Sound Around v. Anhui Light Industries International Co.

Background

Sound Around purchases products manufactured abroad for distribution and resale. Its former buyer, Moises Friedman, negotiated product purchases with Anhui and Yoau. Sound Around alleged that Friedman arranged for the two manufacturers to pay him kickbacks through wire transfers, payments to companies he controlled, or discounts on products he purchased outside his work for Sound Around. In exchange, Friedman allegedly did not arrange purchases from other manufacturers that would have offered Sound Around better products, prices, or terms.

Sound Around’s amended complaint asserted four claims: a claim under the Robinson-Patman Act, tortious interference with its contractual relationship with Friedman, tortious interference with its business relationship with Friedman, and fraud. The defendants submitted sales contracts containing arbitration clauses. Sound Around did not dispute that its sales with Anhui and Yoau were subject to those contracts or that the contracts contained arbitration provisions.

Arbitration agreements

The Federal Arbitration Act generally requires courts to enforce valid arbitration agreements according to their terms. The court found that Yoau’s contracts required arbitration before the China International Economic and Trade Arbitration Commission, or CIETAC, for disputes arising from or connected with the contracts. The contracts also incorporated CIETAC rules giving CIETAC authority to decide whether an arbitration agreement exists, whether it is valid, and whether it has jurisdiction. The court held that this incorporation clearly delegated questions about whether the dispute belonged in arbitration to the arbitrator.

The court found that Anhui’s contracts also required CIETAC arbitration for disputes arising from the execution of or connected with the contracts. Unlike Yoau’s contracts, Anhui’s contracts did not incorporate CIETAC’s rules or otherwise delegate questions about arbitrability to the arbitrator. The court therefore decided whether the arbitration clauses covered Sound Around’s claims.

The court held that they did. It reasoned that Friedman represented Sound Around in negotiating the prices, quantities, and shipping terms of the sales contracts, and that the alleged kickbacks arose from that procurement relationship. The court also rejected Sound Around’s argument that the case concerned only separate bribery arrangements that were not subject to arbitration. It concluded that the alleged bribes were connected with the defendants’ sales to Sound Around and therefore fell within the broad arbitration clauses.

Ruling

Judge Denise Cote granted the defendants’ October 25, 2025 motions to compel arbitration and stayed the action. She denied the defendants’ October 25 motions for dismissal without prejudice. Because the arbitration motions were granted, the court did not reach the defendants’ arguments that the amended complaint failed to state a claim or Anhui’s argument that the court lacked personal jurisdiction over it.