United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION AND ORDER
LAKE UNITED STATES DISTRICT JUDGE
The Shipman Agency, Inc. ("Plaintiff,"
"Shipman" or "Licensor") brings six
causes of action against defendants TheBlaze, Inc.
("TheBlaze") and Tyler Cardon ("Cardon")
(collectively, "Defendants") for: (1) violation of
the Lanham Act, 15 U.S.C. § 1114(a)(1), (2) violation of
the Lanham Act, 15 U.S.C. § 1125(a), (3) violation of
the Texas Business and Commerce Code § 16.102, (4)
unfair competition, (5) promissory estoppel, and (6) tortious
interference with prospective business
relations.Pending before the court is Defendants
TheBlaze Inc. and Tyler Cardon's Amended Motion to Stay
and Compel Arbitration and Brief in Support
("Defendants' Motion to Compel") (Docket Entry
No. 18). For the reasons stated below, the court will grant
Defendants' Motion to Compel.
is an advertising agency and a television creation and
production company owned and operated by Stephanie Shipman.
TheBlaze is a digital network that licenses television and
radio content from producers to provide to its subscribers.
Cardon is the president of TheBlaze and its parent company,
Mercury Radio Arts, Inc. For the last five years Plaintiff and
TheBlaze have entered into successive license agreements in
which Plaintiff licensed its content to TheBlaze to air on
television. On May 22, 2017, the parties executed their most
recent licensing agreement ("2017 License
Agreement" or "the Agreement") for TheBlaze to
air Plaintiff's programs. The 2017 License Agreement
governs the relationship between Plaintiff and TheBlaze,
provides details about airing Plaintiff's programs and
advertising, and contains a mandatory arbitration
alleges that in 2018 Cardon aimed to destroy the relationship
between Shipman and TheBlaze, rejected advertisements from
Plaintiff's sponsors, and refused to provide Shipman two
minutes of commercial airtime. Plaintiff alleges that
contrary to its promises TheBlaze never ran banner ads on its
website or promoted Plaintiff's shows on television,
radio, or social media. Plaintiff and TheBlaze began
negotiating a license agreement for 2018, but on February 21,
2018, TheBlaze informed Plaintiff that it would not enter
into a 2018 license agreement. On March 5, 2018, Plaintiff
sent TheBlaze a notice of termination of the 2017 License
Agreement. Plaintiff alleges that "[d] espite the fact
that its license has been terminated, the Blaze is continuing
to air Shipman's shows and willfully infringe The
Registered Trademarks on television and on digital
media." Plaintiff also alleges that Cardon has
defamed Plaintiff to its sponsors, causing the companies to
cancel their sponsorships of Plaintiff's programs.
filed this action on March 12, 2018, and filed its First
Amended Complaint on April 13, 2018, seeking damages,
permanent injunctive relief, and other appropriate costs and
relief as the court deems appropriate. Defendants have
moved to stay this action and to require Plaintiff to
arbitrate its claims with Defendants pursuant to the Federal
Arbitration Act and the Texas General Arbitration
argue that because the 2 017 License Agreement contained a
valid arbitration provision and that because Plaintiff's
claims fall within the scope of that provision, the court
should stay the action and compel arbitration. Plaintiff
responds that no arbitration agreement exists as to the
unexecuted 2018 License Agreement, that the arbitration
provision in the 2017 License Agreement is illusory and
unconscionable, and that Plaintiff's claims fall outside
the scope of the arbitration provision.
the Federal Arbitration Act ("FAA") an arbitration
agreement in a contract evidencing a transaction involving
interstate commerce is "valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract." 9 U.S.C.
§ 2. Underlying the FAA is "the fundamental
principle that arbitration is a matter of contract."
AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740,
1745 (2011) (internal quotation marks omitted); see
Washington Mutual Finance Group, LLC v. Bailey, 364 F.3d
260, 264 (5th Cir. 2004) ("The purpose of the FAA is to
give arbitration agreements the same force and effect as
other contracts --no more and no less.").
determining whether to enforce an arbitration agreement
"[f]irst, the court asks whether there is a valid
agreement to arbitrate and, second, whether the current
dispute falls within the scope of a valid agreement."
Edwards v. Doordash, Inc., Civil Action No.
17-20082, 2018 WL 1954090, at *3 (5th Cir. April 25, 2018)
(citing Klein v. Nabors Drilling USA L.P., 710 F.3d
234, 236 (5th Cir. 2013)) . If the parties have entered into
a binding agreement to arbitrate, the court must determine
whether any-federal statute or policy renders the claims
nonarbitrable. JP Morgan Chase & Co. v. Conegie ex
rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007). The party
seeking to invalidate an arbitration agreement bears the
burden of establishing its invalidity. Carter v.
Countrywide Credit Industries, Inc., 362 F.3d 294, 297
(5th Cir. 2004). A court should resolve all doubts concerning
the arbitra-bility of claims in favor of arbitration.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 105 S.Ct. 3346, 3353-54 (1985) .
There is a Valid Agreement to Arbitrate
court must first decide whether an agreement to arbitrate was
formed. Paragraph 12 of the Agreement states:
12. Governing Law/Dispute Resolution: This Agreement
shall be construed in accordance with, and shall in all
respects be governed by, the laws of the State of Texas. Any
and all disputes, claims and controversies arising out of or
relating to any provision of this Agreement, or breach or
alleged breach thereof, shall be settled by confidential
arbitration in Dallas, Texas, before a single arbitrator,
with experience in the entertainment industry, in accordance
with the commercial arbitration rules of the American
Arbitration Association, and any award rendered in such
proceeding shall be final and binding upon the parties
hereto. Judgment on the award may be entered in any court
having jurisdiction thereof. In the event of any dispute
relating to the subject matter hereof, Licensor's sole
remedy shall be to pursue an action at law for money damages,
and Licensor agrees the Licensor shall not seek to or be
entitled to enjoin the distribution, advertising or
exploitation of the Programs or the exercise of any of the
rights granted herein or terminate or rescind this Agreement.
... No. failure on the part of Licensor or TBI to exercise,
and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise
of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive or in
limitation of any other right or remedy provided at law or in
equity as otherwise provided herein. (hereinafter the
The Arbitration Provision is Not Illusory
argues that the Arbitration Provision is illusory because it
"restricts the power of Shipman to terminate the
contract but unilaterally retains that power for
Blaze."Plaintiff also argues that the
Arbitration Provision is illusory because it does not include
a savings clause similar to the one at issue in In re
Halliburton Co., 80 S.W.3d 566 (Tex.
2002).Defendant responds that the Arbitration
Provision is not illusory because Paragraph 15 of the 2017
License Agreement states that the arbitration provision
survives the termination of the contract.
arbitration agreements are matters of contract, the validity
and scope of such agreements are governed by state contract
law. Morrison v. Amway Corp., 517 F.3d 248, 254 (5th
Cir. 2008) . An arbitration agreement is illusory under Texas
law "where one party has the unrestrained unilateral
authority to terminate its obligation to arbitrate."
Nelson v. Watch House International, L.L.C., 815
F.3d 190, 193 (5th Cir. 2016) (quotations and citations
omitted). In Halliburton the Texas Supreme Court
held that because of two "savings clauses," the
employer could not "avoid its promise to arbitrate by
amending the provision or terminating it
altogether." Halliburton, 80 S.W.3d at 570.
Paragraph 15 of the 2017 License Agreement states that the
Arbitration Provision "will survive any expiration or
termination of this Agreement, " no party has
unilateral authority to "avoid its promise to arbitrate
by amending the provision or terminating it altogether."
Carey v. 24 Hour Fitness, USA, Inc., 669 F.3d 202,
205 (5th Cir. 2012) (quoting In re 24R, Inc., 324
S.W.3d 564, 567 (Tex. 2010)). Because Defendants do not have
the power to avoid arbitration under the 2017 License
Agreement by unilaterally ...