United States District Court, W.D. Washington, Seattle
BALKRISHNA SETTY, individually and as general partner of Shrinivas Sugandhalaya Partnership with Nagraj Setty, and SHRIVINAS SUGANDHALAYA BNG LLP Plaintiffs,
SHRINIVAS SUGANDHALAYA LLP and R. EXPO USA, INC., Defendants.
Honorable Richard A. Jones United States District Judge
matter comes before the Court on Defendant Shrinivas
Sugandhalaya's (“SS Mumbai”) motion to
dismiss or stay in favor of arbitration. Dkt. # 59.
Plaintiffs oppose the motion. Dkt. # 65. Defendant R. Expo
(USA), Inc. (“R. Expo”) does not oppose
arbitration but requests severance if the Court decides to
grant SS LLP's motion. Dkt. # 64. For the reasons that
follow, the Court DENIES Defendant's
K.N. Satyam Setty formed an incense manufacturing and
distribution partnership in India. Dkt. # 1 (Complaint) at
¶ 16. Mr. Setty's sons, Balkrishna and Nagraj Setty,
continued the partnership after their father passed.
Id. The sons signed a Partnership Deed agreeing to
manufacture the incense and split the profits equally. Dkt. #
60-1. The Partnership Deed included an arbitration clause,
All disputes of any type whatsoever in respect of the
partnership arising between the partners either during the
continuance of this partnership or after the determination
thereof shall be decided by arbitration as per the provision
of the Indian Arbitration Act, 1940 or any statutory
modification thereof for the time being in force.
2014, the sons started their own companies, irrespective of
the Partnership, and “control of the manufacturing of
incense products was effectively transferred from the
Partnership to its partners, ” Balkrishna and Nagraj
Setty. Dkt. # 1 (Complaint) at ¶ 51. Mr. Balkrishna
Setty's company is Shrinivas Sugandhalaya (BNG) LLP
(“SS Bangalore”), located in Bangalore.
Id. at ¶¶ 52, 53. Mr. Nagraj Setty's
company is Shrinivas Sugandhalaya LLP (“SS
Mumbai”), located in Mumbai. Id. at
¶¶ 54, 55. Mr. Balkrishna Setty claims that he and
his brother are now competitors rather than partners.
Id. at ¶ 58.
claim that SS Mumbai misrepresented where it manufactured its
incense-by putting Bangalore on the packaging rather than
Mumbai-in an effort to confuse customers about the quality of
the product. Id. at ¶¶ 85, 86. Plaintiffs
also accuse SS Mumbai of interfering in Plaintiffs'
business by sending cease and desist letters that claim SS
Bangalore is infringing on Defendants' trade dress
rights. Id. at ¶ 108. Plaintiffs further claim
that SS Mumbai fraudulently obtained trademark registrations
for the mark and design of its incense. Id. at
Mumbai is now before the Court seeking dismissal or stay in
proceedings because it claims that Plaintiffs must bring
their claims in arbitration-pursuant to the Partnership
Deed-and not in this forum. Dkt. # 59.
the Federal Arbitration Act (“FAA”) requires
courts to “direct the parties to proceed to arbitration
on issues as to which an arbitration agreement has been
signed, the FAA limits court involvement to determining (1)
whether a valid agreement to arbitrate exists and, if it
does, (2) whether the agreement encompasses the dispute at
issue.” Cox v. Ocean View Hotel Corp., 533
F.3d 1114, 1119 (9th Cir. 2008) (internal quotations
omitted). The party opposing arbitration bears the burden of
showing that the agreement is not enforceable. See Green
Tree Fin. Corp. v. Randolph, 531 U.S. 79, 91-92 (2000);
Rodriguez de Quijas v. Shearson/American Exp., Inc.,
490 U.S. 477, 483 (1989).
the first prong, “arbitration is a matter of contract
and a party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit.”
Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126
(9th Cir. 2013) (citing United Steelworkers v. Warrior
& Gulf Navigation Co., 363 U.S. 574, 582 (1960)).
Generally, the contractual right to compel arbitration
“may not be invoked by one who is not a party to the
agreement and does not otherwise possess the right to compel
the second prong, “[t]he scope of an arbitration
agreement is governed by federal substantive law.”
Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719
(9th Cir. 1999). If a contract contains an arbitration
clause, there is a presumption that the dispute is
arbitrable. AT & T Techs., Inc. v. Comm'ns
Workers of America, 475 U.S. 643, 650 (1986). In that
case, “any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration.”
Simula, 175 F.3d at 719.