Edible International, LLC et al v. Google, LLC

Filing 37

ORDER. For the reasons set forth in the attached, the defendant's motion to compel arbitration or in the alternative transfer venue (ECF No. 28) is hereby GRANTED IN PART AND DENIED IN PART. The matter is hereby stayed pending the parties' ; arbitration of the plaintiff's claims. The clerk is instructed to close this case but not enter judgment. Any party may move to reopen this case within 30 days of completion of the arbitration and the case shall be reopened upon the filing o f such a motion. The moving party may also seek the lifting of the stay and the entry of judgment or may seek to initiate further proceedings in this action. In light of this disposition, I deny without prejudice the defendant's motion in the alternative to transfer venue. If the parties move to reopen this case following the completion of the arbitration, the defendant may refile its motion to transfer venue. Signed by Judge Michael P. Shea on 7/13/2018. (Self, A.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
EDIBLE INTERNATIONAL, LLC et al,
Plaintiff,
v.
GOOGLE, LLC,
Defendants.

No. 3:18-cv-00216 (MPS)

RULING ON MOTION TO COMPEL ARBITRATION, OR IN THE ALTERNATIVE
TO TRANSFER VENUE
Plaintiffs Edible International, LLC and Edible IP, LLC bring suit against defendant
Google, LLC, based on the latter’s alleged “repeated and intentional placement of advertisements
for [plaintiff’s] competitors in prominent locations” throughout its search results. (ECF No. 1 at
1). These placements, the plaintiffs allege, are “likely to cause confusion as to whether
[plaintiffs’] products and services are affiliated with, originate from, and/or are endorsed by
these competitors.” (Id.) The plaintiffs allege the following claims against the defendant based
upon these allegations: (1) trademark infringement in violation of 15 U.S.C. § 1114 of the
Lanham Act (count one); (2) false designation of origin in violation of 15 U.S.C. § 1125(a) of the
Lanham Act (count two); (3) dilution in violation of 15 U.S.C. § 1125(c) of the Lanham Act
(count three); (4) common law unfair competition (count four); and (5) violation of the
Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a, et seq. (“CUTPA”). (Id. at
14-15.) The defendant has filed a “Motion to compel arbitration and dismiss this action pursuant
to Rule 12(b)(6), or in the alternative transfer it to the Northern District of California” (ECF No.
28), averring that the parties’ contract compelled the plaintiffs to arbitrate their claims or
alternatively to litigate them in the Northern District of California. For the reasons set forth

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below, the defendant’s motion is granted in part and denied in part. I grant the defendant’s
motion to compel arbitration with respect to all of the plaintiff’s claims. I decline to dismiss the
matter, however, and instead stay it pending the results of the arbitration. In light of this
disposition, I deny without prejudice the defendant’s motion to transfer venue. If the parties
move to reopen this case following the completion of the arbitration, the defendant may refile its
motion to transfer venue.
I.

Background

The following recitation of the facts is taken from the plaintiff’s complaint, along with
the exhibits attached to the parties’ briefs.
Plaintiff Edible International is the “franchisor of stores offering fresh cut fruit products,
and is best known for its artistically-designed fresh fruit products evocative of floral designs and
its dipped fruit products.” (ECF No. 1 at ¶ 9.) Plaintiff Edible IP “is the owner and licensor of,
among other things, the various trademarks, trade dress, domain names, copyrights, and other
intellectual property used and associated with the . . . [Edible Arrangements] business and brand
. . . .” (Id. at ¶ 10.) The defendant operates, amongst other things, the “Google AdWords
program,” which “permits and encourages merchants and brand owners to buy keywords that
will trigger advertisements when Google users search for the keyword term.” (Id. at ¶ 38.) The
defendant also operates a “Knowledge Graph” program, which “enables [users] to search for
things, people or places that Google knows about . . . and instantly get information that’s relevant
to [his or her] query . . . .” (Id. at ¶¶ 40-41 (internal quotation marks omitted)).
The plaintiffs contend that the defendant “has prioritized increasing its bottom line and
exploiting the value of the [a mark possessed by the plaintiffs] for its own financial benefit over
providing relevant, responsive, and non-misleading information to consumers looking for Edible

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Arrangements and its products on the Internet.” (ECF No. 1 at ¶ 42.) In particular, plaintiffs
contend that the defendant exploits their mark “through various means, including without
limitation its Adwords programs, its marketing and ‘sale’ of [plaintiffs’] valuable trademarks as
keywords to [plaintiffs’] direct competitors, the algorithms it uses to display competitive
‘product listing ads’ to those looking for Edible Arrangements, its manipulation of the
Knowledge Graph technology, and its means of displaying the [plaintiffs’ mark] in prominent
proximity to advertisements for competitors’ products.” (Id. at ¶ 43.)
At some point before 2014, plaintiff Edible International, Inc. opened an advertising
account with the defendant. (ECF No. 30, Declaration of Bright Y. Kellogg (“Kellogg Decl.”) at
¶ 6.) “As a condition of participating in [the defendant’s] advertising services, an advertiser is
first required to accept the Terms And Conditions,” which is “accomplished by clicking ‘yes’ on
an interactive window that appears on [the defendant’s] website . . . .” (Kellogg Decl. at ¶ 4.)
Although “[t]he advertiser is given an opportunity to review the Terms And Conditions before
clicking ‘yes,’ . . . the advertiser will not be able to use [the Defendant’s] services until after the
Terms And Conditions have been agreed to.” (Id. at ¶ 5.) The plaintiffs agreed to the
defendant’s updated Terms And Conditions, which were issued on September 8, 2017. (Id. at ¶
6.) Those Terms and Conditions include a clause providing for the arbitration of disputes, which
provides in relevant part as follows:
A. Arbitration of Disputes. Google, Customer, and Advertiser agree to arbitrate
all disputes and claims between Google . . . and Advertiser that arise out of or relate
in any way to the Programs or these Terms. This agreement to arbitrate . . . is
intended to be broadly interpreted and includes, for example:
1. claims brought under any legal theory;
2. claims that arose before . . . Advertiser first accepted any version of these
Terms containing an arbitration provision;
3. claims that may arise after the termination of . . . Advertiser’s Use of the
Programs;
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4. claims brought by or against Google, Google affiliates that provide the
Programs to . . . Advertiser, Google, parent companies, and the respective
officers, directors, employees, agents, predecessors, successors, and assigns
of these entities; and
5. claims brought by or against . . . Advertiser, the respective affiliates and
parent companies of . . . Advertiser, and the respective officers, directors,
employees, agents, predecessors, successors, and assigns of these entities
(Id., Exhibit A at 5.) The terms and conditions define “Programs” as “Google’s advertising
programs and services (i) that are accessible through the account(s) given to Customer in
connection with these Terms or (ii) that incorporate by reference these Terms.” (Id. at 1.) The
Terms and Conditions also contain a forum selection clause providing as follows:
(a) ALL CLAIMS ARISING OUT OF OR RELATING TO THESE TERMS OR
THE PROGRAMS WILL BE GOVERNED BY CALIFORNIA LAW,
EXCLUDING CALIFORNIA’S CONFLICT OF LAWS RULES, EXCEPT TO
THE EXTENT THAT CALIFORNIA LAW IS CONTRARY TO OR
PREEMPTED BY FEDERAL LAW. (b) EXCEPT AS PROVIDED IN
SECTION 13, ALL CLAIMS ARISING OUT OF OR RELATING TO THESE
TERMS OR THE PROGRAMS WILL BE LITIGATED EXCLUSIVELY IN
THE FEDERAL OR STATE COURTS OF SANTA CLARA COUNTY,
CALFORNIA; THE PARTIES CONSENT TO PERSONAL JURISDICTION IN
THESE COURTS.
(Id. at 7.)
II.

Discussion
a. Legal Standard

The Federal Arbitration Act (“FAA”) provides that “a written provision . . . in a contract
evidencing a transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
The Supreme Court has held that the FAA “establishes a national policy favoring arbitration
when the parties contract for that mode of dispute resolution.” Preston v. Ferrer, 552 U.S. 346,
349 (2008); see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (holding
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that the FAA “manifest[s] a liberal federal policy favoring arbitration agreements.” (internal
quotation marks omitted)). Under Section 4 of the FAA, a court must compel arbitration if it
finds that there has been a “‘failure, neglect, or refusal’ of any party to honor the agreement to
arbitrate.” Phillips v. Cigna Invs., 27 F. Supp. 2d 345, 349 (D. Conn. 1998) (quoting 9 U.S.C. §
4). Further, the Second Circuit has echoed the Supreme Court’s recognition of the FAA’s policy
favoring the strict enforcement of arbitration agreements, instructing that “any analysis of a
party’s challenge to the enforcement of an arbitration agreement must begin by recognizing the
FAA’s strong policy in favor of rigorously enforcing arbitration agreements.” Doctors Assocs. v.
Hamilton, 150 F.3d 157, 162 (2d Cir. 1998).
To determine whether parties are compelled to arbitrate, courts consider four factors: “(1)
whether the parties agreed to arbitrate; (2) the scope o[f] the arbitration agreement; (3) whether,
if federal statutory claims are asserted, Congress intended those claims to be nonarbitrable; and
(4) whether, if some but not all of the claims in the case are arbitrable, the case should be stayed
pending arbitration.” McCallister v. Conn. Renaissance Inc., 496 Fed. App’x 104, 106 (2d Cir.
2012). Finally, the party seeking to compel arbitration bears the “burden of demonstrating by a
preponderance of the evidence the existence of an agreement to arbitrate.” Helenese v. Oracle
Corp., No. 3:09-cv-351 (CFD), 2010 U.S. Dist. LEXIS 15071, at *8 (D. Conn. Feb 19, 2010).
b. Analysis
The plaintiffs’ sole argument in opposition to the defendant’s motion to compel
arbitration avers that arbitration should not be compelled because their claims fall outside the
scope of the arbitration clause. (ECF No. 33 at 6.) “To determine whether a particular dispute
falls within the scope of an agreement’s arbitration clause, a court should undertake a three-part
inquiry.” Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d

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Cir. 2001). The first step involves classifying “the particular [arbitration] clause as broad or
narrow.” Id. If the clause at issue is narrow, “the court must determine whether the dispute is
over an issue that is on its face within the purview of the clause, or over a collateral issue that is
somehow connected to the main agreement that contains the arbitration clause.” Id. (internal
quotation marks omitted). If the arbitration clause is broad, however, “there arises a presumption
of arbitrability and arbitration of even a collateral matter will be ordered if the claim alleged
implicates issues of contract construction or the parties’ rights and obligations under it.” Id.
(internal quotation marks omitted). “In determining whether a particular claim falls within the
scope of the parties' arbitration agreement, this Court ‘focuses on the factual allegations in the
complaint rather than the legal causes of action asserted.’” Specht v. Netscape Comm. Corp., 306
F.3d 17, 36 (2d Cir.2002) (quoting Genesco, Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 846
(2d Cir.1987)). In cases “where . . . the existence of an arbitration agreement is undisputed,
doubts as to whether a claim falls within the scope of that agreement should be resolved in favor
of arbitrability.” Hartford Acc. & Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219,
226 (2d Cir. 2001).
The plaintiffs concede that the arbitration clause at issue in this case “is a ‘broad’
arbitration provision that gives rise to a presumption of arbitrability” (ECF No. 33 at 6), but aver
that their claims nonetheless fall outside of its scope “because they are clearly collateral to [the
defendant’s] Terms [A]nd Conditions and do not implicate either of the parties’ rights or
obligations with respect to [the plaintiffs’] participation in [the defendant’s] advertising
program.” (Id. (internal quotation marks omitted)). As noted previously, an issue is “collateral”
if it does not fall “within the purview of the [arbitration] clause.” Louis Dreyfus Negoce, 252
F.3d at 224. The “party resisting arbitration” bears the burden of “demonstrat[ing] that [a]

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disputed issue is collateral.” Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64 (2d Cir.
1983).
The plaintiffs have failed to meet this burden. The arbitration clause at issue applies to
“all disputes and claims . . . that arise out of or relate in any way” to the defendant’s
“Programs”—which the contract defines as “Google’s advertising programs and services (i) that
are accessible through the account(s) given to Customer in connection with these Terms or (ii)
that incorporate by reference these Terms” (Kellogg Decl, Exhibit A at 1 (emphasis added).)—
and expressly includes “claims brought under any legal theory.” (Id. at 5 (emphasis added).)
The allegations underlying all of the plaintiffs’ claims plainly fall within this broad scope. The
gravamen of the plaintiff’s complaint is that the defendant “accomplishes [an] unlawful scheme
of exploiting the [plaintiffs’ mark] through various means, including without limitation its
Adwords programs, . . . the algorithms it uses to display competitive ‘product listing ads’ to
those looking for Edible Arrangements, its manipulation of the Knowledge Graph technology,
and its means of displaying [plaintiffs’ mark] in prominent proximity to advertisements to
competitors’ products.” (ECF No. 1 at ¶ 43.) The vast majority of the plaintiffs’ other factual
allegations relate similarly to the defendant’s practices concerning the advertising of their
products. (See ECF No. 1 at ¶ 44 (alleging that users attempting to search for “Edible
Arrangements” on defendant’s search engine see advertisements for competitors’ products), at ¶
45 (averring that defendant misuses plaintiffs’ mark by displaying header stating “shop for
Edible arrangements on Google” immediately above competitors’ advertisements). These
allegations clearly “relate in any way” to the defendant’s advertising services and thus fall within
the purview of the parties’ arbitration clause.

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The plaintiffs’ contention that their claims fall outside the scope of the arbitration clause
because they do not relate to the parties’ contract does not merit a contrary conclusion. (See ECF
No. 33 at 11.) In support of this argument, the plaintiffs cite the Second Circuit’s decision in
Collins & Aikman Products Co. v. Buildings Systems, Inc., 58 F.3d 16 (2d Cir. 1995) for the
proposition that “claims that present no question involving construction of the contract, and no
questions in respect of the parties’ rights and obligations under it, are beyond the scope of the
arbitration agreement.” (ECF No. 33 at 11 (citing Collins, 58 F.3d at 23).) The contract at issue
in Collins, however, required arbitration only of claims “arising out or relating to this
agreement,” 58 F.3d at 18, language casting a narrower net than the clause here, which captures
not only disputes arising out of the “Terms” but those relating in any way to Google’s
advertising “Programs.” The same can be said of FUJIFILM N. Am. Corp. v. Geleshmall
Enterprises LLC, on which the plaintiffs also rely and which concerned an arbitration clause that
included “[a]ll claims and disputes arising out of/pertaining to [an] Agreement.” See 239 F.
Supp. 3d 640, 647 (E.D.N.Y. 2017). Given that the breadth of the parties’ arbitration clause
exceeds the contract, the plaintiffs cannot avail themselves of case law construing arbitration
clauses expressly restricted in scope to claims arising out of a contract.
The decision in TradeComet.com LLC v. Google, Inc., 693 F. Supp. 2d 370, 379
(S.D.N.Y. 2010), is instructive on this point. TradeComet.com concerned a forum selection
clause that expressly pertained to all claims that “relat[ed] to [the parties’] agreement or the
[defendant’s advertising] programs.” Id. at 374. The plaintiff argued that its subsequent antitrust
claims fell beyond the scope of the forum selection clause. Id. at 378. In rejecting this
argument, the court noted that it “need not determine whether [the plaintiff’s] antitrust claims
arise out of or relate to the [parties’] agreement because they clearly arise out of and relate to [the

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defendant’s programs].” Id. In reaching this conclusion, the court distinguished Second Circuit
precedent construing forum selection clauses expressly limited to all claims arising out of the
agreements in which the clauses were contained. Id. at 379. Here, just as in TradeComet, the
parties’ arbitration clause exceeds the bounds of their contract. The plaintiff’s claims are
therefore subject to arbitration.
The defendant has also moved to dismiss the action. The Second Circuit has held that an
action must be stayed if all claims have been referred to arbitration and a stay has been
requested.1 Katz v. Cellco P’Ship, 794 F.3d 341, 347 (2d. Cir 2015) (“[W]e conclude that the
text, structure, and underlying policy of the FAA mandate a stay of proceedings when all of the
claims in an action have been referred to arbitration and a stay requested.”). The defendant
argues that Katz only directly applies to cases where a party moves to compel arbitration and to
stay the action; the defendant did not request a stay. (ECF No. 34 at 6.) However, the plaintiff
requested a stay in the event that the Court grants the defendant’s motion to compel arbitration.
(See ECF No. 33 at 11 (“If [the plaintiff’s] claims are found arbitrable, this action should be
stayed to allow arbitration, rather than dismissed as Google contends.”).)
To the extent that the defendant contends Katz only applies in cases where the defendant
requests a stay of proceedings, the Second Circuit has strongly implied that such a narrow
understanding of Katz is unwarranted. See Benzemann v. Citibank N.A., 622 F. App'x 16, 18 (2d
Cir. 2015) (concluding that because plaintiff “did not request a stay before the district court
entered judgment” granting defendant’s motion to compel arbitration, “[9 U.S.C. § 3 of the FAA]
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The defendant contends that this Court should apply the law of the Northern District of
California on this matter because “the parties have agreed to litigate disputes such as this in the
Northern District of California.” (ECF No. 34 at 6.) This argument presupposes that the Court
would ratify the forum selection clause in the Terms And Conditions, an argument that the
defendant advanced in the alternative and that the Court does not reach in this ruling. I therefore
apply the law of the Second Circuit in adjudicating this dispute.
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did not require the district court to stay the proceedings” (citing Katz, 794 F.3d at 346)); Virk v.
Maple-Gate Anesthesiologists, P.C., 657 Fed. App’x 19, 21 (2d Cir. 2016) (summarizing holding
of Katz as “district courts lack discretion to dismiss, rather than stay, an action when all claims
are referred to arbitration and a stay requested by any party” (emphasis added)). Even if I did
have discretion to determine whether to issue a stay or dismiss the case, see Castellanos v.
Raymours Furniture Co., Inc., 291 F. Supp. 3d 294, 302 (E.D.N.Y. 2018) (“When a stay is not
requested, a district court has discretion in determining whether to stay or dismiss the case
pending arbitration.”), I would conclude that a stay was warranted.
The Court will therefore stay this action and administratively close this case (but not
enter judgment) until arbitration has concluded. In light of this disposition, I deny without
prejudice the defendant’s motion in the alternative to transfer venue. If the parties move to
reopen this case following the completion of the arbitration, the defendant may refile its motion
to transfer venue.
IV.

Conclusion

For the reasons discussed above, the defendant’s motion to compel arbitration or in the
alternative transfer venue (ECF No. 28) is hereby GRANTED IN PART AND DENIED IN
PART. The matter is hereby stayed pending the parties’ arbitration of the plaintiff’s claims. The
clerk is instructed to close this case but not enter judgment. Any party may move to reopen this
case within 30 days of completion of the arbitration and the case shall be reopened upon the
filing of such a motion. The moving party may also seek the lifting of the stay and the entry of
judgment or may seek to initiate further proceedings in this action. In light of this disposition, I
deny without prejudice the defendant’s motion in the alternative to transfer venue. If the parties

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move to reopen this case following the completion of the arbitration, the defendant may refile its
motion to transfer venue.

IT IS SO ORDERED.

/s/
Michael P. Shea, U.S.D.J.
Dated:

Hartford, Connecticut
July 13, 2018

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