United States District Court, E.D. Arkansas, Pine Bluff Division
is Defendant's Motion to Dismiss Plaintiff's First
Amended Complaint and to Compel Arbitration. (Doc. No. 35).
Plaintiff has responded, and Defendant has filed a reply. For
the reasons stated below, the motion is granted.
case arises out of a floundering business relationship
between the parties. According to the allegations in its
first amended complaint, Plaintiff Ground Connection, LLC
(“Ground Connection”) entered into a distribution
agreement with Defendant Krinner Schraubfundamente GMBH
(“Krinner”) in 2010 in which Ground Connection
would distribute Krinner products within the United
States. Ground Connection characterizes this
distribution agreement as a franchise. The Krinner product at
issue in this dispute is a ground screw which Ground
Connection targeted for use by the transportation
industry-specifically the Texas Department of Transportation
(TX-DOT)-to mount small highway signs. Ground Connection
alleges that it spent years and tens of thousands of dollars
modifying and marketing this ground screw to the TX-DOT,
including modifying the screw's design to fit the TX-DOT
specifications and getting the requisite approval by the
Texas Transportation Institute (TII) and the Federal Highway
Administration (FHWA). However, without Ground
Connection's knowledge, Krinner had entered into a
distribution agreement with Ground Connect, LLC (a Texas
limited liability company, to be referred to as “Ground
Connect-TX”) in January of 2016 for the purpose of
distributing ground screws to TX-DOT and the National
Transportation Industry; this agreement granted Ground
Connect-TX the exclusive right to distribute the screws in
the transportation industry of the United States. Ground
Connection learned of this agreement between Krinner and
Ground Connect-TX in May of 2017.
Connection filed its original complaint in September of 2017.
In November of 2017, Krinner sent Ground Connection a letter
terminating the parties' distribution agreement on the
basis that Ground Connection was in breach of the agreement
by failing to satisfy the agreement's minimum purchase
quantity provision. On January 22, 2019, Ground Connection
filed an amended complaint (Doc. No. 25) claiming tortious
interference with contractual relations and business
expectancy, constructive fraud, civil conspiracy, unjust
enrichment, and violations of the Arkansas Franchise
Practices Act (“AFPA”). It seeks monetary damages
and injunctive relief to prohibit Krinner from continuing to
violate the AFPA and the parties' distribution agreement.
March 14, 2019, after the first amended complaint was filed,
Ground Connect-TX terminated its distribution agreement with
Krinner. On April 29, 2019, Krinner notified Ground
Connection that it was rescinding its November 2017
termination letter and reinstating the parties'
distribution agreement “effective
has responded to the amended complaint by filing a motion to
dismiss the claims for injunctive relief and to compel
arbitration as to the remaining claims.
Court's role in a challenge to enforcing an arbitration
agreement is to determine whether there is a valid agreement
for arbitration and whether the dispute falls within the
scope of the arbitration agreement. Unison Co. v. Juhl
Energy Dev., Inc., 789 F.3d 816, 818 (8th Cir. 2015).
The parties' distribution agreement states that if
informal settlement negotiations are not successful, the
parties shall submit “any controversy or claim arising
out of or relating to this agreement, or the breach
hereof” to arbitration to be conducted by the American
Arbitration Association in New York. Therefore, the Court finds,
and Ground Connection does not dispute, that the parties had
a valid arbitration agreement.
for Tortious Interference and Civil Conspiracy
Ground Connection concedes that some of its claims arise out
of the agreement and are subject to arbitration, it argues
that the claims for interference with a business expectancy
and civil conspiracy-both tort claims-do not entirely arise
out of the agreement.
Eighth Circuit has held that an arbitration clause using the
“arising out of” or “relating to”
language “constitutes the broadest language the parties
could reasonably use to subject their disputes to that form
of settlement, including collateral disputes that relate to
the agreement containing the clause.” Parm v.
Bluestem Brands, Inc., 898 F.3d 869, 874 (8th Cir. 2018)
(citing Fleet Tire Serv. of N. Little Rock v. Oliver
Rubber Co., 118 F.3d 619, 621 (8th Cir. 1997)). The
question for the Court to resolve when construing a broad
arbitration provision such as this one is whether “the
underlying factual allegations simply touch matters covered
by the arbitration provision.” Id. at 875
(quoting Unison Co. v. Juhl Energy Dev., Inc., 789
F.3d 816, 819 (8th Cir. 2015)). This is not a high bar.
Court is convinced that Ground Connection's claims for
tortious interference and civil conspiracy do more than
simply touch on matters covered by the arbitration agreement.
Regarding the tortious interference claim, the first amended
complaint states: “Ground Connection, as a result of
its efforts and expenditure of money, and as a result of
its agreement with Krinner, had a valid contractual
relationship and business expectancy with TX-DOT.”
(Doc. No. 25, ¶ 32) (emphasis added). The claim for
tortious interference is grounded squarely on the
parties' distribution agreement.
claim for civil conspiracy, Ground Connection alleges that
Krinner entered into an agreement with Ground Connect-TX
“to accomplish the purpose that is unlawful and
oppressive by an unlawful or oppressive means.” (Doc.
No. 25, ¶41). The factual underpinning of this
allegation is that because Ground Connection already
had a distribution agreement with Krinner, the agreement it
subsequently entered into with Ground Connect-TX was
Court finds that the parties had a valid and broad agreement
to arbitrate any claim arising out of their distribution
agreement and that all of Plaintiff's claims for monetary
damages, whether ...