Robbins & Myers, Inc. v. Winger Associates, Inc.

Citations: 874 F. Supp. 252; 1993 U.S. Dist. LEXIS 20809; 1993 WL 762584Docket: No. 3-93 CIV 211

Court: District Court, D. Minnesota; August 2, 1993; Federal District Court

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On June 24, 1993, the Court addressed Robbins. Myers, Inc.'s motions for summary judgment and to stay arbitration. Robbins. Myers seeks a declaration that claims from Winger Associates, Inc. are not subject to arbitration. Robbins. Myers is the successor to Prochem Mixing Equipment, Ltd., which had a Contract for Exclusive Representation with Winger, allowing Winger to sell Prochem products in the Upper Midwest for a commission. The Contract could be terminated with thirty days' written notice. Winger received commissions on eleven sales made primarily to end users and pursued 143 sales leads. After Robbins. Myers acquired Prochem’s assets, it notified Winger of the Contract's termination. Winger contended this termination violated the Termination of Sales Representative Act, claiming lack of good cause and insufficient notice. Subsequently, Winger initiated arbitration for wrongful termination and breach of contract, prompting Robbins. Myers to file a declaratory judgment action to assert that the Act does not apply to this dispute, arguing for summary judgment based on the absence of arbitrability. The summary judgment standard requires that no genuine issue of material fact exists, allowing judgment as a matter of law for the moving party when viewed in favor of the non-moving party.

The test for identifying a genuine issue over a material fact consists of two components: first, materiality is assessed based on the substantive law relevant to the claim, focusing only on disputes that could influence the case's outcome. Second, a dispute is deemed "genuine" if sufficient evidence exists that a reasonable jury could favor either party. The burden rests on the non-moving party to demonstrate evidence supporting all essential claim elements.

Regarding arbitrability, the court must decide whether it or an arbitrator addresses the issue. Winger contends that under Minnesota law, arbitrability must first be determined by an arbitrator, arguing that the Federal Arbitration Act (FAA) does not apply due to the absence of an arbitration agreement. Winger further asserts that diversity jurisdiction necessitates applying Minnesota law. However, the court concludes that arbitrability, even under Minnesota law, is a judicial determination in this case. Minnesota's Uniform Arbitration Act allows courts to stay arbitration if no agreement exists, requiring prompt resolution of substantial disputes. Under Minnesota law, only disputes concerning the arbitration agreement's scope are submitted to an arbitrator, making the court the appropriate venue here.

The Minnesota Termination of Sales Representatives Act stipulates conditions under which a manufacturer can terminate a sales representative agreement, mandating good cause for termination. The Act includes an arbitration clause for claims made by manufacturers, allowing sales representatives the choice to arbitrate or pursue claims in court. A "sales representative agreement" is defined as any contract between a sales representative and another party, with specific exclusions detailed in the statute.

A sales representative, as defined under Minn. Stat. section 325E.37, subd. 1(d), excludes individuals who are employees of the principal, purchase for personal resale, hold goods on consignment for resale, or sell goods to end users not for resale. In the dispute between Robbins. Myers and Winger, the arbitration provision of the Act applies only if the Contract qualifies as a sales representative agreement, which hinges on whether Winger is classified as a sales representative. Although Winger claims to solicit wholesale orders, it is uncontested that Winger sold Prochem products exclusively to end users not for resale. This fact places Winger within the fourth exclusion of the definition, thereby negating its status as a sales representative under the Act. The Court rejects Winger's argument that this exclusion should apply only to sales to consumer end users, choosing instead to adhere to the clear language of the statute. With more than sixty-nine percent of Winger's leads involving end users, the Court concludes that Winger does not meet the definition of a sales representative. Consequently, the Act does not govern this dispute, which means the American Arbitration Association lacks jurisdiction over Winger’s claims, leading to a stay of arbitration proceedings. The Court grants Robbins. Myers' motion for summary judgment, declaring that the Minnesota Termination of Sales Representatives Act does not apply, and orders a permanent stay of the arbitration between Robbins. Myers, Inc. and Winger Associates, Inc. Lastly, the Court acknowledges Winger's assertion regarding engaging with original equipment manufacturers and traditional wholesalers but notes that this claim does not impact the resolution of the motions at hand.