P'ship v. Cargill Inc., 11–2289.

CourtUnited States District Courts. 6th Circuit. Western District of Tennessee
Writing for the CourtSAMUEL H. MAYS
Citation963 F.Supp.2d 798
PartiesL & R FARM PARTNERSHIP and James Steven Lewis, Plaintiffs, v. CARGILL INCORPORATED, a Minnesota Corporation, Defendant.
Docket NumberNo. 11–2289.,11–2289.
Decision Date31 July 2013

963 F.Supp.2d 798

L & R FARM PARTNERSHIP and James Steven Lewis, Plaintiffs,
CARGILL INCORPORATED, a Minnesota Corporation, Defendant.

No. 11–2289.

United States District Court,
W.D. Tennessee,
Western Division.

July 31, 2013.

[963 F.Supp.2d 801]

David Carroll Barrett, Jr., Barrett Easterday Cunningham & Eselgroth, LLP, Dublin, OH, William F. Burns, Frank L. Watson, III, Watson Burns, LLC, Memphis, TN, for Plaintiffs.

Jacob D. Bylund, Faegre Baker Daniels, LLP, Des Moines, IA, Eric E. Hudson, Butler Snow O'Mara Stevens & Canada, PLLC, Memphis, TN, for Defendant.


SAMUEL H. MAYS, JR., District Judge.

Plaintiffs L & R Farms Partnership and James Steven Lewis (“Plaintiffs”) bring this action against Defendant Cargill Incorporated (“Cargill”) for fraud, violation of the Tennessee Consumer Protection Act, Tenn.Code Ann. § 47–18–104 (“TCPA”), and a declaration that the parties' contracts are void. (Compl., ECF No. 1.) On May 23, 2011, Cargill filed a Motion to Stay and Compel Arbitration. (Mot. to Stay and Compel Arb., ECF No. 7.) Plaintiffs did not respond to the Motion, but filed an Amended Complaint in which they contend that “the arbitration clause located in the [contracts] is unenforceable and of no effect.” (Am. Compl., ECF No. 14.) The Amended Complaint also alleges violations of the Commodities Exchange Act (“CEA”), 7 U.S.C. § 25, and Commodities Futures Trading Commission Regulations. ( See Am. Compl.) On August 15, 2011, Cargill filed a Renewed Motion to Stay and Compel Arbitration. 1 (Renewed Mot., ECF No. 15.)

On October 12, 2011, the Court entered an Order requiring Plaintiffs to show cause why Cargill's Renewed Motion should not be granted. (Order to Show Cause, ECF No. 18.) On October 13, 2011, Plaintiffs filed a response stating that the Court had set October 18, 2011 as the deadline for their response to Cargill's Renewed Motion, that they had not therefore violated any deadlines, and that Cargill's Renewed Motion should not be granted without consideration of their currently unfiled but still timely response. (Show Cause Resp., ECF No. 19.)

On November 16, 2011, Plaintiffs filed a Motion to Compel Discovery Responses. (ECF No. 22.) Cargill filed a response on December 2, 2011. (ECF No. 24.) The Court referred Plaintiffs' Motion to Magistrate Diane K. Vescovo, who denied it. (Order of Reference, ECF No. 23; Vescovo Order, ECF No. 25.) Plaintiffs appealed Magistrate Judge Vescovo's Order on January 13, 2012. (ECF No. 27.) Cargill filed a response on January 24, 2012. (ECF No. 28.) The Court affirmed Magistrate Judge Vescovo's Order and denied Plaintiffs' Motion to Compel on March 5, 2012. (March 5 Order, ECF No. 29.)

[963 F.Supp.2d 802]

In a telephone conference on March 8, 2012, the Court indicated that Cargill's Renewed Motion to Stay and to Compel Arbitration was still pending. (ECF No. 32.) Plaintiffs filed a Response in opposition to Cargill's Renewed Motion to Stay and Compel Arbitration on March 20, 2012. (Resp., ECF No. 33.) Cargill filed a Reply Memorandum in further support of its Renewed Motion on March 22, 2012. (Reply, ECF No. 34.) Also before the Court is Cargill's March 19, 2013 Motion for Status Conference, stating that there has been no further activity in the case subsequent to the filing of its reply. (ECF No. 36.)

Cargill's Renewed Motion to Stay and to Compel Arbitration is ripe. For the following reasons, Cargill's Motion is GRANTED.

I. Background

The factual background of this case is recited in the Court's March 5 Order.

II. Jurisdiction

The Court has subject matter jurisdiction under 28 U.S.C. § 1331 because Plaintiffs allege violations of the CEA. To the extent that any state law claims are at issue, the Court has supplemental jurisdiction over Plaintiffs' related state law claims. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 727, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).

III. Standard of Review

Under the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (“FAA”), “a district court must make a number of threshold determinations before compelling arbitration.” Fazio v. Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir.2003). The court has four tasks:

[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.

Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir.2000).

Generally, proceedings are stayed after a proper motion to compel arbitration is filed. 9 U.S.C. § 3; see also Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 726 (9th Cir.1999); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Coors, 357 F.Supp.2d 1277, 1281 (D.Colo.2004). Courts may consider the limited issue of arbitrability. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). A dispute about the validity of an arbitration provision, and not a contract as a whole, is a matter for the court, not an arbitrator. Fazio, 340 F.3d at 393;Express Scripts, Inc. v. Aegon Direct Mktg. Servs., Inc., 516 F.3d 695, 699–701 (8th Cir.2008); accord Nagrampa v. MailCoups, 469 F.3d 1257, 1271 (9th Cir.2006). When parties challenge the validity of an arbitration provision, the Court's role is limited to “determin[ing] only whether a written arbitration agreement exists, and if it does, enforce it in accordance with its terms.” Simula, 175 F.3d at 720.

Under the FAA, “a written agreement to arbitrate disputes arising out of a contract involving interstate commerce ‘shall be valid, irrevocable, and enforceable save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir.2002)

[963 F.Supp.2d 803]

(quoting 9 U.S.C. § 2). “ ‘[C]ourts are to examine the language of the contract in light of the strong federal policy in favor of arbitration. Likewise, any ambiguities in the contract or doubts as to the parties' intentions should be resolved in favor of arbitration.’ ” Id. (quoting Stout, 228 F.3d at 714). An arbitration agreement can be invalidated for the same reasons for which any contract can be invalidated. Fazio, 340 F.3d at 393. The FAA preempts state law specific to arbitration but not general state contract law. Id. State law “governs ‘generally applicable contract defenses [to an arbitration clause], such as fraud, duress, or unconscionability.’ ” Id. (quoting Doctor's Assoc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)).

When a written agreement to arbitrate exists and one party refuses to arbitrate, the other party may petition the district court to order the refusing party to comply with the terms of the agreement. 9 U.S.C. § 4. “If the district court is satisfied that the agreement to arbitrate is not ‘in issue,’ it must compel arbitration. If the validity of the agreement to arbitrate is ‘in issue,’ the court must proceed to a trial to resolve the question.” Great Earth, 288 F.3d at 889; 9 U.S.C. § 4. To show that the validity of an agreement is “in issue” and therefore that a trial is required, “the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate.” Id. “The required showing mirrors that required to withstand summary judgment in a civil suit.” Id.

The court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party can meet this burden by pointing out to the court that the non-moving party, having had sufficient opportunity for discovery, has no evidence to support an essential element of his case. SeeFed.R.Civ.P. 56(c)(1); Asbury v. Teodosio, 412 Fed.Appx. 786, 791 (6th Cir.2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

When confronted with a properly supported motion for summary judgment, the non-moving party must set forth specific facts showing that there is a genuine dispute for trial. SeeFed.R.Civ.P. 56(c). A genuine dispute for trial exists if the evidence is such that a reasonable jury could return a verdict for the non-moving party. See Wasek v. Arrow Energy Servs., 682 F.3d 463, 467 (6th Cir.2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The non-moving party must “ ‘do more than simply show that there is some metaphysical doubt as to the material facts.’ ” Phelps v. State Farm Mut. Auto. Ins. Co., 680 F.3d 725, 735 (6th Cir.2012) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). A party may not oppose a properly supported summary judgment motion by mere reliance on the pleadings. See Beckett v. Ford, 384 Fed.Appx. 435, 443 (6th Cir.2010) (citing Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548). Instead, the non-moving party “must adduce concrete evidence on which a reasonable juror could return a verdict in his favor.” Stalbosky v. Belew, 205 F.3d 890, 895 (6th Cir.2000) (citations omitted); seeFed.R.Civ.P. 56(c)(1). The court does not have the duty to search the record for such evidence. SeeFed.R.Civ.P. 56(c)(3); InterRoyal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir.1989). The non-moving party has the duty to point out specific evidence in the record that would be sufficient to justify a jury

[963 F.Supp.2d 804]

decision in his favor. SeeFed.R.Civ.P. 56(c)(1); InterRoyal Corp., 889 F.2d at 111.

IV. Analysis

In its March 5 Order, the Court decided that the parties had entered into a written agreement to arbitrate and that the...

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