Hodge Brothers v. DeLong Co.

Hodge Brothers, Inc. (Hodge) (plaintiff) owned a grain and soybean farm, and DeLong Company, Inc. (DeLong) (defendant) was a grain dealer in Wisconsin. Hodge and DeLong entered into several agreements for grain purchasing. Each agreement contained a provision stating that the contract was made in accordance with the applicable trade rules of the National Grain and Feed Association (association). Hodge was not a member of the association. The trade rules were listed in a separate booklet and stated that disputes between members of the association would be resolved through the association’s arbitration committee. The arbitration committee would then use the association’s specific arbitration rules. The arbitration rules were listed in a third separate document and stated that if a nonmember agreed to dispute resolution by the association, the nonmember agreed to be bound by the arbitration rules. A dispute arose between the two companies, and Hodge filed suit against DeLong in federal district court on federal and state grounds. DeLong counterclaimed but also filed a motion to stay the proceedings and compel arbitration under the Federal Arbitration Act (FAA). DeLong cited the grain-purchasing agreements, claiming that they incorporated the association’s mandatory arbitration provision by reference. Hodge claimed that it was not bound by the provision because the incorporated trade rules applied only to association members. Additionally, Hodge argued that, even if it were bound to the trade rules of the association, it was not bound to the separate arbitration rules mentioned because the arbitration rules were not expressly incorporated into the purchase agreements.