D'Arrigo Bros. Co., of California v. Doug Mellon Farms II, Inc.

Background

Beginning in 2019, D'Arrigo was involved as a third-party defendant in several New Jersey and Pennsylvania cases concerning allegedly contaminated romaine purchased by restaurants. D'Arrigo incurred fees and costs defending those cases. After tracing the source of the romaine to Doug Mellon Farms, D'Arrigo filed this federal action for equitable indemnity on August 6, 2020.

Doug Mellon Farms later filed a motion for an extension of time to answer and a motion for a more definite statement. After D'Arrigo filed its First Amended Complaint, Doug Mellon Farms filed a motion to compel arbitration. D'Arrigo opposed the motion, arguing that Doug Mellon Farms had waived arbitration by waiting too long, filing motions, and participating in efforts to resolve issues before seeking arbitration.

Arbitration Agreement and Scope

The parties' Doug Mellon Farms II, Inc. Growing Agreement and Lease #1 contained an arbitration clause covering “any disputes under this agreement.” The clause required disputes that the parties could not resolve themselves to be arbitrated by three arbitrators, with the losing party paying the arbitration costs.

Under the Federal Arbitration Act, the court explained that arbitration must be compelled when a valid agreement to arbitrate exists and the dispute falls within its scope, unless the agreement was revoked or the right to enforce it was waived. The court held that both requirements were met because D'Arrigo's indemnity claim was based on obligations imposed by the agreement and therefore fell within the clause's scope.

Revocation and Waiver

Doug Mellon Farms argued that the arbitration agreement had not been revoked. D'Arrigo did not address that argument in its opposition, so the court treated D'Arrigo as conceding that the agreement had not been revoked.

The court also rejected D'Arrigo's waiver argument. It found that D'Arrigo had not shown Doug Mellon Farms knew of an existing right to compel arbitration before D'Arrigo clarified its claims in the First Amended Complaint. Doug Mellon Farms moved to compel arbitration less than one month after that filing.

The court further found that Doug Mellon Farms' earlier motions and meet-and-confer efforts were not inconsistent with arbitration. Those actions were aimed at avoiding duplicate proceedings and clarifying the claims so the company could determine whether the arbitration clause applied, rather than actively litigating the entire case. Finally, the court found that D'Arrigo had not adequately shown prejudice; its statements about delay and continuing harm from defending related lawsuits did not satisfy the required showing.

Disposition

The court stated that the Federal Arbitration Act required it to compel arbitration. It granted Doug Mellon Farms' motion to compel arbitration, ordered the parties to submit to binding arbitration under the agreement's arbitration clause, and dismissed the case. Judge Nathanael M. Cousins signed the order.