Jacobson Warehouse Co. v. Lindt & Sprungli (N. Am.) Inc.

• Decision Date: 01 November 2021
• Docket Number: 2:19-cv-01889-TLN-AC
• Court: U.S. District Court — Eastern District of California
• Parties: JACOBSON WAREHOUSE COMPANY, INC. d/b/a XPO LOGISTICS SUPPLY CHAIN, Plaintiff, v. LINDT & SPRUNGLI (NORTH AMERICA) INC., Defendant,

JACOBSON WAREHOUSE COMPANY, INC. d/b/a XPO LOGISTICS SUPPLY CHAIN, Plaintiff,
v.
LINDT & SPRUNGLI (NORTH AMERICA) INC., Defendant,

No. 2:19-cv-01889-TLN-AC

United States District Court, E.D. California

November 1, 2021

ORDER

TROY L. NUNLEY, UNITED STATES DISTRICT JUDGE.

This matter is before the Court on Defendant Lindt & Sprungli (North America) Inc.'s (“Defendant”) Motion to Compel Arbitration and Dismiss. (ECF No. 18.) Plaintiff Jacobson Warehouse Company, Inc. d/b/a XPO Logistics Supply Chain (“Plaintiff”) filed an opposition. (ECF No. 28.) Defendant filed a reply. (ECF No. 35.) For the reasons set forth below, the Court GRANTS Defendant's motion. The Court also DENIES Plaintiff's Application for Right to Attach Order and Motion for Issuance of Writ of Attachment as moot. (ECF No. 14.)

1

I. Factual and Procedural Background

This case arises out of a dispute between the parties concerning the operation of a warehouse in Tracy, California in which Plaintiff alleges Defendant failed to compensate Plaintiff for services rendered in 2018 and 2019. (ECF No. 13.) Before the breakdown in the parties' business relationship, they and their predecessors and subsidiaries had worked together for nearly twelve years. (ECF No. 32 at 7; ECF No. 28 at 9.) During that period, the parties operated pursuant to a document titled “Services Agreement” signed by Plaintiff's predecessor and Defendant's subsidiary in November 2007, later amended to include Plaintiff and Defendant, and a letter of intent (“LOI”), later amended. (See generally ECF No. 32 at 7-10.) The arbitration provision in the Services Agreement requires the parties submit “any disagreement concerning the existence, interpretation or application” of the Services Agreement to JAMS in San Francisco for binding arbitration. (Id. at 9.)^[1]

Despite this broad arbitration provision, Plaintiff filed a lawsuit in this Court on September 18, 2019, alleging breach of contract and open book account claims against Defendant. (ECF No. 1.) Shortly thereafter, Plaintiff amended its complaint, removing any mention of a prior written agreement between the parties and dropping its breach of contract claim. (ECF No. 13.) Defendant filed the instant motion to compel arbitration on October 24, 2019. (ECF No. 18.)^[2]

II. Standard of Law

The parties agree the Federal Arbitration Act (“FAA”) applies. (See ECF Nos. 32, 28, 35); 9 U.S.C. §§ 1-14. Generally, in deciding whether a dispute is subject to an arbitration agreement covered by the FAA, the Court must determine: “(1) whether a valid agreement to arbitrate exists[;] and, if it does, (2) whether the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). “To evaluate

2

the validity of an arbitration agreement, federal courts should apply ordinary state-law principles that govern the formation of contracts.” Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003) (internal quotation marks and citation omitted). The party seeking to compel arbitration has the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014). Such a showing may be made by extrinsic evidence to the complaint. See Sanford v. MemberWorks, Inc., 483 F.3d 956, 963 n.9 (9th Cir. 2007).

With respect to the first consideration under the FAA, district courts in the Ninth Circuit have reviewed conflicting evidence as to whether a valid agreement to arbitrate exists under the Federal Rule of Civil Procedure 56 standard applicable to motions for summary judgment. See, e.g., Coup v. Scottsdale Plaza Resort, LLC, 823 F.Supp.2d 931, 939 (D. Ariz. 2011); Gonzalez v. Citigroup, Inc., No. CIV. S-11-0795 LKK/GGH, 2011 WL 5884250, at *2 (E.D. Cal. 2011); Concat LP v. Unilever, PLC, 350 F.Supp.2d 796, 804 (N.D. Cal. 2004). Although the Ninth Circuit has not expressly adopted the standard, it has suggested such a standard applies. See Sanford, 483 F.3d at 963 n.9; Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d 1136, 1141 (9th Cir. 1991) (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir. 1980)); but cf. Hamilton v. Shearson-Lehman Am. Exp., Inc., 813 F.2d 1532, 1535 (9th Cir. 1987) (holding a motion to compel arbitration is not the equivalent of a motion for summary judgment for the purposes of disallowing a plaintiff to voluntarily dismiss her action). As the parties provide no alternative evidentiary standard, the Court will determine whether there is a genuine dispute as to the existence of a valid arbitration provision.

Under summary judgment practice, the Court examines the parties' evidence to determine whether the opposing party has established a genuine issue as to any material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968). The opposing party must tender evidence of specific facts in the form of affidavits, and/or admissible discovery material in support of its contention a dispute exists. Fed.R.Civ.P. 56(c). The evidence of the opposing party is to be believed and all reasonable inferences that may be drawn from the facts pleaded

3

before the court must be drawn in favor of the opposing party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F.Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898 (9th Cir. 1987).

With respect to the second consideration under the FAA, the party resisting arbitration bears the burden of proving the dispute does not fall within the scope of the valid arbitration agreement. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000). The FAA requires “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). A motion to compel arbitration should be granted unless “it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986). If a court determines that an arbitration clause is enforceable and the plaintiff's claims are subject to arbitration, it has the discretion to either stay the case pending arbitration or dismiss the complaint. Luna v. Kemira Specialty, Inc., 575 F.Supp.2d 1166, 1176 (C.D. Cal. 2008).

III. Analysis

The parties dispute both prongs of the test. The parties primarily disagree whether the arbitration provision in the Services Agreement was binding at the time of the dispute. (ECF No. 32 at 12-13, 15-19; ECF No. 28 at 13-23.) In addition, the parties dispute whether the arbitration provision is “broad[]” and encompasses Plaintiff's claims (ECF No. 32 at 13), or “narrow” such that Plaintiff's claims fall outside its scope (ECF No. 28 at 24).

The Court will first address Plaintiff's evidentiary objections to Defendant's evidence (see ECF Nos. 28-2, 42), and then address the parties' core arguments regarding the existence and scope of the arbitration agreement.

A. Evidentiary Objections

Plaintiff objects to nearly every piece of evidence submitted by Defendant in support of its motion. (ECF Nos. 28-2, 42.) The Court will address only those objections to evidence upon

4

which the Court relies.

i. Services Agreement

Plaintiff objects to the Services Agreement attached as Exhibit A to Christopher Wood's first declaration (ECF No. 26 at 1-17) on lack of foundation and best evidence rule grounds. (ECF No. 28-2 at 2.) In response, Defendant argues Mr. Wood's first declaration includes adequate foundation of personal knowledge and the best evidence rule objection is frivolous. (ECF No. 39 at 2-3.) Plaintiff fails to provide any explanation as to why Mr. Wood's testimony that the attached Services Agreement is a true and correct copy of the Services Agreement between the parties does not fall into one of the express examples provided by the Federal Rules of Evidence that satisfy the rule. See Fed. R. Evid. 901(b)(1) (providing testimony of a witness with knowledge “that an item is what it is claimed to be” satisfies the requirement of authenticating or identifying evidence). Similarly, Plaintiff fails to explain why the copy of the Services Agreement does not fall into the exception to the best evidence rule permitting admission of copies absent a genuine question of the original's authenticity. See Fed. R. Evid. 1003. Plaintiff does not attempt to raise a genuine question as to the authenticity of the Services Agreement. Therefore, the Court overrules Plaintiff's objections to the admissibility of the Services Agreement.

ii. Letter of Intent & Amendment

Plaintiff objects to the LOI and its amendment attached as Exhibits C and D to Mr. Wood's first declaration (ECF No. 26 at 22-31) on lack of foundation grounds. (ECF No. 28-2 at 4-5.) In response, Defendant argues Mr. Wood has personal knowledge of and can provide a foundation for the LOI and amendment because he was personally involved with them as part of his job. (ECF No. 39 at 6.) As with Plaintiff's objection to the Services Agreement on the same grounds, its objection here is meritless. Mr. Wood states he has been personally involved in all contract negotiations concerning the management of the distribution center. (ECF No. 20 ¶ 2.) Therefore, his statement that the attached LOI and amendment are what Defendant claims them to be is made by a witness with knowledge. See Fed. R. Evid. 901(b)(1). The Court accordingly overrules Plaintiff's objection...