Safran v. iXblue ( 2019 )

19-0567
Safran v. iXblue
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 17th day of October, two thousand nineteen.
PRESENT:
JOHN M. WALKER, JR.,
PIERRE N. LEVAL,
SUSAN L. CARNEY,
Circuit Judges.
_________________________________________
SAFRAN ELECTRONICS & DEFENSE SAS,
SAFRAN ELECTRONICS & DEFENSE GERMANY GMBH,
Petitioners-Appellants,
v. No. 19-0567
IXBLUE SAS,
Respondent-Appellee.
_________________________________________
FOR APPELLANTS: STEPHEN L. DREYFUSS,
(Matthew E. Moloshok, on the brief),
Hellring Lindeman Goldstein &
Siegal LLP, Newark, NJ.
FOR APPELLEE: CAROLINE S. DONOVAN,
Foley Hoag LLP, Boston, MA
(Peter A. Sullivan, Foley Hoag LLP,
New York, NY, on the brief).
Appeal from a judgment of the United States District Court for the Southern District
of New York (Kaplan, J.).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment entered on February 6, 2019, is
AFFIRMED IN PART and VACATED IN PART. The SED Entities’ motion for
judicial notice is DISMISSED AS MOOT.1
Safran Electronics & Defense SAS (“SED”) and Safran Electronics & Defense
Germany GmbH (“SED Germany”) (together, the “SED Entities”) appeal from the
judgment of the United States District Court for the Southern District of New York
(Kaplan, J.) denying their motion for a preliminary injunction (“PI Motion”) and dismissing
their petition to stay arbitration proceedings in New York and to compel arbitration in Paris
(“Petition”). We assume the parties’ familiarity with the underlying facts, procedural history,
and arguments on appeal, to which we refer only as necessary to explain our decision to
affirm in part and vacate in part.
1 On June 14, 2019, while this appeal was pending, the SED Entities moved this Court to take judicial notice
of a May 10, 2019 Partial Award (“Award”) rendered by the tribunal in the Paris arbitration that the SED
Entities initiated in June 2018. The Award holds that the Paris tribunal has jurisdiction over the dispute
between SED and iXblue. Although the Award concludes that iXblue has thus far failed to produce sufficient
evidence that the dispute should be arbitrated in New York, the Award is subject to change based on ongoing
discovery.
This Court may take judicial notice of appropriate documents at any time. Apotex, Inc. v. Acorda
Therapeutics, Inc., 823 F.3d 51, 60 (2d Cir. 2016). But we will not take notice of documents that are “not
relevant to our analysis.” United States v. Pitney Bowes, Inc., 25 F.3d 66, 70 (2d Cir. 1994); see also United States v.
Bleznak, 153 F.3d 16, 21 n.2 (2d Cir. 1998). The SED Entities contend that the Award is relevant primarily
because it further supports their position that the District Court should have granted the PI Motion. This is
incorrect. Whether we affirm the District Court’s decision turns on whether the License Agreement binds
SED Germany, not on whether Article IX (B) or IX (C) applies to the dispute between SED and iXblue
before the Paris tribunal. For this reason, the District Court expressly declined to decide whether Paris or
New York was the appropriate forum “[b]ecause the parties intended for the arbitrators to decide the scope
of their jurisdiction over these claims.” Safran Elecs. & Def. SAS v. iXblue SAS, 18-CV-7220 (LAK), 2019 WL
464784, at *7 (S.D.N.Y. Feb. 6, 2019). Because the Award is not relevant to our decision, we need not take
judicial notice of it.
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SED and iXblue SAS (“iXblue”) are parties to a License and Know-How Agreement
(“License”) that permits SED to use iXblue’s fiber-optic gyroscope (“FOG”) know-how.
Article IX (B) of the License mandates that disputes between the parties be arbitrated in
Paris, except as provided by Article IX (C); Article IX (C) mandates that disputes that arise
from the sale of products to end users outside of the European Union be arbitrated in New
York. The parties treat these provisions as mutually exclusive—either one section governs a
dispute, or the other must.
In February 2014, iXblue applied to the French Commercial Court of Nanterre for a
third-party expert opinion as to whether the SED Entities had breached the License. The
French Commercial Court denied the application, and iXblue appealed the denial to the
Versailles Court of Appeal. The SED Entities filed a brief with the Versailles Court of
Appeal urging affirmance of the French Commercial Court’s decision (“French Brief”)
because, among other reasons, the French courts had no jurisdiction, since the License
requires that all such matters be arbitrated. The Versailles Court of Appeal affirmed the
French Commercial Court’s decision. The parties’ underlying dispute, however, went
unresolved. On June 29, 2018, SED filed a request for arbitration before the Paris Tribunal
de Grande Instance against iXblue in Paris, citing Article IX (B) of the License. Two weeks
later, on July 13, 2018, iXblue filed a request for arbitration before the International
Chamber of Commerce against the SED Entities in New York, citing Article IX (C) of the
License. The SED Entities then turned to the federal courts for relief, filing the Petition and
the PI Motion in the Southern District of New York. iXblue opposed the PI Motion, and
separately moved to dismiss the Petition. The District Court sided with iXblue, denying the
PI Motion and dismissing the case.
1. Motion for Preliminary Injunction
The SED Entities contend that the District Court erred by making factual findings
based on the French Brief and relying on those facts to deny the PI Motion. We review the
denial of a preliminary injunction for abuse of discretion. Nicosia v. Amazon.com, Inc., 834 F.3d
220, 238 (2d Cir. 2016). To obtain a preliminary injunction, a plaintiff must demonstrate: (1)
“either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to
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the merits to make them a fair ground for litigation and a balance of hardships tipping
decidedly in the plaintiff’s favor”; (2) “that he is likely to suffer irreparable injury in the
absence of an injunction”; (3) that the balance of hardships between the plaintiff and
defendant “tips in the plaintiff’s favor”; and (4) that the “public interest would not be
disserved by the issuance of a preliminary injunction.” Salinger v. Colting, 607 F.3d 68, 79-80
(2d Cir. 2010) (alterations and internal quotation marks omitted). The District Court
determined that, under the License, questions of arbitrability must be submitted to the
arbitrator. The court held it necessarily followed that the SED Entities had not shown a
likelihood of success on the merits or sufficiently serious questions going to the merits along
with a balance of hardships tipping decidedly toward them. We agree.
SED Germany first argues that it is not bound to arbitrate the claims in the Petition
because, unlike SED, SED Germany is not a signatory to the License. This Circuit has
recognized that a nonsignatory party may nevertheless be bound by an arbitration clause,
among other circumstances, where “its subsequent conduct indicates that it is assuming the
obligation to arbitrate.” Thomson-CSF, S.A. v. Am. Arbitration Assoc., 64 F.3d 773, 777 (2d Cir.
1995). Conduct manifesting an intent to be bound by an arbitration clause includes relying
on that clause in an attempt to avoid litigation elsewhere. E.g., In re Transrol Navegacao S.A.,
782 F. Supp. 848, 851-53 (S.D.N.Y. 1991). This is precisely what SED Germany did in the
French Brief.
According to SED Germany, however, the District Court should not have considered
the French Brief without holding an evidentiary hearing, never mind that SED Germany
never asked for any such hearing. Cf. Drywall Tapers & Pointers, Local 1974 v. Local 530 of
Operative Plasterers Cement Masons Int’l Ass’n, 954 F.2d 69, 77 (2d Cir. 1992) (“When parties are
content in the district court to rest on affidavits, the right to an evidentiary hearing is
waived.”). Not so. This Court has explained that “there is no hard and fast rule in this circuit
that oral testimony must be taken on a motion for a preliminary injunction or that the court
can in no circumstances dispose of the motion on the papers before it.” Md. Cas. Co. v. Realty
Advisory Bd. on Labor Relations, 107 F.3d 979, 984 (2d Cir. 1997). Here, no hearing was
necessary. The French Brief provided an adequate basis for the District Court’s decision.
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Whatever SED Germany’s “subjective intent” with respect to the License, Appellants’ Br. at
22-23, its actual conduct indicated that it “regarded itself as a party” to, and “intended to
have the dispute arbitrated” consistent with, the License, In re Transrol Navegacao S.A., 782 F.
Supp. at 851.
The SED Entities’ contention that it is unclear which of the two entities make which
arguments in the French Brief strains credulity. The French Brief defines “Sagem” to include
both “Sagem DS” (SED) and “Sagem GmbH” (SED Germany). Some arguments in the
brief are advanced on behalf of just one of those entities—Sagem DS or Sagem GmbH;
others are advanced on behalf of both of those entities—Sagem. For example, the French
Brief asserts that iXblue’s claims implicate only Sagem GmbH, so Sagem DS should be
dismissed. The authors of the French Brief plainly knew how to argue on behalf of just one
entity because, on some points, they did exactly that. The jurisdictional argument was not
one of those points.
Finally, the District Court considered whether, under the License, questions of
arbitrability are for an arbitrator to decide. The SED Entities and iXblue agree that the
License does delegate those questions to the arbitrator. See Appellants’ Br. at 36; Appellee’s
Br. at 32-33. And in any event, when “parties explicitly incorporate rules that empower an
arbitrator to decide issues of arbitrability,” as the License does, “the incorporation serves as
clear and unmistakable evidence of the parties’ intent to delegate such issues to an
arbitrator.” Contec Corp. v. Remote Sol. Co., 398 F.3d 205, 208 (2d Cir. 2005). Accordingly, the
SED Entities have “shown neither a likelihood of success on the merits, nor a sufficiently
serious question going to the merits along with a balance of hardships tipping decidedly
toward [them] to warrant the grant of a preliminary injunction.” Spear, Leeds & Kellogg v. Cent.
Life Assurance Co., 85 F.3d 21, 30 (2d Cir. 1996). We need go no further to affirm the District
Court’s denial of the PI Motion.
2. Motion to Dismiss2
2The District Court stated that it dismissed the Petition based on its determination that: (1) the License
bound the SED Entities; and (2) all parties bound by the License agreed to arbitrate threshold questions of
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The SED Entities similarly argue that the District Court erred in dismissing the
Petition based on improper consideration of the French Brief.3 We review de novo the
dismissal of a complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure,
“accepting as true all factual claims in the complaint and drawing all reasonable inferences in
the plaintiff’s favor.” Fink v. Time Warner Cable, 714 F.3d 739, 740-41 (2d Cir. 2013). A
“complaint is deemed to include any written instrument attached to it as an exhibit or any
statements or documents incorporated in it by reference”; in addition, if a “complaint relies
heavily upon [a document’s] terms and effect,” that document is rendered “integral” to the
complaint and may be considered on a motion to dismiss. Chambers v. Time Warner, Inc., 282
F.3d 147, 152-53 (2d Cir. 2002) (internal quotation marks omitted). Critically, “a plaintiff’s
reliance on the terms and effect of a document in drafting the complaint is a necessary
prerequisite to the court’s consideration of the document on a dismissal motion; mere notice
or possession is not enough.” Id. at 153 (emphasis in original). If, in considering a Rule
12(b)(6) motion, a court takes into account “matters outside the pleadings . . . , the motion
must be treated as one for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). This
“conversion requirement is strictly enforced.” Chambers, 282 F.3d at 154.
The French Brief was outside of the initial pleadings. The SED Entities did not
attach the French Brief to the Petition, and the Petition did not mention either the brief or
the dispute in which that brief was filed. Nor did the District Court take judicial notice of the
French Brief. Global Network Commc’ns, Inc. v. City of New York, 458 F.3d 150, 157 (2d Cir.
2006) (finding that a district court had made an “improper factual finding” instead of taking
judicial notice because “the extraneous documents were used not to establish their existence,
arbitrability. Because SED signed and is therefore bound by the License, the District Court did not err in
dismissing the Petition with respect to SED. We consider here whether the record on motion to dismiss
supports the District Court’s determination that SED Germany also was bound by the License.
3 iXblue contends that the SED Entities waived this argument. We disagree. The French Brief was filed in
connection with the PI Motion. It was not attached to the pleadings, and the parties did not mention it in the
motion to dismiss briefing. The District Court first referenced the French Brief in its dismissal decision. The
SED Entities thus had no prior notice that the District Court might sua sponte import documents from the
preliminary injunction motion to the dismissal motion. We note that the SED Entities could have filed a
motion for reconsideration, but we excuse their failure to do so because of the urgency created by the
numerous ongoing proceedings.
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but rather to provide the reasoned basis for the court’s conclusion”). The District Court thus
had only two options for how to handle the French Brief in connection with the motion to
dismiss: “disregard such material or give the parties notice that the motion is being
converted to one for summary judgment and permit the parties to submit evidence
accordingly.” Kopec v. Coughlin, 922 F.2d 152, 155-56 (2d Cir. 1991).
On de novo review, we conclude that the District Court erred by using the French
Brief as a basis to dismiss the Petition with respect to SED Germany. The District Court
faced unusual circumstances: Two motions were pending before the court, the PI Motion
and iXblue’s motion to dismiss. The French Brief was properly before the court through the
PI Motion. Understandably, the District Court examined all of the papers before it in
deciding both motions simultaneously. The French Brief supports the theory of assumption,
which the District Court invoked.4 Ultimately, however, the French Brief was not properly
before the French Court for the purposes of assessing iXblue’s motion to dismiss. And SED
Germany did not have notice that the French Brief was to be the basis on which the Petition
was dismissed. We think it best to afford SED Germany the opportunity to explain why the
French Brief does not warrant the Petition’s dismissal. Accordingly, we vacate the dismissal
of the Petition with respect to SED Germany.
* * *
For the reasons set forth above, the District Court’s denial of a preliminary injunction
is AFFIRMED, but the dismissal of the Petition is VACATED with respect to SED
Germany. The SED Entities’ motion for judicial notice is DISMISSED AS MOOT.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
4 We understand the theory of assumption to be distinct from judicial estoppel. We also note that an
“inconsistent position must have been adopted by the court in some manner” for estoppel to apply. E.g.,
Bates v. Long Island R.R. Co., 997 F.2d 1028, 1038 & n.4 (2d Cir. 1993). In other words, the Versailles Court of
Appeal’s decision would have to turn on the SED Entities’ jurisdictional argument for estoppel to apply here.
To our knowledge, neither party has made that decision part of the record.
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