O.J. DISTRIBUTING, INC., a/k/a GREAT STATE BEVERAGE v. HORNELL BREWING COMPANY, INC., d/b/a FEROLITO, VULTAGGIO & SONS, a/k/a ARIZONA BEVERAGES

1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0288P (6th Cir.)
File Name: 03a0288p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
O.J. DISTRIBUTING, INC., a/k/a
GREAT STATE BEVERAGE,
Plaintiff-Appellant,
v.
HORNELL BREWING
COMPANY, INC., d/b/a
FEROLITO, VULTAGGIO &
SONS, a/k/a ARIZONA
BEVERAGES,
Defendant-Appellee.
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No. 01-1583
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 98-71940—Denise Page Hood, District Judge.
Argued: January 28, 2003
Decided and Filed: August 14, 2003
Before: BATCHELDER, MOORE, and CLAY, Circuit
Judges.
2 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
_________________
COUNSEL
ARGUED: Matthew A. Gibb, GIBB LAW FIRM, Shelby
Township, Michigan, for Appellant. John A. Ruemenapp,
WEISMAN, YOUNG, SCHLOSS & RUEMENAPP,
Bingham Farms, Michigan, for Appellee. ON BRIEF:
Matthew A. Gibb, GIBB LAW FIRM, Shelby Township,
Michigan, for Appellant. John A. Ruemenapp, WEISMAN,
YOUNG, SCHLOSS & RUEMENAPP, Bingham Farms,
Michigan, for Appellee.
CLAY, J., delivered the opinion of the court, in which
MOORE, J., joined. BATCHELDER, J. (pp. 28-31),
delivered a separate opinion concurring in part and dissenting
in part.
_________________
OPINION
_________________
CLAY, Circuit Judge. Plaintiff, O.J. Distributing, Inc.,
a/k/a Great State Beverage, appeals from the district court’s
order entered on March 29, 2001 granting the motion brought
by Defendant, Hornell Brewing Company, Inc., d/b/a
Ferolito, Vultaggio & Sons, a/k/a AriZona Beverages, to
confirm an arbitration award, while dismissing Defendant’s
motion to dismiss Plaintiff’s amended complaint as moot, and
dismissing Plaintiff’s motion for summary judgment as moot.
For the reasons set forth below, we VACATE the district
court’s order confirming the arbitration award, and
REMAND the case to the district court with instructions that
the case should proceed on the merits of Plaintiff’s claims
inasmuch as Defendant waived its right to arbitrate under the
Agreement.

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 3
BACKGROUND
Procedural History
Plaintiff, a Michigan corporation, filed suit against
Defendant, a New York corporation, in the Eastern District of
Michigan on May 11, 1998, on the basis of diversity of
citizenship and the amount in controversy being over
$75,000, claiming that in May of 1997, Defendant breached
the provisions of the “Distributing Agreement” (“the
Agreement”) held between the parties for the distribution of
AriZona beverage products. Plaintiff mailed the complaint to
Defendant’s corporate counsel along with a request for waiver
of service in May of 1998. The waiver had not been returned
as of July of 1998, so Plaintiff sent an additional copy of the
complaint to Defendant’s corporate counsel via overnight
courier.
On or about August 4 and 5, 1998, Defendant sent two
letters to counsel for Plaintiff demanding arbitration.
Defendant based its demand on a provision of the Agreement
that provided for arbitration of any dispute that arose between
the parties and that the arbitration must be commenced within
180 days following the event giving rise to the claim, and
further provided that “the failure to abide by such time
requirement shall constitute a waiver by the Distributor
[Plaintiff] of any rights in respect of, and shall constitute a bar
on, any claims by Distributor on the basis of such event or
circumstance.” (J.A. at 52-53.) Defendant’s letters advised
counsel for Plaintiff of this provision in the Agreement
requiring arbitration of all disputes.
On September 4, 1998, via “telecopier and mail,”
Defendant restated its objections to Plaintiff’s attempted
service by overnight courier and reiterated that Plaintiff’s
claims were subject to “mandatory arbitration.” The letter
also advised Plaintiff that Defendant “was willing to continue
a dialogue with you in the hopes of achieving at [sic] an
amicable settlement of your claims. Please call if you are
interested.” (J.A. at 115.) Plaintiff arranged for an entry of
4 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
default on September 30, 1998, with the Clerk of the United
States District Court for the Eastern District of Michigan, and
on October 2, 1998, Plaintiff filed a motion for Entry of
Default Judgment.
Defendant claims that it was not served with any papers
regarding Plaintiff’s actions with respect to the entry of
default, but learned of Plaintiff’s actions by way of a voice-
mail message from Plaintiff’s attorney to Defendant’s
counsel. Defendant responded by sending a letter to the
district court “Via Facsimile” with a copy to Plaintiff’s
counsel wherein Defendant explained that entry of default
was inappropriate because Defendant had not been served in
the action, and that Defendant had served Plaintiff with a
demand for arbitration as required under the Agreement. At
that time, Defendant also filed a cross-motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(5) for
insufficiency of service of process, and moved to dismiss or
stay the action pending arbitration.
On October 5, 1998, Defendant initiated arbitration
proceedings before the American Arbitration Association
(“AAA”) in New York City, New York and, in accordance
with the AAA rules, Defendant served the arbitration papers
on Plaintiff via certified mail, return receipt requested. By
letter dated October 20, 1998, the AAA acknowledged receipt
of Defendant’s arbitration demand and requested Plaintiff’s
responses thereto. The AAA also scheduled an administrative
conference regarding the matter for October 27, 1998, and
provided information and papers with which the parties were
to begin the process of selecting arbitrators and hearing dates.
Plaintiff filed a motion on October 28, 1998, seeking a
temporary restraining order preventing Defendant from
arbitrating the matter. On November 3, 1998, the district
court denied Plaintiff’s motion for a temporary restraining
order, and scheduled a hearing for the various other motions.
Thereafter, the district court entered an order on April 2,
1999, denying Defendant’s motion to dismiss, while also

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 5
1Although Defendant makes reference to testimo ny taken at this
hearing in its brief on app eal, (D efendant’s Br. on Appe al at 9), no
transcript of the hearing is provided in the joint appendix and, according
to Plaintiff, “there is no transcript of this hearing.” (Plaintiff’s Br. on
Appeal at 4.)
denying Plaintiff’s motion for entry of a default judgment, but
granted Defendant’s motion to stay the proceedings pending
arbitration.
In the meanwhile, the arbitration set in New York City was
going forward. On April 19, 1999, Plaintiff filed its
arbitration summary and statement of issues with the AAA
setting forth a claim for damages under the Agreement.
Defendant, upon consent of the arbitrators, filed a motion to
enforce the 180-day contractual time limitations as set forth
in the Agreement, and thereby requested a dismissal of
Plaintiff’s claims as time-barred. Defendant argued that the
180-day time limit barred Plaintiff’s claim and that “[u]nder
New York law (which governs this dispute as per ¶ 20.2 of
the Agreement), it is well established that only the arbitrators
(and not the Courts) are charged with enforcing a contractual
time limitation.” (J.A. at 531-32 (citation omitted).) Plaintiff
responded by claiming that the 180-day period did not begin
to run until April 8, 1998, and that Defendant’s filing of its
demand for arbitration on October 5, 1998 satisfied the time
limitation period. In the alternative, Plaintiff argued that
because of Defendant’s alleged false and deceptive acts
throughout the arbitration process, the limitations period
should be tolled under the doctrine of equitable tolling. A
hearing before the arbitrators was held on March 13, 2000,
regarding Defendant’s motion to dismiss Plaintiff’s claim as
untimely.1 Thereafter, on or about March 30, 2000, the
arbitrators issued their award dismissing Plaintiff’s claims in
their entirety.
On May 5, 2000, Plaintiff, filed an amended complaint in
the district court. Defendant filed a motion on May 22, 2000,
seeking to confirm the arbitration award and to dismiss
6 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
2Unless otherwise specified, throughout this opinion, the term
“Defendant” shall refer to Hornell and the names under which it has been
known or operated.
Plaintiff’s amended complaint. (J.A. at 216.) Plaintiff, in
turn, filed a motion for summary judgment. The district court
held a hearing on the various motions on August 11, 2000,
and then entered a memorandum opinion and order on
March 29, 2001, confirming the arbitration award and finding
the remaining motions moot.
Plaintiff timely appealed from the district court’s March 29,
2001, memorandum opinion and order confirming the
arbitration award and denying Plaintiff’s motion for summary
judgment as moot. Oral argument was heard on January 28,
2003, after which Defendant moved to file a supplemental
brief as to a case raised by the panel at oral argument,
General Star National Insurance Co. v. Administratia
Asigurarilor de Stat, 289 F.3d 434 (6th Cir. 2002).
Defendant’s motion was granted and its supplemental brief
has been considered by this Court.
Facts
A. Background of the Relationship Between the
Parties
Defendant is a supplier of certain alcoholic and non-
alcoholic beverages including AriZona brand teas and soft
drinks.2 Plaintiff is a distributor of non-alcoholic beverage
products in the greater Detroit, Michigan area. In April of
1995, Defendant began supplying AriZona beverage products
to Plaintiff for distribution in three Michigan counties:
Wayne, Oakland, and Macomb. About two months later, on
June 16, 1995, Plaintiff entered into a sales agreement (“the
Sales Agreement”) with a third party for the purchase price of
$70,000, for purposes of securing the rights to distribute
AriZona products in two additional Michigan counties,

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 7
Livingston and Washtenaw. According to Plaintiff,
Defendant had to consent to Plaintiff purchasing the rights to
distribute AriZona products in these two additional counties.
Thereafter, on September 16, 1995, Plaintiff and Defendant
entered into the Agreement now at issue for the purpose of
providing the terms under which Defendant would supply and
Plaintiff would distribute AriZona products.
Each party not only performed under the Agreement, but
Plaintiff allegedly met and exceeded the set sales goals and
expended considerable time and resources in exceeding the
expected market growth for AriZona products. Plaintiff
claims that its efforts resulted in a large and profitable
customer list for AriZona products. The performance
continued until April of 1997, when AriZona informed
Plaintiff that it was terminating the relationship.
B. Events Giving Rise to the Matter at Hand
AriZona sent a letter to Plaintiff on April 22, 1997,
informing Plaintiff that it was “concluding our non-alcoholic
supplier relationship with you” effective May 12, 1997. (J.A.
at 155.) The letter was written on AriZona letterhead, signed
by Ted Shanahan, Eastern Division Manager, and copied to
“Don Vultaggio” at Hornell Brewing in Long Island, New
York, as well as to “Lawrence I. Fox” an attorney at
McDermott, Will, and Emory (“MW&E”) in New York, New
York. The letter made no reference the Agreement.
In response, on April 24, 1997, Eric Smith, Plaintiff’s then
counsel, sent a letter to Shanahan acknowledging receipt of
the termination letter and informing Shanahan that 1) “[t]he
relationship between the parties is subject to an executed
Agreement dated September 16, 1995;” 2) the April 22, 1997
letter did not constitute termination “for cause” and under the
terms of the Agreement, if Defendant terminated the
Agreement without cause, Defendant had to provide Plaintiff
with at least thirty days notice; 3) AriZona’s legal obligations
under the Agreement demanded that certain monies be paid
8 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
to Plaintiff; and 4) AriZona’s actions constituted a breach of
the Agreement. (J.A. at 189.) The letter also advised
AriZona that if it was not willing to act pursuant to the terms
of the Agreement, Plaintiff would not hesitate to take legal
action. The letter was copied to, among others, Don
Vultaggio and Lawrence I. Fox, and sent by certified mail
with return receipt requested. The record indicates that
Vultaggio and Fox each received the letter. (J.A. at 191-92.)
On April 29, 1997, attorney Lisa S. Derman, of MW&E
sent a letter to Plaintiff’s former counsel Smith, advising
Smith that the “firm [McDermott, Will & Emery] [was]
litigation counsel for Hornell Brewing Co., Inc. d/b/a Ferolito,
Vultaggio & Sons (“Hornell”).” (J.A. at 196.) The letter also
apprised Smith that his “letter of April 24, 1997, to Mr. Ted
Shanahan ha[d] been forwarded to [Hornell] for response.”
(J.A. at 196.) Finally, the letter advised that MW&E was in
the process of reviewing the matter with Hornell, and would
contact Smith after gathering “the relevant information.”
(J.A. at 196.) The letter was copied to Shanahan and Fox.
Smith sent a letter to Derman on May 2, 1997 advising her
that he had received a direct communication from Shanahan
asking Smith to contact him to “discuss an amicable
resolution of the matter.” (J.A. at 194.) Smith stated that he
was hesitant to contact Shanahan directly inasmuch as
Derman had indicated that MW&E was representing Hornell,
and asked Derman to advise accordingly.
Apparently Derman posted no objection to Smith directly
contacting Shanahan, inasmuch as Shanahan sent a letter to
Smith on May 7, 1997 indicating that, pursuant to a telephone
conversation on May 5, 1997, Smith agreed to send Shanahan
a complete copy “of a [sic] what O.J. Distributing claims is
their ‘contract’ along with case sales information for
Washtenau [sic] and Livingston counties[,]” but that
Shanahan had yet to receive the materials. (J.A. at 193.)
Shanahan therefore asked Smith as to when the materials
would be sent. (J.A. at 193.)

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 9
Smith replied in a May 9, 1997, letter to Shanahan
indicating, among other things, that Shanahan’s “summation
of our conversation [was] not accurate. I am not sending you
a copy of anything O.J. Distributing drafted. It is AriZona’s
contract that it uses for its distributors in this area. It has been
executed by your representative.” (J.A. at 197.) Smith also
discussed monies owed to Plaintiff under the terms of the
Agreement. (J.A. at 197-98.) Smith sent another letter to
Shanahan on May 14, 1997, indicating additional monies
owed to Plaintiff under the terms of the Agreement. (J.A. at
200.)
On June 5, 1997, Shanahan sent a letter to Smith requesting
copies of Plaintiff’s last twelve months “Sales & Inventory”
reports for O.J. Distributing. Shanahan advised that “[w]e are
hoping to amicably resolve this matter as soon as possible.”
(J.A. at 201.) On July 1, 1997, Smith sent a letter to
Shanahan in response to the June 5, 1997, correspondence
indicating that all of the information requested had been sent,
and that Smith therefore had “all of the information required
to make the calculations necessary to move forward toward a
resolution of this matter.” (J.A. at 199.) Thus, Smith asked
that Shanahan provide his “calculations by the next week’s
end so that we know more precisely where this matter is
going to ultimately head.” (J.A. at 199.) Smith added, “[i]f
we are going to resolve the situation, we need to address it
immediately.” (J.A. at 199.)
Plaintiff’s current counsel Matthew Gibb, sent a letter to
attorney Lawrence I. Fox at MW&E on December 12, 1997,
indicating that Gibb was representing Plaintiff and that Gibb
was writing regarding the breach of the Agreement by Fox’s
client, Hornell. Gibb requested that Fox contact him
regarding the matter. A few weeks later, on January 9, 1998,
Gibb sent letter to Don Vultaggio at Hornell Brewing
indicating that Gibb represented Plaintiff, that Hornell
terminated the Agreement with Plaintiff, and that Gibb
attempted to resolve the matter with Lawrence Fox, but Fox
10 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
did not return Gibb’s letters or phone calls. Gibb asked that
Vultaggio contact him regarding the matter.
Gibb sent a letter to attorney John Calandra of MW&E on
January 15, 1998, regarding Plaintiff’s claims against
Defendant. The letter states that “[a]ttached is a copy of the
Sales Agreement assigning Hornell’s Distributor Agreement
with [Plaintiff].” (J.A. at 160.) The letter further provides a
summary of damages that Plaintiff believes it is due under the
terms of the Agreement.
Several days later, on January 27, 1998, Gibb sent a letter
to Calandra and Fox requesting that they advise how they
were going to proceed inasmuch as they had “already stated
that attempts at litigation or arbitration would be opposed
. . . .” (J.A. at 162.) Gibb added that he “look[ed] forward to
discussing how these claims may be settled or if it will be
necessary to send this matter to arbitration or the federal
court.” (J.A. at 162.)
On February 11, 1998, Gibb sent yet another letter to
Calandra requesting that Calandra respond to Gibb’s
January 15, 1998 letter and advise how Hornell wished to
proceed. Gibb also requested that “[i]n the event this matter
does proceed to litigation, would you prefer to accept service
or should Hornell be served personally?” (J.A. at 163.)
Several weeks later, on March 27, 1998, having heard no
reply, Gibb sent a letter to Calandra stating that “[m]y client
has not received a response to their claim against Hornell
Brewing. As no offer of settlement or request for arbitration
appears likely, I am advising my client to seek relief from the
United States District Court. Please advise on how service
should be perfected in this matter. I understand your client is
not registered to do business in Michigan under their
corporate name and therefore, they do not have a local
resident agent. . . . If you have a better solution to this matter,
please call.” (J.A. at 164.)

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 11
Donna Messina, corporate counsel to Hornell, sent a letter
to Gibb on April 8, 1998, indicating that Hornell was not
aware of the existence of any Agreement with Plaintiff, and
asked that if such a document existed. Gibb forwarded a copy
to Messina. On that same day, Gibb responded with a letter
to Messina and enclosed Plaintiff’s “Notice of Lawsuit and
Request for Waiver of Service of Summons.” (J.A. at 168.)
Gibb added, “[a]s your company is not registered to do
business in Michigan, I trust that you, as General Counsel,
have the authority to accept this complaint. A self-addressed,
stamped envelope is enclosed for your assistance.” (J.A. at
168.)
Several weeks later, on May 26, 1998, Gibb sent a letter to
Fox of MW&E stating:
When we last spoke I understood that your client,
Hornell Brewing, was going to make a preliminary offer
of settlement by May 22, 1998. As of the date of this
correspondence, I have not received anything to present
to my clients. Is the offer forthcoming? . . . If no offer
is pending in this matter, I need to know if Hornell is
agreeing to waive service of [sic] if they desire to incur
costs under Rule 4. Please advise what position your
client is taking.
(J.A. at 171.) Then, on June 22, 1998, in response to a
facsimile, Gibb sent a letter to Messina acknowledging that he
was in receipt of the facsimile, and advised that his “previous
correspondence [was] clear as to what [his] client requires in
this matter,” and that if Hornell “ha[d] a counter proposal,
[Plaintiff] would be happy to consider it. However, at this
point, [Plaintiff] cannot delay any longer.” (J.A. at 172.)
Gibb concluded:
“I have not received the waiver of service as requested
with my client’s complaint. Therefore, I am forced to
effectuate personal service in this matter. Under Rule 4
of FRCP, I will be entitled to all costs, including
12 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
attorneys fees. I do not believe that this matter is being
given its proper attention and therefore, feel the Federal
Court is my client’s only source of relief. If Hornell has
an offer in this matter, please fax it to my office upon
your return on June 29, 1998. I look forward to hearing
from you.”
(J.A. at 172.)
On August 4, 1998, yet another attorney from MW&E,
James R. Anderson, sent a letter to Plaintiff stating:
We represent Hornell Brewing Co., Inc. d/b/a Ferolito,
Vultaggio & Sons (“Hornell”) and have received a copy
of a summons and complaint in an action styled O.J.
Distributing, Inc. v. Hornell Brewing Co., Inc., No. 98-
71940 (E.D. Mich) (the “Action”).
Under ¶ 20.3(b) of the above-referenced Distributor
Agreement (the “Distributor Agreement”), the claims
asserted by O.J. Distributing, Inc. (“O.J.”) in the Action
are subject to mandatory arbitration in New York City.
Accordingly, Hornell hereby demands arbitration in New
York City of O.J.’s claims and such counterclaims as
Hornell may choose to interpose.
Hornell reserves its right to assert in such arbitration
any and all defenses it may have to O.J.’s claims,
including but not limited to those relating to the
formation and terms of the Distributor Agreement.
Please have your attorney contact me to discuss the
selection of arbitrators and other procedural and
logistical matters.
(J.A. at 112-13.) Anderson copied Messina on the letter.
Anderson sent a letter to Gibb on August 5, 1998,
indicating that Gibb’s service of process was ineffective, and
reiterating that Plaintiff’s claims were subject to arbitration.

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 13
Anderson copied Donna Messina on the letter. Anderson sent
another letter to Gibb on September 4, 1998, 1) confirming
that Hornell’s time to answer and/or move in response to
Plaintiff’s complaint had been extended to September 18,
1998; 2) advising that Hornell was not waiving any objection
to the service of complaint; 3) Plaintiff’s claims were subject
to arbitration; and 4) Hornell was willing to continue in
dialogue in the hope of reaching an amicable settlement.
(J.A. at 115.)
On October 2, 1998, Anderson sent a letter to the district
court regarding the entry of default, and adding that “Hornell
has advised plaintiff’s attorney on numerous occasions that
there is no basis for this action because the contract that O.J.
seeks to enforce herein requires arbitration of the present
dispute.” (J.A. at 116.) Thereafter, on October 5, 1998,
Anderson sent a letter to Plaintiff enclosing the “Demand for
Arbitration, filed today [October 5, 1998], instituting
proceedings before the American Arbitration Association in
New York.” (J.A. at 118.) The letter was copied to Gibb and
Messina.
DISCUSSION
I. Entry of Default
Plaintiff first argues that the district court erred in setting
aside the clerk’s entry of default and in dismissing Plaintiff’s
motion for a default judgment.
The decision whether to set aside an entry of default under
Federal Rule of Civil Procedure 55(c) is reviewed for an
abuse of discretion. United Coin Meter Co., Inc. v. Seaboard
Coastline R.R., 705 F.2d 839, 844 (6th Cir. 1983) (citing
Keegel v. Key West & Caribbean Trading Co., Inc., 627 F.2d
372, 373 (D.C. Cir. 1980)).
14 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
A. Legal Standards
The process by which a default may be entered by the clerk
of court, and a default judgment entered thereafter by the
district court, has been succinctly stated as follows:
The Federal Rules of Civil Procedure require a
defendant to serve an answer within twenty days of being
served with a summons and complaint. Fed. R. Civ. P.
12(a)(1)(A). Rule 55 permits the clerk to enter a default
when a party fails to defend an action as required. The
court may then enter a default judgment. Fed. R. Civ. P.
55(b)(1). A party against whom a default judgment has
been entered may petition the court to set aside the
default judgment under Rules 55(c) and 60(b) for good
cause, and upon a showing of mistake, or any other just
reason.
Weiss v. St. Paul Fire & Marine Ins. Co., 283 F.3d 790, 794
(6th Cir. 2002).
“[I]t is important to distinguish between an entry of default
and a default judgment.” United States v. Real Property &
All Furnishings Known as Bridwell’s Grocery & Video, 195
F.3d 819, 820 (6th Cir. 1999) (hereinafter “Real Property”).
That is, “‘a stricter standard of review applies for setting aside
a default once it has ripened into a judgment.’” Id. (quoting
Waifersong, Ltd. Inc. v. Classic Music Vending, 976 F.2d
290, 292 (6th Cir. 1992)). Specifically, “‘once the court has
determined damages and a judgment has been entered, the
district court’s discretion to vacate the judgment is
circumscribed by public policy favoring finality of judgments
and termination of litigation’” as reflected in Rule 60(b).
Weiss, 283 F.3d at 794 (quoting Waifersong, 976 F.2d at
292). However, under Federal Rule of Civil Procedure 55(c),
“[f]or good cause shown, the court may set aside an entry of
default . . . .”

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 15
3The three-part inquiry made by a district court in determining good
cause to set aside an entry of default has also been characterized as
whether (1) the plaintiff will be prejud iced; (2) defendant has a
meritorious defense; and (3) defendant’s culpable conduct led to the
default. Berthelsen v. v. Kane, 907 F.2d 61 7, 620 (6th Cir. 1990).
“‘[T]he district court enjoys considerable latitude under the
‘good cause shown’ standard of Rule 55(c)’ to grant a
defendant relief from a default entry.” Real Property, 195
F.3d at 820 (quoting Waifersong, 976 F.2d at 292). The
criteria used to determine whether “good cause” has been
shown for purposes of granting a motion under Rule 55(c) are
whether “‘(1) the default was willful, (2) set-aside would
prejudice plaintiff, and (3) the alleged defense was
meritorious.’”3 United Coin Meter Co., 705 F.2d at 844
(citations omitted) (quoting Keegel, 627 F.2d at 373); see also
Real Property, 195 F.3d at 820. It has been found that a
district court abuses its discretion in denying a motion to set
aside an entry of default when two of the three factors have
been demonstrated by the defendant: the defendant had a
meritorious defense and no prejudice would result to the
plaintiff if the matter were to go forward. See Shepard
Claims Servs., Inc. v. Willaim Darrah & Assoc., 796 F.2d
190, 193-94 (6th Cir. 1986).
Due process requires proper service of process for a court
to have jurisdiction to adjudicate the rights of the parties.
Amen v. City of Dearborn, 532 F.2d 554, 557 (6th Cir. 1976).
Therefore, if service of process was not proper, the court must
set aside an entry of default. Id.; see also Omni Capital Int’l,
Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987)
(“Before a federal court may exercise personal jurisdiction
over a defendant, the procedural requirement of service of
summons must be satisfied.”); Bank One of Cleveland, N.A.
v. Abbe, 916 F.2d 1067 (6th Cir. 1990).
16 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
B. Analysis
Plaintiff attempted to receive a waiver of service from
Defendant pursuant to Federal Rule of Civil Procedure 4(d).
Rule 4(d)(2) provides in part:
An individual, corporation, or association that is
subject to service under subdivision (e), (f), or (h) and
that receives notice of an action in the manner provided
in this paragraph has a duty to avoid unnecessary costs of
serving the summons. To avoid costs, the plaintiff may
notify such a defendant of the commencement of the
action and request that the defendant waive service of a
summons. The notice and request
(A) shall be in writing and shall be addressed
directly to the defendant, if an individual, or else to an
officer or managing or general agent (other agent
authorized by appointment or law to receive service of
process) of a defendant subject to service under
subdivision (h);
Fed. R. Civ. P. 4(d)(2)(A). Rule 4(h) provides in relevant
part:
Unless otherwise provided by federal law, service upon
a domestic or foreign corporation or upon a partnership
or other unincorporated association that is subject to suit
under a common name, and from which a waiver of
service has not been obtained and filed, shall be effected:
(1) in a judicial district of the United States in the
manner prescribed for individuals by subdivision
(e)(1), or by delivering a copy of the summons and
of the complaint to an officer, a managing or general
agent, or to any other agent authorized by
appointment or by law to receive service of process
and, if the agent is one authorized by statute to

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 17
receive service and the statute so requires, by also
mailing a copy to the defendant . . . .
Fed. R. Civ. P. 4(h).
The district court noted that despite Plaintiff’s attempts, it
had not received a waiver of summons pursuant to Rule 4(d),
and that, as a result, Plaintiff was required to comply with
formal service of process. (J.A. at 716.) Specifically, the
court opined:
I think the parties agree that [Plaintiff’s] request for
waiver was in writing. It is unclear whether it was
addressed to the appropriate officer or agent of
[Defendant], and it’s not clear whether the request
informed [Defendant] of the consequences of complying
or not complying with the request under Rule 4(d).
* * *
Because [Defendant] didn’t give its consent to waive
service, [Plaintiff] was then required to follow the formal
procedure for service of process; and it’s undisputed, I
think, that [Plaintiff] did not properly affect [sic] service
on [Defendant] under the rules.
[Plaintiff] sent [Defendant] the Complaint and
Summons by Airborne in care of [Defendant’s] in-house
counsel.
It is not clear to me that under the Federal Rules
overnight mail is not a proper – is a proper method of
serving an officer agent or authorized agent. And even
if were proper service, it is not clear that the receptionist
– it’s clear that the receptionist signed for it. And there
isn’t any evidence, I don’t think, in this record that she is
an authorized agent of [Defendant] to receive that kind of
document.
(J.A. at 716-17.)
18 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
The district court did not err in concluding that service of
process was not effected inasmuch as Plaintiff failed to
receive a waiver of summons from Defendant, and failed to
demonstrate that it served an “authorized agent” by virtue of
an unknown receptionist signing for the overnight package for
purposes of complying with Rule 4(d) or Rule 4(h). See LSJ
Inv. Co., Inc. v. O.L.D., Inc., 167 F.3d 320, 322 (6th Cir.
1999) (noting that where the facts are undisputed,
determination of whether there was adequate service of
process is a question of law); see also Friedman v. Estate of
Presser, 929 F.2d 1151, 1154-156 (6th Cir. 1991) (finding
that service of process under Rule 4(c)(2)(C)(ii), as amended
by current Rule 4(d), requires copy of return of notice and
acknowledgment form).
Therefore, the question becomes whether Plaintiff effected
service of process under the alternative method of Rule 4(h);
that being, the manner prescribed for individuals under Rule
4(e)(1). See Fed. R. Civ. P. 4(h)(1). Federal Rule of Civil
Procedure 4(e)(1) provides:
Unless otherwise provided by federal law, service
upon an individual from whom a waiver has not been
obtained and filed, other than an infant or an incompetent
person, may be effected in any judicial district of the
United States:
(1) pursuant to the law of the state in which the
district court is located, or in which service is
effected, for the service of a summons upon the
defendant in an action brought in the courts of
general jurisdiction of the State; . . . .
The district court found that Plaintiff had complied neither
with Michigan’s procedures for effecting service of process,
nor those of New York. On appeal, Plaintiff provides no
argument as to whether it complied with the laws of either
Michigan or New York for effecting service of process. From
our independent review of those procedures, we conclude that

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 19
the district court did not err in finding that the procedures of
both states were not properly met. See Mich. Ct. R. 2.105(D)
(stating that service of summons and copy of the complaint
must be made upon officer, resident agent, director, trustee,
or person in charge of an office or business establishment of
the corporation, and sending a summons and copy of the
complaint by registered mail to principal office of
corporation); N.Y. CPLR § 311 (McKinney 1999) (“Personal
service upon a corporation or governmental subdivision shall
be made by delivering the summons as follows: . . . to any
other agent authorized by appointment or by law to receive
service.”)
Accordingly, the district court did not err in finding that
Plaintiff had not properly effected service of process on
Defendant, see LSJ Inv. Co., Inc., 167 F.3d at 322, and
therefore did not abuse its discretion in setting aside the entry
of default. See Amen, 532 F.2d at 557. In light of this
holding, we need not weigh the three factors a court considers
when setting aside an entry of default when service of process
has been properly effected, and Plaintiff’s claim regarding the
district court’s denial of its motion for a default judgment is
moot.
II. Stay Pending Arbitration
Plaintiff next argues that the district court erred in granting
Defendant’s motion to stay the proceedings pending
arbitration where Defendant’s actions constituted a waiver of
the arbitration provision.
This Court reviews a district court’s determination as to the
arbitrability of a matter de novo. M&C Corp. v. Erwin Behr
GMBH & Co., 143 F.3d 1033, 1037 (6th Cir. 1998).
A. Legal Standards
“When a suit is brought in federal court on issues that by
written agreement are subject to arbitration, the Federal
20 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
Arbitration Act requires that ‘the court in which the suit is
pending, upon being satisfied that the issue involved in such
suit or proceeding is referable to arbitration . . . shall . . . stay
the trial of the action . . . .’” ATAC Corp. v. Arthur
Treacher’s Inc., 280 F.3d 1091, 1094-095 (6th Cir. 2002)
(quoting 9 U.S.C. § 3).
“[T]here is a strong presumption in favor of arbitration, and
. . . waiver of the right to arbitration is not to be lightly
inferred.” Cotton v. Slone, 4 F.3d 176, 179 (2d Cir.1993); see
also E. L. Kellett, Annotation, Delay in Asserting Contractual
Right to Arbitration as Precluding Enforcement Thereof, 25
A.L.R. 3d 1171 (1969) (providing cases and general
principles regarding when delay in enforcing an arbitration
right constitutes waiver, laches, or default). However, as this
Court recently recognized:
“[a]n agreement to arbitrate may be waived by the
actions of a party which are completely inconsistent with
any reliance thereon.” Germany v. River Terminal Ry.
co., 477 F.2d 546, 547 (6th Cir. 1973) (per curiam).
Although a waiver of the right to arbitration is “not to be
lightly inferred,” MicroStrategy, Inc. v. Lauricia, 268
F.3d 244, 249 (4th Cir. 2001) (internal quotation marks
omitted), a party may waive the right by delaying its
assertion to such an extent that the opposing party incurs
actual prejudice. Doctor’s Assocs., Inc. v. Distajo, 107
F.3d 126, 131 (2d Cir. 1997) (recognizing that a party
waives the right to arbitrate where it delays the
invocation of that right to the extent that the opposing
party incurs “unnecessary delay or expense”) (internal
quotation marks omitted).
Gen. Star Nat’l Ins. Co. v. Administratia Asigurarilor de Stat,
289 F.3d 434, 438 (6th Cir. 2002) (alterations in Gen. Star
Nat’l Ins. Co.).
In General Star National Insurance Co. v. Administratia
Asigurarilor de Stat (“General Star”), the Plaintiff, General

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 21
Star National Insurance Company, an Ohio corporation,
brought suit against Astra, S.A. (“Astra”), a Romanian state-
owned insurance company, asserting claims for breach of
contract and unjust enrichment. 289 F.3d at 436. Astra had
assumed the reinsurance contracts of the defendant,
Administratia Asigurarilor de Stat. Id. Astra did not respond
to the plaintiff’s complaint, and the plaintiff moved for a
default judgment which the district court granted. Id. About
one year later, Astra filed a motion to vacate the default
judgment. Id. Astra claimed that the default judgment was
void because of an alleged lack of subject matter jurisdiction
due, in part, to a clause in the reinsurance contract requiring
the parties to submit any disputes arising under the contract
to mandatory arbitration, thereby making the issue of whether
Astra was a successor in interest to the defendant a matter for
arbitration, not a matter for the district court. Id. at 438.
Astra also contended that the default judgment should be set
aside based on improper service of process. Id. at 437. The
district court denied Astra’s motion to set aside the entry of a
default judgment, and Astra appealed. Id.
On appeal, this Court examined Astra’s claim that the
district court lacked subject matter jurisdiction to hear the
matter due to the contract’s mandatory arbitration provision.
In doing so, the Court also considered whether Astra waived
its right to arbitrate, and opined as follows:
Astra did not assert its purported right to arbitrate until it
filed its motion to vacate the default judgment on
March 16, 2000. General Star gave Astra actual notice
of the lawsuit on October 16, 1998. Thus for 17 months,
Astra remained idle while General Star incurred the costs
associated with this action. Astra, moreover, sought
arbitration only after the district court had entered a
default judgment against it. Under these circumstances,
we believe that Astra has waived its right to arbitrate.
Menorah Ins. Co. v. INX Reinsurance Corp., 72 F.3d
218, 222 (1st Cir. 1995) (concluding that the defendant
waived its right to arbitrate where it “chose not to invoke
22 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
arbitration from July 1992 until October 1993 and [the
plaintiff] bore the costs of proceeding to try to obtain the
sums it thought owed”); Stone v. E.F. Hutton & Co., 898
F.2d 1542, 1543 (11th Cir. 1990) (per curiam) (holding
that the defendant waived its right to arbitrate where it
delayed its assertion of the right for 20 months).
Gen. Star Nat’l Ins. Co., 289 F.3d at 438 (alterations and
emphasis in Gen. Star Nat’l Ins. Co.).
Thus, while there is a strong presumption in favor of
enforcing arbitration rights, both this Court and our sister
circuits have been willing to find under appropriate
circumstances that a party has waived its right to arbitrate by
virtue of its actions in delaying the right to the point of
prejudicing the other party. See id.
B. Analysis
Like Astra in General Star, Defendant in the matter at hand
waived its right to arbitrate due to its actions of engaging in
negotiations with Plaintiff for approximately fifteen months
(April of 1997 through August of 1998), while at the same
time denying the existence of the Agreement and, therefore,
the arbitration provision, to the prejudice of Plaintiff. As the
record indicates, by way of letter dated April 24, 1997 to
Shanahan at AriZona, Plaintiff’s former counsel, Eric Smith,
informed Shanahan that “[t]he relationship between the
parties is subject to an executed Agreement dated September
16, 1995.” (J.A. at 189.) The record further indicates that
this letter also informed Vultaggio at Hornell and attorney
Lawrence I. Fox at MW&E of the Agreement in that Smith’s
letter was copied to these individuals and received by them.
In addition, the record indicates that attorney Lisa S. Derman
at MW&E was also aware of the Agreement’s existence by
way of Smith’s April 24, 1997 letter, in that Derman sent a
letter to Smith on April 29, 1997, apprising Smith that his
letter had been forwarded to her for a “response.” (J.A. at
196.)

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 23
The record goes on to show that, apparently by way of
permission from Derman, Smith and Shanahan engaged in
negotiations, Shanahan requested a copy of the Agreement
from Smith in a telephone conversation that occurred on
May 5, 1997, and Smith sent Shanahan a copy of the
agreement on or about May 9, 1997. It also appears from the
record that from May of 1997 through July of 1997,
negotiations continued between Smith and Shanahan as to the
amount of monies owed to Plaintiff apparently under the
terms of the Agreement.
The record indicates that the matter was not resolved,
Plaintiff obtained new counsel, Gibb, and on December 12,
1997, Gibb sent a letter to Fox at MW&E regarding
Defendant’s breach of the Agreement and requested that Fox
contact Gibb. Having received no response from Fox, Gibb
contacted Vultaggio at Hornell by way of letter dated
January 9, 1998, regarding Defendant’s breach of the
Agreement. The record next indicates that on January 15,
1998, Gibb sent a letter to attorney Calandra at MW&E and
stated that “[a]ttached is a copy of the Sales Agreement
assigning Hornell’s Distributor Agreement with [Plaintiff].”
(J.A. at 160.) The letter further provides a summary of
damages that Plaintiff believes it is due under the terms of the
Agreement. Despite Gibb’s repeated letters to Calandra
during the period of January of 1998 through March of 1998,
wherein Gibb in requested that Calandra respond and advise
Gibb how Defendant wished to proceed, particularly with
respect to the case going to court, Calandra failed to reply.
It was not until April 8, 1998 that Messina, corporate
counsel for Hornell, sent a letter to Gibb again denying the
existence of the Agreement, and requesting that a copy of the
Agreement be sent to her. The record indicates that Gibb
complied with the request on that same day, and letters were
thereafter exchanged between Messina and Gibb clearly
indicating that the two were in the midst of settlement
negotiations. For example, in a May 26, 1998 letter to
Messina, Gibb stated, “[w]hen we last spoke I understood that
24 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
your client, Hornell Brewing, was going to make a
preliminary offer of settlement by May 22, 1998. As of the
date of this correspondence, I have not received anything to
present to my clients. Is the offer forthcoming?” (J.A. at
171.) No settlement was reached, and Gibb indicated in a
June 22, 1998 letter to Messina that it appeared that federal
court was his “client’s only source of relief.” (J.A. at 172.)
Finally, after months of communications and negotiations
with at least six representatives or attorneys for Defendant,
Plaintiff received a letter from yet another attorney at
MW&E, James R. Anderson, indicating that Plaintiff’s claims
as made in its complaint were subject to the mandatory
arbitration provision in the Agreement, and that Defendant
was “demand[ing] arbitration in New York City of O.J.’s
claims and such counterclaims as [Defendant] may choose to
interpose.” (J.A. at 112-13.) Anderson sent a similar letter to
Gibb on August 5, 1998 reiterating that Plaintiff’s claims
were subject to arbitration. It was not until October 5, 1998,
after the entry of default had been made by the clerk of court,
that Defendant made a demand for arbitration in New York.
Under these facts, it is clear that Defendant was aware of
the Agreement’s existence, and in fact had possession of the
Agreement by way of Plaintiff’s counsel in May of 1997,
January of 1998, and April of 1998, and therefore was also
aware of the arbitration provision therein. However,
Defendant did not maintain that Plaintiff’s claims were
subject to arbitration until August of 1998, and did not
demand arbitration until October of 1998, after the entry of
default was made. Thus, as in General Star, Defendant slept
on its rights for approximately fifteen months (April of 1997
through August of 1998) while Plaintiff incurred costs
associated with the matter and was prejudiced as a result.
Accordingly, as in General Star, we find that Defendant
waived its right to arbitrate the matter. See 289 F.3d at 438.
While these actions by themselves appear to be sufficient
to conclude that Defendant waived its right to arbitrate under

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 25
General Star, the fact that the arbitration provision contains
a 180-day limitation provides a further basis to conclude that
Defendant waived its right to arbitrate. That is, for about one
year Defendant appeared to engage in negotiations with
Plaintiff as if the claims were, as Plaintiff has consistently
maintained, not subject to arbitration; then, after suit was filed
Defendant prolonged the matter for two more months before
claiming that the matter was governed by the Agreement’s
arbitration provision. However, at this point, Defendant made
the claim that the matter was one for arbitration under the
Agreement, secure in the knowledge that the 180-day
limitation had long expired inasmuch as the alleged breach of
which Plaintiff complained occurred in April of 1997. In fact,
when Defendant submitted the matter to arbitration, it did so
making a preliminary motion to dismiss Plaintiff’s claims as
time-barred. Under these facts, Plaintiff suffered “actual
prejudice” by Defendant’s “delaying its assertion” regarding
arbitrability, see General Star, 289 F.3d at 438, and
Defendant should therefore be found to have waived its
arbitration rights. Id.
In its brief on appeal, Defendant argues that once Plaintiff
“formally asserted its claims,” Defendant “immediately
demanded arbitration, and consistently asserted that
[Plaintiff’s] claims must be arbitrated.” Defendant’s Br. at
25. Defendant further argues that “although it had no
obligation to do so, [Defendant] commenced the arbitration
that [Plaintiff] could have initiated—and in fact was required
to initiate under the Agreement within 180 days of the
occurrence of the events giving rise to its claims.”
Defendant’s Br. at 25. We are not persuaded by Defendant’s
arguments. The record indicates that Defendant did not
“immediately demand arbitration” after Plaintiff filed its
complaint in May of 1998, but waited for sixty days before
doing so via Defendant’s August of 1998 letter to Plaintiff,
and waited approximately five months before formally
demanding arbitration in New York. Again, Defendant did so
after a year or more of claiming that it was unaware of the
Agreement’s existence—despite Plaintiff’s assertions to the
26 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
4During the district court’s ruling on the various motions, the court
“noted and preserved for the record” that Mr. Ruemenapp, counsel for
Defendant, stipulated on the record that he “accept[ed] service on behalf
of all the claim s involved[.]” (J.A. at 7 27.) Specifically, the district court
inquired of defense counsel, “That is your stipulation, and you accept
service on behalf of all the claims invo lved?” (J.A. at 727.) Defense
counsel replied, “That’s correct.” (J.A. at 727.) The district court
concluded, “Okay. So noted and p reserved for the record.” (J.A. at 727 .)
Thereafter, in its April 2, 1999, order which, among other things, set aside
contrary and despite Plaintiff providing Defendant with a
copy of the Agreement when requested— and after engaging
in talks with Plaintiff, thus providing a basis for Plaintiff to
believe that Defendant agreed that the matters were not the
type for which arbitration applied.
In short, for more than a year Defendant acted “completely
inconsistent with any reliance” upon the arbitration provision,
and “delay[ed] its assertion to such an extent that the
opposing party [Plaintiff] incur[red] actual prejudice”
inasmuch as the 180-day period for resolving matters
pursuant to the arbitration provision had long passed.
General Star, 289 F.3d at 438. The district court found at
oral argument that Defendant had not waived its right to
arbitrate, noting that Defendant had made Plaintiff aware by
way of the August of 1998 letter that the matter was to be
arbitrated pursuant to the Agreement. The district court erred
in so finding inasmuch as Defendant had denied the
Agreement’s existence for more than a year and knew by the
time that it demanded arbitration that the 180-day limitation
had expired.
Because Defendant waived its right to arbitrate, all of
Plaintiff’s claims should have been decided on the merits
before the district court, thus making it unnecessary for us to
address Plaintiff’s claim that the district court erred in finding
that all issues raised in its complaint were subject to
arbitration, or to address any of Plaintiff’s other claims raised
on appeal.4

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 27
the entry of d efault and stayed the matter pending arbitration, the district
court ordered that “Plaintiff shall serve [sic] have fourteen (14) days from
the date of this Order to serve Defendant, and John Ruemenapp stated on
the record that he is authorized to acc ept service of the Summons and
Complaint in this case on behalf of Defendant.” (J.A. at 203.) Inasmuch
as there is no thing in the record to indicate that service of process was not
effected in compliance with this order, it would appear that Defendant has
been served and that the matter may proceed before the district court on
the merits.
CONCLUSION
For the above-stated reasons, the district court’s order
confirming the arbitration award is VACATED, and the case
is REMANDED to the district court with instructions that the
case should proceed on the merits of Plaintiff’s claims.
28 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
1The court in General Star relied upon two cases in which the
defendants who waited more than a year following the filing of complaint
to assert their rights to arbitrate were fo und to have w aived any right to
arbitrate the claim. See Gen. Star, 289 F.3d at 438 (citing Menorah Ins.
_____________________________________________
CONCURRING IN PART, DISSENTING IN PART
_____________________________________________
ALICE M. BATCHELDER, Circuit Judge, concurring in
part and dissenting in part. I concur in the majority opinion’s
holding that the district court did not err in finding that the
plaintiff failed properly to effectuate service of process on the
defendant, and therefore, the court did not abuse its discretion
in setting aside the entry of default. Because I believe that the
majority opinion’s reliance on Gen. Star Nat’l Ins. Co. v.
Administratia Asigurarilor de Stat, 289 F.3d 434 (6th Cir.
2002), is misplaced, I respectfully dissent from the finding
that the defendant waived its right to arbitrate. I believe,
contrary to the majority’s conclusion, that Hornell’s denial of
the existence of the Distributor Agreement, although arguably
suspicious, was not contrary to its rights under that agreement
to arbitrate any properly filed complaint brought by the
plaintiff pursuant to that agreement.
General Star involved a situation in which, following a
lawsuit properly filed by the plaintiff, the defendant waited
more than one year from the entry of a default judgment, and
almost seventeen months following the commencement of the
suit, before finally appearing before the court and moving to
vacate the judgment on the basis of a mandatory arbitration
clause contained within the agreement between the parties.
Gen. Star, 289 F.3d at 438 (emphasizing the amount of time
between the filing of the complaint and the demand for
arbitration, and finding that “a party may waive the right by
delaying its assertion to such an extent that the opposing party
incurs actual prejudice.”)1 In General Star, the defendant’s

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 29
Co. v. INX Reinsurance Corp., 72 F.3d 218 (1st Cir. 1995), and Stone v.
E.F. Hutton & Co., 898 F.2d 15 42 (11th. Cir. 1990)).
actions were inconsistent with the right to arbitrate because
the defendant allowed a complaint to sit for a year and a half
while the plaintiff incurred the costs of maintaining the
litigation. Hornell’s actions in the current case—denying the
existence of the agreement prior to O.J. Distributing’s filing
the complaint and demanding arbitration relatively quickly
after the filing of the complaint—are clearly distinguishable
from the actions of the defendant in General Star.
Furthermore, the only prejudice suffered by the plaintiff arose
from its failure to timely file the complaint and not from any
delay by the defendant in seeking arbitration once the
complaint was filed.
The terms of the Distributor Agreement required the
plaintiff to “formally” assert its claim “no later than 180 days
following the event or circumstances giving rise to the
underlying claim . . . .” Although the defendant’s denial of
the existence of the agreement delayed the plaintiff’s attempts
to negotiate a settlement of the underlying claim, that denial
did not prevent O.J. Distributing from “formally” asserting its
claim with a properly filed complaint. The plaintiff has never
asserted that it was unaware of either the existence of the
Distributor Agreement or the requirement that it formally
bring its claim within 180 days of the act giving rise to the
complaint. None of the actions of Hornell cited by the
majority opinion prevented O.J. Distributing from timely
filing the complaint. A party’s denial of the existence of an
agreement giving rise to a cause of action does not foreclose
a complaining party’s ability to formally bring its charge
within the time period specified in the agreement. The impact
of Hornell’s denial of the contract is completely separate from
the question of whether the plaintiff suffered prejudice from
the timing of the demand for arbitration once the complaint
was filed. No action or dely by Hornell caused the plaintiff to
file its complaint after the 180-day deadline had already
30 O.J. Distributing v. Hornell Brewing Co. No. 01-1583
2The possibility that Hornell acted in bad faith when it denied the
existence of the contract is not relevant to the question of whether or not
it acted inconsistently with its right to arbitrate any formally filed claim.
The only time pertinent to the issue raised by General Star is the time
after O.J. Distributing filed the comp laint. Acc ordingly, I disagree with
the majority opinion’s assertion that the defendant “slept on its rights for
approximately fifteen mo nths (April of 1997 through August of 1998)
while Plaintiff incurred costs associated with the matter and was
prejudiced as a result.” Supra majority at 24. Specifically, we hold above
that the district court did not err in finding that the p laintiff failed to
prope rly effectuate service of process on the defendant. Supra majority
at 18. Therefore, the defendant demanded arb itration before the court
gained personal jurisdiction over Ho rnell, e.g., Omni Capital Int’l v.
Rudolf Wolff & Co., Ltd ., 484 U.S. 97, 104 (1987), which is completely
contrary to the facts of General Star. Moreover, the only costs relevant
to the analysis under Gen eral Star are the costs associated “with the
action,” Gen. Star, 289 F.3d at 438, which is usually considered an actual
judicial proceeding, not the communications between the parties prior to
the lawsuit. See BLACK’S LA W DIC T IO N A R Y 28-29 (Deluxe 7th ed. 1999).
expired.2 Unlike the facts in General Star, there was no one-
year or greater delay by the defendant in demanding
arbitration that prejudiced that plaintiff in the present case.
General Star does not stand for the proposition that a party
to an agreement containing a mandatory arbitration clause
must demand arbitration once it is notified that another party
might bring suit to enforce rights allegedly violated under the
agreement. This is not a case where the plaintiff filed suit
within the deadline and the defendant “participated in the
litigation” beyond the specified deadline and then moved to
dismiss based on a mandatory arbitration clause, or, as in
General Star, failed to appear for over a year, forcing the
plaintiff to incur costs and delay while attempting to vindicate
their rights in court. The obligation on the part of the
defendant to demand arbitration arises once the defendant is
faced with a properly filed claim. Only where a plaintiff
properly files a complaint against the defendant and the
defendant subsequently extends the litigation or delays
asserting its arbitration rights does the question of prejudice
to the plaintiff raise the possibility that the defendant waived

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No. 01-1583 O.J. Distributing v. Hornell Brewing Co. 31
the right to arbitrate—this case presents neither of these
scenarios. Accordingly, on the issue of the waiver, I
respectfully dissent. I would therefore affirm the district
court’s decision in its entirety.

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