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Profitstreams, LLC v. Ameranth

August 17, 2011

PROFITSTREAMS, LLC,
PETITIONER,
v.
AMERANTH, INC RESPONDENT.



The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge

ORDER DENYING RESPONDENT AMERANTH INC.'S MOTION UNDER FEDERAL RULE OF CIVIL PROCEDURE ., [Doc. No. 6]

On April 13, 2011, Profitstreams, LLC filed a petition to compel arbitration against Ameranth, Inc. [Doc. No. 1.] On April 25, 2011, Ameranth filed the pending motion for a more definite statement under Federal Rule of Civil Procedure 12(e), or, in the alternative, to dismiss the petition for failure to state a claim upon which relief can be granted under Rule 12(b)(6). [Doc. No. 6.] For the reasons stated herein, the Court DENIES Ameranth's Rule 12 motion, and ORDERS Ameranth to respond to the petition.

BACKGROUND

On August 27, 2008, Profitstreams and Ameranth entered a Second Amended and Restated License Agreement ("Agreement"), under which Profitstreams obtained a license for certain technology owned by Ameranth. [Doc. No. 1, Exh. A.] A dispute has arisen between the parties regarding the scope of the Agreement. [Doc. No. 1, p.3.]*fn1 It appears the parties attempted to resolve the dispute informally, and when those efforts failed, Profitstreams sought to initiate arbitration proceedings as required by the Agreement. [See Doc. No. 16, Exhs. A-I.]*fn2 The Agreement contains the following dispute resolution provisions:

14.2 Governing Law and Dispute Resolution:

14.2.1 . . .

14.2.2 Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall first be referred to each Party's appointed management, and the Parties shall use reasonable efforts to resolve such dispute.

14.2.3 Any dispute that is not resolved as provided in the preceding Section 14.2.2, whether before or after termination of this Agreement, will be referred to binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association in the city and state where the defendant party has its headquarters. Except with respect to a breach of Section 2.5 or any other unauthorized transfer of Ameranth's intellectual property or proprietary rights, the arbitrator shall not be authorized to award, and no party shall be obligated to pay to the other Party hereunder, punitive, exemplary, consequential, indirect, special or incidental damages or lost profits (collectively "Special Damages") with respect to any such claim or controversy, nor shall any party seek Special Damages relating to any matter under, arising out of or relating to this Agreement in any other forum. Judgment upon the award of the arbitrators may be entered in any court having jurisdiction thereof or such court may be asked to judicially confirm the award and order its enforcement, as the case may be.

14.2.4 . . . 14.2.5 Notwithstanding anything to the contrary in this Section 14, either Party shall be entitled to seek injunctive relief in any court of competent jurisdiction for a breach or threatened breach of Section 13 or any infringement of such Party's intellectual property or proprietary rights.

[Doc. No. 1, Exh. A, p.16 (bold and italics in original) (underline added).]

Ultimately, the parties reached an impasse regarding which claims could be sent to arbitration, and Profitstreams filed its petition to compel Ameranth to participate in arbitration to resolve their dispute regarding the scope of the license. [Doc. No. 1.] The petition is drafted as a motion, not as a civil complaint. Accordingly, Ameranth asserts Profitstreams's case initiating document is improper, and so vague that it cannot form a meaningful response. [Doc. No. 6.]

LEGAL STANDARDS

Federal Rule of Civil Procedure 81(a)(6) provides that, to the extent applicable, the Federal Rules of Civil Procedure govern arbitration proceedings under 9 U.S.C. ยงยง 1 et seq., unless the arbitration ...


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