American Mariculture, Inc. v. Syaqua Americas, Inc.

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

AMERICAN MARICULTURE, INC.,

a Florida corporation and

AMERICAN PENAEID, INC.,

Plaintiffs,

v. Case No: 2:20-cv-711-JES-MRM

SYAQUA AMERICAS, INC., a

Florida corporation and

SYAQUA GROUP PTE. LTD.,

Defendants.

OPINION AND ORDER

This matter comes before the Court on defendant's Motion to

Strike Plaintiff's Jury Demand (Doc. #49) filed on January 5, 2021.

Plaintiff filed a Response in Opposition (Doc. #57) on February

22, 2021.

The relevant allegations in the Complaint (Doc. #1)1 provide

that plaintiff and defendant executed a Memorandum of

Understanding in 2016 for plaintiff to produce shrimp broodstock

for defendant at plaintiff’s facilities in St. James City, Florida.

After the expiration of the initial two-year term, plaintiff

terminated the Memorandum and gave defendant 12 months advance

notice of the obligation to remove any shrimp and materials from

1 An Amended Complaint (Doc. #61) was filed on June 21, 2021,

after the Demand for Jury Trial (Doc. #46) and after the motion to

strike the Demand was filed. The Court will focus on the

the facility. In 2019, the parties entered into a second agreement

providing that plaintiff would continue to utilize its own shrimp

breeding facility to grow out shrimp provided by defendant for

subsequent sale by defendant outside the United States. This

Production Agreement has an initial five-year term ending in

September 2023, and defendant cannot terminate prior to the end of

this term without cause.

Plaintiff alleges that defendant breached the Production

Agreement by engaging in the theft of confidential and trade secret

information consisting of breeding records pertaining to

plaintiff’s shrimp. (Doc. #1, ¶ 20.) Plaintiff also alleges a

breach of the Production Agreement by engaging in theft of shrimp

tissue samples. (Id., ¶ 21.) Plaintiff alleges that defendant

breached the Production Agreement by disseminating a marketing

brochure in India that falsely claimed that defendant was in

possession of the Kentucky line, and falsely claimed that defendant

owned plaintiff’s production facilities. (Id., ¶ 25.) Plaintiff

alleges that defendant breached the Agreement by falsely claiming

association with plaintiff’s various lines of shrimp in both China

and Indonesia. (Id., ¶ 26.)

Count I of the Complaint alleges unfair competition under the

Lanham Act and Count II alleges the same under Florida law.

Plaintiff alleges that “Defendant’s unauthorized use in commerce

of the marks, “AMI” and “Kentucky line” . . . constitutes use of

representation of fact”, and that “Defendant’s conduct as alleged

herein constitutes unfair competition in violation of Chapter

501.204, Florida Statutes. (Id., ¶¶ 32, 39.) Count III alleges a

theft of trade secrets under the Defend Trade Secrets Act and Count

IV alleges the same under state law. Plaintiff alleges that its

shrimp breeding records were misappropriated by intentional

misrepresentations and acts of espionage. (Id., ¶¶ 44, 52.)

Count V alleges a breach of the Production Agreement and Count VI

alleges a breach of the duty of good faith and fair dealing.

Defendant argues that the demand for a trial by jury must be

stricken because plaintiff waived its right to a jury trial for

all claims “arising out of” the Production Agreement. (Doc. #49,

p. 2.) Plaintiff agrees that Count VI for breach of the duty of

good faith and fair dealing arises out of the Production Agreement

and is covered by the jury waiver provision. However, plaintiff

takes the position that a jury demand is appropriate for Counts I

through IV.2 (Doc. #57, p. 2 n.1.)

“A party may validly waive its Seventh Amendment right to a

jury trial so long as the waiver is knowing and voluntary. See

Brookhart v. Janis, 384 U.S. 1, 4–5, 86 S. Ct. 1245, 1246–47, 16

L. Ed. 2d 314 (1966); see also Leasing Serv. Corp. v. Crane, 804

F.2d 828, 833 (4th Cir. 1986).” Bakrac, Inc. v. Villager Franchise

Sys., Inc., 164 F. App'x 820, 823–24 (11th Cir. 2006). “[W]hile

2 There is no disagreement as to Count V being excluded from

‘the seventh amendment right is . . . a fundamental one,’ courts

have recognized that ‘it is one that can be knowingly and

intentionally waived by contract.’” Aponte v. Brown & Brown of

Fla., Inc., 806 F. App'x 824, 827 (11th Cir. 2020) (citations

omitted).

Paragraph 12 of the Production Agreement states, “The parties

waive any right to a trial by jury in the event of litigation

arising out of this Agreement.” (Doc. #49-1, p. 7.) Similar to

a clause requiring arbitration, the Court focuses “on whether the

tort or breach in question was an immediate, foreseeable result of

the performance of contractual duties.” Telecom Italia, SpA v.

Wholesale Telecom Corp., 248 F.3d 1109, 1116 (11th Cir. 2001).

In Princess Cruise Lines, the Eleventh Circuit noted that

“[i]f the cruise line had wanted a broader arbitration provision,

it should have left the scope of it at “any and all disputes,

claims, or controversies whatsoever” instead of including the

limitation that narrowed the scope to only those disputes, claims,

or controversies “relating to or in any way arising out of or

connected with” the agreement. Doe v. Princess Cruise Lines,

Ltd., 657 F.3d 1204, 1218 (11th Cir. 2011). See also Jaffe v.

Bank of Am., N.A., 395 F. App'x 583, 586 (11th Cir. 2010)

(examining an “unequivocal” and broader waiver “arising out of, in

connection with or in any way pertaining to, this agreement.”).

“The term ‘arising out of’ is broad, but it is not all

that are not related-with at least some directness-to performance

of duties specified by the contract do not count as disputes

‘arising out of’ the contract, and are not covered by the standard

arbitration clause.” Telecom Italia, 248 F.3d at 1116. The

Florida Supreme Court has held that ‘arising out of’ is ‘broader

in meaning than “the term ‘caused by’ and means ‘originating from,’

‘having its origin in,’ ‘growing out of,’ ‘flowing from,’ ‘incident

to’ or ‘having a connection with.’” James River Ins. Co. v. Ground

Down Eng'g, Inc., 540 F.3d 1270, 1275 (11th Cir. 2008) (quoting

Taurus Holdings, Inc. v. United States Fid. and Guar. Co., 913

So.2d 528, 539 (Fla. 2005)).

In this case, the waiver is limited to “arising out of” the

Production Agreement to produce Vannamei breeders for export of

live shrimp outside the United States. Under the Production

Agreement, either party may terminate for cause, including for:

the “intentional act of fraud, theft or any other material

violation of law”; the “intentional disclosure of confidential

information”; or the “intentional engagement in any competitive

activity which would constitute a breach of duty.” (Doc. #1-1,

p. 2.) The Production Agreement also contains several competitive

restrictions:

a. Neither of the parties may knowingly or

purposely circumvent, or cause the breach of,

or undermine an exisiting [sic] breeders sales

contract. Both companies are free to offer

their breeders on a best effort’s basis to

existing or potential customers worldwide.

ethical way. Both parties agree not to

disparage or make false claims about each

other in any way, while this Agreement is in

force and for one year after the Termination

Date.

b. SyAqua Agrees not to offer any Florida-

grown SyAqua Breeders to any hatchery located

in the U.S. and Canada.

c. The commercial name of “SyAqua” in any form

remains the sole property of SyAqua Group

Incorporated and may not be used, directly or

indirectly, by AM or any individual or entity

affiliated with AMI without written approval.

d. While the Agreement is in force, AMI agrees

that they will not enter into any similar

agreement with other parties for the use of

the Hatchery to raise or store Breeders.

e. SyAqua will supply, without charge, up to

1,000 pairs of commercial production Breeders

annually for use in the hatchery in order for

AM I to produce commercial PL’s that it will

market as its “Kentucky” line for its shrimp

farming customers. If AMI needs more than

1,000 pairs per year, then AMI will pay SyAqua

$65.00 per Breeder.

f. AMI may sell the “Kentucky” PL’s to any

shrimp farming customer in North America and

the EU. AMI may not sell any “Kentucky” PL's

to any customer who operates a hatchery.

g. AMI requires that all customers of the

“Kentucky” line PL's sign an agreement that

limits their ability to use the PL’s for

growout purposes only.

(Id., p. 20.) The allegations in Counts I through IV clearly

could have been brought as claims for breach of the Production

Agreement, which covers intentional disclosure of confidential

information or competitive activity, “willful conduct . . .

injurious to a party to the Agreement, monetarily or otherwise,”

false and disparaging claims about one another, and the limitation

of customers of the “Kentucky” line for grow out purposes only.

The claims originate from the performance of the contract, and the

Production Agreement provides a basis for termination that covers

the factual allegations in Counts I through IV.

Claims of unfair competition and theft of confidential

information clearly “arise out of” the terms and performance of

the Production Agreement, and therefore a jury demand is deemed

waived as to Counts I through IV, and all counts.

Accordingly, it is hereby

ORDERED :

Defendant's Motion to Strike Plaintiff's Jury Demand (Doc.

#49) is GRANTED and the Demand for Jury Trial (Doc. #46) is

stricken. The Clerk shall reset this case as a bench trial.

DONE and ORDERED at Fort Myers, Florida, this 19th day

of July 2021.

0 x

: le hy Zé. tkisol

adi EF. STEELE

SHNIOR UNITED STATES DISTRICT JUDGE

Copies: Counsel of Record