Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-00014/USCOURTS-caed-1_07-cv-00014-2/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

COLLEGE OF THE SEQUOIAS FARM, )

FOUR J FARMS, a California General )

Partnership, and JONATHAN TODD )

FERNANDES dba J. TODD )

FERNANDES FARMS, individually and )

on behalf of themselves and all others )

similarly situated, )

)

Plaintiffs, )

)

vs. )

)

)

WHITE GOLD ASSOCIATION, INC., a )

California corporation, COSTA )

COTTON ) COMPANY, INC., a )

California Corporation, MARK COSTA, )

an individual, J. B. COTTON TRADING, )

INC., a California corporation, CRAIG )

TOBIN, an individual, and DOES 1 -50, )

)

Defendants. )

)

)

___________________________________ )

1:07-cv-00014 AWI 

NEW(WMW)

ORDER REQUIRING

FURTHER BRIEFING RE

PETITION FOR ORDER

COMPELLING

ARBITRATION

Plaintiffs College of the Sequoias Farm (“COS Farm”); Four J Farms; and J. Todd

Case 1:07-cv-00014-AWI-GSA Document 29 Filed 04/18/07 Page 1 of 4
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Fernandes dba J. Todd Fernandez Farms (collectively “Plaintiffs”), on behalf of themselves

and all others similarly situated, have sued Defendants White Gold Association, Costa

Cotton Company, Mark Costa, J. B. Cotton Trading, and Craig Tobin alleging, inter allia,

conspiracy and fraud in connection with the marketing and sale of Plaintiffs’ cotton. The

complaint sets forth the following causes of action: 1) Violation of the Racketeer Influenced

and Corrupt Organizations Act, 18 U.S.C. §§ 1961 - 1968 (“RICO”) [§ 1962(b)]; 2)

violation of RICO,§ 1962(c); 3) violation of RICO, §1962(c); 4) Fraud - misrepresentation;

5) Fraud - concealment; 6) breach of fiduciary duty; 7) constructive fraud based on fiduciary

relationship; 8) accounting; and 9) conversion. The complaint was filed in Kern County

Superior Court and has been removed to this court by Defendants.

Defendants have now filed a motion pursuant to 9 U.S.C. § 4, to compel Plaintiffs to 

an arbitration before the American Cotton Shippers Association (“ACSA”). Plaintiffs

oppose the petition. 

In connection with their opposition, Plaintiffs request a jury trial on issues of fact

presented in connection with their opposition to the petition for an order compelling

arbitration. Plaintiffs base their request on 9 U.S.C. § 4, which provides in part that, “[a]

party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a

written agreement for arbitration may petition any United States district court which, save for

such agreement, would have jurisdiction under Title 28 . . . for an order directing that

such arbitration proceed in the manner provided for in such agreement.” Section 4 further

provides,

If the making of the arbitration agreement or the failure, neglect, or refusal to

perform the same be in issue, the court shall proceed summarily to the trial thereof. 

If no jury trial be demanded by the party alleged to be in default, or if the matter in

dispute is within admiralty jurisdiction, the court shall hear and determine such issue. 

Where such an issue is raised, the party alleged to be in default may, except in cases

of admiralty, on or before the return day of the notice of application, demand a jury

trial of such issue, and upon such demand the court shall make an order referring the

issue or issues to a jury in the manner provided by the Federal Rules of Civil

Procedure, or may specially call a jury for that purpose. If the jury find that no

agreement in writing for arbitration was made or that there is no default in proceeding

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thereunder, the proceeding shall be dismissed. If the jury find that an agreement for

arbitration was made in writing and that there is a default in proceeding thereunder,

the court shall make an order summarily directing the parties to proceed with the

arbitration in accordance with the terms thereof.

In this case, Plaintiffs state that their request for a jury trial includes, but is not limited to, the

following issues: 1) whether the allegations raised by Plaintiffs in their Complaint are within

the scope of the trade dispute arbitration procedures referenced in the CCA By-Laws, and

2) whether there has been a “failure, neglect, or refusal” by Plaintiffs to arbitrate the claims

raised in the Complaint. Defendants oppose Plaintiffs’ request for a jury trial.

In reviewing the parties’ arguments, the court has concluded that Plaintiffs appear to

be asserting an impossibility defense to the arbitration provision contained in Section 11.14

of the CCA By-Laws . This provision provides:

ARBITRATION: Any and all disputes between or among a member or members and

the Association, and/or other members, whether arising in connection with or under

the Membership and Marketing Agreement or in connection with the activities of the

Association or otherwise, shall be subject to arbitration in accordance with the rules

of the American Cotton Shippers Association. By becoming a member of this

Cooperative Association all members consent to arbitration and to said rules. 

As Defendants note, Plaintiffs apparently seek to offer evidence to contradict this “any and

all” language. claiming that the arbitration provision covers only “disputes as to matters of

cotton “grade, quality, weights or fulfillment of contracts.” Defendants argue that evidence

of such a limitation of the scope of the arbitration provision is barred by the parole evidence

rule.

The court finds that resolution of the issue of the existence of an impossibility

defense may moot the need for further analysis of the petition for order compelling

arbitration. The court further finds, therefore, that additional briefing from the parties is

required.

Accordingly, IT IS HEREBY ORDERED as follows:

1) Plaintiff shall, within fourteen (14) days of the date of service of this order, file and

serve a supplemental brief addressing the existence of an impossibility defense to the

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enforcement of the arbitration clause contained in Section 11.14 of the CCA ByLaws. Plaintiffs shall also address the application of the parole evidence rule to any

evidence used to support this impossibility defense. Finally, Plaintiffs shall address

the issue of the need for a jury trial as to any issues of fact connected with the

impossibility defense.

2) Defendants shall, fourteen (14) days after being served with Plaintiffs’ supplemental

brief, file and serve their own supplemental brief, addressing the same issues and

responding to Plaintiffs’ arguments.

3) Plaintiffs may file a supplemental reply brief no more than eleven (11) days after

service of Defendants’ supplemental brief.

IT IS SO ORDERED.

Dated: April 18, 2007 /s/ William M. Wunderlich 

mmkd34 UNITED STATES MAGISTRATE JUDGE

Case 1:07-cv-00014-AWI-GSA Document 29 Filed 04/18/07 Page 4 of 4