Tentative Ruling: Grow Source Technologies Inc vs United Parcel Service Inc et al

Case Number

25CV04922

Case Type

Hearing Date / Time

Fri, 05/08/2026 - 10:00

Nature of Proceedings

CMC; Motion to Compel

Tentative Ruling

For the reasons set forth herein, Defendants’ Motion to Compel Arbitration and Stay Action is granted.  This action is ordered stayed pending the completion of arbitration.

Background:

This action commenced on August 8, 2025, by the filing of the complaint by plaintiff Grow Source Technologies, Inc. (GST) against defendants United Parcel Service, Inc. (UPS) and Travis Groot (incorrectly identified as “Root” in the complaint) (Groot) (collectively “defendants”) for defamation, interference with contract, and interference with prospective economic advantage.

As alleged in the complaint:

Groot is an employee of UPS as an account manager. (Compl., ¶ 3.)

GST was formed in June 2023, for the purpose of acquiring certain assets from third-party Lively Root Technologies (Lively Root). (Compl., ¶ 7.) Lively Root was formed in 2020 as an e-commerce company specializing in online direct-to-consumer and business-to-business sales of indoor and outdoor plaints, along with plant care products and accessories. (Id. at ¶ 8.)

Lively Root experienced rapid revenue growth during its first two years but, because of significant market competition, Lively Root was forced to increase its marketing efforts to stay competitive and grow the company, which resulted in Lively Root operating at a loss. (Compl., ¶¶ 9, 10.)

In early 2022, Lively Root’s board of directors and senior management concluded that it needed substantial equity or debt financing to continue operations and grow the business, so in April 2022, Lively Root engaged a financial services firm offering investment banking services to find and obtain additional equity investment for the company. (Compl., ¶ 11.) Despite these efforts, by September 2022, Lively Root was unable to obtain any debt or equity financing, so in September 2022, Lively Root obtained an $800,000 loan from a third-party in return for a Secured Promissory Noted which gave a first priority lien on all of Lively Root’s assets, including all inventory, intellectual property, general intangibles, fixtures, equipment, accounts, and proceeds. (Id. at ¶ 12.) As a result, the third-party became Lively Root’s first and only secured creditor (the “secured creditor”). (Ibid.) Other than this loan, the secured creditor never had any involvement in Lively Root. (Id. at ¶ 13.)

The secured promissory note matured before Lively Root was able to obtain any other financing or locate a buyer for its business and, by June 2023, Lively Root was insolvent, lacked liquidity, and was unable to continue operations. (Compl., ¶¶ 14, 15.)

On June 8, 2023, Lively Root received a notice and proposal from the secured creditor for a strict foreclosure on the collateral, which was all of Lively Root’s assets, under the secured promissory note. (Compl., ¶ 15.) At that time, Lively Root was indebted to its secured creditor in the approximate amount of $1,022,830, while the book value of its total assets was less than $800,000, most of which consisted of inventory of negligible value to the secured creditor. (Ibid.)

Because of the above, certain of Lively Root’s shareholders negotiated purchasing Lively Root assets from the secured creditor following foreclosure so as to continue the online horticulture sales business. (Compl., ¶ 16.) To accomplish this, the parties negotiated an asset purchase agreement between GST, third-party Liberty Pony, LLC, and Lively Root, which would transfer certain liabilities to GST. (Ibid.) Lively Root subsequently dissolved as an entity. (Id. at ¶ 17.)

Since acquiring the assets and business of Lively Root in June 2023, GST has continued to operate the business under the Lively Root tradename and through its website. (Compl., ¶ 18.)

Beginning in February 2025, UPS refused to ship GST products. (Compl., ¶ 19.) In particular, Groot has interfered with GST’s shipping product by: (1) identifying GST’s accounts within UPS’s shipping system as fraudulent, (2) delivering picked up product from one GST location to another GST location rather than delivering the product to GST’s customers to whom it was shipped, and (3) failing to pick up GST’s scheduled product for shipment. (Id. at ¶ 20.)

UPS’s refusal appeared to be based on the mistaken belief that GST and Lively Root were one and the same. (Compl., ¶ 21.) Despite informing Groot and UPS that GST and the former Lively Root entity were not the same, defendants’ “campaign of harassment” continued. (Id. at ¶ 22.)

Defendants have targeted other companies having a business relationship with GST in an effort to disrupt those relationships, including Groot contacting GST’s landlord, and other partners in Carpinteria, accusing GST and its employees of being thieves, liars, and cheats, in an effort to have GST evicted or to stop fulfillment operations. (Compl., ¶¶ 23, 24.) Groot has tried to harm GST by repeating these verbal attacks to GST’s employees, encouraging them to quit or leave the company. (Id. at ¶ 25.) Groot and UPS made the same or similar defamatory statements about GST to non-party Sugarwish Inc., which owns and operates a gift fulfillment company. (Id. at ¶ 26.) At that time, GST had a contract with Sugarwish to manufacture, package, and ship all orders for plants received by Sugarwish, but, as a result of defendants’ conduct, Sugarwish terminated its contractual relationship with GST resulting in loss of profits. (Ibid.)

Defendants have also failed and refused to pick up GST packages for shipment to their customers and have refused to ship the products of GST partners and vendors. (Compl., ¶ 27.)

UPS and Groot “took these actions to pressure and force without justification [GST] to pay Lively Root’s outstanding amount owed to UPS.” (Compl., ¶ 28.)

On November 7, 2025, defendants answered the complaint with a general denial and five affirmative defenses, with the first affirmative defense being the existence of a binding arbitration clause.

On December 1, 2025, defendants filed the present motion to compel arbitration and stay action.

The motion is opposed.

Analysis:

“California law, like federal law, favors enforcement of valid arbitration agreements.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.)

“Under both federal and California state law, arbitration is a matter of contract between the parties.” (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 787.)

Arbitration agreements are valid and enforceable under both California and Federal Law. “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)

The arbitration agreements in question are contained in the UPS Tariff/Terms dated August 18, 2023, December 26, 2023, July 1, 2024, and December 23, 2024. (Rasmuson Decl., ¶ 5 & Exhs. A-D.)

“General principles of contract law determine whether the parties have entered a binding agreement to arbitrate.” (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

The preliminary question that must be addressed is the existence of the arbitration agreement. Defendants have provided copies of the agreements.

The relevant arbitration agreement reads, in part:

“Agreement to Arbitrate Claims

Claimant and UPS agree that, except for disputes that qualify for state courts of limited jurisdiction (such as small claims, justice of the peace, magistrate court, and similar courts with monetary limits of less than $30,000 on their jurisdictions over civil disputes), any controversy or claim, whether at law or equity, arising out of or related to the provision of services by UPS, regardless of the date of accrual of such dispute, shall be resolved in its entirety by individual (not class-wide nor collective) binding arbitration. Claimant and UPS expressly agree that the foregoing obligation to arbitrate disputes regardless of the date of accrual of such disputes includes, but is not limited to, preexisting disputes and disputes that arise from or relate to Packages shipped at the time of a previous version of these Terms. Claimant and UPS further agree that the foregoing obligation to arbitrate disputes applies to claims brought by UPS against Claimant, regardless of whether Claimant has also brought a claim against UPS.” (12/23/2024 Tariff/Terms & Conditions of Service, § 55.)

The remainder of the arbitration agreement adequately explains the arbitration procedure and how the agreement affects the rights of the parties to the agreement.

GST does not dispute the existence of the arbitration agreement, does not deny agreeing to the arbitration provision, and does not dispute that the Federal Arbitration Act applies to its enforcement.

Further, GST does not argue that the arbitration agreement is unconscionable or otherwise objectionable.

GST’s arguments are solely that its claims do not arise under the UPS contract and that its claims fall outside the scope of the arbitration clause. The arguments fail.

“ ‘[T]he decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘ “broad” ’ or ‘ “narrow.” ’ ” [Citation.] “ ‘A ‘ “broad” ’ clause includes those using language such as ‘ “any claim arising from or related to this agreement” ’ ” [citation] or “ ‘arising in connection with the [a]greement’ ” [Citation]. “ ‘It has long been the rule in California that a broadly worded arbitration clause . . . may extend to tort claims that may arise under or from the contractual relationship. ‘ “There is no requirement that the cause of action arising out of a contractual dispute must be itself contractual. At most, the requirement is that the dispute must arise out of contract.” ’ ” [Citation.] “ ‘ “[W]here contracts provide arbitration for “ ‘ “any controversy . . . arising out of or relating to the contract . . .” ’ ” the courts have held such arbitration agreements sufficiently broad to include torts, as well as contractual, liabilities so long as the tort claims “ ‘have their roots in the relationship between the parties which was created by the contract.’ ” ’ ” ’ [Citation.] As the Ninth Circuit stated in Simula: “ ‘Every court that has construed the phrase ‘ “arising in connection with” ’ in an arbitration clause has interpreted that language broadly. We likewise conclude that the language ‘ “arising in connection with” ’ reaches every dispute between the parties having a significant relationship to the contract and all disputes having their origin or genesis in the contract.’ ” [Citation.] “ ‘To require arbitration, [the] factual allegations need only ‘ “touch matters” ’ covered by the contract containing the arbitration clause and all doubts are to be resolved in favor of arbitrability.’ ” [Citation.]” (Rice v. Downs (2016) 248 Cal.App.4th 175, 186.)

Here, GST’s causes of action all not only “touch matters” covered by the arbitration clause, the causes of action all arise from matters covered under the arbitration agreement. As set forth above, GST’s allegations include numerous actions by Groot that could be classified as torts. However, GST alleges that “UPS and Mr. [Gr]oot took these actions to pressure and force without justification Grow Source to pay Lively Root’s outstanding amount owed to UPS.” (Compl., ¶ 28.) The allegations taken as a whole, clearly demonstrate that GST’s entire action arises out of or relates to UPS’s services. The gist of the complaint is that defendants harassed GST in an effort to coerce GST to pay for services that were incurred by another entity.

The motion to compel arbitration will be granted and the action will be stayed pending the completion of arbitration.