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DWL International, LLC v. YRC Logistics Global

July 30, 2010

DWL INTERNATIONAL, LLC, PLAINTIFF,
v.
YRC LOGISTICS GLOBAL, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

Plaintiff DWL International, LLC ("DWL") filed its complaint against Defendant to enjoin arbitration proceedings and obtain a declaration that no valid International Agency Agreement or arbitration agreement exists between the parties. Defendant, YRC Logistics, LLC ("YRC") now moves to compel DWL to engage in arbitration, pursuant to the Federal Arbitration Act, 9 U.S.C. § 3-4. For the following reasons, Defendant's motion to compel arbitration is denied.

I. BACKGROUND

DWL seeks to enjoin an arbitration proceeding that was initiated in September of 2009. DWL is a Dutch limited liability corporation that provides forwarding and logistic services. YRC is a United States freight forwarder and a shareholder of JHJ, a Chinese non-vessel operating common carrier that provides transportation and logistics services between the People's Republic of China and various other countries.

YRC sought to initiate an arbitration proceeding against DWL based on an arbitration clause contained in an executed International Agency Agreement ("Agreement") between the parties. DWL denies that it ever signed or agreed to be bound by the Agreement. Instead, DWL contends that business between the parties was governed by the Dutch Forwarding Conditions. E-mails between Sean Burke ("Burke"), Vice President, Business and Service Development, Asia, for YRC and Pieter Dubbeld ("Dubbeld"), the Director of DWL, discussed the terms of the Agreement. None of the e-mail communications submitted to the Court contains objections to signing the Agreement. Dubbeld indicated in an e-mail to Burke that he would bring an executed copy of the Agreement to a meeting in Shanghai, China. Dubbeld denies that he presented YRC with a copy of the Agreement signed by DWL in Shanghai, or at any other time. Two signatures appear on the Agreement, allegedly of Dubbeld and Paulus Wetzels ("Wetzels"). Both Dubbeld and Wetzels have submitted affidavits denying that the signatures that appear on the Agreement are their own. Nonetheless, the parties began doing business on a limited basis with respect to one account.

The dispute underlying the arbitration involves DWL's alleged improper release of cargo. In July, 2008 DWL and Defendant discussed an arrangement whereby DWL would act for YRC in arranging for and providing logistic services, including ocean carriage. In late 2008, JHJ consigned certain containers to DWL. Those containers were transported pursuant to JHJ's bills of lading. DWL allegedly released the cargo without collecting original JHJ bills of lading, violating the Agreement and internationally recognized shipping procedures. JHJ was sued in China by the shippers of the goods. DWL did not indemnify and hold JHJ and YRC harmless from damages resulting from breach of the Agreement. DWL denies that it is bound by either the Agreement or the arbitration provision contained therein.

On September 23, 2009 JHJ/YRC made an arbitration demand upon DWL. JHJ/YRC designated Manfred W. Arnold to act as arbitrator and proposed submitting the dispute to the arbitration on documents alone. On October 12, 2009, DWL's counsel, Marc Padberg, responded to the arbitration demand stating that "without any prejudice as far as DWL's defense is concerned," it accepted JHJ/YRC's proposal of arbitrator and agreed to resolve the dispute based on documents alone.

On November 2, 2009 JHJ/YRC set forth the basis of its claim and requested that DWL provide information as to the basis for any defenses or claims it intended to assert in the arbitration. Following this request, DWL sought to retain an attorney in the United States to handle the arbitration, and on December 22, 2009, retained Jonathan Bunge ("Bunge"). DWL also requested a copy of the Agreement which was sent on the same day via e-mail. On December 24, 2009, Bunge thanked Collins for the signed Agreement and stated that DWL did not believe JHJ was a party under the Agreement, and therefore was not entitled to a demand of arbitration. When the executed Agreement was forwarded to Wetzels and Dubbeld, the DWL representatives who allegedly signed the Agreement, they each denied that they had signed the Agreement. DWL objected to proceeding with the arbitration on January 4, 2010, January 28, 2010, January 29, 2010, and February 2, 2010 and further objected to the suggested briefing schedule. YRC submitted its brief to the arbitrator on January 8, 2010. DWL did not submit any brief to the arbitrator and instead filed its complaint to enjoin the arbitration proceedings on March 9, 2010.

II. STANDARD OF REVIEW

Pursuant to Section 3 of the Federal Arbitration Act, a court shall stay any suit in which the issue forming the basis of the suit is subject to arbitration pursuant to a written agreement. 9 U.S.C. § 3. The Federal Arbitration Act further instructs courts to order arbitration "upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue." 9 U.S.C. § 4. The stay must last until the arbitration has been completed under the terms of the agreement. Id. at § 3. Where a party alleged that there is no agreement to arbitrate because no agreement was executed, it is for the court to decide whether the agreement was formed. Will-Drill Resources Inc. v. Samson Resources Co., 352 F.3d 211, 216 (5th Cir. 2003).

III. DISCUSSION

YRC argues that DWL is subject to the arbitration for two reasons. First, YRC contends that even if the Agreement was not properly executed, DWL has waived its right to dispute arbitration. Second, YRC argues that because the Agreement was validly executed, DWL is bound by the arbitration provisions contained therein. Neither of these two arguments is successful.

A. DWL Did Not Waive Its Right to Contest Arbitration

When a party "voluntarily and unreservedly submits an issue to arbitration, he cannot later argue that the arbitrator had no authority to resolve it." Jones Dairy Farm v. Local No P-1236, United Food and Comm. Workers Int'l Union, AFL-CIO, 760 F.2d 173, 175-76 (7th Cir. 1985). YRC argues that DWL waived any right to dispute the terms of the arbitration clause within the Agreement by submitting to the arbitration. Specifically, YRC points to three instances of waiver. First, DWL argues that YRC did not dispute the arbitration clause during negotiations. Second, YRC states that Dubbeld consented to sign the Agreement. Finally, YRC ...


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