D'Arrigo Bros. Co., of California v. Doug Mellon Farms II, Inc.

• Court: District Court, N.D. California
• Decided: December 18, 2020
• Docket: 5:20-cv-05463
• Status: Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9

10 D'ARRIGO BROS. CO., OF CALIFORNIA, Case No.20-cv-05463-NC 11 Plaintiff, ORDER GRANTING MOTION 12 TO COMPEL ARBITRATION v. 13 Re: ECF 22 DOUG MELLON FARMS II, INC., 14 Defendant. 15 16 17 On November 25, 2020, Defendant Doug Mellon Farms II, Inc. filed a Motion to 18 Compel Arbitration. Plaintiff D’Arrigo Bros. Co. of California responded to the motion 19 arguing that Mellon Farms waived its right to compel arbitration by failing to timely assert 20 it. The Court finds that Mellon Farms did not waive its right to compel arbitration. 21 Therefore, the Court GRANTS Mellon Farms’ Motion. 22 I. BACKGROUND 23 Beginning in 2019, D’Arrigo was involved in several New Jersey and Pennsylvania 24 cases as a third-party defendant. ECF 19 at 2. The cases concern allegedly contaminated 25 romaine purchased by restaurants. Id. In defending the cases, D’Arrigo incurred fees and 26 costs. Id. at 4. On August 6, 2020, after it traced the source of the romaine at issue to 27 Mellon Farms, D’Arrigo brought this suit against Mellon Farms for indemnity. ECF 19 at 1 to file its answer citing the pending duplicate New Jersey suits. ECF 9 at 3. The Court 2 granted the request. ECF 15. On October 13, 2020, Mellon Farms moved for a more 3 definite statement. ECF 16. This motion became moot after D’Arrigo filed its First 4 Amended Complaint on October 27, 2020. ECF 19. On November 25, 2020, Mellon 5 Farms filed the Motion to Compel Arbitration that is the subject of this order. ECF 22. 6 All parties consented to the jurisdiction of a magistrate judge. ECF 6, 11. 7 II. LEGAL STANDARD 8 Under the Federal Arbitration Act, a district court must compel arbitration if (1) a 9 valid agreement to arbitrate exists, and (2) the dispute falls within the scope of the 10 agreement. Geier v. M-Qube Inc., 824 F.3d 797, 799 (9th Cir. 2016) (citing Chiron Corp. 11 v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). A party can challenge 12 an arbitration clause as invalid by showing that the contract containing it was revoked. 13 9 U.S.C. § 2. And, even if a valid arbitration clause exists, a party may have waived its 14 right to arbitration if the opposing party can show that: (1) the party knew of an existing 15 right to compel arbitration, (2) the party acted in a manner inconsistent with that existing 16 right, and (3) enforcing arbitration would prejudice the opposing party as a result of the 17 other party’s inconsistent acts. See Letizia v. Prudential Bache Sec., Inc., 802 F.2d 1185, 18 1187 (9th Cir. 1986). 19 III. DISCUSSION 20 A. D’Arrigo and Mellon Farms’ Arbitration Clause 21 The document setting out the parties’ agreement is the Doug Mellon Farms II, Inc. 22 Growing Agreement and Lease #1. ECF 19 at 4. Both parties acknowledge that the 23 Agreement contains an Arbitration Clause that states: In the event of any disputes under this agreement that is not 24 resolvable by both parties themselves, then said dispute will be arbitrated. Each party shall choose an arbiter and the two 25 arbiters shall choose a third arbiter. A decision of a majority of the arbiters shall be binding upon the parties. The losing party 26 shall pay the cost of arbitration. 27 ECF 19, Ex. A, ¶ 10; see ECF 22 at 6; see also ECF 25 at 3. This Clause sets forth a valid B. Applicability of the Clause to this Dispute 1 It is well established that federal policy favors arbitration. See AT&T Mobility LLC 2 v. Concepcion, 563 U.S. 333 (2011). The Clause at issue here states that it applies to “any 3 disputes under this agreement.” ECF 19, Ex. A, ¶ 10. Because the claim for equitable 4 indemnity is based on actions taken as a result of obligations imposed by the Agreement, 5 the claims in this case are subject to the Clause. See ECF 19 at 4; see also Sanders v. Cty. 6 of Santa Cruz, No. 5:13-cv-03205 EJD, 2014 U.S. Dist. LEXIS 132833, at *16 (N.D. Cal. 7 Sep. 19, 2014). Because both requirements of the FAA test are met, the Court must 8 compel arbitration unless the Clause is revoked or the parties’ right to enforce it is waived. 9 C. Revocation of the Clause 10 In its Motion, Mellon Farms asserts that the validity of a valid arbitration clause can 11 only be challenged through revocation of the contract. See ECF 22 at 8. Mellon Farms 12 then demonstrates why the contract in this case was not revoked. Id. In its Opposition, 13 D’Arrigo does not address Mellon Farms’ revocation argument. See ECF 25. Thus, 14 D’Arrigo concedes that the contract was not revoked. See Civ. L. R. 7-3(a). 15 D. Waiver of Right to Compel Arbitration 16 D’Arrigo fails to make the necessary showing that Mellon Farms waived its right to 17 compel arbitration. See Letizia, 802 F.2d at 1187. First, D’Arrigo did not show that 18 Mellon Farms knew of an existing right to compel arbitration. Mellon Farms’ Motion for a 19 More Definite Statement evidences the lack of clarity in D’Arrigo’s initial filing. See ECF 20 16. D’Arrigo’s claims were not clear until it filed its FAC, and less than one month later 21 Mellon Farms moved to arbitrate. ECF 27 at 4; see also ECF 22. After clarifying the 22 claims against it, Mellon Farms timely moved to compel arbitration. 23 Second, D’Arrigo asserts that Mellon Farms acted inconsistently with its right to 24 compel arbitration by filing motions and engaging in meet and confer efforts. These facts 25 are insufficient to show that Mellon Farms acted inconsistently. Mellon Farms filed two 26 motions with the court before this one–a Motion for an Extension of Time to Answer the 27 Complaint and a Motion for a More Definite Statement. ECF 9; ECF 16. As Mellon 1 || Farms describes in its Reply, its actions were not “inconsistent” with arbitration efforts 2 || because they were aimed at avoiding duplicate proceedings and clarifying the claims in the 3 || instant case to determine if the arbitration clause applied. See ECF 27 at 4-5; but cf. Van 4 || Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754, 759 (finding that the defendant 5 || waived its right to arbitrate by choosing to “litigate actively the entire matter—including 6 || pleadings, motions, and approving a pre-trial conference order”). Mellon Farms was 7 || clarifying the application of the arbitration clause, not actively litigating the case, so its 8 || actions were not inconsistent. 9 Finally, D’ Arrigo does not make an adequate showing of prejudice. D’ Arrigo states 10 || that Mellon Farms’ actions “resulted in a delay” and caused D’ Arrigo to “continu[e] to be 11 |} harmed by having to defend actions arising from Mellon Farms’ growing operations.” 12 || ECF 25 at 2. This statement does not meet the burden established by the Ninth Circuit, 13 || requiring that a plaintiff “must show more than self-inflicted wounds that they incurred as C 14 || adirect result of suing in federal court” to prove prejudice. Martin v. Yasuda, 829 F.3d 3 15 || 1118, 1126 (9th Cir. 2016). Consequently, D’ Arrigo fails to make the requisite showing 16 |} that Mellon Farms waived its right to compel arbitration. 8 17 || Iv. CONCLUSION 5 18 The Court finds that, following the requirements of the Federal Arbitration Act, it 19 || must compel arbitration. The agreement between Mellon Farms and D’ Arrigo contains an 20 || arbitration clause and the causes of action in this suit fall within the scope of that 21 || agreement. Additionally, the Clause was not invalidated through revocation or waiver. 22 || Accordingly, the Court: (1) GRANTS Mellon Farms’ Motion to Compel Arbitration, (2) 23 || ORDERS the parties to submit to binding arbitration in accordance with the Arbitration 24 Clause in the Agreement, and (3) DISMISSES the case. 25 IT IS SO ORDERED. 26 27 Dated: December 18, 2020 h-_———— _ NATHANAEL M. COUSINS 28 United States Magistrate Judge