“When you collect marine animals there are certain flat worms so delicate that they are almost impossible to catch whole for they will break and tatter under the touch. You must let them ooze and crawl of their own will onto a knife blade and lift them gently into your bottle of sea water. And perhaps that might be the way to write this book-to open the page and let the stories crawl in by themselves.” – John Steinbeck, Cannery Row.
We can't say that any decision of a federal appeals court has the same lure as a Steinbeck novel, but we couldn't stop thinking of Cannery Row when we read this one. The Ninth Circuit just issued an opinion in a case where several fishermen sought to enjoin the merger of two seafood processors citing federal antitrust laws. The Court affirmed the trial court's preliminary injunction against the sale. The opinion is Boardman v. Pacific Seafood Group, et al. and the decision can be found here. Oh, and the Federal Arbitration Act is thrown in, too.
Several years ago, fisherman brought an lawsuit seeking to stop a merger of two fish industry processors – the buyers of fish from the fishing vessels. That lawsuit ended in settlement that contractually addressed the fishermen's concerns about the anti-competitive aspects of the merger. The settlement included a provision that the acquiring company, Pacific Seafood, would provide 60 days notice before attempting to acquire the target company, Ocean Gold.
In 2015, the acquiring company, Pacific Seafood, gave notice that it intended to acquire Ocean Gold's stock. The fishermen argued that such a merger would increase Pacific Seafood's "market power in seafood input markets" significantly giving rise to a claim of decreased competition in the West Coast market. The trial court found that the merger would lessen competition and enjoined the stock sale until the lawsuit could be tried. The Ninth Circuit affirmed this decision.
Separate from the antitrust issues, the Court analyzed the arbitrability of the dispute since the settlement agreement in the first case had an arbitration provision. The settlement agreement in the earlier litigation included the following provision:
The February 9, 2006 Agreement between Pacific Seafood Group and Ocean Gold Seafoods, will not be renewed in 2016. In the event that the [sic] Pacific Seafood and Ocean Gold intend to enter into any new agreement that requires Pacific Seafood Group to act as the exclusive marketer of any seafood product produced by Ocean Gold Seafoods, Pacific Seafood and Ocean Gold shall first give 60 days’ notice to class counsel and the Oregon Department of Justice and an opportunity to object to the agreement. In the event of an objection to the new contractual arrangement, Judge Hogan shall determine whether the proposed new agreement is pro-competitive and if so, it may be approved.
The Court found that the current dispute was not covered by this agreement making the current claims not arbitrable. There is a separate issue as to whether federal judges or magistrate judges can be arbitrators with the majority indicating that use of federal judges as arbitrators may not be authorized under federal law. N.7.
The dissent would have compelled this matter to be arbitrated in the first instance.
It isn't Steinbeck, but we usually do not have insights into the economics of the commercial fishing industry, so we will be watching this one.