Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_19-cv-06810/USCOURTS-cand-5_19-cv-06810-0/pdf.json

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

---

1

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

AMBERCROFT TRADING LIMITED, 

et al.,

Plaintiffs,

v.

CHRIS BIDDY, et al.,

Defendants.

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO 

COMPEL ARBITRATION; DENYING 

AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

Re: Dkt. Nos. 15, 18

Before the Court are Defendants Astro Digital US, Inc., Astro Digital, Inc., and Chris 

Biddy’s motion to dismiss, ECF No. 13; Defendants’ Mikhail Kokorich and Liudmila Kokorich’s 

motion to compel arbitration, ECF No. 15; and Defendants’ Mikhail Kokorich and Liudmila 

Kokorich’s motion to dismiss, ECF No. 18. Having considered the submissions of the parties, the 

relevant law, and the record in this case, the Court GRANTS the motion to compel arbitration, 

DENIES as moot the motions to dismiss, and STAYS the case.

I. BACKGROUND

Plaintiff Dmitri Kushaev (“Kushaev”) is a citizen of Russia currently residing in 

Switzerland and is the beneficial owner and manager of Plaintiff Ambercroft Trading Limited 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 1 of 13
2

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

(“Ambercroft”), a company registered in the British Virgin Islands. ECF No. 1, Ex. 1 (“Compl.”) 

¶ 4–5. The Court refers to Kushaev and Ambercroft collectively as “Plaintiffs”. Plaintiffs bring 

the instant suit against Defendants Mikhail Kokorich, his wife Liudmilia Kokorich, Chris Biddy, 

Astro Digital US, Inc., and Astro Digital, Inc. Id. ¶¶ 6–11. 

Plaintiffs allege that Defendant Mikhail Kokorich carried out a “fraudulent scheme” with 

the other Defendants to “convince[] Plaintiffs to invest $10 million into a joint venture” only to 

“divert[] and misappropriate[] the key assets of that Joint Venture.” Id. ¶ 1. Plaintiff Kushaev and 

Defendant Mikhail Kokorich allegedly first reached an oral agreement to form the joint venture 

(the “Joint Venture Agreement”), whereby both parties would form companies through which to 

effectuate the Joint Venture Agreement. Id. ¶ 21. Accordingly, Plaintiff Kushaev formed 

Ambercroft, and Defendant Mikhail Kokorich formed Dauria Holding International Limited 

(“DHIL”). Id. ¶¶ 23–24. By way of a written agreement containing an arbitration provision (the 

“DHIL Agreement”), Plaintiffs acquired a 14.29% interest in DHIL. Id. ¶ 24. However, Plaintiffs 

allege that subsequently, Defendant Mikhail Kokorich formed a number of competing companies 

(including Defendant Astro Digital US, Inc. and Astro Digital, Inc.) and diverted the assets of 

DHIL to those new companies.

Accordingly, on August 8, 2019, Plaintiffs filed the instant suit in the California Superior 

Court for the County of Santa Clara. ECF No. 1 ¶ 1. The case was removed to this Court on 

October 21, 2019. See id. Plaintiffs assert six claims against Defendants: (1) breach of fiduciary 

duty, (2) fraud, (3) violation of California’s Unfair Competition Law, (4) Racketeer Influenced 

and Corrupt Organizations Act (“RICO”) violation under 18 U.S.C. 1962(c), (5) RICO violation 

under 18 U.S.C. § 1962(d), and (6) unjust enrichment. See Compl. at 1. In response, Defendants 

filed two separate motions to dismiss and a motion to compel arbitration.

First, on November 27, 2019, Defendants Biddy, Astro Digital US Inc., and Astro Digital, 

Inc. filed a motion to dismiss. ECF No. 13. On January 20, 2020, Plaintiffs filed an opposition. 

ECF No. 25. On February 14, 2020, Defendants filed a reply. ECF No. 30.

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 2 of 13
3

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Second, on November 27, 2019, Defendants Mikhail Kokorich and Liudmila Kokorich

filed a motion to compel arbitration.1 ECF No. 15 (“Mot.). On January 20, 2020, Plaintiffs filed 

an opposition. ECF No. 24 (“Opp’n). On February 14, 2020, Defendants filed a reply. ECF No. 

32 (“Reply”).

Third, on November 27, 2019, Defendants Mikhail Kokorich and Liudmila Kokorich filed 

their own motion to dismiss. ECF No. 18. On January 20, 2020, Plaintiffs filed an opposition. 

ECF No. 26. On February 14, 2020, Defendants filed a reply. ECF No. 31.

All three motions are thus fully briefed and properly before the Court.

II. LEGAL STANDARD

The Federal Arbitration Act (“FAA”) applies to arbitration agreements in any contract 

affecting interstate commerce. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001); 9 

U.S.C. § 2. Under Section 3 of the FAA, “a party may apply to a federal court for a stay of the 

trial of an action ‘upon any issue referable to arbitration under an agreement in writing for such 

arbitration.’” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010) (quoting 9 U.S.C. § 3).

Interpretation of arbitration agreements generally turns on state law. See Arthur Andersen 

LLP v. Carlisle, 556 U.S. 624, 630–31 (2009). However, the United States Supreme Court has 

stated that “the first task of a court asked to compel arbitration of a dispute is to determine whether 

the parties agreed to arbitrate that dispute,” and that “[t]he court is to make this determination by 

applying the federal substantive law of arbitrability, applicable to any arbitration agreement within 

the coverage of the Act.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 

614, 626 (1985). The FAA creates a body of federal substantive law of arbitrability that requires a 

healthy regard for the federal policy favoring arbitration and preempts state law to the contrary. 

Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475-79 (1989) 

1 The Kokorich Defendants’ motion to compel arbitration and motion to dismiss both contain a 

notice of motion that is separately paginated from the memorandum of points and authorities in 

support of the motion. Civil Local Rule 7-2(b) provides that the notice of motion and points and 

authorities should be contained in one document with a combined limit of 25 pages. See Civ. Loc. 

R. 7-2(b).

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 3 of 13
4

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

(“[T]he FAA must be resolved with a healthy regard for the federal policy favoring arbitration.”). 

To decide whether a dispute is arbitrable under federal law, a court must answer two

questions: (1) whether the parties agreed to arbitrate; and, if so, (2) whether the scope of that 

agreement to arbitrate encompasses the claims at issue. See Brennan v. Opus Bank, 796 F.3d 

1125, 1130 (9th Cir. 2015). As to the first question, when deciding whether the parties agreed to 

arbitrate a certain matter, courts generally apply ordinary state law principles of contract 

interpretation. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (“Courts generally 

should apply ordinary state-law principles governing contract formation in deciding whether [an 

arbitration] agreement exists.”). Thus, the court ordinarily applies “general state-law principles of 

contract interpretation, while giving due regard to the federal policy in favor of arbitration by 

resolving ambiguities as to the scope of arbitration in favor of arbitration.” Mundi v. Union Sec. 

Life Ins. Co., 555 F.3d 1042, 1044 (9th Cir. 2009) (quoting Wagner v. Stratton Oakmont, Inc., 83 

F.3d 1046, 1049 (9th Cir. 1996)). “[A]s with any other contract, the parties' intentions control, but 

those intentions are generously construed as to issues of arbitrability.” Mitsubishi Motors Corp. v. 

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). If the party seeking to compel 

arbitration establishes both factors, the court must compel arbitration. See Chiron Corp., 207 F.3d 

at 1130. “The standard for demonstrating arbitrability is not a high one; in fact, a district court has 

little discretion to deny an arbitration motion, since the [FAA] is phrased in mandatory terms.” 

Republic of Nicar. v. Std. Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991).

In addition, the parties can agree to delegate arbitrability—or “gateway” issues concerning 

the scope and enforceability of the arbitration agreement, and whether the dispute should go to 

arbitration at all—to the arbitrator. The United States Supreme Court has held that the question of 

“who has the power to decide arbitrability,” the court or the arbitrator, “turns on what the parties 

agreed about that matter.” First Options, 514 U.S. at 943. “An agreement to arbitrate a gateway 

issue is simply an additional, antecedent agreement the party seeking arbitration asks the federal 

court to enforce, and the FAA operates on this additional arbitration agreement just as it does on 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 4 of 13
5

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

any other.” Rent-A-Center, 561 U.S. at 70. “[Q]uestions of arbitrability may go to the arbitrator

. . . when the parties have demonstrated, clearly and unmistakably, that it is their intent to do so.” 

Id. at 80. The Ninth Circuit—along with “[v]irtually every circuit to have considered the issue”—

has expressly held that incorporation of arbitration rules, such as the American Arbitration 

Association’s rules, “constitutes clear and unmistakable evidence that the parties agreed to 

arbitrate arbitrability.” Brennan, 796 F.3d at 1130 (quoting Oracle Am., Inc. v. Myriad Grp. A.G., 

724 F.3d 1069, 1074 (9th Cir. 2013)).

III. DISCUSSION

Defendants Mikhail Kokorich and Liudmila Kokorich (collectively, the “Kokorich 

Defendants”) seek to compel arbitration based upon an arbitration clause contained in the DHIL 

Investment and Shareholders Agreement (the “DHIL Agreement”). Mot. at 1; see ECF No. 17, 

Ex. A (“DHIL Agmt.”). The parties to the agreement included DHIL, Plaintiff Ambercroft, 

Plaintiff Kushaev, and Defendant Mikhail Kokorich. DHIL Agmt. at 1. The DHIL Agreement 

contains a clause that specifies:

All and any disputes or differences arising out of or in connection with this 

Agreement, or its breach, termination or invalidity . . . shall be finally settled by 

arbitration in accordance with the Rules of Arbitration of the International Chamber 

of Commerce (“ICC”) in force as at the time of the Dispute.

Id. ¶ 13.2. 

As an initial matter, the parties do not dispute that the Federal Arbitration Act (“FAA”) 

governs this arbitration agreement. Mot. at 5; Opp’n at 7; see also Baysand Inc. v. Toshiba Corp., 

No. 15-cv-02425-BLF, 2015 WL 7293651, at *2 (N.D. Cal. Nov. 19, 2015) (explaining that the 

FAA governs arbitration agreements between international contracts where parties are not all 

United States citizens). Further, the Court agrees with Kokorich Defendants that United States 

federal arbitrability law applies to determine whether Plaintiff’s claims are arbitrable, despite the 

parties’ choice of English law to generally govern the agreement. Mot. at 6 n.6; see Cape Flattery 

Ltd. v. Titan Mar., 647 F.3d 914, 921 (9th Cir. 2011) (holding that “federal law applies to 

determine arbitrability” where the choice of English law in a contract generally was nonetheless 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 5 of 13
6

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

silent as to the specific issue of arbitrability). Accordingly, pursuant to the FAA and federal law 

of arbitrability, the Court must first decide whether the parties have agreed to arbitrate, and second 

whether the scope of that arbitration agreement encompasses the claims at issue. See Brennan, 

796 F.3d at 1130. The Court addresses each question in turn.

A. Plaintiffs agreed to arbitrate claims in the DHIL Agreement.

Plaintiffs do not dispute that the DHIL Agreement provision above requires the parties to 

arbitrate “[a]ll and any disputes or differences arising out of or in connection with” the DHIL 

Agreement. DHIL Agmt. ¶ 13.2; see Opp’n at 9–18. Moreover, although Defendant Liudmila 

Korkorich was not a party to the DHIL Agreement, Plaintiffs do not argue that she may not invoke 

the arbitration provision because she was a nonparty. See Opp’n at 17–18. Instead, Plaintiffs 

merely reiterate that Defendant Liudmila Kokorich’s ability to compel arbitration fails for the 

same reasons as Defendant Mikhail Kokorich. See id. at 17 (“Liudmila Kokorich cannot enforce 

the arbitration provision in the DHIL Agreement for the same reasons that Mikhail Kokorich 

cannot enforce that provision.”). Plaintiffs further argue that the Joint Venture Agreement did not 

contain any arbitration provision, and as such, neither Defendant Mikhail Kokorich nor Defendant 

Liudmila Kokorich may compel arbitration. See id. at 17–18; see also Portland Gen. Elec. Co. v. 

Liberty Mut. Ins. Co., 862 F.3d 981, 985–86 (9th Cir. 2017) (reversing district court where 

arbitrability of claims against a non-signatory to the arbitration agreement should have been 

decided by arbitrator). 

Accordingly, the Court agrees with Defendants that there is no dispute as to the existence 

of the parties’ agreement to arbitrate. See Reply at 1.

B. The Court need not construe the scope of the DHIL Agreement arbitration 

because the parties delegated the question of arbitrability to the arbitrator.

As to the scope of the parties’ arbitration agreement, the parties dispute whether the DHIL 

Agreement arbitration provision applies to Plaintiff’s claims in the instant case. The Kokorich 

Defendants first argue that, under the rules of the ICC, the issue of arbitrability is delegated to an 

arbitrator. Mot. at 6–8. They next argue that, even if the Court were to decide for itself the issue 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 6 of 13
7

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

of arbitrability, the Court should still find Plaintiffs’ claims arbitrable. Mot. at 8–11. Because the 

Court agrees with the Kokorich Defendants’ first argument that the parties delegated the issue of 

arbitrability to the arbitrator, the Court does not reach the Kokorich Defendants’ second argument.

1. The Parties’ Agreement Delegates the Question of Arbitrability to the Arbitrator

Under the arbitration provision in the DHIL Agreement, the parties’ arbitration of any 

dispute would be conducted under “the Rules of Arbitration of the International Chamber of 

Commerce (“ICC”) in force as at the time of the Dispute.” DHIL Agmt. ¶ 13.2. The applicable 

ICC rules provide that:

[I]f any party raises one or more pleas concerning the existence, validity or scope of 

the arbitration agreement or concerning whether all of the claims made in the 

arbitration may be determined together in a single arbitration, the arbitration shall 

proceed and any question of jurisdiction or of whether the claims may be determined 

together in that arbitration shall be decided directly by the arbitral tribunal . . . 

Mot. at 7; see ECF No. 16, Ex. A (“ICC Arbitr. Rules”), at 14. This provision in the ICC Rules of 

Arbitration is “clear and unmistakable evidence” that the parties delegated the threshold question 

of arbitrability to be decided by the arbitrator, not the Court. See Portland Gen. Elec. Co., 862 

F.3d at 985 (“We have found such delegation when the parties have incorporated by reference the 

rules of the American Arbitration Association (“AAA”), which state in relevant part that the 

‘arbitrator shall have the power to rule on his or her own jurisdiction, including any objections 

with respect to the . . . validity of the arbitration agreement.’”). Crucially, Plaintiffs do not dispute 

that they agreed to this arbitration provision, or that such arbitration provision does in fact 

delegate the threshold question of arbitrability to the ICC. See Opp’n at 9–10. 

Instead, Plaintiffs raise three arguments that the issue of arbitrability was not delegated to 

the arbitrator. Plaintiffs argue that, where there are multiple contracts at issue, the court must 

analyze the claims in a complaint to determine whether the claims arise from the contract with the 

arbitration provision. Id. at 9–10. Plaintiffs further argue that the Joint Venture Agreement did 

not contain any arbitration provision. Id. at 9. Finally, Plaintiffs argue that the parties’ factual 

dispute on this question precludes the Court from finding that the parties clearly and unmistakably 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 7 of 13
8

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

agreed to have the arbitrator resolve the question of arbitrability. Id. at 10. None of Plaintiffs’ 

arguments are persuasive, and the Court addresses each in turn below.

First, Plaintiffs argue that the existence of multiple contracts in this case requires the Court 

to perform the threshold analysis of arbitrability. Opp’n at 9. However, to support this 

proposition, Plaintiffs cite cases that are neither binding nor analogous. Specifically, Plaintiffs 

cite two out-of-circuit cases: Dental Assocs., P.C. v. Am. Dental Partners of Michigan, LLC, 520 

F. App'x 349, 351–52 (6th Cir. 2013), and Int’l Underwriters AG v. Triple I: Int'l Investments, 

Inc., 533 F.3d 1342, 1344–49 (11th Cir. 2008). Most importantly, neither case considered whether 

the parties delegated the issue of arbitrability to the arbitrator. See Assocs., P.C., 520 F. App'x at 

351–52; Int'l Underwriters, 533 F.3d at 1344–49. Instead, as this Court has previously held, 

where there are multiple agreements between the parties, the parties’ delegation of the issue of 

arbitrability to the arbitrator in one agreement requires the arbitrator, not the Court, to decide 

whether Plaintiffs’ claims fall within the scope of the arbitration agreement. See Guidewire 

Software, Inc. v. Chookaszian, No. 12-CV-03224-LHK, 2012 WL 5379589, at *4–5 (N.D. Cal. 

Oct. 31, 2012)). Plaintiffs provide no authority contrary to Guidewire.

Second, Plaintiffs attempt to distinguish the parties’ Joint Venture Agreement from the 

DHIL Agreement. Id. Because the parties’ oral Joint Venture Agreement did not contain an 

arbitration provision, Plaintiffs argue, the parties did not “clearly and unmistakably” delegate to 

the ICC the power to determine whether any claims premised on the Joint Venture Agreement are 

arbitrable. Id.; see Portland Gen. Elec. Co., 862 F.3d at 985. However, Plaintiffs’ argument fails 

to address the existence of the arbitration agreement in the separate DHIL Agreement. Nor do the 

terms of the separate Joint Venture Agreement undermine the Court’s conclusion that the DHIL 

Agreement’s arbitration provision does in fact delegate the issue of arbitrability to the arbitrator. 

As discussed above, the delegation of the issue of arbitrability in one of the parties’ agreements 

requires the arbitrator, not the Court, to assess which of the parties’ agreements are implicated by 

Plaintiffs’ claims.

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 8 of 13
9

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Third, Plaintiffs argue that there are “disputes of material fact” that “preclude the Court 

from finding that the parties’ ‘clearly and unmistakably’ agreed to send the gateway questions of 

arbitrability to the arbitrator.” Opp’n at 10. But Plaintiffs do not demonstrate that there is any 

dispute of fact whatsoever as to the arbitration agreement in the DHIL Agreement, or as to 

whether that arbitration agreement delegates the issue of arbitrability to the arbitrator. See id. 

Plaintiffs cite Plaintiff Dmitri Kushaev’s Declaration, ECF No. 24-1 (“Kushaev Decl.”), but that 

declaration merely states:

While the written DHIL Agreement contains an arbitration provision, the oral Joint

Venture Agreement contains no such provision or term. I never agreed to arbitrate 

any disputes concerning the Joint Venture Agreement, and I never believed that the 

arbitration provision in the separate DHIL Agreement governed or applied to my 

separate Joint Venture Agreement with Mr. Kokorich.

Id. ¶ 7. Plaintiffs have identified no dispute of fact as to the DHIL Agreement, and particularly 

raise no dispute that the parties intended to have the arbitrator decide the threshold issue of 

whether a claim is arbitrable pursuant to the DHIL Agreement.

Accordingly, the Court holds that the parties “clearly and unmistakably” agreed to have the 

ICC resolve any threshold questions of arbitrability. See Portland Gen. Elec. Co., 862 F.3d at 985 

(quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83–84 (2002)).

2. The Kokorich Defendants’ assertion that the DHIL Agreement arbitration 

provision applies to Plaintiffs’ claims is not “wholly groundless.”

Because the parties have delegated the question of arbitrability to the ICC, the Court’s 

inquiry is theoretically at an end. See, e.g., Brennan, 796 F.3d at 1132 (9th Cir. 2015) (“[A] court 

must enforce an agreement that, as here, clearly and unmistakably delegates arbitrability questions 

to the arbitrator.” (emphasis added)).

However, there is one final hurdle that the Kokorich Defendants may have to clear. Some 

circuits have adopted the rule that a delegation clause “applies only to claims that are at least 

arguably covered by the agreement to arbitrate,” which the Kokorich Defendants’ frame as a test 

to see if their invocation of the arbitration agreement is “wholly groundless.” Mot. at 8 (citing 

Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1374 (Fed. Cir. 2006)). Whether this requirement 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 9 of 13
10

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

applies is unclear because the Ninth Circuit recently stated that the “arguably covered” rule is “not 

universally followed.” Portland Gen. Elec. Co., 862 F.3d 981, 986 n.3 (9th Cir. 2017). For 

example, the Ninth Circuit cast doubt on the reasoning of a Sixth Circuit case employing the 

“arguably covered” rule. Oracle, 724 F.3d at 1076. In Portland Gen. Elec. Co., the Ninth Circuit 

concluded that it “need not take a side in this circuit split, or determine if we already have” 

because the delegation clause in that case “arguably covered” the claim at issue. 862 F.3d at 986 

n.3. 

In an abundance of caution, the Court applies the same approach in this case and reaches 

the same conclusion. Arguably, Plaintiffs waived any argument to the contrary because they 

failed to respond to the Kokorich Defendants’ arguments on the “wholly groundless” question, but 

merely point in a footnote to their arguments on the merits. See Opp’n at 10 n.7. In any event, the 

arbitration provision at issue here requires arbitration of “[a]ll and any disputes or differences 

arising out of or in connection with [the DHIL Agreement], or its breach, termination or 

invalidity.” DHIL Agmt. ¶ 13.2. As Plaintiffs explain in the Complaint, this case revolves 

entirely around the $10 million investment that Plaintiffs allegedly made by way of the DHIL 

Agreement. See Compl. ¶¶ 1, 21–25. Plaintiffs claim that, after they invested millions through 

DHIL, Defendants misappropriated those assets, resulting in “Plaintiffs’ loss of their entire 

investment.” Id. ¶ 1. The Court thus agrees with Defendants that Plaintiffs’ claims, which allege 

breach of fiduciary duty, fraud, unfair business practices, civil RICO violations, and unjust 

enrichment, at least arguably “arise out of” or are “in connection with” the DHIL Agreement. See 

DHIL Agmt. ¶ 13.2. While Plaintiffs’ arguments that their claims do not arise out of or are in 

connection with the DHIL Agreement “may ultimately prove to be correct, these arguments should 

be raised before the arbitrator.” See Guidewire, 2012 WL 5379589, at *5.

In sum, even if the Kokorich Defendants are required to show that their invocation of the 

arbitration provision is not “wholly groundless,” the Court finds that the Kokorich Defendants 

have cleared that hurdle. Accordingly, the Court finds that it must grant the Kokorich Defendants’ 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 10 of 13
11

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

motion to compel arbitration.

C. A stay of the instant case pending arbitration is appropriate.

Defendants request that, if the Court compels arbitration, the Court consider staying or 

dismissing the case. Mot. at 8. Because the Court finds that it must compel arbitration as to 

Plaintiffs’ claims against the Kokorich Defendants, the Court finds that staying the litigation is the 

most appropriate course of action.

Under Section 3 of the FAA, courts must “stay litigation of arbitral claims pending 

arbitration of those claims ‘in accordance with the terms of the agreement.’” AT&T Mobility LLC 

v. Concepcion, 563 U.S. 333, 344 (2011). When a court “determines that all of the claims raised 

in the action are subject to arbitration,” the court “may either stay the action or dismiss it 

outright.” Johnmohammadi v. Bloomingdale’s Inc., 755 F.3d 1072, 1074 (9th Cir. 2014). The 

United States Supreme Court has held that “[i]n some cases, . . . it may be advisable to stay 

litigation among the non-arbitrating parties pending the outcome of the arbitration.” Moses H. 

Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 21 n.23 (1983). “That decision is one 

left to the district court . . . as a matter of its discretion to control its docket.” Id. “Where it is 

proposed that a pending proceeding be stayed, the competing interests which are affected by the 

granting or refusal to grant a stay must be weighed.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th 

Cir. 1962); see also Lockyer v. Mirant Corp., 398 F.3d 1098, 1109 (9th Cir. 2005) (applying 

CMAX standard). “Among these competing interests are the possible damage which may result 

from the granting of a stay, the hardship or inequity which a party may suffer in being required to 

go forward, and the orderly course of justice measured in terms of the simplifying or complicating 

of issues, proof, and questions of law which could be expected to result from a stay.” CMAX, 300 

F.2d at 268.

In the instant case, only the Kokorich Defendants have moved the Court to compel 

arbitration, while the other three named Defendants have not attempted to do so. Plaintiff’s 

opposition entirely fails to address Defendants’ request to stay the case or to provide the Court 

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 11 of 13
12

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

with any reason why such a course would be disadvantageous. Regardless, the Court finds that 

simply letting the case proceed without the Kokorich Defendants would be both inefficient and 

ineffectual. Defendant Mikhail Kokorich is the only defendant that is named in all six of 

Plaintiffs’ claims, and his conduct with respect to Plaintiffs’ investment appears to be at the center 

of the entire lawsuit. See Compl. It would be impracticable to attempt to cleave Defendant 

Mikhail Kokorich from all of Plaintiffs’ claims. 

Moreover, such a course would necessarily overlap with questions to be decided by the 

arbitrator. For example, Plaintiffs’ fifth cause of action asserts a RICO conspiracy between 

Defendant Mikhail Kokorich and the other defendants (except for Defendant Liudmila Kokorich). 

See id. ¶¶ 107–114. Having one tribunal consider whether Mikhail Kokorich engaged in the RICO 

conspiracy and a separate tribunal consider whether the other Defendants engaged in the same 

alleged conspiracy with Mikhail Kokorich would needlessly complicate the issues and questions 

of law in this case. See CMAX, 300 F.2d at 268. Parallel proceedings would also needlessly risk 

inconsistent decisions. See, e.g., Ballard v. Corinthian Colleges, Inc., No. C06-5256 FDB, 2006 

WL 2380668, at *2 (W.D. Wash. Aug. 16, 2006) (staying a case pending arbitration, in part, to 

prevent “risk of inconsistent decisions and inefficiencies”).

By contrast, staying the lawsuit pending the arbitration will help clarify what claims and 

issues will remain for the Court to decide. For example, if the arbitrator decides that no aspects of 

Plaintiffs’ claims are arbitrable and that the Court should consider all aspects of Plaintiffs’ claims, 

it would waste judicial resources for the Court to have proceeded on two separate tracks with 

respect to the same claims and the same alleged conduct. Thus, a stay will advance “the orderly 

course of justice.” CMAX, 300 F.2d at 268; see e.g., Wilcox v. Ho-Wing Sit, 586 F. Supp. 561, 567 

(N.D. Cal. 1984) (granting stay where arbitrator’s decision was likely “to decide issues that will, at 

least, streamline subsequent proceedings” before the court). Furthermore, the parties raise no 

other reason why granting a stay would result in any damage or hardship to the parties, and the 

Court cannot identify any reason why this would be the case.

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 12 of 13
13

Case No. 19-CV-06810-LHK 

ORDER GRANTING MOTION TO COMPEL ARBITRATION; DENYING AS MOOT MOTIONS TO DISMISS; 

AND STAYING CASE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Accordingly, the Court, in its discretion, finds that a stay of the lawsuit is appropriate 

because all of Plaintiffs’ claims against the remaining Defendants substantially overlap with 

Plaintiffs’ claims against the Kokorich Defendants. The Court therefore GRANTS the Kokorich 

Defendants’ motion to stay Plaintiffs’ lawsuit pending arbitration.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS the Kokorich Defendants’ motion to 

compel arbitration and stay the instant case. Accordingly, the Court DENIES as moot the

Defendants’ pending motions to dismiss. ECF Nos. 13, 18. The parties shall notify the Court 

within seven days of the arbitration ruling. 

The Clerk shall administratively close the case file. This is an internal administrative 

procedure that does not affect the rights of the parties.

IT IS SO ORDERED.

Dated: April 10, 2020

______________________________________

LUCY H. KOH

United States District Judge

Case 5:19-cv-06810-LHK Document 39 Filed 04/10/20 Page 13 of 13