PRIMAVERA LABORATORIES INC v. AVON PRODUCTS INC (2002)

Order and judgment (one paper), Supreme Court, New York County (Richard Braun, J.), entered March 11, 2002, which granted defendant's motion to stay the within action and compelled arbitration as to all causes of action delineated in plaintiff's complaint, unanimously modified, on the law, the twelfth and thirteenth causes of action, which assert that defendant has failed to pay plaintiff certain royalties required by their agreements, are deemed arbitrable and severed, and arbitration stayed pending the resolution of the court action concerning the first through eleventh causes of action, and otherwise affirmed, without costs.

 It is well settled that a court will not order a party to submit to arbitration absent evidence of that party's “unequivocal intent to arbitrate the relevant dispute” (Matter of Helmsley [Wien], 173 A.D.2d 280, 281, 569 N.Y.S.2d 672;  accord, Matter of Bunzl [Battanta], 224 A.D.2d 245, 637 N.Y.S.2d 703), and unless the dispute falls clearly within that class of claims which the parties agreed to refer to arbitration (Matter of Bunzl [Battanta], 224 A.D.2d at 246, 637 N.Y.S.2d 703).   The threshold determination of whether there is a “clear, unequivocal and extant agreement to arbitrate” the disputed claims is to be made by the court and not the arbitrator (Matter of Primex Intl. Corp. v. Wal-Mart Stores, Inc., 89 N.Y.2d 594, 598, 657 N.Y.S.2d 385, 679 N.E.2d 624;  Sisters of St. John the Baptist v. Phillips R. Geraghty Constructor, 67 N.Y.2d 997, 998, 502 N.Y.S.2d 997, 494 N.E.2d 102), and arbitration clauses, as contractual agreements, must be enforced according to their terms, even if the result is bifurcated litigation (PNE Media, LLC v. Cistrone, 294 A.D.2d 143, 741 N.Y.S.2d 405;  HSBC Bank USA v. Natl. Equity Corp., 279 A.D.2d 251, 254, 719 N.Y.S.2d 20).

In this matter, when the arbitration clauses are read in context with the other requirements and obligations of the parties' agreements, they are clearly narrow in scope and limited to one category of claim-a dispute as to royalties payable.   The agreements expressly provide for the enforcement of all other obligations between the parties in the New York courts.

 In addition, the method of arbitration to which the parties have agreed ¹ mandates the resolution of numerous preliminary issues concerning alleged breaches of contract, including the refusal to allow auditors to access data and the failure to create and maintain documents, as well as misrepresentation and spoliation, before the arbitration procedure can be invoked.   It is these issues which are the subject of plaintiff's first through eleventh causes of action.   Accordingly, these non-arbitrable issues must be resolved by the court before arbitration can proceed (see Teplitsky v. Douglaston Golf Practice Range, Inc., 64 A.D.2d 578, 407 N.Y.S.2d 46).

FOOTNOTES

1.   The parties chose an arbitration procedure sometimes referred to as “baseball” arbitration, whereby each party submits to the arbitrators, in writing, a statement of that party's position with supporting facts and data, and a best and final offer with respect to each issue submitted for resolution.   The arbitrators must then choose one party's offer, and are not empowered to modify the chosen offer.