Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Q Holding Co. v. Repco, Inc.

United States District Court, N.D. Ohio

May 22, 2017

Q HOLDING COMPANY, Plaintiff,
v.
REPCO, INC., dba PETERSON ENTERPRISES, Defendant.

          OPINION AND ORDER [RESOLVING DOC. 12]

          JAMES S. GWIN UNITED STATES DISTRICT JUDGE.

         On March 3, 2017, Plaintiff Q Holding Company filed a fraudulent inducement claim against Defendant Repco, Inc., otherwise known as Peterson Enterprises (“Peterson”).[1] The parties are currently involved in arbitration in Minnesota.

         On April 28, 2017, Defendant Peterson filed a motion to dismiss or in the alternative to stay the action pending arbitration or decline jurisdiction.[2]

         For the following reasons, the Court DENIES Defendant's motion to stay or decline jurisdiction and DENIES Defendant's motion to dismiss.

         I. Background

         This case involves a sales representative agreement between Plaintiff Q Holdings and Defendant Peterson. Plaintiff claims Peterson fraudulently induced it to enter the contract.

         Plaintiff Q Holdings is a rubber and plastic manufacturer for medical and automotive devices. Defendant Peterson is a sales and marketing company.[3] In 2016, the parties were negotiating a potential sales agreement.[4] However, in March 2016, Defendant informed Plaintiff that Defendant was obligated to do sales work exclusively for Plaintiff's primary competitor, Flexan Corporation.[5] Defendant Peterson's negotiations with Plaintiff were on hold pending Defendant breaking ties with Flexan.[6]

         Later, in June 2016, Defendant representative Steve Fischer told Plaintiff representative Craig Stark that Defendant was “free and clear” to do sales work for Plaintiff.[7] The parties signed the sales agreement on September 7, 2016.[8]

         On December 16, 2016, Plaintiff received a letter from its competitor Flexan informing Plaintiff that Defendant was still obligated to work for Flexan.[9] The letter said the arrangement between Plaintiff and Defendant violated Defendant's non-compete agreement with Flexan.[10]

         Defendant states that its non-compete with Flexan did not apply when it entered the contract with Plaintiff. Defendant and Flexan are currently arbitrating that issue.[11]

         Plaintiff sent Defendant a notice of termination of their relationship on March 3, 2017.[12]

         Defendant has commenced arbitration against Plaintiff in Minnesota under the Minnesota Termination of Sales Representative Act (“MTSRA”).[13] Defendant argues that the MTSRA limits Plaintiff's right to terminate the relationship and to litigate in this Court.

         Procedural History

         On March 3, 2017, Plaintiff Q Holding filed a fraudulent inducement claim against Defendant Peterson.[14] Plaintiff seeks a declaratory judgment that their contract was invalid from the outset.[15]

         On April 28, 2017, Defendant Peterson filed a motion to dismiss or in the alternative to stay the action or decline jurisdiction.[16] Defendant argues that the fraudulent inducement claim underlying Plaintiff's declaratory judgment action cannot survive.[17] In the alternative, Defendant asks this Court to stay the action pending resolution of the parties' Minnesota arbitration or decline jurisdiction altogether.[18]

         II. Motion to Stay or Decline Jurisdiction

         If the Court will not dismiss the case, Defendant argues the Court should decline jurisdiction or impose a stay pending arbitration. Because sending the case to arbitration or declining jurisdiction would make Defendant's merits dismissal arguments irrelevant, the Court first considers the motion to stay or decline jurisdiction first.

         A. Motion to Stay

         Defendant seeks to arbitrate the dispute under the Minnesota Termination of Sales Representative Act (“MTSRA”). The MTSRA provides: “[t]he sole remedy for a manufacturer, wholesaler, assembler, or importer who alleges a violation of any provision of this section is to submit the matter to arbitration.”[19]

         Responding, Plaintiff argues the MTSRA does not apply here because the parties' agreement includes an Ohio choice-of-law provision and an Ohio forum selection clause.[20]

         The Court agrees with Plaintiff Q Holding. The choice-of-law provision selecting Ohio law defeats Defendant's argument.[21]

         Federal courts in diversity cases apply the forum state choice-of-law principles.[22] The Ohio Supreme Court has adopted the Restatement (Second) of Conflict of Laws, which provides:

         The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.[23]

         Neither exception applies here.

         First, Ohio has a substantial relationship to the case-Plaintiff has its principle place of business in North Canton, Ohio and Defendant does business here.[24]

         Second, Minnesota also has an interest in the case because Defendant is a Minnesota corporation and has its principal place of business in Minneapolis. However, Minnesota's interest is not “materially greater” than Ohio's interest.

         Because neither exception to the Restatement applies, the parties' choice-of-law provision controls and the MTSRA does not apply. The Court also notes that that where the parties agree to non-Minnesota law in a choice-of-law provision, courts routinely find that the MTSRA does not apply.[25] Accordingly, the Court DENIES Defendant's motion to stay pending arbitration.[26]

         B. Motion to Decline Jurisdiction

         The Declaratory Judgment Act provides that “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.”[27] The Act is “an enabling Act, which confers discretion on the court rather than an absolute right upon the litigant.”[28] “Federal courts, and federal district courts in particular, have ‘unique and substantial discretion in deciding whether to declare the rights of litigants.'”[29]

         Defendant Peterson argues the Court should decline jurisdiction because after Plaintiff realized Defendant wanted to arbitrate in Minnesota, Plaintiff forum shopped. Specifically, Plaintiff rushed to file in ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.