the lien case is separate; proceeding will not create inconsistent rulings and a stay would prejudice Graybar | Weyerhaeuser: arbitration will resolve common facts (e.g., whether Premier kept mill free of liens) and a stay avoids inconsistent outcomes | Denied: Court declined a discretionary stay—Graybar not bound by arbitration and prejudice from indefinite delay outweighed stay benefits |
Key Cases Cited
- E.E.O.C. v. Woodmen of the World Life Ins. Soc., 479 F.3d 561 (8th Cir. 2007) (two‑part inquiry for motions to compel arbitration)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (federal policy favoring arbitration)
- Donaldson Co. v. Burroughs Diesel, Inc., 581 F.3d 726 (8th Cir. 2009) (federal law determines whether dispute falls within arbitration agreement; state contract law governs nonsignatory enforcement)
- Daisy Mfg. Co., Inc. v. NCR Corp., 29 F.3d 389 (8th Cir. 1994) (doubts resolved in favor of arbitration)
- 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193 (8th Cir. 2008) (broad arbitration clauses compel arbitration when disputes "touch matters covered by" the clause)
- AgGrow Oils, L.L.C. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 242 F.3d 777 (8th Cir. 2001) (factors for discretionary stay pending arbitration)
- Landis v. N. Am. Co., 299 U.S. 248 (1936) (district court’s power to stay proceedings to manage its docket)