J. MICHELLE CHILDS, District Judge.
Plaintiffs, Fleetwood Transportation Corporation ("Fleetwood") and Transportation Consultants, Inc. ("TCI") (collectively "Plaintiffs"), filed this action against Defendant Packaging Corporation of America ("Defendant"), alleging state law claims for breach of contract, unjust enrichment, civil conspiracy, and breach of the duty of good faith and fair dealing. (ECF No. 61.) This matter is before the court on Defendant's motion to compel arbitration and to dismiss or stay the case. (ECF No. 67.) In the alternative, Defendant moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. (ECF No. 70.) Plaintiffs oppose Defendant's motions in their entirety and further move the court to allow oral argument on the pending motions. (ECF Nos. 74, 82, & 90.) For the reasons set forth below, the court
Beginning in 1995, Fleetwood was retained by Defendant's predecessor, Tenneco Packaging, Inc. ("TPI"), to provide contract carrier services for TPI's corrugated packaging materials facilities in South Carolina. (ECF No. 67-2, p. 3 at 32:24-33:2.) Fleetwood and TPI initially conducted business pursuant to an "Agreement for Contract Carriers Trucking Service," which contract was executed on November 15, 1995 (the "1995 Agreement"). (
In 1997, the relationship between TPI and Fleetwood expanded such that the companies agreed that Fleetwood should service all of TPI's facilities in the southeast. (ECF 67-2, pp. 3-4 at 33:3-34:20.) As such, on June 9, 1997, Fleetwood and TPI entered into a new "Agreement for Contract Carriers Trucking Service" (the "1997 Agreement"), which contract expressly replaced the 1995 Agreement. (ECF 67-2, p. 4 at 36:3-11; ECF No. 67-4, ¶ 14.) The 1997 Agreement contained a provision requiring the arbitration of all disputes arising under that Agreement. (ECF No. 67-4, ¶15.)
In 1999, the corrugated packaging portion of TPI's business was sold to Madison Dearborn Partners, Inc., which adopted Defendant's name for the business it acquired. (ECF No. 74-1, p. 5 at 16:2-25.) Defendant's formation was governed by a "Contribution Agreement" dated January 25, 1999, between TPI, PCA Holdings LLC, and Defendant. (
After Defendant's creation, the parties agree they had a business relationship, but are unable to agree on exactly what contractual documentation that relationship was based on. In this regard, Defendant contends that Fleetwood hauled corrugated materials for Defendant pursuant to the terms of the 1997 Agreement until 2007. Additionally, Defendant asserts that it and Fleetwood executed additional rate sheets in the same form as the rate sheets that were attached to the 1997 Agreement as "Schedule A" to allow for periodic adjustment in prices. (ECF No. 67-2, p. 5 at 38:3-41:2; ECF No. 67-8.) Defendant argues these rate sheets were not designed to replace the comprehensive 1997 Agreement, but to supplement 1997 Agreement and replace earlier issued rate sheets. (ECF No. 67-1, p. 4.)
Plaintiffs, on the other hand, contend that after the sale of TPI and the formation of Defendant, Fleetwood and Defendant "operated under written rate agreements, which were reviewed annually and modified periodically by revised written rate agreements." (ECF No. 61, ¶ 13; ECF No. 74-2.) Plaintiffs further contend that Defendant was not a party to the 1997 Agreement and the numerous rate sheets that were executed between 2000 and 2007 were not addendums to the 1997 Agreement, but were separate, stand-alone contracts between Defendant and Fleetwood. (ECF No. 24, pp. 3-6.)
On May 14, 2007, Defendant provided thirty day written notice to Fleetwood that it was terminating their business relationship effective June 15, 2007. (ECF No. 67-9, p. 2.) After the termination of Fleetwood's business relationship with Defendant, Plaintiffs, on April 7, 2010, filed a summons and complaint against Defendant in the Court of Common Pleas of Greenville County, South Carolina alleging breach of contract, unjust enrichment, civil conspiracy, and breach of the duty of good faith and fair dealing. (ECF No. 1-1.) On May 12, 2010, Defendant removed the case to the United States District Court for the District of South Carolina and filed its answer on May 13, 2010. (ECF Nos. 1 & 5.)
On November 9, 2010, Defendant filed a motion to compel arbitration and to dismiss or stay the matter. (ECF No. 18.) On November 24, 2010, Plaintiffs moved for leave to amend their complaint. (ECF No. 21.) Plaintiff filed opposition to Defendant's motion to compel arbitration on November 29, 2010. (ECF Nos. 24.) On April 27, 2011, Defendant moved for summary judgment pursuant to Fed. R. Civ. P. 56. (ECF No. 51.) On May 10, 2011, the court granted Plaintiffs' motion for leave to amend the complaint and dismissed without prejudice Defendant's motions to compel arbitration, to dismiss or stay the matter, and for summary judgment. (ECF No. 58.) Plaintiffs subsequently filed an amended complaint on May 19, 2011. (ECF No. 61.)
After filing its answer to the amended complaint on May 27, 2011, Defendant filed a second motion to compel arbitration and to dismiss or stay the matter on June 17, 2011. (ECF Nos. 64 & 67.) Thereafter, on June 30, 2011, Defendant filed a second motion for summary judgment. (ECF No. 70.) Plaintiff filed opposition to Defendant's motion to compel arbitration on July 20, 2011 and its motion for summary judgment on August 18, 2011. (ECF Nos. 74 & 82.) Defendant filed a reply in support of the motion to compel arbitration on August 1, 2011 and the motion for summary judgment on September 8, 2011. (ECF Nos. 77 & 89.) Additionally, Plaintiffs moved the court to set a hearing and entertain oral argument on Defendant's pending motions. (ECF No. 90.)
Plaintiffs have moved the court to allow oral argument on Defendant's motions to compel arbitration, to dismiss or stay the matter, and for summary judgment. Pursuant to the local rules of this court, the judge has discretion to order hearings on motions and motions may be adjudicated without a hearing. Local Rule 7.08 D.S.C. In this matter, the court finds that the pending motions have been briefed extensively and oral argument will not aid the decisional process.
"The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16 (2006),
Despite these policies favoring arbitration, federal courts have the authority to evaluate the validity of arbitration agreements.
"A party can compel arbitration under the FAA if it establishes: (1) the existence of a dispute between the parties; (2) a written agreement that includes an arbitration provision purporting to cover the dispute that is enforceable under general principles of contract law; (3) the relationship of the transaction, as evidenced by the agreement, to interstate or foreign commerce; and (4) the failure, neglect or refusal of a party to arbitrate the dispute."
In this case, there is sufficient evidence establishing both the dispute between Plaintiffs and Defendant and the refusal by Plaintiffs to submit their claims to arbitration. (
To satisfy this final requirement, Defendant contends that the 1997 Agreement is the written agreement that defined the business relationship of the parties and included an arbitration provision, which provision covers this dispute based on language stating that "[t]he parties agree to submit any dispute arising under this agreement to binding arbitration. . . ." (ECF No. 67-1, p. 10; ECF No. 67-4, ¶15.) Defendant further contends that applicability of the 1997 Agreement is evidenced by Plaintiffs' inclusion of allegations of Defendant's breach of the 1997 Agreement in the initial complaint filed in this case.
In opposing Defendant's arguments about the 1997 Agreement, Plaintiffs simply argue that their evidence establishes that the 1997 Agreement did not govern any relationship involving Plaintiffs and Defendant. (ECF No. 74, pp. 6-7, 9.) In reply, Defendant asserts that Plaintiffs expressed a dispute with the validity of the 1997 Agreement (contract) as a whole and such "a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator." (ECF No. 77, pp. 1-2 (citing
Upon the granting of a motion to compel arbitration, the court must determine whether to stay or dismiss Plaintiffs' lawsuit.
Upon review of the terms of the contract at issue in this matter, the court finds that Plaintiffs' state law claims of breach of contract, unjust enrichment, civil conspiracy, and breach of the duty of good faith and fair dealing, are all subject to arbitration. (ECF No. 67-4, ¶15 ("The parties agree to submit any dispute arising under this agreement to binding arbitration . . .").) Moreover, Plaintiffs did not offer any arguments or authority as to why a stay would be more appropriate than dismissal of their claims under these circumstances. Accordingly, the court dismisses Plaintiffs' claims in this matter without prejudice.
The court deems Defendant's motion for summary judgment to be moot after the dismissal of Plaintiff's claims pursuant to Defendant's motion to compel arbitration.
Upon careful consideration of the entire record, the court hereby