Linglong Americas, Inc. v. Horizon Tire, Inc.
666 F. App'x 445
6th Cir.2016Background
- In 2006 Horizon and Shandong Linglong Tire Co. entered a five-year "Collaboration Agreement" making Horizon the sole U.S. distributor for certain light-truck tires and including an arbitration clause for disputes to be heard in China.
- The Agreement expired by its terms in December 2011 and was not renewed, but the parties continued business dealings and expanded product lines together.
- From 2014–2015 Horizon alleges Linglong breached post‑2011 obligations: soliciting U.S. customers, selling Crosswind tires through other channels, failing to deliver a large order, and not repaying a $3.6 million loan.
- Horizon sued Linglong in California in May 2015; Linglong filed suit in Ohio; Horizon dismissed California suit and asserted counterclaims in the Ohio action for breach, declaratory relief, and misappropriation of trade secrets.
- Linglong moved to dismiss or stay Horizon’s counterclaims under Rule 12(b)(1) and to compel arbitration under the expired Collaboration Agreement; the district court denied the motion, finding the arbitration clause did not apply and that Linglong waived arbitration.
- On appeal the Sixth Circuit reviewed de novo and affirmed, holding Horizon’s claims arose after the Agreement’s expiration and Horizon waived any claim based on rights created by the Agreement.
Issues
| Issue | Plaintiff's Argument (Horizon) | Defendant's Argument (Linglong) | Held |
|---|---|---|---|
| Does the Agreement's arbitration clause survive the contract's expiration so as to cover Horizon's post‑2011 claims? | Horizon contends its post‑2011 claims do not rely on the expired Agreement and thus are not subject to arbitration. | Linglong argues the arbitration clause survives expiration and covers the dispute because the relationship and rights trace to the Agreement. | Held: No. Majority of material events occurred after expiration and Horizon waived reliance on contractual rights, so arbitration clause does not apply. |
| Did Linglong waive any right to compel arbitration? | Horizon asserts it is not seeking relief under the expired Agreement and thus arbitration is inapplicable; it waived any claim based on continuing contractual obligations. | Linglong contends it retained the arbitration right despite lapse. | Held: Court accepted Horizon's concession; Linglong cannot compel arbitration because Horizon disclaimed contract‑based claims; judicial estoppel bars Horizon from asserting contract claims now. |
Key Cases Cited
- Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478 (6th Cir. 2009) (pleading facts are recited in favor of the nonmoving party on motions to compel arbitration)
- S. Cent. Power Co. v. Int’l Bhd. of Elec. Workers, Local Union 2359, 186 F.3d 733 (6th Cir. 1999) (arbitration clauses survive expiration only when the dispute "arises under" the contract)
- Huffman v. Hilltop Cos., LLC, 747 F.3d 391 (6th Cir. 2014) (de novo review standard for district court refusals to compel arbitration)
- Thomas v. Miller, 489 F.3d 293 (6th Cir. 2007) (waiver and related issues concerning contractual claims and post‑expiration rights)
- Pennycuff v. Fentress City Bd. of Educ., 404 F.3d 447 (6th Cir. 2005) (doctrine of judicial estoppel applies to inconsistent positions in litigation)