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Antonio Campos, et al v. Campos Family Farms

June 8, 2012

ANTONIO CAMPOS, ET AL.,
PLAINTIFFS,
v.
CAMPOS FAMILY FARMS, LLC, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Gary S. Austin United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS REGARDING DEFENDANTS' MOTION TO COMPEL ARBITRATION AND FOR STAY OF THE PROCEEDINGS (Document 13)

INTRODUCTION

Relevant Procedural Background On April 16, 2012, Plaintiffs Antonio Campos and Juliet Campos, Trustees of the Antonio and Juliet Campos Family Trust, doing business as Campos Brothers Farms ("Plaintiffs"), filed a complaint for damages and injunctive relief against Defendants Campos Family Farms, LLC, a California limited liability company, Veronica Campos, individually, Fermin M. Campos, individually and as Trustee of the Fermin and Veronica Campos Family Trust and the Fermin M. Campos Administrative Trust, and Alfred Martinez, individually ("Defendants"). More specifically, Plaintiffs assert claims of trade name and trademark infringement, unfair competition, false designation of origin, dilution of mark, damage to business reputation, use of counterfeit mark, cyberpiracy, false advertising, intentional and negligent interference with prospective business advantage, fraud, breach of fiduciary duty and unjust enrichment. (See Doc. 1.)

In response, on May 4, 2012, Defendants filed a Notice of Motion to Compel Arbitration and for Stay of Proceedings Pending Completion of Arbitration. (Doc. 13.)

On May 25, 2012, Plaintiffs filed an opposition to the motion. (Doc. 17.) Thereafter, on June 1, 2012, Defendants filed a reply to the opposition. (Doc. 29.) This Court determined the matter was suitable for decision without oral argument pursuant to Local Rule 230(g).*fn1 The hearing scheduled for June 8, 2012, was vacated and the matter was deemed submitted for written findings. (Doc. 30.)

Factual Summary*fn2

Campos Brothers Farms, a California general partnership, was originally formed in 1957 by brothers Antonio ("Tony") Campos, and Fermin Campos, Sr., now deceased ("Fermin Sr."). Each brother owned 50% of Campos Brothers Farms. Eventually, each brother's Family Trust became 50% owner/partner. Beginning in 1957 and continuing for several years thereafter, Campos Brothers Farms bought and leased hundreds of acres of land to farm almonds and other crops. On June 1, 1979, Tony and Fermin Sr.'s respective corporations, Antonio Campos Farms, Inc. and Fermin Campos Farms, Inc., formed F&T Farms partnership, a California general partnership. Each brother's corporation owned 50% of F&T Farms. F&T Farms took over farming of the real property owned and leased by Campos Brothers Farms.

In or about the early-1980s, Tony and Fermin Sr. began to expand their business into almond hulling and shelling. By about 1981, in addition to its farming activities, F&T Farms became the owner and operator of Tony and Fermin Sr.'s first almond huller.

In or about the mid- to late-1980s, Tony sought to expand the business even further by getting into the processing, marketing, and sale of almonds. He registered Campos Brothers Farms with the Almond Board of California as an almond handler to buy and sell almonds for F&T Farms, third-parties, and itself. As the business continued to grow, F&T Farms built a second almond huller, along with a 22,500 square foot warehouse and an additional packing line. By the late 1980s, Campos Brothers Farms owned and leased approximately 900 acres of land. In or about the late 1980s, Tony and Fermin Sr.'s children became more involved in the farming operations. Tony's children, Steven Campos ("Steven"), Joseph Campos ("Joseph"), and Jeannine Grech ("Jeannine"), along with Fermin Sr.'s son, Defendant Fermin M. Campos ("Fermin"), formed Campos Land, a California general partnership. Each of the four children held a 25% interest in Campos Land.

In the 1990s, Campos Brothers Farms, Campos Land, and their related entities grew the farming operation to approximately 10,000 acres. During that period of time, the handling side of the business, operated by Campos Brothers Farms, continued to grow. F&T Farms added an additional 50,000 square foot warehouse, as well as a dehydrator.

In or about the early 2000s, Tony and Fermin Sr. built and developed a manufacturing facility under F&T Farms. The facility provided F&T Farms with the capability to slice, dice, powder, flour, blanch, dry roast, and sliver their almonds. The new capabilities allowed for Campos Brothers Farms to broaden the number of almond products that it could offer its customers in the open market. The advances and growth led to the addition of a third huller, as well as an additional 100,000 square foot warehouse. By the late 2000s, F&T Farms also owned and operated a brown skin packing facility, additional packing lines, and a pasteurizer. By that time, Campos Brothers Farms, Campos Land, and their related entities owned and leased over 18,000 acres of almonds.

From about the early 1980s to the late 2000s, Tony and Fermin Sr. developed a fully integrated operation that took almonds from inception to end user. Campos Brothers Farms, Campos Land, and their related entities owned and leased the land. F&T Farms and Campos Land farmed the ground, harvested the almonds, and delivered them to the F&T Farms processing and manufacturing facilities. There, the almonds were, and continue to be, hulled, shelled, processed, warehoused, packed, and, ultimately, shipped to customers throughout the world. All of Campos Brothers Farms' (and related entities') almonds were processed under contract at F&T Farms' plant in Caruthers, California, through which Campos Brothers Farms offered and continues to offer various custom manufacturing options to customers needing superior quality and consistency in their almond products.

F&T Farms' almond processing facility utilizes cutting-edge manufacturing techniques designed to maximize sorting effectiveness and product consistency and quality. For example, F&T Farms' cutting and dicing lines are designed to optimize the effectiveness of various sorting techniques to satisfy the most rigorous customer specifications. Electronic controls monitor the temperature, moisture, pliability, and color of the product during the cutting/dicing process. In addition, F&T Farms' roasting process involves longer roasting times at lower temperatures than industry standards to maximize natural quality and consistency.

As a result of the cutting-edge processing and manufacturing facilities operated by and through F&T Farms, Campos Brothers Farms has become world renowned for its utilization of the most scientific and technologically advanced manufacturing techniques in its almond processing business, and for its continuous improvement of hulling and shelling operations, earning a name for itself as one of the world's finest natural almond processors. It is also one of the largest growers and shippers of California almonds in the State, both domestically and internationally.

Over the course of its more than 30 years in the almond growing and processing business, Campos Brothers Farms has continuously used the name "Campos Brothers Farms" in connection with its growing, processing, marketing, and selling of its natural and processed products to identify its exceptional products, both domestically and internationally. Over the years, Campos Brothers Farms invested and expended a considerable amount of financial resources in establishing the "Campos Brothers Farms" trade name and related trademarks in the minds of customers. During this period, the "Campos Brothers Farms" trade name, trademarks, and reputation grew continuously in the hearts and minds of its customers and the public, such that they have now attained a level of recognition as a source of high quality and consistency in its almonds and almond products that is virtually unmatched by Campos Brothers Farms' competitors. Customers today associate "Campos Brothers Farms" with one of the largest and most reputable almond processors in the world, with superior almonds and almond products.

Indeed, it is precisely because of Campos Brothers Farms' stellar reputation for quality and consistency that Campos Brothers Farms has been able to attract and keep long-term international customers in countries such as Japan, which requires adherence to the most stringent quality and consistency standards and specifications. It is also because of Campos Brothers Farms' stellar reputation for meeting and exceeding the standards for brown skin and in-shell almonds in China, India, and the Middle East, that Campos Brothers Farms enjoys its premiums, a consistently high demand, and significant growth in those markets.

Campos Brothers Farms is also the only major handler in the United States which markets and sells almonds of the Marcona variety. These highly coveted almonds are of superior quality and are sold almost exclusively to customers in Spain, at a significant premium. Campos Brothers Farms controls approximately 500 acres of Marcona almonds.

Over the years, Campos Brothers Farms, by and through its relationship with F&T Farms, has continued to integrate and expand its manufacturing and processing capabilities, utilizing the most scientific and technologically advanced manufacturing techniques in its almond processing business, and has continued to improve its hulling and shelling operations. As a result of these efforts, Campos Brothers Farms' processing and manufacturing operations have enjoyed the benefit of the ever-increasing goodwill associated with the "Campos Brothers Farms" trade name, trademark and reputation.

Campos Brothers Farms' products have proudly borne the name "Campos Brothers Farms" continuously in substantially the same form and style as its now registered trademarks. These products, sold throughout the United States and the world, are identified by the "Campos Brothers Farms" name and trademarks. The names and trademarks appear on packaging and marketing materials of all sorts. []

"Campos Brothers Farms" has been registered on the Principal Register of the United States Patent and Trademark Office, U.S. Registration No. 3579184, since February 24, 2009, and remains in full force and effect. []

Campos Brothers Farms (Drawing) has also been registered on the Principal Register of the United States Patent and Trademark Office, U.S. Registration No. 3579185, since February 24, 2009, and remains in full force and effect. []On or about October 3, 2008, Fermin Sr. passed away. Following Fermin Sr.'s death, 50% of Campos Brothers Farms was owned by Antonio Campos and Juliet Campos, as Trustees of the Antonio and Juliet Campos Family Trust, 25% was owned by Fermin M. Campos, as Trustee of the Fermin and Veronica Campos Family Trust, and 25% was owned by Fermin M. Campos, as Trustee for the Fermin M. Campos Administrative Trust.

Following Fermin Sr.'s death, 50% of F&T Farms continued to be owned by Antonio Campos Farms, Inc. and the other 50% by Fermin Campos Farms, Inc.

Prior to his death, Fermin Sr. communicated his intention to Tony to initiate the dissolution of Campos Brothers Farms and F&T Farms. The parties spent considerable time negotiating dissolution of the partnerships and distribution of the assets, to no avail. On or about March 1, 2010, after several failed attempts to reach resolution, Tony sent notices of election to dissolve the Campos Brothers Farms and F&T Farms partnerships.

On or about April 12, 2010, the parties engaged in a legal action over the dissolution and winding up of Campos Brothers Farms and F&T Farms. On or about May 13, 2010, the case was submitted to binding contractual arbitration before the Honorable Justice Nicholas Dibiaso. During the course of arbitration, the parties participated in a mediation process which was spanned approximately eight months, beginning on or about August 22, ...


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