United States District Court, D. Massachusetts
ORDER & MEMORANDUM
TALWANI, UNITED STATES DISTRICT JUDGE.
the court is Defendants' Motion to Dismiss and Compel
Arbitration [#7]. For the following reasons, the motion
is DENIED IN PART and ALLOWED IN PART.
December 2016, Plaintiff Anna Hernandez, as owner of
Charlie's Project, and Defendant T2B, LLC
(“T2B”) executed two agreements, the Distribution
Agreement [#9-1] and the Services and Logistics Agreement
[#9-2]. The Distribution Agreement detailed T2B's
agreement to serve as the “exclusive wholesale
distributor” of Charlie's Project's products.
Dist. Agreement [# 9-1] at 3. The Services and Logistics
Agreement outlined T2B's agreement to store and ship
Charlie's Project's products. Serv. and Logistics
Agreement [#9-2] at 2. These agreements (collectively the
“2016 Agreements”) contain no clauses requiring
arbitration of disputes. On January 17, 2017, Charlie's
Project became a Limited Liability Company, Plaintiff
Charlie's Project, LLC (“CP”), and on January
18, 2017, Plaintiff Hernandez purchased an ownership interest
in Defendant T2B and executed an LLC Agreement (the
“2017 Agreement”) [#9-3] with T2B, Defendant
Brandon McDaniel (T2B's founder), and two others. The
2017 Agreement contains the following provision:
14.23 Arbitration. Unless injunctive action is
sought, all claims, demands, disputes, controversies and
differences that may arise between or among any of the
Disputing Parties concerning any issue relating to the
interpretation or enforcement of this Agreement or relating
to the rights or liabilities of any of the Disputing Parties
under this Agreement, any management agreement, or cross
indemnification agreement, shall be exclusively determined
and settled by arbitration.
…(e) except where in conflict with the terms of this
paragraph 14.23, the AAA Rules shall govern the Arbitration
2017 Agreement [#9-3] at 33-34.
October 2017, Plaintiffs commenced this action in Superior
Court against T2B, Brendon McDaniel, and his spouse Nicole
McDaniel. Complaint, State Court Record [#1-1]. Plaintiffs
alleged that T2B manufactured an inferior product, altered
CP's branding without permission, deprived CP of rights
to exclusive product designs in violation of the Distribution
Agreement, sold directly to end users in violation of the
Distribution Agreement's wholesale requirements, failed
to meet shipping obligations in violation of the Distribution
Agreement, charged CP fees in violation of the Distribution
Agreement, failed to follow the Services and Logistics
Agreement's shipping payment schedule, terminated the
Services and Logistics Agreement in violation of the
agreement's terms, overcharged for shipping under the
Services and Logistics Agreement, refused to provide
Plaintiffs access to T2B's financial records in violation
of the Distribution Agreement, refused to return inventory in
violation of the Services and Logistics Agreement, and
retained copies of CP's customer list in violation of the
2016 Agreements. Id. at 2-14. The suit alleged
breach of contract and breach of the implied covenant of good
faith and fair dealing (based on alleged breaches of the 2016
Agreements), unfair trade practices, misappropriation, and
defamation. Id. at 10-12.
moved to dismiss and compel arbitration, citing the 2017
Agreement's arbitration clause. State Court Record [#1-1]
at 44. The Superior Court (Salinger, J.) denied the motion,
finding none of Plaintiffs' claims implicated the 2017
Agreement. Superior Court Mem. and Order [#15-1] at 2.
2018, Plaintiffs amended their complaint, adding additional
claims arising from the 2016 Agreements and claims for
trademark infringement. State Court Record [#1-1] at 74-107.
Defendants removed to this court based on the federal
trademark claims and again moved to dismiss and to compel
arbitration. Notice of Removal [#1]; Def.'s Mot. to
Dismiss and Compel Arbitration [#7].
of the Case
contend that the law of the case doctrine bars
reconsideration of the Superior Court's decision denying
Defendants' first motion to dismiss and to compel
arbitration. Pl.'s Mem. [#15] at 9. “Under the law
of the case doctrine, when a court decides upon a rule of law
that decision should continue to govern the same issues in
subsequent stages in the same case.” Negron-Almeda
v. Santiago, 579 F.3d 45, 50 (1st Cir. 2009) (internal
quotation marks and citation omitted).
“[L]aw-of-the-case rules afford courts the security of
consistency within a single case while at the same time
avoiding the wastefulness, delay, and overall wheel-spinning
that attend piecemeal consideration of matters which might
have been previously adjudicated.” United States v.
Connell, 6 F.3d 27, 30 (1st Cir. 1993). However,
“law of the case permits a lower court to review prior
interlocutory orders as long as that review is not an abuse
of discretion.” Harlow v. Children's
Hosp., 432 F.3d 50, 55 (1st Cir. 2005) (affirming
district court's dismissal of case after reconsideration
of state court's ruling that defendant's contacts
with forum satisfied requirements of personal jurisdiction).
court finds further review appropriate. Although its
reasoning was sound, the Superior Court relied in part on
cases which the United States Supreme Court has since
abrogated in Henry Schein, Inc. ...