United States District Court, W.D. Wisconsin
OPINION & ORDER
D. PETERSON DISTRICT JUDGE
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
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.
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).
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.
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.
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.
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.
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.
Business relies on another provision, Section 17, one that
gives the parties the right to seek injunctive relief in