Noah's Ark Processors v. UniFirst Corp.
310 Neb. 896
| Neb. | 2022Background:
- UniFirst and Nebraska Prime Group (Prime) executed a customer service agreement (CSA) in 2013 requiring arbitration of “all disputes.”
- Noah’s Ark Processors (Noah’s) acquired Prime’s meatpacking assets by foreclosure and began operating the plant on January 2, 2015; UniFirst continued providing services under the CSA through 2018.
- UniFirst invoiced the plant in the name “Nebraska Prime” (233 invoices from Aug 2017–Jan 2018); invoices were paid and UniFirst expanded services (new route, new garments/pricing) while believing Prime remained the customer.
- Noah’s terminated the CSA in January 2018; UniFirst demanded arbitration in June 2018 seeking damages; Noah’s sued in district court seeking a declaration it was not bound by the CSA or arbitration clause.
- The district court held a bench trial, found equitable estoppel (Noah’s conduct led UniFirst to reasonably believe Prime remained the customer and UniFirst relied to its detriment), denied waiver, and ordered Noah’s to arbitrate; Noah’s appealed.
- The Nebraska Supreme Court affirmed: Noah’s is equitably estopped from denying the CSA/arbitration clause; arbitration covers the disputes; evidentiary rulings were not an abuse of discretion.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Noah’s is bound to arbitrate under the CSA (equitable estoppel) | Noah’s: not a signatory; no conduct or notice binding it; no fraud | UniFirst: Noah’s conduct (payments, use of services, invoices in Prime’s name, CFO acknowledgment, termination for cause) misled UniFirst and UniFirst relied to its detriment | Court: Affirmed estoppel; Noah’s conduct estops it from denying the CSA/arbitration clause |
| Scope of arbitration — do billing disputes over non-CSA garments fall outside arbitration | Noah’s: some billing disputes involve items not in CSA and thus are for court | UniFirst: arbitration clause is broad (“all disputes of whatever kind”) and Noah’s is bound by CSA | Court: Arbitration provision is unambiguous and broad; disputes fall to arbitrator |
| Pleading/notice — equitable estoppel not properly pled | Noah’s: estoppel theory was unpled or raised too late | UniFirst: estoppel was pleaded as an affirmative defense and litigated; Noah’s had fair notice | Court: No prejudice to Noah’s; estoppel was pleaded and tried; ruling proper |
| Waiver/venue — UniFirst demanded arbitration in Kansas though CSA call for state capital | Noah’s: UniFirst’s Kansas venue demand waived arbitration or breached CSA | UniFirst: venue error was a mistake; conduct otherwise preserved arbitration rights; no prejudice | Court: Argument first raised on appeal; not considered; trial court found no waiver; affirmed |
| Admission of hearsay evidence at bench trial | Noah’s: various statements/documents admitted over hearsay objections prejudiced it | UniFirst: statements were offered for their effect on the listener, as agent admissions, or admitted as business records | Court: Admission not abuse of discretion; evidence went to weight not admissibility; no substantial prejudice |
Key Cases Cited
- Good Samaritan Coffee Co. v. LaRue Distributing, 275 Neb. 674, 748 N.W.2d 367 (2008) (arbitrability and stay of proceedings is a question of law for the court).
- Cullinane v. Beverly Enters.-Neb., 300 Neb. 210, 912 N.W.2d 774 (2018) (two-step analysis: contract formation and interpretation to determine arbitrability).
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (courts decide gateway arbitrability questions unless parties clearly delegate them to arbitrator).
- PRM Energy Systems, Inc. v. Primenergy, L.L.C., 592 F.3d 830 (8th Cir. 2010) (party cannot selectively invoke contract benefits and repudiate burdens).
- O’Brien v. Cessna Aircraft Co., 298 Neb. 109, 903 N.W.2d 432 (2017) (standard for abuse of discretion in evidentiary rulings).
- VKGS v. Planet Bingo, 309 Neb. 950, 962 N.W.2d 909 (2021) (appellate review standard for hearsay rulings).