FarmedHere, LLC v. Just Greens, LLC d/b/a AeroFarm Systems, LLC, No. 14 C 370, Slip Op. (N.D. Ill. June 16, 2014) (Holderman, Sen. J.).

Judge Holderman granted defendant AeroFarm’s Fed. R. Civ. P. 12(b)(3) motion to dismiss plaintiff FarmedHere’s Lanham Act and declaratory judgment patent claims related to the parties’ aeroponic, locally grown farming businesses because AeroFarm had filed for arbitration. AeroFarms entered a Distribution Agreement with CityPonics, but the principal of CityPonics never formed the entity, instead forming FarmedHere, allegedly to gain the benefits of the Distribution Agreement without the obligations.  The Distribution Agreement contains a mandatory arbitration clause.

This case was different than a typical arbitration clause because the Court had to make a threshold determination regarding whether FarmedHere was bound by the Distribution Agreement.  FarmedHere at least bound itself to the Distribution Agreement for the purpose of allowing the Court to decide whether it had jurisdiction over FarmedHere’s complaint.

The Court held that FarmedHere’s principal bound it to the Distribution Agreement for at least the following reasons:

  • The principal requested substituting FarmedHere for CityPonic in the Distribution Agreement;
  • The principal drafted a document attempting to formally allow FarmedHere to exploit the technology;
  • FarmedHere and CityPonic shared an address; and
  • FarmedHere chose not to provide any countervailing documents outside of its complaint.

Having found that FarmedHere was bound by the Distribution Agreement, the Court held it lacked jurisdiction based upon the arbitration clause.  The Court, therefore, dismissed without prejudice so that to the extent that the arbitration or a New York court proceeding refused to address all of FarmedHere’s claims, it could refile in this Court.