United States / 04 January 2011 / United States, U.S. District Court, Southern District of Texas / QPro Inc. v. RTD Quality Servs. USA, Inc. / H-09-3904
| Country | United States |
| Court | United States, U.S. District Court, Southern District of Texas |
| Date | 04 January 2011 |
| Parties | QPro Inc. v. RTD Quality Servs. USA, Inc. |
| Case number | H-09-3904 |
| Applicable NYC Provisions | II | II(1) | II(2) |
| Source |
online: PACER |
| Languages | English |
| Summary | The Plaintiff, QPro Inc. (“QPro”), sued the Defendants, RTD Quality Services USA (“RTD”) and the Dow Chemical Company (“Dow”), in Texas state court alleging tortious interference with its contract with Applus RTD (“Applus”), the Dutch parent company of RTD. QPro had entered into a five-year technology lease contract with Applus (the “QPro-Applus contract”), permitting it to provide certain services to Dow. The QPro-Applus contract contained an arbitration agreement requiring the parties to arbitrate their disputes in the Netherlands, under Dutch law and pursuant to the Arbitration Rules of the International Chamber of Commerce (“ICC Rules”). After QPro filed its suit in state court, RTD successfully removed the case to the United States District Court for the Southern District of Texas pursuant to Section 205 of the Federal Arbitration Act (“FAA”). Section 205 of the FAA grants a federal district court removal jurisdiction over cases it determines relate to an arbitration agreement or award governed by the NYC. Although RTD had not entered into any agreement with QPro, it sought to compel arbitration pursuant to the arbitration agreement in the QPro-Applus contract on grounds of equitable estoppel. RTD contended that QPro should be equitably estopped from avoiding arbitration because its claims against RTD relied on the QPro-Applus contract and the misconduct between Applus, a signatory to that contract, and RTD, a nonsignatory, were “intertwined”. The United States District Court for the Southern District of Texas denied the motion to compel arbitration and granted QPro’s motion to remand. As an initial matter, the Court held that it was for the Court rather than an arbitrator to decide whether a nonsignatory to an arbitration agreement (RTD) may enforce it against a signatory (QPro). The Court found that in this case there was insufficient evidence of the parties’ intent to delegate threshold questions of arbitrability to an arbitrator, leaving the matter for the Court to decide. Second, the Court held that under principles of equitable estoppel a nonsignatory to an arbitration agreement may compel a signatory to that agreement to arbitrate, if the nonsignatory’s claims against the signatory are sufficiently intertwined and dependent on the agreement containing the arbitration agreement. The Court explained that the signatory must rely on the terms of the agreement to assert its claims, and must equally allege substantially interdependent and concerted misconduct by both a signatory and nonsignatory to the agreement. In the dispute before it, the Court determined that although signatory QPro relied on the existence of the QPro-Applus contract to allege tortious interference by nonsignatory RTD, it did not rely on the terms, i.e. rights and obligations, of the contract to do so. Nor, according to the Court, did signatory QPro allege substantially interdependent and concerted wrongdoing by both the signatory Applus and nonsignatory RTD to justify compelling QPro to arbitrate its claims against the nonsignatory RTD. The Court concluded that for both of these reasons, RTD could not compel QPro to arbitrate on equitable estoppel grounds and instead remanded the case back to Texas state court. |
Attachment (1)
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