Jeff Boardman v. Pacific Seafood Group

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JEFF BOARDMAN; DENNIS RANKIN; Nos. 15-35257
ROBERT SEITZ; TODD L. WHALEY; 15-35504
SOUTH BAY WILD, INC.; LLOYD D.
WHALEY; MISS SARAH, LLC; MY D.C. No.
FISHERIES, INC., CV 15-0108 MC
Plaintiffs-Appellees,
v. OPINION
PACIFIC SEAFOOD GROUP; OCEAN
GOLD HOLDING CO., INC.; DULCICH
INC.; FRANK DULCICH; PACIFIC
SEAFOOD GROUP ACQUISITION
COMPANY, INC.; PACIFIC SEAFOOD
WASHINGTON ACQUISITION CO.,
INC.; BANDON PACIFIC, INC.; BIO-
OREGON PROTEIN, INC.; PACIFIC
CHOICE SEAFOOD COMPANY;
PACIFIC COAST SEAFOODS
COMPANY; PACIFIC GARIBALDI,
INC.; PACIFIC GOLD SEAFOOD
COMPANY; PACIFIC PRIDE SEA FOOD
COMPANY; PACIFIC SEA FOOD CO.;
PACIFIC SURIMI CO., INC.; PACIFIC
TUNA COMPANY, LLC;
WASHINGTON CRAB PRODUCERS,
INC.; PACIFIC ALASKA SHELLFISH,
INC.; SEA LEVEL SEAFOODS, LLC;
ISLAND FISH CO., LLC; PACIFIC
RESURRECTION BAY; PACIFIC
2 BOARDMAN V. PACIFIC SEAFOOD GROUP
CONQUEST, INC.; CALAMARI, LLC;
JO MARIE LLC; LESLIE LEE, LLC;
MISS PACIFIC, LLC; PACIFIC
FUTURE, LLC; PACIFIC GRUMPY J,
LLC; PACIFIC HOOKER, LLC;
PACIFIC HORIZON, LLC; PACIFIC
KNIGHT, LLC; PRIVATEER LLC; SEA
PRINCESS, LLC; TRIPLE STAR, LLC;
PACIFIC FISHING, LLC; PACIFIC SEA
FOOD OF ARIZONA, INC.; STARFISH
INVESTMENTS, INC.; DULCICH
SURIMI, LLC; BIO-OREGON
PROPERTIES, LLC; PACIFIC GROUP
TRANSPORT, CO.; PACIFIC
MARKETING GROUP, INC.; PACIFIC
RUSSIA, INC.; PACIFIC RUSSIA
VENTURES, LLC; PACIFIC TUNA
HOLDING COMPANY, INC.; POWELL
STREET MARKET, LLC; PACIFIC
FRESH SEA FOOD COMPANY;
SEACLIFF SEAFOODS, INC.; COPPER
RIVER RESOURCE HOLDING CO.,
INC.; PACIFIC COPPER RIVER
ACQUISITION CO., INC.; SEA LEVEL
SEAFOODS ACQUISITION, INC.;
ISLAND COHO, LLC; S&S SEAFOOD
CO., INC.; PACIFIC SEAFOOD DISC.,
INC.; DULCICH REALTY, LLC;
DULCICH REALTY ACQUISITION,
LLC; DULCICH JET, LLC; OCEAN
COMPANIES HOLDING CO., LLC,
Defendants-Appellants.
BOARDMAN V. PACIFIC SEAFOOD GROUP 3
Appeals from the United States District Court
for the District of Oregon
Owen M. Panner and Michael J. McShane, District Judges,
Presiding
Argued and Submitted
October 13, 2015—Portland, Oregon
Filed May 3, 2016
Before: A. Wallace Tashima, Ronald Lee Gilman,*
and Carlos T. Bea, Circuit Judges.
Opinion by Judge Tashima;
Partial Concurrence and Partial Dissent by Judge Gilman
*
The Honorable Ronald Lee Gilman, Senior United States Circuit Judge
for the Court of Appeals for the Sixth Circuit, sitting by designation.
4 BOARDMAN V. PACIFIC SEAFOOD GROUP
SUMMARY**
Antitrust
The panel affirmed the district court’s orders granting a
preliminary injunction and denying a motion to compel
arbitration in an antitrust action brought by a group of West
Coast fishermen against seafood processors.
A previous antitrust action—brought by another group of
fishermen against Frank Dulcich, seafood processor entities
owned by Dulcich (“Pacific Seafood”), and Ocean Gold
Seafoods, Inc.—was settled. Pacific Seafood subsequently
announced that it was planning to acquire Ocean Gold. The
current group of fishermen then brought claims under the
Sherman Act and the Clayton Act, alleging monopolization
and unlawful merger.
The panel affirmed the district court’s denial of
defendants’ motion to compel arbitration pursuant to the
settlement agreement in the first action. Applying the Federal
Arbitration Act, the panel held that the fishermen’s claims did
not fall within the scope of the purported arbitration provision
in the settlement agreement.
The panel also affirmed the district court’s preliminary
injunction against Pacific Seafood’s acquisition of Ocean
Gold. The panel held that the fishermen showed a sufficient
likelihood of success on the merits because they did not
release their claims in the previous settlement agreement, and
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
BOARDMAN V. PACIFIC SEAFOOD GROUP 5
they adequately demonstrated that the proposed transaction
could substantially lessen competition. The fishermen also
demonstrated a likelihood of irreparable harm. The district
court did not abuse its discretion in finding that the balance
of the equities tipped in favor of the fishermen. In addition,
the preliminary injunction was in the public interest, and it
was not overbroad.
Concurring in part and dissenting in part, Judge Gilman
agreed with the majority’s holding that the district court did
not abuse its discretion in granting the preliminary injunction.
Judge Gilman also agreed with the majority’s framework for
analyzing motions to compel arbitration, but he dissented
from the majority’s conclusion that the fishermen’s claims
clearly and unambiguously fell outside the scope of the
settlement agreement. Judge Gilman would hold that the
scope of the language in the agreement was at best
ambiguous, and he would resolve this ambiguity in favor of
arbitration.
COUNSEL
Timothy W. Snider (argued), Rachel C. Lee, and Randolph C.
Foster, Stoel Rives LLP, Portland, Oregon; Michael J. Esler,
John W. Stephens, and Kim T. Buckley, Esler, Stephens, &
Buckley, Portland, Oregon, for Defendants-Appellants.
Michael E. Haglund (argued), Michael K. Kelley, Shay S.
Scott, and Sara Ghafouri, Haglund Kelley LLP, Portland,
Oregon, for Plaintiffs-Appellees.
6 BOARDMAN V. PACIFIC SEAFOOD GROUP
OPINION
TASHIMA, Circuit Judge:
These consolidated appeals arise out of an antitrust action
brought by a group of West Coast fishermen against Frank
Dulcich, the West Coast seafood processor entities owned by
Dulcich (collectively, “Pacific Seafood”), and Ocean Gold
Seafoods, Inc. (“Ocean Gold”), another West Coast seafood
processor, which was commenced in 2010 and settled in
2012. Their settlement is documented in a Resolution
Agreement.
In December 2014, Pacific Seafood informed the other
parties to the Resolution Agreement, including several who
are now plaintiffs in the instant action, that Pacific Seafood
was planning to acquire Ocean Gold. Plaintiffs, a second
group of West Coast fishermen,1 then filed the present action
against Dulcich, Pacific Seafood, and an Ocean Gold entity
(collectively, “Defendants”), alleging antitrust claims under
the Sherman Act and the Clayton Act.
Plaintiffs moved for a preliminary injunction to enjoin the
acquisition pendente lite, which the district court granted.
Defendants then filed a motion to compel arbitration, arguing
that the dispute should be arbitrated pursuant to a provision
in the Resolution Agreement. The district court denied this
motion.
Defendants now appeal the district court’s decisions
granting the preliminary injunction and denying the motion
1
Plaintiffs here are the second group, if the group of fishermen who
filed the 2010 action is considered the first group.
BOARDMAN V. PACIFIC SEAFOOD GROUP 7
to compel arbitration. We have jurisdiction over the appeal
from the order granting the preliminary injunction under
28 U.S.C. § 1292(a)(1). We have jurisdiction over the appeal
from the order denying Defendants’ motion to compel
arbitration under 9 U.S.C. § 16(a)(1)(C). We affirm both
decisions.
I.
A. The 2010 Litigation: Whaley v. Pacific Seafood Group
In 2010, a group of West Coast fishermen (the “Whaley
plaintiffs”) sued Frank Dulcich, Pacific Seafood, and Ocean
Gold in the District of Oregon. The Whaley plaintiffs – and
Plaintiffs here – sell their catch to processors such as Pacific
Seafood and Ocean Gold, and seek to insure competition
between the buyers of their fish. The Whaley plaintiffs
alleged that the defendants had engaged in a conspiracy to
restrain trade in, as well as monopolization and attempted
monopolization of, multiple West Coast seafood markets.
Within a few months of filing suit, the Whaley plaintiffs
learned that Pacific Seafood was planning to acquire Ocean
Gold and its affiliated companies. They filed for a temporary
restraining order to halt the proposed transaction. Defendants
then represented to the district court and the Whaley plaintiffs
that they had terminated the transaction, and that they would
not pursue it again without prior notice to the plaintiffs and
the Oregon Attorney General.
Throughout the course of the Whaley litigation, Pacific
Seafood and Ocean Gold were parties to an exclusive
marketing contract, under which Pacific Seafood acted as the
8 BOARDMAN V. PACIFIC SEAFOOD GROUP
exclusive marketer and distributor of Ocean Gold’s products.
This agreement was set to expire in 2016.
The Whaley litigation continued for twenty months. From
February to March 2012, the parties engaged in settlement
negotiations, mediated by then-Senior District Judge Michael
Hogan. The parties filed a Stipulation and Resolution
Agreement of Class Action Claims (the “Resolution
Agreement”) in April 2012. The district court entered a
Judgment and Order of Dismissal on May 21, 2012.
In the Resolution Agreement, the Whaley defendants
agreed not to renew Pacific Seafood and Ocean Gold’s
exclusive marketing contract when it expired in 2016.
Additionally, in Paragraph 3(a) of the Resolution Agreement,
defendants agreed that, if Pacific Seafood and Ocean Gold
were to “enter into any new agreement that require[d] Pacific
Seafood Group to act as the exclusive marketer of any
seafood product produced by Ocean Gold Seafoods,” Pacific
Seafood and Ocean Gold would give 60-days’ notice to
plaintiffs’ counsel and the Oregon Department of Justice.
Objections to the new contractual arrangement were to be
submitted to Judge Hogan, or, if he were unavailable,
Magistrate Judge John Jelderks, for resolution. If Judge
Hogan, or his successor, were to determine that the new
agreement were “pro-competitive . . . it may be approved.”
B. The 2015 Litigation: Boardman v. Pacific Seafood
Group
In December 2014, counsel for Frank Dulcich and Pacific
Seafood informed lead plaintiffs’ counsel in the Whaley
litigation that Pacific Seafood again intended to acquire
Ocean Gold’s stock. Plaintiffs’ counsel then conducted an
BOARDMAN V. PACIFIC SEAFOOD GROUP 9
investigation into this proposed acquisition, and learned that
Pacific Seafood and Ocean Gold had been negotiating the
proposed transaction for 15 months. On January 21, 2015,
plaintiffs’ counsel asked defendants’ counsel whether the
transaction was scheduled to close in the near future, and
defendants’ counsel replied that he did not know.
Plaintiffs, a second group of West Coast fishermen,2 then
filed this action against Pacific Seafood, an Ocean Gold entity
(Ocean Gold Holding Co., Inc.), and Dulcich (collectively,
“Defendants”) on January 22, 2015, alleging monopolization
and attempted monopolization under § 2 of the Sherman Act,
and requesting a declaratory judgment that Pacific Seafood’s
proposed acquisition of Ocean Gold violated the Whaley
Resolution Agreement.3 Plaintiffs also applied for a
temporary restraining order to halt Pacific Seafood’s
proposed acquisition of Ocean Gold, which the district court
granted.
Plaintiffs then moved for a preliminary injunction, after
which Defendants filed a stipulation stating that the Oregon
Attorney General had begun an investigation into Pacific
Seafood’s proposed acquisition of Ocean Gold, and that
Defendants agreed that they would not “enter into any
purchase transaction” with respect to Ocean Gold while the
investigation was pending. Further, that Defendants could
2
Several – although not all – of the plaintiffs in the instant action also
were plaintiffs in the Whaley litigation.
3
Plaintiffs dropped this last claim for a declaratory judgment on January
23, and added a claim of unlawful merger under § 7 of the Clayton Act on
February 26.
10 BOARDMAN V. PACIFIC SEAFOOD GROUP
terminate the stipulation “upon 60-days’ prior notice to the
Oregon Attorney General and the Court.”
The district court (Judge McShane) granted Plaintiffs’
preliminary injunction motion. The preliminary injunction
prohibited defendants “from undertaking any further act to
acquire or control any interest in” Ocean Gold’s stock or
assets. Defendants timely appeal from the decision granting
the preliminary injunction.
About a month after the preliminary injunction was
granted, Defendants filed a motion to compel arbitration,
arguing that Plaintiffs were obligated to submit their
objection to Pacific Seafood’s proposed acquisition of Ocean
Gold to Magistrate Judge Jelderks, the replacement for now-
retired Judge Hogan, for arbitration under Paragraph 3(a) of
the Whaley Resolution Agreement. The district court (Judge
Panner) denied Defendants’ motion, holding that Plaintiffs’
claims did not fall within the scope of Paragraph 3(a).
Defendants timely appeal the denial of their motion to compel
arbitration.
These consolidated appeals are now before this Court.
II.
We review a district court’s denial of a motion to compel
arbitration de novo. See Brown v. Dillard’s, Inc., 430 F.3d
1004, 1009 (9th Cir. 2005).
We review a district court’s grant of a preliminary
injunction for an abuse of discretion. Stormans, Inc. v.
Selecky, 586 F.3d 1109, 1119 (9th Cir. 2009). A district court
abuses its discretion if it “base[s] its decision on an erroneous
BOARDMAN V. PACIFIC SEAFOOD GROUP 11
legal standard or on clearly erroneous findings of fact.” Id.(quoting FTC v. Enforma Nat. Prods., Inc., 362 F.3d 1204,
1211–12 (9th Cir. 2004)).
III.
A. The Framework for Analyzing a Motion to Compel
Arbitration
Section 2 of the Federal Arbitration Act (“FAA”) makes
enforceable a written arbitration provision in “a contract
evidencing a transaction involving commerce.” Chiron Corp.
v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir.
2000). When a contract meets this requirement, a court is
“limited to determining (1) whether a valid agreement to
arbitrate exists [within the contract] and, if it does,
(2) whether the agreement encompasses the dispute at issue.”
Id. If so, the court must compel arbitration. See id. at 1134.
To interpret the parties’ contract, a court should look to
“general state-law principles of contract interpretation, while
giving due regard to the federal policy in favor of arbitration
by resolving ambiguities as to the scope of arbitration in
favor of arbitration.” Wagner v. Stratton Oakmont, Inc.,
83 F.3d 1046, 1049 (9th Cir. 1996). Under Oregon law, “[t]o
interpret a contractual provision . . . the court follows three
steps. First, the court examines the text of the disputed
provision, in the context of the document as a whole. If the
provision is clear, the analysis ends.” Yogman v. Parrott,
937 P.2d 1019, 1021 (Or. 1997) (en banc). If, on the other
hand, the provision is ambiguous, the court “examine[s]
extrinsic evidence of the contracting parties’ intent.” Id. at
1022. If this step does not resolve the ambiguity, the court
looks to appropriate canons of construction for guidance. Id.12 BOARDMAN V. PACIFIC SEAFOOD GROUP
B. Plaintiffs’ Claims Are Not Within the Scope of
Paragraph 3(a) of the Resolution Agreement
Because Plaintiffs’ claims are not within the scope of the
purported arbitration provision in the Resolution Agreement,
we conclude that the district court did not err in denying
Defendants’ motion to compel arbitration.4
Defendants contend that: (1) the FAA applies to the
Resolution Agreement; (2) Paragraph 3(a) of the Resolution
Agreement includes a valid agreement to arbitrate; (3) the
agreement to arbitrate encompasses Plaintiffs’ suit; and
(4) the Court must therefore compel arbitration of the instant
action.
Because the FAA applies only to arbitration provisions in
“contract[s] evidencing a transaction involving commerce,”
see Chiron Corp., 207 F.3d at 1130, we must first determine
whether the Resolution Agreement is such a contract. The
Resolution Agreement settled claims regarding seafood
processors’ purchases of fish from fishermen on the West
Coast;5 accordingly, it evidences a transaction involving
4
Because nearly all of the plaintiffs in the instant suit were also
plaintiffs in the Whaley litigation, we analyze the relevant issues
assuming, but not deciding, that all of the current plaintiffs are bound by
the Resolution Agreement. Were we to conclude, as does the
concurring/dissenting opinion, that Plaintiffs’ claims are within the scope
of Paragraph 3(a), see Concur. & Dissent. Op. at 34–37, presumably, we
would have to decide whether Plaintiffs here, who were not plaintiffs in
the Whaley litigation, are bound by the Resolution Agreement, including
Paragraph 3(a).
5
The Resolution Agreement defines “West Coast” as encompassing the
west coast of the continental United States from northern California to the
Canadian border.
BOARDMAN V. PACIFIC SEAFOOD GROUP 13
commerce. See generally Rogers v. Royal Caribbean Cruise
Line, 547 F.3d 1148, 1154 (9th Cir. 2008) (explaining that the
Supreme Court has adopted a broad interpretation of the
phrase “evidencing a transaction involving commerce”).
Thus, the district court would have been obligated to
compel arbitration of Plaintiffs’ claims if the Resolution
Agreement contained a valid agreement to arbitrate, and if
that arbitration provision encompassed this dispute. Chiron
Corp., 207 F.3d at 1130. We need not decide whether
Paragraph 3(a) of the Resolution Agreement constitutes a
valid agreement to arbitrate because we conclude that
Plaintiffs’ claims are not encompassed by Paragraph 3(a)’s
plain language.
Paragraph 3(a) of the Resolution Agreement provides:
The February 9, 2006 Agreement between
Pacific Seafood Group and Ocean Gold
Seafoods, will not be renewed in 2016. In the
event that the [sic] Pacific Seafood and Ocean
Gold intend to enter into any new agreement
that requires Pacific Seafood Group to act as
the exclusive marketer of any seafood product
produced by Ocean Gold Seafoods, Pacific
Seafood and Ocean Gold shall first give 60
days’ notice to class counsel and the Oregon
Department of Justice and an opportunity to
object to the agreement. In the event of an
objection to the new contractual arrangement,
Judge Hogan shall determine whether the
proposed new agreement is pro-competitive
and if so, it may be approved.
14 BOARDMAN V. PACIFIC SEAFOOD GROUP
Because of the federal policy in favor of arbitration,
ambiguities regarding the scope of arbitrable issues are to be
resolved in favor of arbitration. Id. at 1131. At the same
time, 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.” See Knutson v. Sirius XM Radio
Inc., 771 F.3d 559, 565 (9th Cir. 2014) (quoting United
Steelworkers of Am. v. Warrior & Gulf Navigation Co.,
363 U.S. 574, 582 (1960)).
In Paragraph 3(a) of the Resolution Agreement, the
parties to the Whaley lawsuit agreed to submit to then-Senior
District Judge Hogan, or his replacement, Magistrate Judge
Jelderks, disputes regarding “any new agreement that requires
Pacific Seafood Group to act as the exclusive marketer of any
seafood product produced by Ocean Gold Seafoods.” The
purchase and sale agreements for stock and other interests
between Pacific Seafood and Ocean Gold that led to the
current suit do not pertain to marketing. They do not deal
with the marketing of Ocean Gold’s products in any explicit
way, exclusive or otherwise. Instead, they detail Pacific
Seafood’s plan to purchase Ocean Gold’s stock and other
interests.
Pacific Seafood argues that the purchase agreements
functionally require it to act as the exclusive marketer of
Ocean Gold’s products, by virtue of its contemplated
ownership of Ocean Gold’s stock and other interests. But the
owner of a company is not necessarily that company’s
exclusive marketer, just as under the former exclusive
marketing agreement, Ocean Gold was not the marketer of its
own products. The owner of a company may have the right
to act as the exclusive marketer of the company’s products,
but there is no requirement that it do so. The parties could
BOARDMAN V. PACIFIC SEAFOOD GROUP 15
have drafted the provision more broadly to require any
objections to a proposed merger or other combination of
Pacific Seafood and Ocean Gold, or to any modification of
their relationship, to be submitted to Judge Hogan for
resolution, but they did not. Instead, the provision only
includes objections to a new agreement that requires Pacific
Seafood to act as the exclusive marketer of Ocean Gold’s
products.6 The purchase and sale agreements at issue in this
litigation are thus not fairly encompassed by this provision of
the Resolution Agreement. Regardless of whether the
provision constitutes a valid agreement to arbitrate, Plaintiffs’
claims are not within the scope of Paragraph 3(a).
Accordingly, the district court’s order denying Defendants’
motion to compel arbitration is affirmed.7
6
The concurring/dissenting opinion argues that the purchase agreements
“authorize” and “permit” Pacific Seafood to act as Ocean Gold’s exclusive
marketer. Concur. & Dissent. Op. at 36. But this argument elides the
clear and unambiguous language of the Resolution Agreement, that
Paragraph 3(a) applies only to agreements that require Pacific Seafood to
act as Ocean Gold’s exclusive marketer.
7
Because we conclude that paragraph 3(a) of the Resolution Agreement
does not encompass the acquisition by Pacific Seafood of Ocean Gold’s
stock, we need not decide the other issues tendered by the parties,
including whether Paragraph 3(a) is an agreement to arbitrate or whether
Judge Hogan or Magistrate Judge Jelderks, consistent with the legal and
ethical obligations that bind federal judges, could serve as a privately-
appointed arbitrator. The concurring/dissenting opinion concludes that
“Plaintiffs’ argument that magistrate judges may not serve as arbitrators
is therefore without merit in light of Congress’s specific language to the
contrary.” Concur. & Dissent. Op. at 32. The authorities relied on,
however, in support of the argument that there is no impediment to
Magistrate Judge Jelderks, Judge Hogan’s designated replacement, acting
as an arbitrator are inapposite. Even assuming that the Federal
Magistrates Act and the Alternative Dispute Resolution Act of 1998, on
which the concurrence/dissent relies, see id. at 30–32, grant to district
16 BOARDMAN V. PACIFIC SEAFOOD GROUP
IV.
A. The Framework for Analyzing Preliminary
Injunctions
To obtain a preliminary injunction, a plaintiff must
demonstrate that: (1) it “is likely to succeed on the merits”;
(2) it “is likely to suffer irreparable harm in the absence of
preliminary relief”; (3) “the balance of equities tips in [its]
favor”; and (4) “an injunction is in the public interest.”
Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).
We hold that the district court did not abuse its discretion in
finding that Plaintiffs satisfied each of these requirements and
granting their motion for a preliminary injunction.
courts the authority to designate magistrate judges to serve as arbitrators
as part of a court’s alternative dispute resolution program, nothing in the
record demonstrates that magistrate judges were so authorized by the
District of Oregon. The Alternative Dispute Resolution Act plainly
requires the authorization to come from the “United States district court
. . . by local rule,” not from a single judge of that court. 28 U.S.C.
§ 651(b) (“Each United States district court shall authorize, by local rule
adopted under section 2071(a), the use of alternative dispute resolution
processes in all civil actions . . . .”). The concurring/dissenting opinion
insists “that the authorization here is based on the District of Oregon’s
local rules. The local rule in question specifically permits an individual
judge—‘on his/her own motion or at the request of a party’—to assign the
case to arbitration.” Concur. & Dissent. Op. at 32 (quoting D. Or. Civil
Local Rule 16-4(e)(4)(A)). But nothing in Local Rule 16-4(e) speaks to
who may be appointed as an arbitrator and certainly does not authorize
that judge to appoint an active magistrate judge to act as an arbitrator in
such a case.
BOARDMAN V. PACIFIC SEAFOOD GROUP 17
B. Plaintiffs Have Shown a Sufficient Likelihood of
Success on the Merits
1. Plaintiffs Did Not Release Their Claims in the
Prior Settlement
Defendants argue that Plaintiffs cannot show a likelihood
of success on the merits of their monopolization and unlawful
merger claims because they released these claims in the
Resolution Agreement. When settling the Whaley lawsuit,
Plaintiffs agreed to release the following:
Any and all claims for monopolization,
attempted monopolization or conspiracy to
restrain trade under Sections 1 and 2 of the
Sherman Act that relate to the delivery of
trawl-caught groundfish, whiting or pink
shrimp to West Coast processors from Ft.
Bragg, California north to the Canadian
border between June 21, 2006 and December
31, 2011 and specifically including any claims
for damages and/or injunctive relief related to
those claims.
As required by Oregon contract law, we interpret the above
provision by examining its text; if the provision is clear, its
plain text governs. See Yogman, 937 P.2d at 1021. Plaintiffs
argue that the entire release is temporally limited (that is, only
claims arising between June 21, 2006 and December 31, 2011
were released), while Defendants argue that the last clause of
the provision (“including any claims for damages and/or
injunctive relief related to those claims”) is not so limited,
and thus encompasses the claims at issue in this case. We
18 BOARDMAN V. PACIFIC SEAFOOD GROUP
agree with Plaintiffs and conclude that they did not release
their current claims when they settled the Whaley lawsuit.
Defendants read the last clause of the release expansively
to mean that the Whaley plaintiffs released all claims for
damages or injunctive relief related to – which Defendants
define to mean “logically or causally connected to” – the
claims asserted in Whaley. By this logic, the Whaley
plaintiffs released their antitrust claims against Defendants
that arose between June 21, 2006 and December 31, 2011,
and any related claims for damages or injunctive relief arising
at any time before or after. This construction would render
the temporal limitation in the first clause meaningless.
We decline to reach this illogical result, and we instead
read the second clause in the context of the provision as a
whole. The release states that the claims in the first clause,
which are temporally limited, “specifically includ[e]” the
claims in the second clause – the “related” claims for
“damages and/or injunctive relief.” Thus, the claims in the
second clause are a smaller subset of the temporally limited
claims in the first clause. See, e.g., Ariz. State Bd. for
Charter Sch. v. U.S. Dep’t of Educ., 464 F.3d 1003, 1007–08
(9th Cir. 2006) (“Using a common-sense construction . . . ,
the term ‘including’ indicates that [which follows] is an
illustrative subset of the preceding principle . . . .”). The
release in the Resolution Agreement is clear: the Whaley
plaintiffs released their antitrust claims against Defendants
that arose between June 2006 and December 2011, which
specifically included plaintiffs’ claims for damages and
injunctive relief that arose during the specified time period.
Accordingly, we conclude that the release in the Resolution
Agreement has no bearing on Plaintiffs’ likelihood of success
BOARDMAN V. PACIFIC SEAFOOD GROUP 19
on the merits of their claims in this case, which arose after the
Resolution Agreement was executed.
2. Plaintiffs Have Adequately Demonstrated That the
Proposed Transaction Could Substantially Lessen
Competition
To prove an unlawful merger claim under § 7 of the
Clayton Act, a plaintiff must show that the effect of the
challenged acquisition “may be substantially to lessen
competition, or to tend to create a monopoly.” 15 U.S.C.
§ 18. The plaintiff need not prove that a merger or
acquisition has altered prices in the relevant market; rather,
“[a]ll that is necessary is that the merger create an appreciable
danger of such consequences in the future.” Saint Alphonsus
Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd.,
778 F.3d 775, 788 (9th Cir. 2015) (quoting Hosp. Corp. of
Am. v. FTC, 807 F.2d 1381, 1389 (7th Cir. 1986)).
This Court evaluates § 7 claims “under a burden-shifting
framework.” Id. at 783. “A prima facie case can be
established simply by showing a high market share” would
result from the proposed merger, although plaintiffs often put
forth other evidence as well, because market share statistics
do not conclusively prove harm to competition. Id. at 785.
The burden then shifts to the defendant to “cast doubt on the
accuracy of the [plaintiff’s] evidence as predictive of future
anticompetitive effects.” Id. at 788 (quoting Chi. Bridge &
Iron Co. N.V. v. FTC, 534 F.3d 410, 423 (5th Cir. 2008)).
Plaintiffs have adduced evidence that, if Pacific Seafood
were to acquire Ocean Gold, Pacific Seafood’s market power
20 BOARDMAN V. PACIFIC SEAFOOD GROUP
in seafood input markets8 on the West Coast would increase
significantly, to the point that the markets would become
“highly concentrated.” To support their argument, Plaintiffs
have utilized the Herfindahl-Hirschman Index, which is “[a]
commonly used metric for determining market share,” Saint
Alphonsus Med. Ctr., 778 F.3d at 786, as well as the U.S.
Department of Justice’s and Federal Trade Commission’s
Horizontal Merger Guidelines. Plaintiffs’ expert, Dr. Radtke,
also submitted a declaration explaining that there were
“multiple barriers to entry in the West Coast seafood market.”
To “cast doubt” on Plaintiffs’ “evidence as predictive of
future anticompetitive effects,” Defendants respond that
Pacific Seafood and Ocean Gold have been cooperating for
nearly 15 years, with Pacific Seafood acting as the sole buyer
of Ocean Gold’s seafood output, using Ocean Gold’s seafood
processing assets, and offering marketing and distribution
services to Ocean Gold in return. According to Defendants,
the companies’ joint efforts have improved the industry by
increasing ex vessel prices9 and expanding the market. In
other words, Defendants claim that Pacific Seafood’s
acquisition of Ocean Gold would merely continue the
companies’ joint efforts and not change the current market
structure. Defendants argue that, as a result, the proposed
acquisition poses no danger to competition.
Plaintiffs respond that Pacific Seafood’s acquisition of
Ocean Gold would indeed change the relevant market
8
“Input market” signifies seafood processors’ purchase of fish from
fishermen, such as Plaintiffs.
9
“Ex vessel prices” are those prices paid to fishermen for their catches
at the point of delivery.
BOARDMAN V. PACIFIC SEAFOOD GROUP 21
structure, which is that of input markets on the West Coast.
In West Coast input markets for trawl-caught groundfish,
Pacific whiting, and Pacific coldwater shrimp, Ocean Gold
and Pacific Seafood are currently competitors, though they
cooperate in other respects. Thus, according to Plaintiffs,
Pacific Seafood’s acquisition of Ocean Gold would
substantially decrease competition in multiple seafood input
markets.
The district court found convincing Plaintiffs’ showing
that Pacific Seafood’s acquisition of Ocean Gold would
substantially reduce competition in multiple buyers’ input
markets, and it found that Defendants had not sufficiently cast
doubt on Plaintiffs’ evidence to meet their burden. This
conclusion is supported by the evidence in the record
summarized above, and it was not implausible in light of the
record as a whole. The district court thus did not abuse its
discretion in finding that the effect of the challenged
acquisition could be to lessen competition substantially; thus,
that Plaintiffs had adequately demonstrated a likelihood of
success on the merits.
C. Plaintiffs Are Likely to Suffer Irreparable Harm in
the Absence of Preliminary Relief
Next, a plaintiff must show that she “is likely to suffer
irreparable harm in the absence of preliminary relief.” See
Winter, 555 U.S. at 20. This Court has ruled that
“[s]peculative injury does not constitute irreparable injury
sufficient to warrant granting a preliminary injunction. A
plaintiff must do more than merely allege imminent harm
sufficient to establish standing; a plaintiff must demonstrate
immediate threatened injury as a prerequisite to preliminary
injunctive relief.” Caribbean Marine Servs. Co., Inc. v.
22 BOARDMAN V. PACIFIC SEAFOOD GROUP
Baldrige, 844 F.2d 668, 674 (9th Cir. 1988) (citations
omitted).
Plaintiffs argue that Pacific Seafood’s acquisition of
Ocean Gold would create a monopsony in multiple seafood
input markets on the West Coast. A monopsony occurs when
there is “market power on the buy side of the market” and
buyers consequently pay suppliers less than they would in a
competitive market. Weyerhaeuser Co. v. Ross-Simmons
Hardwood Lumber Co., Inc., 549 U.S. 312, 320–22 (2007).
As noted above, Plaintiffs support their argument with market
concentration statistics and expert declarations. A lessening
of competition constitutes an irreparable injury under our
case law. See United States v. BNS Inc., 858 F.2d
456,464–66 (9th Cir. 1988) (“Koppers has demonstrated that
serious questions exist regarding the possibility of irreparable
harm to competition in the Irwindale aggregate market if the
tender offer is consummated . . . .”). Thus, the district court
did not abuse its discretion in finding that Plaintiffs
adequately demonstrated a threatened irreparable injury.
Defendants argue that there is no immediate danger of
irreparable harm because they have terminated the proposed
acquisition that led to this suit, and they have stipulated with
the Oregon Attorney General that they would not enter a
purchase transaction with Ocean Gold entities while the
Attorney General’s investigation is pending. Defendants,
however, may terminate the stipulation with 60-days’ notice
to the Oregon Attorney General and the district court.
Defendants’ argument is unavailing. A threat of
irreparable harm is sufficiently immediate to warrant
preliminary injunctive relief if the plaintiff “is likely to suffer
irreparable harm before a decision on the merits can be
BOARDMAN V. PACIFIC SEAFOOD GROUP 23
rendered.” See Winter, 555 U.S. at 22 (quoting 11A Charles
A. Wright & Arthur R. Miller, Federal Practice and
Procedure § 2948.1 (2d ed. 1995)). Given: (1) the limited
nature of Defendants’ proposed stipulation (not to enter a
“purchase transaction,” when a deal with Ocean Gold could
take on many different structures); (2) the expiration of
Pacific Seafood and Ocean Gold’s exclusive marketing
agreement in February 2016; (3) Defendants’ history of
negotiating an acquisition for many months in secret before
notifying Plaintiffs; and (4) the fact that Defendants may
terminate their stipulation with 60-days’ notice, Plaintiffs
have established a sufficient likelihood that, in the absence of
preliminary injunctive relief, they would suffer irreparable
harm before a trial on the merits could be held. Thus, the
district court did not abuse its discretion in ruling that
Plaintiffs sufficiently demonstrated a threat of irreparable
harm.
D. The Balance of Equities Tips in Plaintiffs’ Favor
The district court likewise did not abuse its discretion in
finding that the balance of equities tips in favor of Plaintiffs.
Plaintiffs have demonstrated a reasonable probability that
Pacific Seafood’s acquisition of Ocean Gold would
substantially lessen competition in the relevant input markets
on the West Coast. This decrease in competition would
injure Plaintiffs, who sell fish in these markets. Defendants,
on the other hand, have not established how maintaining the
status quo while the district court decides the case on the
merits will injure them. Accordingly, the district court’s
finding as to the balance of equities in this case was not an
abuse of discretion.
24 BOARDMAN V. PACIFIC SEAFOOD GROUP
E. A Preliminary Injunction Is in the Public Interest
A district court should consider whether a preliminary
injunction would be in the public interest if “the impact of an
injunction reaches beyond the parties, carrying with it a
potential for public consequences.” Stormans, Inc., 586 F.3d
at 1138–39. This Court has said that “the central purpose of
the antitrust laws, state and federal, is to preserve
competition. It is competition . . . that these statutes
recognize as vital to the public interest.” Knevelbaard
Dairies v. Kraft Foods, Inc., 232 F.3d 979, 988 (9th Cir.
2000) (emphasis added). Again, Plaintiffs have demonstrated
a reasonable likelihood that Pacific Seafood’s acquisition of
Ocean Gold could substantially lessen competition in relevant
input markets. Thus, the district court did not abuse its
discretion in finding that a preliminary injunction is in the
public interest.
F. The Preliminary Injunction Is Not Overbroad
Finally, Defendants argue that the district court abused its
discretion by granting an overly broad preliminary injunction.
“An overbroad injunction is an abuse of discretion.” Lamb-
Weston, Inc. v. McCain Foods, Ltd., 941 F.2d 970, 974 (9th
Cir. 1991).
The preliminary injunction provides, as follows:
Defendants, their subsidiaries, affiliates,
owners, officers, employees, and agents and
all persons acting on their behalf are
prohibited, through contractual or any other
means, from undertaking any further act to
acquire or control any interest in the stock,
BOARDMAN V. PACIFIC SEAFOOD GROUP 25
capital assets, real property, quota, or fishing
permits of Ocean Gold Seafoods, Inc. or its
affiliated companies including but not limited
to Ocean Gold International, Inc.; Ocean
Protein, LLC; Ocean Cold, LLC; Ocean Cold
Transport, LLC, and Hoquiam Riverview
Properties, LLC, or their shareholders or
members until further order of this Court.
Defendants take issue with the fact that the district court
prohibited them “from undertaking any further act to acquire
or control any interest in” Ocean Gold. Defendants argue that
the preliminary injunction is overbroad because it prohibits
not only Pacific Seafood’s ultimate acquisition of Ocean
Gold, but also any lawful preparatory conduct (such as
negotiating an acquisition, signing a letter of intent, or
entering into an agreement contingent on resolution of
Plaintiffs’ antitrust claims). According to Defendants, such
preparatory conduct was specifically contemplated by the
Resolution Agreement, which states that Pacific Seafood may
enter new contractual arrangements with Ocean Gold.
“District courts have broad latitude in fashioning
equitable relief when necessary to remedy an established
wrong.” Earth Island Inst. v. Carlton, 626 F.3d 462, 475 (9th
Cir. 2010) (quoting Sierra Hikers Ass’n v. Blackwell,
390 F.3d 630, 641 (9th Cir. 2004)) (internal quotation marks
omitted). The “purpose of a preliminary injunction is to
preserve the status quo ante litem pending a determination of
the action on the merits.” Sierra Forest Legacy v. Rey,
577 F.3d 1015, 1023 (9th Cir. 2009) (quoting L.A. Mem’l
Coliseum Comm’n v. Nat’l Football League, 634 F.2d 1197,
1200 (9th Cir. 1980)) (internal quotation marks omitted).
“Status quo ante litem” refers to “the last uncontested status
26 BOARDMAN V. PACIFIC SEAFOOD GROUP
which preceded the pending controversy.” GoTo.com, Inc. v.
Walt Disney Co., 202 F.3d 1199, 1210 (9th Cir. 2000)
(quoting Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d
804, 809 (9th Cir. 1963)).
By prohibiting Pacific Seafood from undertaking any
further act to acquire Ocean Gold’s stock or assets, the
district court effectively preserved the parties’ last
uncontested status, prior to Pacific Seafood’s attempt to
acquire Ocean Gold. Pacific Seafood and Ocean Gold could
combine their operations in a number of ways to lessen
competition, and the district court thus did not abuse its
discretion by prohibiting Pacific Seafood from undertaking
any further acts to acquire Ocean Gold’s stock or assets, as
opposed to prohibiting only an actual acquisition.
• ! •
Because the district court did not abuse its discretion in
finding that Plaintiffs had satisfied the Winter requirements,
we affirm the district court’s order granting Plaintiffs’ motion
for a preliminary injunction.
V.
We hold that the district court did not err in concluding
that Plaintiffs are not required to arbitrate their claims. We
further hold that the district court did not abuse its discretion
in granting Plaintiffs’ motion for a preliminary injunction.
Accordingly, both orders of the district court are
AFFIRMED.
BOARDMAN V. PACIFIC SEAFOOD GROUP 27
GILMAN, Circuit Judge, concurring in part and dissenting in
part:
I agree with the majority opinion’s holding that the
district court did not abuse its discretion in granting the
Plaintiffs’ motion for a preliminary injunction. Accordingly,
I concur in Part IV. of the opinion. I further agree with the
majority’s framework for analyzing motions to compel
arbitration as described in Part III.A. But I respectfully
disagree with the majority’s conclusion in Part III.B. that the
Plaintiffs’ claims clearly and unambiguously fall outside the
scope of Paragraph 3(a) of the Resolution Agreement. Such
a conclusion strikes me as contrary to well-established circuit
precedent and contravenes the “emphatic federal policy in
favor of arbitral dispute resolution.” See Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 631
(1985).
Reading Paragraph 3(a) in the context of this particular
dispute, I believe that the scope of the language is at best
ambiguous. And because this court’s long-standing precedent
requires that any ambiguity regarding the scope of an
arbitration agreement be resolved in favor of arbitration, I
would hold that the Plaintiffs’ claims are arbitrable. I would
therefore grant Pacific Seafood’s motion to compel
arbitration.
1. Paragraph 3(a) is a valid arbitration agreement
The majority states that it “need not decide” whether
Paragraph 3(a) is a valid arbitration agreement because,
notwithstanding such a determination, the Plaintiffs’ claims
“are not encompassed by Paragraph 3(a)’s plain language.”
(Maj. Op. 13.) In other words, the majority bypasses the first
28 BOARDMAN V. PACIFIC SEAFOOD GROUP
step of the Chiron analysis and addresses only the second.
But because I would hold that the dispute at issue is fairly
encompassed within the scope of Paragraph 3(a), I will first
consider whether Paragraph 3(a) constitutes a valid
arbitration agreement. See Chiron Corp. v. Ortho Diagnostic
Sys., 207 F.3d 1126, 1130 (9th Cir. 2000). I believe that it
does.
The Federal Arbitration Act (FAA) does not specifically
define the term “arbitration.” See 9 U.S.C. § 2. But in
Wolsey Ltd. v. Foodmaker, Inc., 144 F.3d 1205 (9th Cir.
1998), this court adopted the reasoning of two other courts in
determining what constitutes an arbitration agreement within
the meaning of the FAA. The Wolsey court first relied on the
Eastern District of New York’s rather straightforward
definition, which stated: “If the parties have agreed to submit
a dispute for a decision by a third party, they have agreed to
arbitration.” Id. at 1208 (emphasis omitted) (quoting AMF
Inc. v. Brunswick Corp., 621 F. Supp. 456, 460 (E.D.N.Y.
1985)). The Wolsey court also observed that the Third
Circuit, in a case decided the year before, had narrowed the
definition to require that “the parties must . . . also agree not
to pursue litigation ‘until the process is completed.’” Id.(quoting Harrison v. Nissan Motor Corp., 111 F.3d 343, 350
(3d Cir. 1997)). In applying Harrison, the Wolsey court
reasoned that if the agreement in question does not “explicitly
permit one of the parties to seek recourse to the courts”
before an arbitrator makes a decision, then the agreement is
arbitrable. Id. at 1209 (internal quotation marks omitted).
A “final factor weighing in favor” of arbitration, Wolsey
emphasized, is the “presumption in favor of arbitrability
created by the FAA.” Id.(noting that the FAA “was designed
to overrule the judiciary’s longstanding refusal to enforce
BOARDMAN V. PACIFIC SEAFOOD GROUP 29
agreements to arbitrate” (citation and internal quotation
marks omitted)). The Wolsey court concluded that the dispute
in question satisfied both the Eastern District of New York’s
and the Third Circuit’s criteria; it did not endorse one court’s
definition over the other. Id. at 1208–09.
Here, Paragraph 3(a) of the Resolution Agreement would
likewise satisfy both definitions of an arbitration agreement.
Pacific Seafood and the West Coast fishermen, in adopting
the Resolution Agreement, agreed to submit any objection to
a “new agreement that requires Pacific Seafood Group to act
as the exclusive marketer of any seafood product by Ocean
Gold Seafoods” to a named third party (District Judge Hogan
or his replacement, Magistrate Judge Jelderks) for a decision
to “determine whether the proposed new agreement is pro-
competitive.” This satisfies the Eastern District of New
York’s broader definition of arbitration. In addition,
Paragraph 3(a) does not “explicitly permit” either party to
pursue litigation before the named third party renders a
decision. See id. at 1209. It therefore satisfies the Third
Circuit’s narrower definition. So according to either
criterion, and in light of the “presumption in favor of
arbitrability,” see id., Paragraph 3(a) should properly be
considered as an arbitration agreement.
The Plaintiffs do not contest the fact that the West Coast
fisherman had agreed to submit any dispute regarding a new
exclusive marketing agreement to a third party for a decision.
But they challenge the validity of Paragraph 3(a) on three
alternate grounds. For the reasons discussed below, I believe
that each challenge is without merit.
First, the Plaintiffs argue that Paragraph 3(a) is not an
arbitration agreement because its language does not contain
30 BOARDMAN V. PACIFIC SEAFOOD GROUP
the word “arbitrate.” But such an argument was
unequivocally rejected in Wolsey. Id. at 1208 (noting that
“[n]o magic words such as ‘arbitrate’ or ‘binding arbitration’
or ‘final dispute resolution’ are needed” to invoke the FAA)
(quoting AMF, 621 F. Supp at 460)). The argument therefore
has no merit.
Next, the Plaintiffs argue that Paragraph 3(a) cannot be an
arbitration agreement because it names District Judge Hogan
or his replacement, Magistrate Judge Jelderks, as the third-
party decisionmaker and, according to the Plaintiffs, federal
district and magistrate judges cannot serve as arbitrators as a
matter of law. Whether a federal district judge may act as an
arbitrator is a question that need not be addressed here
because District Judge Hogan has already retired from the
federal bench. Magistrate Judge Jelderks would therefore
serve as the third-party decisionmaker if Paragraph 3(a) is
enforced. The relevant question is thus whether Magistrate
Judge Jelderks may lawfully act as an arbitrator in the instant
dispute.
Under the Federal Magistrates Act, 28 U.S.C. § 636,
Congress gave federal courts broad discretion to designate
certain duties to magistrate judges. These duties include
conducting hearings, making factual findings, deciding
motions, and rendering judgments in civil and criminal cases.
See id. § 636(b)–(c). In addition to these specifically
enumerated duties, Congress provided that magistrate judges
“may be assigned such additional duties as are not
inconsistent with the Constitution of the United States.” Id.
§ 636(b)(3). Courts have observed that, over time, “Congress
has encouraged district court judges to experiment in the
assignment of . . . duties to magistrates and to otherwise
engage in innovative experimentation in the use of magistrate
BOARDMAN V. PACIFIC SEAFOOD GROUP 31
judges.” Ovadiah v. New York Ass’n for New Americans, No.
95 CIV. 10523(SS), 1997 WL 342411, at *9 (S.D.N.Y. June
23, 1997) (brackets and internal quotation marks omitted)
(quoting Denny v. Ford Motor Co., 146 F.R.D. 52, 55
(N.D.N.Y. 1993)).
Whether one of the “additional duties” contemplated by
Congress is the power of a magistrate judge to preside over
arbitration proceedings has been a question that a number of
courts have approached with great skepticism. See DDI
Seamless Cylinder Int’l Inc. v. Gen. Fire Extinguisher Corp.,
14 F.3d 1163, 1165 (7th Cir. 1994) (avoiding language that
called the procedure at issue an arbitration because federal
statutes “do not appear to authorize or envisage the
appointment of judges or magistrate judges as arbitrators”);
Hameli v. Nazario, 930 F. Supp. 171, 181 (D. Del. 1996)
(“Arbitration is not in the job description of a federal judge,
including a magistrate judge.” (alteration and citation
omitted)); cf. Ovadiah, 1997 WL 342411 at *10
(acknowledging that “arbitration by a magistrate judge, upon
the consent of the parties, may be . . . permissible under the
‘additional duties’ clause” but warning that it “should be
avoided”).
All of the above cases, however, predate Congress’s
adoption of the Alternative Dispute Resolution Act of 1998
(the Act), which authorizes federal courts to use alternative
dispute resolution processes “in which a neutral third party
participates to assist in the resolution of issues in controversy,
through processes such as . . . arbitration.” 28 U.S.C.
§ 651(a). And in the Act, Congress specifically mentions
magistrate judges as eligible third-party neutrals. Id. § 653(b)
(noting that “the district court may use, among others,
magistrate judges who have been trained to serve as neutrals
32 BOARDMAN V. PACIFIC SEAFOOD GROUP
in alternative dispute resolution processes”); see also
Delaware Coal. for Open Gov’t v. Strine, 894 F. Supp. 2d
493, 502 (D. Del. 2012) (noting that “the Alternative Dispute
Resolution Act . . . seems to allow magistrate judges to serve
as arbitrators,” even though commenting that such an
approach is uncommon).
The Plaintiffs’ argument that magistrate judges may not
serve as arbitrators is therefore without merit in light of
Congress’s specific language to the contrary. But the
majority asserts that these statutes do not apply to the instant
dispute because “[t]he Alternative Dispute Resolution Act
plainly requires the authorization to come from the ‘United
States district court . . . by local rule,’ not from a single judge
of that court.” (Maj. Op. 16 n.7) (ellipsis in original). In
response, I would point out that the authorization here is
based on the District of Oregon’s local rules. The local rule
in question specifically permits an individual judge—“on
his/her own motion or at the request of a party”—to assign
the case to arbitration. D. Or. R. 16.4(e)(4)(A). I therefore
do not believe that the arbitration procedure at issue is in any
way inconsistent with this rule or with the Alternative
Dispute Resolution Act. My conclusion is bolstered by the
District of Oregon’s comments following the local rule,
which specifically state that the rule was clarified to
“[r]einforce[] the assigned judges’ powers” to refer civil
cases to all forms of alternative dispute resolution, including
arbitration. See id. 16.4(e) cmt. on Jan. 1, 2011 amend.
Pursuant to this local rule, the record shows that the
district court overseeing the Whaley litigation adopted and
approved the terms of the Resolution Agreement, which
included the arbitration procedure set forth in Paragraph 3(a).
In so doing, the district court expressly noted that “the
BOARDMAN V. PACIFIC SEAFOOD GROUP 33
District Court of Oregon retains jurisdiction over . . . the
implementation, interpretation and enforcement of the terms
of the Stipulation and Resolution Agreement.”
By the plain language of the District of Oregon’s local
rule as well as its own judgment and order of dismissal, the
district court therefore not only authorized the arbitration
procedure at issue—one in which Magistrate Judge Jelderks
would presently act as the arbitrator—but also retained
jurisdiction to enforce the terms of the agreement. I
accordingly conclude that the parties’ designation of
Magistrate Judge Jelderks does not invalidate the arbitration
procedure set forth in Paragraph 3(a).
Finally, the Plaintiffs argue that Paragraph 3(a) is not an
arbitration clause, but rather an ancillary-jurisdiction clause
in connection with the Whaley litigation. Ancillary
jurisdiction, however, does not extend to “proceedings that
are entirely new and original . . . or where the relief sought is
of a different kind or on a different principle than that of the
prior decree.” Peacock v. Thomas, 516 U.S. 349, 358 (1996)
(brackets, citation, and internal quotation marks omitted).
Because ancillary jurisdiction is not an “inherent power” of
the federal courts, a court must “explicitly retain[] jurisdiction
over the settlement agreement, or incorporate[] the terms of
the agreement in its dismissal order” to exercise such
jurisdiction. Arata v. Nu Skin Int’l, 96 F.3d 1265, 1268–69
(9th Cir. 1996); see also Fed. Sav. and Loan Ins. Corp. v.
Ferrante, 364 F.3d 1037, 1041–42 (9th Cir. 2004) (holding
that enforcement of a promissory note was “wholly
unrelated” to a lien for legal services performed in a prior
action and, therefore, the court lacked ancillary jurisdiction
over the subsequent proceeding).
34 BOARDMAN V. PACIFIC SEAFOOD GROUP
The doctrine is not applicable here. Not only does
Paragraph 3(a) relate to disputes that are “wholly unrelated”
to the underlying Whaley litigation, see Ferrante, 364 F.3d at
1041, but it also contemplates arbitration based on “entirely
new and original” facts, Peacock, 516 U.S. at 358. The
language of Paragraph 3(a) explicitly refers to a “new
contractual arrangement” and a “proposed new agreement”
between Pacific Seafood and Ocean Gold that would be
submitted to a third-party decisionmaker. Proceedings under
Paragraph 3(a) would thus necessarily be predicated on
entirely new and original facts and governed under a new
standard of sustainability—i.e., whether the proposed new
agreement between Pacific Seafood and Ocean Gold is “pro-
competitive.” Because Paragraph 3(a) cannot be fairly read
as an ancillary-jurisdiction clause, the Plaintiffs’ challenge on
this point is without merit.
In sum, I would hold that Paragraph 3(a) is a valid
arbitration agreement under Chiron’s first prong. See Chiron
Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130
(9th Cir. 2000). This leads me to the second prong of
Chiron—whether Paragraph 3(a) “encompasses the dispute at
issue,” id.,—and I conclude that it does.
2. The dispute falls within the scope of Paragraph 3(a)
The crux of my disagreement with the majority is its
conclusion that the “plain language” of Paragraph 3(a)
precludes the proposed stock acquisition between Pacific
Seafood and Ocean Gold from falling within its scope. (Maj.
Op. 13.) This conclusion rests solely on the majority’s
extended focus on the word “requires” within Paragraph 3(a).
The majority first states that Paragraph 3(a) applies to
“disputes regarding ‘any new agreement that requires Pacific
BOARDMAN V. PACIFIC SEAFOOD GROUP 35
Seafood Group to act as the exclusive marketer of any
seafood product produced by Ocean Gold Seafoods.’” (Id. at
14.) This simply quotes the terms of the agreement, and is
thus undisputed.
But the majority then categorically concludes that because
the proposed stock acquisition “detail[s] Pacific Seafood’s
plan to purchase Ocean Gold’s stock” without any “explicit”
language requiring Pacific Seafood to act as the exclusive
marketer, the proposed acquisition does “not pertain to
marketing.” (Id. at 14.) The majority would thus bar the
application of Paragraph 3(a) even if the proposed acquisition
would “functionally require” Pacific Seafood to act as an
exclusive marketer of Ocean Gold’s products, as is argued by
Pacific Seafood. (Id. at 14) (Emphasis in original.) In
response, the majority maintains that “the owner of a
company is not necessarily that company’s exclusive
marketer” because, although it may have “the right” to
market products, “there is no requirement that it do so.” (Id.
at 14) (Emphasis in original.) Solely based on this reasoning,
the majority concludes that the “Plaintiffs’ claims are not
encompassed by Paragraph 3(a)’s plain language.” (Id. at
13.)
I, on the other hand, am of the opinion that the majority
reads too much into the word “requires” when neither the
district court nor the parties themselves argue that its usage is
dispositive of the arbitration question. This is especially true
in light of the strong presumption in favor of arbitrability, see
Wolsey Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1209 (9th
Cir. 1998), and this court’s holding that, “if the purported
agreement is susceptible of an interpretation that would allow
arbitration, any doubts should be resolved in favor of
arbitration.” Republic of Nicaragua v. Standard Fruit Co.,
36 BOARDMAN V. PACIFIC SEAFOOD GROUP
937 F.2d 469, 479 (9th Cir. 1991) (alterations and internal
quotation marks omitted) (quoting French v. Merrill Lynch,
784 F.2d 902, 908 (9th Cir. 1986)).
Contrary to the majority’s view, I believe that Paragraph
3(a) is susceptible of an interpretation that would permit the
proposed stock acquisition to fall within its scope. Perhaps
the choice of the word “requires” was simply an oddity of
draftsmanship. One would think that a more appropriate
word would be “permits” or “authorizes.” Pacific Seafood,
after all, presumably desired to be Ocean Gold’s exclusive
marketer; no one would think of Pacific Seafood being forced
to do so.
So what did the parties intend by the word “requires”?
The record is silent on this point, which raises an ambiguity
about the paragraph’s scope. Pacific Seafood argues that the
Plaintiffs “ignore[] the economic reality” of the proposed
purchase of Ocean Gold’s stock, which would have the
“effect” of empowering Pacific Seafood to become the
exclusive marketer of Ocean Gold’s seafood. Even the
Plaintiffs point out that the proposed stock acquisition would
give Pacific Seafood “full authority to make . . . decisions”
related to management and operations. For all practical
purposes, then, the proposed acquisition is a new agreement
that would functionally permit Pacific Seafood to exclusively
market Ocean Gold’s products—rights that were granted to
Pacific Seafood in the February 2006 agreement and are set
to expire in 2016.
This precise scenario, however, is presumably what the
Plaintiffs were seeking to avoid in Paragraph 3(a) of the
Resolution Agreement because they did not want Pacific
Seafood to be in the position of continuing to be the exclusive
BOARDMAN V. PACIFIC SEAFOOD GROUP 37
marketer of Ocean Gold’s products. Yet this stock
acquisition would allow Pacific Seafood to do just that. To
prevent such a paradoxical outcome, the proposed agreement
should not be categorically excluded from falling within
Paragraph 3(a)’s scope simply because it lacks express
language specifying an exclusive marketing requirement.
I believe that this is a very plausible argument, an
argument that brings into play the principle that “any doubts
concerning the scope of arbitrable issues should be resolved
in favor of arbitration, whether the problem at hand is the
construction of the contract language itself or an allegation of
waiver, delay, or a like defense to arbitrability.” See Chiron
Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1131
(9th Cir. 2000) (quoting Moses H. Cone Memorial Hosp. v.
Mercury Const. Corp., 460 U.S. 1, 24–25 (1983)).
Pacific Seafood’s argument is all the stronger because the
Plaintiffs themselves initially invoked Paragraph 3(a) when
they brought a breach-of-contract action against Pacific
Seafood for the very transaction in question. The fact that the
Plaintiffs later dismissed this claim in the belief (mistaken,
for the reasons explained above) that magistrate judges
cannot be arbitrators does not diminish the point that even the
Plaintiffs at one point argued that Paragraph 3(a) governs the
current dispute. They now contend the opposite, but this
simply highlights the ambiguity over whether Paragraph 3(a)
requires arbitration.
In any event, to place an outsized emphasis on the one
word “requires,” when its usage and operation is not analyzed
with particularity in either party’s brief, assigns unwarranted
weight to a clause that is arguably unclear. Such ambiguity
38 BOARDMAN V. PACIFIC SEAFOOD GROUP
should not bar the applicability of the arbitration agreement
and instead should militate in its favor.
Finally, I reach my conclusion in light of the this court’s
precedent favoring a strong presumption of arbitrability.
Wolsey, 144 F.3d at 1209; see also Republic of Nicaragua,
937 F.2d at 478 (“[T]he clear weight of authority holds that
the most minimal indication of the parties’ intent to arbitrate
must be given full effect . . . .”); Simula, Inc. v. Autoliv, Inc.,
175 F.3d 716, 721 (9th Cir. 1999) (holding that disputes
“need only touch matters covered by the contract containing
the arbitration clause and all doubts are to be resolved in
favor of arbitrability” (citation and internal quotation marks
omitted)).
This is an instance in which the issues involved in the
proposed stock acquisition—including the practical effect
that it would have on marketing exclusivity—would clearly
“touch matters” contemplated in the Resolution Agreement.
And because we are constrained by Chiron and the FAA from
conducting any further inquiry into the substance of the
agreement and should resolve all doubts in favor of
arbitrability, I would grant Pacific Seafood’s motion to
compel arbitration.