Wolf, et al., v. Langemeier, et al.,

Filing 107

ORDER signed by Judge Garland E. Burrell, Jr on 1/18/13 ORDERING for the stated reasons, Defendants' Motion to Compel Arbitration (ECF No. 100 ) is granted. Further, this action is dismissed without prejudice in light of the requirement tha t Plaintiffs arbitrate their claims. Sparling v. Hoffman Constr., Co., 864 F.2d 635, 638 (9th Cir. 1988) (stating "district court acted within its discretion when it dismissed... claims [since]... the arbitration clause was broad enough to bar all of the plaintiff's claims since it required [plaintiff] to submit all claims to arbitration."). Therefore, this action shall be closed. CASE CLOSED. (Becknal, R)

1
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8

IN THE UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11
12

TAMSCO PROPERTIES,LLC;
JKR LASER INVESTMENT, LLC;
SURFER BEACH, LLC; and TO BE
DETERMINED, LLC,

13

Plaintiffs,

14
15

)
)
)
)
)
)
)
)
)
)
)
)
)
)

v.
LORAL LANGEMEIER and LIVE OUT
LOUD, INC.,

16
Defendants.
17
18

Defendants

seek

an

2:09-cv-03086-GEB-EFB
ORDER GRANTING MOTION TO
COMPEL ARBITRATION

order

compelling

Plaintiffs,

19

nonsignatories to an arbitration agreement, to arbitrate all claims

20

in this action. The order is sought under 9 U.S.C. § 4 of the Federal

21

Arbitration Act (“FAA”). Defendants argue arbitration should be

22

compelled under the equitable estoppel doctrine, inter alia, because

23

all of Plaintiffs’ claims relate to Defendants’ alleged investment

24

representations which were made with the understanding that any

25

dispute

26

Specifically,

27

individuals,” “affiliated with each Plaintiff” limited liability

28

company, “attended the Big Table program[, an investment-education

concerning

those

Defendants

representations
argue

“Plaintiffs

1

would
admit

be

arbitrated.
that

.

.

.

1

program,]

2

Arbitration 4:6–9, ECF No. 100.) Defendants argue “the individuals

3

through which Plaintiffs attended the Big Table programs and heard

4

the

5

arbitration agreements that this Court has determined to be valid,

6

enforceable, and broad enough to cover the claims at issue in this

7

litigation.” (Id. at 4:20–24.) Defendants argue that at Big Table

8

programs, said members received “educational information . . . that

9

[is] the basis . . . of their claims,” concerning which the members

10

agreed in writing to arbitrate any dispute arising from or related to

11

the Big Table programs. (Id. at 7:20–23, 8 n.3.) Defendants argue

12

“Plaintiffs cannot adopt only the parts of this transaction which are

13

beneficial, and then reject the burdens.” (Id. at 7:25–26.) Further,

14

Defendants argue Plaintiffs’ claims are “inextricably intertwined

15

with the contract that contained the arbitration agreement,” because

16

“[a]ll of the claims in this case arise out of representations that

17

were supposedly made during the Big Table programs.” (Id. at 8:6–14.)

18

Plaintiffs counter that their “claims are not intertwined

on

alleged

[each

plaintiff]

representations

entity’s

regarding

behalf.”

(Mot.

investments

all

Compel

signed

19

to

20

agreement,” because “[P]laintiffs have not alleged a claim for breach

21

of contract or the negligent performance of any duty to be provided

22

under the agreements, nor even mention[ed the Big Table] agreements

23

in their complaint.” (Opp’n Mot. Compel Arbitration 7:10–16, ECF No.

24

102.) Further, Plaintiffs rejoin with nonresponsive, conclusory, and

25

unsupported equity arguments, which are insufficient to establish

26

that applying equitable estoppel would be inappropriate in this case.

27

Plaintiffs also respond with a waiver of arbitration argument.

28

any

degree

with

the

obligations

stated

in

the

Big

Table

However, as explained below, Plaintiffs have not shown that
2

1

Defendants waived arbitration, and Plaintiffs will be compelled to

2

arbitrate their claims under the equitable estoppel doctrine since

3

Plaintiffs claims are intertwined with the Big Table Program contract

4

which

5

alternative argument on which their motion is based need not be

6

addressed.

includes

an

arbitration

7

clause.

Therefore,

Defendants’

I. BACKGROUND

8

The following assertions and allegations in the complaint

9

concern the motion. See Am. Title Ins. Co. v. Lacelaw Corp., 861 F.2d

10

224, 226 (9th Cir. 1988) (“Factual assertions in pleadings, unless

11

amended, are considered judicial admissions conclusively binding on

12

the party who made them.”). Defendants’ “on-going business activities

13

in the State of California . . . includ[ed] the Big Table events that

14

Plaintiffs

15

DPPonline . . . [which] was used to direct [those] attending Big

16

Table events towards the purchase of investments.” (Compl. ¶¶ 16, 19,

17

ECF No. 1.) Each Plaintiff is a limited liability company. (Id.

18

¶¶ 12–15.) The individual members of each Plaintiff limited liability

19

company

20

California. (Id. ¶ 13 (“JKR is a limited liability company . . .

21

whose individual members . . . attended Big Table No. 24 . . . at the

22

Embassy Suite in South Lake Tahoe California.”); id. ¶ 14 (“Surfer

23

Beach is a limited liability company . . . whose individual members

24

. . . attended Big Table No. 24 . . . at the Embassy Suite in South

25

Lake Tahoe California.”); id. ¶ 15 (“TBD is a limited liability

26

company . . . whose individual members . . . attended Big Table No.

27

23 . . . at the Embassy Suite in South Lake Tahoe California.”); see

28

id. ¶¶ 10–11 (stating that S. Newell and M. Newell “attended the Big

.

.

attended

.

attended,

the

“Big

[and

Table”

3

Defendants’]

events

in

website

South

known as

Lake

Tahoe,

1

Table . . . in 2006"); id ¶ 12 (listing “Newell” as Tamsco’s “only

2

member and manager since its formation”). At “Big Table” programs in

3

South

4

“exhort[ed] and encourag[ed]” Plaintiffs “to invest in various real

5

estate ventures and other investment ‘opportunities.’” (Id. ¶ 228

6

(regarding JKR Laser Investments); accord id. ¶ 202 (“Langemeier

7

exhort[ed] and encourag[ed] Tamsco, and other Big Table participants,

8

to purchase this investment.”); id. ¶ 246 (“Langemeier exhort[ed] and

9

encourag[ed] Surfer Beach, and other Big Table participants, to

10

invest in the Cerritos.”); id. ¶ 264 (“Langemeier exhort[ed] and

11

encourag[ed] [Plaintiff To Be Determined, LLC,] and other Big Table

12

participants, to purchase the investment offered by Renaissance.”).)

Lake

Tahoe,

California

in

2006,

(id.

¶

6),

Defendants

13

Defendants’ misrepresentations at and in connection with

14

these programs promoted “high risk and not safe” investments “in

15

pursuit

16

Plaintiffs sue Defendants for these misrepresentations alleging,

17

inter alia, fraud and breach of fiduciary duties. (Id. ¶¶ 115–144,

18

189–302.)

19

of

their

Tamsco

own

pecuniary

Properties

LLC

interests.”

(“Tamsco”)

(Id.

¶¶

states:

20,

“In

117.)

actual

20

reliance upon Langemeier’s representations Tamsco paid $50,000 for

21

an equity interest in Z Harvard Square, $50,000 . . . for a ‘unit’

22

of STG [a business], and $125,000 . . . for a limited partnership

23

interest in Renaissance.” (Compl. ¶ 193.) JKR Laser Investment LLC

24

(“JKR”) states: “In actual reliance upon Langemeier’s representations

25

JKR paid $100,000 for a limited property interest in Renaissance.”

26

(Id. ¶ 219.) Surfer Beach LLC states: “In actual reliance upon

27

Langemeier’s representations Surfer Beach paid $250,000 for what it

28

had been told by Langemeier to be an interest in real property . .
4

1

. .” (Id. ¶ 237.) To Be Determined LLC (“TBD”) states: “In actual

2

reliance upon Langemeier’s representations TBD paid $75,000 for a

3

limited partnership interest in Renaissance.” (Id. ¶ 255.)

4

Defendants also filed a declaration in support of their

5

motion, in which Defendant Loral Langemeier declares: “Everyone who

6

attends a Big Table program signs a Big Table Agreement.” (Decl.

7

Loral Langemeier ¶¶ 2–5, ECF No. 100-1.) Defendants attached to

8

Langemeier’s

9

pertinent part, the following:

10

declaration

Big

Table

agreements

that

state,

in

Services
Client engages [Defendant], and [Defendant] agrees to
undertake and provide a program of services commonly known
as Loral’s Big Table, to the Client . . . .
* * *
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 . . . resolved by final binding arbitration
before the American Arbitration Association (AAA),
utilizing its Commercial Arbitration Rules.

11
12
13
14
15
16
17

(E.g., id. Ex. A, at 5–6, ¶ “Arbitration.”)

18

Further,

Defendants

attached

to

the

motion

special

19

interrogatories and requests for admissions. Attached interrogatory

20

No. 2 asks Plaintiffs to “IDENTIFY each person affiliated with YOU

21

who heard representations at the BIG TABLE as alleged in YOUR

22

COMPLAINT.” (Decl. Benoff. Ex. A, at 9, ECF No. 100-3.) Plaintiff

23

Tamsco responded by identifying Steven Newell, (id. at 13), Plaintiff

24

JKR identified Jessica Behrman, (id. Ex. B, at 24), Plaintiff Surfer

25

Beach also identified Jessica Behrman, (id. Ex. C, at 35), and

26

Plaintiff

27

Defendants’ requests for admissions include the following:

28

TBD

identified

Request No. 4
Admit that

Wendy

the

Maynard.

people
5

(Id.

Ex.

identified

in

D,

at

YOUR

47.)

1
2
3
4
5
6
7
8
9
10
11
12

response to Interrogatory Number 2 attended the BIG
TABLE on YOUR BEHALF.
Request No. 5
Admit that the people identified in YOUR
response to Interrogatory Number 2 signed a BIG
TABLE AGREEMENT.
Request No. 6
Admit that the BIG TABLE AGREEMENT(s) signed
by the people identified in YOUR response to
Interrogatory Number 2 contained an arbitration
clause.
(Id. Ex. E, at 53.) Tamsco responded as follows:
Response to Request No. 4
Admit.
Response to Request No. 5
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit.
Response to Request No. 6
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit.

13
(Id. at 57.) JKR responded as follows:
14
15
16
17
18
19
20
21
22
23

Response to Request No. 4
Admit,
based
on
present
knowledge.
If
responding party subsequently obtains information
that would lead to a different response it will
seek to amend this response.
Response to Request No. 5
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit, based on present knowledge. If
responding party subsequently obtains information
that would lead to a different response it will
seek to amend this response.
Response to Request No. 6
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit, based on present knowledge. If
responding party subsequently obtains information
that would lead to a different response it will
seek to amend this response.

24
25
26
27
28

(Id. Ex. F, at 68–69.) Surfer Beach responded as follows:
Response to Request No. 4
Admit,
based
on
present
knowledge.
If
responding party subsequently obtains information
that would lead to a different response it will seek
to amend this response.
6

1
2
3
4
5
6
7

Response to Request No. 5
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit, based on present knowledge. If
responding party subsequently obtains information
that would lead to a different response it will seek
to amend this response.
Response to Request No. 6
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit, based on present knowledge. If
responding party subsequently obtains information
that would lead to a different response it will seek
to amend this response.

8
(Id. Ex. G, at 79–80.) Plaintiff TBD responded as follows:
9
10
11
12
13
14
15
16
17
18

Response to Request No. 4
Admit,
based
on
present
knowledge.
If
responding party subsequently obtains information
that would lead to a different response it will seek
to amend this response.
Response to Request No. 5
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit, based on present knowledge. If
responding party subsequently obtains information
that would lead to a different response it will seek
to amend this response.
Response to Request No. 6
Objection on the grounds of relevancy. Without
waiving said objection responding party answers as
follows: Admit, based on present knowledge. If
responding party subsequently obtains information
that would lead to a different response it will seek
to amend this response.

19
(Id. Ex. H, at 90–91.) Further, Plaintiffs produced the formation
20
documents of their respective entities, which show that Steve Newell
21
is a member of Tamsco, (id. Ex. I, at 103), Jessica Behrman is a
22
member of both Surfer Beach and JKR, (id. Ex. J, at 117-18 (regarding
23
JKR); id. Ex. K, at 133 (regarding Surfer Beach)), and Wendy Maynard
24
is a member of TBD. (Id. Ex. L, at 158.)
25
Further, Defendants attached to Langemeier’s Declaration
26
a copy of the Big Table Agreement signed by a member of each entity
27
Plaintiff who attended the Big Table program in South Lake Tahoe,
28
California. (Id. Ex. A, at 7 (showing Jessica Behrman, member of both
7

1

JKR and Surfer Beach, signed the agreement); id. Ex. E, at 20

2

(showing Steven Newell, member of Tamsco, signed the agreement); id.

3

Ex. I, at 32 (showing Wendy Maynard, member of TBD, signed the

4

agreement).)

5

II. DISCUSSION

6

“A district court’s role under the FAA is limited to

7

determining (1) whether a valid agreement to arbitrate exists and, if

8

it does, (2) whether the agreement encompasses the dispute at issue.”

9

Samson v. NAMA Holdings LLC, 637 F.3d 915, 923 (9th Cir. 2010)

10

(internal alterations and quotation marks omitted). “If the response

11

is affirmative on both counts, then the Act requires the court to

12

enforce the arbitration agreement in accordance with its terms.” Id.

13

at 923–24.

14

Defendants’ evidence evincing that a valid arbitration

15

agreement exists between Defendants and an individual member of each

16

entity Plaintiff is uncontroverted. Therefore, the issue is whether

17

Plaintiffs are required to arbitrate their claims under the equitable

18

estoppel doctrine even though they are nonsignatories. Defendants cite

19

both federal and California authority in support of their motion, but

20

do not directly address the issue of which law governs. However, the

21

precise law governing the issue need not be decided, since the

22

conclusion is the same under both federal and California law. See

23

generally Allianz Global Risk U.S. Ins. Co. v. Gen. Elec. Co., 470 F.

24

App’x 652, 653 (9th Cir. 2012) (finding that a district court’s

25

decision to apply federal law to “equitably estop[ a party] from

26

refusing to arbitrate” was “not material” since the conclusion would

27

have been the same under state law).

28

“Equitable estoppel ‘precludes a party from claiming the
8

1

benefits of a contract while simultaneously attempting to avoid the

2

burdens that contract imposes.’” Mundi v. Union Sec. Life Ins. Co.,

3

555 F.3d 1042, 1045 (9th Cir. 2009); accord NORCAL Mut. Ins. Co. v.

4

Newton, 84 Cal. App. 4th 64, 84 (2000) (“No person can be permitted

5

to adopt that part of an entire transaction which is beneficial to

6

him/her, and then reject its burdens.”). Further, “[a] nonsignatory

7

can be compelled to arbitrate when a preexisting relationship existed

8

between the nonsignatory and one of the parties to the arbitration

9

agreement, making it equitable to compel the nonsignatory to arbitrate

10

as well.” JSM Tuscany, LLC v. Superior Court, 193 Cal. App. 4th 1222,

11

1240 (2011). “The equitable estoppel doctrine extends to claims that

12

are dependent upon or inextricably intertwined with the obligations

13

imposed by the contract containing the arbitration clause. As with

14

signatory plaintiffs, when nonsignatory plaintiffs are pursuing such

15

claims, they should be bound by the arbitration clause in the contract

16

which is integral to their claims.” Id. at 1241.

17

The Court is “thus required to analyze the [claims]

18

alleged in the complaint, to determine whether the claims asserted by

19

the plaintiffs are dependent upon, or inextricably intertwined with,”

20

the benefits attendant to the Big Table programs concerning which an

21

arbitration obligation exists. Id. at 1242. Plaintiffs sue Defendants

22

for fraud, false statements, breach of fiduciary duties, and unlawful

23

and unfair business practices based on misrepresentations allegedly

24

made in relation to the Big Table programs. (Id. ¶¶ 115–144, 189–302.)

25

All of these claims are based upon alleged obligations related to

26

Defendants’ performance under the Big Table agreement, and therefore

27

are subject to the arbitration clauses that an individual member of

28

each Plaintiff entity signed. (Decl. Langemeier Ex. A at 6 (showing
9

1

Jessica Behrman, an member of both JKR and Surfer Beach, signed the

2

Big Table agreement); id. Ex. E, at 20 (showing Steven Newell, a

3

member of Tamsco, signed the Big Table agreement); id. Ex. I, at 32

4

(showing Wendy Maynard, a member of TBD, signed the Big Table

5

agreement).)

6

Equitable

estoppel

“prevent[s]

a

non-signatory

from

7

embracing a contract, and then turning its back on the portions of the

8

contract, such as an arbitration clause, that it finds distasteful.”

9

E.I.

DuPont

de

Nemours

&

Co.

v.

Rhone

Poulenc

Fiber

&

Resin

10

Intermediates, S.A.S., 269 F.3d 187, 200 (3d Cir. 2001); accord Mundi

11

v. Union Sec. Life Ins., Co., 555 F.3d 1042, 1045 (9th Cir. 2009)

12

(stating “a nonsignatory may be held to an arbitration clause where

13

the nonsignatory knowingly exploits the agreement containing the

14

arbitration

15

(internal quotation marks and citation omitted)).

16
17

clause

despite

having

never

signed

the

agreement.”

Defendants argue Plaintiffs are required to arbitrate their
claims because:

18

Plaintiffs admittedly received the benefits of the
Big Table Agreement. They judicially admit to
attending and participating in the Big Table
programs. Similarly, Plaintiffs judicially admit
that they received the educational information
offered at those programs—this is the very same
information that Plaintiffs cast as the purported
representations regarding investments that are the
basis for all of their claims. Plaintiffs cannot
adopt only the parts of this transaction which are
beneficial, and then reject the burdens. Since the
representations allegedly made to Plaintiffs at the
Big Table program form the basis of every claim in
this litigation, those claims must be arbitrated
under the terms of the Big Table Agreement signed
by Plaintiffs’ [individual members].

19
20
21
22
23
24
25
26
27

(Mot.

28

(citing (Decl. Langemeier, Exs. A-L).) Plaintiffs counter that their

Compel

Arbitration

7:18–8:2

10

(internal

citations

ommitted)

1

“claims are not intertwined to any degree with the obligations stated

2

in the Big Table agreement.” (Opp’n Mot. Compel Arbitration 7:10–12.)

3

Defendants reply: “It is the law of this case that Plaintiffs’ claims

4

are intertwined with the Big Table Programs and Agreements. Indeed,

5

this Court previously stayed this litigation on two separate occasions

6

because all of the claims arise out of the Big Table.” (Reply 6:12–16,

7

ECF No. 104 (citing Prior Orders ECF Nos. 37, 70).)

8

Here, the language of the Big Table agreement establishes

9

the benefits and, conversely, the detriments or burdens of the

10

agreement. The Big Table agreements state, in pertinent part, the

11

following:

12

Services
Client engages [Defendant], and [Defendant] agrees
to undertake and provide a program of services
commonly known as Loral’s Big Table, to the Client
. . . .
* * *
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 . . .
resolved by final binding arbitration before the
American Arbitration Association (AAA), utilizing
its Commercial Arbitration Rules.

13
14
15
16
17
18
19
20

(Decl. Langemeier Ex. A, at 5–6.) Thus, the “Clients” under the Big

21

Table agreement agreed to the “burden” or “detriment” of forgoing

22

their rights to litigate by agreeing to arbitrate disputes “related

23

to this Agreement[ and] its performance” in exchange for the “benefit”

24

of the “program of services commonly known as Loral’s Big Table,”

25

which Defendants agreed to provide. (Id. at 6.)

26

Further, Plaintiffs admitted in the complaint and in their

27

responses to requests for admissions that they received information

28

“about

individual

investments,”

(Compl.
11

¶¶

190,

192

(regarding

1

Tamsco); id. ¶ 228 (regarding JKR); id. ¶ 256 (regarding Surfer

2

Beach); id. ¶ 264 (regarding TBD), when their individual members

3

“attended the Big Table” events “on [their] behalf.” (Decl. Benoff Ex.

4

E, at 53, 57 (regarding Tamsco); id. Ex. F, at 68–67 (regarding JKR);

5

id. Ex. G, at 79–80 (regarding Surfer Beach); id. Ex. H, at 90–91

6

(regarding TBD).) This information was obtained through the “program

7

of services commonly known as Loral’s Big Table” which Defendants

8

agreed to provide, and was the sole benefit that the “Clients” who

9

signed this agreement expected to receive. See Deloitte Noraudit A/S

10

v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993)

11

(holding that if a nonsignatory “knowingly accepted the benefits”

12

which were the same as those “benefits secured for all” signatories,

13

the

14

arbitrate”). The entity Plaintiffs were aware of this agreement and

15

its obligation to arbitrate disputes related to performance thereunder

16

since

17

Langemeier Ex. A at 6 (showing Jessica Behrman, member of both JKR and

18

Surfer Beach, signed the agreement); id. Ex. E, at 20 (showing Steven

19

Newell, member of Tamsco, signed the agreement); id. Ex. I, at 32

20

(showing

21

Plaintiffs assert in their complaint that: “In actual reliance” on

22

these “representations,” Plaintiffs used the information and made

23

substantial investments. (Id. ¶ 193; accord id. ¶¶ 219, 237, 255.)

nonsignatory

their

is

“estopped

individual

Wendy

Maynard,

from

members

member

denying

signed

of

TBD,

the

its

obligation

agreements.

signed

the

to

(Decl.

agreement).)

24

Therefore, by virtually attending the Big Table programs,

25

using the Defendants’ investment information, and asserting claims

26

founded on representations made at the Big Table programs which are

27

related to Defendants’ performance under the Big Table agreement,

28

Plaintiffs “embrac[ed]” the Big Table Agreement and now “turn [their]
12

1

back[s]” to its arbitration clause. E.I. DuPont de Nemours & Co., 269

2

F.3d at 200. “To allow [P]laintiff[s] to claim the benefit of the [Big

3

Table Agreements] and simultaneously avoid its burdens would both

4

disregard equity and contravene the purposes underlying enactment of

5

the Arbitration Act.” Int’l Paper Co. v. Schwabediseen Maschinen &

6

Analgen

7

uncontroverted

8

inequitable to permit” Plaintiffs to use the investment information

9

upon which this suit is grounded, “and at the same time . . . avoid

10

arbitration of claims clearly within the ambit of the arbitration

11

clause.” Hughes Masonry Co. v. Greater Clark Cnty. Sch. Bldg. Corp.,

12

659 F.2d 836, 838-39 (7th Cir. 1981).

GMBH,

206

F.3d

evidence

411,

418

(4th

demonstrates

Cir.

that

2000).

“it

would

Defendants’
be

.

.

.

13

However, Plaintiffs argue that “Defendants have waived their

14

right to arbitrate by waiting three years after their initial motions

15

and less than a year before trial, as well as seeking the court’s

16

determination on issues going to the merits of this case.” (Opp’n Mot.

17

Compel Arbitration 1:25–27, ECF No. 102.) Plaintiffs contend this

18

delay has prejudiced Plaintiffs in part because “[P]laintiffs have yet

19

been able to conduct discovery in a meaningful way, and the discovery

20

cut-off

21

discussing, inter alia, the procedural history of this action, which

22

includes stays imposed while previous parties in this action were

23

ordered to arbitrate claims, and argue that Defendants’ discovery

24

requests were designed to “gather[] the information necessary to file

25

a motion to compel arbitration.” (Reply 10:22–23, ECF No. 10.)

is

approaching.”

(Id.

at

10:25–11:4.)

Defendants

reply

26

Although “it is certainly possible to waive contractual

27

rights to arbitration, such waivers are not favored.” Letizia v.

28

Prudential Bache Sec., Inc., 802 F.2d 1185, 1187 (9th Cir. 1986). “A
13

1

party seeking to prove such a waiver must demonstrate: (1) knowledge

2

of an existing right to compel arbitration; (2) acts inconsistent with

3

that

4

arbitration resulting from such inconsistent acts.” Id. (quoting

5

Fisher v. A.G. Becker Paribas, Inc., 791 F.2d 691, 694 (9th Cir.

6

1986)) (internal quotation marks omitted). In the arbitration context,

7

“[w]aiver . . . is distinct from forfeiture . . . . [W]aiver is the

8

intentional relinquishment or abandonment of a known right, whereas

9

forfeiture is the failure to make the timely assertion of that right.”

10

United States v. Park Place Assocs., Ltd., 563 F.3d 907, 935 n.10 (9th

11

Cir. 2009) (internal quotation marks and alterations omitted) (quoting

12

United States v. Jacobo Castillo, 496 F.3d 947, 952 n.1 (9th Cir.

13

2007)

14

participation in litigation if there has been no judicial litigation

15

of the merits of arbitrable issues. . . . Prejudice typically is found

16

only

17

undermined this important public policy or substantially impaired the

18

other

19

efficiencies of arbitration.” Saint Agnes Med. Ctr. v. PacifiCare of

20

Cal., 31 Cal. 4th 1187, 1203–04 (2003). “Because waiver of the right

21

to arbitration is disfavored, any party arguing waiver of arbitration

22

bears a heavy burden of proof.” Fisher v. A.G. Becker Paribas Inc.,

23

791 F.2d 691, 694 (9th Cir. 1986) (internal quotation marks omitted).

24

existing

(en

right;

banc)).

where

side’s

the

and

(3)

Further,

“waiver

petitioning

ability

Plaintiffs

to

have

prejudice

party’s

take

not

to

does

not

conduct

advantage

shown

the

that

of

party

occur

has

the

opposing

by

mere

substantially

benefits

Defendants’

and

litigation

25

actions in this case have been inconsistent with Defendants’ assertion

26

of their arbitration rights, in light of the procedural history in

27

this action showing that Defendants have asserted their rights to

28

arbitration.

Further,

since

Defendants’
14

discovery

requests

were

1

focused on identifying the individuals who attended the Big Table

2

Programs on behalf of each Plaintiff in order to support their motion

3

to compel arbitration, these acts were consistent with their rights

4

to arbitrate. Nor have Plaintiffs shown that they would be prejudiced

5

in any measurable manner by being compelled to arbitrate their claims,

6

particularly since “there has been no judicial [resolution] of the

7

merits of arbitrable issues.” Saint Agnes Med. Ctr., 31 Cal. 4th at

8

1203 (reversing trial court for failing to stay proceeding and order

9

arbitration, reasoning that even extensive litigation over venue does

10

not waive arbitration rights); see also Fisher, 791 F.2d at 697

11

(holding that even extensive discovery over three and a half years is

12

insufficient prejudice for a

13

Plaintiffs have failed to sustain their burden of showing that

14

Defendants waived their right to arbitrate.

15

waiver of arbitration). Therefore,

III. CONCLUSION

16

For

the

stated

reasons,

Defendants’

Motion

to

Compel

17

Arbitration

18

dismissed

19

Plaintiffs arbitrate their claims. Sparling v. Hoffman Constr., Co.,

20

864 F.2d 635, 638 (9th Cir. 1988) (stating “district court acted

21

within its discretion when it dismissed . . . claims [since]. . . the

22

arbitration clause was broad enough to bar all of the plaintiff’s

23

claims

24

arbitration.”). Therefore, this action shall be closed.

25

1/18/13

26
27

(ECF

without

since

it

No.

100)

is

prejudice

required

granted.

in

light

[plaintiff]

Further,
of

to

the

this

action

requirement

submit

all

GARLAND E. BURRELL, JR.
Senior United States District Judge

28
15

that

claims

_________________________

is

to