Presstek v. Agfa Gevaert

• Court: District Court, D. New Hampshire
• Decided: January 26, 1996
• Docket: CV-95-220-M
• Status: Published

Opinion

Presstek v. Agfa Gevaert CV-95-220-M 01/26/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Presstek, Inc., Plaintiff,

v. Civil No. 95-220-M

Agfa Gevaert, N.V., Defendant.

O R D E R

Invoking the Federal Arbitration Act, 9 U.S.C. § 3,

defendant AGFA-GEVAERT, N.V. ("Agfa")a moves to stay all

proceedings in this case pending arbitration of the parties'

dispute before the International Chamber of Commerce. Plaintiff,

Presstek, Inc. ("Presstek") objects.

The parties entered into two relevant agreements, a

"Confidentiality Agreement" in 1989, and a "Manufacturing

Agreement" in 1991. Presstek brought this suit alleging that

Agfa breached its obligations under the Confidentiality Agreement

relative to confidential information Presstek provided to Agfa

before the parties entered into the Manufacturing Agreement. The present dispute stems from the fact that the

Manufacturing Agreement contains an arbitration clause, while the

Confidentiality Agreement does not. Presstek asserts that its

claims against Agfa arise out of (and are governed exclusively

by) the Confidentiality Agreement and, therefore, are not subject

to arbitration. Agfa disagrees.

The threshhold guestion presented by the parties is whether

the court or an arbitrator should determine the proper scope of

the arbitration agreement (i.e., did the parties intend it to

apply to disputes relating to the Confidentiality Agreement).

For the reasons set forth below, the court holds that the parties

have agreed to submit all guestions concerning the arbitrability

of disputes relating to their business relationship to an

arbitrator. Accordingly, Agfa's motion to stay this case pending

arbitration is granted.

Discussion

Paragraph 1 of the Manufacturing Agreement is entitled

"Prior Agreements" and provides:

This Manufacturing Agreement, when executed by both parties, supersedes and replaces the Memorandum of Understanding. The

2 Confidentiality Agreement shall remain in full force and effect and shall continue to apply to disclosures prior to the effective date of this Agreement and to disclosures made pursuant to this Agreement, and a copy thereof is attached hereto as Exhibit 1.

Paragraph 17 of the Manufacturing Agreement describes the "entire

agreement" between the parties, in part, as follows:

This Agreement and the Confidentiality Agreement, represent the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, representations, and agreements made by and between the parties, (emphasis added) .

The arbitration clause contained in the Manufacturing

Agreement provides that " [d]isputes arising out of or in

connection with the interpretation and application of this

Agreement" shall be resolved by binding arbitration, conducted

pursuant to the rules of the International Chamber of Commerce.

Manufacturing Agreement, para. 22 (emphasis added). The parties

disagree as to the effect of the referenced language. Presstek

asserts that disputes related to breaches of the Confidentiality

Agreement that antedate the Manufacturing Agreement neither

"arise out of" nor are "connected with" the Manufacturing

Agreement. And, because the Confidentiality Agreement stands

3 alone, relates to distinct matters, and contains no arbitration

clause, Presstek says no agreement to arbitrate such disputes

ever existed.

Agfa, on the other hand, argues that the Manufacturing

Agreement redefined the business relationship between the

parties, reaffirmed and continued the protections provided in the

Confidentiality Agreement, and memorialized the parties' express

agreement to arbitrate all matters relating to the "entire

agreement" between them (which, as noted above, is defined to

include the Confidentiality Agreement and the Manufacturing

Agreement). Accordingly, it claims that alleged breaches of the

Confidentiality Agreement are necessarily included within the

scope of the arbitration agreement.

The arbitration clause found in the Manufacturing Agreement

is reasonably broad and reasonably clear. The parties

unguestionably agreed, at a minimum, to submit disputes "in

Agreement" to International Chamber of Commerce for arbitration.

Manufacturing Agreement, para. 22. Whether the reference to

"this Agreement" in the arbitration clause was intended to mean

4 "the entire agreement" as defined in paragraph 17 (to include

both the Confidentiality Agreement and the Manufacturing

Agreement) depends ultimately on the intent of the parties.1

At this juncture, however, the court need not resolve

whether the parties intended the arbitration clause of the

Manufacturing Agreement to be construed broadly (as Agfa asserts)

or narrowly (as Presstek asserts). As noted above, the

threshhold guestion is who decides what the parties intended --

the court or an arbitrator? The court resolves that issue in

favor of permitting the arbitrator to determine the parties'

intent and the appropriate scope of the arbitration clause.

This case presents a classic situation in which there is

disagreement as to whether a reasonably clear and reasonably

broad arbitration clause does or does not cover particular

1 The terms of the Manufacturing Agreement certainly lend themselves to a reasonable construction in favor of arbitrability of all disputes related to the business relationship described in the Manufacturing Agreement. Nevertheless, Presstek's assertion that the parties always consciously intended to carve out Confidentiality Agreement disputes from the arbitration clause's reach may be valid. At a minimum, it raises a factual dispute regarding the parties' intent (and raises the guestion as to why sophisticated commercial entities would not have simply and explicitly excluded the Confidentiality Agreement from the arbitration clause if that was their intent).

5 disputes. That disagreement is itself arbitrable in the first

instance, because there is undeniably a valid preexisting

agreement to arbitrate disputes arising between these parties and

related to the Manufacturing Agreement. Once such an agreement

is shown, "if the contract language chosen by the parties is

unclear as to the nature of the claims to which an agreement to

arbitrate extends, a 'healthy regard1 for the federal policy

favoring arbitration reguires that 'any doubts concerning the

scope of an arbitrable issue be resolved in favor of

arbitration.1" McCarthy v. Azure, 22 F.3d 351, 355 (1st Cir.

1994) (citations omitted).

In light of the clear policy favoring arbitration and the

parties1 unambiguous and enforceable agreement to arbitrate

disputes (at least those "arising out of or in connection with"

the Manufacturing Agreement), the court finds that the issue

concerning the scope of the arbitration agreement is properly

resolved by an arbitrator.2

2 The court's decision is further supported by Article 8 of the International Chamber of Commerce rules of arbitration, which provides, in part:

Should one of the parties raise one or more pleas concerning the existence or validity of the agreement to arbitrate, and should the Court be satisfied of the

6 Conclusion

All proceedings in this case are hereby stayed under the

Federal Arbitration Act pending arbitration of the proper

interpretation and scope of the Manufacturing Agreement's

arbitration clause and, if appropriate, arbitration of the merits

of the disputes between the parties. Defendant's motion to stay

(document no. 11) is granted.

SO ORDERED.

Steven J. McAuliffe United States District Judge

January 26, 1996

cc: George R. Moore, Esg. Daniel S. Ebenstein, Esg. Steven J. Frank, Esg. Theodore A. Breiner, Esg. Garry R. Lane, Esg. A. Hugh Scott, Esg.

prima facie existence of such an agreement, the Court may, without prejudice to the admissibility or merits of the plea or pleas, decide that the arbitration shall proceed. In such a case any decision as to the arbitrator's jurisdiction shall be taken by the arbitrator himself, (emphasis added)