Opinion
CASE NO. 1:19-cv-24235-JB
2020-12-10
The TAYLOR GROUP, INC., a Mississippi corporation, Taylor Machine Works, Inc., a Mississippi corporation, Sudden Service, Inc., a Mississippi corporation, Plaintiffs, v. INDUSTRIAL DISTRIBUTORS INTERNATIONAL CO., a Florida corporation, Defendant.
Jesse L. Beringer, Pro Hac Vice, Michael J. Lockerby, Pro Hac Vice, Foley & Lardner LLP, Washington, DC, Laura Ganoza, Mary Leslie Smith, Foley & Lardner LLP, Miami, FL, for Plaintiffs. Charles Christian Kline, James Anthony Gale, Samuel Abraham Lewis, Cozen O'Connor, Miami, FL, for Defendant.
Jesse L. Beringer, Pro Hac Vice, Michael J. Lockerby, Pro Hac Vice, Foley & Lardner LLP, Washington, DC, Laura Ganoza, Mary Leslie Smith, Foley & Lardner LLP, Miami, FL, for Plaintiffs.
Charles Christian Kline, James Anthony Gale, Samuel Abraham Lewis, Cozen O'Connor, Miami, FL, for Defendant.
ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION AND STAY ACTION
The parties consented to proceed before the undersigned on May 18, 2020. ECF Nos. [65], [66], and [67]. Thereafter, the cause was referred entirely to the undersigned to "take all necessary and proper action as required by law, including, if necessary, a jury or non-jury trial and entry of final judgment." ECF No. [68].
JACQUELINE BECERRA, UNITED STATES MAGISTRATE JUDGE
Plaintiffs, The Taylor Group, Inc. ("Taylor Group"), Taylor Machine Works, Inc. ("TMW"), and Sudden Service, Inc. ("SSI") (collectively, "Plaintiffs," or the "Taylor Plaintiffs"), filed their Complaint against Defendant Industrial Distributors International Co. ("IDICO" or "Defendant") alleging acts of infringement and unfair competition under the Trademark Act of 1946 (the "Lanham Act"), 15 U.S.C. § 1051 et seq. ECF No. [1] ¶¶ 2, 5–8. The following day, Plaintiffs filed a Motion for Preliminary Injunction against Defendant to prevent Defendant from making unauthorized use of Plaintiffs’ federally registered marks and from holding itself out as an authorized dealer of Plaintiffs’ genuine equipment, parts, and services. ECF No. [4] at 2. On November 27, 2019, Defendant filed a Motion to Compel Arbitration and Stay the Action and its Response in Opposition to the Motion for Preliminary Injunction. ECF Nos. [25], [28]. Defendant also advised the Court that they filed a Request for Arbitration with the International Court of Arbitration in New York and submitted to arbitration its rights under the IDICO Marketing Agreement. ECF No. [25] at 2. Plaintiffs filed their Reply to the Opposition to the Motion for Preliminary Injunction on December 2, 2019, and a Response to the Motion to Compel Arbitration and Stay the Action on December 11, 2019. ECF Nos. [31], [39].
A Status Conference Hearing took place on January 10, 2020 after which the parties were given leave to submit supplemental briefs on the issue of whether the Court had jurisdiction to rule on Plaintiffs’ Motion for Preliminary Injunction while the Motion to Compel Arbitration and Stay the Action was still pending. ECF No. [51]. The parties submitted supplemental briefing regarding this issue. ECF Nos. [52], [53], [55], [59], [61]. Several months later, the parties requested to have the matter referred to the undersigned for full disposition.
Thereafter, a telephonic hearing took place on June 1, 2020. ECF Nos. [70], [71]. After the telephonic hearing, the parties filed supplemental briefing. ECF Nos. [72], [74]. On October 6, 2020, Plaintiffs notified the Court that the Superintendent of Industry and Commerce in Colombia rejected the trademark application by IDICO for the registration of Taylor marks in Colombia. ECF Nos. [76-2] at 21, [77-2] at 21.
On November 19, 2020, the Court heard oral argument on the Motion to Compel Arbitration ("Hearing"). ECF No. [81]. Prior to the Hearing and at the request of the Court, the parties each submitted a report describing the status of the arbitral proceeding, including the parties, causes of action, and contracts in dispute. ECF Nos. [79], [80]. Finally, at the request of Defendant, the parties were each permitted to submit briefing on one issue that had been identified at the Hearing. ECF Nos. [82], [83], [86]. The pending Motion to Compel Arbitration and Stay the Action, ECF No. [25], is now ripe for disposition.
I. BACKGROUND
Plaintiff, Taylor Group, is a privately held company headquartered in Louisville, Mississippi, currently under the leadership of the third generation of the Taylor family. ECF No. [1] ¶¶ 12, 15. Its affiliates, among others, include Plaintiff TMW and Plaintiff SSI. Taylor Group has operated in the United States since 1927, manufacturing agricultural, forestry, and reforestation equipment. Id. ¶ 12. In the 1950's, Taylor began developing forklift trucks, a product Taylor Group continues producing to this day. Id. ¶¶ 13–15. Taylor Group's "Big Red" forklift machines are used throughout the world in diverse industries for all types of materials handling jobs. Id. ¶ 16. Customers who purchase Taylor machines enjoy aftermarket support in parts and repairs offered through SSI. Id. ¶ 18. As part of its business, Plaintiffs also own nine different active registered marks. Id. ¶ 19. Plaintiffs state that "through decades of widespread use, sales, advertising, and promotion, the [Taylor] Marks have become famous and have earned wide renown as identifiers of quality forklifts, parts, and service." Id. ¶ 22. A. The International Equipment Distribution Agreement And The International Parts And Service Agreement
These include the following: Taylor Sudden Service, registration number 885,228; Big Red Taylor, registration number 887,106; Taylor, registration number 2,119,117; Big Red, registration number 2,121,046; Big Red Taylor, registration number 3,367,539; Taylor, registration number 3,379,971; Big Red, registration number 3,425,059; Vision Plus, registration number 4,118,756; and Taylor Power Systems, registration number 4,320,291. ECF No. [1] ¶ 19.
On January 4, 1991, TMW and Taylor Machine Works International ("International") entered into an agreement whereby TMW granted International certain overseas distribution rights to Taylor equipment and parts (the "International Equipment Distribution Agreement"). ECF No. [1-7] at 2. International, despite its name and distributor relationship, was not owned by or otherwise a part of Plaintiffs. ECF No. [1] ¶ 3. The overall objective of the International Equipment Distribution Agreement was "the development and implementation thereafter of an International Sales program for the sole interest of increasing TAYLOR equipment, parts and service sales throughout the International marketplace which will work economically for the benefit of both companies." ECF No. [1-7] at 2. In the International Equipment Distribution Agreement, International agreed to not engage in "contractual or business relationships or arrangements with competitive manufacturers of industrial lift trucks" that were the same or similar to Taylor's. Id. at 3.
The International Equipment Distribution Agreement also contained the following relevant provisions. Under the "TERRITORY" heading of the International Equipment Distribution Agreement, it states that:
INTERNATIONAL shall be the sole export management organization engaged by TAYLOR in the territory outlined as all geographic locations outside the continental United States, Alaska, Hawaii and Canada (all provinces thereof). TAYLOR shall not contract with, or otherwise engage, any other company, individual or other entity to conduct any export management function of Taylor Machine Works, Inc. in the above-stated geographic locations during the period of time that this Agreement is in effect without first obtaining the prior written consent of INTERNATIONAL, which consent shall not be unreasonably withheld.
Id. at 5. Under the heading "AGENCY," the International Equipment Distribution Agreement specified that this was not an agency contract and stated as follows:
IT IS UNDERSTOOD AND AGREED THAT INTERNATIONAL, AS AN INDEPENDENT BUSINESS, IS A SEPARATE LEGAL ENTITY FROM TAYLOR, AND THE RELATIONSHIP ESTABLISHED IS THAT OF A BUYER AND SELLER, INTERNATIONAL BUYING THE SAID PRODUCTS FROM TAYLOR FOR RESALE TO OTHERS FOR ITS OWN ACCOUNT. INTERNATIONAL IS NOT, IN ANY SENSE, AN AGENT OF TAYLOR AND HAS NO AUTHORITY TO TRANSACT ANY BUSINESS IN TAYLOR'S NAME OR TO INCUR ANY OBLIGATION OR LIABILITY FOR OR AGAINST TAYLOR, OR TO BIND TAYLOR IN ANY MANNER WHATSOEVER.
Id. at 10–11. Finally, under the heading "NO ASSIGNMENT," it also stated that:
[t]he Agreement is not assignable in whole or in part by either party, and it is understood and agreed that the right extended by TAYLOR to sell TAYLOR products is not an asset of INTERNATIONAL, but belongs at all times to TAYLOR, subject to the terms of this Agreement.
Id. at 11.
On December 30, 1991, International entered into a similar agreement with SSI for international parts and services ("International Parts and Service Distribution Agreement"). ECF Nos. [1] ¶ 36, [1-8] at 1–8. The territory provision of the International Parts and Service Distribution Agreement limited the agreement to all countries outside the United States, except Canada. ECF No. [1-8] at 3. It had similar provisions with respect to agency and assignment. Id. at 5–6.
These agreements between International and TMW and International and SSI were terminated on September 3, 2019, pursuant to an asset purchase agreement whereby Taylor International, LLC, a Mississippi limited liability company whose sole member is TMW, repurchased from International the rights that had been provided in the two agreements noted above (the "Asset Purchase Agreement"). ECF No. [1] ¶¶ 40–45. The relevant portion of the Asset Purchase Agreement will be addressed below.
B. IDICO's Relationship with Taylor
IDICO is a Florida corporation that has been marketing and distributing Taylor machines in the Dominican Republic and Colombia since the 1990s. ECF Nos. [25] at 2, [25-1] at 4. As outlined more specifically below, IDICO marketed and distributed Taylor products as a result of its agreement and relationship with International, although it also had contacts with some members of Plaintiffs’ companies and employees. Defendant submitted the Affidavit of IDICO's President, Paolo Amore ("Amore"), to describe the relationship between IDICO and Taylor. ECF No. [25-1]. According to Amore, he was approached in the early 1990s by a customer in the Dominican Republic who needed assistance sourcing parts for a Taylor forklift. Id. ¶ 11. Amore avers that he called Doug Hulse, who was at International and was able to source the parts. Id. ¶¶ 13–14. From then on, Amore continued to place Taylor parts orders with Mr. Hulse. Id. ¶ 14.
Amore stated that he and IDICO's Operations Manager, Ward Casterton, were invited to Mississippi to tour the Taylor factory and meet the Taylor family—including Robert Taylor, his father ("Big Red"), his older brother William ("Lex"), and Donnie Woodruff. Id. Over the years Amore visited the Taylor factory and met with the Taylor family several times and "[e]ach time the Taylors inquired whether [Amore] could sell their product in the [Dominican Republic]." Id. ¶ 16. Amore told the Taylor family that "the [Dominican Republic] was primarily a used machine market at that time," but that if he could evidence a relationship with Taylor, then "it would certainly be possible to convince customers in the [Dominican Republic] to purchase new Taylor equipment." Id. ¶ 17. Thereafter, Amore stated that Big Red and Lex Taylor authorized him and encouraged him "to use the Taylor name and Taylor mark(s) in [his] marketing efforts and to hold [himself] out as the Taylor representative in the [Dominican Republic]." Id. ¶ 18. Amore was encouraged to participate in trade shows for which half of the expenses were incurred by International, with whom he placed all orders. Id. Over the years, International wrote numerous letters confirming to potential new customers that IDICO was Taylor's authorized agent in the Dominican Republic. ECF Nos. [25] at 4, [25-1] at 5.
IDICO proffers that it enjoyed a close working relationship directly with the Taylor Plaintiffs. ECF No. [25] at 1–8. For example, Teresa Taylor, Robert and Lex's sister, who oversaw Taylor's marketing, provided IDICO with the Taylor logo so that they could create IDICO business cards incorporating the logo. ECF Nos. [25] at 5, [25-1] at 7. Taylor also provided IDICO with Taylor branded promotional materials and provided training for IDICO sales and service personnel at the Taylor factory. ECF Nos. [25] at 5–6, [25-1] at 5–7. Taylor also discussed with IDICO the improper activity of other Taylor dealers selling in the Dominican Republic and Colombia, and Taylor agreed to add a special code number to each part "to help identify dealers selling into IDICO's territory." ECF Nos. [25] at 6, [25-1] at 8, 233. In 2016, Robert Taylor and Donnie Woodruff asked IDICO to show its commitment by making a one-time purchase of over $3 million in Taylor machines to be kept at the factory until sold. ECF Nos. [25] at 6, [25-1] at 9. IDICO agreed and purchased $2 million in Taylor machines that were kept in the factory until sold. ECF Nos. [25] at 6, [25-1] at 9. In 2017, Robert Taylor, "liked" and "retweeted" posts on Instagram and Twitter where IDICO used the Taylor marks in conjunction with the IDICO marks. ECF No. [25-1] at 3. In sum, the Taylor group was aware of IDICO's business. See ECF No. [33-1] at 10–13. There are no written agreements between Plaintiffs and IDICO.
In his affidavit, Amore specifies that Taylor refers to the Taylor Group, TMW, and SSI, collectively. ECF No. [25-1] at 1.
C. The Marketing Agreement Between IDICO And International
In 1999, IDICO entered into a written agreement with International whereby IDICO was appointed as a marketing agent for Taylor machines in the Dominican Republic (the "Marketing Agreement"). ECF Nos. [25] at 2, [25-1] at 25–35. The IDICO Marketing Agreement was between International and IDICO, with no reference to any of the Taylor Plaintiffs, and specified that "[t]he Company grants to the Agent the right to market the equipment ...." ECF No. [25-1] at 26. There was no reference to any exclusivity between IDICO and International. The IDICO Marketing Agreement could be terminated "by either party at any time after the date of its approval with or without cause, by giving ninety (90) days written notice ...." Id. at 31. Finally, and at issue here, the IDICO Marketing Agreement contained the following arbitration clause:
22.b. This agreement shall be binding, and shall be generally construed with the laws of the State of New Jersey, U.S.A. In the event of a dispute between the Company and the Agent, the International Chamber of Commerce shall be the arbitrating body. Their decision shall be considered binding to both parties.
Id. at 33. Colombia was later added to IDICO's territory in 2009. ECF No. [25] at 2.
It appears from the record that there was no separate Marketing Agreement or addendum between International and IDICO authorizing IDICO to act as Taylor's authorized agent in Colombia. However, International wrote numerous letters confirming IDICO's authority to potential new customers. ECF Nos. [25] at 4–5, [25-1] at 6–7, 48–55.
On May 16, 2018, International terminated the IDICO Marketing Agreement by sending a Notice of Termination because of the "continued lack of Taylor business advancement in both the Dominican Republic and Colombia ...." ECF No. [25-1] at 256. The letter continued, stating that, until the date of termination, ninety days from the date of the Notice, IDICO "may still place part orders on the factory under the current terms and conditions" and that "[p]ayment [would] be expected, in full, for any parts ordered and not paid for yet, and any parts ordered during this period of time." Id. International's President, Doug Hulse, copied Robert Taylor and Davis Taylor on the letter and emailed them regarding the termination of the IDICO Marketing Agreement. ECF Nos. [25-1] at 10, 256, [33-1] at 10–13.
Notwithstanding the termination of the IDICO Marketing Agreement, Amore stated that from May 16, 2018, "IDICO had access to Taylor's internal ordering system and Taylor accepted and filled $647,727.42 worth of IDICO's orders." ECF No. [25-1] at 10. Amore stated that from his perspective it was "business being conducted as usual." Id. A letter dated January 3, 2019 from a parts and support manager at International noted IDICO was "an authorized parts and equipment reseller into the territory of the Dominican Republic." ECF No. [33-1] at 17. It was not until October 31, 2019 that "Taylor cut off IDICO's access to its international ordering system without any notice." ECF No. [25-1] at 10.
On September 9, 2019, International informed IDICO that it was acquired by a Taylor entity and later identified Jairo De Maarten as IDICO's immediate contact. ECF Nos. [25] at 7, [25-1] at 258. During the weeks of September 16 and September 23, 2019, De Maarten visited five customers in Colombia for the purpose of informing them that International would "no longer be distributing [Taylor] equipment and parts in Colombia, either directly or through an authorized dealer." ECF No. [5-1] ¶ 2. In turn, those five customers all informed De Maarten that their source for Taylor equipment and parts had been IDICO. Id. However, all five of those customers expressed dissatisfaction with IDICO and four of the five companies no longer purchase parts or equipment from IDICO. Id. ¶¶ 3–28.
D. Taylor's Claims Against IDICO
On October 14, 2019, Plaintiffs filed the instant Complaint against IDICO alleging that IDICO engaged in trademark infringement and unfair competition under the Lanham Act. ECF No. [1] ¶¶ 56–71. Plaintiffs claim that International had no right to appoint IDICO as an authorized Taylor dealer through any agreement with IDICO, IDICO was not in fact an authorized dealer, and Taylor never licensed IDICO to use any Taylor marks. Id. ¶¶ 3, 45, 52–53. Plaintiffs state that because IDICO continues to use the Taylor marks, customers are likely to confuse IDICO for an authorized Taylor dealer. Id. ¶ 67. For this reason, Plaintiffs request not only a judgment finding that IDICO violated the Lanham Act but also an injunction preliminarily and permanently restraining and enjoining IDICO from: (a) [u]sing the Taylor marks, to advertise, market, promote, supply, or distribute new materials handling equipment or parts; and (b) [e]ngaging in any other activity constituting unfair competition with the Taylor Plaintiffs. Id. at 23.
Defendant counters that any decision regarding injunctive relief should be stayed until the Court determines whether the parties’ claims must be arbitrated pursuant to the IDICO Marketing Agreement. ECF No. [28] at 5. Defendant states that the Taylor Group was fully aware of the Marketing Agreement between IDICO and International, accepted the benefits of it, ratified it, and should be estopped to deny such appointment. ECF No. [25] at 7. For these reasons, Defendant filed a request for arbitration with the International Court of Arbitration "seeking a determination as to its rights under the IDICO Marketing Agreement, the ownership of the right to use the relevant trademarks in the [Dominican Republic] and Colombia, and damages for Taylor's wrongful termination of the IDICO Marketing Agreement...." Id. at 8. IDICO's affiliates also "filed to register the marks used by IDICO over the past 25 years in the [Dominican Republic] and Colombia to protect the good will IDICO created." Id. at 7.
E. The Pending ICC Arbitration
On November 17, 2020, the parties each filed submissions to the Court describing the status of the ongoing ICC arbitral proceeding. ECF Nos. [79], [80]. IDICO explained that the arbitral proceeding was currently against TMW, SSI, and International and that in that arbitration they claim that their rights in the Dominican Republic and Colombia, as established in the IDICO Marketing Agreement, were terminated without cause. ECF No. [79] at 2. IDICO is seeking an award of damages in excess of three million dollars, a declaration that International's distribution of the purchase price for the sale of its assets constitutes a fraudulent transfer under New Jersey law, and attorneys’ fees and costs. Id. at 4–5. IDICO, however, is not seeking a reinstatement of the IDICO Marketing Agreement. TMW and SSI object to jurisdiction before the arbitral panel because neither is a party, signatory, or successor to the IDICO Marketing Agreement. ECF No. [80] at 5. International seeks dismissal of the claims by arguing that the Marketing Agreement with IDICO was not wrongfully terminated. Id. at 7–10.
Plaintiff, Taylor Group, was initially included in the arbitration but was dismissed on April 2, 2020. ECF No. [80] at 2.
II. ANALYSIS
As an initial matter, the Court must first determine whether the question of arbitrability of the dispute is properly before this Court or whether that question should be, as Defendant suggests, determined by the arbitrator as part of the pending ICC proceeding. If the Court finds that it has the authority to decide the question, the Court must then determine whether Plaintiffs are bound by the arbitration clause in the Marking Agreement. The Court concludes, for the reasons noted below, that it has the authority to decide whether Plaintiffs are compelled to arbitrate, and finds that Plaintiffs cannot be compelled to arbitrate the claims that were set forth in the Complaint.
A. The Court Has The Authority To Decide Whether Non-Signatories To The Arbitration Agreement Should Be Obligated To Arbitrate Their Claims.
IDICO argues that this Court must defer to the ICC's decision on whether Plaintiffs, who are non-signatories to the arbitration clause should be compelled to arbitrate, because the Court can "take no action that would obstruct the arbitrator's power to determine which parties are bound to arbitrate." ECF No. [72] at 3. Specifically, IDICO argues that because the IDICO Marketing Agreement requires arbitration before the ICC but does not specify any alternate rules, the ICC rules apply. Id. at 3. Thereafter, because the ICC rules state that the arbitrator must decide the question of arbitrability, this Court should not decide the issue of whether Plaintiffs should be compelled to arbitrate. Id. IDICO relies on the Supreme Court's opinion in First Options of Chicago v. Kaplan , which held that "a court must defer to an arbitrator's arbitrability decision when the parties submitted that matter to arbitration." 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). IDICO then cites to Gorelik v. Dillon , where the Eleventh Circuit further clarified that when:
an arbitration agreement incorporates (by reference) arbitration rules providing the arbitrator the authority to rule on his or her own jurisdiction, including the validity and scope of the arbitration provision, the parties ‘clearly and unmistakably’ agreed that the arbitrator—and not the court—should decide issues pertaining to arbitrability.
No. 10-20877-civ-JORDAN, 2010 WL 11553317, at *5 (S.D. Fla. Dec. 15, 2010) (citing Terminix Int'l Co. v. Palmer Ranch Ltd. , 432 F.3d 1327, 1332 (11th Cir. 2005) ). IDICO proposes that "[o]nce there is clear and unmistakable evidence in the arbitration agreement that the parties to that agreement intended to arbitrate arbitrability, it is up to the arbitrator to determine what non-signatories may be bound to arbitrate under ordinary principles of contract law." ECF No. [72] at 4. They propose that "any other interpretation [of the Kaplan test] would lead to hopeless conflicts." Id.
Plaintiffs countered that IDICO conceded that the question of arbitrability was before this Court when it filed its Motion to Compel Arbitration, ECF No. [25]. ECF No. [73] at 14–25. Further, Plaintiffs propose that Kaplan actually supports their position because the Supreme Court held that non-signatories did not "clearly agree to submit the question of arbitrability to arbitration" and therefore the decision was subject to independent review by the courts. Id. at 16 (citing 514 U.S. at 947, 115 S.Ct. 1920 ). Finally, Plaintiffs state that even if they were parties to the arbitration agreement, there is no clear language in the IDICO Marketing Agreement indicating that the arbitrator should decide arbitrability. Id. at 19.
The Court finds that the question of whether a non-party is bound by an arbitration clause is within the sound discretion of the court and not an arbitrator. Indeed, in delineating the clear and unmistakable standard, the Eleventh Circuit clearly noted that its finding would necessarily be limited to "the parties to that contract." Gorelik , 2010 WL 11553317, at *7 (emphasis in original). See also Contec Corp. v. Remote Solution, Co. , 398 F.3d 205, 209 (2nd Cir. 2005) ("[J]ust because a signatory has agreed to arbitrate issues of arbitrability with another party does not mean that it must arbitrate with any non-signatory."). Although an arbitrator may have the authority to decide the scope of the claims of the parties that have agreed to proceed to arbitration, that cannot encompass the issue of whether its jurisdiction applies to non-signatories. Indeed, if it did, the issue of whether a non-signatory could be compelled to arbitrate would rarely, if ever, be before a court. Because "[a]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit," the Court cannot make the leap that an agreement to arbitrate the issue of arbitrability can encompass non-signatories. United Steelworkers v. Warrior & Gulf Navigation Co. , 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) ; see also Griswold v. Coventry First LLC , 762 F.3d 264, 271 (3rd Cir. 2014) ("The presumption in favor of arbitration does not extend ... to non-signatories to an agreement; it applies only when both parties have consented to and are bound by the arbitration clause."). Nor is the Court persuaded that simply because it might be easier or more expeditious to have one body decide all the issues between these parties that the Court should abdicate is jurisdiction over the Lanham Act claims at issue. Having determined this threshold question, the Court must now consider whether Plaintiffs, as non-signatories, should be compelled to arbitrate their claims against IDICO.
B. As A Non-Signatory, Plaintiffs Should Not Be Compelled To Arbitration.
It is well-settled that a non-signatory to an arbitration clause can be compelled to arbitrate under various theories. Here, IDICO proposed that Plaintiffs should be compelled to arbitrate their claims under the following theories: (1) Taylor assumed the IDICO Marketing Agreement as a result of the Asset Purchase Agreement and is now bound by it; (2) there was an agency relationship between Taylor and International that binds Plaintiffs to the IDICO Marketing Agreement; and (3) Plaintiffs should be estopped from refusing to arbitrate the case. ECF No. [25] at 12–20. As outlined below, the Court finds that these theories are not applicable.
The Federal Arbitration Act (the "Act"), which codified the multi-lateral treaty regarding arbitrations, encourages the recognition and enforcement of commercial arbitration agreements. 9 U.S.C. §§ 201 et seq. ; see Bautista v. Star Cruises , 396 F.3d 1289, 1299 (11th Cir. 2005). The Act requires that a motion to compel arbitration be granted if four jurisdictional prerequisites are met: (1) there is an agreement in writing to arbitrate the subject of the dispute, (2) the agreement provides for arbitration in the territory of a signatory of the Convention, (3) the agreement arises out of a legal relationship, whether contractual or not, that is considered commercial, and (4) a party to the agreement is not an American citizen or the commercial relationship has some reasonable relation with one or more foreign states. Suazo v. NCL (Bahamas), Ltd. , 822 F.3d 543, 546 (11th Cir. 2016). Although "[f]ederal law establishes the enforceability of arbitration agreements, [it is] state law [that] governs the interpretation and formation of arbitration agreements." Employers Ins. of Wausau v. Bright Metal Specialties, Inc. , 251 F.3d 1316, 1322 (11th Cir. 2001) (citing Perry v. Thomas , 482 U.S. 483, 107 S. Ct. 2520, 96 L. Ed. 2d 426 (1987) ). IDICO argues that Plaintiffs should be compelled to arbitration because they satisfy the four jurisdictional prerequisites in that: (1) there is an agreement in writing to arbitrate—the IDICO Marketing Agreement, (2) the IDICO Marketing Agreement would permit arbitration in the United States, which is a signatory to the Convention, (3) the agreement arises out of a legal relationship between IDICO "act[ing] as a marketing agent" for Taylor, and (4) the commercial relationship was regarding the marketing of United States Taylor products in the Dominican Republic and Colombia. ECF No. [25] at 10–11.
Here, however, the issue is whether non-signatories to an arbitration agreement can be compelled to arbitration. As such, the Court's analysis does not turn on the jurisdictional prerequisites noted above, but rather, on the various theories of contract that can be used to bind a non-party to a contract. "State law provides the rule of decision on the question of whether an arbitration provision may be enforced against a nonparty." Guy Roofing, Inc. v. Angel Enterprises, LLC , No. 17-14081-CIV, 2018 WL 1863764, at *4 (S.D. Fla. Mar. 1, 2018), report and recommendation adopted, No. 2:17-CV-14081, 2018 WL 1863602 (S.D. Fla. Mar. 20, 2018) ; see also Arthur Andersen LLP v. Carlisle , 556 U.S. 624, 631, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009) ; Lawson v. Life of the South Ins. Co. , 648 F.3d 1166 (11th Cir. 2011). "Under Florida law, a non-signatory can be bound to arbitrate under the following five theories: 1) incorporation by reference; 2) assumption; 3) agency; 4) veil piercing/alter ago; and 5) estoppel." KWEST Commc'ns, Inc. v. United Cellular Wireless Inc. , No. 16-20242-CIV, 2016 WL 10859787, at *6 (S.D. Fla. Apr. 7, 2016), report and recommendation adopted , No. 16-20242-CIV, 2016 WL 10870449 (S.D. Fla. June 28, 2016) (citing Johnson v. Pires , 968 So. 2d 700,701 (Fla. 4th DCA 2007) ).
Pursuant to the Marketing Agreement, any interpretation of the provisions of the contract is governed by New Jersey state law. ECF No. [25-1] at 33. However, the issue here is not one of contract interpretation, the issue is whether the equitable doctrines dictate that Plaintiffs, all non-signatories, should be compelled to arbitration; the Court is not in interpreting the meaning of any particular contract provision. As such, the Court will review the matter under Florida law. It should be noted that the issue of choice of law was addressed by counsel at the Hearing on this matter and counsel agreed that there was no substantive difference between the law of Florida and New Jersey on this issue.
As noted above, IDICO argues that Plaintiff should be compelled to arbitrate under any one of these three theories: assumption, agency, or estoppel. ECF No. [25] at 11. In response, Taylor states that they are not bound to the IDICO Marketing Agreement because they never signed the contract. ECF No. [39] at 7–13. Specifically, as to the theories proposed by IDICO, it states that International had no authority to bind the Taylor Plaintiffs through the IDICO Marketing Agreement, no agreement was ever amended to make Taylor a party to an arbitration or agreement with IDICO, and that the IDICO Marketing Agreement was terminated by International before it could even be assumed by Plaintiffs following the purchase of International. Id. As to the agency and estoppel theories, Taylor argues that International was not its agent, and that the estoppel theories do not apply, among other reasons, because it is a non-signatory seeking to address rights that do not arise from the IDICO Marketing Agreement. Id. at 13–21.
1. Plaintiffs Cannot Be Compelled To Arbitrate Under A Theory Of Assumption Because The Asset Purchase Agreement Did Not Include The IDICO Marketing Agreement.
Under Florida law, "an assignee or successor who assumes the rights of a party to an agreement with a mandatory arbitration provision is also bound by that arbitration provision." KWEST , 2016 WL 10859787, at *8 ; see Akin Bay Co., LLC v. Von Kahle , 180 So. 3d 1180, 1182–83 (Fla. 3d DCA 2015) (binding the nonsignatory creditor assignee to the arbitration provision in the underlying agreement between the financial advisor assignor and the debtor); see also Cone Constructors, Inc. v. Drummond Cmty. Bank , 754 So. 2d 779, 780 (Fla. 1st DCA 2000) (finding that assignee was bound by the terms of the assigned contract, including the arbitration provision). The law is not at issue, the question before the Court is whether the IDICO Marketing Agreement was assumed by the Asset Purchase Agreement.
IDICO argues that the new entity—Taylor International LLC, wholly owned by TMW—purchased all the distribution rights of International which included the IDICO Marketing Agreement. ECF No. [25] at 12. Although International had sent a termination notice on May 16, 2018, terminating the agreement in ninety days, IDICO states that this was an effective termination. ECF No. [40] at 7. IDICO points instead to a letter from January 3, 2019 which stated that "[IDICO] is noted as an authorized parts and equipment reseller into the territory of the Dominican Republic" to demonstrate that even after the alleged, termination, International still recognized their status as a Taylor reseller. Id. (citing ECF No. [33-1] at 17).
A review of the Asset Purchase Agreement undermines IDICO's position. Here, Plaintiff TMW, through International LLC, purchased certain assets of International. The purchased assets were those identified in, and limited by, Section 2.1 of the Asset Purchase Agreement. ECF No. [39-1] at 12–13. The liabilities that the purchaser agreed to assume, pursuant to Section 2.3 of the Asset Purchase Agreement were "None." Id. at 13–14. At issue, therefore, is: (1) whether as part of that Purchase and Sale Agreement, TMW purchased or assumed the contract that International had with IDICO, and (2) if it did, would the Plaintiffs be subject to the arbitration clause in the Marketing Agreement. The IDICO Marketing Agreement was not listed as an asset to be purchased. In addition, the liabilities that the purchaser agreed to assume, pursuant to Section 2.3 of the Asset Purchase Agreement were "[n]one." ECF Nos. [1] ¶ 41, [39-1] at 13–14. Finally, Section 2.4(g) specifically excluded from purchase those liabilities "relating to, resulting from, or arising out of, any former operation of the [International] that has been discontinued or disposed of prior to the Closing." ECF No. [39-1] at 14. Based on the Court's reading of the Asset Purchase Agreement, the IDICO Marketing Agreement was not assumed by Plaintiffs.
Indeed, the failure to include the Marketing Agreement does not appear to be an oversight. To the contrary, the record shows that International terminated the agreement on May 16, 2018, a termination that the Taylor Group was advised of by e-mail. Specifically, International sent IDICO a ninety-day notice of termination letter on May 16, 2018, which unilaterally terminated the contract prior to the effective date of the Asset Purchase Agreement because of the "continued lack of business advancement in both the Dominican Republic and Colombia ...." ECF No. [23-2] at 3. There is no evidence in the record that IDICO took any steps to dispute that termination before the Asset Purchase Agreement was entered into, or any time before they filed their claims before the ICC.
IDICO argues that "International walked the notice [of termination] back and the parties kept doing business." ECF No. [40] at 6. The record does not support that claim. Instead, the termination letter from May 16, 2018 acknowledges that IDICO could "still place part orders on the factory under the current terms and conditions" until the termination became effective in ninety days. ECF No. [33-1] at 9. Indeed, although IDICO could continue doing business with International until and after the termination date, the Court is unpersuaded that this is evidence that the contract was not terminated or that the termination was "walked back." At best, IDICO might be able to argue (as they did at the Hearing) that there is an implied agreement. However, such an implied agreement would certainly not have an arbitration clause. In short, Plaintiffs cannot be compelled to arbitration based on the theory that TMW assumed the IDICO Marketing Agreement at the time of the Asset Purchase Agreement.
2. International Was Not Plaintiffs’ Agent, And Therefore, Cannot Be Compelled To Arbitrate Under The Marketing Agreement.
A non-signatory to an arbitration agreement can be compelled to arbitrate if one of the signatories to an arbitration agreement is the agent of the non-signatory. Kwest , 2016 WL 10859787, at *6. An agency relationship requires: (1) acknowledgement by the principal that the agent will act for it; (2) acceptance by the agent; and (3) control by the principal over the action of the agent. MasTec Renewables Puerto Rico LLC, Plaintiff, v. Mammoth Energy Servs., Inc. & Cobra Acquisitions, LLC, Defendants , No. 20-20263-CIV, 2020 WL 6781823, at *6 (S.D. Fla. Nov. 18, 2020). In analyzing the first two elements, some of the factors to consider include whether there is a sharing of employees, splitting of commission, exclusive to working with each other, or a sharing of meaningful market research or trade information. Commodity Futures Trading Commission v. Gibraltar Monetary Corp., Inc. , 575 F.3d 1180, 1189 (11th Cir. 2009). In determining the third element, the degree of control by the principal must be " ‘very significant.’ " Id. (citing State of Florida v. American Tobacco Co., 707 So. 2d 851, 855 (Fla. 4th DCA 1998) ). However, under Florida law, "the mere presence of a wholly owned subsidiary is insufficient to form a basis for the assertion of personal jurisdiction." American Tobacco , 707 So. 2d at 854. A parent corporation "must exercise control to the extent the subsidiary manifests no separate corporate interests of its own and functions solely to achieve the purposes of the dominant corporation" in order to be held liable for its subsidiary's acts under a theory of agency. Id. at 855.
In considering the first two elements of an agency relationship, the Court notes that the Distribution Agreements between International and TMW and SSI specifically disclaim any agency relationship. ECF Nos. [1-7] at 10, [1-8] at 5. As the Plaintiffs note, the distribution agreements between TMW and SSI and International, under the heading titled "AGENCY" state that International "as an independent business, is a separate legal entity from [TMW/SSI], and the relationship it establishes is that of a buyer and seller." ECF Nos. [39] at 15, [1-7] at 10-11, [1-8] at 5-8. Further, the Distribution Agreements specify that International "is not, in any sense, an agent of [TMW/SSI] and has no authority to transact any business in [TMW/SSI]’s name ... or to bind [TMW/SSI] in any manner whatsoever. ECF Nos. [1-7] at 10–11, [1-8] at 5.
Although the language in those contracts plainly reveals that International was not authorized to act as an agent for TMW or SSI, the language in the agreements alone is not dispositive. "Express disclaimers of agency do not eliminate the existence of an agency relationship ...." Carr v. Stillwaters Development Company, L.P. , 83 F. Supp. 2d 1269, 1279 (M.D. Ala. 1999). Nevertheless, considerable efforts to avoid an agency relationship through express disclaimers is "palpable evidence" that there was no consent or acquiescence to an agency relationship. Commodity Futures Trading Commission v. Gibraltar Monetary Corp., Inc. , 575 F.3d 1180, 1189 (11th Cir. 2009). Here, the agreements plainly undermine the argument that there was an agency relationship between International and TMW or SSI.
The third prong also dictates a finding that International was not Plaintiffs’ agent. The record before the Court shows that Taylor did not exercise control over International. In Commodity Futures , the Court found no control by the principal because the principal "played no role in hiring, training, supervising, or disciplining [the agent]’s employees." 575 F.3d at 1190. Here, Plaintiffs had no control over hiring, training, or supervising any of International's employees, nor is there any evidence that they had any oversight or authority over the company. See also Reed v. Sage Group, Inc., et al. , CFTC Docket No. 85R-312, 1987 CFTC LEXIS 161, at *26–27 (CFTC Oct. 14, 1987) (finding agency where principal had the power to obtain documents relating to agent, the general power to inspect and audit all of its books, records, and facilities, and the power to review logs of conversations with customers); Commodity Futures Trading Com'n v. Millenium Trading Group, Inc., No. 07-CV-11626, 2007 WL 2639474, at *9, 2007 U.S. Lexis 65784, at *11-12 (noting that FCM set customer criteria).
In addition, the companies did not share employees and only International was responsible for the "[a]ppointment of overseas dealers in the territories ceded." ECF No. [25] at 14. Specifically, there is no evidence that International's appointment of these dealers required any oversight or approval by Taylor. Rosenthal & Co. v. Commodity Futures Trading Com'n , 802 F.2d 963, 967–68 (7th Cir. 1986) (finding it relevant that FCM designated an associated person as a branch manager, leased office space to him, described the associated person as a "salesperson," and split commissions with him). Although International and TMW split commissions, this is only one factor indicative of an agency relationship. ECF No. [1-7] at 6; see Shroff v. Rosenthal Collins Grp., LLC , No. 08 C 929, 2009 WL 2704582, at *6 (N.D. Ill. Aug. 25, 2009) (concluding that there was no agency relationship between a Future Commission Merchant and broker where, although they split commissions, the agreements contained an express denial of any agency relationship and they "shared no employees ..., maintained separate ownership, did not coordinate sales efforts, and did not provide [broker with] market research or trade information."). That one factor alone is not sufficient to find that International was Plaintiffs’ agent.
During oral argument, and in its briefs, IDICO relied heavily on the fact that Taylor retained a right to cancel any order placed by IDICO as evidence of an agency relationship. ECF Nos. [25] at 15, [40] at 8. IDICO points to the section of the Distribution Agreements between International and TMW and SSI titled "NO ASSIGNMENT" that states that "it is understood and agreed that the rights extended by Taylor to sell Taylor products is not an asset of International but belongs at all times to Taylor, subject to the terms of this agreement." ECF Nos. [25] at 13, [1-7] at 11, [1-8] at 6. IDICO argues that "any appointment of dealers was an act on behalf of Taylor because only Taylor had the right to sell Taylor products." ECF No. [25] at 14. During the hearing on November 19, 2020, IDICO elaborated that because every order for Taylor equipment was for a custom piece of equipment, the Taylor factory had to be involved with the sale. Therefore, when IDICO received an order, it sent it to the Taylor factory for approval and production. Indeed, the goods at issue are not simply manufactured and waiting in a warehouse for a purchase order, but rather, they are often manufactured after the order is placed and approved.
The Court is unpersuaded that Taylor's right to cancel an order is sufficient to create an agency relationship. There is simply no authority for such a broad proposition. Indeed, to find that the right to cancel the order is sufficient would convert every dealer, distributor, or seller of the item an agent of a manufacturer. Indeed, the Court would be hard pressed to know where that chain of agents would end. Agency law requires a level of control over the entity, not a particular sale or transaction. Given that the record lacks sufficient evidence of control over International and that the first two elements—acknowledgment by the principal that the agent will act for it and acceptance by the agent—were also not met, the Court finds that International was not an agent of Plaintiffs, and, therefore, Plaintiffs should not be compelled to arbitrate under the terms of an agreement to which International was a party.
3. Plaintiffs Are Not Estopped From Refusing To Submit Their Claims To Arbitration.
In their final argument, IDICO argues that the non-signatory Taylor Plaintiffs are bound to arbitrate under various theories of estoppel. Specifically, IDICO claims that Plaintiffs are estopped from avoiding arbitration because: (1) estoppel requires a non-signatory to arbitrate his claims based on an agreement between a defendant (IDICO) and a third-party (International) to whom a plaintiff is "affiliated," ECF No. [25] at 15; (2) IDICO must rely on the terms of the Marketing Agreement in asserting its claims against the non-signatory, Id. ; and (3) Plaintiffs accepted the benefits of the IDICO Marketing Agreement. Id. at 16. To be sure, whether these various forms of estoppel, recognized by other Courts in this Circuit, are viable legal theories is not at issue. See Kwest , 2016 WL 10859787, at *6 (stating that there are only three possible ways in which equitable estoppel may bind a non-signatory: "(1) where a nonsignatory plaintiff sues a signatory defendant, based upon an agreement that contains an arbitration clause between the defendant and a third-party to whom the plaintiff is affiliated," "(2) where a company's non-signatory affiliate is compelled to arbitrate" and (3) "where a signatory to a written agreement must rely on the terms of the agreement in asserting its claims against the nonsignatory."); see also In re Managed Care Litig. , 132 F. Supp. 2d 989, 995 (S.D. Fla. 2000) (discussing various estoppel theories that could bind a non-signatory to an arbitration clause). Instead, what is at issue is whether any of them apply to the facts at hand. After a thorough review of the record, the Court finds that they do not.
As to the first theory, Courts in this District have recognized that "a non[-]signatory plaintiff is bound to arbitrate disputes against a signatory defendant, where the plaintiff brings suit based upon an agreement between the defendant and a third party to whom the [plaintiff] is affiliated." In re Managed Care Litig. , 132 F. Supp. 2d at 996–97. At the "heart" of the definition of affiliate is "a person who, or entity which owns or exercises control over or is controlled by, directly or indirectly, another person or entity." League of Women Voters of Fla. v. Browning , 575 F. Supp. 2d 1298, 1317 (S.D. Fla. 2008). The Court already found that the Taylor Plaintiffs did not exercise control over International. For the same reasons that International was not found to be an agent of Plaintiffs, the Court finds that International was not an affiliate of Plaintiffs.
Second, IDICO's claim that because it must rely on the IDICO Marketing Agreement for its defense Plaintiffs are estopped from refusing to arbitrate is also unpersuasive. ECF No. [25] at 15. As Plaintiffs correctly note, its claims here are under the Lanham Act, and their action does not rely on nor is it based on the IDICO Marketing Agreement. The fact that it is a defendant claiming to use an agreement with an arbitration clause in its defense against a non-signatory who seeks the enforcement of rights unrelated to the agreement that contains an arbitration clause is not an insignificant point, indeed, it is dispositive of the argument. Indeed, to hold otherwise would put the estoppel principle on its head, as the theory addresses the unfairness of allowing a party to avoid arbitration when its suit is based on an agreement where the party being sued has bargained for the right to arbitrate claims related to the agreement.
IDICO's Motion to Compel cited to no authority to support the application of this theory to this scenario, ECF No. [25] at 15, but in its Reply it relied on Kwest . ECF No. [40] at 9–10. In Kwest , however, the Court made the specific finding that the non-signatory's claims were "integrally related and necessarily depend on the rights and obligations created" by the agreement that contained the arbitration clause. 2016 WL 10859787, at *8. The Court could not identify any authority that supported the same conclusion when the signatory's claims were those that relied on the agreement with the arbitration clause. Moreover, this theory also appears to require a close relationship between the signatory and the non-signatory that is being compelled to arbitrate his claim. See Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc. , 10 F.3d 753, 758 (11th Cir. 1993) (finding a sufficiently close relationship where defendant-non-signatory was also a parent corporation). Here, too, a reading of Kwest is instructive. In Kwest , the non-signatory shared the same directors and officers and was the "operating entity" of the party that was the signatory to the arbitration clause. 2016 WL 10859787, at *8. The close relationship between signatory and non-signatory in Kwest undermines IDICO's position that no such relationship existed between Plaintiffs and International.
Indeed, "[a]lthough federal courts generally ‘have been willing to estop a signatory from avoiding arbitration with a non-signatory ...’ they have been hesitant to estop a non-signatory seeking to avoid arbitration. The distinction is not insignificant: ‘arbitration is strictly a matter of contract; if the parties have not agreed to arbitrate the courts have no authority to mandate that they do so.’ " Seth v. Rajagopalan , No. 12-61040-CIV, 2013 WL 11927712, at *7 (S.D. Fla. Jan. 25, 2013) (quoting United Steelworkers of Am , 363 U.S. at 582, 80 S.Ct. 1347 ) (emphasis in original). Here, the Court is faced with precisely that question, whether a non-signatory should be compelled to arbitrate, not whether a signatory should be estopped from avoiding arbitration with a non-signatory. Plaintiffs here, under no recognized theory, should be forced to litigate their Lanham Act claims before an arbitrator when neither they nor any of their affiliates bargained away their right to proceed in federal court. To the extent that IDICO's defense here may rely, at least in some part, on an agreement that has an arbitration clause, the Court does not see that as a basis to compel the claims here to arbitration where Plaintiffs were not a party to that agreement, and are not, either by agency, assumption or estoppel, otherwise bound to arbitrate any of their claims.
IDICO also points to McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., Inc. , 741 F.2d 342, 344 (11th Cir. 1984), to argue that a non-signatory may be compelled to arbitrate when claims are " ‘intimately founded in and intertwined with the underlying contract obligations.’ " ECF No. [25] at 18. In McBro , a hospital had two contracts—one with a construction manager and one with an electrical contractor—each with their own arbitration clauses. Id. at 342–43. The manager and contractor did not have agreements with each other. However, when the construction manager sued the electrical contractor and tried to bind defendant to the arbitration clause, the court compelled the arbitration due to the close relationship between the parties and the "close relationship of the alleged wrongs." Id. at 343–44. Here, of course, there is neither the close relationship that existed in McBro nor are the claims at issue, the Lanham Act claims, founded or based on the IDICO Marketing Agreement. See also Ex parte Isbell , 708 So. 2d 571, 578–79 (Ala. 1997) (holding that the instant case was unlike McBro because the claims did not turn on duties set forth in the contracts requiring arbitration).
IDICO's final argument, that when a company "knowingly" accepts benefits from an agreement that contains an arbitration clause it can be compelled to arbitrate pursuant to that agreement, is also unavailing. ECF No. [25] at 16. This theory requires that the benefits must be direct, or "directly flowing from the agreement." MAG Portfolio Consult , 268 F.3d at 61. Indirect benefits, "where the non[-]signatory exploits the contractual relation of the parties to an agreement, but does not exploit (and thereby assume) the agreement itself" is insufficient. Id.
IDICO states that Taylor has accepted IDICO's efforts to develop the market for Taylor products in the Dominican Republic and Colombia. ECF No. [25] at 16–17. IDICO cites to Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S. , 9 F.3d 1060 (2d Cir. 1993). ECF No. [25] at 16. In Deloitte , a Norwegian accounting firm was compelled to arbitrate based on an agreement containing an arbitration clause whereby local affiliates of Deloitte Haskins & Sells International were entitled to use the trade name "Deloitte." 9 F.3d at 1064. The Norwegian entity did not sign the agreement, but instead, after reviewing it and making no objection to it continued to knowingly use the trade name. Id. The court found that they were estopped from avoiding arbitration, despite being a non-signatory, because they accepted the benefits of that agreement. Id. The facts of Deloitte are highly distinguishable. There, the non-signatory was on notice of the agreement, reviewed the agreement, and then proceeded to act as if they had joined and adopted the agreement in full. Indeed, their use of the name "Deloitte" depended on their acceptance of it. Here, of course, there was no such acceptance of the IDICO Marketing Agreement. Indeed, Plaintiffs could have had the same relationship vis a vis IDICO with or without an agreement as evidenced by the conduct after the termination of the IDICO Marketing Agreement and as evidenced by the dealings in Colombia where no such agreement was even in place.
A more persuasive authority is the Second Circuit's analysis in Thomson CSF, S.A. v. American Arbitration Association , 64 F.3d 773 (2d Cir. 1995), where the court, relying on Deloitte , made a distinction between direct and indirect benefits. In Thomson , the company Rediffusion had an exclusivity agreement with a second company, E & S. Thomson , 64 F.3d at 775. When Rediffusion was purchased by parent-company Thompson, Thompson explicitly disavowed obligations arising under the agreement and shut out E & S from the market. Id. When E & S filed a demand for arbitration under the agreement against Thompson and Rediffusion, Thompson claimed that it was not bound to the arbitration clause. Id. The Second Circuit agreed holding that, unlike the facts in Deloitte , Thompson had not directly benefited from the agreement containing an arbitration clause. Thomson , 64 F.3d at 779. "The benefit which E & S assert[ed] ... derived[d] directly from Thompson's purchase of Rediffusion, and not from the Working Agreement itself." Id. at 779. Had the Plaintiff in Thomson sought to "purchase equipment from [defendant] or enforced the exclusivity provision of the Agreement, it would be estopped from avoiding arbitration." Id.
Here, the Court finds that Taylor did not directly benefit from the IDICO Marketing Agreement. The benefit to Plaintiffs was the sale of Taylor products in the Dominican Republic and Colombia. However, sales alone are not a direct benefit. Core Prop. Capital, LLC v. Profor Sec. , LLC , No. 2:15-cv-209-FtM-29MRM, 2015 WL 4606124, at *5, 2015 U.S. Dist. LEXIS 99735, at *11 (M.D. Fla. July 30, 2015) ("Florida courts have held that non-signatories are not bound by arbitration clauses simply because the contract in question generates income that ultimately flows to the non-signatory.") (citing Morgan Stanley DW, Inc. v. Halliday , 873 So. 2d 400, 402-03 (Fla. Dist. Ct. App. 2004) ). Again, to hold that sales were sufficient would bind a manufacturer to the terms of any agreement between its distributors and all its customers. The expansion of the brand name that results from sales also is insufficient. Indeed, to hold otherwise would be to conclude that Taylor should also be bound by any contract between any distributor and the ultimate customers as any sale itself could be seen as an expansion of the brand.
The Court is unpersuaded by Taylor's claim that they had no knowledge of the IDICO Marketing Agreement. The email communication in the exhibits indicates that Taylor was aware of the agreement and discussed its termination with Taylor officers. See ECF No. [33-1] at 10–13 (showing that the President of IDICO, Doug Hulse, communicated with Taylor officers to let them know of the termination of the IDICO Marketing Agreement in May 2018). However, their knowledge of the agreement or relationship is not sufficient.
III. CONCLUSION
For the reasons noted above, it is hereby ORDERED AND ADJUDGED that Defendant's Motion to Compel Arbitration, ECF No. [25], is DENIED.
The parties must confer within three days of this Order and submit a notice to the Court with three mutually agreeable dates for a hearing on Plaintiffs’ Motion for Preliminary Injunction.
DONE AND ORDERED in Chambers at Miami, Florida, this 10th day of December, 2020.