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Henrichs Grain, Inc. v. Cargill

January 28, 2010

HENRICHS GRAIN, INC., AN ILLINOIS CORPORATION, PLAINTIFF,
v.
CARGILL, INCORPORATED, A DELAWARE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

Now before the Court is Defendant Cargill, Incorporated's ("Cargill") Motion to Stay Proceedings and to Compel Arbitration [#26]. For the reasons set forth below, Cargill's motion is GRANTED.

BACKGROUND

Plaintiff Henrichs Grain, Inc. ("Henrichs Grain") filed its Complaint against Cargill in the Circuit Court of the Eleventh Judicial Circuit in Livingston County, Illinois, which Cargill removed to this Court on January 23, 2009. In its Complaint, Henrichs Grain alleged breach of fiduciary duty, consumer fraud, intentional interference with business relationships, a demand for accounting, a declaration that Cargill breached certain contracts so that Henrichs Grain has no further obligations or liabilities arising from those contracts, negligent misrepresentation, and fraudulent misrepresentation. Cargill filed the instant motion to stay proceedings and to compel arbitration on August 14, 2009. Following that, Henrichs Grain argued that Cargill failed to provide the documents necessary for the Court to rule on Cargill's motion to compel arbitration.*fn1

Cargill ultimately provided the additional contracts and the parties filed supplemental briefs on the arbitration issue.*fn2

The parties entered into approximately 90 to 100 contracts for the sale of grain between 2003 and 2008. Over that period of time, four different versions of the arbitration clause appeared in their contracts. The first ("Version 1") reads:

1. The parties agree that the sole remedy for resolution of all disagreements or disputes between the parties arising under this Contract shall be arbitration proceedings under the trade association identified on the front side hereof. If no trade association is identified, then NGFA Arbitration Rules then in effect shall apply, and judgment upon the award may be entered in any court having jurisdiction thereof. The decision and award determined by such arbitration shall be final and binding upon both parties.

The second version ("Version 2") reads:

1. Unless otherwise provided herein, this Contract shall be subject to the Trade Rules of the National Grain and Feed Association (NGFA), which Trade Rules are incorporated herein by reference. The parties agree that the sole forum for resolution of all disagreements or disputes between the parties arising under this Contract or relating to the formation of this Contract shall be arbitration proceedings before NFGA pursuant to NGFA Arbitration Rules. The decision and award determined by such arbitration shall be final and binding upon both parties and judgment upon the award may be entered in any court having jurisdiction thereof. Copies of the NGFA Trade and Arbitration Rules are available from Buyer upon request. The third version ("Version 3") reads:

1. NGFA Trade and Arbitration Rules. Unless otherwise provided herein, this Contract shall be subject to the Trade Rules of the National Grain and Feed Association (NGFA), which Trade Rules are incorporated herein by reference. The parties agree that the sole forum for resolution of all disagreements or disputes between the parties arising under this Contract or relating to the formation of this Contract shall be arbitration proceedings before NGFA pursuant to NGFA Arbitration Rules. The decision and award determined by such arbitration shall be final and binding upon both parties and judgment upon the award may be entered in any court having jurisdiction thereof. Copies of the NGFA Trade and Arbitration Rules are available from Buyer upon request and are available at www.ngfa.org. The fourth and final version ("Version 4") reads:

1. NGFA Trade and Arbitration Rules. Unless otherwise provided herein, this Contract, and all other grain contracts by and between Buyer and Seller, shall be subject to the Trade Rules of the National Grain and Feed Association (NGFA), which Trade Rules are incorporated herein by reference. The parties agree that the sole forum for resolution of all disagreements or disputes between the parties arising under any grain contract between Buyer and Seller or relating to the formation of any grain contract between Buyer and Seller shall be arbitration proceedings before NGFA pursuant to NGFA Arbitration Rules. The decision and award determined by such arbitration shall be final and binding upon both parties and judgment upon the award may be entered in any court having jurisdiction thereof. Copies of the NGFA Trade and Arbitration Rules are available from Buyer upon request and are available at www.ngfa.org. In addition to any damages otherwise provided by law, Buyer shall be entitled to recovery of its attorney's fees and costs.

DISCUSSION

The Federal Arbitration Act ("FAA") provides that a written provision in a contract "evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Section 2 of the FAA declares a liberal federal policy that favors arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983); Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909 (7th Cir. 1999); but see Gotham Holdings, LP v. Health Grades, Inc., 580 F.3d 664, 665 (7th Cir. 2009) (explaining that there is no federal policy favoring arbitration, but rather, "arbitration agreements are optional and enforced just like other contracts"). Federal courts may apply state contract law to resolve issues of contract formation and validity. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, ...


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