D3 International Inc. v. AGGF Cosmetic Group S.p.A.

Background

D3 International Inc. sued AGGF Cosmetic Group S.p.A. and Cosmetica, S.R.L. The defendants moved to dismiss or stay the action in favor of arbitration, or alternatively to dismiss it based on the doctrine of forum non conveniens, which concerns whether another court is a more appropriate place to hear a dispute. They also asked the court to stay, or pause, discovery while the motion was pending.

Arbitration issue

The defendants argued that a 2010 agreement between D3 International and AGGF continued after its stated expiration because the parties continued doing business. D3 International responded that its claims arose only under a later oral agreement and that this agreement contained no arbitration provision. D3 International indicated that the earlier written agreement might matter only if the parties later incorporated some of its terms into the oral agreement.

Under the Federal Arbitration Act, a court generally decides whether a valid arbitration agreement exists unless the parties clearly assigned that question to the arbitrator. Because the parties disputed whether an arbitration agreement existed, the court applied a procedure similar to summary judgment and considered the evidence submitted by both sides. The court concluded that factual disputes remained about whether the parties agreed to arbitrate.

Rulings and next steps

The court denied the motion to compel arbitration without prejudice. The court granted the motion to stay discovery except for discovery relevant to the contents of the claimed oral agreement and whether that agreement included arbitration. The parties were directed to identify witnesses and other persons they would rely on concerning the alleged oral agreement and the arbitration issue, and depositions were to be completed by November 19, 2021. The defendants’ deadline to answer was extended indefinitely. The court scheduled a remote status conference for December 9, 2021, to discuss whether the defendants would renew their arbitration motion or respond to the complaint. The opinion does not state a separate disposition of the defendants’ forum non conveniens request.