Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-03086/USCOURTS-caed-2_09-cv-03086-2/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1332 - Diversity: Securities Fraud

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

LAURIE WOLF; DOLORES BERMAN; )

I-SHUN CHOW KIMCHI CHOW; )

GRASSHILL LAND, INC.; BRADY )

HEATH; THERESA HEATH; STEVEN A. )

NEWELL; MARILYN CADREAU NEWELL; )

TAMSCO PROPERTIES, LLC; JKR LASER )

INVESTMENT, LLC; SURFER BEACH, )

LLC; and TO BE DETERMINED, LLC, )

)

Plaintiffs, ) 2:09-CV-03086-GEB-EFB

)

v. ) ORDER DENYING DEFENDANTS’

) MOTION TO DISMISS AND GRANTING

LORAL LANGEMEIER and LIVE OUT ) DEFENDANTS’ MOTION TO STAY

LOUD, INC., ) PROCEEDINGS PENDING ARBITRATION

) 

Defendants. ) 

)

Defendants Loral Langemeier (“Langemeier”) and Live Out

Loud, Inc. (“LOL”) (collectively, “Defendants”) filed two pending

motions: a motion to dismiss Plaintiffs’ complaint under Federal Rules

of Civil Procedure 12(b)(2) and 12(b)(6) and a motion to stay this

action pending arbitration under 9 U.S.C. § 3. For the following

reasons, the motion to dismiss is denied and the motion to stay is

granted.

I. PLAINTIFFS’ ALLEGATIONS AND CLAIMS

Plaintiffs are eight individuals, one corporation, and four

limited liability companies that attended various “investment

education” events, known as “Big Table programs,” at the Embassy

Suites Hotel in South Lake Tahoe, California in April, May, August,

and September 2006, and in January 2007. (Compl. ¶¶ 5-15.) 

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Defendants marketed these programs, at which they encouraged

Plaintiffs to “invest in various real estate ventures and other

investment opportunities.” (Id. ¶¶ 18-19.) Plaintiffs allege 

Defendants made several “misrepresentations” when they promoted these

“high risk and not safe” investments “in pursuit of their own

pecuniary interests.” (Id. ¶¶ 20, 23.) Each Plaintiff alleges a lost

of tens or hundreds of thousands of dollars as a result of the

investments they made following the Big Table programs. (Id. ¶¶ 29,

49, 77, 105, 123.)

Plaintiffs allege the following claims in their complaint:

(1) fraud and deceit; (2) aiding and abetting fraud; (3) breach of

California Civil Code § 3373; (4) breach of fiduciary duty; (5)

violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5; (6)

violation of California Corporation Code § 25401; (7) assisting in the

violation of California Corporation Code § 25401; (8) violation of

California Corporation Code § 25110; (9) assisting in the violation of

California Corporation Code § 25110; and (10) violation of California

Business and Professions Code §§ 17200, et seq. (Compl. ¶¶ 21-302.)

II. LEGAL STANDARD

A. Motion to Dismiss

A Rule 12(b)(6) motion “challenges a complaint’s compliance

with . . . pleading requirements.” Champlaie v. BAC Home Loans

Servicing, LP, 2009 WL 3429622, at *1 (E.D. Cal. 2009). A pleading

must contain “a short and plain statement of the claim showing that

the pleader is entitled to relief . . . .” Fed. R. Civ. P. 8(a)(2). 

The complaint must “give the defendant fair notice of what the

[plaintiff’s] claim is and the grounds upon which relief rests 

. . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To 

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avoid dismissal, a plaintiff must allege “enough facts to state a

claim to relief that is plausible on its face.” Twombly, 550 U.S. at

547. “A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Iqbal, 129

S. Ct. at 1949. When the court evaluates a dismissal motion under

Rule 12(b)(6), it “accept[s] as true all facts alleged in the

complaint, and draw[s] all reasonable inferences in favor of the

plaintiff.” Al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009).

B. Motion to Stay

Defendants motion to stay this action concerns Section 3 of

the Federal Arbitration Act which prescribes:

If any suit or proceeding be brought in any of the

courts of the United States upon any issue

referable to arbitration under an agreement in

writing for such arbitration, the court in which

such suit is pending, upon being satisfied that the

issue involved in such suit or proceeding is

referable to arbitration under such an agreement,

shall on application of one of the parties stay the

trial of the action until such arbitration has been

had in accordance with the terms of the agreement,

providing the applicant for the stay is not in

default in proceeding with such arbitration.

9 U.S.C. § 3. “In deciding a motion to stay a proceeding pending

arbitration, a court must determine ‘(1) whether a valid agreement to

arbitrate exists and, if it does, (2) whether the agreement

encompasses the dispute at issue.’” McLeod v. Ford Motor Co., 2005 WL

3763354, at *2 (C.D. Cal.) (quoting Chiron Corp. v. Ortho Diagnostic

Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000), and citing Wagner v.

Stratton Oakmont, Inc., 83 F.3d 1046, 1048-49 (9th Cir. 1996)).

//

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III. DISCUSSION

A. Motion to Dismiss

Defendants argue Plaintiffs’ complaint should be dismissed

under Federal Rule of Civil Procedure 12(b)(2) since “personal

jurisdiction is lacking because Plaintiffs’ claims are subject to

arbitration.” (Defs.’ Mot. to Dismiss 4:13-14.) However, Defendants

provide no authority supporting this argument.

Defendants also argue Plaintiffs’ claims should be dismissed

under Federal Rule of Civil Procedure 12(b)(6) “because the

allegations in their complaint contradict . . . documents.” (Defs.’

Mot. to Dismiss 5:10-12.) However, Defendants fail to identify which

documents are contradicted, and disregard the general rule that when

ruling on a dismissal motion “facts that are not alleged on the face

of the complaint or contained in documents attached to the complaint”

are disregarded. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir.

2005). Therefore, Defendants’ dismissal motion is denied.

B. Motion to Stay

Defendants also seek “an order staying the instant matter

pending arbitration.” (Defs.’ Mot. to Stay 2:15-16.) Defendants

argue “Plaintiffs agreed to arbitrate any dispute arising from or

related to the Big Table programs.” (Id. 5:16-17.) Defendants rely

on arbitration clauses in the following agreements as support for

their position: five Coaching Resource, Inc. Big Table Agreements

(“Big Table Agreements”), signed by Plaintiffs Laurie Wolf, Delores

Berman, Kimchi Chow, Steven A. Newell, and Marilyn Cadreau Newell, and

six Big Table Alumni Agreements (“Alumni Agreements”), signed by

Plaintiffs Laurie Wolf, Kimchi Chow, Steven A. Newell, Marilyn Cadreau

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Newell, Brady Heath, and Theresa Heath. (Benoff Decl. Ex. 1, Ex. A at

23-32.) Each Agreement contains the following arbitration provision: 

Arbitration

Any dispute or claim arising or related to this

Agreement, its performance, breach, or

interpretation (including issues about its validity

or enforceability), shall be exclusively (except as

provided below) resolved by final binding

arbitration before the American Arbitration

Association (AAA), utilizing its Commercial

Arbitration Rules. One arbitrator shall use all

reasonable efforts to minimize discovery and to

complete the arbitration proceedings as

expeditiously as possible. The Arbitrator shall

render a written decision within thirty (30)

calendar days of the hearing. The arbitrator will

not award attorney’s fees, or punitive, incidental,

consequential, treble or other multiple or

exemplary damages, and the parties hereby agree to

waive and not seek such damages. Either party may

seek judicial relief to compel the other party to

comply with the provisions of this Section, or

injunctive or other equitable relief to protect its

intellectual property rights, provided (unless

prohibited by applicable law) that the remainder of

the dispute or claim is submitted to arbitration.

The arbitration shall be held in Marin County,

California; both parties hereby give their

irrevocable consent to jurisdiction of courts of or

in the State of California, as well as processes of

the AAA in California. Awards shall be final,

binding and non-appealable (except on the minimal

grounds required under the Federal Arbitration Act

or other applicable law). All awards may be filed

with one or more courts, state, federal or foreign

having jurisdiction over the party against whom

such award is rendered or its property, as a basis

of judgment and of the issuance of execution for

its collection.

Plaintiffs argue the six Alumni Agreements are not pertinent to

Defendants’ motion because the Alumni Program “is a different event

than the Big Table [program]” and “[t]here are no allegations in the

complaint concerning the Alumni Program.” (Plts.’ Opp’n to Mot. to

Stay 2:26-28.) Defendants do not respond to this argument in their

reply brief. However, the following averment in Langemeier’s

declaration supports Plaintiffs’ argument that the Alumni Agreements

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are unrelated to the Big Table programs: “Participants who have

graduated from the Big Table programs are eligible to attend

additional educational seminars called ‘Alumni’ programs. Every

participant in the Big Table Alumni programs signs a Big Table Alumni

Agreement.” (Langemeier Decl. ¶ 5.) Further, allegations in

Plaintiffs’ complaint allege claims arising out of Big Table programs

Plaintiffs attended in 2006 and January 2007; however, the dates of

each of the six signatures on the Alumni Agreements are May, August,

and September 2007. Defendants have failed to show how these Alumni

Agreements, signed several months after Plaintiffs attended the Big

Table programs, “encompass[] the dispute at issue.” McLeod, 2005 WL

3763354 at *2.

Plaintiffs do not dispute, however, that the Big Table

Agreements, if valid, would encompass each contracting Plaintiff’s

claim. Rather, Plaintiffs argue that (1) Defendants do not have

standing to enforce the Big Table Agreements, and (2) the agreements

to arbitrate in the Big Table Agreements are unconscionable.

1. Standing

Plaintiffs argue Defendants cannot enforce the arbitration

agreements in the Big Table Agreements because it was Coaching

Resource, Inc. (“CRI”), and not LOL or Langemeier, that was a party to

the Big Table Agreements. (Plts.’ Opp’n to Mot. to Stay 4:5.) 

Defendants counter LOL can enforce the agreements to arbitrate as the

successor in interest to CRI, and that Langemeier can enforce the

agreements as the agent of both CRI and LOL. Defendants have

presented two sets of Big Table Agreements. The agreements in the

second set, which are attached to Defendants’ reply brief, are signed

by Loral Langemeier on behalf of CRI, while the agreements in the

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first set, which are attached to Defendants’ motion to stay, are

unsigned. Plaintiffs object to Defendants’ submission of exhibits

with their reply brief. (Plts.’ Supplemental Brief 6:24-7:5.) 

However, Plaintiffs’ objection is overruled in light of Plaintiffs’

failure to show in their supplemental brief why this evidence should

be excluded.

“Nonsignatory successors and alleged alter egos are entitled

to compel arbitration under clauses signed by the corporations whose

liabilities they are alleged to have assumed.” Prograph Inter. Inc.

v. Barhyde, 928 F. Supp. 983, 991 (N.D. Cal. 1996) (citing Pritzer v.

Merill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1121-22 (3d

Cir. 1993)). Further, nonsignatories may bind signatories under

“ordinary contract and agency principles.” Comer v. Micor, Inc., 436

F.3d 1098, 1101 (9th Cir. 2006). “[A] willing non-signatory seeking

to arbitrate with a signatory that is unwilling may do so under what

has been called an ‘alternate estoppel theory,’ which takes into

consideration the relationship of the persons, wrongs, and issues.” 

Merill Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 125, 130 (2d

Cir. 2003); see also Brown v. General Steel Domestic Sales, LLC, 2008

WL 2128057, at *6-*7 (C.D. Cal. 2008) (compiling cases for this

“agency principle”).

Here, all of Plaintiffs’ claims arise out of the alleged

misrepresentations made by Langemeier on behalf of LOL at the Big

Table programs. The uncontroverted evidence shows that CRI operated

the Big Table programs in 2006 and January 2007, and that LOL assumed

all of CRI’s assets and liabilities related to the Big Table programs

on January 3, 2008. (Langemeier Decl. ¶ 6; Supplemental Decl. of

Langemeier Ex. 3, “Unanimous Written Consent” of Directors of LOL

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accepting assets and liabilities, and “Unanimous Written Consent” of

Directors of CRI transferring liabilities; see also id. ¶ 3

(Langemeier declaring “CRI transferred all of its assets and liability

related to the Big Table programs to LOL [and] LOL accepted these

assets and liabilities”).) The uncontroverted evidence also shows

Langemeier is a “shareholder and [an] officer of [LOL], and was a

shareholder and officer of its predecessor [CRI].” (Supplemental

Decl. of Langemeier ¶ 1.) It is in this capacity Plaintiffs allege

Langemeier made the fraudulent statements on which their claims are

based. (Compl. ¶¶ 16-17 (“LOL is a mere shell corporation and alter

ego of Langemeier.”).) Accordingly, LOL is entitled to enforce the

arbitration agreements as CRI’s successor in interest and Langemeier

is entitled to enforce the arbitration agreements as an agent of both

LOL and CRI.

2. Unconscionability

Plaintiffs argue the “the Big Table Arbitration Agreements

are not valid because they are unconscionable under California Law.” 

(Plts.’ Opp’n to Mot. to Stay 13:26-27.) Defendants rejoin

“Plaintiffs have not met their burden of proving both procedural and

[substantive] unconscionability.” (Reply 6:13-14.)

Under the Federal Arbitration Act, a written arbitration

provision is valid and enforceable “save upon such grounds as exist at

law or in equity for the revocation of any contract.” 9 U.S.C. § 2. 

“Generally applicable contract defenses, such as unconscionability,

may render an arbitration provision unenforceable. Whether an

arbitration provision is unconscionable is governed by state contract

law.” Omstead v. Dell, Inc., 594 F.3d 1081, 1086 (9th Cir. 2010)

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(citation omitted). Here, the parties agree California contract law

governs the Big Table Agreements.

Under California law, an arbitration agreement

. . . is unenforceable if it is both procedurally

and substantively unconscionable. California

courts apply a “sliding scale” analysis in making

this determination: the more substantively

oppressive the contract term, the less evidence of

procedural unconscionability is required to come to

the conclusion that the term is unenforceable, and

vice versa. Thus, although both procedural and

substantive unconscionability must be present for

the contract to be declared unenforceable, they

need not be present to the same degree.

Pokorney v. Quixtar, Inc., 601 F.3d 987, 996 (9th Cir. 2010) (internal

citations and quotations omitted). “[T]he party opposing arbitration

has the burden of proving the arbitration provision is

unconscionable.” Sullivan v. Lumber Liquidators, Inc., 2010 WL

2231781, *3 (N.D. Cal. 2010); Engalla v. Permanente Med. Grp., Inc.,

15 Cal. 4th 951, 972 (1997) (“a party opposing the petition [to

arbitrate] bears the burden of proving by a preponderance of the

evidence any fact necessary to its defense”).

a. Procedural Unconscionability

“Procedural unconscionability concerns the manner in which

the contract was negotiated and the circumstances of the parties at

the time. It focuses on factors of oppression and surprise . . . . 

[The court is to] commence [its] procedural unconscionability analysis

by determining whether the [agreements] were contracts of adhesion. A

contract of adhesion is a standardized contract, which, imposed and

drafted by the party of a superior bargaining strength, relegates to

the subscribing party only the opportunity to adhere to the contract

or reject it.” Parada v. Superior Court, 176 Cal. App. 4th 1554, 1570

(2009) (internal citations and quotations omitted). Here, the parties

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do not dispute that the agreements to arbitrate were contained in

standardized forms drafted by Defendants, and that Defendants were the

parties of superior bargaining strength, which gave Plaintiffs the

option of signing the contracts or rejecting them, in which case

Plaintiffs could not attend the Big Table programs. Therefore, the

arbitration agreements are contracts of adhesion. However, “[t]he

take-it-or-leave-it nature of [the] agreement[s] is insufficient to

render [them] unenforceable.” Chalk v. T-Mobile USA, Inc., 560 F.3d

1087, 1094 (9th Cir. 2009). “A procedural unconscionability analysis

also includes consideration of the factors of surprise and

oppression.” Parada, 176 Cal. App. 4th at 1571 (internal citations

and quotations omitted).

Plaintiffs argue the arbitration agreements were oppressive

because Plaintiffs had already made over-the-phone credit card

payments for the Big Table programs before they were provided with the

Big Table Agreements, and therefore Plaintiffs were not given an

opportunity to negotiate the terms of the arbitration agreements. 

Defendants counter the arbitration agreements were not oppressive

because Plaintiffs never attempted to negotiate the terms of the

agreements, and “[i]n choosing to receive coaching and education at

the Big Table, Plaintiffs decided to forego a number of alternative

sources of education.” (Reply 9:18-26.)

Oppression refers not only to an absence of power

to negotiate the terms of a contract, but also to

the absence of reasonable market alternatives. In

many cases of adhesion contracts, the weaker party

lacks not only the opportunity to bargain but also

any realistic opportunity to look elsewhere for a

more favorable contract; he must either adhere to

the standardized agreement or forego the needed

service. Conversely, the oppression factor of the

procedural element of unconscionability may be

defeated, if the complaining party has a meaningful

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choice of reasonably available alternative sources

of supply from which to obtain the desired goods

and services free of the terms claimed to be

unconscionable.

Parada, 176 Cal. App. 4th at 1572 (internal citations and quotations

omitted). Here, the Big Table Agreements expressly provide Plaintiffs

with the opportunity to receive a refund of their Big Table program

tuition prior to the second day of the program. Plaintiffs have not

shown that they attempted to negotiate the terms of the arbitration

agreements before signing the Big Table Agreements, or that they

attempted to obtain a reimbursement of their tuition. Further,

Plaintiffs have not shown they did not have “many reasonable and

realistic market alternatives” to attending the Big Table programs,

including choosing not to attend investment education events at all. 

Id. (finding no oppression when Plaintiffs could have invested in

precious metals through other vendors or chosen not to invest in

precious metals at all); Monex Deposit Co. v. Gilliam, 671 F. Supp. 2d

1137, 1149 (C.D. Cal. 2009) (same). “This is not a situation such as

admittance to a hospital or employment, in which an adhesion contract

might be oppressive despite the availability of alternatives.” 

Parada, 176 Cal. App. 4th at 1572. Therefore, Plaintiffs have failed

to meet their burden of showing the arbitration agreements were

oppressive.

Plaintiffs argue the arbitration agreements were a surprise

because they were in the same “type setting” as the other terms in the

contract. (Plts.’ Opp’n to Mot. to Stay 16:21-22.) However,

Plaintiffs have not shown how the arbitration agreements were a

surprise since the “arbitration provisions [are] not hidden, but [are]

in the same typeface and font as the rest of the [two-page Big Table

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Agreement] and [have] bold headings accurately describing the

substance of each paragraph.” Monex, 671 F. Supp. 2d at 1144 (finding

no surprise under these circumstances); Parada, 176 Cal. App. 4th at

1571 (same). Plaintiffs also argue the arbitration agreements were a

surprise because Plaintiffs were not informed about the American

Arbitration Association cost structure or provided a fee schedule. 

(Plts.’ Opp’n 15:22-17:21.) However, “[P]laintiff[s] have not shown

that the American Arbitration Association rules, referenced in the

arbitration agreement, contain provisions that are unfair or

inequitable. The mere fact that the arbitration agreement

incorporates another document by reference does not constitute

procedural unconscionability.” Sullenberger v. Titan Health Corp.,

2009 WL 1444210, at *8 (E.D. Cal. 2009). Therefore, Plaintiffs have

not met their burden of showing procedural unconscionability.

b. Substantive Unconscionability

Substantive unconscionability “focuses on the terms of the

agreement and whether those terms are so one-sided as to shock the

conscience.” Soltani v. W. & S. Life Ins. Co., 258 F.3d 1038, 1043

(9th Cir. 2001). “The focus of the inquiry is whether the term is

one-sided and will have an overly harsh effect on the disadvantaged

party. Thus, mutuality is the ‘paramount’ consideration when

assessing substantive unconscionability. Agreements to arbitrate must

contain at least a modicum of bilaterality to avoid

unconscionability.” Pokorny, 601 F.3d at 997-98.

Plaintiffs argue the arbitration agreements are

substantively unconscionable because they “strip away” “litigation

rights” such as trial by jury and the availability of full discovery,

punitive damages, incidental damages, and attorneys fees. (Plts.’

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Opp’n to Mot. to Stay 18:1-9.) Defendants counter Plaintiffs have not

provided evidence that the limitations on discovery and damages are

unconscionable. (Reply 11:21-12:20.) Plaintiffs have failed to cite

authority supporting their argument that these limitations in the

context of an investment education agreement “shock the conscience or

[are] unfairly one-sided.” Monex, 671 F. Supp. 2d at 1147 (rejecting

plaintiff’s argument that limitation on damages was substantively

unconscionable in context of an investor agreement and distinguishing

cases involving employment agreements); see also Borden Inc. v. Advent

Ink Co., 701 A.2d 255, 264 (Pa. Sup. Ct. 1997) (“In commercial

settings, a limitation on damages clause will rarely be found

unconscionable.”). Nor have Plaintiffs shown how the discovery

provision “will prove insufficient to allow [Plaintiffs] a fair

opportunity to present their claims.” Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 31 (1991) (rejecting challenge to limitation

on discovery in an arbitration agreement); see also Coast Plaza

Doctors Hosp. v. Blue Cross of Cal., 83 Cal. App. 4th 677, 689-90

(2000) (“The fact that an arbitration may limit a party’s discovery

rights is not ‘substantive unconscionability.’ If it were, every

arbitration clause would be subject to an unconscionability challenge

on that ground.”).

Plaintiffs also argue the arbitration agreements are

substantively unconscionable because they are “silen[t] regarding

potentially significant arbitration costs” and Plaintiffs’ inability

to pay those costs prevents Plaintiffs from vindicating their

statutory rights that “affect the public interest.” (Plts.’ Opp’n to

Mot. to Stay 18:27-19:23.) Defendants counter “Plaintiffs have

offered no evidence to show that the fees are unconscionable in the

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specific context of this case.” (Reply 13:15-17.) Each Plaintiff

avers lack of resources to afford arbitration, which could cost

“$7,750 and anywhere from $300 to $500 an hour.” However, Plaintiffs

have not shown how the potential costs of arbitration are higher than

the costs of litigating their case in federal court. Nor have

Plaintiffs presented evidence of their net worth or monthly expenses;

rather, they refer only to their monthly and annual incomes. Further,

“unconscionability is determined as of the time the contract was

entered into, not in light of subsequent events.” Morris v. Redwood

Empire Bancorp., 128 Cal. App. 4th 1305, 1324 (2005). Therefore,

Plaintiffs have failed to show that the terms of the arbitration

agreements “are so one-sided as to shock the conscience.” Soltani,

258 F.3d at 1043. 

Since Plaintiffs have failed to show that the arbitration

agreements -- which Plaintiffs concede, if valid, encompass the

contracting Plaintiffs’ claims -- are either procedurally or

substantively unconscionable, Defendants’ motion to stay will be

granted.

3. Scope of the Stay

Defendants argue the entire action should be stayed since

arbitration will likely involve the “resolution of common issues” and

“failing to stay the [entire] action could lead to inconsistent

rulings.” (Reply 14:5-17.) Plaintiffs argue “[o]nly five of the

thirteen plaintiffs entered into contracts for the Big Table that

contains[] the arbitration clause at issue.” (Plts.’ Opp’n to Mot. to

Stay 2:13-14.) 

“Where some portions of an action are arbitrable and others

are not, the decision to stay those claims not subject to arbitration

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is in the court’s discretion.” McLeod, 2005 WL 376334 at *2; see also

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20

n.22 (1983) (“In some cases, of course, it may be advisable to stay

litigation among the non-arbitrating parties pending the outcome of

the arbitration. That decision is one left to the district court 

. . . as a matter of its discretion to control its docket.”); see also

United States v. Neumann Caribbean Int’l, Ltd., 750 F.2d 1422, 1427

(9th Cir. 1985) (staying all proceedings in case, including nonarbitrable third party complaint, pending arbitration for reasons of

“economy and efficiency”). “In deciding whether to stay nonarbitrable claims, a court considers economy and efficiency, the

similarity of the issues of law and fact to those that will be

considered during arbitration, and the potential for inconsistent

findings absent a stay.” McLeod, 2005 WL 3763354 at *2 (internal

citations, quotations, brackets, and ellipses omitted).

Here, Defendants have shown that the Big Table Agreements

were signed by Plaintiffs Laurie Wolf, Delores Berman, Kimchi Chow,

Steven A. Newell, and Marilyn Cadreau Newell. Defendants have not

shown that Plaintiff I-Sun Chow (Plaintiffs collectively refer to the

“Chows” in their complaint and allege that the Chows attended Big

Table programs together) signed the agreements. (Compl. ¶ 7.) 

Further, Plaintiffs allege Grasshill is a corporation with “Chow” as

its “only shareholder, director, and officer.” (Id. ¶ 8.) Similarly,

Plaintiffs allege Tamsco is a limited liability company with “Newell”

as its “only member and manager.” (Id. ¶ 12.) The remaining

Plaintiffs -- Theresa Heath, Brady Heath, JKR, Surfer Beach, and TBD 

-- all allege the same claims as the contracting Plaintiffs, against

the same Defendants, all allegedly arising out of investments made

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following advice obtained from the Big Table programs in 2006 and

January 2007. In light of the similarity of the issues of law and

fact among each Plaintiff’s claim and the possibility of inconsistent

rulings if the entire action is not stayed, the interests of economy

and efficiency favor staying this entire action.

IV. CONCLUSION

For the stated reasons, Defendants’ motion to dismiss

(Docket No. 8) is denied and Defendants’ motion to stay (Docket No. 9)

is granted. This action is stayed under 9 U.S.C. § 3 pending

arbitration of Plaintiffs Laurie Wolf, Delores Berman, Kimchi Chow,

Steven A. Newell, and Marilyn Cadreau Newell’s claims in accordance

with the terms of the Big Table Agreements. Further, the status

conference currently scheduled for October 4, 2010, is continued to

commence at 9:00 a.m. on March 14, 2011. A joint status report shall

be filed fourteen (14) days prior to the status conference, in which

the status of the arbitration proceedings shall be explained.

Dated: August 24, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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