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Polyone Corp. v. Westlake Vinyls, Inc.

United States District Court, W.D. Kentucky, Paducah

January 16, 2019

POLYONE CORPORATION, PLAINTIFF
v.
WESTLAKE VINYLS, INC., DEFENDANT

          MEMORANDUM OPINION

          THOMAS B. RUSSELL JUDGE.

         This matter comes before the Court on Defendant Westlake Vinyls, Inc.'s Motion to Dismiss, [R. 35]. Plaintiff PolyOne Corporation responded, [R. 41], and Westlake replied, [R. 42]. Fully briefed, this matter is ripe for adjudication. For the reasons stated herein, Westlake's Motion to Dismiss, [R. 35], is GRANTED.

         Background

         The factual background and procedural history of this case is well known to the Court. Further detail concerning the relationship between these parties can be found in this Court's Memorandum Opinion in PolyOne Corporation v. Westlake Vinyls, Inc, No. 5:17-CV-157-TBR, 2018 WL 2437241 (W.D. Ky. May 30, 2018). In short, the ongoing dispute between the parties arises from the 2007 Settlement and Release Agreement (“2007 Settlement Agreement”), which contains the arbitration provision that is currently at issue. On October 31, 2017, PolyOne filed an Amended Complaint regarding arbitration of a different provision of the 2007 Settlement Agreement, and on May 30, 2018, this Court granted Westlake's Motion to Dismiss the matter. See Id. The Court noted in its Memorandum Opinion, that PolyOne stated that it filed a Demand for Arbitration on May 19, 2017 and a Cross-Notice of Arbitration on or around September 19, 2017. Id. at *4-6.

         On July 10, 2018, PolyOne filed a Complaint for Declaratory and Injunctive Relief and Petition to Enjoin Arbitration with this Court, [R. 1]. PolyOne pleaded that due to the Tenth Circuit's holding on February 6, 2018, in Citizen Potawatomi Nation v. Oklahoma, 881 F.3d 1226 (10th Cir. 2018), the arbitration provision of the 2007 Settlement Agreement is invalid. [Id.] PolyOne further noted in its Complaint that a seven-week arbitration hearing was scheduled to begin on August 6, 2018, in Louisville, Kentucky. [R. 1 at 2.] On the same day the Complaint was filed, PolyOne filed a Motion for Temporary Restraining Order, [R. 4], which was denied by this Court, [R. 38]. Thereafter, Westlake filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), which is currently before the Court.

         Legal Standard

         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In order to survive a motion to dismiss under Rule 12(b)(6), a party must “plead enough ‘factual matter' to raise a ‘plausible' inference of wrongdoing.” 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 504 (6th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim becomes plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). When considering a Rule 12(b)(6) motion to dismiss, the Court must presume all of the factual allegations in the complaint are true and draw all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc., 552 F.3d at 434 (citing Great Lakes Steel, 716 F.2d at 1105). “The court need not, however, accept unwarranted factual inferences.” Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)). Should the well-pleaded facts support no “more than the mere possibility of misconduct, ” then dismissal is warranted. Iqbal, 556 U.S at 679. The Court may grant a motion to dismiss “only if, after drawing all reasonable inferences from the allegations in the complaint in favor of the plaintiff, the complaint still fails to allege a plausible theory of relief.” Garceau v. City of Flint, 572 Fed.Appx. 369, 371 (6th Cir. 2014) (citing Iqbal, 556 U.S. at 677- 79). The Court may properly consider documents as part of the pleadings if the document is “referred to in the complaint and is central to the plaintiff's claim.” DBI Investments, LLC v. Blavin, 617 Fed.Appx. 374, 376 (6th Cir. 2015) (quoting Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir.1999)). Furthermore, “[a] court that is ruling on a Rule 12(b)(6) motion may consider materials in addition to the complaint if such materials are public records or are otherwise appropriate for the taking of judicial notice.” New England Health Care Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir. 2003), holding modified by Merck & Co. v. Reynolds, 559 U.S. 633, 130 S.Ct. 1784, 176 L.Ed.2d 582 (2010).

         Discussion

         A. The Waiver Issue

         Although there is a fair amount of briefing between the parties, many of the arguments remain the same as they appeared in the briefs regarding PolyOne's Motion for Temporary Restraining Order and Preliminary Injunction, [R. 4; see also R. 26 (Westlake's Response to PolyOne's Motion for TRO)]. Westlake, once again, asserts that PolyOne's claim cannot succeed based on res judicata, the equitable doctrines of waiver and judicial estoppel, etc. The Court stands by its previous observation that PolyOne has waived the right to challenge the validity of the arbitration clause of the 2007 Settlement Agreement, [See R. 38 at 4].

         “‘[W]aiver is the intentional relinquishment or abandonment of a known right' leaving no correctable error in its wake.” Williams v. Port Huron Sch. Dist., 455 Fed.Appx. 612, 623 (6th Cir. 2012) (Moore, J. dissenting) (quoting United States v. Olano, 507 U.S. 725, 733, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993)). “Waiver requires ‘knowledge of the right and intent to waive that right, either by action or omission.'” CFE Racing Prod., Inc. v. BMF Wheels, Inc., 793 F.3d 571, 587 (6th Cir. 2015). Here, Westlake argues that PolyOne waived any right to challenge the validity of the arbitration clause of the 2007 Settlement Agreement by twice initiating arbitration against Westlake and allegedly conceding the validity of the arbitration agreement in the October 2017 lawsuit. [R. 35-6 at 26.] PolyOne retorts that it did not commit waiver because the basis for its objection to the arbitration provision comes from a recently decided case by the Tenth Circuit, i.e., Potawatomi. PolyOne believes that “the Potawatomi court made new law, ” therefore, its delay in objecting to Section 6 of the 2007 Agreement is justified. [R. 41 at 18.] The parties dispute whether the basis for PolyOne's argument actually derives from Potawatomi, or from the Supreme Court's holding in Hall St. Assocs., L.L.C. v. Mattel, Inc., [1] decided in 2008-one year after the parties agreed to the 2007 Settlement Agreement.

         B. Hall Street and Potawatomi

         In Hall Street, the Supreme Court faced the question of “whether statutory grounds for prompt vacatur and modification may be supplemented ...


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