ORDER GRANTING MOTION TO COMPEL ARBITRATION
Defendants seek an order compelling Plaintiffs, nonsignatories to an arbitration agreement, to arbitrate all claims in this action. The order is sought under 9 U.S.C. § 4 of the Federal Arbitration Act ("FAA"). Defendants argue arbitration should be compelled under the equitable estoppel doctrine, inter alia, because all of Plaintiffs' claims relate to Defendants' alleged investment representations which were made with the understanding that any dispute concerning those representations would be arbitrated. Specifically, Defendants argue "Plaintiffs admit that . . . individuals," "affiliated with each Plaintiff" limited liability company, "attended the Big Table program[, an investment-education program,] on [each plaintiff] entity's behalf." (Mot. Compel Arbitration 4:6--9, ECF No. 100.) Defendants argue "the individuals through which Plaintiffs attended the Big Table programs and heard the alleged representations regarding investments all signed arbitration agreements that this Court has determined to be valid, enforceable, and broad enough to cover the claims at issue in this litigation." (Id. at 4:20--24.) Defendants argue that at Big Table programs, said members received "educational information . . . that [is] the basis . . . of their claims," concerning which the members agreed in writing to arbitrate any dispute arising from or related to the Big Table programs. (Id. at 7:20--23, 8 n.3.) Defendants argue "Plaintiffs cannot adopt only the parts of this transaction which are beneficial, and then reject the burdens." (Id. at 7:25--26.) Further, Defendants argue Plaintiffs' claims are "inextricably intertwined with the contract that contained the arbitration agreement," because "[a]ll of the claims in this case arise out of representations that were supposedly made during the Big Table programs." (Id. at 8:6--14.)
Plaintiffs counter that their "claims are not intertwined to any degree with the obligations stated in the Big Table agreement," because "[P]laintiffs have not alleged a claim for breach of contract or the negligent performance of any duty to be provided under the agreements, nor even mention[ed the Big Table] agreements in their complaint." (Opp'n Mot. Compel Arbitration 7:10--16, ECF No. 102.) Further, Plaintiffs rejoin with non-responsive, conclusory, and unsupported equity arguments, which are insufficient to establish that applying equitable estoppel would be inappropriate in this case. Plaintiffs also respond with a waiver of arbitration argument.
However, as explained below, Plaintiffs have not shown that Defendants waived arbitration, and Plaintiffs will be compelled to arbitrate their claims under the equitable estoppel doctrine since Plaintiffs claims are intertwined with the Big Table Program contract which includes an arbitration clause. Therefore, Defendants' alternative argument on which their motion is based need not be addressed.
The following assertions and allegations in the complaint concern the motion. See Am. Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988) ("Factual assertions in pleadings, unless amended, are considered judicial admissions conclusively binding on the party who made them."). Defendants' "on-going business activities in the State of California . . . includ[ed] the Big Table events that Plaintiffs . . . attended, [and Defendants'] website known as DPPonline . . . [which] was used to direct [those] attending Big Table events towards the purchase of investments." (Compl. ¶¶ 16, 19, ECF No. 1.) Each Plaintiff is a limited liability company. (Id.
¶¶ 12--15.) The individual members of each Plaintiff limited liability company attended the "Big Table" events in South Lake Tahoe, California. (Id. ¶ 13 ("JKR is a limited liability company . . . whose individual members . . . attended Big Table No. 24 . . . at the Embassy Suite in South Lake Tahoe California."); id. ¶ 14 ("Surfer Beach is a limited liability company . . . whose individual members . . . attended Big Table No. 24 . . . at the Embassy Suite in South Lake Tahoe California."); id. ¶ 15 ("TBD is a limited liability company . . . whose individual members . . . attended Big Table No. 23 . . . at the Embassy Suite in South Lake Tahoe California."); see id. ¶¶ 10--11 (stating that S. Newell and M. Newell "attended the Big Table . . . in 2006"); id ¶ 12 (listing "Newell" as Tamsco's "only member and manager since its formation"). At "Big Table" programs in South Lake Tahoe, California in 2006, (id. ¶ 6), Defendants "exhort[ed] and encourag[ed]" Plaintiffs "to invest in various real estate ventures and other investment 'opportunities.'" (Id. ¶ 228 (regarding JKR Laser Investments); accord id. ¶ 202 ("Langemeier exhort[ed] and encourag[ed] Tamsco, and other Big Table participants, to purchase this investment."); id. ¶ 246 ("Langemeier exhort[ed] and encourag[ed] Surfer Beach, and other Big Table participants, to invest in the Cerritos."); id. ¶ 264 ("Langemeier exhort[ed] and encourag[ed] [Plaintiff To Be Determined, LLC,] and other Big Table participants, to purchase the investment offered by Renaissance.").)
Defendants' misrepresentations at and in connection with these programs promoted "high risk and not safe" investments "in pursuit of their own pecuniary interests." (Id. ¶¶ 20, 117.) Plaintiffs sue Defendants for these misrepresentations alleging, inter alia, fraud and breach of fiduciary duties. (Id. ¶¶ 115--144, 189--302.)
Tamsco Properties LLC ("Tamsco") states: "In actual reliance upon Langemeier's representations Tamsco paid $50,000 for an equity interest in Z Harvard Square, $50,000 . . . for a 'unit' of STG [a business], and $125,000 . . . for a limited partnership interest in Renaissance." (Compl. ¶ 193.) JKR Laser Investment LLC ("JKR") states: "In actual reliance upon Langemeier's representations JKR paid $100,000 for a limited property interest in Renaissance." (Id. ¶ 219.) Surfer Beach LLC states: "In actual reliance upon Langemeier's representations Surfer Beach paid $250,000 for what it had been told by Langemeier to be an interest in real property . . . ." (Id. ¶ 237.) To Be Determined LLC ("TBD") states: "In actual reliance upon Langemeier's representations TBD paid $75,000 for a limited partnership interest in Renaissance." (Id. ¶ 255.)
Defendants also filed a declaration in support of their motion, in which Defendant Loral Langemeier declares: "Everyone who attends a Big Table program signs a Big Table Agreement." (Decl. Loral Langemeier ¶¶ 2--5, ECF No. 100-1.) Defendants attached to Langemeier's declaration Big Table agreements that state, in pertinent part, the following:
Client engages [Defendant], and [Defendant] agrees to undertake and provide a program of services commonly known as Loral's Big Table, to the Client . . . .
Any dispute or claim arising or related to this Agreement, its performance, breach, or interpretation (including issues about its validity or enforceability), shall be exclusively . . . resolved by final binding arbitration before the American Arbitration Association (AAA), utilizing its Commercial Arbitration Rules.
(E.g., id. Ex. A, at 5--6, ¶ "Arbitration.")
Further, Defendants attached to the motion special interrogatories and requests for admissions. Attached interrogatory No. 2 asks Plaintiffs to "IDENTIFY each person affiliated with YOU who heard representations at the BIG TABLE as alleged in YOUR COMPLAINT." (Decl. Benoff. Ex. A, at 9, ECF No. 100-3.) Plaintiff Tamsco responded by identifying Steven Newell, (id. at 13), Plaintiff JKR identified Jessica Behrman, (id. Ex. B, at 24), Plaintiff Surfer Beach also identified Jessica Behrman, (id. Ex. C, at 35), and Plaintiff TBD identified Wendy Maynard. (Id. Ex. D, at 47.) Defendants' requests for admissions include the following:
Admit that the people identified in YOUR response to Interrogatory Number 2 attended the BIG Request No. 5 TABLE on YOUR BEHALF.
Admit that the people identified in YOUR response to Interrogatory Number 2 signed a BIG Request No. 6 TABLE AGREEMENT.
Admit that the BIG TABLE AGREEMENT(s) signed by the people identified in YOUR response to Interrogatory Number 2 contained an arbitration clause. (Id. Ex. ...