Purus Plastics GmbH v. Eco Terr Distributing, Inc, No. 2:2018cv00277 - Document 20 (W.D. Wash. 2018)
Court Description: ORDER denying Defendant's 8 Motion to Dismiss and confirming the Foreign Arbitration Awards 1 . The court further GRANTS in part and DENIES in part Purus's request for post-award, prejudgment interest and attorneys' fees (Dkt. # 16 ). Accordingly, the court AWARDS prejudgment interest on the arbitral award of 20,000.00 Euros, commencing on September 8, 2015, through the date of judgment. Such interest shall accrue at a rate equal to the federal post-judgment interest rate, see 28 U.S.C. § 1961(a), applicable for the calendar week preceding the date of judgment. Signed by Judge James L. Robart. (PM)
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Purus Plastics GmbH v. Eco Terr Distributing, Inc Doc. 20 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 PURUS PLASTICS GMBH, 10 CASE NO. C18-0277JLR Petitioner, 11 v. 12 ECO-TERR DISTRIBUTING, INC., 13 ORDER DENYING MOTION TO DISMISS AND CONFIRMING FOREIGN ARBITRATION AWARDS Respondent. 14 15 I. 16 INTRODUCTION Before the court is Respondent Eco-Terr Distributing, Inc.’s (“Eco-Terr”) motion 17 to dismiss. (MTD (Dkt. # 8).) Petitioner Purus Plastics GmbH (“Purus”) opposes the 18 motion and requests that the court confirm the foreign arbitration awards, enter judgment 19 in Purus’s favor, and award prejudgment interest and attorneys’ fees. (Resp. (Dkt. # 16).) 20 The court has considered the parties’ submissions in support of and in opposition to the 21 // 22 // ORDER - 1 Dockets.Justia.com 1 motion, the relevant portions of the record, and the applicable law. Being fully advised, 1 2 the court denies the motion, confirms the arbitration awards, and grants in part and denies 3 in part the request for interest and fees for the reasons set forth below. 4 5 II. BACKGROUND This is an action to recognize and enforce two foreign arbitration awards (“the 6 Awards”) in Purus’s favor. (See Pet. (Dkt. # 1).) Both parties sell plastic interlocking 7 grid products, which are “used to reinforce and stabilize surfaces such as grass, gravel, 8 and soil to improve the stability and drainage of those surfaces for humans, animals, and 9 vehicles.” 2 (Baker Decl. (Dkt. # 10) ¶ 3.) On August 9, 2008, the parties entered into a 10 distributorship agreement (“the Agreement”). (Pet. ¶ 7; see also 1st Helkenberg Decl. 11 (Dkt. # 1-1) ¶ 3, Ex. A (“Agreement”).) 3 12 13 Pursuant to the Agreement, Purus transferred “distribution of the flooring system ECOGRID (‘the Product’)” to Eco-Terr, which assumed a duty to “actively promote 14 15 16 17 18 19 20 1 Eco-Terr requests oral argument (MTD at 1), but the court determines that oral argument would not be helpful to its disposition of the motion, Local Rules W.D. Wash. LCR 7(b)(4). 2 Both parties provide extensive factual information. Unless directly applicable to one of the seven grounds for declining to recognize and enforce a foreign arbitration award, see infra § III.B, the court recounts the facts only to provide background information, see Zeiler v. Deitsch, 500 F.3d 157, 169 (2d Cir. 2007) (“Confirmation under the Convention is a summary proceeding in nature, which is not intended to involve complex factual determinations, other than a determination of the limited statutory conditions for confirmation or grounds for refusal to confirm.”). 3 21 22 The Agreement was executed in German. (See 1st Helkenberg Decl. ¶ 3.) The parties also prepared a “Convenience Translation” version of the Agreement, which translates the Agreement into English. (See id.) Because neither party the English translation, the court cites that version. (See generally MTD; Resp.; Reply (Dkt. # 19).) ORDER - 2 1 distribution of the Product and to use its best efforts to safeguard the interests of [P]urus.” 2 (Agreement § A.1.) The Agreement extended to Eco-Terr’s distribution efforts in 3 Canada and the United States. (Id. § A.2.) The Agreement further granted Eco-Terr the 4 exclusive right to distribute the Product under the designations HOOFGRID, 5 STABILIGRID, and HOMEGRID. (Id. § H.6.) 6 Within six months of executing the Agreement, Eco-Terr was required to “apply 7 for registration of the designations HOOFGRID, STABILIGRID[,] and HOMEGRID as 8 trademarks solely for the Product (the ‘Trademarks’) with the United States Patent and 9 Trademark Office [“the USPTO”] and with the Canadian Intellectual Property Office.” 10 (Id. § H.7.) Eco-Terr was to “take all necessary steps to have the Trademarks registered 11 to it without undue delay and bear any costs related to the registration.” (Id.) The 12 Agreement provided that Eco-Terr would transfer the Trademarks to Purus effective from 13 the expiration date of the Agreement. (Id. § H.8.) Eco-Terr, however, did not register the 14 Trademarks while the Agreement was in effect. (See Pet. ¶ 13.) 15 The Agreement also contained an arbitration clause. (See Agreement § N.5.) That 16 clause specified that the parties would first attempt to resolve any “differences of opinion 17 over the performance or termination of this Agreement” by mediation. (Id.) But the 18 Agreement further provided that if the parties could not reach a resolution through 19 mediation, they could “require that arbitration proceedings be instituted—to the exclusion 20 of ordinary courts—on the basis of the rules of arbitration for the standing arbitral 21 tribunal of the Nuremberg Chamber of Industry and Commerce for Central Franconia.” 22 (Id.) The arbitral tribunal’s decision would be “final and binding.” (Id.) ORDER - 3 1 On June 22, 2011, Purus informed Eco-Terr that Purus intended to terminate the 2 Agreement on December 31, 2011. (Pet. ¶ 14; see also Christian Decl. (Dkt. # 9) ¶ 10.) 3 The day after the Agreement terminated, Eco-Terr filed applications with the USPTO for 4 the HOOFGRID and STABILIGRID marks. (Pet. ¶ 15.) In January 2012, Purus first 5 learned of Eco-Terr’s attempts to register the marks. (Id. ¶ 18.) The United States 6 registration of the HOOFGRID mark became effective on December 11, 2012, followed 7 by the United States registration of the STABILIGRID mark on January 1, 2013. (Id. 8 ¶ 16; see also Christian Decl. ¶¶ 11-15.) Eco-Terr’s registration of those marks with the 9 Canadian Trademark Office became effective on February 5, 2013. (Pet. ¶ 17.) Purus 10 demanded that Eco-Terr transfer the marks as called for by the Agreement, and when 11 Eco-Terr refused, Purus filed an arbitration action. (Id. ¶¶ 18-19.) 12 The arbitration commenced on May 7, 2013, with Purus’s submission of an 13 arbitration statement. (Id. ¶ 19.) A three-member arbitral panel in Nuremberg, Germany 14 presided over the arbitration (id. ¶ 21), and issued the first award on September 8, 2015 15 (id. ¶ 22). The unanimous panel (1) ordered Eco-Terr to transfer the United States and 16 Canadian trademarks to Purus; (2) enjoined Eco-Terr from further using those marks in 17 the United States and Canada; (3) ordered Eco-Terr to turn over to Purus “information 18 regarding the sales and distribution channels of the subject products”; (4) ordered 19 Eco-Terr to pay compensatory damages of €20,000.00; (5) ordered Eco-Terr to 20 compensate Purus for all past and future damages arising from its failure to register the 21 marks pursuant to the Agreement and its use of the marks; and (6) ordered Eco-Terr to 22 reimburse Purus for its arbitration costs. (Id. ¶ 23; see also Christian Decl. ¶ 19, Ex. 12 ORDER - 4 1 (“9/8/15 Award”).) On October 24, 2015, the panel issued a second award that detailed 2 the amount Eco-Terr was to reimburse Purus for bringing the arbitral action. (Pet. ¶ 24; 3 see also Christian Decl. ¶ 20, Ex. 13 (“10/14/15 Award”).) 4 According to Purus, since the panel issued the Awards, Purus has “repeatedly 5 demanded that Eco-Terr comply” with the terms of the Awards. (Pet. ¶ 25.) Specifically, 6 Purus contends that on May 23, 2016, its counsel demanded compliance with the Awards 7 and that Eco-Terr cease and desist from continuing to use the marks. (Id. ¶ 28.) Purus 8 further contends that Eco-Terr continues to the use the marks in the United States and 9 Canada. (Id. ¶ 29.) 10 On February 22, 2018, Purus filed a petition for recognition and enforcement of 11 the Awards. (See generally id.) Eco-Terr moves to dismiss the petition, contending that 12 certain exceptions in the United Nations Convention on the Recognition and Enforcement 13 of Foreign Arbitral Awards (“the Convention”), June 10, 1958, 21 U.N.T.S. 2517, permit 14 the court to deny Purus’s petition (see MTD). In response, Purus requests that the court 15 deny Eco-Terr’s motion, enter judgment confirming the Awards, and award Purus 16 attorneys’ fees and costs and post-award, prejudgment interest. (Resp. at 8, 28.) The 17 court now addresses the petition and motion to dismiss. 18 // 19 // 20 // 21 // 22 // ORDER - 5 1 2 3 III. A. ANALYSIS Legal Standard 4 The Convention governs the “recognition and enforcement” of foreign arbitration 4 awards in United States courts. 5 See 9 U.S.C. § 201. “The goal of the Convention, and 5 the principal purpose underlying American adoption and implementation of it, was to 6 encourage the recognition and enforcement of commercial arbitration agreements in 7 international contracts and to unify the standards by which agreements to arbitrate are 8 observed and arbitral awards are enforced in the signatory countries.” Scherk v. 9 Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974). 10 When a party seeks confirmation of an award under the Convention, the court 11 “shall confirm the award unless it finds one of the grounds for refusal or deferral of 12 recognition or enforcement of the award specified in the said Convention.” See 9 U.S.C. 13 § 207. Those seven grounds are: 14 4 15 16 17 Eco-Terr’s motion to dismiss is not subject to the standards that typically apply to such motions under Federal Rule of Civil Procedure 12(b)(6) because Eco-Terr does not argue that Purus fails to state a claim. Cf. Fed. R. Civ. P. 12(b)(6). For that reason, the court does not recite those standards herein and considers the evidence the parties have submitted in support of their filings. 5 18 19 20 21 22 In 1970 Congress ratified the Convention, a multilateral treaty providing for ‘the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought.’ Convention, art. I(1), 21 U.S.T. 2517. Congress implemented the Convention by passing Chapter II of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 201-208, which provides that ‘[a]n action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States. The district courts of the United States . . . shall have original jurisdiction over such an action or proceeding, regardless of the amount in controversy.’ 9 U.S.C. § 203. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1119-20 (9th Cir. 2002) (internal footnote omitted). ORDER - 6 1 2 3 4 5 [1] The parties to the agreement . . . were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or [2] The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or 6 7 8 9 [3] The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or 10 11 12 [4] The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or 13 14 15 16 17 18 [5] The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made[; or] . . . [6] The subject matter of the difference is not capable of settlement by arbitration under the law of [the country where enforcement is sought]; or [7] The recognition or enforcement of the award would be contrary to the public policy of [the country where enforcement is sought]. 19 Admart AG v. Stephen & Mary Birch Found., Inc., 457 F.3d 302, 307-08 (3d Cir. 2006) 20 (internal quotation marks omitted). The party defending against enforcement of the 21 award must prove one of the Convention’s enumerated defenses, which the court 22 ORDER - 7 1 interprets narrowly. Polimaster Ltd. v. RAE Sys., Inc., 623 F.3d 832, 836 (9th Cir. 2010). 2 The “burden is substantial because the public policy in favor of international arbitration is 3 strong.” Id. 4 “Under the Convention, a district court’s role is limited—it must confirm the 5 award unless one of the grounds for refusal specified in the Convention applies to the 6 underlying award.” Admart AG, 457 F.3d at 307; see also Ministry of Def. of the Islamic 7 Republic of Iran v. Gould, Inc., 969 F.3d 764, 770 (9th Cir. 1992). Accordingly, 8 confirmation proceedings are necessarily “summary” in nature and are “not intended to 9 involve complex factual determinations, other than a determination of the limited 10 statutory conditions for confirmation or grounds for refusal to confirm.” Marker Volkl 11 (Int’l) GmbH v. Epic Sports Int’l, Inc., 965 F. Supp. 2d 308, 311 (S.D.N.Y. 2013) 12 (internal quotation marks omitted). The court does “not sit to hear claims of factual or 13 legal error by an arbitrator in the same manner than an appeals court would review the 14 decision of a lower court.” Int’l Trading & Indus. Inv. Co. v. DynCorp Aerospace Tech., 15 763 F. Supp. 2d 12, 20 (D.D.C. 2011) (internal quotation marks omitted). 16 B. Motion to Dismiss and Petition to Confirm 17 Eco-Terr argues that five grounds support dismissing Purus’s petition to confirm 18 the Awards: (1) the Awards deal with differences not contemplated by or falling within 19 the terms of Purus’s submission to arbitration and contain decisions beyond the scope of 20 that submission; (2) the subject of the parties’ difference could not be settled by 21 arbitration under German law, (3) the arbitral procedure was not in accordance with the 22 Agreement, (4) the Awards are not yet final binding on the parties, and (5) the court’s ORDER - 8 1 recognition and enforcement of the Awards would contravene the public policy of the 2 United States. (See MTD at 9-10.) The court considers each of those grounds in turn, 3 and if none of them support dismissal, the court must confirm the Awards. See 9 U.S.C. 4 § 207. 5 1. Differences Not Contemplated by the Agreement to Arbitrate 6 Eco-Terr first argues that the arbitration involved differences not contemplated by 7 the Agreement or falling within the terms of Purus’s submission to arbitration. (See 8 MTD at 10.) The crux of this defense is that a party may “attack an award predicated 9 upon arbitration of subject matter not within the agreement to submit to arbitration.” 10 Parsons & Whittemore Overseas Co., Inc. v. Societe Generale De L’Industrie Du Papier 11 (RAKTA), 508 F.2d 969, 976 (2d Cir. 1974). 12 Eco-Terr argues that because the Agreement terminated on December 31, 2011, 13 the Awards are unenforceable because “the Parties’ agreement to arbitrate disputes 14 pertaining to the performance or termination of the Agreement only applied to events 15 occurring during that contract period.” (MTD at 11.) Eco-Terr provides no authority for 16 that position. (See generally id. at 10-12.) But based on that contention, Eco-Terr argues 17 that the Awards deal with differences not contemplated by the Agreement and contain 18 decisions beyond the scope of the Agreement. (See id. at 11.) 19 Eco-Terr too narrowly views the Agreement’s arbitration provision. The law 20 presumes that arbitration clauses survive termination of the underlying contract for 21 disputes arising under that contract. See Litton Fin. Printing Div. v. Nat’l Labor 22 Relations Bd., 501 U.S. 190, 205 (1991). If that were not the case, “a party could avoid ORDER - 9 1 [its] contractual duty to arbitrate by simply waiting until the day after the contract expired 2 to bring an action regarding a dispute that arose while the contract was in effect.” Milfort 3 v. Comcast Cable Commc’ns Mgmt. LLC, --- F. Supp. 3d ----, 2018 WL 2455012, at *3 4 (S.D. Fla. Apr. 9, 2018). Here, the arbitration clause stated that “[i]n the event that the 5 parties have differences of opinion over the performance or termination of this 6 Agreement, . . . any party may require that arbitration proceedings be instituted.” 6 7 (Agreement § N.5.) Thus, Eco-Terr’s contention that the parties’ duty to arbitrate ended 8 upon termination of the Agreement is without merit. (See MTD at 11.) 9 However, that conclusion does not end the inquiry because the duty to arbitrate 10 continues only for disputes arising under the relevant contract. See Litton, 501 U.S. at 11 205. The court therefore looks to whether a particular claim falls within the scope of the 12 arbitration clause. See Aviation Alliance Ins. Risk Retention Grp., Inc. v. Polaris Enter. 13 Grp., No. CV 17-35-M-DWM, 2017 WL 2799151, at *3 (D. Mont. June 27, 2017). The 14 issue of the trademarks was before the arbitral panel. (See Agreement §§ H.7, H.8, N.5; 15 6 16 17 18 19 20 21 22 Although the language of that provision suggests only that arbitration was permissible—not mandatory—that distinction makes no difference here. (See Agreement § N.5 (stating that the parties could require arbitration)); see also Asus Comput. Int’l v. InterDigital, Inc., No. 15-cv-01716-BLF, 2015 WL 5186462, at *5 (N.D. Cal. Sept. 4, 2015) (stating that “even when an arbitration clause uses permissive language, the clause still [may] give[] rise to mandatory arbitration”). First, the way the provision is structured first mandates the parties to participate in mediation to settle any dispute, followed by recourse to arbitration if they are unable to resolve the dispute. (See Agreement § N.5.) Viewed in context, the arbitration provision is best read as mandatory after mediation occurs. (See id.); The Casiano-Bel Air Homeowners Assoc. v. Phila. Indem. Ins., No. 2:16-cv-08549-SVW-SK, 2017 WL 3273654, at *4 (C.D. Cal. Feb. 22, 2017) (concluding that an arbitration clause was mandatory even though it used the word “may” because once a party opted to demand arbitration, the clause became mandatory). Second, the issue before the court is not whether the parties agreed to arbitrate. Rather, now that the parties have completed arbitration, the issue before the court is whether to confirm the Awards. ORDER - 10 1 9/8/15 Award.) The relevant contractual provision called for Eco-Terr to apply for 2 registration of those marks with the USPTO and Canadian Intellectual Property Office 3 within six months after the parties executed the Agreement. (Agreement § H.7.) In 4 addition, the parties agreed that Eco-Terr would transfer the marks to Purus upon 5 termination of the Agreement. (Id. § H.8.) Thus, because the arbitration centered on 6 Eco-Terr’s lack of compliance with those contractual provisions, the parties’ dispute 7 arose under the Agreement and therefore was subject to arbitration. 8 9 Eco-Terr’s focus on the arbitral panel’s consideration of trademark-related events that occurred after the Agreement ended is misplaced. (See MTD at 11-12; see also 10 Christian Decl. ¶ 4 (stating that “Eco-Terr presented the three arbitrators . . . with clear 11 proof that at no time during the Agreement . . . were there ever goods bearing either the 12 HOOFGRID or STABILIGRID trademark that could have been submitted to [the 13 USPTO] or the Canadian Intellectual Property Office”).) Specifically, Eco-Terr takes 14 issue with the panel’s decision that Eco-Terr’s “2012 business efforts to design, 15 manufacture, and offer for sale a new United States-made product . . . entitled Purus to 16 obtain ownership of the trademarks and the sales channel data for the new United States- 17 made product.” (MTD at 12.) Eco-Terr further contests that the panel granted “Purus 18 ownership of Eco-Terr’s ‘word’ trademark registrations when the Agreement only 19 addressed ‘design’ trademarks,” and applied the Agreement to United States-made 20 products. 7 (Id.) Eco-Terr essentially “attempt[s] to secure a reconstruction in this court 21 7 22 In any event, it is not clear from the Agreement that it pertained only to design trademarks. (See Agreement § H.7.) The Agreement states that “[t]he design of the trademarks ORDER - 11 1 of the contract—an activity wholly inconsistent with the deference due arbitral decisions 2 on law and fact.” Parsons, 508 F.2d at 976; (see also Christian Decl. ¶¶ 5 (“Each of the 3 arguments raised in Eco-Terr’s Motion to Dismiss . . . was raised in Eco-Terr’s 4 objections to the Arbitration Panel.”), 6 (“The Arbitration Panel erroneously assumed that 5 because Eco-Terr was entitled to apply for trademark registration in 2012, it was equally 6 entitled to apply for trademark registrations . . . in 2008.”). Thus, the court inquires no 7 further into the arbitral panel’s decision and concludes that Eco-Terr fails to demonstrate 8 this ground for refusing confirmation of the Awards. 9 2. Subject Matter Capable of Settlement by Arbitration 10 Eco-Terr next argues that the court should refuse to confirm the Awards because 11 the trademark issues could not have been settled by arbitration under German law. (See 12 MTD at 12-13.) This ground “authorizes a court to deny enforcement . . . of a foreign 13 arbitral award when the subject matter of the difference is not capable of settlement by 14 arbitration under the law of” the country where confirmation of the award is sought. 15 Parsons, 508 F.2d at 974. The provision “only covers disputes which under domestic 16 law would be ‘entrusted to the exclusive competence of the judiciary.’” Changzhou 17 AMEC E. Tools & Equip. Co., Ltd. v. E. Tools & Equip., Inc., No. EDCV 11-00354 VAP 18 (DTBx), 2012 WL 3106620, at *10 (C.D. Cal. July 30, 2012) (quoting Parsons, 508 F.2d 19 at 974). Thus, a party contesting confirmation fails to establish this ground for relief 20 21 22 HOOFGRID, STABILIGRID[,] and HOMEGRID shall be adapted to the design of the trademarks ECORASTER and ECOGRID. The design of the trademarks shal[l] require the prior written approval of [P]urus . . . .” (Id.) On its face, that language does not necessarily demonstrate that Agreement’s trademark provision extended only to design marks. (See id.) ORDER - 12 1 when “[t]here is no special national interest in judicial, rather than arbitral, resolution of 2 the . . . claim underlying the award.” Parsons, 508 F.2d at 975. 3 Eco-Terr argues the subject matter of the parties’ dispute was not capable of 4 settlement under German law and that the panel improperly “assigned German law to 5 matters exclusively governed by United States and Canadian trademark laws.” 8 (MTD at 6 13.) In support of this argument, Eco-Terr submits its letter to the panel asserting that the 7 German Trademark Act does not apply to the Agreement. (Id. (citing Christian Decl. 8 ¶ 22, Ex. 15 at 1-2).) 9 As an initial matter, Eco-Terr misunderstands the defense. (See id. at 13.) 10 Although Eco-Terr focuses on whether the parties’ dispute could be settled under German 11 law, the defenses implicates the law of the country in which confirmation is sought— 12 here, the United States. See Admart, 457 F.3d at 308. Article V of the Convention states 13 that a court may refuse to confirm an arbitration award “if the competent authority in the 14 country where recognition and enforcement is sought finds that . . . [t]he subject matter of 15 the difference is not capable of settlement by arbitration under the law of that country.” 16 Id. Thus, “that country” refers to the country in which the court asked to recognize the 17 // 18 19 20 21 22 8 Eco-Terr’s arguments in this regard rehash Eco-Terr’s position that the panel could not address conduct occurring after the Agreement terminated. (See MTD at 13 (“While it is true that the [p]arties selected German law to govern the Agreement, it is simply not the case that German law or the Agreement’s arbitration provision applied to Eco-Terr’s 2012 conduct or trademarks obtained after the Agreement was terminated in 2011.”).) In addition, Eco-Terr rests in part on its position that the arbitral panel incorrectly decided the issues. (See id. at 14.) Such arguments fail for the reasons discussed above. See supra § III.B.1. ORDER - 13 1 award sits. See id. Thus, Eco-Terr’s arguments regarding German law are beside the 2 point. 3 Moreover, United States law does not require the judiciary to resolve contract 4 disputes involving trademark issues. Rather, parties may agree to arbitrate those issues. 5 Cf. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627 (1985) 6 (stating that the Federal Arbitration Act “provides no basis for disfavoring agreements to 7 arbitrate statutory claims by skewing the otherwise hospitable inquiry into arbitrability”); 8 Lozano v. AT & T Wireless Servs., Inc., 504 F.3d 718, 725 (9th Cir. 2007) (“Contractual 9 arbitration agreements are equally applicable to statutory claims as to other types of 10 common law claims.”). Eco-Terr makes no showing otherwise by, for example, 11 demonstrating that Congress intended only for judicial resolution of trademark issues. 12 (See MTD at 13-14 (failing to address any congressional intent to exempt trademark 13 issues from arbitration)); Lozano, 504 F.3d at 725-26 (stating that the party asserting a 14 statutory claim may not be arbitrated has the burden of showing congressional intent to 15 that effect); see also Mitsubishi, 473 U.S. at 628 (stating that Congress must “evince[] an 16 intention to preclude waiver of judicial remedies for the statutory rights at issue”). The 17 fact that the parties’ dispute is, at bottom, based on contractual provisions regarding 18 trademarks further supports concluding that the dispute need not be judicially resolved. 19 Eco-Terr also makes a number of ancillary arguments—none of which change the 20 court’s conclusion. First, Eco-Terr argues that the arbitral panel applied German 21 trademark law. (See MTD at 13 (pointing to no specific portion of the panel’s decision in 22 making that assertion).) Even assuming that the arbitral panel should not have done so, it ORDER - 14 1 does not appear that the panel in fact applied German trademark law. (See 9/8/15 Award 2 at 21-28 (applying German law regarding contract construction).). 3 Second, Eco-Terr contends that “the Award is unenforceable as issued because it 4 lacks full consideration of the practicality of complying with United States, Canadian, 5 and German laws.” (MTD at 14.) However, Eco-Terr’s ability to comply with the 6 Awards is not a valid reason to deny confirmation. See TMCO Ltd. v. Green Light 7 Energy Sols. R&D Corp., No. 4:17-cv-00997-KAW, 2017 WL 5450762, at *4 (N.D. Cal. 8 Nov. 14, 2017) (stating that whether the party was able to perform in accordance with the 9 final foreign arbitration award was irrelevant and not a basis for denying confirmation). 10 For those reasons, the court concludes that Eco-Terr fails to establish this defense. 11 3. Arbitral Procedure in Accordance with the Parties’ Agreement 12 Eco-Terr next argues that the procedure the panel used contradicted the 13 Agreement. (See MTD at 16.) The Convention provides a defense to enforcement when 14 “the arbitral procedure was not in accordance with the agreement of the parties.” Admart, 15 457 F.3d at 307-08. But the defense applies only if the asserted procedural violation 16 “worked substantial prejudice to the complaining party.” Karaha Bodas Co., L.L.C. v. 17 Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 190 F. Supp. 2d 936, 945 18 (S.D. Tex. 2011) (quoting Compagnie des Bauxites de Guinee v. Hammermills, No. 19 90-0169, 1992 WL 122712, at *5 (D.D.C. May 29, 1992)), aff’d, Karaha Bodas Co., 20 L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274 (5th 21 Cir. 2004); see also Calbex Mineral Ltd. v. ACC Res. Co., L.P., 90 F. Supp. 3d 442, 462 22 (W.D. Pa. 2015). The court examines the language of the arbitration agreement to ORDER - 15 1 “determine whether the procedure used was contrary to the parties’ agreed arbitral 2 procedures.” Polimaster, 623 F.3d at 836. 3 Eco-Terr argues that the defense applies because the arbitration panel conducted 4 the proceedings in German rather than English. (See MTD at 16.) According to 5 Eco-Terr, English should have been used because (1) the parties and the panel were 6 fluent in English, and Eco-Terr was not fluent in German; and (2) the use of German 7 contravened the “consistent course of conduct” between the parties. (Id.; see also Baker 8 Decl. ¶ 15.) Eco-Terr further contends that using German instead of English amounts to 9 a due process violation. 9 (Id. at 16-17.) 10 The court first addresses whether the parties agreed to arbitrate using the German 11 language. Eco-Terr states that the Agreement does not specify which language would 12 apply to an arbitration, and therefore contends that using German contradicts the 13 Agreement. (Id. at 16 (citing Agreement §§ M-N).) Purus counters that the parties 14 agreed to the rules of arbitration of the Nuremberg Chamber of Commerce, which 15 incorporates the rules of the Deutsche Institutionen für Schiedsgerichtsbarkeit e.V. (“the 16 DIS Rules”). (See Resp. at 24; 2d Helkenberg Decl. (Dkt. # 17) ¶ 6.) The DIS Rules 17 allowed the panel to “determine the language or languages to be used in the 18 19 20 21 22 9 In this regard, Eco-Terr essentially invokes a sixth ground for refusing to enforce the Awards under the Convention. See Anatole Stati v. Republic of Kazakhstan, --- F. Supp. 3d ----, 2018 WL 1461898, at *12 (D.D.C. Mar. 23, 2018) (stating that the Convention allows refusal of an award if “the party against whom the award is invoked was not given proper notice of . . . the arbitration proceeding or was otherwise unable to present [its] case” (quoting Convention, Article V(1)(b))); see also Iran Aircraft Indus. v. Avco Corp., 980 F.2d 141, 145-46 (2d Cir. 1992) (noting that Article V(1)(b) “essentially sanctions the application of the forum state’s standards of due process”). ORDER - 16 1 proceedings.” (Resp. at 24 (citing DIS Rules § 22); see also 2d Helkenberg Decl. ¶ 6, 2 Ex. 2 (Dkt. # 17-2); id. ¶¶ 7 (stating the rule), 9-10.) Specifically, the DIS Rules specify 3 that if the parties do not agree to the language to be used in the arbitral proceedings, “the 4 arbitral tribunal shall determine the language . . . to be used in the proceedings.” (2d 5 Helkenberg Decl. ¶ 6, Ex. 2 §§ 22.1-22.2.) Because the parties’ arbitration agreement 6 was silent as to the language to be used, the DIS Rules filled that gap by allowing the 7 panel to decide the language. (See id.; see also Agreement § N.5.) Thus, “the arbitral 8 procedure” conformed to the Agreement. (See Agreement § N.5); Polimaster, 623 F.3d 9 at 836. 10 Moreover, Eco-Terr demonstrates no prejudice arising from the panel’s language 11 decision. (See MTD at 16-17 (failing to discuss prejudice).) Eco-Terr again disputes the 12 content of the Awards, but does not tie the outcome of the proceedings to the use of 13 German as opposed to English. (See id.) Thus, Eco-Terr fails to demonstrate prejudice. 14 The court also addresses whether proceeding in German violated Eco-Terr’s right 15 to due process. (See id. at 16-17 (arguing that the use of German also violated Eco-Terr’s 16 right to due process).) To satisfy the requirements of due process, parties to an 17 arbitration must be given notice of the proceedings and an opportunity to be heard. See 18 Gould, 887 F.2d at 1365 (“The Convention contains several due process protections 19 requiring notice and the opportunity to be heard as well as a defense to guard against 20 enforcement of awards contrary to public policy.”). When a party is unable to present its 21 case in arbitration, there is a due process violation. See Research & Dev. Ctr. 22 “Teploenergetika,” LLC v. EP Int’l, LLC, 182 F. Supp. 3d 556, 565 (E.D. Va. 2016). ORDER - 17 1 The court must deny confirmation of the award if the party challenging it “proves that [it] 2 was not given a meaningful opportunity to be heard.” Id. Eco-Terr, however, received 3 such an opportunity. 4 Eco-Terr’s due process argument centers on the fact that Eco-Terr “offered to 5 provide English versions of all submissions to avoid translation errors,” but “could never 6 have known if its translated submissions were accurate or captured the intended 7 meaning.” 10 (MTD at 17 (citing Christian Decl. ¶¶ 7, 18).) In the immigration and 8 criminal contexts, due process may be violated where a translation is “nonsensical” and 9 “subject to doubt.” See Augustin v. Sava, 735 F.2d 32, 38 (2d Cir. 1984); see also 10 Davila-Marquez v. City of Pasco, No. C12-5059LRS, 2013 WL 1136658, at *3 (E.D. 11 Wash. Mar. 18, 2013) (stating that federal courts “hold that the right to an interpreter 12 affects a [criminal] defendant’s Sixth Amendment right of confrontation and the right 13 inherent in a fair trial to be present at one’s own trial”); cf. Hadjimehdigholi v. I.N.S., 49 14 F.3d 642, 649 (10th Cir. 1995) (“INS regulations also contemplate that proceedings and 15 documents in a foreign language will be accurately translated.”). Even if the same 16 standard governed arbitration proceedings—and it is not clear that it does—Eco-Terr 17 makes no showing that any translation was incorrect or that any purported inaccuracy 18 19 20 21 22 10 Due process may be violated if a party does not receive notice of the arbitration proceedings in a language the party understands. See Qingdao Free Trade Zone Genius Int’l Trading Co., Ltd. v. P & S Int’l, Inc., No. 08-1292-HU, 2009 WL 2997184, at *5 (D. Or. Sept. 16, 2009). However, Eco-Terr makes no argument that it did not receive an English-language notice of the proceedings. (See generally MTD; Christian Decl.) More importantly, Eco-Terr participated in the proceedings, thus demonstrating that it in fact received notice. Cf. Qingdao, 2009 WL 2997184, at *2 (stating that the party opposing enforcement of the foreign arbitration award did not appear at the arbitration proceedings). ORDER - 18 1 adversely affected Eco-Terr. Indeed, it appears from Eco-Terr’s phrasing that Eco-Terr 2 takes umbrage with its own translated submissions, over which it had control. (See MTD 3 at 17.) In any event, Eco-Terr fails to show any errors or that, even if errors were present, 4 they amount to a due process violation in a private arbitration proceeding. 5 6 Thus, Eco-Terr fails to show that the arbitration procedure was inconsistent with the Agreement, and this defense provides no basis for denying confirmation. 7 4. Whether the Award Is Final and Binding 8 Eco-Terr next argues that the Awards are not yet final and binding. (MTD at 17.) 9 This defense applies when a party files an action to confirm or enforce an arbitral award 10 before the award is final. Ministry of Def. & Support for the Armed Forces of the Islamic 11 Republic of Iran v. Cubic Def. Sys., Inc., 665 F.3d 1091, 1100 (9th Cir. 2011). The award 12 is final when a party has no further recourse in the arbitration proceeding, such as to an 13 appeals tribunal. Id. (quoting Fertilizer Corp. of India v. IDI Mgmt., Inc., 517 F. Supp. 14 948, 958 (S.D. Ohio 1981)). 15 Eco-Terr asserts that because the September 8, 2015, Award includes “an 16 undefined monetary award of ‘all damage, which has arisen or will arise in the future,’” 17 the parties have no way to calculate that amount. (MTD at 17.) Yet Eco-Terr fails to 18 show that it has further recourse to challenge the arbitration award and therefore, that the 19 award is not yet final. (See id.) Indeed, Eco-Terr provides no information or argument at 20 all on that point. (See id.) Rather, as with its other arguments, the crux of Eco-Terr’s 21 contention is that it simply disagrees with the panel. (See id. (stating that “these damages 22 are based upon hypothetical trademark registrations that were impossible in 2008 and ORDER - 19 1 could only be calculated by pure speculation”)). Such disagreement is not a basis for 2 denying confirmation of the Awards pursuant to the Convention. 3 And to the extent an open-ended damages award is even relevant to this defense, 4 the Award here is not as uncertain as Eco-Terr makes it out to be. The Award requires 5 Eco-Terr to “compensate” Purus a specific amount—€20,000.00—even as the Award 6 also requires reimbursement for damages that might arise in the future. Thus, the Award 7 states an ascertainable amount that Eco-Terr must pay Purus. (See 9/8/15 Award at 29.) 8 9 For those reasons, the Award is final and binding, and this ground provides no basis for denying confirmation. 10 5. Public Policy Defense 11 Finally, Eco-Terr contends that public policy considerations counsel against 12 confirming the award. (See MTD at 18-21.) The public policy defense “applies only 13 when confirmation or enforcement of a foreign arbitration award would violate the forum 14 state’s most basic notions of morality and justice.” Cubic Def., 665 F.3d at 1097 (internal 15 quotation marks omitted) (quoting Parsons, 508 F.2d at 974). The defense is rarely 16 successful, see Parsons, 508 F.2d at 974, because “[t]o read the public policy defense as 17 a parochial device protective of national political interests would seriously undermine the 18 Convention’s utility,” Cubic Def., 665 F.3d at 1099 (internal quotation marks omitted) 19 (quoting Parsons, 508 F.2d at 974). 20 In invoking the public policy exception, Eco-Terr simply rehashes its earlier 21 arguments: (1) that the panel improperly decided the trademark issues, (2) misapplied 22 United States and Canadian trademark law, and (3) violated Eco-Terr’s due process rights ORDER - 20 1 by conducting the proceedings in German. (See MTD at 18-21.) The court rejects those 2 arguments for the same reasons articulated above. See supra §§ III.B.1-4. In addition, 3 the court rejects them for the independent reason that the panel’s decision—even if based 4 on a misapplication of law—does not violate the United States’ “most basic notions of 5 morality and justice.” See Cubic Def., 665 F.3d at 1097. Thus, this defense also fails. 6 Because the court concludes that Eco-Terr demonstrates none of the asserted bases 7 for denying confirmation of the Awards, the court must confirm the Awards. See 9 8 U.S.C. § 207; (see also MTD at 9 (stating that the court “must recognize and enforce” the 9 Awards “unless Eco-Terr can prove that at least one of the . . . grounds for refusal 10 exists”). Thus, the court denies Eco-Terr’s motion to dismiss and confirms the Awards. 11 C. Post-Award, Prejudgment Interest and Attorneys’ Fees 12 In addition to confirmation of the Awards, Purus seeks post-award, prejudgment 13 interest and attorneys’ fees. (Resp. at 28-30.) Eco-Terr opposes those requests. (Reply 14 at 11-12.) Eco-Terr argues that because the arbitration panel did not award prejudgment 15 interest, it is not available in this action. (Id. at 11.) Eco-Terr further argues that 16 attorneys’ fees are unwarranted because it “participated in every aspect of the arbitration” 17 and has not acted in bad faith. (Id. at 12.) 18 “[P]ost-award, prejudgment interest is available in an action to confirm an 19 arbitration award under the . . . Convention.” Cubic Def., 665 F.3d at 1102. The purpose 20 of awarding prejudgment interest is to compensate a party “for the loss of use of money 21 due as damages from the time the claim accrues until judgment is entered.” Schneider v. 22 Cty. of San Diego, 285 F.3d 784, 789 (9th Cir. 2002). The decision whether to award ORDER - 21 1 such interest “falls within the district court’s discretion.” Cubic Def., 665 F.3d at 1103. 2 The court must exercise that discretion, however, “consistent with the underlying 3 arbitration award,” and therefore may not award interest “when the arbitration tribunal 4 has determined that such interest is not available.” Id. Where an award is silent on 5 whether a party may recover post-award interest, prejudgment interest is consistent with 6 the award. See Cont’l Transfert Technique Ltd. v. Fed. Gov’t of Nigeria, 932 F. Supp. 2d 7 153, 164 (D.D.C. 2013) (citing Cubic Def., 665 F.3d at 1103). Courts presume that 8 post-award, prejudgment interest is “appropriate” absent a persuasive showing to the 9 contrary. See Al Maya Trading Establisment v. Global Export Mktg. Co., Ltd., 10 No. 16-CV-2140 (RA), 2017 WL 1050123, at *5 (S.D.N.Y. Mar. 17, 2017); Waterside 11 Ocean Navigation Co. v. Int’l Navigation, Ltd., 737 F.2d 150, 154 (2d Cir. 1984) (noting 12 a general presumption in favor of prejudgment interest). The Ninth Circuit generally uses 13 “the interest rate prescribed for post-judgment interest under 28 U.S.C. § 1961 . . . for 14 fixing the rate of pre-judgment interest.” Asdale v. Int’l Game Tech., 763 F.3d 1089, 15 1093 (9th Cir. 2014); see also W. Pac. Fisheries, Inc. v. SS President Grant, 730 F.2d 16 1280, 1288 (9th Cir. 1984) (stating that using 28 U.S.C. § 1961(a) is appropriate “unless 17 the trial judge finds, on substantial evidence, that the equities of the particular case 18 require a different rate”); ESCO Corp. v. Bradken Res. Pty Ltd., Civ. No. 10-788-AC, 19 2011 WL 1625815, at *23 (D. Or. Jan. 31, 2011) (stating that the rate of interest specified 20 in 28 U.S.C. § 1961 applied in a case to confirm a foreign arbitration); 28 U.S.C. 21 § 1961(a). 22 // ORDER - 22 1 In addition, the court may award attorneys’ fees “when the losing party has acted 2 in bad faith, vexatiously, wantonly[,] or for oppressive reasons.” Cubic Def., 665 F.3d at 3 1104 (citing Int’l Union of Petroleum & Indus. Workers v. W. Indus. Maint., Inc., 707 4 F.2d 425, 428 (9th Cir. 1983)). In the context of a petition to confirm a foreign 5 arbitration award, the losing party’s unjustified refusal to comply with the award may 6 provide a basis for awarding attorneys’ fees. See id.; cf. Landmark Ventures, Inc. v. 7 InSightec, Ltd., 63 F. Supp. 3d 343, 359 (S.D.N.Y. 2014) (concluding that “[t]his is not a 8 case where [the petitioner] simply failed to abide by the Award” because the petitioner 9 “attempted to vacate the Award”). 10 Because much of Eco-Terr’s motion attempts to relitigate issues before the 11 arbitration panel, the court finds an award of prejudgment interest on the €20,000.00 12 award appropriate. Cf. ESCO, 2011 WL 1625815, at *24 (stating that to award 13 prejudgment interest in that case would “discourage parties from asserting objectively 14 reasonable grounds for vacatur”). However, neither party addresses an appropriate rate 15 of prejudgment interest. (See generally Resp.; Reply.) The court thus applies the rate 16 from 28 U.S.C. § 1961(a) to the €20,000.00 award from September 8, 2015, to the date of 17 judgment. The court declines, however, to award attorneys’ fees. Although Eco-Terr has 18 failed to comply with the Awards despite the passage of nearly three years, Purus has not 19 shown that Eco-Terr was unjustified in its refusal. See Cubic Def., 665 F.3d at 1104. 20 Indeed, Eco-Terr has contested the Awards both before the arbitration panel and here, 21 indicating that it did not simply choose to disregard the Awards. Cf. Landmark Ventures, 22 63 F. Supp. 3d at 359. The fact that Purus petitioned the court to confirm the Awards is ORDER - 23 1 not itself sufficient to show that Eco-Terr acted in bad faith or vexatiously. (See Resp. at 2 29 (citing Reif Decl. (Dkt. # 1-1).) 3 IV. CONCLUSION 4 For the reasons set forth above, the court DENIES Eco-Terr’s motion to dismiss 5 (Dkt. # 8) and CONFIRMS the Awards (Dkt. # 1). The court further GRANTS in part 6 and DENIES in part Purus’s request for post-award, prejudgment interest and attorneys’ 7 fees (Dkt. # 16). Accordingly, the court AWARDS prejudgment interest on the arbitral 8 award of €20,000.00, commencing on September 8, 2015, through the date of judgment. 9 Such interest shall accrue at a rate equal to the federal post-judgment interest rate, see 28 10 11 U.S.C. § 1961(a), applicable for the calendar week preceding the date of judgment. Dated this 21st day of June, 2018. 12 13 A 14 JAMES L. ROBART United States District Judge 15 16 17 18 19 20 21 22 ORDER - 24
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