1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 KEVIN JAMESON Case No. 3:24-CV-08654-CRB

9 Plaintiff,

10 v. ORDER GRANTING MOTION TO

STAY

11 RINGSIDE DEVELOPMENT COMPANY dba Bio One Colorado, Inc., 12 et al.,

13 Defendants.

14 This action arises from a dispute between franchisee Kevin Jameson and franchisor 15 Ringside Development Company. Jameson alleges several causes of action based on 16 Ringside’s allegedly fraudulent representations about its products. Ringside now moves to 17 stay the action pending resolution of the dispute through contractually mandated 18 alternative dispute resolution. The Court finds this matter suitable for resolution without 19 oral argument pursuant to Civil Local Rule 7-1(b), vacates the hearing, and GRANTS 20 Ringside’s motion to stay. 21 I. BACKGROUND 22 Ringside, doing business as Bio One Colorado, Inc., is a franchisor in the biohazard 23 remediation industry. Compl. (dkt. 1-3) at 3. Franchisees obtain the right to use Bio One’s 24 proprietary “system, trade names, and trademarks” to operate biomedical waste removal 25 businesses. Mot. (dkt. 12) at 4. Jameson is one such franchisee, and his business operates 26 in California. Compl. at 6. Jameson sued Ringside in Alameda County Superior Court, 27 alleging that Ringside’s equipment and chemicals were substandard and caused harm to 1 Removal (dkt. 1). 2 One element of Ringside and Jameson’s Franchise Agreement is a three-step 3 alternative dispute resolution procedure that requires the parties to first meet face-to-face 4 to resolve any disputes, then engage in mediation if the face-to-face meeting is 5 unsuccessful, and ultimately arbitrate their disputes if mediation is unsuccessful. Mot. at 6 23–26. Jameson asserts that he sued (rather than filed an arbitration demand) because 7 Ringside refused to meet face-to-face. Opp. (dkt. 15) at 5. Ringside maintains that it 8 requested a face-to-face meeting but that Jameson refused to engage. Reply (dkt. 16) at 2. 9 Ringside now moves to stay this proceeding pending resolution through the parties’ 10 agreed-upon alternative dispute resolution process. Mot. at 1. 11 II. LEGAL STANDARD 12 A district court “has broad discretion to stay proceedings as an incident to its power 13 to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706 (1997). “When a district 14 court finds that a lawsuit involves an arbitrable dispute, and a party requests a stay pending 15 arbitration, § 3 of the [Federal Arbitration Act] compels the court to stay the proceeding.” 16 Smith v. Spizzirri, 601 U.S. 472, 478 (2024).1 17 A district court's role under the FAA is normally limited to determining two 18 gateway issues: “(1) whether a valid agreement to arbitrate exists and, if it does, 19 (2) whether the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho 20 Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). But “these gateway issues can 21 be expressly delegated to the arbitrator where ‘the parties clearly and unmistakably provide 22 otherwise.’” Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) (citing AT&T 23 Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 649 (1986)). In 24 determining whether the parties agreed to delegate these issues to an arbitrator, courts 25 “must first make a threshold finding that the document evidencing an agreement at least 26

27 1 Contracts “evidencing a transaction involving commerce” are subject to the Federal 1 purports to be a contract” before determining whether parties agreed to delegate questions 2 of arbitrability. Galilea, LLC v. AGCS Marine Ins. Co., 879 F.3d 1052, 1056 (9th Cir. 3 2018) (cleaned up). 4 III. DISCUSSION 5 Ringside moves to stay this proceeding pending resolution of the instant dispute 6 through contractually mandated mediation or arbitration. Mot. at 1. Jameson opposes, 7 making two primary arguments: (1) the parties did not establish mutual assent with regards 8 to the forum selection and choice-of-law clauses in their arbitration agreement, so Ringside 9 cannot insist upon out-of-district arbitration, and (2) Ringside failed to satisfy mandatory 10 conditions precedent, such that Ringside cannot seek to compel arbitration. Opp. at 11–17. 11 As to Jameson’s first argument, there is sufficient evidence to conclude that there was a 12 meeting of the minds with regards to the arbitration agreement, meaning that any issues of 13 venue or choice-of-law are to be resolved by the arbitrator, not the Court. It therefore 14 follows that, as to Jameson’s second argument, the parties delegated to the arbitrator 15 questions of arbitrability, which includes questions about whether the parties satisfied 16 conditions precedent. 17 A. Existence of a Valid Contract 18 The Court must first determine whether a valid contract exists. “Although 19 challenges to the validity of a contract with an arbitration clause are to be decided by the 20 arbitrator, challenges to the very existence of the contract are, in general, properly directed 21 to the court.” Kum Tat Ltd. v. Linden Ox Pasture, LLC, 845 F.3d 979, 983 (9th Cir. 2017) 22 (citations omitted). Jameson does not appear to argue that the arbitration agreement itself 23 is wholly invalid—but to the extent that he does, see Opp. at 17, the Court must decide this 24 issue rather than delegating it to an arbitrator. See Belyea v. GreenSky, Inc., No. 20-cv- 25 1693-JCS, 2020 WL 3618959, at *3 (N.D. Cal. July 2, 2020) (“The question of contract 26 formation, however, is not a delegable gateway issue.”) (citing Kum Tat, 845 F.3d at 983). 27 Jameson raises only one issue with respect to the validity of the contract—whether 1 of-law provisions. Opp. at 16–17. According to Jameson, the Franchise Disclosure 2 Document, given to him in advance of the Franchise Agreement, contained language he 3 believed meant that the contract was to be governed by California law and that disputes 4 between the parties were subject to arbitration in California. Id. at 14. 5 To the extent that Jameson’s argument on this front challenges the validity of the 6 contract in its entirety, it is not persuasive.2 “The existence of mutual consent is 7 determined by objective rather than subjective criteria, the test being what the outward 8 manifestations of consent would lead a reasonable person to believe.” Meyer v. Benko, 55 9 Cal. App. 3d 937, 942–43 (1976). Jameson plainly concedes that any disputes between 10 himself and Ringside are subject to arbitration as long as the conditions precedent are met. 11 See Opp. at 17 (“Had [Ringside] complied with mandatory and not permissive condition 12 [sic] precedent for arbitration, any such arbitration must occur in California.”). Jameson 13 signed the contract, initialed the portion of the contract related to alternative dispute 14 resolution, and conceded in his opposition that “arbitration must occur.” Franchise 15 Agreement (dkt. 14-1) § 16.1(d), Ex. 8 (Closing Acknowledgments); Opp. at 17. These 16 are clear, outward manifestations of mutual assent. To the extent that issues of mutual 17 assent as to specific contract provisions arise before the arbitrator, invalid clauses “can be 18 severed, thus salvaging the remainder of the arbitration provision.” See Bencharsky v. 19 Cottman Transmission Sys., LLC, 625 F. Supp. 2d 872, 884 (N.D. Cal. 2008). But that is 20 not an issue for the Court. A valid contract exists. 21 B. Delegation of Arbitrability 22 The Court must next determine whether, under federal arbitrability law, the 23 delegation provision in the Franchise Agreement properly delegated the question of 24 arbitrability to the arbitrator. A court “must [] resolve any challenge directed specifically 25 to the enforceability of the delegation clause” and determine whether there is “‘clear and 26 unmistakable’ evidence that ‘the parties agreed to arbitrate arbitrability.’” Caremark, LLC 27 1 v. Chickasaw Nation, 43 F.4th 1021, 1029–30 (9th Cir. 2022) (quoting First Options of 2 Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). In deciding whether parties clearly and 3 unmistakably agreed to delegate the question of arbitrability to an arbitrator, courts can 4 consider evidence such as “a course of conduct demonstrating assent” or “an express 5 agreement.” Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011) (citations omitted). 6 Silence or ambiguity must be construed in favor of the court deciding the issue of 7 arbitrability. First Options, 514 U.S. at 944–45. 8 Ringside contends that the parties agreed to delegate the question of arbitrability to 9 the arbitrator. Mot. at 6. The parties contractually agreed that “[a]rbitration will be held 10 before and under the arbitration rules of” JAMS. Id. (citing Franchise Agreement 11 § 16.2(b)). The current JAMS arbitration rules provide: 12 Jurisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the 13 agreement under which Arbitration is sought, and who are proper Parties to the Arbitration, shall be submitted to and ruled 14 on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary 15 matter. 16 JAMS Comprehensive Arbitration Rules & Procedures, Rule 11(b) (2021), 17 https://www.jamsadr.com/rules-comprehensive-arbitration/#Rule-11. And in the Franchise 18 Agreement, the parties agreed that “the arbitrator will decide any factual, procedural, or 19 legal questions relating to the dispute, including … whether this Article is applicable and 20 enforceable.” Franchise Agreement § 16.5. 21 Ninth Circuit law supports Ringside’s position. In a similar case the Ninth Circuit 22 held that “[i]ncorporation of the JAMS arbitration rules by reference constitutes clear and 23 unmistakable evidence that the parties agree to arbitrate arbitrability.” Patrick v. Running 24 Warehouse, LLC, 93 F.4th 468, 481 (9th Cir. 2024). Moreover, the delegation clause in 25 the parties’ contract expressly provides that “any factual, procedural, or legal questions 26 relating to the dispute, including … whether this Article is applicable and enforceable,” 27 shall be decided by the arbitrator. Franchise Agreement § 16.5. This too is clear evidence 1 contracting parties agreed to arbitrate the question of arbitrability. See Momot, 652 F.3d at 2 988 (“We hold that this language, delegating to the arbitrators the authority to determine 3 the validity or application of any of the provisions of the arbitration clause, constitutes ‘an 4 agreement to arbitrate threshold issues concerning the arbitration agreement.’ In other 5 words, the parties clearly and unmistakably agreed to arbitrate the question of 6 arbitrability.”) (citing Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68 (2010)). 7 Jameson does not challenge the delegation provision of the franchise agreement or 8 the JAMS Rules. Rather, he relies on the same argument discussed above—that there was 9 a lack of mutual assent with respect to the arbitration agreement’s venue and choice-of-law 10 provisions. See Opp. at 17. But the delegation provision takes that question from the 11 Court and delegates it to the arbitrator. Jameson is free to reraise his arguments before the 12 arbitrator. 13 C. Conditions Precedent 14 All that is left is Jameson’s final argument—that Ringside failed to satisfy 15 mandatory conditions precedent to arbitration. Id. at 8. But this too is an issue of 16 arbitrability reserved for the arbitrator. See Johnson v. Oracle Am., No. 17-cv-05157- 17 EDL, 2017 WL 8793341, at *4 (N.D. Cal. Nov. 17, 2017) (“[T]he arbitrator decides 18 whether the pre-arbitration steps of a grievance procedure were completed.”) (citing John 19 Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964)). So the Court is, once again, 20 not the appropriate entity to decide whether Ringside and Jameson abided by their 21 contractual agreements to informally resolve any disputes before submitting to arbitration. 22 IV. CONCLUSION 23 The parties have clearly and unmistakably agreed to arbitrate arbitrability. 24 Jameson’s substantive arguments are therefore not before the Court. Accordingly, the 25 Court STAYS this suit pending alternative dispute resolution. 26 IT IS SO ORDERED. 27 Dated: February 20, 2025

CHARLES R. BREYER