JES Farms Partnership v. Indigo Ag Inc.

United States Court of Appeals
For the Eighth Circuit
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No. 23-2565
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JES Farms Partnership,
lllllllllllllllllllllPlaintiff - Appellee,
v.
Indigo Ag Inc.,
lllllllllllllllllllllDefendant - Appellant.
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Appeal from United States District Court
for the District of South Dakota - Southern
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Submitted: May 8, 2024
Filed: August 29, 2024
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Before COLLOTON, Chief Judge, SHEPHERD and STRAS, Circuit Judges.
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COLLOTON, Chief Judge.
Indigo Ag operates a digital platform that facilitates transactions between
farmers and buyers. JES Farms Partnership sold its crops on the platform. In 2021,
JES initiated arbitration proceedings against Indigo, alleging that Indigo breached a
marketplace seller agreement and violated several trade rules. Indigo counter-

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claimed, alleging that JES breached the agreement and various addenda to the
agreement.
JES then sued Indigo in federal court, seeking a declaratory judgment that
Indigo’s counterclaims were not arbitrable and that some of the addenda were invalid
and unenforceable. Indigo moved to compel arbitration under the arbitration clause
contained in the marketplace seller agreement. The district court denied the motion
in part. The court agreed that Indigo’s counterclaims were arbitrable, but determined
that the parties did not agree to arbitrate the enforceability of the addenda. Indigo
appeals, and we conclude that all of the parties’ claims are arbitrable, so we reverse
the order in relevant part.
I.
In 2019, Indigo operated Indigo Marketplace, a digital platform that facilitated
the sale of agricultural products. Through the Marketplace, Indigo acted as an
intermediary between farming operations and purchasers. When JES agreed to sell
its crops through the Marketplace, JES and Indigo executed a marketplace seller
agreement to govern the parties’ transactions.
The agreement contained the following arbitration clause:
Dispute Resolution. Except as otherwise provided herein, the
Agreement and any addendum, or transactions under the Agreement, the
Indigo Marketplace Platform or through Indigo Marketplace will be
subject to National Grain & Feed Association (“NGFA”) trade rules (the
“Rules”) in effect on the date thereof, and any dispute will be referred
to NGFA arbitration in accordance with the Rules. The parties agree
that the sole forum for resolution of all disagreements or disputes
relating to crop transactions arising under the Agreement, the Indigo
Marketplace or the Indigo Marketplace Platform between You and
Indigo shall be arbitration proceedings before the NGFA pursuant to the
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Rules. The decision and award determined by such arbitration shall be
final and binding upon the parties and judgment upon the award may be
entered in any court having jurisdiction thereof.
The parties executed new marketplace seller agreements in April 2019, May 2020,
June 2020, and August 2020. Each agreement contained the same arbitration
agreement.
In addition to the marketplace seller agreement, the parties executed several
addenda to the agreement that set the purchase price for specific transactions. Each
addendum stated, “This Addendum is binding on You and is subject to the terms and
conditions of the Marketplace Seller Agreement between Indigo and You
(“Agreement”), except that the Additional Terms below prevail in the event of a
conflict with the terms of the Agreement with respect to the crops contemplated
hereunder.”
In 2021, JES initiated arbitration proceedings against Indigo in the National
Grain & Feed Association and executed an arbitration services contract. The contract
stated that the parties “agree[d] to submit the following controversy to arbitration by
the National Grain and Feed Association (NGFA) for resolution.” The controversy
“concern[ed] claims by JES Farms Partnership against Indigo Ag, Inc. involving
multiple contracts for corn.” Specifically, JES alleged that Indigo failed to comply
with its contractual obligations under the marketplace seller agreement and with the
Association’s trade rules by initially making untimely payments to JES and then by
withholding payment altogether.
Indigo disputed JES’s claims and asserted counterclaims. Indigo alleged that
JES breached the marketplace seller agreement and several of the pricing addenda.
The National Grain & Feed Association scheduled an arbitration hearing for March
2023. In January 2023, JES contacted the Association to express concern that
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Indigo’s counterclaims were not arbitrable. The Association concluded that JES’s
concerns were untimely and without merit.
Less than a month before the scheduled hearing, JES filed this action against
Indigo in federal court. JES sought a declaratory judgment that Indigo’s
counterclaims are not arbitrable and that the pricing addenda relating to the parties’
transactions for the sale of grain are unenforceable under the Commodity Exchange
Act, 7 U.S.C. § 6(a). The district court stayed the arbitration hearing pending its
resolution of the arbitrability issue.
Indigo moved to compel arbitration and dismiss the case. The district court
denied the motion to dismiss, and denied the motion to compel in part. The court
concluded that Indigo’s counterclaims were arbitrable under the arbitration services
contract. But the court concluded that the arbitration clause in the marketplace seller
agreement was “narrow,” and that a dispute about enforceability of the pricing
addenda was not one “relating to crop transactions.” Therefore, the court ruled that
the enforceability issue was not arbitrable under the marketplace seller agreement.
The court similarly concluded that the dispute was beyond the scope of the arbitration
agreement contained in the arbitration services contract.
Indigo appeals and argues that the agreements require arbitration of the dispute
over the pricing addenda. We review de novo the district court’s denial of a motion
to compel arbitration based on contract interpretation. Indus. Wire Prods., Inc. v.
Costco Wholesale Corp., 576 F.3d 516, 520 (8th Cir. 2009). The parties agree that
Tennessee law governs interpretation of the agreement, and Tennessee follows
traditional principles of contract interpretation. See Dick Broad. Co. of Tenn. v. Oak
Ridge FM, Inc., 395 S.W.3d 653, 664 (Tenn. 2013).
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II.
The Federal Arbitration Act provides that a party aggrieved by the failure of
another party to arbitrate under a written agreement may petition the district court for
an order compelling arbitration. 9 U.S.C. § 4. To decide the question of arbitrability,
we must determine whether a valid arbitration agreement exists between the parties
and, if so, whether the subject matter of the dispute falls within the scope of the
arbitration clause. Parm v. Bluestem Brands, Inc., 898 F.3d 869, 873 (8th Cir. 2018).
The district court concluded—and the parties agree—that the marketplace seller
agreement contains a valid arbitration agreement. The parties dispute only whether
the enforceability of the addenda is within the scope of that agreement.
Generally, “unless the challenge is to the arbitration clause itself, the issue of
the contract’s validity is considered by the arbitrator in the first instance.” Buckeye
Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445-46 (2006). The arbitration
clause in the marketplace seller agreement does not require a different result. The
first sentence of the arbitration clause, standing alone, is broad in scope: “Except as
otherwise provided herein, the Agreement and any addendum, or transactions under
the Agreement, the Indigo Marketplace Platform or through Indigo Marketplace will
be subject to National Grain & Feed Association (“NGFA”) trade rules (the “Rules”)
in effect on the date thereof, and any dispute will be referred to NGFA arbitration in
accordance with the Rules.” (emphasis added). The reference to “any dispute”
denotes a broad arbitration clause that would encompass Indigo’s counterclaims about
alleged breaches of the pricing addenda and enforceability of the addenda. See
Leonard v. Del. N. Cos. Sport Serv., Inc., 861 F.3d 727, 730 (8th Cir. 2017).
The district court did not address this first sentence and instead relied on the
second sentence of the clause: “The parties agree that the sole forum for resolution
of all disagreements or disputes relating to crop transactions arising under the
Agreement, the Indigo Marketplace or the Indigo Marketplace Platform between You
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and Indigo shall be arbitration proceedings before the NGFA pursuant to the Rules.”
(emphasis added). JES urges that the phrase “relating to crop transactions” limits
what kind of “dispute” will be referred to arbitration under the first sentence. To read
the first sentence more broadly, JES asserts, would render the second sentence
superfluous.
The first two sentences of the arbitration clause appear to perform similar
functions. A dispute that is “relating to crop transactions” under the second sentence
seems indistinguishable from a dispute that concerns “transactions” under the first
sentence. Yet contract interpretation allows for the possibility that parties will use
a “belt and suspenders” approach to emphasize the breadth of a particular provision.
See Leonard v. Exec. Risk Indem., Inc. (In re SRC Holding Corp.), 545 F.3d 661, 670
(8th Cir. 2008). Where the most natural reading of the text suggests a duplicative
emphasis on capaciousness, we do not infer an intent of the parties to narrow the
clause. See Brazil v. Auto-Owners Ins. Co., 3 F.4th 1040, 1043-44 (8th Cir. 2021);
cf. United States v. Bronstein, 849 F.3d 1101, 1110 (D.C. Cir. 2017).
In any event, even taking the second sentence alone, a dispute over the
enforceability of the pricing addenda is a dispute “relating to crop transactions.” The
pricing addenda affect payment and other obligations between the parties in a given
crop transaction. Therefore, whether the pricing addenda are valid is a matter relating
to crop transactions. The dispute about whether the pricing addenda are enforceable
thus falls within the dispute resolution provision in the marketplace seller agreement
and is subject to arbitration.
For these reasons, we reverse the decision of the district court and remand with
directions to grant Indigo’s motion to compel arbitration and to address the status of
the case pending arbitration. See Smith v. Spizzirri, 601 U.S. 472 (2024).
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