Gravestone Entertainment LLC v. Maxim Media Marketing Inc.

          ORDER

          G. Murray Snow Chief United States District Judge.

         Pending before the Court is the Motion to Dismiss and Compel Arbitration of Defendants Maxim Media Marketing, Inc. and Darrin Ramage (Doc. 10). For the following reasons the motion is granted.

         BACKGROUND

         Plaintiff Gravestone Entertainment LLC produces horror films. In 2012, Gravestone entered licensing agreements with Defendant Maxim Media Marketing, Inc. for two of its films, “15: The Mind of a Serial Killer, ” and “The Innocent.” Under the agreements, Maxim had exclusive, worldwide rights to promote, distribute, and sell the films for five years. A year later, however, the parties' relationship had decayed. Maxim released the rights to the films to Gravestone in July 2013, and the licensing agreements were terminated.

         The license agreements each contained an identical arbitration clause, which in pertinent part stated that:

[a]ny controversy or claim arising out of or related to this Agreement and to any part of it, including, but not limited to this Paragraph on arbitration, and to the performance, breach, interpretation or enforceability hereof, and all claims of fraud in the inducement of this Agreement and all claims for rescission of this Agreement, or any part of this Agreement, shall be settled by arbitration.

(Doc. 10 at 2.)

         In 2019, Gravestone brought this copyright infringement action against Maxim, alleging that Maxim had continued to distribute the two films after the termination of the licensing agreement. Maxim now moves to dismiss and compel arbitration, arguing that the arbitration clauses of the two agreements bind the parties to arbitrating Gravestone's claims.

         DISCUSSION

         I. Legal Standards

         Motions to dismiss and compel arbitration are properly brought under Federal Rule of Civil Procedure 12(b)(1), which allows a defendant to challenge the plaintiff's assertion that a court has subject matter jurisdiction over a claim. Fed.R.Civ.P. 12(b)(1); ROI Properties Inc. v. Burford Capital Ltd., No. CV-19-003300-PHX-DJH, 2019 WL 1359254, at *2 (D. Ariz. Jan. 14, 2019) (citing Doe v. Schachter, 804 F.Supp. 53, 56 (N.D. Cal. 1992)).

         The Federal Arbitration Act (“FAA”) governs the enforceability of arbitration agreements in contracts involving interstate commerce. Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (citing 9 U.S.C. §§ 1 et seq.). The FAA broadly provides that written agreements to arbitrate disputes arising out of transactions involving interstate commerce “shall be valid, irrevocable, and enforceable” except upon grounds that exist at common law for the revocation of a contract. 9 U.S.C. § 2. Absent a valid contract defense, the FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The district court's role under the FAA is “limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” Id.

         “A court deciding a motion to compel arbitration must first decide whether and to what extent the parties agreed to arbitrate.” Bonner v. Michigan Logistics, Inc., 250 F.Supp.3d 388, 394-95 (D. Ariz. 2017) (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)). The question of arbitrability is governed by federal substantive law. See Collins v. D.R. Horton, Inc., 252 F.Supp.2d 936, 939 (D. Ariz. 2003) (“[T]he Ninth Circuit establishes that ‘federal substantive law governs the question of arbitrability.'”) (quoting Simula, Inc. v. Autoliv, Inc., 175 F.3d at 716, 719 (9th Cir. 1999)). Where the arbitrability of a dispute is in question, a court must look to the terms of the contract. See Chiron Corp., 207 F.3d 1130. “Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Simula, 175 F.3d at 719 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983)).

         II. ...