Nuance Communication, Inc. v. Purtell

Filing 24

MEMORANDUM AND ORDER granting 5 Motion to Dismiss. For the foregoing reasons, respondent's motion to dismiss (Dk. No. 5) is GRANTED and the petition is DISMISSED. The Clerk is directed to close the case. (Signed by Judge P. Kevin Castel on 8/28/2013) (ja)

USDSSDNY
DOCUMENT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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NUANCE COMMUNICATIONS, INC.,

ELECTRONICALLY FILED
DOC #: _ _--=:---:-:-_
DATE FILED: ?-:J.. '1-13
12 Civ. 8425 (PKC)

Petitioner,

MEMORANDUM
AND ORDER

-against-

JOHN PURTELL, as Stockholder
Representative on behalf of Stockholders of
Vocada, Inc.,
Respondent.

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P. KEVIN CASTEL, District Judge:
This is an action under 9 U.S.C.§9 to confirm an arbitration award rendered by
the American Arbitration Association ("AAA") on October 4,2012 (the "Award"). Petitioner
Nuance Communications, Inc. ("Nuance") seeks to confirm the Award, which denied Purtell, as
Stockholder Representative on behalf of stockholders of Vocada, Inc. ("Vocada"), any relief on
his claims against Nuance.
According to the petition, Nuance acquired Vocada under a merger agreement
dated October 16,2007 (the "Merger Agreement").

(Pet.~7.)

The Merger Agreement provides

for AAA arbitration of certain disputes, requiring, among any things, that any award "shall be
written and shall be supported by written findings of fact and conclusions .... " (Romanello
Decl.§ 7.4( d)(v).) It also states that, "[ e])(cept as provided in Sections 7.4(d) and 8.5(c), each of
the paJ1ies hereto ilTevocably consents to the e)(clusive jurisdiction and venue of any COUlt within
New York County, State of New York, in connection with any matter based upon or arising out
of this Agreement or the matters contemplated here .... " (Id.§ 11.7.) The calve-out in section

7.4 provides that "[jJudgment upon any award rendered by the arbitrator(s) may be entered in
any COUlt having jurisdiction." (Id.§ 7.4(d)(vi).)
In December 2010, the Vocada stockholders, through the Stockholder
Representative, filed a demand for arbitration with the AAA, alleging that Nuance breached its
obligations under the Merger Agreement, breached the implied covenant of good faith and fair
dealing, and fraudulently induced the Vocada shareholders to enter into the Merger Agreement.
(Pet.1I8.) A three-member arbitration panel held an eight-day hearing in New York in July 2010
and issued the Award on October 4,2012. (Id.1[9-11.) The petition notes that, on November 1,
2012, the fOlmer stockholders ofVocada filed an application to vacate and remand the Award in
a Texas state court. (Id. at 4 n.4.) That action was later removed to federal district court.
Murchison Capital Pmtners, L.P" et ai. v. Nuance Communications, Inc" No, 12 Civ. 4749 (N.D.
Tex.) (the "Texas Action").
Purtell moved to dismiss without prejudice the action pending before this Court or
altematively to stay this action in favor of the first-filed Texas Action. Pmiell argued that the
two actions-one seeking vacatur and one seeking confilmation of the Award-were essentially
identical and that proper venue should be adjudicated in the first-filed action. See Fort Howard
Paper Co. v. William D. Witter, Inc., 787 F.2d 784, 790 (2d Cir. 1986) ("[W]here there are two
competing lawsuits, the first suit should have priority, absent the showing of balance of
convenience in favor of the second action, or unless there are special circumstances which justify
giving priority to the second." (citation and quotation marks omitted)); Reliance Ins. Co. v. Six
Star, Inc., 155 F. Supp. 2d 49,54 n.2 (S.D.N.Y. 2001) ("The court in which the first-filed case
was brought decides whether the first-filed rule or an exception to the first-filed rule applies.");
see also Motion Picture Lab. Technicians Local 780, LA.T.S.E. v. McGregor & Wemer, Inc.,
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804 F.2d 16, 19 (2d Cir. 1986) (noting that action to confinn arbitration award and action to
vacate same are "essentially identical" actions).
On July 30, 2013, the court in the Texas Action issued an Order granting in part
and denying in part the application to vacate and remand the Award. Murchison Capital
Paltners, L.P., et at. v. Nuance Communications, Inc., No. 12 Civ. 4749, slip op. (N.D. Tex. July
30,2013). The court denied Nuance's motion to dismiss, rejecting its argument that the Merger
Agreement's exception to its New York forum selection clause for an action seeking u[j]udgment
upon any award rendered by the arbitrators(s)" applied only to a petition to confinn the Award
and not to a petition to vacate the Award. (Id. at 6 (quoting D.H. Blair & Co., Inc. v. Gottdiener,
462 F.3d 95, 104 (2d Cir. 2006) ("[I)t is irrational to consent to jurisdiction in a cOUit for
pUiposes of confirming an award but not for purposes of vacating all or part ofit."».) The court
denied the application to vacate the Award but granted "the Application to the extent it requests
to remand the Award because the Panel failed to provide sufficient findings of fact and
conclusions oflaw on the issue of out-of-pocket damages, which was submitted to it but not
resolved," reasoning that the panel's failure to do so "exceed[ed) its power." (Id. at 12-13.)
In light ofthe foregoing, the Court cannot grant petitioner the relief sought in this
action (confinllation ofthe Award), as the court in the first-filed Texas Action has remanded the
Award to the arbitration panel for fUither consideration. Accordingly, the petition is dismissed
as moot.

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CONCLUSION
For the foregoing reasons, respondent's motion to dismiss (Dk. No.5) is
GRANTED and the petition is DISMISSED. The Clerk is directed to close the case.
SO ORDERED.

United States District Judge

Dated: New York, New York
August 28, 2013

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