496 F.Supp.3d 518
D. Me.2020Background
- Parties: McKenzie (American Image Art, NY publisher) sues Brannan (personal representative of Robert Indiana Estate, ME) and Maine Attorney General concerning a November 2019 Mediation Term Sheet McKenzie says supersedes a 2008 publishing agreement.
- 2008 Agreement: bilateral publishing agreement contained a broad arbitration clause stating disputes "will be settled by arbitration through the American Arbitration Association, governed by the laws of the State of New York."
- Parallel New York matter: Morgan Art sued in SDNY; Judge Torres compelled arbitration under the 2008 Agreement; the Estate filed an AAA demand against McKenzie in June 2019 and the AAA arbitration is ongoing.
- Mediation Term Sheet: parties reached a November 26, 2019 document that McKenzie calls a binding settlement that, he says, supersedes the 2008 Agreement and calls for dismissal of the NY arbitration; the Estate disputes enforceability.
- Procedural posture: Estate moved to compel arbitration and to stay this Maine suit; McKenzie moved for a preliminary injunction to enjoin the NY arbitration and asked this Court to decide enforceability of the Mediation Term Sheet.
- District Court ruling: court held the 2008 arbitration clause (by specifying arbitration "through the AAA") incorporated AAA rules (including Rule 7(a)), thereby delegating the gateway arbitrability question to the arbitrator; the court granted the Estate's motion to compel arbitration, stayed the case pending the AAA’s arbitrability ruling, and dismissed McKenzie’s preliminary injunction motion without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability (gateway question)? | McKenzie: Court should decide whether the Mediation Term Sheet supersedes the 2008 Agreement; no clear delegation to arbitrator. | Estate: Parties agreed to arbitrate "through the AAA," which incorporates AAA rules (Rule 7(a)) and clearly delegates arbitrability to the arbitrator. | Held: Delegation found. By specifying AAA arbitration, the clause incorporated AAA rules and, under Awuah, Rule 7(a) clearly and unmistakably delegates arbitrability to the arbitrator. |
| Whether incorporation of AAA rules occurs when contract only references AAA (not its rules explicitly) | McKenzie: Mere reference to AAA does not clearly incorporate AAA rules; Biller supports court resolution absent clear delegation. | Estate: Agreement to arbitrate "through the AAA" implies incorporation per AAA Rule 1(a) and persuasive circuit law; thus Rule 7(a) applies. | Held: Reference to AAA was sufficient to incorporate AAA rules; AAA Rule 1(a) and circuit authority support incorporation, so Rule 7(a) delegates arbitrability. |
| Whether Estate waived right to arbitrate by litigation conduct | McKenzie: Suggests forum and equities favor court resolution; points to reliance on Mediation Term Sheet. | Estate: Moved promptly to compel arbitration and did not waive rights; active in AAA proceeding. | Held: No waiver; Estate timely moved to compel and preserved arbitration rights. |
| Whether preliminary injunction enjoining the NY arbitration should issue | McKenzie: Asserts likely success on merits (Term Sheet binding), irreparable harm, balance/public interest favor injunction. | Estate & AG: Term Sheet is unenforceable; equities/public policy favor arbitration; injunction unwarranted. | Held: Moot/denied without prejudice — because arbitrability was delegated to arbitrator and the court stayed proceedings, injunction dismissed without prejudice. |
Key Cases Cited
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (gateway arbitrability questions are for arbitrator only when parties clearly and unmistakably delegate them)
- Awuah v. Coverall N. Am., Inc., 554 F.3d 7 (1st Cir. 2009) (incorporation of AAA Rules is clear and unmistakable evidence delegating arbitrability via AAA Rule 7(a))
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (separability and enforcement of delegation clauses; courts enforce delegation unless the delegation clause itself is specifically challenged)
- AT&T Techs., Inc. v. Communications Workers of America, 475 U.S. 643 (1986) (general principle that courts decide arbitrability unless parties clearly delegate)
- Biller v. S-H OpCo Greenwich Bay Manor, LLC, 961 F.3d 502 (1st Cir. 2020) (distinguishes cases lacking AAA incorporation; certain superseding-contract claims may be for courts)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (procedural gateway questions are for arbitrator unless clearly for the court)
- Idea Nuova, Inc. v. GM Licensing Group, Inc., 617 F.3d 177 (2d Cir. 2010) (agreeing that language submitting disputes to AAA arbitration reasonably incorporates AAA rules)