UNDER FAA, CHICAGO COURT REFUSES TO DETERMINE WHETHER CLAIMS SHOULD BE PART OF PENDING NEW YORK ARBITRATION
A dispute involving competing actions between two competing aeroponic farming companies, FarmedHere, LLC and Just Greens, LLC (doing business as Aero Farm Systems), was simultaneously at issue in a New York arbitration, a New York state court, and a Chicago federal court. Aero Farm had originally demanded arbitration in New York based on an arbitration clause in a distribution agreement between Aero Farm and a company affiliated with FarmedHere. In response, FarmedHere filed a petition to stay the arbitration in the New York court, contending that it was not a party to the distribution agreement, and a separate case in Chicago alleging unfair trade practices and seeking a declaration regarding certain patented aeroponic farming technology. Aero Farm then moved to dismiss the Chicago action, contending that (1) FarmedHere assumed obligations under the distribution agreement, (2) FarmedHere’s claims were therefore subject to the arbitration clause, and (3) the proper jurisdiction under the FAA to determine arbitrability was New York (where the arbitration was pending), and not Chicago. After a review of the evidence, the court agreed with Aero Farm and dismissed the Chicago proceedings without prejudice. FarmedHere can attempt to refile its claims in Chicago if the New York court determines that FarmedHere’s claims are not arbitrable. FarmedHere, LLC v. Jut Greens, LLC, Case No. 14 C 370 (USDC N.D. Ill. June 16, 2014).
This post written by Michael Wolgin.
