Dell'Oro Group, Inc. v. Weckel

Filing 53

Order by Judge James Donato granting 31 Motion Order to Arbitrate and Stay of Action Pending Arbitration. Status Report due by 11/13/2017. (jdlc1, COURT STAFF) (Filed on 8/14/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DELL’ORO GROUP, INC.,
Plaintiff,

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United States District Court
Northern District of California

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Case No. 3:17-cv-00750-JD
ORDER RE ARBITRATION

v.

Re: Dkt. No. 31
ALAN WECKEL, et al.,
Defendants.

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Plaintiff Dell’Oro Group, Inc. sued its former employee, Alan Weckel, for purloining the

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company’s proprietary and confidential business information. Dkt. No. 13. Dell’Oro also sued

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the 650 Group, LLC, a business Weckel created after he left Dell’Oro. The amended complaint

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alleges a breach of contract claim against Weckel based on an “Agreement of Nondisclosure of

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Trade Secrets and Confidential Information, and Assignment of Patent, Copyright, and Other

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Rights” (“the Agreement”), and several federal and California state law claims arising out of the

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same alleged data misappropriation underlying the contract claim. The 650 Group is named only

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in two trade secrets counts.

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Weckel and the 650 Group have moved to send the dispute to arbitration under an

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“Arbitration Agreement” that Weckel and Dell’Oro signed at the start of his employment in 2006.

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Dkt. No. 31-2. Under the broad language of this agreement, the parties committed to arbitrating

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“all matters directly or indirectly related to” Weckel’s employment, including a breach of contract

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claim based on the Agreement. Although the 650 Group is not a signatory to the arbitration

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agreement, defendants say the claims against it are inextricably intertwined with the claims against

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Weckel under the Agreement, and so 650 Group is entitled to assert the arbitration commitment.

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Dkt. No. 31 at 7-8.

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Dell’Oro does not attack the arbitration agreement as unconscionable or unenforceable in

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any respect. Dkt. No. 42. It would be hard pressed to levy such charges given that the agreement

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is its own work. Dell’Oro’s main objections are that the 650 Group has “no standing” to invoke

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arbitration and that defendants waived any right to arbitration by “engaging in litigation conduct.”

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Id. at 4-9.

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Neither objection carries any weight. The waiver contention is particularly thin. Overall,

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little of substance has happened here beyond a case management conference and this motion,

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which defendants filed promptly after service of the complaint. Dell’Oro has not shown that

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defendants have acted inconsistently with their arbitration demand, or that Dell’Oro was
prejudiced in any way by their conduct. Waiver cannot be found in these circumstances. See

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United States District Court
Northern District of California

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Martin v. Yasuda, 829 F.3d 1118, 1124-25 (9th Cir. 2016).

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The “standing” argument is also unavailing. While it is true that the 650 Group was not a

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party to the Agreement or the arbitration agreement, its status as a non-signatory does not

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absolutely bar invocation of arbitration. California, whose law the parties agree applies here,

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expressly allows non-signatories to enforce an arbitration agreement on equitable estoppel grounds

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when the claims against the non-signatory “are dependent on or inextricably bound up with” the

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agreement featuring arbitration. Murphy v. DirecTV, Inc., 724 F.3d 1218, 1232 (9th Cir. 2013)

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(quoting Goldman v. KPMG LLP, 92 Cal. Rptr. 3d 534, 537 (Cal. Ct. App. 2009)). That is

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eminently the case here, where the 650 Group is alleged to be the business Weckel set up to

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exploit the fruit of breaching the Agreement and poaching Dell’Oro’s proprietary materials. The

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complaint portrays the 650 Group as nothing more then the vessel into which Weckel purportedly

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poured his ill-gotten gains. That is more than enough to allow it to assert the arbitration

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agreement.

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Consequently, the case is sent to arbitration pursuant to the terms of the arbitration

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agreement. The Court’s evidence preservation order, Dkt. No. 41, remains in effect pending

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further order. The case will be closed administratively but not dismissed. The parties are directed

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to file joint status reports on the arbitration proceedings every 90 days from the date of this order.
IT IS SO ORDERED.
Dated: August 14, 2017

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JAMES DONATO
United States District Judge

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United States District Court
Northern District of California

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