Rath v. Network Marketing, LC

790 So. 2d 461, 2001 WL 527722
CourtDistrict Court of Appeal of Florida
DecidedMay 16, 2001
Docket4D00-1276
StatusPublished
Cited by12 cases

This text of 790 So. 2d 461 (Rath v. Network Marketing, LC) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rath v. Network Marketing, LC, 790 So. 2d 461, 2001 WL 527722 (Fla. Ct. App. 2001).

Opinion

790 So.2d 461 (2001)

Matthias RATH, M.D. and Health Now, Inc., Appellants,
v.
NETWORK MARKETING, L.C., n/k/a Rexall Showcase International, Inc., Appellee.

No. 4D00-1276.

District Court of Appeal of Florida, Fourth District.

May 16, 2001.
Rehearing Denied August 14, 2001.

*462 Richard J. Ovelmen, Landon K. Clayman and Enrique D. Arana of Jorden Burt Boros Cicchetti Berenson & Johnson LLP, Miami, and Lisa S. Small and Michael B. Small of Small & Small, P.A., Palm Beach, for appellants.

Mark F. Bideau, Lori Gleim and Janet Bernstein Teebagy of Greenberg Traurig, P.A., West Palm Beach, for appellee.

STEVENSON, J.

Matthias Rath, M.D. and Health Now, Inc. (collectively "Rath") appeal from a non-final order, holding that Network Marketing, L.C., n/k/a Rexall Showcase International, Inc. ("Rexall") did not waive its right to arbitrate. We agree with Rath and reverse.

Rexall markets health and wellness products. Rath represents himself as the scientist who developed the world's first patented therapy for the natural reversal of cardiovascular disease. In August 1994, the parties entered into a written agreement whereby Rath agreed, in return for royalties, to assist Rexall in developing products and formulas for vitamins and dietary and nutritional supplements, to serve as Rexall's spokesperson, and to develop marketing materials. The agreement contained a non-compete clause, a confidentiality provision, and an arbitration provision. The latter provision provided:

All disputes arising out of or under this agreement shall be submitted to the American Arbitration Association (AAA).... Such determination of the AAA shall be enforceable through collateral proceedings to enforce arbitration awards in the state courts of Florida which shall have the authority to enjoin any violation of this agreement.

In September 1996, Rexall filed a statement of claim with the AAA in Miami, seeking a hearing in West Palm Beach. Rexall alleged (1) that Rath violated the agreement by utilizing trade secrets and confidential information in the form of Rexall's customer lists to directly contact Rexall distributors and customers for purposes of persuading them to become defendants' customers; (2) that Rath libeled and slandered Rexall to distributors and customers; and (3) that Rath refused to provide clinical study data as required by the agreement while appropriating such study results for its own purposes. Rexall sought temporary and permanent injunctive relief based on Rath's alleged breaches of the parties' agreement.

Rexall also filed an action in the circuit court in Palm Beach County, seeking emergency temporary injunctive relief pending a determination in arbitration of the issues set forth in its statement of claim filed with the AAA. Through the motion for injunctive relief, Rexall sought to restrain Rath from using or disclosing confidential or proprietary information relating *463 to Rexall's business. Rexall also sought the return of all originals and copies of any confidential information relating to Rexall's product or formula or identifying Rexall's customers' ordering requirements. Of import, Rexall sought to restrain Rath from relying on the clinical study results on Rexall's products. It alleged that, but for the issuance of the immediate injunction, Rath's wrongful conduct would cause irreparable damage and harm to Rexall before arbitration could be conducted.

On September 17, 1996, the trial court granted the temporary injunction and ordered Rath to return to Rexall the clinical study documents. Rath did not appeal from the order granting injunction. On October 17, 1996, Rexall moved for a contempt order, arguing that Rath failed to return the confidential documents as referenced under the relevant section of the order granting temporary injunction. The trial court conducted a hearing and thereafter found Rath in contempt. Rath appealed to this court on these contempt and injunctive issues, and this court affirmed. See Rath v. Network Mktg., L.C., 702 So.2d 506 (Fla. 4th DCA 1997); Rath v. Network Mktg., L.C., 698 So.2d 941 (Fla. 4th DCA 1997).

In May 1999, Rexall moved to amend its complaint in the trial court to add counts alleging defamation and tortious interference with business relationships by Rath. The trial court denied the motion.

Rexall then filed a separate action in state court alleging these claims. Rath removed the case to federal court, which dismissed the case. Rexall did not pursue an appeal from that order.

Rath finally moved the circuit court for a partial summary judgment that Rexall had waived its right to arbitration. Rath argued that Rexall waived its right by, among other reasons, seeking and obtaining affirmative injunctive relief in the circuit court. The court denied the motion. This appeal followed.

We begin our discussion with the general principle that all doubts regarding the scope of an arbitration agreement, as well as any questions about waivers thereof, should be construed in favor of arbitration rather than against it. See Breckenridge v. Farber, 640 So.2d 208, 210 (Fla. 4th DCA 1994). Nevertheless, a party may waive his contractual right to arbitration by actively participating in a lawsuit or by taking action inconsistent with that right. See Finn v. Prudential-Bache Sec., Inc., 523 So.2d 617, 618 (Fla. 4th DCA), rev. denied, 531 So.2d 1354 (Fla.1988). Overall, "[a] party claiming waiver of arbitration must demonstrate: 1) knowledge of an existing right to arbitrate and 2) active participation in litigation or other acts inconsistent with the right." Breckenridge, 640 So.2d at 211.

Rath, citing to Romar Transports, Ltd., Inc. v. Iron & Steel Co. of Trinidad & Tobago, Ltd., 386 So.2d 572 (Fla. 4th DCA 1980), argues that Rexall waived its right by seeking and obtaining temporary injunctive relief in circuit court. In Romar, the parties entered into a contract involving the receiving, inspection, documentation, warehousing, loading, ocean freight and offloading of respondent's cargo. The contract contained an arbitration clause, which provided:

If any questions, difference, controversy, disagreement or dispute shall arise between the parties or with respect to the interpretation construction or application of any clause or term in this Contract concerning the rights, duties, or liabilities of the parties, under this Contract or in any other way touching or arising out of this Contract the same shall be referred to the determination of *464 two arbitrators, one to be appointed by each party to the dispute and an umpire to be appointed by the two arbitrators. The proceedings shall be in accordance with the Arbitration Ordinance of Trinidad and Tobago, Chapter 7, No. 1, or any statutory reenactment or modification thereof for the time being in force.

Id. at 573.

The petitioners later sued the respondent for breach of contract and for the reasonable value of services performed. The respondent filed no answer to the complaint and undertook no discovery, but did file a counterclaim to recover property held by the petitioners. The respondent sought to avoid waiver by asserting, "By the filing of this Counter Claim said Counter Plaintiff does not waive nor relinquish any rights which it has to arbitration and this Counter Claim is being filed solely for the purpose of obtaining possession of the property referred to." Id.

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790 So. 2d 461, 2001 WL 527722, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rath-v-network-marketing-lc-fladistctapp-2001.