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Arctic Glacier U.S.A. Inc. v. Principal Life Insurance Co.

United States District Court, D. Nebraska

August 24, 2017



          Robert F. Rossiter, Jr. United States District Judge

         This matter is before the Court on Arctic Glacier U.S.A., Inc. (“Arctic Glacier U.S.A.”) and Arctic Glacier U.S.A., Inc. Savings and Retirement Plan's (the “Plan” and collectively, “Arctic Glacier”) Petition to compel Principal Life Insurance Company (“Principal”) to participate in arbitration and other dispute-resolution procedures pursuant to Section 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq.[1] Although not signatories to the Service and Expense Agreement (“Agreement”) between Principal and Arctic Glacier International, Inc. (“Arctic Glacier International”) that includes the dispute-resolution procedures, Arctic Glacier U.S.A. and the Plan contend they are nonetheless entitled to enforce those procedures as, respectively, Arctic Glacier International's corporate successor and a third-party beneficiary of the Agreement. Principal moves to dismiss the Petition (Filing No. 7), maintaining neither entity has any rights to compel arbitration or otherwise enforce the Agreement.

         On August 1, 2017, the Court entered an order giving the parties an opportunity to supplement the record with additional evidence related to the reported sale of Arctic Glacier International's assets in 2012 and the parties' relationship, if any, under the Agreement after that sale. The parties have each filed an Index of Evidence in support of their respective positions. Having thoroughly reviewed the parties' submissions and the record evidence in this case, the Court finds Arctic Glacier has the stronger position, and that referral to arbitration is proper here.

         I. DISCUSSION

         A. The Right to Compel Arbitration

         Under FAA § 4, “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” (Emphasis added). “The purpose of the FAA is ‘to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible.'” Koch v. Compucredit Corp., 543 F.3d 460, 463 (8th Cir. 2008) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 (1983)). The FAA declares a “liberal federal policy favoring arbitration agreements” and requires that “questions of arbitrability must be” answered “with a healthy regard for [that] policy.” Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). “[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Id. at 24-25.

         Still, “arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002) (quoting Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)). “Ordinary contract principles determine who is bound by . . . written [arbitration] provisions and of course parties can become contractually bound absent their signatures.” Daisy Mfg. Co. v. NCR Corp., 29 F.3d 389, 392 (8th Cir. 1994) (quoting A/S Custodia v. Lessin Int'l, Inc., 503 F.2d 318, 320 (2d Cir. 1974)). A party's agreement to arbitrate can be implied from its conduct. Id. “[A]s with any other contract, the parties' intentions control, but those intentions are generously construed as to issues of arbitrability.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985).

         In reviewing a petition to compel arbitration, the Court must determine “(1) whether there is a valid arbitration agreement and (2) whether the particular dispute falls within the terms of that agreement.” Robinson v. EOR-ARK, LLC, 841 F.3d 781, 783-84 (8th Cir. 2016) (quoting Faber v. Menard, Inc., 367 F.3d 1048, 1052 (8th Cir. 2004)). The Court must grant a petition to compel arbitration “if a valid arbitration clause exists which encompasses the dispute between the parties.” 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193, 1198 (8th Cir. 2008).

         In this case, Principal does not contest the validity or enforceability of its Agreement with Arctic Glacier International or the scope of the arbitration clause. Rather, Principal contends the Petition should be denied and this case dismissed because Arctic Glacier U.S.A. and the Plan are not named as parties in the Agreement and have not otherwise acquired any rights to enforce the arbitration provision. As Principal sees it, “the parties' dispute resolution procedure limits the Agreement to arbitrate to disputes ‘between the parties, '” and the Agreement was never amended to make Arctic Glacier U.S.A. or the Plan parties. Principal's arguments are overly simplistic and miss the mark.

         B. State Contract Law

         “[S]tate contract law governs the threshold question of whether an enforceable arbitration agreement exists between litigants” and “the ability of nonsignatories to enforce arbitration provisions.” Donaldson Co. v. Burroughs Diesel, Inc., 581 F.3d 726, 731-32 (8th Cir. 2009). In other words, “a litigant who was not a party to the relevant arbitration agreement may” compel arbitration under § 4 “if the relevant state contract law allows him to enforce the agreement.” Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009); accord Restoration Pres. Masonry, Inc. v. Grove Europe Ltd., 325 F.3d 54, 62 n.2 (1st Cir. 2003) (“A non-signatory may be bound by or acquire rights under an arbitration agreement under ordinary state-law principles of agency or contract.”).

         The parties agree that Nebraska contract law governs the threshold arbitrability issues in this case. The parties have not cited (and the Court has not found) a case in which a Nebraska court has considered a nonsignatory's ability to enforce an arbitration agreement executed by others. But “‘traditional principles' of state law allow a contract to be enforced by or against nonparties to the contract through ‘assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estoppel.'” Arthur Andersen, 556 U.S. at 631 (quoting 21 R. Lord, Williston on Contracts § 57:19, p. 183 (4th ed. 2001)). Nebraska generally follows these traditional principles. See, e.g., Earl v. Priority Key Servs., Inc., 441 N.W.2d 610, 613 (Neb. 1989) (corporate successor liability); Podraza v. New Century Physicians of Neb., LLC, 789 N.W.2d 260, 267 (Neb. 2010) (third-party beneficiary).

         Noting the Agreement binds not only the “Parties” but “also extend[s] to their respective successors and assigns, ” Arctic Glacier contends Arctic Glacier U.S.A.-as Arctic Glacier International's successor-“has all rights that formerly belonged to Arctic Glacier International under the Agreement, including the right to enforce any dispute resolution provisions.” As for the Plan, Arctic Glacier asserts it is authorized to enforce the arbitration provisions as a third-party beneficiary of the Agreement under Nebraska law. The Court takes each argument in turn.

         1.Corporate ...

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