Facts

International Precision Products B.V. sued Staco Systems Inc. fka Stacoswitch Inc., for an injunction to maintain the status quo in aid of arbitration in connection with Staco's termination of a contract providing International Precision with the exclusive rights to distribute Staco's aerospace products in Europe. International Precision, a Dutch corporation, distributes American-manufactured aerospace industry products in Europe. Staco, a California corporation, manufactures such products, including switches, keyboards, keypads, electronic controllers, and panel assemblies.

PLAINTIFF'S CONTENTIONS:
In 1998, International Precision entered into an agreement to become the exclusive distributor of Staco's products in Europe. The agreement was placed in writing in 2003. Pursuant to the written agreement, Staco also agreed to pay International Precision a 10 percent commission on the sale of its products. The agreement stated that it could only be terminated on two years notice. The agreement also contained an arbitration provision.

On Oct. 8, 2013, Staco notified International Precision by letter that it would terminate the agreement effective Oct. 15, 2013, unless they could reach a new agreement by Oct. 14 removing the exclusivity provision, among other material modifications. However, the parties failed to renegotiate, and Staco terminated the agreement on one-week notice. International Precision contended that its performance under the agreement did not provide cause for Staco to terminate prematurely. Accordingly, International Precision concurrently served Staco with an arbitration demand and initiated proceedings in federal court seeking an injunction to maintain the status quo until the completion of arbitration proceedings.

DEFENDANT'S CONTENTIONS:
Staco contended that it had the right to terminate the agreement based on International Precision's declining sales performance since 2010.

Result

The court found that the contract was "not a model of clarity," and there was a significant dispute as to the interpretation of the contract that could not be resolved on the record before it. Therefore the court determined International Precision could not prove that it was likely to succeed on the merits. Moreover, the court ruled that a reasonable basis existed for calculating the monetary harm to International Precision resulting from Staco's termination of the agreement, making injunctive relief unnecessary. Accordingly, International Precision's motion was denied and the action was dismissed to allow the parties to resolve the dispute in arbitration.

Other Information

FILING DATE: Nov. 21, 2013.