Et ST Status Report 52619

Electronically Filed
5/24/2019 8:59 AM
Steven D. Grierson
CLERK OF THE COURT
1 RRPT
Peter Dubowsky, Esq.
2 Nevada Bar No. 4972
Amanda C. Vogler-Heaton, Esq.
3 Nevada Bar No. 13609
DUBOWSKY LAW OFFICE, CHTD.
4 300 South Fourth Street
Suite 1020
5 Las Vegas, Nevada 89101
(702) 360-3500
6 Fax (702) 360-3515
peter@dubowskylaw.com
7 amanda@dubowskylaw.com
Attorney for Petitioner
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DISTRICT COURT
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CLARK COUNTY, NEVADA
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) Case No.: A-18-784952-C

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) Dept No.: XX
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16 In the Matter of EARTH SCIENCE TECH, )
INC. )
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20 RECEIVER’S INTERIM STATUS REPORT DATED MAY 24, 2019
21 Robert L. Stevens (“Receiver”), as Receiver for EARTH SCIENCE TECH, INC.
22 (“ETST” or “Company”) hereby files this Interim Status Report to inform the Court of the status
23 of ETST’s property, assets, operations, and the activities of the Receiver.
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Case Number: A-18-784952-C

1 BACKGROUND
2 1. The Receiver was appointed on Jan 9, 2019 and provides this estate update
3 (“Status Report”) for the period as required by the court.
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2. The Receiver incorporates by reference the historical background regarding the
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litigation and the items that gave rise to the voluntary petition by the Company to appoint Mr.
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Stevens of Strongbow Advisors, Inc. as Receiver.
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3. The Receiver incorporates by reference the items presented in the previous
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status report, filed on March 26, 2019
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4. The Receiver also incorporates by reference the other filings in the case,
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including the ex parte motion to shorten time, the opposition to the motion to shorten time, and
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its reply.
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FINANCIAL RESULTS AND OPERATIONAL UPDATE
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5. Earth Science Tech, Inc. (“ETST” or “Company”) is a public, company and
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registered under the Securities Exchange Act of 1934. It is traded under the symbol ETST on the
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OTCQB Market, operated by the OTC Markets Group, Inc.
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6. ETST since the appointment of the Receiver has filed all required filings with the
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SEC during the period of appointment to present. Financial reports during the period include:
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a. Form 10-Q for the period end September 30, 2018.
20 b. Form 10-Q filed on February 27, 2019 for the period ending December 31, 2018.
21 c. Numerous Form 8-K filings.
22 d. The filing of a Form S-1 registration statement under the Securities Act of 1933,
23 (“S-1”).
24 7. From the establishment of the Receivership the Company has generated sales of
25 approximately $336,599.19 and a loss of approximately .$233,391.91, primarily due to the cost
of ongoing litigation. This is a cash-basis analysis of the cash flow, and for a full GAAP analysis
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1 quarter-by-quarter ETST publishes PCAOB audited financial statements on the EDGAR system
2 as a public company.
3 8. Key operational initiates include:
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a. Drive Sales and Revenue at highest level of Profitability - sales efficiency, sales
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team reorganization and expansion based on highest value with lowest cost and
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current strategy alignment, sales strategy evolution
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b. Operational Efficiency - expense management, A/R collections, cash flow
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management, merchant processor, webs sales development.
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c. S-1 and 10-K preparation.
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d. Post S-1 Effectiveness strategy - expansion of sales, team and sales organization
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growth and development, existing product refinement and new product
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development, investor communication and press release strategy relating to
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meaningful milestones.
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9. The Receiver and his staff continue to manage both the estate and the operational
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aspects of the business remotely on a day-to-day basis.
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FINANCING ACTIVITIES
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10. The Receiver has been successful in sourcing funds for the company through
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private sales of securities and debt. The Receiver has obtained an institutional investor who has
20 executed an equity financing agreement which provides for a sale of up to 5,873,370 shares of
21 stock as well as extended up to $250,000 in debt financing, of which $200,000 has been accessed
22 by ETST. The registration pending under the Securities Act of 1933 will be discussed further
23 below under “SECURITIES REPORTING AND ACTIVITIES”.
24 11. The Receiver feels the debt financing and revenues from product sales will be
25 sufficient to cover costs until the S-1 and equity financing is available and declared effective by
the SEC.
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1 ONSITE VISIT AND EXAMINATION
2 12. The Receiver’s staff made an additional onsite visit and examination of the
3 operations and had meetings with the staff of ETST from April 15-17, 2019. The staff found the
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operations robust and spent time streamlining operations and reviewing financial documents as
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well as inventory.
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13. The professional background of Mr. Fred Green, Associate Receiver, having
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managed sales and operations for many years including a senior sales role for a $50 billion public
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company has aided greatly in the operations and business development. ETST without this
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receivership action would not be able to obtain the management consulting it is receiving from
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the Strongbow team.
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14. The Receiver’s staff also gave a tour of the facility to a representative of the
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institutional investor on April 16, 2019.
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MEDIATION AS ORDERED BY THE FEDERAL APELLATE COURT
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15. The Receiver and the Associate Receiver attended a mediation as ordered by the
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Federal Appellate Court in the Cromogen matter on April 17, 2019 from the officers of Damian
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and Valori in Miami.
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16. The mediation was unsuccessful and did not result in a settlement between the
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parties.
20 APPEAL STATUS
21 17. The Cromogen judgment is on appeal as discussed above. Through the firm of
22 Damian and Valori, the Receiver on behalf of ETST filed an appellate brief on May 1, 2019. This
23 is attached as Exhibit 1.
24 18. The date for the initial appellate arguments has not been set as of the time of this
25 status report. It is not anticipated to be completed for some time.
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1 19. The federal appeal process is costly and time-consuming. The Receiver and his
2 staff have both the personal and professional resources to continue the process.
3 CROMOGEN CLAIM STATUS
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20. On April 29, 2019 creditor Cromogen filed a defective claim in the estate,
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refusing to comply with the jurisdictional requirements in the estate. Post hearing on May 1,
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2019, the Court denied Cromogen’s motion to edit the terms of the claim, and the Receiver
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required Cromogen to re-submit its claim on an unconditional basis on May 23, 2019, with a 48-
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hour deadline to submit an unqualified claim. As of the preparation of this status report Cromogen
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has not complied.
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SECURITIES REPORTING AND ACTIVITIES
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21. ETST is a reporting company under the Securities Exchange Act of 1934 (“34
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Act”) by virtue of the filing of a Form 10-12G on May 15, 2018, which went effective under
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statute 60 days after filing.
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22. Since the SEC filings for ETST are all publicly available, the Receiver will
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consider these filings incorporated by reference in this Status Report No. 2. The Receiver feels
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that including them as attachments would be too voluminous and not productive.
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23. ETST has filed on a timely basis all reports as required as a reporting issuer of
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securities under the 34 Act before and during the pendency of this action. The Receiver
20 anticipates ETST to remain current in its reporting obligations.
21 24. The Receiver, in its appointment order, is specifically empowered and ordered
22 to:
23 “Borrow money, issue receiver’s certificates, incur debt, issue any class of stock,
24 debenture or other financial instrument as required to finance the administration
25 of the estate.”
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1 25. Through the reputation, track record and contacts of the Receiver, ETST has
2 obtained a $250,000 note, of which $200,000 has been advanced to the estate, through an
3 institutional investor (“Investor”). This Investor has also entered into a stock purchase agreement
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(“SPA”)with ETST which requires registration under the Securities Act of 1933 (“Securities
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Act”).
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26. ETST, under the terms of the SPA filed a Form S-1 registration statement with
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the United States Securities and Exchange Commission (“SEC”) on March 27, 2019. ETST
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received its first round of comments on April 23, 2019.
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27. ETST filed a Form S-1/A-1 as its first amendment on May 10, 2019.
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28. On Monday, May 17, 2019 ETST received its second round of comments from
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the SEC, and in this round the SEC only raised two comments. ETST through its securities
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counsel also spoke with the examiner for guidance in adequately responding to the comments
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and has prepared a second Form S-1/A-2.
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29. Due to the requirements under 17 CFR §210.3-12(d) the financial statements
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included in a registration statement must not be more than 45 days aged. Specifically, the statute
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states:
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“The age of the registrant's most recent audited financial statements included in
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a registration statement filed under the Securities Act of 1933 or filed on Form
20 10 (17 CFR 249.210) under the Securities Exchange Act of 1934 shall not be
21 more than one year and 45 days old at the date the registration statement
22 becomes effective if the registration statement relates to the security of an issuer
23 that was not subject, immediately before the time of filing the registration
24 statement, to the reporting requirements of section 13 or 15(d) of the Securities
25 Exchange Act of 1934.”
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1 30. As such ETST must complete and file its audited financial statements for the
2 fiscal year end March 31, 2019 to include in the registration statement. We have been advised by
3 counsel that since the annual report, 10-K is not due until July 1, 2019 (90 days from March 31,
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2019 falls on a Saturday, June 29, 2019 and the next business day is Monday July 1, 2019), that
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counsel will implement the audited financial statements in the next amended registration
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statement, and ETST and this will not obligate ETST to file its annual report early.
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31. The Receiver’s counsel anticipates the registration statement going effective
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within the next three weeks, which will greatly enhance the liquidity and provide a foundation to
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resolve the issues facing the estate.
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32. The complexity of a federal securities registration has been taxing on the time of
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the Receiver and his staff, and due to the internal experience of the team members of Strongbow
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Advisors, who collectively have completed more than 100 such federal securities registrations
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the process is being completed in a streamlined and efficient manner.
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FINANCIAL SUMMARY AND ANALYSIS
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33. The Receiver incorporates by reference the so called “Johnson Factors” as
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outlined in the status report provided to the court March 26, 2019, and for the purposes of brevity
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will not re-analyze the characteristics involved in the fees, hours and professionals involved in
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the administration of the estate. Suffice it to say that this is a highly complex case.
20 34. In analyzing the fees and expenses below it is important to understand that the
21 fees paid below were and will continue to be generated out of the active management of the estate
22 by the Receivership staff -including sourcing financing directly. As such the fees below have had
23 minimal affect on the operational assets of the business and are not a drain to the claimants in the
24 estate.
25 35. As of May, 23 2019 the Receiver and his staff have accumulated a grand total of
394.5 hours managing the estate at the approved rate of $400 per hour, including 376 hours
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1 accumulated by the associate Receiver, legal, accounting, consulting and advisory staff ranging
2 from $250-$400 per hour. The Receiver and staff have also expended the following hard costs:
3 a. Travel and meals $ 11,314.15
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b. Postage and Delivery $609.59 (the previous status report contained postage and
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shipping expenses from the operational entity not the estate, and this number is
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the correct amount paid by the estate).
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36. The Receiver will address compensation using the Johnson Factors in this initial
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status report but will not include the full descriptive language in future reports unless requested
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by the Court.
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37. The estate has generated $336,599.19 in deposits from business revenue and
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raised $203,000 in the form of secured notes as well as $130,000 in the sale of common equity,
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for a total of $700,598.97 in deposits, and expended $588,644,88 in expenses, including
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$387,037.99 in operating expenses, $101,872.38 in legal and professional fees, and partial
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payments to the Receiver and his staff of $97,678.26. An operating statement is attached as
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Exhibit 2.
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38. The estate has assets of $425,484.00. A Case Asset Report is attached as Exhibit
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3.
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1 39. The estate has received secured claims in the amount of $356,862.50. The
2 Receiver has allowed $144,181.50 in claims for four creditors and is reviewing an additional
3 secured claim for $212,681 that has not been approved or denied at this time. A claims register
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is attached as Exhibit 4. As stated above, the Receiver has rejected a conditional claim from
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Cromogen in the amount of $4,575,175.
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Dated: May 24, 2019
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“Receiver”
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10 By:
Robert L. Stevens
11 387 Corona Street, Suite 555
Denver, CO 80218
12 Telephone No.: (720) 442-7000

Email: robert@somerset.vc
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Receiver for Earth Science Tech, Inc..
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15 DUBOWSKY LAW OFFICE, CHTD.
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By: /s/ Amanda C. Vogler-Heaton
17 Peter Dubowsky, Esq.
Nevada Bar No. 4972
18 Amanda C. Vogler-Heaton, Esq.
Nevada Bar No. 13609
19 300 South Fourth Street, Suite 1020
Las Vegas, Nevada 89101
20 (702) 360-3500
Fax (702) 360-3515
21 Attorney for Plaintiff
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Exhibit “1”
Case: 19-10118 Date Filed: 05/01/2019 Page: 1 of 45
No. 19-10118
UNITED STATES COURT OF APPEALS

ELEVENTH CIRCUIT
___________________________________
EARTH SCIENCE TECH, INC.
Appellant,
v.
IMPACT UA, INC., ET AL.
Appellee.
___________________________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA
THE HONORABLE ROBIN L. ROSENBERG
____________________________________
APPELLANT’S INITIAL BRIEF
By: Melissa D. Visconti
MELISSA DAMIAN VISCONTI

Damian & Valori LLP
1000 Brickell Avenue
Suite 1020
Miami, FL 33131
Tel: (305) 371-3960
Fax: (305) 371-3965
mvisconti@dvllp.com
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U.S. COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
CERTIFICATE OF INTERESTED PARTIES

AND DISCLOSURE STATEMENT (CIP)
EARTH SCIENCE TECH, INC. IMPACT UA, INC., ET AL.

vs. Appeal No. 19-10118
11th Cir. R. 26.1-1(a) (enclosed) requires the appellant or petitioner to file a Certificate
of Interested Persons and Corporate Disclosure Statement (CIP) with this court within 14
days after the date the case or appeal is docketed in this court, and to include a CIP within
every motion, petition, brief, answer, response, and reply filed. Also, all appellees,
intervenors, respondents, and all other parties to the case or appeal must file a CIP within
28 days after the date the case or appeal is docketed in this court. You may use this
form to fulfill these requirements. In alphabetical order, with one name per line, please
list all trial judges, attorneys, persons, associations of persons, firms, partnerships, or
corporations that have an interest in the outcome of this case or appeal, including
subsidiaries, conglomerates, affiliates, parent corporations, any publicly held corporation
that owns 10% or more of the party’s stock, and other identifiable legal entities related
to a party.
(please type or print legibly):
Brubeck, Michael
Burd, Gene, Esq.
Cromogen Biotechnology Corporation
Earth Science Tech, Inc.
Harris, Derek M., Esq.
Holodak, Edward F., Esq.
Impact UA, Inc., et al.
Kamenetsky Shea, Alexandra, Esq.
Klapholz, Joseph, Esq.
Nenaydoch, Slavik
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U.S. COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
CERTIFICATE OF INTERESTED PERSONS

AND CORPORATE DISCLOSURE STATEMENT (CIP)
EARTH SCIENCE TECH, INC. IMPACT UA, INC., ET AL.

vs. Appeal No. 19-10118
11th Cir. R. 26.1-1(a) (enclosed) requires the appellant or petitioner to file a Certificate of
Interested Persons and Corporate Disclosure Statement (CIP) with this court within 14
days after the date the case or appeal is docketed in this court, and to include a CIP within
every motion, petition, brief, answer, response, and reply filed. Also, all appellees,
intervenors, respondents, and all other parties to the case or appeal must file a CIP within
28 days after the date the case or appeal is docketed in this court. You may use this
form to fulfill these requirements. In alphabetical order, with one name per line, please
list all trial judges, attorneys, persons, associations of persons, firms, partnerships, or
corporations that have an interest in the outcome of this case or appeal, including
subsidiaries, conglomerates, affiliates, parent corporations, any publicly held corporation
that owns 10% or more of the party’s stock, and other identifiable legal entities related to
a party.
(please type or print legibly):
Reinhart, Bruce E., Magistrate Judge
Rosenberg, Robin L., Judge
Sarkozi, Paul D., Esq.

______________________________________________________________________
___________________________________
Stevens, Robert, Receiver for Earth Science Tech, Inc.
Trotter, Robert W., Esq.
Visconti, Melissa Damian, Esq.
PAGE 2
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STATEMENT REGARDING ORAL ARGUMENT
Appellant, Earth Science Tech, Inc., respectfully submits that oral argument
would be helpful in the instant case, and the decisional process regarding the legal
and factual issues presented would be significantly aided by oral argument. This
request is made pursuant to Federal Rule of Appellate Procedure 34(a).
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TABLE OF CONTENTS
CERTIFICATE OF INTERESTED PARTIES AND

DISCLOSURE STATEMENT (CIP) ...................................................................... ii
STATEMENT REGARDING ORAL ARGUMENT ............................................ iv
TABLE OF CONTENTS ......................................................................................... v
TABLE OF AUTHORITIES ................................................................................ viii
STATEMENT OF JURISDICTION........................................................................ 1
PRELIMINARY STATEMENT ............................................................................. 2
STATEMENT OF THE ISSUES............................................................................. 3
STATEMENT OF THE CASE ................................................................................ 4
A. Course of Proceedings and Disposition Below ............................................. 4
1. The Initiation Of The Underlying Action. ................................................ 4
2. The Arbitration And the Arbitration Award ............................................. 5
3. Earth Science’s Motion to Correct the Award ......................................... 7
4. Cromogen’s Motion to Confirm The Award And Earth

Science’s Cross-Motion to Vacate And Correct The Award .................... 8
5. The District Judge’s Order Adopting The R&R

And Final Judgment ............................................................................... 11
6. Appointment Of The Receiver On Behalf Of Earth Science ................... 12
B. Statement Of Facts Relevant To The Issues On Appeal ............................. 12
1. Cromogen and Earth Science’s Respective Businesses

And The Terms of the Distribution Agreement....................................... 12
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2. The Extra-Contractual Communications That Gave

Rise to Cromogen’s Alleged Tort Claims ............................................... 14
SUMMARY OF THE ARGUMENT .................................................................... 17
STANDARD OF REVIEW ................................................................................... 19
ARGUMENT AND CITATIONS OF AUTHORITY .......................................... 19
I. THE DISTRICT COURT ERRED IN ADOPTING

THE MAGISTRATE JUDGE’S FINDING THAT
CROMOGEN’S TORT CLAIMS WERE ARBITRABLE ................... 19
A. The Public Policy Favoring Arbitration Does Not Outweigh

The Arbitration Provision’s Unambiguous Terms Demonstrating
That The Parties Did Not Agree To Arbitrate Matters Unrelated
To The Agreement ............................................................................. 21
B. Cromogen’s Tort Claims Are Not Within The Scope Of

The Distribution Agreement .............................................................. 22
1. The Arbitration Clause Does Limit The Scope Of

Issues To Be Arbitrated And Does Not Include
Actions Beyond The Parties’ Performance Under
The Distribution Agreement ........................................................ 23
2. Cromogen’s Tort Claims Do Not Fall Within The

Issues The Parties Agreed to Arbitrate ........................................ 24
II. THE DISTRICT COURT ERRED BY FAILING TO

CONSIDER EARTH SCIENCE’S SUBMISSION
REGARDING THE TRIBUNAL’S IMPROPER
DAMAGE CALCULATIONS .............................................................. 29
III. THE DISTRICT COURT FAILED TO ADDRESS THE

ISSUE OF WHETHER IT COULD CONFIRM AND
ENFORCE THE ARBITRATION AWARD IN LIGHT
OF THE DEPARTMENT OF JUSTICE MEMORANDUM
REGARDING THE ILLEGALITY OF CBD ...................................... 33
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CONCLUSION ..................................................................................................... 34
CERTIFICATE OF COMPLIANCE WITH TYPEFACE

REQUIREMENTS, AND TYPE-STYLE REQUIREMENTS ............................. 35
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TABLE OF AUTHORITIES
Cases
Arenas v. U.S. Trustee (In re Arenas), 535 B.R. 845 (10th Cir. B.A.P. 2015) .......33
Armada Coal Export, Inc. v. Interbulk, Ltd., 716 F.2d 1566, 1568 (11th Cir. 1984)
..............................................................................................................................28
Asturiana De Zinc Mktg., Inc. v. LaSalle Rolling Mills, Inc., 20 F. Supp. 2d 670,
673 (S.D.N.Y. 1998).............................................................................................31
AT&T Technologies, Inc. v. Communications Workers of America et al., 475 U.S.
643 (1986).............................................................................................................20
Cargill Rice, Inc. v. Empresa Nicaraguense Dealimentos Basicos, 25 F.3d 223,
226 (4th Cir. 1994) ...............................................................................................20
Cole v. Burns Intern. Sec. Servs., 105 F.3d 1465, 1486 (D.C. Cir. 1997) ...............32
Diamond Castle Partners IV PRC, L.P. v. IAC/InterActivecorp., 826 A.D.3d 421,
422, 918 N.Y.S.2d 73 (N.Y. App. Div. 2011) ......................................................23
Eljer Mfg., Inc., v. Kowin Dev. Corp., 14 F.3d 1250, 1254 (7th Cir. 1994) ............32
Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204, 1214 (11th Cir. 2011) ..... 22, 27
Fantis Foods, Inc. v. Standard Importing Co. Inc., 63 A.D.2d 52, 58, 606 N.Y.S.2d
763, 767 (N.Y. App. Div. 1978) .................................................................... 25, 26
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) ..............................20
Frazier v. CitiFinancial Corp., 604 F.3d 1313, 1321 (11th Cir. 2010 ....................19
Goldberg v. Bear, Stearns & Co., 912 F.2d 1418, 1419–20 (11th Cir.1990) .........22
Hodom v. Stearns, 32 A.D.2d 234, 301 N.Y.S.2d 146 (N.Y. App. Div. 1969) ......26
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002) ............................20
HSBC Bank USA v. Nat’l Equity Corp., 279 A.D.2d 251, 253, 719 N.Y.S.2d 20
(N.Y. App. Div. 2001) ..........................................................................................23
In re Johnson, 532 B.R. 53 (Bankr. W.D. Mich. 2015) ..........................................33
In re Medpoint Management, LLC, 528 B.R. 178 (Bankr. D. Ariz. 2015) .............33
Int'l Assn. of Machinists and Aerospace Workers, Progressive Lodge v. General
Electric Co., 865 F.2d 902, 904 (7th Cir. 1989)...................................................20
JPay Inc. v. Kobel, 904 F.3d 923 (11th Cir. 2003) ..................................................24
Klock v. Lehman Bros. Kuhn Loeb Inc., 584 F. Supp. 210, 215 (S.D.N.Y. 1984) ..26
Knieriemen v. Bache Halse Stuart Shields Inc., 74 A.D.2d 290, 293, 427 N.Y.S.2d
10, 12-13 (N.Y. App. Div. 1980) .................................................................. 26, 27
Matteson v. Ryder Sys. Inc., 99 F.3d 108, 113 (3d Cir. 1996).................................32
Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 232, 107 S. Ct. 2332,
2340 (1987)...........................................................................................................32
Sterling Nat. Bank & Trust Co. of N.Y., 468 F. Supp. 1100, 1102 (S.D.N.Y. 1979)
..............................................................................................................................27
viii
Telecom Italia, 248 F.3d at 1114 .............................................................................22

United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582
(1960) ....................................................................................................................22
Waffle House, 534 U.S. at 294 .................................................................................22
White Springs Agric. Chemicals, Inc. v. Glawson Investments Corp., 660 F.3d
1277 ......................................................................................................................19
Other Authorities
Section 10(a)(4) of the Federal Arbitration Act............................................ 2, 10, 19
Rules
9 U.S.C. § 11(a) ................................................................................................ 29, 31
Title 28, United States Code, Section 1291 ...............................................................1
Title 28, United States Code, Section 1331 ...............................................................1
Title 9, United States Code, Section 203 ...............................................................1, 4
ix
STATEMENT OF JURISDICTION
This is a direct appeal of a final decision by the United States District Court
affirming a Final Arbitration Award and entering judgment in favor of Appellee.
This Court has jurisdiction over the final decision of the District Court pursuant to
Title 28, United States Code, Section 1291.
The District Court had jurisdiction over the case below pursuant to Title 9,
United States Code, Section 203, as incorporated by Title 9, United States Code,
Section 302, which provides for jurisdiction over cases brought pursuant to the Inter-
American Convention on International Commercial Arbitration of January 30, 1975,
and pursuant to Title 28, United States Code, Section 1331, in that the case is deemed
to arise under the treaties of the United States.
1
PRELIMINARY STATEMENT
The Appellant, Earth Science Tech, Inc. (“Appellant” or “Earth Science”) is
the Plaintiff in the case below. Throughout this Initial Brief, Appellant will be
referred to as “Earth Science”. The Appellee, Cromogen Biotechnology Corporation
(“Appellee” or “Cromogen”), was the Defendant in the case below and will be
referred to in this Initial Brief as “Cromogen” or “Appellee.”
In this appeal, Earth Science seeks to reverse the District Court’s Final
Judgment and Order Adopting the Magistrate Judge’s Report and Recommendation
to Confirm Arbitration Award and Deny Cross-Motion to Partially Vacate Award
on the grounds that the District Court erred in denying the motion to vacate or modify
the arbitration award where the arbitrators exceeded their authority by adjudicating
tort claims that were beyond the scope of the parties’ arbitration agreement and
entering an exorbitant damages award based on incorrect calculations, mandating
vacatur under Section 10(a)(4) of the Federal Arbitration Act (“FAA”).
All references to documents filed in the electronic case filing system in the
case below will be to “ECF No.—,” indicating the electronic case filing entry
number in the electronic docket. All references to documents in the Appendix to the
Initial Brief will be to “App. –,” indicating the tab number in the Appendix at which
the cited document is included.
2
STATEMENT OF THE ISSUES
1. Whether the Tribunal exceeded the scope of its authority by arbitrating
Cromogen’s tort claims and, as such, whether the District Court erred in
adopting the Magistrate Judge’s R&R recommending that Cromogen’s tort
claims were arbitrable.
2. Whether the District Court erred by failing to consider Earth Science’s Rule
38 Application and submission regarding the Tribunal’s improper damage
calculation.
3. Whether the district court should have addressed the issue of whether it could
confirm and enforce the arbitration award in light of the Department of Justice
memorandum regarding the illegality of CBD products.
3
STATEMENT OF THE CASE
A. Course of Proceedings and Disposition Below.
1. The Initiation Of The Underlying Action.
Earth Science initiated this action by filing the Complaint in the Circuit Court
in Palm Beach County, Florida, against Cromogen and other related corporate and
individual defendants on November 4, 2014. (App. 1 (ECF No. 1)).
In the Complaint, Earth Science alleged that Cromogen breached a
Distribution Agreement for CBD-rich hemp oil (the “Distribution Agreement”)
because the oil provided to Earth Science by Cromogen did not meet the
concentrations required by the Distribution Agreement. Id. at ¶ 14. Earth Science
also asserted claims against individual defendants, Cromogen executives, who
misinformed Earth Science about quality analysis of the product (Id. at ¶ 27), and
against Impact UA, Inc. (“Impact UA”), a company related to one of the individual
defendants, which was also complicit in Cromogen’s breaches. (Id. ¶ 39). The claims
in Earth Science’s Complaint were all based on breaches of the Distribution
Agreement. Though multiple defendants were named in the Complaint, only Earth
Science and Cromogen are parties to this appeal.
Defendant Impact UA, which is not a party to this appeal, removed the action
to the Southern District of Florida on December 31, 2014, pursuant to Title 9, Section
203, as incorporated by Title 9, Section 302, on the grounds the action falls under
4
the Inter-American Convention on International Commercial Arbitration of January
30, 1975 (the “Inter-American Convention”) and, as such, is deemed to arise under
the laws and treaties of the United States. (Id.)
Impact UA then filed a Motion to Dismiss or, Alternatively, to Compel
Arbitration on January 7, 2015, citing the arbitration provision in the Distribution
Agreement. (App. 2 (ECF No. 3).) On January 23, 2015, the District Court stayed
the proceedings pursuant to a Consent Order, and the parties proceeded to arbitration
in New York, New York. (App. 3 (ECF No. 5).)
2. The Arbitration And The Arbitration Award.
Acknowledging the arbitration provision in the Distribution Agreement and
given that the action was, at that time, a breach of contract action based on the terms
of the Distribution Agreement, Earth Science consented to arbitration.
Arbitrators were selected by Earth Science and Cromogen, and the Presiding
Arbitrator was appointed on February 25, 2015. The arbitration panel will be referred
to herein as the “Tribunal”.
Although Earth Science was the plaintiff in the original complaint, Cromogen
was the Claimant in the arbitration. In the arbitration, Cromogen asserted causes of
action against Earth Science for: (1) breach of the Distribution Agreement; (2)
conversion; and (3) tortious interference with a contract. (App. 4 (ECF 24-1(Trotter
Declaration (“Trotter Decl.”), Ex. A) at ¶¶ 79, 105, 120.) The conversion and
5
tortious interference claims were not related to the products or the terms of the
parties’ Distribution Agreement but, instead, involved different product samples
intended for a completely separate potential customer of Cromogen.
The Tribunal held a five-day hearing between November 30, 2015, and
December 4, 2015 at JAMS in New York City, and closing arguments were
ultimately heard in May and June of 2017 via videoconference. Throughout the
hearing, Earth Science objected repeatedly that Cromogen’s tort claims were outside
the scope of the arbitration provision in the Distribution Agreement but proceeded
with the hearing as Earth Science did not object to arbitration of the contract claims,
which did fall within the Arbitration Provision.
Earth Science repeatedly argued that Cromogen’s tort claims were well
beyond the scope of the Arbitration Provision, and therefore beyond the scope of the
Arbitration itself. (See App. 4 (ECF 24-4 (Trotter Decl., Ex. D at 7-8; Ex. E at 16.))
The Tribunal rejected Earth Science’s arguments that the conversion and tortious
interference claims were beyond the scope of the Arbitration Provision. In justifying
its finding that the unrelated tort claims were arbitrable, the Tribunal explained that
Earth Science “never would have received these samples were it not for its
[Distribution] Agreement with Cromogen.” (App. 4 (ECF 24-1(Trotter Decl., Ex. A
¶ 105.))
6
Cromogen offered the testimony of an expert witness who testified regarding
Cromogen’s damages resulting from the tort claims by calculating lost profits based
on the costs of goods sold.
On June 8, 2018, the Tribunal entered the Award: (1) granting Cromogen
breach of contract damages in the amount of $[Redacted] (Id. ¶ 138(a)-(b)); (2)
denying Earth Science’s counterclaims for breach of the Distribution Agreement;
and (3) awarding Cromogen $[Redacted] in tort damages for Earth Science’s
purported conversion of the samples and tortious interference with the contract
between Cromogen and its other potential client. (Id. at ¶ 138.)
Due to the confidentiality order entered by the Tribunal, the specific award
amounts, as well as details regarding Cromogen’s other potential customer, were
sealed and redacted throughout the unsealed Award. However, the parties have
openly confirmed that approximately 97% of the damages awarded by the Tribunal
are attributable to the tort claims. Put differently, the tort damages were more than
thirty times the amount implicated by Cromogen’s breach of contract claim and ten
times the face value of the parties’ Distribution Agreement.
3. Earth Science’s Motion to Correct the Award.
On July 16, 2018, Earth Science filed a Rule 38 Application to Correct the
Award. (The “Rule 38 Application”) (App. 4 (ECF 24-1(Trotter Decl., Ex. F).) Earth
Science informed the Tribunal that it had mistakenly calculated Cromogen’s alleged
7
lost profits by relying upon an incorrect Cost of Goods Sold of $[Redacted], when
Cromogen’s own documents show that the actual Cost of Goods Sold was
$[Redacted]. (Id. at 2.) As Earth Science pointed out in its Rule 38 Application, the
number used by the Tribunal for the cost of goods sold was incorrect and actually
inconsistent with documents submitted by Cromogen, and, when the correct number
is used, Cromogen shows a loss rather than a profit, which would significantly
change the resulting lost profit calculations. As a result, the Tribunal’s Award of tort
damages should have been reduced from $[Redacted] to $[Redacted], or to less than
one sixth of the amount awarded for the torts.
The Tribunal denied Earth Science’s Rule 38 Application on August 3, 2018.
4. Cromogen’s Motion To Confirm The Award And Earth Science’s Cross-

Motion to Vacate And Correct The Award.
On August 16, 2018, Cromogen filed its motion to re-open the case and to
confirm the Award in the District Court (App. 5 (ECF No. 9, the “Motion to
Confirm”).) In response, Earth Science filed a cross-motion to partially vacate the
Award (App. 6, 7 (ECF No. 20, 21, the “Motion to Vacate”).) In its cross-motion,
Earth Science argued: (1) confirmation and vacatur of the Award is governed by the
FAA as opposed to the Panama Convention; (2) the tort claims were beyond the
scope of the arbitration clause; (3) the Tribunal exceeded the scope of its authority
under the FAA; and (4) the Court should modify the award to correct a computation
error in the damages calculations.

8
At the heart of the cross-motion is the issue of the Tribunal arbitrating matters
that do not fall within the Arbitration Provision and then awarding millions of dollars
in damages on those claims. Damages on the breach of contract claim would not
have exceeded $250,000.
Cromogen also raised a concern about whether the dispute concerning sale
and distribution of CBD – including the confirmation of the Award – may be
addressed by the District Court. CBD is a Schedule 1 illegal substance under federal
law. See 21 U.S.C. § 812 (controlled substance schedule). The Justice Department
recently issued a memorandum indicating its intent to enforce this law in connection
with any sale of CBD within the United States. See Jefferson B. Sessions, Att’y Gen.,
Memorandum for All United States Attorneys: Marijuana Enforcement (Jan. 4,
2018).
The District Judge referred the motions to the Magistrate Judge, who issued a
Report and Recommendation on November 21, 2018 ((App. 8 (ECF No. 39, the
“R&R”).) The Magistrate Judge recommended that the Motion to Confirm be
granted and that Earth Science’s Motion to Partially Vacate be denied. (Id.)
In considering the motions to confirm and partially vacate the Award, the
Magistrate Judge found that interpretation of the Distribution Agreement is governed
by New York law (not federal common law), that the issue of arbitrability would be
decided by the District Court (not the Tribunal), and that Earth Science’s cross-
9
motion to vacate the Award is governed by Section 10(a)(4) of the FAA (not the
Panama Convention). The Magistrate Judge also found that the Arbitration Provision
of the Distribution Agreement applies to the “Agreement and performance by the
parties hereunder[]” and that Cromogen’s tort claims arose not from the Agreement,
but from Earth Science’s “subsequent promise” to Cromogen to forward vials of
other samples to a potential new Cromogen counterparty.
The Magistrate Judge went on, however, to attempt to justify the Tribunal’s
improper consideration of the tort claims by reasoning that those claims “stem from”
and “relate” to the parties’ performance under the Distribution Agreement. The
Magistrate Judge thus rejected Earth Science’s argument that the Tribunal was not
permitted to arbitrate the unrelated tort claims along with the contract claims that
were actually within the scope of the Arbitration Provision. (Id.). The Magistrate
Judge also denied Earth Science’s request to file under seal its Rule 38 Application
and supporting exhibits that had previously been submitted to the Tribunal in support
of Earth Science’s motion to modify the damages calculations in the Award.
(Because of the Tribunal’s confidentiality order, filing under seal was required.) As
such, the Magistrate Judge was unable to and did not even read the Rule 38
Application or supporting documents.
10
The Magistrate Judge did not address Earth Science’s concern about the
enforceability of the Award in light of the Justice Department’s position that CBD
controlled substances are illegal.
Earth Science timely objected to the R&R on December 4, 2018. (App. 9 (ECF
40).) Cromogen did not file objections to the R&R.
5. The District Judge’s Order Adopting The R&R And Final Judgment.
On December 12, 2018, the District Judge entered an Order Adopting the
R&R, granted the Motion to Confirm the Award, and denied the Cross-Motion to
Partially Vacate the Award. (App. 10 (ECF 41).) The District Judge did not add any
further analysis or comment regarding the Magistrate Judge’s analysis. Two days
later, the District Judge entered a Final Judgment adopting the amounts and
calculations of the Tribunal. (App. 11 (ECF 44).).
In the Final Judgment, the District Court entered judgment in the amount of
$3,994,522.55 for the principal amount of the Award and $580,651.93 in pre-
judgment interest and ordered that post-judgment interest would run from December
12, 2018. (Id.) As indicated above, approximately 97% of the damages award was
based on the tort claims. The result is momentous as the damages award resulting
from the tort claims would likely bankrupt Earth Science.
Earth Science filed a timely Notice of Appeal. Cromogen did not file a notice
of appeal.
11
6. Appointment Of The Receiver On Behalf Of Earth Science.
After entry of the judgment in this case, on January 11, 2019, the Nevada
District Court in Clark County, Nevada, entered an Order granting the request of
Earth Science’s majority shareholder for appointment of a Receiver for Earth
Science (The “Receiver Appointment Order”). The Court appointed Robert Stevens
as Receiver. Pursuant to the Receiver Appointment Order, Mr. Stevens has complete
control of Earth Science, its ongoing business concern, and all of its accounts, books,
and records. The Receiver Appointment Order also provides for a blanket stay of all
proceedings against Earth Science. (App. 12 (ECF 55 -2) (“Appointment Order”)).
Therefore, all collection efforts against the Earth Science Receivership are presently
prohibited by the stay.
B. Statement of Facts Relevant To The Issues On Appeal.
1. Cromogen and Earth Science’s Respective Businesses and The Terms of

the Distribution Agreement.
As set forth in the Award, Cromogen is an El Salvadoran corporation that acts
as a supplier of “global hemp based biotechnology.” (App. 4 (ECF 24 -1) Trotter
Decl. Ex. A at ¶ 17.) Earth Science is a Florida-based company that distributes and
re-sells CBD-rich hemp oil throughout the United States. (Id. at ¶ 19.)
Cromogen and Earth Science entered into the Distribution Agreement at issue
in this case on or about June 5, 2014. ((App. 4 (ECF 24 -2) Trotter Decl. Ex. B).
Pursuant to the Distribution Agreement, Cromogen granted Earth Science the “right
12
to distribute and resell CBD-rich hemp oil produced by Cromogen.” (Id. at ¶ C.) The
“Product” to be supplied by Cromogen and distributed by Earth Science was defined
as “CBD (Cannabidiol) rich hemp Oil.” (Id. §§ 1.1, 1.3.) The Distribution
Agreement provided for: (1) Cromogen’s obligation to provide conforming
quantities of the Product; (2) Earth Science’s obligation to purchase the Product from
Cromogen and re-sell it within the United States; and (3) the sharing of revenue
generated by Earth Science’s sales of the Product. (Id. at §§ 1, 2, 4.)
Importantly, there is no reference in the Distribution Agreement to any
obligation on the part of Earth Science to help facilitate Cromogen’s sales to other
customers. To the contrary, the Distribution Agreement expressly provided that it
was “not intended to establish any partnership, joint venture, employment or other
relationship between the parties except that of independent contractors.” (Id. at §
19.) The Agreement also contained a standard merger clause which provided, in
relevant part, that the “[Distribution] Agreement, including all exhibits attached
thereto and documents referenced [there]in, constitutes the entire agreement between
[Cromogen] and [Earth Science]” and that the Agreement “may not be modified,
supplemented, qualified or interpreted except in writing signed” by both Cromogen
and Earth Science. (Id. at § 22.)
13
The Distribution Agreement contained the following provision:
Governing Law and Venue. This Agreement and performance by the

parties hereunder shall be construed in accordance with the laws of the
State of New York, U.S.A., without regard to provisions on the conflicts
of laws. Both parties submit to exclusive International Arbitration through
JAMS International using UNCITRAL rules in New York, New York.
U.N. Convention and International Sale of Goods shall not apply to this
Agreement.
(Id. at § 15, the “Arbitration Provision”) (emphasis added.) The Distribution
Agreement therefore expressly provided that any disputes arising from “the
Agreement and performance of the parties [there]under” were to be: (1) governed
by New York law; and (2) subject to arbitration before the Tribunal in New York.
2. The Extra-Contractual Communications That Gave Rise to Cromogen’s

Alleged Tort Claims.
Consistent with the terms of the Distribution Agreement, Earth Science placed
its first order of the Product with Cromogen and made a partial payment of $175,000.
Cromogen delivered its first shipment “in two separate deliveries due to the size of
the barrels.” (App. 4 (ECF 24-1) Trotter Decl. Ex. A at ¶ 105.) When the second half
of the first order was delivered, a Cromogen representative contacted Earth Science
and alerted them that in addition to the Product being sent pursuant to the
Distribution Agreement, four vials of samples that related to a wholly distinct
contract between Cromogen and a different, unrelated potential customer were also
included in the shipment. (Id. at ¶ 23.)
14
The Award reflects that the evidence at Arbitration was that the four samples
were included because “they were needed in order to proceed with a large deal that
Cromogen had in process which required the samples to demonstrate that
performance indicators were met.” (Id. at ¶ 107.) Although the four samples
pertained to a Cromogen contract that had nothing to do with the Distribution
Agreement, a consultant for Cromogen asked Earth Science’s representative to do
Cromogen a favor by helping Cromogen perform its contract with the other
customer. (Id.) Thus, the Cromogen consultant asked the Earth Science
representative to pull the samples from the Earth Science shipment and send them
to Cromogen’s representative in California, so that Cromogen could then send the
samples to its other customer. (Id.)
According to the Tribunal’s Award, Earth Science was advised by
Cromogen’s representative that these samples unrelated to the Distribution
Agreement were included in the second shipment of the Product, and that Earth
Science’s representative confirmed by text message that he would forward the
samples as requested. (Id. ¶ 107.) Notably, Cromogen admitted in its pre-hearing
memorandum that “the samples . . . were not part of [the Distribution Agreement].”
(App. 4 (ECF 24-3) Trotter Decl. Ex. C at ¶ 90.) Indeed, had the samples been
covered under the Distribution Agreement, Earth Science would have been asked to
sell the samples and share the profits from those sales with Cromogen pursuant to
15
the terms of the Distribution Agreement. (App. 4 (ECF 24-2) Trotter Decl. Ex. B at
§ 4.) Instead, Cromogen specifically directed Earth Science not to sell the samples
but to deliver them to Cromogen’s Consultant. (App. 4 (ECF 24-1) Ex. A ¶¶ 106-
07.) Earth Science’s representative failed to send the samples to Cromogen.
Meanwhile, Earth Science determined that the Cromogen shipments of the
Product did not conform to the requirements of the Distribution Agreement as far as
the purity of the Product was concerned and informed Cromogen that they intended
to cancel the Distribution Agreement and seek a refund of the funds already paid.
Cromogen disagreed and asserted that Earth Science was in breach for canceling the
Agreement and not paying the second half of the amount owed for the two
shipments. It was that disagreement that led to Earth Science’s and Cromogen’s
breach of contract claims in the original complaint and the Arbitration.
16
SUMMARY OF THE ARGUMENT
The Tribunal exceeded its authority by arbitrating Cromogen’s tort claims,
which were outside the scope of the Arbitration Provision in the parties’ Distribution
Agreement. Although there is a well established federal policy favoring arbitration,
that policy does not require or justify ignoring the rule that parties cannot be forced
to arbitrate claims they did not agree to arbitrate. Earth Science did not agree to
arbitrate claims that did not arise from the Distribution Agreement or the
performance of the parties thereunder, and, therefore, the Tribunal should not have
forced it to arbitrate the tort claims. The Tribunal exceeded its authority in arbitrating
the tort claims, and the District Court erred in denying Earth Science’s Motion to
Vacate the Tribunal’s Award on those claims.
Not only did the Tribunal improperly arbitrate the tort claims, but it then
compounded the error by entering a damages award based on improper calculations.
The error resulted in enormous damages that will likely bankrupt Earth Science if
enforced. The Magistrate Judge and the District Court erred in summarily
confirming the damages award without reviewing the underlying documents, which
evidence the Tribunal’s error.
The Tribunal’s handling of the arbitration insofar as Cromogen’s tort claims
are concerned was improper, and the improper arbitration of those claims had
potentially catastrophic implications. The order adopting the Magistrate Judge’s
17
R&R confirming the Award and denying Earth Science’s motions to vacate or
correct the Award was error and should be reversed with instructions to vacate the
Award on the tort claims on the grounds they were not arbitrable or, alternatively, to
permit the filing (under seal) and review of Earth Science’s submission regarding
the improper damages calculations.
Finally, upon remand, the District Court should address the issue of the
enforceability of the judgment in light of the Department of Justice position that
Cromogen’s business of profiting from the hemp based Product is illegal.
18
STANDARD OF REVIEW
The standard of review of the district court's confirmation of
an arbitration award and its denial of a motion to vacate or modify the award is de
novo, but the standard of review of the court’s factual findings is clear error. White
Springs Agric. Chemicals, Inc. v. Glawson Investments Corp., 660 F.3d 1277, 1280
(11th Cir. 2011) (citing Frazier v. CitiFinancial Corp., 604 F.3d 1313, 1321 (11th
Cir. 2010)).
ARGUMENT AND CITATIONS OF AUTHORITY
Because the R&R improperly distorts the otherwise clear language of the
arbitration clause and misapplies Section 10(a)(4) of the FAA as a result, Earth
Science’s cross-motion to partially vacate the Award should be granted. In the
alternative, and in light of the Magistrate Judge’s failure to consider the full,
unredacted record in support of Earth Science’s cross-motion, the Court should grant
Earth Science’s request for modification of the Award pursuant to Section 11(a) of
the FAA.
I. THE DISTRICT COURT ERRED IN ADOPTING THE MAGISTRATE

JUDGE’S FINDING THAT CROMOGEN’S TORT CLAIMS WERE
ARBITRABLE.
The District Court erred by adopting the Magistrate Judge’s Report and
Recommendation regarding the arbitrability of Cromogen’s tort claims. The
Magistrate Judge first considered the arbitrability of the tort claims. It is well settled
19
that fundamental gateway matters that raise "questions of arbitrability" are for a
court to decide. AT&T Technologies, Inc. v. Communications Workers of America
et al., 475 U.S. 643 (1986).
While there is a strong policy favoring arbitration, where an arbitrator renders
a decision on such gateway matters as arbitrability in the first instance, the courts
retain primary decision-making authority and are to review the arbitrator's decision
independently and de novo. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938
(1995). Conversely, courts generally defer to an arbitrator's judgment for other
various gateways matters deemed procedural such as "allegation[s] over waiver,
delay, or a like defense to arbitrability.” Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 84 (2002). An arbitrator's determination of his/her own jurisdiction is not
entitled to the same deference, and as such is within that category of matters
considered "questions of arbitrability," which are presumptively for courts to decide.
See Cargill Rice, Inc. v. Empresa Nicaraguense Dealimentos Basicos, 25 F.3d 223,
226 (4th Cir. 1994); Int'l Assn. of Machinists and Aerospace Workers, Progressive
Lodge v. General Electric Co., 865 F.2d 902, 904 (7th Cir. 1989). Questions
involving an arbitrator's jurisdiction are not the type of matters that courts presume
parties intended to be left to the arbitrator, such as defenses of time limits, notice,
laches, estoppel, and whether other conditions precedent to an obligation to arbitrate
have been met.
20
In the instant case, the Magistrate Judge considered the arbitrability of
Cromogen’s tort claims by interpreting the unambiguous arbitration provision in the
parties’ Distribution Agreement against the strong policies favoring arbitration.
A. The Public Policy Favoring Arbitration Does Not Outweigh The

Arbitration Provision’s Unambiguous Terms Demonstrating That The
Parties Did Not Agree To Arbitrate Matters Unrelated To The Agreement.
The public policy in favor of arbitration is strong; it is not unbounded.
Cromogen and the Magistrate Judge cite numerous cases which advise that there is
a strong federal policy in favor of arbitration. Earth Science does not quarrel with
that principle. When interpreting an arbitration provision, legitimate doubts and
ambiguities are to be construed in favor of arbitration. But there is no doubt – and
no ambiguity – about the fact that the samples Cromogen included with Earth
Science’s Product shipment were intended for another unrelated, unaffiliated
customer and did not, in any way, arise out of or relate to the Distribution Agreement
or the parties’ responsibilities thereunder. Automatic adherence to broad principles
do not blind the courts to the obvious: that torts arising from matters wholly
unrelated to the subject matter of a binding contract, such as the one in the present
case, cannot reasonably be seen as arising out of or related in any way to the parties’
performance under the Agreement.
As this Court has written many times, even though there is a presumption in
favor of arbitration, “[t]he courts are not to twist the language of a contract to achieve
21
a result which is favored by federal policy but contrary to the intent of the
parties.” Goldberg v. Bear, Stearns & Co., 912 F.2d 1418, 1419–20 (11th Cir.1990).
That means “the parties will not be required to arbitrate when they have not agreed
to do so.” Id. at 1419; see also Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204,
1214 (11th Cir. 2011); Waffle House, 534 U.S. at 294 (“Arbitration under the FAA
is a matter of consent, not coercion.” (quotation marks and alteration
omitted)); Telecom Italia, 248 F.3d at 1114 (“‘[A] party cannot be required to
submit to arbitration any dispute which he has not agreed so to submit.’”
(quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S.
574, 582 (1960))).
Here, the contract reflects that there was no intent to arbitrate anything other
than issues regarding the Distribution Agreement and the parties’ performance
thereunder.
B. Cromogen’s Tort Claims Are Not Within The Scope Of The Distribution
Agreement.
The Arbitration Provision in the Distribution Agreement states:
This Agreement and performance by the parties hereunder shall be

construed in accordance with the laws of the State of New York, U.S.A.,
without regard to provisions on the conflicts of laws. Both parties submit
to exclusive International Arbitration through JAMS International using
UNCITRAL Rules in New York, NY. U.N. Convention on International
Sale of Goods shall not apply to this Agreement.
((App. 4 (ECF 24 -2) Trotter Decl. Ex. B)) (emphasis added.)
22
As the Magistrate Judge confirmed, the provision is governed by New York
law, and New York law requires that the arbitration clause be read as a whole with
the Court looking to the plain meaning of each of its terms. See Diamond Castle
Partners IV PRC, L.P. v. IAC/InterActivecorp., 826 A.D.3d 421, 422, 918 N.Y.S.2d
73 (N.Y. App. Div. 2011) (quoting HSBC Bank USA v. Nat’l Equity Corp., 279
A.D.2d 251, 253, 719 N.Y.S.2d 20 (N.Y. App. Div. 2001)). The Magistrate Judge
acknowledged that the parties’ agreement to arbitrate should be limited to
“performance by the parties” under the Agreement. (App. 8 (ECF 39) at 10-11.) The
Magistrate Judge’s conclusion that Cromogen’s tort claims were arbitrable under the
Distribution Agreement cannot be reconciled with this law or the plain terms of the
Agreement.
1. The Arbitration Provision Does Limit The Scope Of Issues To Be

Arbitrated And Does Not Include Actions Beyond The Parties’
Performance Under The Distribution Agreement.
The Magistrate Judge first justifies his recommendation by finding that the
arbitration clause, while unambiguous, “does not limit the scope of the issues to be
arbitrated.” (App. 8 (ECF 39) at 10). This finding flatly contradicts the Arbitration
Provision itself which is expressly limited in application to the Distribution
Agreement and the performance of the parties thereunder. Therefore, the parties did
limit their intention to arbitrate and did not indicate an intention to arbitrate “all of
their disputes,” as found by the Magistrate Judge.
23
The decision in JPay Inc. v. Kobel, 904 F.3d 923 (11th Cir. 2003), relied on
by the Magistrate Judge, does not apply to the facts of this case because there is no
ambiguity in the Distribution Agreement’s Arbitration Provision. The Magistrate
Judge cites JPay for the proposition that where there is some ambiguity as to what
issues the parties agreed to arbitrate, the presumption is in favor of arbitrability.
(App. 8 (ECF 39) 9.) The underlying rationale of Jpay, and the presumption in favor
of arbitrability, do not apply where, as here, the arbitration clause is not ambiguous
JPay, 904 F.3d at 929 (when a “contract is ambiguous or silent . . . we work from a
set of default presumptions).
Given the clear and express limiting language in the Distribution Agreement’s
Arbitration Provision, which limits arbitration to matters involving the Agreement
and the performance of the parties thereunder, the issue is what the parties
contemplated as the performance of the parties.
2. Cromogen’s Tort Claims Do Not Fall Within The Issues The Parties
Agreed to Arbitrate.
The parties’ Distribution Agreement was limited to the following: (1)
Cromogen’s obligation to provide conforming quantities of the Product; (2) Earth
Science’s obligation to purchase the Product from Cromogen and re-sell it within
the United States; and (3) the sharing of revenue generated by Earth Science’s sales
of the Product. (See App. 7 (ECF 21-3) at §§ 1, 2, 4.) These are the matters relevant
to the parties’ performance under the Agreement. There is no ambiguity that requires
24
guesswork or speculation as these matters are expressly laid out. The Agreement
does not make any reference to any obligation on the part of Earth Science to help
facilitate Cromogen’s sales to other customers by acting as an intermediary for other
items that Cromogen unilaterally decided to include in its shipment of the Product
to Earth Science. Therefore, issues arising from those acts are not contemplated as
performance under the Agreement and do not fall within the limited scope of the
Arbitration Provision.
The Magistrate Judge found that Cromogen’s request that Earth Science send
the samples for its other unrelated customer, a request that Cromogen admits was
not part of the Distribution Agreement, was sufficiently “related to” the parties’
Distribution Agreement and, therefore, encompassed by the Arbitration Provision.
(App. 8 (ECF 39) at 11). This expansive reading of the Agreement contravenes New
York law regarding contract interpretation.
New York state and federal decisions analyzing contractual references to
claims or disputes “arising from” a contract under New York law consistently hold
that tort claims arising from events which transpired after the execution of the
contract do not fall within the scope of such contractual provisions. For example, in
Fantis Foods, Inc. v. Standard Importing Co. Inc., 63 A.D.2d 52, 58, 606 N.Y.S.2d
763, 767 (N.Y. App. Div. 1978) (reversed on other grounds), New York’s Appellate
Division interpreted a forum selection provision that referred to “objections that may
25
arise from the present agreement.” The court held that “[a]lthough this clause would
be applicable respecting a claim brought in contract, it has no application to [third
party plaintiff’s] claim which sounds in the tort of conversion” and that the alleged
conversion “subsequent to the contract constitutes an undisputed act not arising out
of the contract.”)
The Magistrate Judge, like Cromogen and the Tribunal, also appears to have
relied on a foreseeability analysis to find that the unrelated tort claims should fall
within the arbitration provision, finding that but for the parties’ participation in the
Distribution Agreement, Earth Science would not have received the unrelated
samples from Cromogen. The Fantis Foods court rejected such a theory, explaining
that even though “the contract created the property rights which were violated . . .
conversion does not render indistinct the fact that the conversion is a dispute outside
of that contract.” Id. (citing Hodom v. Stearns, 32 A.D.2d 234, 301 N.Y.S.2d 146
(N.Y. App. Div. 1969)). Similarly, in Knieriemen v. Bache Halse Stuart Shields Inc.,
74 A.D.2d 290, 293, 427 N.Y.S.2d 10, 12-13 (N.Y. App. Div. 1980), the court held
that a contractual forum selection clause did not apply to the plaintiff’s tort claims
because “[t]hat the parties agreed that their contract should be governed by an
expressed procedure does not bind them as to causes of action sounding in tort.”
Federal courts applying New York law have reached the same conclusion,
citing the Knieriemen and Fantis Foods decisions. See Klock v. Lehman Bros. Kuhn
26
Loeb Inc., 584 F. Supp. 210, 215 (S.D.N.Y. 1984) (citing Knieriemen); Sterling Nat.
Bank & Trust Co. of N.Y., 468 F. Supp. 1100, 1102 (S.D.N.Y. 1979). The decision
in Sterling is particularly instructive. In Sterling, the Southern District of New York
applied the state judge’s analysis in Fantis Foods within the context of a dispute
over the scope of an agreement to arbitrate and concluded that the agreement did not
include tort claims that did not arise out of the contract. The contractual provision at
issue in Sterling was much broader than the provision at issue in this case, extending
to “any controversy or claim arising out of or relating to this contract, or the breach
thereof, shall be settled by arbitration.” 468 F. Supp. at 1102. Even so, the court held
that the arbitration provision did not encompass a claim for conversion of goods,
noting that the defendant had “consented to arbitrate only with respect to matters
‘arising out of or relating to the contract.’” Id. at 1103. The Sterling court further
explained that “reason dictates that for a dispute to be characterized as germane to
the subject matter of the contract it must as least raise some issue, the resolution of
which (involves) a reference to, or construction of some portion of the contract
involved.” Id. at 1104 (quoting Old Dutch Farms, Inc. v. Milk Drivers & Dairy
Employees Union, 359 F.2d 598, 601 (2d Cir. 1966)).
This Court has also analyzed and rejected the argument that unrelated torts
should fall within a contractual arbitration clause merely because the tort would not
have occurred but for the contractual relationship. In Doe v. Princess Cruise Lines,
27
Ltd., 657 F.3d 1204, 1217-18 (11th Cir. 2011), this Court rejected the argument that
tort claims arising from the rape of a cruise ship employee on the ship were arbitrable
because the employee would not have been on the ship but for her agreement with
the cruise line that contained the arbitration provision. The Court explained, “[t]he
incidental fact that Doe might not have been on the cruise ship if she had not been
working for the cruise line does not mean that her claims relate to, arise from, or are
connected with the crew agreement and the services she performed as an employee.”
Similarly, in Armada Coal Export, Inc. v. Interbulk, Ltd., 716 F.2d 1566, 1568 (11th
Cir. 1984), this Court found that a plaintiff’s claims for wrongful attachment and
conversion were not arbitrable despite the admittedly “broad language of the
arbitration clause” because, “[w]hile certainly there was a connection between [the
plaintiff’s] claims and the [relationship between the parties] – i.e., but for the two
parties having entered into this business arrangement . . . there would have been no
wrongful attachment and conversion – such connection is not sufficiently close to
constitute a dispute arising during the execution, or performance of the [contract].”
These decisions dictate that the Distribution Agreement’s Arbitration
Provision cannot be read to include unrelated torts that arose after execution of the
Distribution Agreement. Despite acknowledging that Cromogen’s tort claims arose
from an agreement subsequent to the execution of the Distribution Agreement (R&R
at 11), coupled with Cromogen’s admission that the shipment of the product samples
28
for the other customer were not part of the Agreement, the Magistrate Judge
nevertheless ignored these courts’ decisions and stretched the Arbitration Provision
to cover torts arising outside of and unrelated to the terms of the Distribution
Agreement. The Magistrate Judge’s conclusion is contrary to the law, and the
District Court erred by adopting it.
The preference in favor of arbitration does not justify the wholesale rewriting
of the unambiguous language of the Arbitration Provision. The Tribunal ignored the
Arbitration Provision’s clear reference to performance under the Agreement, and
awarded tort damages worth more than 30 times the amount implicated by
Cromogen’s breach of contract claim and 10 times the face value of the Agreement.
In doing so, it exceeded the scope of its authority, and its Award should be partially
vacated as a result.
II. THE DISTRICT COURT ERRED BY FAILING TO CONSIDER

EARTH SCIENCE’S SUBMISSION REGARDING THE
TRIBUNAL’S IMPROPER DAMAGE CALCULATIONS.
Section 11 of the FAA empowers the District Court to modify the Award
“where there was an evident material miscalculation of figures or an evident material
mistake in the description of any person, thing or property referred to in the award.”
9 U.S.C. § 11(a). Citing this rule, Earth Science urged the District Court and the
Magistrate Judge to consider the full, unredacted copies of its Rule 38 Application
to Correct the Award and the supporting documents.
29
The Magistrate Judge declined to consider Earth Science’s Rule 38
Application and submissions or to modify the Tribunal’s tort damage calculation on
the grounds the documents were unnecessary “because they relate to facts and
arguments presented during the arbitration.” (App. 8 (ECF 39) at 3, n. 4.) By refusing
to review Earth Science’s Rule 38 Application (attached as Exhibit F to the Trotter
Decl. App. 7 (ECF No. 21-5), prior to recommending the denial of Earth Science’s
request for modification, the Magistrate Judge foreclosed Earth Science’s ability to
demonstrate that the Tribunal’s award could be modified based on Section 11(a) of
the FAA.
Review of the full, unredacted copy of Earth Science’s Rule 38 Application
demonstrates that the Tribunal’s computational error was a product of the Tribunal
ignoring the evidentiary record. Earth Science was denied the benefit of a de novo
review of the Tribunal’s decision. As set forth in its letter to the Court on October
9, 2018 (App. 13 (ECF No. 33) the “October 9 Letter”)), Earth Science is currently
prohibited by the Confidentiality and Protective Order entered in the Arbitration
from publicly filing all but two of the exhibits to the Trotter Declaration. Earth
Science sought the permission of the District Court to file them under seal. (See
Statement of Joinder in Defendant’s Motion to File Arbitral Award Under Seal,
(App. 14 (ECF No. 19)). The Court denied Earth Science’s request on October 5,
2018. (App. 15 (ECF No.32))
30
The Rule 38 Application and the exhibits thereto provide the full context for
the Tribunal’s enormous computational error, which had the effect of artificially
inflating the Tribunal’s calculation of Cromogen’s supposed tort damages by more
than 600 percent. As Earth Science argued below, the District Court could not
properly consider Earth Science’s request for modification in the absence of the
unredacted Rule 38 Application.
Without the benefit of the relevant documents, Earth Science attempted to
convey the nature and extent of the Tribunal’s miscalculations justifying a
modification of the Award. As set forth in its redacted Memorandum of Law in
Opposition to the Motion to Confirm and in Support of the Cross-Motion to Partially
Vacate the Award (App. 7 (ECF 21)), the Tribunal imposed lost profit damages
arising from Cromogen’s conversion and tortious interference claims, and while the
Tribunal did deny Earth Science’s Rule 38 Application, that alone does not preclude
this Court from conducting a review and modifying the Award. Asturiana De Zinc
Mktg., Inc. v. LaSalle Rolling Mills, Inc., 20 F. Supp. 2d 670, 673 (S.D.N.Y. 1998)
(modifying award to account for erroneous figures submitted by claimant).
If the District Court were to conduct a de novo review of the record, and
review the Rule 38 Application, it would see that the Tribunal was wrong, and Earth
Science’s motion for modification of the Award pursuant to 9 U.S.C. § 11(a) should
be granted. By declining to modify the Award, and by failing to even consider the
31
substance of the Rule 38 Application prior to reaching such a conclusion, the Court
failed to give Earth Science a meaningful review of the Award and granted
Cromogen an enormous windfall at Earth Science’s expense. Such an outcome
would fly in the face of the evidence submitted to the Tribunal and all notions of
fairness.
Courts reviewing arbitration awards must take care not to “confuse[] a narrow
standard of review with a nonexistent standard of review.” Eljer Mfg., Inc., v. Kowin
Dev. Corp., 14 F.3d 1250, 1254 (7th Cir. 1994); see Matteson v. Ryder Sys. Inc., 99
F.3d 108, 113 (3d Cir. 1996) (stating that courts are “neither entitled nor encouraged
to simply ‘rubber stamp’ the ... decisions of arbitrators”). As the United States
Supreme Court has made clear, courts must review arbitration awards in a manner
“sufficient to ensure that arbitrators comply with the requirements of [the applicable
law].” Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 232, 107 S. Ct.
2332, 2340 (1987); cf. Cole v. Burns Intern. Sec. Servs., 105 F.3d 1465, 1486 (D.C.
Cir. 1997) (“Judicial review of arbitration awards ... is necessarily focused, but that
does not mean that meaningful review is unavailable.”). Earth Science asked the
Magistrate Judge and the District Court for a meaningful review of the Tribunal’s
Award but was denied. The decision should be remanded with instructions to accept
Earth Science’s submission of documents and conduct a meaningful review
regarding the alleged miscalculation of damages.
32
III. THE DISTRICT COURT FAILED TO ADDRESS THE ISSUE OF

WHETHER IT COULD CONFIRM AND ENFORCE THE
ARBITRATION AWARD IN LIGHT OF THE DEPARTMENT OF
JUSTICE MEMORANDUM REGARDING THE ILLEGALITY OF
CBD.
Earth Science also raised a concern about whether the dispute concerning sale
and distribution of CBD – including the confirmation of the Award – may be
addressed by the District Court. CBD is a Schedule 1 illegal substance under federal
law. See 21 U.S.C. § 812 (controlled substance schedule). The Justice Department
recently issued a memorandum indicating its intent to enforce this law in connection
with any sale of CBD within the United States. See Jefferson B. Sessions, Att’y Gen.,
Memorandum for All United States Attorneys: Marijuana Enforcement (Jan. 4,
2018).
Federal Bankruptcy Courts have refused to administer cases in which a
business receives even a portion of its income through activities relating to the sale
of such an illegal substance. See Arenas v. U.S. Trustee (In re Arenas), 535 B.R. 845
(10th Cir. B.A.P. 2015) (dismissing bankruptcy case because debtor’s business was
illegal under federal law); In re Johnson, 532 B.R. 53 (Bankr. W.D. Mich. 2015)
(court enjoined debtor from conducting medical marijuana business during the
bankruptcy even though it complied with state law); In re Medpoint Management,
LLC, 528 B.R. 178 (Bankr. D. Ariz. 2015) (vacated in part) (cause existed to dismiss
involuntary bankruptcy case involving debtor whose sole income was fees from a
33
trademark licensed to a medical marijuana company).
Against this background, Earth Science requested that the District Court
consider whether confirmation of the Award would be inconsistent with federal law.
The District Court did not address the issue, leaving the issue unresolved. Upon
remand, the District Court should provide guidance to the parties regarding whether
Cromogen can collect on the judgment given that it is based on profits from its CBD
based business.
CONCLUSION
Based on the foregoing reasons and citations of authority, Appellant, Earth
Science, respectfully requests that the Court reverse the District Court’s Final
Judgment and Order Adopting the Magistrate Judge’s Report and Recommendation
to Confirm Arbitration Award and Denying Cross-Motion to Partially Vacate Award
and remand with instructions to vacate that portion of the Award directed toward
Cromogen’s tort claims and, alternatively, in the event this Court affirms the District
Court regarding the arbitrability of the tort claims, that the Court remand with
instructions for the District Court to fully consider Earth Science’s Rule 38
Application and supporting documents regarding the calculation of damages on the
tort claims.
34
Respectfully submitted,
/s/ Melissa Damian Visconti

Melissa Damian Visconti
Florida Bar No. 0068063
mvisconti@dvllp.com
DAMIAN & VALORI, LLP
1000 Brickell Avenue, Suite 1020
Miami, FL 33131
Telephone: (305) 371-3960
Facsimile: (305) 371-3965
Counsel for Appellant
CERTIFICATE OF COMPLIANCE WITH TYPEFACE

REQUIREMENTS, AND TYPE-STYLE REQUIREMENTS
This document complies with the typeface requirements of Federal Rule of
Appellate Procedure 32(a)(5) and the type-style requirements of Federal Rule of
Appellate Procedure 32(a)(6), because this document has been prepared in a
proportionally spaced typeface using Microsoft Word in 14-point Times New
Roman font. This document complies with the word limit of Federal Rule of
Appellate Procedure 27(d)(2)(a) because, excluding the parts of the document
exempted by Federal Rule of Appellate Procedure 32(f), this document contains 331
words.
By: /s/ Melissa Damian Visconti

35
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on May 1, 2019, I electronically filed the
foregoing document with the Clerk of the Court using CM/ECF. I also certify that
the foregoing document is being served this day on all counsel of record via
transmission of Notices of Electronic Filing generated by CM/ECF or in some other
authorized manner for those counsel or parties who are not authorized to receive
electronic Notices of Electronic Filing.
By: /s/ Melissa Damian Visconti

36
Exhibit “2”
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Exhibit “4”

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Electronically Filed

) Case No.: A-18-784952-C

20 RECEIVER’S INTERIM STATUS REPORT DATED MAY 24, 2019

21 Robert L. Stevens (“Receiver”), as Receiver for EARTH SCIENCE TECH, INC.

Case Number: A-18-784952-C

21 c. Numerous Form 8-K filings.

23 below under “SECURITIES REPORTING AND ACTIVITIES”.

25 status report. It is not anticipated to be completed for some time.

20 anticipates ETST to remain current in its reporting obligations.

24 debenture or other financial instrument as required to finance the administration

22 becomes effective if the registration statement relates to the security of an issuer

24 statement, to the reporting requirements of section 13 or 15(d) of the Securities

25 Exchange Act of 1934.”

12 Telephone No.: (720) 442-7000

15 DUBOWSKY LAW OFFICE, CHTD.

UNITED STATES COURT OF APPEALS

EARTH SCIENCE TECH, INC.

IMPACT UA, INC., ET AL.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

THE HONORABLE ROBIN L. ROSENBERG

APPELLANT’S INITIAL BRIEF

By: Melissa D. Visconti

MELISSA DAMIAN VISCONTI

U.S. COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

CERTIFICATE OF INTERESTED PARTIES

EARTH SCIENCE TECH, INC. IMPACT UA, INC., ET AL.

(please type or print legibly):

Burd, Gene, Esq.

Cromogen Biotechnology Corporation

Earth Science Tech, Inc.

Harris, Derek M., Esq.

Holodak, Edward F., Esq.

Impact UA, Inc., et al.

Kamenetsky Shea, Alexandra, Esq.

Klapholz, Joseph, Esq.

U.S. COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

CERTIFICATE OF INTERESTED PERSONS

EARTH SCIENCE TECH, INC. IMPACT UA, INC., ET AL.

Reinhart, Bruce E., Magistrate Judge

Rosenberg, Robin L., Judge

Sarkozi, Paul D., Esq.

Trotter, Robert W., Esq.

Visconti, Melissa Damian, Esq.

STATEMENT REGARDING ORAL ARGUMENT

request is made pursuant to Federal Rule of Appellate Procedure 34(a).

CERTIFICATE OF INTERESTED PARTIES AND

STATEMENT REGARDING ORAL ARGUMENT ............................................ iv

TABLE OF CONTENTS ......................................................................................... v

TABLE OF AUTHORITIES ................................................................................ viii

PRELIMINARY STATEMENT ............................................................................. 2

STATEMENT OF THE ISSUES............................................................................. 3

STATEMENT OF THE CASE ................................................................................ 4

A. Course of Proceedings and Disposition Below ............................................. 4

1. The Initiation Of The Underlying Action. ................................................ 4

2. The Arbitration And the Arbitration Award ............................................. 5

3. Earth Science’s Motion to Correct the Award ......................................... 7

4. Cromogen’s Motion to Confirm The Award And Earth

5. The District Judge’s Order Adopting The R&R

6. Appointment Of The Receiver On Behalf Of Earth Science ................... 12

B. Statement Of Facts Relevant To The Issues On Appeal ............................. 12

1. Cromogen and Earth Science’s Respective Businesses

2. The Extra-Contractual Communications That Gave

SUMMARY OF THE ARGUMENT .................................................................... 17