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Federated Mutual Insurance Co. v. Federated National Holding Company, Inc.

United States District Court, D. Minnesota

June 22, 2018

Federated Mutual Insurance Company, Petitioner,
Federated National Holding Company, Inc. Respondent.



         This matter is before the Court on Respondent's Motion to Dismiss and Petitioner's Motion to Confirm Arbitration Award. For the following reasons, the Motion to Dismiss is denied and the Motion to Confirm is granted.


         This case arises out of the parties' arbitration relating to the similarities in their corporate names. Petitioner Federal Mutual Insurance Company and Respondent Federated National Holding Company, Inc. are insurance companies. Petitioner is based in Minnesota and Respondent is based in Florida.

         For many decades, Petitioner has owned rights in the trademarks “Federated, ” “Federated Insurance, ” “Federated Mutual, ” and other marks containing the word “Federated” relating to insurance services. Before 2012, Respondent was named 21st Century Holding Company. When Respondent changed its name to Federated National, Petitioner asserted its trademark rights. The parties resolved their dispute in 2013 by executing a Co-Existence Agreement (“Agreement”) under which Respondent agreed to cease using the term “Federated” in its name and the names of its affiliates within seven years. (Pet. Ex. A Art. 2.A.10.) In the interim, Respondent agreed to minimize confusion within the industry given its similarity to Petitioner's name. (Id. Art. 2.A.) For example, Respondent agreed to include a statement on its website that it is unrelated to Petitioner and to train its employees to help avoid customer confusion. (Id. Art. 2.A.6, 2.A.7.) The parties agreed to resolve any dispute by arbitration. (Id. Art. 4.) The parties further agreed that the arbitrator could decide any dispute on the written submission and on an expedited basis. (Id.) Lastly, the parties agreed that “[a]ny judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.” (Id.) The Agreement is to be “construed and interpreted in accordance with the laws of Minnesota.” (Id. Art. 6.J.)

         According to Petitioner, Respondent did not comply with the Agreement and, in fact, created even more confusion in the industry. Petitioner ultimately initiated arbitration with the American Arbitration Association in July 2016.[1] The arbitration was lengthy and contentious. On February 16, 2018, the Illinois-based arbitrator issued an award concluding that Respondent had breached various aspects of the Agreement, but denying Petitioner's trademark infringement claim (“Award”). (Pet. Ex. C at 15-16.) Among other things, the arbitrator ordered Respondent and its affiliates to cease using the term “Federated” in trade names, marketing, advertising, websites, stationery, email, contracts, policies, and riders within 90 days of the date of the Award. (Id. at 15.)

         Respondent complained to Petitioner that it could not meet the deadline established in the Award. Petitioner proposed an adjusted schedule to accommodate Respondent in exchange for Respondent's agreement that it would not challenge the Award. Respondent responded with an alternative time line that was unacceptable to Petitioner. On March 14, 2018, Petitioner filed the instant Petition to Confirm the Award under § 9 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9. Petitioner does not challenge the arbitrator's denial of its trademark claim.

         On April 6, 2018, Respondent filed an Application and Motion to Confirm, in Part, and Vacate or Modify, in Part, the Arbitration Award in the Northern District of Illinois under §§ 9-10 of the Federal Arbitration Act (“FAA”). Federated Nat'l Holding Co. v. Federated Mut. Ins. Co., Civil No. 18-2489, Docket No. 1 (Norgle, J.). Specifically, Respondent seeks to confirm the Award insofar as it held that Respondent did not infringe Petitioner's trademark and to vacate the holding that Respondent violated the Agreement. Petitioner moved to stay that case pending resolution of this case. The motion is fully briefed but has not yet been decided.

         Respondent now moves to dismiss the Petition for lack of jurisdiction and Petitioner moves for confirmation of the Award.


         A. Motion to Dismiss

         Respondent challenges the Court's subject matter and personal jurisdiction and argues that venue here is improper and that the case should be transferred to the Northern District of Illinois.

         1. Subject Matter Jurisdiction

         A motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) may challenge the complaint either on its face or on the factual truthfulness of its averments. Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). When a defendant challenges the complaint on its face, the Court reviews the pleadings and affords the plaintiff the same protections that it would receive on a Rule 12(b)(6) motion to dismiss. See Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). The Court takes the factual allegations as true and will only dismiss the complaint if the plaintiff fails to allege an essential element for subject matter jurisdiction. See Titus, 4 F.3d at 593.

         The FAA “confers no federal jurisdiction, but instead requires ‘an independent jurisdictional basis.'” CMH Homes, Inc. v. Goodner, 729 F.3d 832, 835 (8th Cir. 2013) (quoting Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 581-82 (2008)). Petitioner asserts that the Court has subject matter jurisdiction over the Petition under both federal question and diversity jurisdiction. Respondent contests both jurisdictional bases.

         a. Federal Question

         According to Petitioner, the Court has federal question jurisdiction because the underlying dispute involved a federal trademark claim. Respondent argues that because Petitioner did not include that claim in the Petition, there is no federal question presented. The issue is whether the Court should assess jurisdiction based on the face of the Petition or if it should “look through” the Petition to the underlying arbitration to determine whether a federal question exists.

         The Supreme Court has held that the look-through approach applies in the context of § 4 of the FAA (petitions to compel arbitration), but has not addressed whether it applies to actions brought under §§ 9-10 of the FAA (petitions to confirm or vacate). Vaden v. Discover Bank, 556 U.S. 49, 62 (2009). The Eighth Circuit Court of Appeals has yet to address this issue and the circuits that have are split. The First and Second Circuit Courts of Appeals have held that the look-through approach applies to petitions under §§ 9-10 of the FAA and the Third and Seventh Circuit Courts of Appeals have held to the contrary. Compare Ortiz-Espinosa v. BBVA Sec. of P.R., Inc., 852 F.3d 36, 40 (1st Cir. 2017), and Doscher v. Sea Port Grp. Sec., LLC, 832 F.3d 372, 388 (2d Cir. 2016), with Goldman v. Citigroup Global Mkts., Inc., 834 F.3d 242, 254-55 (3d Cir. 2016), and Magruder v. Fidelity Brokerage Servs., LLC, 818 F.3d 285, 288 (7th Cir. 2016).

         Respondent argues that the Court should decline to apply the look-through approach because there are fundamental differences between §§ 4 and 9 of the FAA that make the reasoning in Vaden inapplicable to cases brought under ยง 9. Petitioner responds that the court should apply the look-through approach because doing so reinforces ...

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