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LLC v. Fun Club Usa, Inc.

United States District Court, D. Nevada

June 27, 2014

BTG180, LLC, et al., Plaintiff(s),
v.
FUN CLUB USA, INC., et al., Defendant(s)

ORDER

JAMES C. MAHAN, District Judge.

Presently before the court is plaintiffs BTG180, LLC's and Randall Jeffers' motion for leave to amend complaint and for joinder of an additional defendant. (Doc. #12). Defendants Fun Club USA, Inc., Robert Craddock, and Sylvia Salgado Craddock filed a response in opposition (doc. #13) and plaintiffs filed a reply (doc. #16).

Defendants' opposition included a counter-motion to dismiss and compel arbitration. (Doc. #14). Plaintiffs' reply also responded to defendants' counter-motion. (Doc. #16).

I. Background

Plaintiff BTG180 is a multi-level marketing network. (Doc. #1 at p. 14).

Plaintiffs filed this action on February 5, 2014, alleging several claims against defendants: (1) cybersquatting, (2) trademark infringement (violations of both state law and common law), (3) wrongful use of computer, (4) misappropriation of trade secret (violations of both state law and common law), (5) wrongful interference with economic relations, (6) breach of contract, (7) unjust enrichment, and (8) defamation. (Doc. #1 at p. 1). Plaintiffs also assert piercing the corporate veil or alter ego as theories of liability. (Doc. #1 at p. 1).

Plaintiff BTG180 entered into a contract with defendants Robert Craddock and Fun Club USA relating to marketing services. (Doc. #1 at p. 3). The contract contained an arbitration clause that stated: "Any disputes hereunder shall be subject to binding arbitration under the rules of the American Arbitration Association." (Doc. #14 at p. 12).

The court will address defendants' counter-motion to dismiss and compel arbitration before addressing plaintiffs' motion to amend.

II. Counter-Motion to Dismiss and Compel Arbitration

A. Legal Standard Section 2 of 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. "In enacting § 2 of the federal Act, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration." Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). Courts shall place arbitration agreements "upon the same footing as other contracts." Volt Info. Sciences, Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989).

Additionally, § 3 of the FAA permits a court to stay an action while the parties proceed to arbitration. 9 U.S.C § 3. "Despite the mandatory language, the Ninth Circuit has interpreted this provision to allow dismissal of the action in certain circumstances." Germaine Music v. Universal Songs of Polygram, 275 F.Supp.2d 1288, 1299 (D. Nev. 2003).

Finally, § 4 of the FAA states that "upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration ...


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