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Athletic Business Media, Inc. v. National Wood Flooring Association

United States District Court, W.D. Wisconsin

October 17, 2016


          OPINION & ORDER


         Plaintiff Athletic Business Media, Inc. has published a magazine for defendant National Wood Flooring Association (NWFA) for thirty years. NWFA now wants to terminate the publishing contract. Athletic Business has filed suit, claiming that NWFA's termination, and some disparaging remarks that NWFA allegedly made about Athletic Business in the process, violate Wisconsin's Fair Dealership Act and the publishing contract's implied covenant of good faith and fair dealing.

         NWFA moves to dismiss this case in favor of arbitration pursuant to the contract's arbitration clause under Federal Rule of Civil Procedure 12(b)(3) and the Federal Arbitration Act. Dkt. 12. But Athletic Business contends that its request for injunctive relief fits within a contractual exception to the arbitration clause. The court will grant a preliminary injunction to enjoin NWFA from making any further disparaging remarks about Athletic Business, because NWFA does not object to that relief. But the main issue is a matter of contractual interpretation, which requires the court to reconcile potentially conflicting contract provisions. The court concludes that terminating the contract precisely according to its express terms is not a “breach” that would fall within the contract's injunctive relief exception to arbitration. Accordingly, the court concludes that the parties' dispute must be arbitrated, and it will grant NWFA's motion to dismiss the case.


         When deciding a motion to dismiss under Rule 12(b)(3), the court should draw reasonable inferences from the facts in the plaintiff's favor, Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 806 (7th Cir. 2011), and it need not limit its consideration to the pleadings. Continental Cas. Co. v. Am. Nat'l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005).

         Athletic Business has published the magazine Hardwood Floors, using NWFA's name and trademarks, for almost 30 years under a series of publishing contracts. Under the terms of the current publishing contract, NWFA may terminate the contract upon 30 days' written notice, a two-thirds affirmative vote of the NWFA Board of Directors, and payment of $250, 000 to Athletic Business. NWFA has done just that, providing a written, 30-day notice of termination to Athletic Business on August 26, 2016, and following up with a $250, 000 payment to Athletic Business a few weeks later.

         Athletic Business filed this suit claiming that NWFA breached the contract's implied covenant of good faith and fair dealing and violated the Wisconsin Fair Dealership Law (WFDL), Wis. Stats. Ch. 135, and Wis.Stat. § 134.01 when it: (1) terminated the contract without good cause or proper notice; and (2) made improper, false, or denigrating statements about Athletic Business and its agents and representatives to Athletic Business's employees, customers, and advertisers. Dkt. 1, at 4. Athletic Business moved for a temporary restraining order and preliminary injunction. Dkt. 4. The court denied Athletic Business's motion for a temporary restraining order. Dkt. 9. NWFA moved to dismiss the case in favor of arbitration. Dkt. 12. The court stayed briefing on the motion for preliminary injunction pending the resolution of NWFA's motion to dismiss in favor of arbitration. Dkt. 15.

         The court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332, because the parties are completely diverse and the value of the relief sought exceeds $75, 000.


         To compel arbitration, “a party need only show: (1) an agreement to arbitrate, (2) a dispute within the scope of the arbitration agreement, and (3) a refusal by the opposing party to proceed to arbitration.” Zurich Am. Ins. Co. v. Watts Indus., Inc., 466 F.3d 577, 580 (7th Cir. 2006). Federal policy favors arbitration, in that courts resolve ambiguities in favor of finding enforceable agreements to arbitrate. Druco Restaurants, Inc. v. Steak N Shake Enters., Inc., 765 F.3d 776, 781 (7th Cir. 2014). In other words, the parties must arbitrate those disputes they agreed to arbitrate. The question here is whether the parties agreed to arbitrate the dispute over the termination of the publishing contract.

         NWFA's motion to dismiss in favor of arbitration is based on the contract's arbitration provision, Section 22, which is broad and plainly stated:

Any claim, dispute or controversy arising out of, or in connection with, this Agreement, or any breach hereof, shall be arbitrated by the parties pursuant to the terms and procedures of the American Arbitration Association (or such other terms and procedures as the parties shall agree upon). The arbitration shall be held in Chicago, Illinois.

Dkt. 3, at 9. This simple, unambiguous paragraph would be decisive if it were the only contract provision concerning disputes. But it is not.

         Athletic Business relies on another provision, Section 17, one that gives the parties the right to seek injunctive relief in ...

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