Law Offices of Joseph L. Manson III v. Aoki

Background

Law Offices of Joseph L. Manson III brought state-law contract claims against Keiko Aoki for unpaid legal fees and expenses allegedly incurred while representing Aoki and Benihana of Tokyo, LLC in federal trademark litigation. The plaintiff alleged that Aoki owed $652,583.55. Aoki moved under the Federal Arbitration Act to compel arbitration and stay the federal case.

The parties had signed a 2014 retention agreement. The agreement covered legal services for Aoki personally, for her role as trustee, for her role as an officer and director of Benihana of Tokyo, LLC, and for the company. It stated that disputes arising under the agreement would be resolved through mediation or arbitration under the American Arbitration Association and required arbitration to take place in Washington, DC.

The plaintiff did not dispute the agreement’s existence or validity but argued that it did not cover the claims in this case. The plaintiff also asserted that the parties later entered into a new retention agreement, but it did not produce that agreement or identify terms showing that the arbitration clause had been replaced. Aoki maintained that the original arbitration agreement remained in effect.

Analysis

The court held that the 2014 retention agreement created a valid arbitration agreement relevant to the dispute. The complaint alleged that the work at issue was necessary for both Aoki and Benihana of Tokyo, LLC and that the invoices did not separate work performed for each client. The court therefore found that the claims were sufficiently connected to the agreement for arbitration purposes.

The court also held that the agreement’s reference to American Arbitration Association procedures clearly showed that the parties intended the arbitrator to decide whether the claims fell within the arbitration clause. This issue is called arbitrability. Because the parties had assigned that issue to the arbitrator, the court would not decide the clause’s scope itself.

The court nevertheless concluded that it could not issue an order compelling arbitration in Washington, DC. Under Section 4 of the Federal Arbitration Act, the court determined that an order compelling arbitration must direct proceedings within the district where the petition was filed. Because this case was filed in the Southern District of New York and the agreement required arbitration outside that district, the court could not compel arbitration here.

Disposition

The court denied Defendant’s motion to compel arbitration and granted Defendant’s motion for a stay of the proceedings. The case was stayed pending arbitration of the plaintiff’s claims. The parties were directed to file a joint status report by June 30, 2020, and every December 30 and June 30 afterward, addressing whether the case should remain stayed, return to the active calendar, or be dismissed. Judge Laura Taylor Swain’s order resolved Docket Entry No. 12.