Opinion
02 Civ. 6505 (SAS)
March 10, 2003
Judd Burstein, Esq., New York, NY, For Plaintiff.
Samuel Feldman, Esq., Orloff, Lowenbach, Stifelman Siegel, P.A., Roseland, NJ, For Defendant.
OPINION AND ORDER
Lennox Lewis brings this action against boxing promoter New Jersey Sports Productions, Inc. ("Main Events"). In 1998, the parties entered into a contract related to the broadcasting and promotion of several of Lewis' boxing matches (the "Multi-Fight Agreement"). Lewis is seeking a judgment declaring that the Multi-Fight Agreement does not obligate him to use Main Events as his promoter for future matches. Main Events moves to compel arbitration of this dispute pursuant to the terms of a separate contract between the parties. For the reasons set forth below, Main Events' motion is denied.
I. BACKGROUND
Lewis is the current heavyweight boxing champion of the world and a citizen of the United Kingdom. Complaint ("Compl.") ¶ 3. Main Events is a boxing promoter incorporated in New Jersey with its principal offices in New Jersey. Id. ¶ 4. Between 1998 and 2000, Lewis and Main Events entered into two written agreements which are the subject of the instant dispute.
A boxing promoter collects revenue from various sources, such as television broadcasters and commercial sponsors, and then pays the expenses for presenting the boxing match. See Plaintiff's Memorandum in Opposition to Defendant's Motion to Compel Arbitration ("Pl. Mem.") at 2.
A. The Multi-Fight Agreement
On June 25, 1998, Lewis entered into the Multi-Fight Agreement, which provides for broadcasting and promotion of his boxing matches, or "bouts". See Multi-Fight Agreement, Ex. C to 12/18/02 Verification of Patrick C. English, attorney for Main Events ("English Ver."), at 1-2. Pursuant to this Agreement, television broadcasters Home Box Office ("HBO") and TVKO have the right to broadcast at least six of Lewis' future bouts. See id. In exchange for these rights, HBO and TVKO agree to pay licensing fees to Lewis' "Promoter."
As defined by the Multi-Fight Agreement, Main Events and Panix Promotions, Ltd. ("Panix") are collectively Lewis' "Promoter." Id. Accordingly, Main Events and Panix agree to arrange, present, and promote Lewis' bouts. However, the Multi-Fight Agreement is silent as to whether Main Events and Panix are Lewis' exclusive promoters. Lewis' ratification of this Agreement states, inter alia:
I agree that I shall be bound by the foregoing whether or not Promoter, or any of Main Events, Panix or Panix U.S. is the promoter for any of my bouts under the Multi-Fight Agreement, and I shall cause any other promoter for any of said bouts to contractually agree to all the terms and conditions of the Third Amendment and the Multi-Fight Agreement.
Third Amendment to the Multi-Fight Agreement ("Third Amendment"), Ex. D to 1/17/03 Declaration of Judd Burstein, attorney for Lewis ("Burstein Decl."), at 5 (emphasis added).
The parties dispute the validity of Lewis' ratification, which is dated September 12, 2000. Lewis claims that the ratification was signed as part of an amendment to the Multi-Fight Agreement. Compl. ¶ 8. Main Events acknowledges that the Multi-Fight Agreement was amended, but contends that Lewis never signed it. Answer ¶ 8; Defendant's Reply Memorandum of Law in Further Support of Its Motion to Compel Arbitration ("Def. Rep. Mem.") at 3.
B. The Tua Agreement
On October 18, 2000, Lewis entered into an agreement concerning the promotion of the fight between Lewis and David Tua (the "Tua Agreement"). Compl. ¶ 9; Amended and Restated Bout and Promotion Agreement (the "Tua Agreement"), Ex. E to English Ver., ¶ 7(1). Pursuant to the terms of the Tua Agreement, Main Events and Panix were given rights to promote the Tua bout. In exchange, Main Events and Panix agreed to pay Lewis' employer, Shogun Securities Ltd. ("Shogun"), a minimum fee ("purse") of $8 million dollars.
The Tua Agreement superceded a prior agreement entered into by the parties on August 14, 2000, entitled the Purse Bid Bout and Promotion Agreement. See Memorandum of Law in Support of Motion to Compel Arbitration ("Def. Mem.") at 3-5; Tua Agreement ¶ 7(1).
The Tua Agreement also states that:
[T]he Parties acknowledge that there exists a certain Multibout agreement including amendments among the Parties and Time Warner Sports [HBO] and the Parties further agree that they will use their best endeavors to fulfill the obligations therein on a commercially reasonable basis. . . .
Tua Agreement ¶ 7(m). In addition, the Tua Agreement includes the following arbitration clause:
Except for actions or proceedings seeking injunctive relief or specific performance . . ., any disputes between the Parties hereto, relating to or arising from the making, existence, terms of performance of this Agreement shall be resolved by an arbitration panel . . . .
Id. ¶ 7(b) (emphasis added).
The Tua bout occurred in November 2000, and the parties fulfilled their obligations with respect to that bout. Following the Tua bout, Lewis claims that he used Main Events as a promoter for three additional bouts, each pursuant to separate agreements. See Pl. Mem. at 7. However, Lewis no longer wishes to use Main Events' services. Compl. ¶ 12.
C. The Complaint
Lewis brings this action alleging that Main Events has contacted HBO repeatedly insisting that pursuant to the Multi-Fight Agreement, HBO must negotiate with Main Events for all of Lewis' future bouts. Compl. ¶ 13; Pl. Mem. at 7. The parties dispute whether the terms of Lewis' verification in the Multi-Fight Agreement require him to use Main Events as a promoter for his future fights. Lewis seeks a declaratory judgment that the Multi-Fight Agreement does not obligate him to use Main Events for future bouts.
Main Events moves to compel arbitration pursuant to the Tua Agreement's arbitration clause. Main Events contends that the Tua Agreement is at issue because its terms require Lewis to fulfill his obligations under the Multi-Fight Agreement, and therefore the arbitration clause should apply. See Def. Rep. Mem. at 4, 7. Lewis does not challenge the existence of the Tua Agreement's arbitration clause nor the validity of the Tua Agreement, but he argues that his claim only arises under the Multi-Fight Agreement, which does not have an arbitration clause. See Pl. Mem. at 15.
II. LEGAL STANDARD
Whether a dispute is arbitrable under the Federal Arbitration Act ("FAA") raises two questions:
"(1) whether there exists a valid agreement to arbitrate at all under the contract in question . . . and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement." Hartford Accident and Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219, 226 (2d Cir. 2001) (quoting National Union Fire Ins. Co. v. Belco Petroleum Corp., 88 F.3d 129, 135 (2d Cir. 1996)). "There is a strong federal policy favoring arbitration as an alternative means of dispute resolution." Id. However, "federal law `does not require parties to arbitrate when they have not agreed to do so.'"
Collins Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir. 1995)) (quoting Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989)).
III. DISCUSSION
Lewis' dispute concerning his obligations under the Multi-Fight Agreement is not arbitrable. First, the Multi-Fight Agreement contains no language indicating the parties' intent to have arbitration serve as the recourse for disputes arising under that Agreement. Second, neither party contends that the Multi-Fight Agreement was entered into with an understanding that disputes would be subject to arbitration. The FAA's primary purpose is to ensure that private agreements to arbitrate are enforced according to their terms. See Volt, 489 U.S. at 479. The FAA cannot be used to enforce a non-existent arbitration agreement. As a result, conflicts arising under the Multi-Fight Agreement are not subject to mandatory arbitration.
Although Main Events argues that the arbitration clause of the Tua Agreement should apply to Lewis' claim under the Multi-Fight Agreement, the Tua Agreement is inapplicable and irrelevant in this dispute. To begin, the Multi-Fight Agreement is separate and distinct from the Tua Agreement. The Multi-Fight Agreement concerns the broadcasting and promotion rights for more than six of Lewis' bouts. On the other hand, the Tua Agreement concerns the promotion and purse associated with only one bout. The Tua Agreement is only between Main Events, Panix, Shogun, and Lewis, while the Multi-Fight Agreement also involves HBO and TVKO. The Tua Agreement does not supercede the Multi-Fight Agreement. In addition, the Multi-Fight Agreement was executed in 1998, and obviously does not incorporate any terms of the Tua Agreement, which was executed in 2000. See Louis Dreyfus Negoce S.A. v. Blystad Shipping Trading Inc., 252 F.3d 218, 228 (2d Cir. 2001) (finding that the arbitration clause in a main agreement does not apply to a separate and distinct agreement, which does not incorporate the terms of the main agreement); Fairmont Shipping (H.K.), Ltd. v. Primary Indus. Corp., No. 86 Civ. 3668, 1988 WL 7805, at *4 (S.D.N.Y. Jan. 25, 1988) (same), aff'd, 940 F.2d 649 (2d Cir. 1991). Consequently, the Multi-Fight Agreement is not inextricably related to the Tua Agreement because disputes under the Multi-Fight Agreement can be resolved without any interpretation or consideration of the terms of the Tua Agreement. See Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64 (2d Cir. 1983) (holding that a dispute is inextricably tied to the main agreement where "resolution of [the] dispute necessarily implicates resolution of" terms of the main agreement); Triad Petroleum, Inc. v. Intercarbon Bermuda, Ltd., No. 83 Civ. 6190, 1984 WL 766, at *2 (S.D.N.Y. Aug. 16, 1984) (denying petition to compel arbitration where dispute is not "inextricably tied up with the merits of" the disputes under the main agreement).
Furthermore, Lewis' claim is limited to the narrow dispute of whether the terms of the Multi-Fight Agreement require him to use Main Events' services for his future bouts. He is not challenging the terms of the Tua Agreement. Indeed, Lewis recognizes that the Tua Agreement "obligates him to `use [his] best endeavors to fulfill [his] obligations [under the 1998 HBO multi-fight agreement] on a commercially reasonable basis." Pl. Mem. at 15 (alterations in original) (quoting Tua Agreement ¶ 7(m)). "He further acknowledges that if he has any obligations to Main Events under [the Multi-Fight Agreement], he is not presently honoring them. Finally, he also acknowledges and represents that he will honor those obligations if the Court determines they exist." Id.
As a result, Lewis' claim is not within the scope of the Tua Agreement's arbitration clause because it is not dependent upon the construction of the Tua Agreement or the parties' rights and obligations under that contract. See Louis Dreyfus, 252 F.3d at 224. The dispute can only be resolved under the terms of the Multi-Fight Agreement, as it is the only contract that addresses Lewis' obligation, if any, to use Main Events as a long term promoter. The purported ratification of the Multi-Fight Agreement governs the extent to which Lewis and his promoters are bound to the terms of that Agreement for future Lewis bouts. See Third Amendment at 5. In contrast, the Tua Agreement only acknowledges that the Multi-Fight Agreement exists and that the parties will "use their best endeavors to fulfill the obligations therein on a commercially reasonable basis." Tua Agreement ¶ 7(m). The Tua Agreement provides absolutely no insight into the actual obligations and rights of the parties under the Multi-Fight Agreement. Thus, Lewis' claim is completely independent of the Tua Agreement.
An example may serve to clarify the distinction between claims that fall within the Tua Agreement's arbitration clause and those that do not. The Tua Agreement requires that the parties fulfill the obligations of the Multi-Fight Agreement "on a commercially reasonable basis." If Lewis were seeking a judgment declaring that he is fulfilling the obligations of the Multi-Fight Agreement "on a commercially reasonable basis," the dispute would implicate the terms of both the Tua Agreement and the Multi-Fight Agreement. In other words, one could only determine whether the "commercially reasonable basis" provision of the Tua Agreement is being fulfilled by first determining Lewis' obligations under the Multi-Fight Agreement. In that situation, interpretation of the Tua Agreement would arise under the arbitration clause and consequently an arbitrator would also interpret the Multi-Fight Agreement. The instant case is quite different.
Lewis is requesting that the Court interpret the language of the Multi-Fight Agreement, which specifically addresses Lewis' obligations to his promoters. Because Lewis does not challenge the terms of the Tua Agreement and because the Multi-Fight Agreement can be interpreted without any consideration of the Tua Agreement, the arbitration clause is not triggered.
IV. CONCLUSION
For the foregoing reasons, Main Events' motion to compel arbitration is denied. A conference is scheduled for March 19, 2003 at 4:30 p.m. The Clerk is directed to close this motion.
SO ORDERED: