Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-01637/USCOURTS-cand-3_15-cv-01637-0/pdf.json

Parties Involved:
Ixmation, Inc.
Counter-claimant
Switch, LLC
Counter-defendant

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SWITCH, LLC,

Plaintiff,

v.

IXMATION, INC.,

Defendant.

Case No. 15-cv-01637-MEJ 

ORDER DENYING MOTION TO 

COMPEL ARBITRATION 

Re: Dkt. No. 6

INTRODUCTION

Pending before the Court is Defendant ixmation, Inc.’s Motion to Compel Arbitration and 

to Dismiss or Stay Action pursuant to Federal Rule of Civil Procedure 12(b)(1).1 Dkt. No. 6. 

Plaintiff Switch (Assignment for the Benefit of Creditors), LLC (“Switch”) filed an Opposition 

(Dkt. No. 17), and ixmation filed a Reply (Dkt. No. 19). The Court finds this matter suitable for 

disposition without oral argument and VACATES the July 30, 2015 hearing. See Fed. R. Civ. P. 

78(b); Civ. L.R. 7-1(b). Having considered the parties’ positions, relevant legal authority, and the 

record in this case, the Court DENIES ixmation’s Motion for the reasons set forth below.

BACKGROUND

Switch is the successor-in-interest to Switch Bulb Company, Inc.2 Compl. ¶ 1, Dkt. No. 1-

1. Switch’s business related to the design, manufacture, and sale of light-emitting diode (LED) 

light bulbs. Id. ixmation is in the business of designing and building production machinery and 

automation systems. Id. ¶ 2. 

In July 2013, ixmation provided a proposal to Switch to design and manufacture 

production machinery for Switch for $3,908,000 (the “Proposal”). A copy of ixmation’s Proposal 

 

1 Although Civil Local Rule 7-2(b) requires all motions to be filed as one document, ixmation 

filed a separate Motion (Dkt. No. 6) and Memorandum of Points and Authorities in Support of 

Motion (Dkt. No. 7). For citation purposes herein, the Court’s references to ixmation’s Motion 

refer to the Memorandum.

2

For purposes of this Order, the Court shall refer to Switch (Assignment for the Benefit of 

Creditors), LLC and Switch Bulb Company as “Switch.” 

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to Switch is attached as Exhibit A to Switch’s September 9, 2014 Notice of Removal in ixmation, 

Inc. v. Switch Bulb Co., Inc., No. 14-cv-6993, filed in the United States District Court for the 

Northern District of Illinois, Eastern Division (the “Illinois Action”).

3

 The Proposal includes a 

provision that requires “any dispute, claim, question, or disagreement arising from or relating to 

this agreement or any claim breach thereof” that the parties cannot resolve on their own to be 

adjudicated by arbitration in Illinois. Illinois Action, Dkt. No. 1; Glass Decl., Ex. 1, Dkt. No. 8.

On or about July 17, 2013, Switch submitted a written purchase order to ixmation for the 

design, manufacture, and delivery of a light bulb manufacturing machine. Compl. ¶ 4 & Ex. A 

(“Purchase Order”). The Purchase Order contains Switch’s terms and conditions of purchase,

titled “Standard Conditions of Purchase,” and does not include an arbitration provision, but instead 

provides that acceptance of the Purchase Order “shall be construed and governed in accordance 

with the laws of the state of California,” with jurisdiction and venue in “the Superior Court of 

California for the County of Sonoma, or the United States District Court for the Northern District 

of California.” Id., Ex. A. Switch alleges that ixmation agreed to Switch’s terms and conditions 

of purchase by its performance under the Purchase Order. Id. ¶ 5. In the following months, 

Switch proposed and ixmation accepted various change orders that modified the purchase price. 

Id. Copies of the change orders are attached as Exhibit A to Switch’s Notice of Removal in the 

Illinois Action. See also Glass Decl., Ex. 3. In order to secure payment for the machinery, Switch

opened a letter of credit (the “Letter of Credit”) with Wells Fargo Bank, N.A. (“Wells Fargo”) in 

August 2013. Glass Decl., Ex. 1 (Ex. D to Switch’s Notice of Removal in the Illinois Action). 

In 2014, Switch alleges ixmation failed to adhere to the parties’ agreed timetable for 

delivery of the machinery, after which Switch gave notice of termination of its order to ixmation. 

Compl. ¶ 6. In April 2014, ixmation initiated an American Arbitration Association (“AAA”)

arbitration proceeding in Illinois under the arbitration provision contained in its Proposal. Mot. at 

 

3 As discussed below, ixmation previously brought suit against Switch in Illinois state court, and 

Switch subsequently removed that matter to the Illinois District Court’s Eastern Division. The 

Court takes judicial notice of the Illinois District Court’s docket and documents filed therein. See 

Fed. R. Evid. 201(b); Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 

2006).

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6; Opp’n at 2. 

On September 5, 2014, after it had initiated the AAA arbitration proceeding, ixmation filed 

suit against Switch and Wells Fargo in Illinois state court. Illinois Action, Dkt. No. 1. In that 

case, ixmation requested that Wells Fargo be enjoined from terminating the Letter of Credit 

pending resolution of the arbitration proceedings. Id. On September 9, 2014, Switch removed 

ixmation’s lawsuit to the Illinois District Court. Id. 

Thereafter, on September 12, 2014, Switch filed a Motion to Dismiss, and in the 

Alternative, Motion to Compel Arbitration. Illinois Action, Dkt. No. 7. In that motion, Switch 

states it accepted ixmation’s July 2013 Proposal, issued Purchase Order M00000016, and the two 

documents together became the parties’ “Agreement.” Id. at 2. Switch further argues ixmation’s

“dispute with Switch is subject to an arbitration agreement between the parties,” and there “is no 

dispute that the Agreement contains a valid arbitration provision because the Agreement’s terms 

expressly mandate arbitration.” Id. at 1, 4. In a minute order dated September 17, 2014, the 

Illinois District Court denied Switch’s motion on grounds related to ixmation’s pending request 

for preliminary injunctive relief related to the Letter of Credit. Illinois Action, Dkt. No. 18. 

Switch subsequently filed a second Motion to Dismiss, and in the Alternative, Motion to 

Compel Arbitration on October 10, 2014. Illinois Action, Dkt. No. 48. In its second motion, 

Switch incorporates its arguments from the first motion and argues that the court has no authority 

over the dispute as ixmation had already instituted an AAA arbitration. Id. at 1. The Illinois 

District Court did not rule on Switch’s second motion, instead granting ixmation’s oral motion to 

dismiss the case by minute order dated November 3, 2014. Illinois Action, Dkt. No. 61. 

On March 6, 2015, Switch filed the present Complaint in Sonoma County Superior Court, 

alleging one claim for Breach of Written Contract. ixmation subsequently removed the case to 

this Court on April 10, 2015. Dkt. No. 1. ixmation filed the present Motion to Compel 

Arbitration on April 17, 2015. 

LEGAL STANDARD

The Federal Arbitration Act (“FAA”) provides that written agreements to settle a 

controversy through arbitration “shall be valid, irrevocable, and enforceable, save upon such 

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grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The central 

purpose of the FAA “is to ensure that private agreements to arbitrate are enforced according to 

their terms.” Momot v. Mastro, 652 F.3d 982, 986 (9th Cir. 2011). In order to enforce an 

arbitration agreement, a court shall issue an affirmative order to proceed in arbitration if the court 

is satisfied “that the making of the agreement for arbitration or the failure to comply therewith is 

not in issue.” 9 U.S.C. § 4. Thus, a court’s role in applying the FAA is “limited to determining 

(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement 

encompasses the dispute at issue. If the response is affirmative on both counts, the [FAA] requires 

the court to enforce the arbitration agreement in accordance with its terms.” Chiron Corp. v. 

Ortho Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir. 2000) (citations omitted). The FAA leaves 

no place for the exercise of discretion by a district court. Dean Witter Reynolds v. Byrd, 470 U.S. 

213, 218 (1985).

In enacting the FAA, “Congress declared a national policy favoring arbitration . . . .” 

Southland Corp. v. Keating, 465 U.S. 1, 10 (1984); see also Republic of Nicaragua v. Standard 

Fruit Co., 937 F.2d 469, 475 n.8 (9th Cir. 1991) (“The [FAA] reflects the strong Congressional 

policy favoring arbitration by making such clauses ‘valid, irrevocable, and enforceable.’”)

(quoting 9 U.S.C. § 2). Allowing parties to design an arbitration process tailored to their dispute 

allows for efficient, streamlined procedures. AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 

131 S. Ct. 1740, 1749 (2011). Thus, courts have consistently applied a “liberal federal policy 

favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 

U.S. 1, 24 (1983). “[A]ny doubts concerning the scope of arbitrable issues [are to] be resolved in 

favor of arbitration, whether the problem at hand is the construction of the contract language itself 

or an allegation of waiver, delay, or a like defense to arbitrability.” Id. at 24-25. 

“When evaluating a motion to compel arbitration, courts treat the facts as they would when 

ruling on a motion for summary judgment, construing all facts and reasonable inferences that can 

be drawn from those facts in a light most favorable to the non-moving party.” Chavez v. Bank of 

Am., 2011 WL 4712204, at *3 (N.D. Cal. Oct. 07, 2011) (citing Perez v. Maid Brigade, Inc., 2007 

WL 2990368, at *3 (N.D. Cal. Oct. 7, 2007)).

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DISCUSSION

In its Motion, ixmation argues the parties’ agreement is subject to the arbitration provision 

contained in the Proposal it submitted to Switch in July 2013. Mot. at 4. The arbitration provision 

requires “any dispute, claim, question, or disagreement arising from or relating to this agreement 

or any claim breach thereof” that the parties cannot resolve on their own to be adjudicated by 

arbitration. Glass Decl., Ex. 1. Although Switch subsequently issued a separate Purchase Order, 

ixmation maintains Switch judicially admitted it accepted the terms and conditions in the 

Proposal, including the arbitration provision, when it argued before the Illinois District Court in its 

Motion to Dismiss “there is no dispute that the Agreement contains a valid arbitration provision 

because the Agreement’s terms expressly mandate arbitration and, consistent with that mandate, 

[ixmation] has already initiated the arbitration.” Mot. at 10-11 (quoting Switch’s first Motion to 

Dismiss at 4). 

In response, Switch argues it did not sign or otherwise agree to ixmation’s Proposal, and 

the parties have therefore never agreed to arbitrate their disputes. Opp’n at 3. As for the argument 

that Switch judicially admitted to being bound by the arbitration clause based on its filings in the

Illinois Action, Switch argues that ixmation has either misinterpreted or misrepresented Switch’s 

arguments. Id. at 5.

It is well settled that “[a]rbitration is a matter of contract and a party cannot be required to 

submit any dispute which he has not agreed so to submit.” AT&T Techs., Inc. v. Commc’n 

Workers, 475 U.S. 643, 648 (1986). Thus, when a party disputes “the making of the arbitration 

agreement,” the FAA requires that the “court [ ] proceed summarily to the trial thereof” before 

compelling arbitration under the agreement. Sanford v. MemberWorks, Inc., 483 F.3d 956, 962 

(9th Cir. 2007) (citing 9 U.S.C. § 4). The court’s inquiry encompasses “not only challenges to the 

arbitration clause itself, but also challenges to the making of the contract containing the arbitration 

clause.” Id. (citing Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1140-41 

(9th Cir. 1991)). As the Ninth Circuit clarified in Sanford, “[i]ssues regarding the validity or 

enforcement of a putative contract mandating arbitration should be referred to an arbitrator, but 

challenges to the existence of a contract as a whole must be determined by the court prior to 

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ordering arbitration.” Id. (emphasis in original).

Under California contract law, the elements for a viable contract are (1) parties capable of 

contracting; (2) their consent; (3) a lawful object; and (4) sufficient cause or consideration. United 

States ex rel. Oliver v. Parsons Co., 195 F.3d 457, 462 (9th Cir. 1999). Here, there is no dispute

the parties were capable of contracting, their agreement for ixmation to design and manufacture a 

light bulb manufacturing machine related to a lawful matter, and delivery by ixmation and 

payment by Switch constitutes sufficient consideration. Thus, the only question before the Court 

is whether Switch consented to the arbitration agreement. 

A party’s acceptance of an agreement to arbitrate may be express or implied. Bayer v. 

Neiman Marcus Holdings, Inc., 2011 WL 5416173, at *5 (N.D. Cal. Nov. 8, 2011), aff’d 582 F. 

App’x 711 (9th Cir. 2014); Pinnacle Museum Tower Ass’n v. Pinnacle Mktg. Dev. (U.S.) LLC, 55 

Cal. 4th 223, 236 (2012). “Although an implied in fact contract may be inferred from the conduct, 

situation or mutual relation of the parties, the very heart of this kind of agreement is an intent to 

promise.” Friedman v. Friedman, 20 Cal. App. 4th 876, 887 (1993) (internal quotation marks 

omitted). “[A] promise may be stated in words either oral or written, or may be inferred wholly or 

partly from conduct.” Northstar Fin. Advisors Inc. v. Schwab Invs., 779 F.3d 1036, 1050 (9th Cir. 

2015), as amended on denial of reh’g and reh’g en banc (Apr. 28, 2015) (internal quotations and 

citation omitted).

Here, the Proposal and Purchase Order together could constitute the parties’ agreement, as 

both appear to contain material terms. However, the Proposal contains an arbitration provision 

while the Purchase Order does not. Further, the Proposal provides that all disputes shall be 

governed by the laws of the State of Illinois, while the Purchase Order provides that California law 

applies and jurisdiction for any disputes exists exclusively in the Sonoma County Superior Court 

or the Northern District of California. While federal law is applied to the interpretation of forumselection clauses, see Doe I v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009), those general 

principles are difficult to apply on an undeveloped record with so many factual issues. Thus, it is 

not clear from the documents themselves that an agreement to arbitrate exists. 

It is true “any doubts concerning the scope of arbitrable issues [are to] be resolved in favor 

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of arbitration,” including “the construction of the contract language itself.” Moses H., 460 U.S. at 

24-25. However, the same is not true on a motion to compel arbitration that is opposed on the 

ground that no agreement to arbitrate had been made between the parties. If there is doubt as to 

whether an express, unequivocal agreement to arbitrate exists, the matter should be submitted to a 

jury. See, e.g., Three Valleys Mun. Water Dist., 925 F.2d at 1141 (indicating agreement with 

Third Circuit that, where there is a doubt as to whether an agreement to arbitrate exists, the matter 

should be submitted to a jury and “[o]nly when there is no genuine issue of fact concerning the 

formation of the agreement should the court decide as a matter of law that the parties did or did

not enter into such an agreement”) (internal quotations and citation omitted); Concat LP v. 

Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004) (indicating that, where a motion to 

compel arbitration “is opposed on the ground that no agreement to arbitrate was made,” a court 

should apply a standard similar to the Rule 56 summary judgment standard—i.e., the court should 

give to the opposing party the benefit of all reasonable doubts and inferences that may arise, and 

“[o]nly when there is no genuine issue of material fact concerning the formation of an arbitration 

agreement should a court decide as a matter of law that the parties did or did not enter into such an 

agreement”).

ixmation argues that a signed arbitration agreement is not required because Switch’s 

agreement is reflected by its statements and conduct. Reply at 5-6. As noted above, Switch itself 

maintained in the Illinois Action that the dispute between the parties was subject to an agreement 

to arbitrate. In that case, Switch argued it accepted ixmation’s July 2013 Proposal, and the 

Proposal and Purchase Order together became the parties’ “Agreement.” Illinois Action, Dkt. No. 

7 at 2. It further argued “there is no dispute that the Agreement contains a valid arbitration 

provision because the Agreement’s terms expressly mandate arbitration.” Id. at 4. However, 

while the Court may consider Switch’s previous argument as evidence of an agreement to 

arbitrate, it is not considered a judicial admission in this case. See Nextdoor.Com, Inc. v. 

Abhyanker, 2013 WL 3802526, at *8 (N.D. Cal. July 19, 2013) (an admission in a prior lawsuit, 

while admissible as evidence in a later proceeding, is not binding) (citing Kohler v. Leslie 

Hindman, Inc., 80 F.3d 1181, 1185 (7th Cir. 1996)). 

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Further, Switch argues that it did not have the opportunity to contest the arbitrability of 

ixmation’s claims at the time it filed its motions to dismiss in the Illinois District Court because

ixmation had opened the AAA arbitration proceeding and was already attempting to assert rights 

under the arbitration provision. Opp’n at 5. Switch maintains it “simply argued that 

IXMATION’s claims in the [Illinois] Lawsuit should be made part of the arbitration already 

pending. If the arbitration had proceeded, Switch would have moved for the arbitrator to conclude 

AAA lacked jurisdiction for want of an arbitration agreement.” Id. at 5-6. ixmation argues this 

argument is “frivolous” and the Court should hold Switch to its prior statements because it is 

“playing fast and loose with the courts.” Reply at 6-7. However, as noted above, the Court must 

construe all facts in a light most favorable to the non-moving party. Chavez, 2011 WL 4712204, 

at *3. Accordingly, because Switch disputes whether an arbitration exists, it would be

inappropriate for the Court to find as a matter of law that the parties entered into such an 

agreement. The Court finds that fact questions need development and the record needs 

improvement before this issue can be sorted out. 

Accordingly, the Court finds ixmation has not proven by a preponderance of the evidence 

that an agreement to arbitrate was formed between the parties. 

CONCLUSION

Based on the analysis above, the Court DENIES ixmation’s Motion to Compel 

Arbitration. ixmation’s Motion to Dismiss or Stay Action is therefore DENIED AS MOOT.

IT IS SO ORDERED.

Dated: July 21, 2015

______________________________________

MARIA-ELENA JAMES

United States Magistrate Judge

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