USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 1 of 26
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 20-14764 Non-Argument Calendar ________________________
D.C. Docket No. 1:19-cv-24235-JB
THE TAYLOR GROUP, INC., a Mississippi corporation, TAYLOR MACHINE WORKS, INC., a Mississippi corporation, SUDDEN SERVICE, INC., a Mississippi corporation,
Plaintiffs-Appellees,
versus
INDUSTRIAL DISTRIBUTORS INTERNATIONAL CO., a Florida corporation,
Defendant-Appellant. USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 2 of 26
________________________
Appeal from the United States District Court for the Southern District of Florida ________________________
(June 8, 2021)
Before NEWSOM, LUCK, and ANDERSON, Circuit Judges.
PER CURIAM:
Industrial Distributors International Co. appeals the district court’s order
denying its motion to compel Taylor Group 1 to arbitrate its trademark infringement
claims. We affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This case is about three separate agreements: a distribution agreement, in
which Taylor Group granted Taylor Machine Works International, Inc. 2 the right to
distribute its products overseas; a marketing agreement, in which Taylor
International granted International Distributors the right to market its products in the
Dominican Republic; and an asset purchase agreement, in which Taylor Group
purchased the overseas distribution rights it had granted to Taylor International.
International Distributors contends Taylor Group is bound by the marketing
1 We refer to The Taylor Group, Inc., Taylor Machine Works, Inc., and Sudden Service, Inc., as “Taylor Group.” 2 Despite the name, Taylor International was not owned by the Taylor family. 2 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 3 of 26
agreement’s arbitration clause, even though Taylor Group is not a party to the
marketing agreement.
The Distribution Agreement. Taylor Group manufactures forklifts. In
1991, Taylor Group entered a distribution agreement with Taylor International,
granting it “overseas distribution rights to TAYLOR® equipment and parts.” The
distribution agreement provided that Taylor International would “be the sole export
management organization engaged by” Taylor Group outside the United States and
Canada. The distribution agreement also said it was:
UNDERSTOOD AND AGREED THAT [TAYLOR] INTERNATIONAL, AS AN INDEPENDENT BUSINESS, [WAS] A SEPARATE LEGAL ENTITY FROM TAYLOR [GROUP], AND THE RELATIONSHIP ESTABLISHED [WAS] THAT OF A BUYER AND SELLER, [TAYLOR] INTERNATIONAL BUYING THE SAID PRODUCTS FROM TAYLOR [GROUP] FOR RESALE TO OTHERS FOR ITS OWN ACCOUNT. [TAYLOR] INTERNATIONAL [WAS] NOT, IN ANY SENSE, AN AGENT OF TAYLOR [GROUP] AND HA[D] NO AUTHORITY TO TRANSACT ANY BUSINESS IN [TAYLOR GROUP’S] NAME OR TO INCUR ANY OBLIGATION OR LIABILITY FOR OR AGAINST TAYLOR [GROUP], OR TO BIND TAYLOR [GROUP] IN ANY MANNER WHATSOEVER.
“The Agreement [was] not assignable in whole or in part by either party,” and it
was “agreed that the right extended by TAYLOR [GROUP] to sell TAYLOR
products [was] not an asset of [TAYLOR] INTERNATIONAL, but belong[ed] at all
times to TAYLOR [GROUP], subject to the terms of th[e] Agreement.”
3 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 4 of 26
After Taylor Group entered into the distribution agreement with Taylor
International, International Distributors’ president, Paolo Amore, reached out to
Taylor Group to purchase parts for customers in the Dominican Republic who were
having trouble getting replacement parts for their Taylor forklifts. Taylor Group
referred Amore to Taylor International, and International Distributors continued to
purchase Taylor parts from Taylor International for a couple of years. Taylor
International’s president, Doug Hulse, invited Amore to tour the Taylor factory and
meet the Taylor family. Amore accepted the invitation and Hulse introduced Amore
to the Taylors.
The Marketing Agreement. In 1999, Taylor International entered into a
“marketing agreement” with International Distributors. The marketing agreement
had an arbitration clause that provided: “In the event of a dispute between the
Company and the Agent, the International Chamber of Commerce shall be the
arbitrating body.” The marketing agreement provided that Taylor International
“grant[ed] to [International Distributors] the right to market the equipment” in the
Dominican Republic. Taylor International later added Colombia to International
Distributors’ territories.
International Distributors agreed that it would not sell or recommend any
products that were not “genuine or new [Taylor International] products
manufactured by or for [Taylor International].” The marketing agreement also
4 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 5 of 26
provided that International Distributors would service Taylor International’s
“products already in operation” in International Distributors’ territories.
International Distributors agreed that it would not “use the name ‘[Taylor
International]’ or any [Taylor International] trademark or trade name” except as
“approved in writing” by Taylor International. The parties agreed that the marketing
agreement could not be assigned “in whole or in part” and that it could be terminated
by either party on ninety days’ written notice.
In May 2018, Taylor International sent a letter to International Distributors
terminating the marketing agreement “effective 90 calendar days” from the date of
the letter. In the letter, Taylor International said that International Distributors could
still order parts “under the current terms and conditions” until the ninety-day
termination period ended. That same day, Hulse emailed Taylor Group and said that
Taylor International had “issued [International Distributors] the 90 day notice of
cancellation.” Hulse noted that the marketing agreement allowed “cancellation for
any reason by either side,” but he explained that the termination was for many
reasons, including “[c]ustomer complaints,” “[p]oor business levels,” and a “[l]ack
of service support.”
The Asset Purchase Agreement and Trademark Dispute. In early
September 2019, Taylor Group purchased some of Taylor International’s assets,
including the overseas distribution rights covered by the 1991 distribution
5 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 6 of 26
agreement. After it bought back the international distribution rights, Taylor Group
learned that International Distributors was using Taylor brand trademarks on its
website to represent itself as an authorized dealer of Taylor brand equipment and
parts, so Taylor Group sued International Distributors for trademark infringement
and unfair competition. International Distributors filed a motion to compel
arbitration based on the arbitration clause in the marketing agreement.
International Distributors argued that the International Chamber of Commerce
panel should decide “in the first instance” whether Taylor Group—which did not
sign the marketing agreement—was bound to arbitrate under the agreement. But if
the arbitration question was for the district court, International Distributors argued
that Taylor Group was “bound to arbitrate under several theories,” including that:
(1) Taylor Group assumed the marketing agreement when it purchased Taylor
International’s assets; (2) Taylor International was acting as Taylor Group’s agent
when Taylor International entered the marketing agreement with International
Distributors; and (3) Taylor Group should be estopped from opposing arbitration
because of its distribution agreement with Taylor International and the fact that
Taylor Group benefitted from the marketing agreement.
Taylor Group opposed arbitration because, as a non-party to the marketing
agreement, it could not be compelled to arbitrate. Taylor Group argued that: (1) it
did not assume the marketing agreement, since Taylor International terminated the
6 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 7 of 26
marketing agreement before Taylor Group purchased its assets; (2) Taylor
International did not act as Taylor Group’s agent, since it had no authority to bind
Taylor Group to the marketing agreement; and (3) Taylor Group was not equitably
estopped from opposing arbitration, since Taylor International was not Taylor
Group’s “affiliate,” Taylor Group did not knowingly receive any direct benefits from
the marketing agreement, and International Distributors could not compel arbitration
by basing its defense on the marketing agreement.
After reviewing the briefing and affidavits, and holding a hearing, the district
court denied International Distributors’ motion to compel arbitration.3 The district
court concluded that it had the authority to answer the arbitrability question because
“the question of whether a non-party is bound by an arbitration clause [was] within
the sound discretion of the court and not an arbitrator.” The district court explained
that “[a]lthough an arbitrator may have the authority to decide the scope of the claims
of the parties that have agreed to proceed to arbitration, that cannot encompass the
issue of whether its jurisdiction applies to non-signatories” because, by definition,
non-signatories have not agreed to the arbitration clause’s language.
Having determined that it was the one that had to decide, the district court
concluded that Taylor Group could not be compelled to arbitrate under any of
3 After the parties consented to proceed before the magistrate judge, the district court referred the case “entirely” to the magistrate judge. 7 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 8 of 26
International Distributors’ theories. First, the district court found that Taylor Group
did not assume the marketing agreement when it purchased some of Taylor
International’s assets. Taylor Group, the district court explained, did not assume any
of Taylor International’s liabilities and only purchased specific assets, which did not
include the marketing agreement. The failure to include the marketing agreement
“[did] not appear to be an oversight” because “the record show[ed] that [Taylor]
International terminated the agreement,” and advised Taylor Group of the
termination, a year before the asset purchase agreement.
Second, the district court found that Taylor International did not act as Taylor
Group’s agent. The district court explained that the distribution agreement “plainly
undermine[d] the argument that there was an agency relationship between [Taylor]
International and [Taylor Group]” because it “specifically disclaim[ed] any agency
relationship.” The record also “show[ed] that Taylor [Group] did not exercise
control over [Taylor] International,” as was required for an agency relationship.
Third, the district court also found that Taylor Group was not estopped from
opposing arbitration of its trademark claims. International Distributors advanced
three “species” of estoppel, arguing that Taylor Group was estopped because:
(1) Taylor International was its “affiliate”; (2) International Distributors’ defense to
Taylor Group’s trademark claims was based on the marketing agreement; and
(3) Taylor Group accepted benefits from the marketing agreement. The district court
8 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 9 of 26
rejected the argument that Taylor International was Taylor Group’s “affiliate”
because “the ‘heart’ of the definition of affiliate” is control and Taylor Group “did
not exercise control over [Taylor] International.” Next, the district court rejected
International Distributors’ argument that because its defense to Taylor Group’s
claims was based on the marketing agreement, Taylor Group was estopped from
opposing arbitration of its claims. That argument, the district court explained, was
not supported by any authority and the theory of estoppel did not apply because
Taylor Group was seeking to enforce intellectual property rights that were unrelated
to the marketing agreement with the arbitration clause. Finally, the district court
rejected International Distributors’ argument that Taylor Group knowingly received
direct benefits from the marketing agreement because the benefit Taylor Group
received “was the sale of Taylor [Group] products in the Dominican Republic and
Colombia” and “sales alone are not a direct benefit.”
International Distributors appeals the district court’s order denying its motion
to compel arbitration.
STANDARD OF REVIEW
“We review de novo a district court’s denial of a motion to compel
arbitration,” Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., 845
F.3d 1351, 1354 (11th Cir. 2017), “accept[ing] the district court’s findings of fact
that are not clearly erroneous,” Multi-Fin. Sec. Corp. v. King, 386 F.3d 1364, 1366
9 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 10 of 26
(11th Cir. 2004). “Contract interpretation is a question of law and is subject to de
novo review.” Am. Cas. Co. of Reading, Pa. v. Etowah Bank, 288 F.3d 1282, 1285
(11th Cir. 2002).
DISCUSSION
International Distributors argues that the district court erred by deciding the
question of arbitrability because that question was for the International Chamber of
Commerce panel, not the district court. Even if the question was properly before the
district court, International Distributors contends that the district court erred in
concluding that Taylor Group could not be compelled to arbitrate under the
marketing agreement’s arbitration clause. International Distributors argues that the
district court erred in concluding that: 1) Taylor Group was not estopped from
opposing arbitration; 2) Taylor Group was not a third-party beneficiary to the
contract; 3) Taylor International did not act as Taylor Group’s agent; and 4) Taylor
Group did not assume the contract when it purchased Taylor International’s assets.
We address these arguments below.
The District Court Properly Decided the Question of Arbitrability
International Distributors argues that the district court should not have
decided the question of arbitrability because International Distributors and Taylor
International agreed that the International Chamber of Commerce panel would have
the power to determine its jurisdiction. But International Distributors’ motion to
10 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 11 of 26
compel arbitration asked the district court “to determine if there [was] a basis for
binding Taylor Group or its subsidiaries to arbitration.” That is what the district
court did. Only because the district court’s answer was “no” does International
Distributors now argue that the district court should not have decided the question.
Nevertheless, International Distributors is wrong.
There is no evidence that Taylor Group, a non-party to the marketing
agreement, agreed to submit the question of arbitrability to arbitration. In First
Options of Chicago, Inc. v. Kaplan, the Supreme Court made clear that if “the parties
did not agree to submit the arbitrability question itself to arbitration, then the court
should decide that question just as it would decide any other question that the parties
did not submit to arbitration, namely, independently.” 514 U.S. 938, 943 (1995).
International Distributors concedes that only it “and [Taylor] International agreed
that the [International Chamber of Commerce panel would have] the power to
determine its jurisdiction.” That does not include Taylor Group and we cannot
“assume . . . parties agreed to arbitrate arbitrability unless there is clear and
unmistakable evidence that they did so.” Id. at 944 (quotation omitted; alterations
adopted). The marketing agreement’s arbitration clause says that “[i]n the event of
a dispute between the Company and the Agent, the International Chamber of
Commerce shall be the arbitrating body.” That is all. There is no mention of Taylor
Group or any non-party. Therefore, we cannot say that Taylor Group “clear[ly] and
11 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 12 of 26
unmistakabl[y]” agreed to arbitrate this threshold question. Absent “clear and
unmistakable evidence” to the contrary, “the question whether the parties have a
valid arbitration agreement at all is for the court, not the arbitrator, to decide.” See
Terminix Int’l Co., LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327, 1332 (11th Cir.
2005) (quotation omitted).
International Distributors suggests that we should err on the side of arbitration
because Taylor Group would suffer no “irreparable harm” by being compelled to
arbitrate because “Taylor [Group] can simply move to vacate any award against it if
the arbitrators exceed their powers.” But even-if-its-wrong-the-courts-can-vacate-it
is not the test we apply and the Supreme Court has explained that, although a “party
. . . can ask a court to review [an] arbitrator’s decision,” courts “will set that decision
aside only in very unusual circumstances.” Kaplan, 514 U.S. at 942. For this reason,
“who—court or arbitrator—has the primary authority to decide whether a party has
agreed to arbitrate can make a critical difference to a party resisting arbitration.” Id.
That is why we require “clear and unmistakable evidence” that a party has agreed to
submit the question of arbitrability to arbitration, and because International
Distributors has shown no evidence that non-party Taylor Group did so, the district
court did not err by deciding the question of arbitrability. See Chastain v. Robinson-
Humphrey Co., Inc., 957 F.2d 851, 854 (11th Cir. 1992) (“If a party has not signed
an agreement containing arbitration language, such a party may not have agreed to
12 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 13 of 26
submit grievances to arbitration at all. Therefore, before sending any such
grievances to arbitration, the district court itself must first decide whether or not the
non-signing party can nonetheless be bound by the contractual language.”).
Taylor Group Cannot be Compelled to Arbitrate its Claims
The Federal Arbitration Act “places arbitration agreements on an equal
footing with other contracts and requires courts to enforce them according to their
terms.” Hearn v. Comcast Cable Commc’ns, LLC, 992 F.3d 1209, 1213 (11th Cir.
2021) (quotation omitted); see also 9 U.S.C. § 2 (“A written provision in any . . .
contract evidencing a transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or transaction . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for
the revocation of any contract.”). There is no dispute that Taylor International and
International Distributors would be required to arbitrate their disputes under the
marketing agreement’s arbitration clause. The question here is whether Taylor
Group, a non-party to the marketing agreement, is bound by that agreement to
arbitrate its trademark infringement claims.
State law “governs the issue whether a contract may be enforced by or against
a nonparty.” Kong v. Allied Prof’l Ins. Co., 750 F.3d 1295, 1302 (11th Cir. 2014)
(citations omitted); see also Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630
(2009) (The Federal Arbitration Act does not “alter background principles of state
13 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 14 of 26
contract law regarding the scope of agreements (including the question of who is
bound by them).”). Although the marketing agreement selects New Jersey law, the
parties agreed at the hearing “that there was no substantive difference between the
law of Florida and New Jersey.” In its motion to compel, International Distributors
primarily relied on Florida law and the district court did the same.
Under Florida law, generally a “party who has not agreed to be bound by an
arbitration agreement cannot be compelled to arbitrate.” Massa v. Michael Ridard
Hosp. LLC, 306 So. 3d 1106, 1109 (Fla. Dist. Ct. App. 2020). But non-parties can
be “bound to arbitration agreements under the theories of (1) incorporation by
reference; (2) assumption; (3) agency; (4) veil piercing/alter ego; and (5) estoppel.”
Id. A non-party to an arbitration agreement may also be bound to arbitrate if the
non-party “has received something more than an incidental or consequential benefit
of the contract, or if the [non-party] is specifically the intended third-party
beneficiary of the contract.” Germann v. Age Inst. of Fla., Inc., 912 So. 2d 590, 592
(Fla. Dist. Ct. App. 2005) (citations omitted). International Distributors raises four
of these theories: (1) estoppel; (2) third-party beneficiary; (3) agency; and (4)
assumption. All are without merit.
1. Taylor Group Cannot be Compelled to Arbitrate by Estoppel.
International Distributors argues that Taylor Group is estopped from
“asserting lack of signature to avoid arbitration” because Taylor Group’s “claim
14 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 15 of 26
[was] based in some way on the contract that contained the arbitration clause” and
Taylor Group “directly benefitted from the contract.”
a. Taylor Group’s Trademark Claims are not Based on the Marketing Agreement.
Taylor Group’s claims are not based on the marketing agreement.
International Distributors concedes this point in its brief: “To be sure, [Taylor
Group’s] trademark claims do not seek to enforce the [Marketing] Agreement.”
Instead, International Distributors contends that Taylor Group must arbitrate its
claims because of “the fact that the [Marketing] Agreement serves as a defense to
the trademark claims.” International Distributors cites no case for the proposition
that a non-party to an agreement whose claims are not based on the agreement may
nevertheless be estopped from opposing arbitration of its claims because a
defendant’s theory of defense invokes the agreement. The cases it does cite stand
only for the uncontroversial point that if a plaintiff’s claims are based on the contract
containing the arbitration clause, it cannot oppose arbitration. See, e.g., McBro
Planning & Dev. Co. v. Triangle Elec. Const. Co., Inc., 741 F.2d 342, 344 (11th Cir.
1984) (holding that plaintiff was estopped from opposing arbitration because its
claims were “intimately founded in and intertwined with the underlying contract
obligations”); Jackson v. Shakespeare Found., Inc., 108 So. 3d 587, 595 (Fla. 2013)
(holding that plaintiff must arbitrate its claim because the claim was “inextricably
intertwined with both the transaction from which the contract arose and the contract 15 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 16 of 26
itself—the reliance element of the claim emanate[d] from the transaction from which
the contract arose, and the damages element of the claim [arose] from the execution
and existence of the contract itself”).
International Distributors contends that by raising the marketing agreement as
a defense to Taylor Group’s trademark infringement claims, it meets the “significant
relationship” test. In Jackson, the Florida Supreme Court held that a plaintiff must
arbitrate her claim when her claim has a “significant relationship” to the contract.
108 So. 3d at 593. “[A] significant relationship is described to exist between an
arbitration provision and a claim if there is a ‘contractual nexus’ between the claim
and the contract.” Id. “A contractual nexus exists between a claim and a contract if
the claim presents circumstances in which the resolution of the disputed issue
requires either reference to, or construction of, a portion of the contract.” Id.
Here, the marketing agreement is wholly unrelated to Taylor Group’s
trademark claims based on conduct beginning in September 2019—over a year after
the marketing agreement was terminated. As Taylor Group points out, “the fact that
[Taylor International] may have at one time authorized [International Distributors]
to sell TAYLOR® equipment and parts in Colombia and the Dominican Republic
provides no defense to [International Distributors’] ongoing use of the TAYLOR®
Marks—in Miami and elsewhere—long after termination of the Marketing
Agreement.” Because the marketing agreement was terminated long before Taylor
16 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 17 of 26
Group alleges that International Distributors infringed trademarks, Taylor Group’s
trademark “claims present no circumstances in which the resolution of the disputed
issue requires either reference to, or construction of, a portion of the contract,” and,
thus, there is no “significant relationship” between the marketing agreement and
Taylor Group’s trademark claims.
International Distributors disputes that the marketing agreement was ever
terminated, but the district court found that it was and that finding is supported by
substantial evidence in the record.4 See Thelma C. Raley, Inc. v. Kleppe, 867 F.2d
1326, 1328 (11th Cir. 1989) (“a finding of fact [is not] clearly erroneous if the record
[contains] substantial evidence to support it”). In its May 2018 letter, Taylor
International told International Distributors that “any / all agreements that [were]
currently in place between [Taylor International] and [International Distributors]
[were] terminated effective 90 calendar days” from the date of the letter, which
would be August 14, 2018. That same day, Hulse told Taylor Group that Taylor
4 International Distributors argues that the district court erred because it “resolv[ed] factual disputes” on the affidavits without holding an evidentiary hearing. But International Distributors does not explain why an evidentiary hearing was necessary. A district court may resolve a motion without live testimony. See Fed. R. Civ. P. 43 (“When a motion relies on facts outside the record, the court may hear the matter on affidavits or may hear it wholly or partly on oral testimony or on depositions.”). Even so, the district court asked the parties whether there was a “need for an evidentiary hearing on the motion to compel.” International Distributors said that the district court could resolve the motion by “rely[ing] on the affidavits” alone. That is what the district court did. The failure to hold an evidentiary hearing—even if it was error—was invited by International Distributors and, thus, we cannot address the issue. See Pensacola Motor Sales Inc. v. E. Shore Toyota, LLC, 684 F.3d 1211, 1231 (11th Cir. 2012) (“A party that invites an error cannot complain when its invitation is accepted.”). 17 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 18 of 26
International had “issued [International Distributors] the 90 day notice of
cancellation,” and though Hulse noted that the marketing agreement allowed
“cancellation for any reason by either side,” he explained that the termination was
for many reasons, including “[c]ustomer complaints,” “[p]oor business levels,” and
a “[l]ack of service support.”
According to International Distributors, a series of emails between Amore and
Hulse show that Taylor International “withdrew the termination notice before it
became effective.” But those emails confirm the termination rather than undermine
it. On August 13, 2018—one day before the ninety-day termination period ended—
Hulse emailed Amore and said it was “sad that it took a letter of cancellation for
[Amore] to once again surface.” Hulse offered to buy back International
Distributors’ trucks and “stock parts.” Amore responded that he was “on vacation
with [his] family, cruising the outer islands of the Bahamas” and would respond
when he returned from vacation. The termination became effective the next day. A
week later, Amore responded, disputing Taylor International’s reasons for
terminating the marketing agreement. Hulse and Amore continued arguing by email
for months, both sticking to their positions. International Distributors identified no
email from Hulse “withdrawing” the termination of the marking agreement.
Next, International Distributors argues that the marketing agreement could not
have been terminated because “that termination would be wrongful.” International
18 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 19 of 26
Distributors does not explain what was “wrongful” about the termination. To the
extent International Distributors disputes Taylor International’s reasons for
terminating the marketing agreement, those reasons were given only as a courtesy.
The marketing agreement allowed for termination by either party “at any time . . .
with or without cause.”
International Distributors also argues that the marketing agreement could not
have been terminated because Taylor International continued to accept and fulfill
orders from International Distributors. But those orders were not a continuation of
the marketing agreement. While the marketing agreement allowed International
Distributors to resell Taylor forklifts and required International Distributors to
provide warranty service for those forklifts, after Taylor International sent
International Distributors the termination letter, the only business between the two
companies was a few parts orders.
The communications between Taylor International and International
Distributors confirm that the parts orders were not placed under the marketing
agreement. The emails between Amore and Hulse show that International
Distributors was trying to be reinstated as an authorized dealer of Taylor forklifts
and asked for an in-person meeting. At that meeting, Taylor International
maintained the termination of the marketing agreement and explained why it would
not reinstate International Distributors. Whatever their new agreement was for parts
19 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 20 of 26
orders, it did not revive the marketing agreement containing the arbitration clause
that International Distributors seeks to use as a defense here.
b. Taylor Group did not Receive Direct Benefits from the Marketing Agreement.
International Distributors argues that Taylor Group should be estopped from
opposing arbitration because it “directly benefited” from the marketing agreement
by accepting and fulfilling orders and relying on International Distributors to provide
warranty service. “[W]here a company knowingly accepted the benefits of an
agreement with an arbitration clause, even without signing the agreement, that
company may be bound by the arbitration clause.” MAG Portfolio Consult, GMBH
v. Merlin Biomed Group LLC, 268 F.3d 58, 61 (2d Cir. 2001) (quotation marks
omitted). But the “benefits must be direct—which is to say, flowing directly from
the agreement,” not a “benefit derived from an agreement . . . where the
nonsignatory exploits the contractual relation[ship] of parties to an agreement, but
does not exploit (and thereby assume) the agreement itself.” Id.
Taylor Group did not receive direct benefits from the marketing agreement.
The record shows that International Distributors placed its orders with Taylor
International and then Taylor International ordered the equipment from Taylor
Group to resell to International Distributors. At most, Taylor Group made money
from the contractual relationship between Taylor International and International
Distributors, but simply making money as a result of a contract between other parties 20 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 21 of 26
is not a “direct benefit” that binds a non-party to the contract. See, e.g., Morgan
Stanley DW Inc. v. Halliday, 873 So. 2d 400, 403 (Fla. Dist. Ct. App. 2004) (holding
that a non-signatory trust beneficiary was not bound by an arbitration clause despite
the contract generating income that ultimately flowed to the non-signatory). As for
the warranty service International Distributors provided, that was a direct benefit to
Taylor International, not Taylor Group. Under the marketing agreement, the
equipment International Distributors agreed to service in the Dominican Republic
was “[e]quipment sold or serviced by [Taylor International],” not Taylor Group.
Thus, the “direct benefits” of the marketing agreement flowed to Taylor
International, not Taylor Group.
2. Taylor Group was not a Third-Party Beneficiary of the Marketing Agreement.
International Distributors argues that the district court did not address its
theory that Taylor Group was a third-party beneficiary of the marketing agreement.
But International Distributors conceded in the district court that “[t]he analysis of
whether a non-signatory is a third-party beneficiary to a contract containing an
arbitration clause is the same as the analysis applicable to direct benefits estoppel.”
Thus, the district court’s rejection of International Distributors’ direct-benefits
estoppel theory also applied to its third-party-beneficiary theory.
Taylor Group was not a third-party beneficiary of the marketing agreement.
“A non-party is the specifically intended beneficiary only if the contract clearly 21 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 22 of 26
expresses an intent to primarily and directly benefit the third party or a class of
persons to which that person belongs.” Bochese v. Town of Ponce Inlet, 405 F.3d
964, 983 (11th Cir. 2005). Here, the marketing agreement expressed the opposite
intent. It said that Taylor International and International Distributors were
“independent businessmen who ha[d] joined together for their mutual benefit, but
only to best realize their individual goals.” Taylor Group, as we explained above,
did not receive a direct benefit from the contract so it could not be an intended third-
party beneficiary. See Germann, 912 So. 2d at 592 (To be bound as a third-party
beneficiary, “a nonsignatory to an arbitration agreement” must have “received
something more than an incidental or consequential benefit of the contract.”).
3. Taylor International did not Sign the Marketing Agreement as Taylor Group’s Agent.
International Distributors argues that Taylor Group is bound by the arbitration
clause in the marketing agreement because Taylor International entered the
marketing agreement as Taylor Group’s agent. “The essential elements necessary
to establish an actual agency relationship are (1) acknowledgment by the principal
that the agent will act for him, (2) acceptance by the agent of the undertaking, and
(3) control by the principal over the agent’s actions.” Roman v. Bogle, 113 So. 3d
1011, 1016 (Fla. Dist. Ct. App. 2013).
Taylor Group explicitly rejected an agency relationship with Taylor
International in the distribution agreement. The distribution agreement provided that 22 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 23 of 26
“Taylor International, as an independent business, [was] a separate legal entity from
Taylor [Group], and the relationship established [was] that of a buyer and seller,”
with “Taylor International buying the said products from Taylor [Group] for resale
to others for its own account.” The distribution agreement also made clear that
“Taylor International [was] not, in any sense, an agent of Taylor [Group] and ha[d]
no authority to transact any business in [Taylor Group’s] name or to incur any
obligation or liability for or against Taylor [Group], or to bind Taylor [Group] in any
manner whatsoever.” Taylor Group’s “considerable efforts” to avoid an agency
relationship shows that Taylor Group did not acknowledge that Taylor International
would act on its behalf. Commodity Futures Trading Comm’n v. Gibraltar Monetary
Corp., Inc., 575 F.3d 1180, 1189 (11th Cir. 2009) (“[C]onsiderable efforts to avoid
an agency designation is palpable evidence” that a party “did not intend to consent
or acquiesce to an agency relationship.”).
Taylor Group also had no control over Taylor International’s actions.
International Distributors argues that “[t]he degree of control by Taylor [Group]
[was] high” because Taylor Group “ha[d] the absolute right to accept or reject
orders.” But Taylor Group’s ability to accept or reject an order from Taylor
International does not show that Taylor Group had “control” over Taylor
International. The ability to accept or reject an order from a customer shows that
Taylor Group had control over its own manufacturing capacity, not its customers.
23 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 24 of 26
Without any evidence that Taylor Group had the power to control Taylor
International’s business—beyond rejecting an order—International Distributors
cannot show control and, thus, cannot show an actual agency relationship. Virgilio
v. Ryland Group, Inc., 680 F.3d 1329, 1336 (11th Cir. 2012) (“An essential element
of the existence of an actual agency relationship is control by the principal over the
actions of the agent.” (quotation omitted)).5
International Distributors contends that “[e]ven if Taylor International was not
[Taylor Group’s] [a]gent in fact, Taylor [Group] is nonetheless estopped to deny that
the [marketing] [a]greement was executed on behalf of Taylor [Group]” under a
theory of apparent agency. “Apparent agency exists only if” there is: “1) a
representation by the purported principal; 2) reliance on that representation by a third
party; and 3) a change in position by the third party in reliance on the
representation.” Ocana v. Ford Motor Co., 992 So. 2d 319, 326 (Fla. Dist. Ct. App.
2008). “‘Apparent authority’ does not arise from the subjective understanding of
the person dealing with the purported agent, nor from appearances created by the
5 International Distributors argues that Taylor International made Taylor Group a party to the marketing agreement because “the Company” in the agreement referred to Taylor Group, not Taylor International. This argument is not supported by the contract language. The marketing agreement never mentions Taylor Group, only Taylor International and International Distributors. The “products” that International Distributors agreed to resell in the Dominican Republic are “[Taylor International] products.” The equipment International Distributors agreed to service was “[e]quipment sold or serviced by [Taylor International].” And the arbitration clause, which International Distributors concedes was between International Distributors and Taylor International, said it was between “the Company and the Agent.” In short, “the Company” was Taylor International, not Taylor Group in disguise. 24 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 25 of 26
purported agent himself; instead, ‘apparent authority’ exists only where the principal
creates the appearance of an agency relationship.” Id.
International Distributors argues that Taylor Group represented Taylor
International as its “international division” and that International Distributors relied
on that representation when it entered into the marketing agreement. But
International Distributors couldn’t have relied on Taylor Group’s representation.
The marketing agreement between Taylor International and International
Distributors said that its parties were acting as “independent businessmen . . . only
to best realize their individual goals.” In other words, even if Taylor Group made
some representation of Taylor International’s “apparent authority,” International
Distributors agreed that it understood Taylor International was not acting with that
authority, but only on its own behalf when it entered into the marketing agreement.
4. Taylor Group did not Assume the Marketing Agreement.
International Distributors finally argues that Taylor Group was bound by the
arbitration clause because it assumed the marketing agreement in its asset purchase
agreement with Taylor International. There are several problems with this theory.
First, the asset purchase agreement was “limited” to specific assets listed in
section 2.1, which did not include the marketing agreement. Second, at the time of
the purchase, the marketing agreement was no longer one of Taylor International’s
assets because it had been terminated and the marketing agreement specifically
25 USCA11 Case: 20-14764 Date Filed: 06/08/2021 Page: 26 of 26
excluded “any liability or obligation . . . relating to, resulting from, or arising out of,
any former operation of [Taylor International] that had been discontinued or
disposed of prior to the Closing.” Third, even if it was still an asset, the marketing
agreement could not have been purchased by Taylor Group because it could not be
assigned. The marketing agreement provided that it was “not assignable in whole
or in part by either party.” Thus, Taylor Group cannot be compelled to arbitrate
under a theory of assumption.
CONCLUSION
International Distributors moved to compel Taylor Group to arbitrate its
trademark claims, relying on the arbitration clause in a marketing agreement that
Taylor Group did not sign. Taylor Group was not a party to the marketing
agreement, its trademark claims were not based on the marketing agreement, it did
not receive a direct benefit from the marketing agreement, it was not a third-party
beneficiary of the marketing agreement, neither party to the marketing agreement
acted as Taylor Group’s agent, and Taylor Group never assumed the marketing
agreement. Therefore, International Distributors cannot show that Taylor Group was
bound to the marketing agreement’s arbitration clause. Thus, we affirm the district
court’s denial of International Distributors’ motion to compel arbitration.
AFFIRMED.