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CINDY'S CANDLE CO. v. WNS

June 14, 1989

CINDY'S CANDLE COMPANY, INC., an Illinois corporation, Plaintiff,
v.
WNS, INC., a Texas corporation, Defendant



The opinion of the court was delivered by: DUFF

 BRIAN BARNETT DUFF, UNITED STATES DISTRICT JUDGE

 Cindy's Candle Company, Inc. filed suit against WNS, Inc. on February 8, 1988, seeking relief for various violations of state and federal law, as well as damages for breach of contract and intentional interference with prospective economic advantage. Cindy's Candle originally wished to represent a class of persons similarly situated on some of these claims, but this court denied Cindy's Candle's motion for class certification. The court's principal reason for the denial was a perceived problem with Cindy's Candle's representation of the class, stemming from a dispute over whether Cindy's Candle's claims were subject to arbitration. This court held that there was a good chance that some of Cindy's Candle's claims were not subject to arbitration, while most persons in the proposed class had to submit to arbitration. For this reason it appeared to the court that Cindy's Candle would not be a proper representative.

 Cindy's Candle has since amended its complaint, and has dropped its class claims. The Amended Complaint has six counts. Count 1 is a claim under the Clayton Act, as amended, 15 U.S.C. §§ 12 et seq. (1982). Count 2 is a claim under § 17.50 of the Texas Deceptive Trade Practices -- Consumer Protection Act, Tex.Bus.& Com. Code Ann. arts. 17.41 et seq. (Vernon 1985). Count 3 is a claim for breach of contract; Counts 4-5 are claims under the Illinois Franchise Disclosure Act, Ill.Rev.Stat. ch. 121-1/2, §§ 701 et seq. (1979), while Count 6 is a claim for intentional interference with prospective economic advantages.

 Cindy's Candle hoped that it had stripped its complaint of every claim that raised the specter of arbitration. WNS now moves for a stay pending arbitration, claiming that Cindy's Candle cannot escape arbitration of its claims no matter how the company pleads.

 WNS's argument stems from these facts. Prior to March 8, 1986, WNS had three agreements with Cindy's Candle, which licensed Cindy's Candle's operation of certain Wicks 'N' Sticks retail candle stores in Illinois. None of these licenses provided for arbitration of disputes arising under these agreements. On March 8, 1986, Cindy's Candle entered into a fourth license agreement, one for an entirely different store than the ones WNS had licensed previously. Like the previous agreements, this one gave Cindy's Candle valuable rights to operate a Wicks 'N' Sticks store, use WNS's proprietary marks, and receive WNS's training and other sales assistance. This agreement also contained three clauses which particularly pertain to WNS's present motion:

 
XXI. Applicable Law.
 
A. This Agreement takes effect upon its acceptance and execution by [WNS] in Texas, and shall be interpreted and construed under the laws thereof, which laws shall prevail in the event of any conflict of law.
 
* * * *
 
C. Nothing herein contained shall bar [WNS's] right to obtain injunctive relief against threatened conduct that will cause it loss or damages, under the usual equity rules, including the applicable rules for obtaining restraining orders and preliminary injunctions.
 
XXII. Arbitration.
 
The parties agree that any and all disputes between them, and any claim by either party that cannot be amicably settled, except as to monies owed, . . . shall be determined solely and exclusively by arbitration under the Federal Arbitration Act as amended and in accordance with the rules then obtaining of the American Arbitration Association or any successor at its office nearest the home office of [WNS], unless the parties otherwise agree in writing.

 WNS submits that Article XXII mandates arbitration of all disputes between Cindy's Candle and WNS, unless specifically exempted. "All" means "all" in WNS's eyes, and includes disputes arising under previously executed license agreements. Cindy's Candle for its part argues that Article XXII does not reach back to cover disputes under previous agreements. It argues further that its present claims are for monies owed, which escape Article XXII, and that in any event its antitrust claim cannot be arbitrated as a matter of federal law.

 In the parties' original briefs on this motion, much effort was spent on discussing what the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (1982), required this court to do. The court had to remind the parties that this was an incorrect approach to the issue -- rather, an agreement to arbitrate is simply an agreement, and disputes over the interpretation of an agreement are, as usual, matters of contract law. The Supreme Court made ...


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