APAC Customer Services, Inc. v. Marrow et al

Filing 54

MEMORANDUM Opinion. Signed by the Honorable Samuel Der-Yeghiayan on 4/26/2012. (lw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
APAC CUSTOMER SERVICES, INC.,
Plaintiff,
v.
MICHAEL MARROW, et al.,
Defendants.

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No. 12 C 2217

MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendant Michael Marrow’s (Marrow)
motion to compel arbitration and to stay proceedings. For the reasons stated below,
the motion to compel arbitration is granted.

BACKGROUND
Plaintiff APAC Customer Services, Inc. (APAC) contends that it is a leading
provider of customer care and business processing outsourcing solutions. In
February 2008, Marrow allegedly became the President and CEO of APAC. Prior to
commencing employment with APAC, Marrow allegedly executed several

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agreements including an Agreement Protecting Company Interests (APCI). The
APCI allegedly includes a non-competition clause (Non-Competition Clause), nonsolicitation clauses (Non-Solicitation Clauses), and a confidential information clause
(Confidential Information Clause). In September 2010, Marrow allegedly resigned
from APAC and he signed a waiver and release (Waiver and Release) that indicated
that he remained bound by the terms of the APCI. In March 2012, Marrow allegedly
accepted a position as CEO for Defendant Qualfon Corporation (Qualfon). APAC
asserts that Qualfon is a direct competitor of APAC. According to APAC, with the
encouragement of Qualfon, Marrow allegedly violated the terms of the APCI by
working for a competitor, disclosing trade secrets, and soliciting APAC’s customers
and employees. APAC includes in its amended complaint a claim alleging a breach
of the Non-Competition Clause (Count I), a claim alleging a breach of the Waiver
and Release (Count II), a tortious interference with contract claim (Count III), a
claim alleging violations of the Illinois Trade Secrets Act, 765 ILCS 1065/1 et seq.
(Count IV), and two declaratory relief claims (Counts V and VI). Marrow now
moves to compel arbitration and to stay the instant proceedings.

LEGAL STANDARD
The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., provides “that a

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written provision in any contract evidencing an intent to settle by arbitration any
future controversy arising out of such contract shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of
any contract.” French v. Wachovia Bank, 574 F.3d 830, 834 (7th Cir. 2009)(internal
quotations omitted)(quoting Livingston v. Assocs. Fin., Inc., 339 F.3d 553, 556 (7th
Cir. 2003) and 9 U.S.C. § 2). A party can bring an action in federal court to compel
an opponent to submit to arbitration pursuant to 9 U.S.C. § 4. Id. A court “will

compel arbitration unless it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted dispute.”
United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Indus. and Service
Workers Intern. Union v. TriMas Corp., 531 F.3d 531, 536 (7th Cir. 2008)(internal
quotations omitted). When an arbitration agreement contains a broad arbitration
provision, “there is a presumption in favor of arbitrability,” and “[a]ny ambiguities
as to the scope of the arbitration clause are resolved in favor of arbitration.” Id.
(internal quotations omitted); see also Sweet Dreams Unlimited, Inc. v. Dial-AMattress Intern., Ltd., 1 F.3d 639, 642 (7th Cir. 1993)(stating that the Court should
“[b]ear[] in mind the Supreme Court’s instruction that ‘any doubt concerning the
scope of arbitrable issues should be resolved in favor of arbitration’”)(quoting in part
Moses H. Cone Mem. Hosp. v. Mercury Construction Corp., 460 U.S. 1, 24-25

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(1985)); Miller v. Flume, 139 F.3d 1130, 1136 (7th Cir. 1998)(stating that “once it is
clear the parties have a contract that provides for arbitration of some issues between
them, any doubts concerning the scope of the arbitration clause are resolved in favor
of arbitration”); see also Gore v. Alltel Communications, LLC, 666 F.3d 1027, 1032
(7th Cir. 2012)(stating that “because arbitration is a matter of contract, ‘a party
cannot be required to submit to arbitration any dispute which he has not agreed so to
submit’”)(quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)).

DISCUSSION
Marrow argues that he executed an Executive Employment Agreement while
employed by APAC (Employment Agreement). Marrow contends that the dispute in
the instant action is subject to arbitration under the terms of the Employment
Agreement.

I. Preliminary Injunctive Relief
APAC argues that even if this case falls within the scope of the Arbitration
Clause, APAC is entitled under the law to seek preliminary injunctive relief from the
court before arbitration. A party generally may obtain preliminary injunctive relief
in a case, even if the parties have agreed to resolve the dispute in arbitration.

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Gateway Eastern Ry. Co. v. Terminal R.R. Ass’n of St. Louis, 35 F.3d 1134, 1141
(7th Cir. 1994)(recognizing the “equitable power on the part of the district court to
issue preliminary injunctive relief in disputes that are ultimately to be resolved by an
arbitration panel”). However, in this case, APAC has already been provided with an
opportunity to obtain preliminary injunctive relief. On April 4, 2012, this court
granted APAC’s motion for a temporary retraining order (TRO). On April 16, 2012,
APAC moved for the withdrawal of the TRO and indicated that APAC would not
pursue a preliminary injunction. Thus, preliminary injunctive relief is no longer an
issue in these proceedings and does not provide a basis to delay a resolution of the
request for arbitration.

II. Scope of Arbitration Clause
Marrow argues that the dispute in the instant action falls within the scope of
the Arbitration Clause. The Employment Agreement, which is attached to the second
amended complaint, provides the following arbitration clause (Arbitration Clause):
14.

Arbitration. Except as provided in Section 12 above, in the event that
there shall be a dispute among the parties arising out of or relating to
this Agreement, or the breach thereof, the parties agree that such dispute
shall be resolved by final and binding arbitration in Chicago, Illinois
administered by the American Arbitration Association (the “AAA”), in
accordance with AAA’s Commercial Arbitration Rules. . . .

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(A Compl. Ex. B Par. 14). The Employment Agreement also provides that Marrow
“agrees” to “abide by the terms of the Agreement Protecting Company Interests
attached hereto as Exhibit C.” (A. Compl. Ex. B Par. 9). The Employment
Agreement further provides that the agreement “together with all Exhibits thereto,
contains the entire agreement between” the parties. (A. Compl. Ex. B Par. 20).
APAC argues that it is not premising any claims in this case on a breach of the
Employment Agreement. APAC argues that its claims are mainly premised on a
breach of the terms of the APCI.
If it is clear “that the parties have a contract that provides for arbitration of
some issues between them, any doubt concerning the scope of the arbitration clause
is resolved in favor of arbitration as a matter of federal law.” Gore, 666 F.3d at
1032. A federal court cannot deny a motion to compel arbitration on “an issue unless
it may be said with positive assurance that the arbitration clause is not susceptible of
an interpretation that covers the asserted dispute.” Id. (internal quotations
omitted)(quoting Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909
(7th Cir. 1999)). When parties enter into multiple agreements, and “only one
contains an arbitration clause, and the plaintiff brings a cause of action based, at least
in part, on conduct contrary to the agreement that does not have the arbitration
clause, the parties can be compelled to arbitrate only if (1) the clause itself is broad

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enough to encompass their dispute, or (2) the agreement containing the clause
incorporates the other[(s)] by reference.” Gore, 666 F.3d at 1033.
Marrow argues that the claims in the instant action fall within the scope of the
Arbitration Clause. In the Arbitration Clause, the parties agree that any “dispute
among the parties arising out of or relating to this Agreement or the breach thereof
. . . shall be resolved by final and binding arbitration. . . .” (A. Compl. Ex B Par. 14).
APAC has expressly disavowed that its claims in any way arise from a breach of the
Employment Agreement. However, in Paragraph 9 of the Employment Agreement,
Marrow expressly agreed to abide by the terms of the APCI, thus incorporating the
terms of the APCI into the Employment Agreement. Regardless of whether APAC is
alleging a breach of the Employment Agreement, the same non-competition and nonsolicitation provision that are included by reference in the Employment Agreement
are at issue in this case. Thus, the dispute in the instant action clearly relates to the
terms of the Employment Agreement. APAC has not argued that the Employment
Agreement is invalid, and APAC is bound by the terms that it agreed to in the
Arbitration Clause. To the extent that the Arbitration Clause contradicts any
provisions in the APCI or other agreements entered into by the parties, the
Arbitration Clause controls based on the presumption in favor of arbitration. United

Steel, 531 F.3d at 536; Gore, 666 F.3d at 1032-33; Miller, 139 F.3d at 1136.

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Therefore, Marrow’s motion to compel arbitration is granted.

CONCLUSION
Based on the foregoing analysis, Marrow’s motion to compel arbitration is
granted.

___________________________________
Samuel Der-Yeghiayan
United States District Court Judge
Dated: April 26, 2012

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