Allied Seed, LLC v. Norfarm Seeds, Inc.

Background

Allied Seed, LLC and Norfarm Seeds, Inc. entered a seed-production contract in December 2014. Norfarm agreed to produce seed that Allied would later purchase for resale. The contract stated that it would last for “3 Years with [an] option to extend,” referred to seed produced from 300 acres seeded in summer 2015, and incorporated the North American Seed Rules established by the American Seed Trade Association. Those rules required binding arbitration of any dispute resulting from transactions started or concluded under the rules.

The dispute concerned a January 25, 2019 purchase confirmation for Allied to buy seed from Norfarm’s 2018 harvest. Allied alleged that the seed was of lower quality than Norfarm was required to provide. Allied asserted claims for breach of express warranty, breach of implied warranties, intentional misrepresentation, and violations of Idaho and Minnesota laws.

Arbitration Agreement

Norfarm moved to compel arbitration, arguing that the parties’ contract covered the 2018 harvest and required arbitration. Allied argued that the 2019 purchase confirmation was a new contract and that the earlier contract had expired before the transaction at issue.

The court applied Minnesota contract law. It concluded that the contract’s three-year term included the 2018 harvest when the contract was read as a whole. The court relied on the references to the 2018 harvest, the 2015 seeding, and the undisputed fact that the first harvest year under the contract was 2016. Because the 2019 purchase confirmation concerned the 2018 harvest, the court held that the transaction was based on the incorporated arbitration rules.

The court also held that the arbitration agreement covered Allied’s claims. The rules required arbitration of any dispute resulting from transactions started or concluded under those rules, and Allied did not argue that its claims were otherwise outside the agreement’s scope.

Disposition

The court granted Norfarm’s motion to compel arbitration. It also exercised its discretion to dismiss the case rather than stay it while arbitration proceeded. The order states that the case was dismissed without prejudice.

Judge Wilhelmina M. Wright did not decide whether Norfarm was liable for the alleged seed-quality problems, warranties, misrepresentation, or statutory violations. The order required those disputes to proceed in arbitration instead of this federal case.