TDG Acquisition Company, LLC v. Vuzix Corporation et al
Filing
26
-CLERK TO FOLLOW UP-DECISION AND ORDER granting 13 Motion to Dismiss. Clerk of the Court is directed to close the case. Signed by Hon. Charles J. Siragusa on 5/8/13. (KAP)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
TDG ACQUISITION COMPANY, LLC,
Plaintiff,
-vs-
DECISION & ORDER
VUZIX CORPORATION, PAUL J. TRAVERS,
JOHN DOE #1,
13-CV-6035-CJS-MWP
Defendants.
APPEARANCES
For Plaintiff:
Barry I. Friedman, Esq.
Brian T. Must, Esq.
Metz, Lewis Brodman Must O'Keefe LLC
535 Smithfield Street
Suite 800
Pittsburgh, PA 15222
(412) 918-1110
For Defendants:
Kimberly I. Shimomura, Esq.
Stephen B. Salai, Esq.
A. Paul Britton, Esq.
Harter, Secrest and Emery, LLP
1600 Bausch & Lomb Place
Rochester, NY 14604-2711
(585) 231-1382
INTRODUCTION
Siragusa, J. In this case Plaintiff alleges unfair competition pursuant to 15
U.S.C. § 1125(a) and computer fraud and abuse pursuant to 18 U.S.C. § 1030, as well
as tortious interference with a business relationship and unfair competition pursuant to
state law. It is before the Court on Defendants’ Rule 12(b)(6) motion requesting
dismissal of
this action on the ground that the written Asset Purchase Agreement
among the parties that is the subject of the Complaint provides that all
disputes between the parties arising out of, relating to, or in connection
with that agreement and its related agreements and their performance are
to be resolved through mandatory arbitration as provided in the
agreement.
Defs.’ Notice of Motion at 1, Feb. 8, 2013, ECF No. 13. For the reasons stated below,
Defendants’ application is granted.
FACTUAL BACKGROUND
For the purposes of this motion, the Court assumes that the allegations in the
complaint are true. Plaintiff TDG Acquisition Company, LLC (“TDG”), purchased certain
intellectual property from Vuzix Corporation (“Vuzix”) relating to hands free displays for
accessing data and video. Those displays have military, commercial, industrial, and
consumer applications. As part of the purchase, Vuzix agreed not to compete for
business from military, defense and security organizations. TDG alleges that “Vuzix
immediately violated its obligation and the Asset Purchase Agreement.”1 Compl. ¶ 2.
The Asset Purchase Agreement, dated June 15, 2012, was signed by James P.
Balet (“Balet”) on behalf of TDG and by Paul J. Travers (“Travers”) on behalf of Vuzix.
That Agreement contains the following arbitration clause:
Section 10.06 Arbitration.
(a) General. All controversies and disputes between the Parties arising out
of, relating to or in connection with the interpretation, performance or
enforcement of this Agreement, any Transaction Document or the
Transactions (each, a “Dispute”) shall be finally resolved and decided as
provided in this Section 10.06.
1
The actual text of the Asset Purchase Agreement (sometime referred to by the Court
as “Agreement”) is attached to the Declaration submitted by Travers and filed on February 8,
2013, ECF No. 14.
2
(b) Negotiated Resolution. Any Party that desires to raise a Dispute shall
give written notice thereof to the other Party, which notice shall state with
reasonable specificity the subject to the Dispute and the principal facts
underling the Dispute. In the event that a Dispute arises between the
Parties, the Parties shall promptly meet and negotiate in good faith to
reach an amicable resolution of the Dispute.
(c) Arbitration. If the Parties are unable to resolve any Dispute through
negotiation within thirty (30) days after the notice of Dispute, except as
provided in Sections 10.05(d) and (e) below, the Dispute, whether it is
based on federal, state or foreign Law and whether it is grounded in
common law or statutory law, shall be settled exclusively by arbitration
conducted as provided herein, and otherwise in accordance with the
Commercial Arbitration Rules of the American Arbitration Association
(“AAA”)….
(e) Other Relief. The procedures specified in this Section 10.06 shall be
the sole and exclusive procedures for the resolution of disputes between
the Parties arising out of or relating to this Agreement, any other
Transaction Document or the Transactions, and, without limiting the
generality of the foregoing, a Party, without prejudice to the above
procedures, may seek an injunction, specific performance or other legal or
provisional equitable relief from the arbitrator(s) pursuant to the AAA
Optional Rules for Emergency Measures of Protection (or any other AAA
rules providing for equitable or other similar types of relief) or, in the event
such relief is not available or inappropriate, judicial relief from a tribunal
other than the AAA if in that Party’s sole judgment such action is
necessary to avoid irreparable damage or to preserve the status quo and
that money damages will not provide an adequate remedy.
Asset Purchase Agreement Section 10.06, Feb. 8, 2013, ECF No. 14-1. Section 1.01 of
the Agreement defines the following relevant terms:
“Shared Services Agreement” means the Shared Services Agreement
that is attached as Exhibit F.…
“Transaction Documents” means this Agreement and any other
agreements, documents, certificates or instruments to be executed and/or
delivered in connection with the Transactions and all Schedules including
the Bill of Sale, the Assignment and Assumption Agreement, the Shared
Services Agreement, the Authorized Reseller Agreement, and the License
Agreement.
3
“Transactions” means the transactions contemplated by this Agreement
and the other Transaction Documents.
Asset Purchase Agreement Section 1.01. The parties also executed a Shared Services
Agreement, also dated June 15, 2012, and signed by Balet for TDG and Travers for
Vuzix. In that document, the following section relates back to the Asset Purchase
Agreement; “1.1 Definitions. Capitalized terms used herein (including the Appendix
hereto) and not otherwise defined herein shall have the meanings assigned to such
terms in the Purchase Agreement.” Shared Services Agreement section 1.1. The
Shared Services Agreement does not have an arbitration clause, but does contain two
sections that are relevant to the Court’s decision here:
4.3 Injunctive Relief. Seller, on the one hand, and Buyer, on the other,
acknowledge and agree that the other party would be damaged
irreparably if any provisions of ARTICLE IV are not performed in
accordance with their specific terms or are otherwise breached, and that
money damages alone would be an inadequate remedy to compensate
the other party for any such breach. Accordingly, each party agrees that
the other party will be entitled to an injunction or injunctions to prevent
breaches of the provisions of ARTICLE IV and to enforce specifically
ARTICLE IV in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter, in
addition to any other remedy to which a party may be entitled at law or in
equity, which other remedies, including monetary damages, will in no way
be limited by the foregoing.…
6.13 Consent to Jurisdiction. Each of the parties irrevocably submits to
the exclusive jurisdiction of (a) the courts of the State of Delaware, and (b)
the United States District Court for the Western District of New York , for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the parties
agrees to commence any action, suit or proceeding relating hereto either
in the United States District Court for the Western District of New York or
if such suit, action or other proceeding may not be brought in such court
for jurisdictional reasons, in the applicable New York state court sitting in
Monroe County, New York. Each of the parties further agrees that service
of any process, summons, notice or document by U.S. registered mail to
such party’s respective address set forth above shall be effective service
4
of process for any action, suit or proceeding in New York with respect to
any matters to which it has submitted to jurisdiction in this Section 6.13.
Each of the parties irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (i) the New York
state court sitting in Monroe County, New York, or (ii) the United States
District Court for the Western District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
Id. sections 4.3 & 6.13.
In its complaint, TDG details two incidents in support of its causes of action: (1) a
Vuzix employee passed himself off as the vice president of TDG, used that vice
president’s email account to contact a prospective TDG customer, and falsely
represented the nature, characteristics and qualities of TDG’s services and commercial
activities, all without authorization; and (2) Paul J. Travers made false and misleading
statements to a representative of the United States Army Contracting Command that
TDG, to which work was to be transferred, would not be able to perform the work, and
caused the Army to not award the contract to TDG.
STANDARDS OF LAW
Motion to Dismiss
The U.S. Supreme Court, in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007),
clarified the standard to be applied to a 12(b)(6) motion:
Federal Rule of Civil Procedure 8(a)(2) requires only a short and plain
statement of the claim showing that the pleader is entitled to relief, in
order to give the defendant fair notice of what the claim is and the
grounds upon which it rests. While a complaint attacked by a Rule
12(b)(6) motion to dismiss does not need detailed factual allegations, a
Plaintiff's obligation to provide the grounds of his entitlement to relief
requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of right to relief above the speculative level, on
the assumption that all the allegations action will not do. Factual
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allegations must be enough to raise a in the complaint are true (even if
doubtful in fact).
Id. at 1964-65 (citations and internal quotations omitted). See also, ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (ATo survive dismissal,
the plaintiff must provide the grounds upon which his claim rests through factual
allegations sufficient >to raise a right to relief above the speculative level.=") (quoting Bell
Atl. Corp. v. Twombly) (footnote omitted); Iqbal v. Hasty, 490 F.3d 143 (2d Cir. 2007)
(Indicating that Bell Atl. Corp. v. Twombly adopted Aa flexible >plausibility standard,=
which obliges a pleader to amplify a claim with some factual allegations in those
contexts where such amplification is needed to render the claim plausible[,]@ as
opposed to merely conceivable.)
When applying this standard, a district court must accept the allegations
contained in the complaint as true and draw all reasonable inferences in favor of the
nonmoving party. Burnette v. Carothers, 192 F.3d 52, 56 (1999), cert. denied, 531 U.S.
1052 (2000). On the other hand, A[c]onclusory allegations of the legal status of the
defendants= acts need not be accepted as true for the purposes of ruling on a motion to
dismiss.@ Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1092 (2d Cir. 1995)(citing In
re American Express Co. Shareholder Litig., 39 F.3d 395, 400-01 n. 3 (2d Cir.1994)).
Documents Included in the Complaint
Both parties have relied upon documents incorporated in the complaint in
support of their positions. As the Court of Appeals stated, A[f]or purposes of a motion to
dismiss, we have deemed a complaint to include any written instrument attached to it as
an exhibit or any statements or documents incorporated in it by reference . . . and
6
documents that the plaintiffs either possessed or knew about and upon which they
relied in bringing the suitY.@ Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000) (citation
omitted). Thus, the Court will employ the same rule in examining the papers outside the
complaint relied upon by the parties here.
Scope of Arbitration Agreements
The Southern District addressed a court’s duty to construe arbitration clauses
broadly in in Gidatex, S.r.L. v. Campaniello Imports, Ltd., 13 F. Supp. 2d 420, 425
(S.D.N.Y. 1998), writing:
Given the strong federal policy favoring arbitration as an alternative
means of dispute resolution, a court must “construe arbitration clauses as
broadly as possible, resolving any doubts concerning the scope of
arbitrable issues in favor of arbitration.” Oldroyd v. Elmira Savings Bank,
134 F.3d 72, 76 (2d Cir. 1998) (citation and quotations omitted). A
broadly-worded arbitration agreement “creates a presumption of arbitrability which is only overcome if it may be said with positive assurance that
the arbitration clause is not susceptible of an interpretation that [it] covers
the asserted dispute.” Id. at 76 (quoting WorldCrisa Corp. v. Armstrong,
129 F.3d 71, 74 (2d Cir. 1997)).
In determining whether a particular claim falls within the scope of an
arbitration agreement, a court must “focus on the factual allegations in the
complaint rather than the legal causes of action asserted.” Genesco, Inc.
v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d Cir. 1987). “If these factual
allegations ‘touch matters’ covered by the parties’ contract, then those
claims must be arbitrated, whatever the legal labels attached to them.” Id.
(citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 624-25 n.13, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985)).
Applying this standard in Campaniello I, the Second Circuit held that
Campaniello’s claims were covered by the arbitration agreement:
[Campaniello's claims] essentially involve claims that appellees
sought fraudulently to violate and terminate the Gidatex Agreement; clearly these claims touch matters involved in the
agreement. Similarly, the [claim for unjust enrichment] alleges that
Gidatex received “unjust” benefits through “repudiation and
7
termination of plaintiffs’ agency agreement.” … This claim is
naturally dependent on [Campaniello’s] rights under the Gidatex
Agreement and also touches matters covered by the Gidatex
Agreement; thus, the unjust enrichment claim is also subject to
mandatory arbitration.
Campaniello I, 117 F.3d at 668.
Gidatex, S.r.L., 13 F. Supp. 2d at 425.
Subjects of Arbitration
In 3-J Hospitality, LLC v. Big Time Design, Inc., No. 09-61077-CIVMARRA/JOHNSON, 2009 U.S. Dist. LEXIS 100601 (S.D. Fla. Oct. 27, 2009), the
district court was faced with a situation similar to the one before this Court and
discussed the arbitrability of claims under the Lanham Act, writing:
Here, the mediation clause provides for mediation of “[a]ny claim, dispute
or other matter in question arising out of or related to this agreement[.]”
See Comp. Exh. C. at 34 (emphasis added). As such, the mediation
clause is considered “broad,” rather than “narrow,” because it evidences
the parties’ intent to have mediation serve as the primary recourse for
disputes connected to the agreement containing the clause. Louis Dreyfus
Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218 (2d Cir.
2001).
***
In cases where the clause is “broad”, as in this case, Lanham Act claims
are subject to alternative dispute resolution under the parties’ agreement.
See Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 723-24 (Lanham Act
claims were arbitrable where agreement had broad arbitration clause);
NRP Group, Inc. v. Hydropress, LLC, 2007 U.S. Dist. LEXIS 5110, 2007
WL 201259 (S.D. Fla. 2007) (compelling arbitration of all claims, including
those for violations of the Lanham Act). Additionally, unfair competition
claims are subject to alternative dispute resolution when faced with a
“broad” clause. See Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10
F.3d 753, 758 (11th Cir. 1993) (claims for tortious interference with
contract, tortious interference with prospective advantage, trademark
infringement, unfair competition, civil conspiracy, fraudulent misrepresenttation, declaratory relief, and abuse of process are subject to arbitration
under broad arbitration clause); NCR Corp. v. Korala Associates, Ltd., 512
8
F.3d 807 (6th Cir. 2008) (holding that unfair competition claim was
arbitrable as “arising out of or relating to” the parties’ licensing
agreement); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840 (2d Cir.
1987) (construing a broad arbitration clause and holding that RICO
claims, Robinson-Patman Act claims, common law fraud claims, unfair
competition claims, and unjust enrichment claims were all arbitrable);
Olsher Metals Corp. v. Olsher, 2003 U.S. Dist. LEXIS 27516, 2003 WL
25600635, *8-9 (S.D. Fla. 2003) (holding that each of the plaintiff's claims,
including allegations of unfair competition, were subject to broad
arbitration clause).
3-J Hospitality, LLC, 2009 U.S. Dist. LEXIS 100601, *4–7.
ANALYSIS
The Court’s role in this dispute was outlined by the Second Circuit in
PaineWebber Inc. v. Bybyk, 81 F.3d 1193 (2d Cir. 1996), where it wrote:
Arbitration “is a matter of contract and a party cannot be required to
submit to arbitration any dispute which he has not agreed so to submit.”
AT & T Technologies, Inc. v. Communications Workers of America, 475
U.S. 643, 648, 106 S. Ct. 1415, 1418, 89 L.Ed.2d 648 (1986) (quoting
United Steelworkers of America v. Warrior & Gulf Navigation Co., 363
U.S. 574, 582, 80 S. Ct. 1347, 1352-53, 4 L.Ed.2d 1409 (1960)). The
Federal Arbitration Act creates a “body of federal substantive law of
arbitrability, applicable to any arbitration agreement within the coverage of
the Act.” Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24, 103 S. Ct. 927, 941, 74 L.Ed.2d 765 (1983). Any arbitration
agreement affecting interstate commerce, such as the one at issue, is
subject to the Act. Id.; see 9 U.S.C. §§ 1 & 2 (1988).
[7] Pursuant to section 4 of the Federal Arbitration Act, the court
shall hear the parties, and upon being satisfied that the making of
the agreement for arbitration or the failure to comply therewith is not
in issue, the court shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the
agreement.
9 U.S.C. § 4 (1988). The role of the courts in reviewing matters subject to
arbitration, therefore, is limited to determining two issues: i) whether a
valid agreement or obligation to arbitrate exists, and ii) whether one party
to the agreement has failed, neglected or refused to arbitrate, in whole or
in part. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,
9
403-04, 87 S. Ct. 1801, 1805-06, 18 L.Ed.2d 1270 (1967). Thus, “[u]nless
the parties clearly and unmistakably provide otherwise, the question of
whether the parties agreed to arbitrate is to be decided by the court, not
the arbitrator.” AT & T Technologies, 475 U.S. at 649, 106 S. Ct. at 1418;
see also John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-47, 84
S. Ct. 909, 913-13, 11 L.Ed.2d 898 (1964). In other words, the court must
determine whether a given issue falls within the scope of the parties’
undertaking to accept arbitration.
PaineWebber Inc., 81 F.3d at 1198.
The two agreements before the Court contain contradictory provisions
concerning the settlement of disputes. The Asset Purchase Agreement encompasses
more than just itself. By its terms, it also specifically includes, “any other agreements,
documents, certificates or instruments to be executed and/or delivered in connection
with the Transactions and all Schedules including the Bill of Sale, the Assignment and
Assumption Agreement, the Shared Services Agreement, the Authorized Reseller
Agreement, and the License Agreement.” Asset Purchase Agreement, “Transaction
Documents” at 9.
The Shared Services Agreement has two provisions that could be read as
contradicting the general agreement to arbitrate: the injunctive relief provision and the
jurisdiction provision. The injunction clause of the Shared Services Agreement reads, in
part, “each party agrees that the other party will be entitled to an injunction or
injunctions to prevent breaches of the provisions of ARTICLE IV and to enforce
specifically ARTICLE IV in any action instituted in any court of the United States or any
state thereof having jurisdiction over the parties and the matter, in addition to any other
remedy to which a party may be entitled at law or in equity, which other remedies,
including monetary damages, will in no way be limited by the foregoing.” Shared
10
Services Agreement section 4.3, Jun. 15, 2012, ECF No. 14-3 (emphasis added). The
language clearly states that each party is entitled to enforce the confidentiality article via
a court action for injunctive relief.
The language from the Shared Services Agreement, quoted above, contradicts
the beginning of the Asset Purchase Agreement section 10.06, which states in pertinent
part that, “[a]ll controversies and disputes between the Parties arising out of, relating to
or in connection with the interpretation, performance or enforcement of this Agreement,
any Transaction Document or the Transactions (each, a “Dispute”) shall be finally
resolved and decided as provided in this Section 10.06.” Asset Purchase Agreement
section 10.06(a).
“Under the FAA, 2 the policy in favor of arbitration generally requires that any
ambiguity about the scope of arbitrable issues be decided in favor of arbitration.”
Fraternity Fund Ltd. v. Beacon Hill Asset Management LLC, 371 F. Supp. 2d 571,
574 (S.D.N.Y. 2005). The Asset Purchase Agreement section 10.05 sets out that the
Agreement is governed by New York law. In that event, the Second Circuit wrote:
New York follows the common law rule that, “[i]n interpreting a contract,
the intent of the parties governs,” and therefore “[a] contract should be
construed so as to give full meaning and effect to all of its provisions.”
American Express Bank Ltd. v. Uniroyal, Inc., 164 A.D.2d 275, 277, 562
N.Y.S.2d 613, 614 (1st Dep't 1990), appeal denied, 77 N.Y.2d 807, 569
N.Y.S.2d 611, 572 N.E.2d 52 (1991); see also Tigue v. Commercial Life
Ins. Co., 631 N.Y.S.2d 974, 975 (4th Dep't 1995) (“[T]he court must
ascertain the intent of the parties from the plain meaning of the language
employed.”). In interpreting a contract, “[w]ords and phrases are given
their plain meaning. Rather than rewrite an unambiguous agreement, a
court should enforce the plain meaning of that agreement.” American
2
Referring to the Federal Arbitration Act, 9 U.S.C. § 1 et seq., originally enacted in 1925
as the United States Arbitration Act. 68 Cong. Ch. 213, Feb. 12, 1925, 43 Stat. 883, 883.
11
Express, 164 A.D.2d at 277, 562 N.Y.S.2d at 614 (citations omitted); see
also Heller v. Pope, 250 N.Y. 132, 135, 164 N.E. 881 (1928).
Furthermore, where “the intent of the parties can be determined from the
face of the agreement, interpretation is a matter of law,” and a claim
turning on that interpretation may thus be determined by summary
judgment or by dismissal. American Express, 164 A.D.2d at 277, 562
N.Y.S.2d at 614; see also Tigue, 631 N.Y.S.2d at 974.
As Mastrobuono makes clear, the common-law rule of contract
interpretation that “a court should construe ambiguous language against
the interest of the party that drafted it” applies in interpreting arbitration
agreements. 514 U.S. at ----, 115 S. Ct. at 1219; see also Graff v. Billet,
64 N.Y.2d 899, 902, 487 N.Y.S.2d 733, 734-35, 477 N.E.2d 212 (1984).
The purpose of this rule is “to protect the party who did not choose the
language from an unintended or unfair result.” Mastrobuono, 514 U.S. at
----, 115 S. Ct. at 1219.
PaineWebber Inc., 81 F.3d at 1199. The Court considers that the Asset Purchase
Agreement and the Shared Services Agreement are part of the same contract, since
the Asset Purchase Agreement incorporates all the documents signed by the parties on
June 15, 2012, as part of the transaction between them. Consequently, in construing
the contract to give full meaning and effect to all of its provisions, the Court determines
that Article IV of the Shared Services Agreement relating to confidentiality excepts from
the broad arbitration clause court ordered injunctive relief.
The facts of the complaint implicate the confidentiality provision of Article IV of
the Shared Services Agreement since TDG alleges that an employee of Vuzix
impersonated a TDG vice president by using, without authorization, his email account to
communicate with a prospective TDG customer. In that regard, Article IV defines the
type of information protected as follows: “the term ‘Confidential Information’ means any
and all non-public or trade secret information related, in any manner whatsoever, to the
business, operations, or condition (financial or otherwise) of a party hereto, whether
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now existing or acquired or developed after the date hereof.” Shared Services
Agreement section 4.4. Article IV also imposes a duty on the parties to, “not use or
permit the use of (without the prior written consent of the other party) and shall keep,
and shall cause its consultants and advisors to keep, confidential all Confidential
Information (hereafter defined) of the other party received pursuant to or in connection
with this Agreement.” Id. section 4.1. Impersonating an employee of one party to
communicate with a potential customer fits within the Agreement’s definition of confidential information.3
The Court now turns to the other incident, that is TDG’s allegation that Travers
made false and misleading statements to a representative of the United States Army
Contracting Command, which resulted in the non-award of a contract to TDG. TDG has
argued that since Travers is not a party to the Asset Purchase Agreement, the
mandatory arbitration clause does not apply to the allegations against him.
However, there is no dispute that Travers is a party to the Restrictive Covenants
Agreement. The Restrictive Covenants Agreement is also part of the Asset Purchase
Agreement, as shown in section 8.01(i), and is included within the definition of
Transaction Document in section 1.01. The Restrictive Covenants Agreement contains
a Remedies provision that reads as follows:
5. Remedies. In addition to all of the remedies otherwise available to a
party, including the recovery of damages, each party shall have the right
3
James Donnelly, vice president of business development at TDG, complained that,
“[t]here is an email that appears to have been sent from me to the customer on 12/21/12. I have
never seen an inquiry from this customer and the phone number on the bottom of the email is for
Wilfred Victoria who is a Vuzix sales person. It is clear that they are reading my email and even
responding to customers from my account.” Email from James Donnelly (Jan. 2, 2013 11:19:06
AM EST), ECF No. 1-3. Vuzix denies that it intercepted or read email belonging to TDG.
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to injunctive and equitable relief to restrain and enjoin any actual or
threatened breach of any of the provisions of this Agreement, including
temporary restraining orders and/or preliminary or permanent injunctions
to restrain or enjoin any such breach or threatened breach, without the
necessity of posting a bond, cash or otherwise. All of a party’s remedies
for the breach or threatened breach of any of the provisions of this
Agreement shall be cumulative and the pursuit of one remedy shall not be
deemed to exclude any and all other remedies available to such party.
Restrictive Covenants Agreement ¶ 5, Jun. 15, 2012, ECF No. 14-2. This provision
gives TDG the “right” to seek injunctive relief. However, unlike the injunctive relief
provision of the Shared Services Agreement, the remedies provision in the Restrictive
Covenants Agreement is consistent with the Asset Purchase Agreement. Consequently,
the Court finds that the dispute involving Travers is subject to arbitration.
Finally, the Court considers the effect of dismissal on the injunctive relief it
ordered. Decision and Order, filed on February 5, 2013, ECF No. 10. During oral
argument, Vuzix’s counsel agreed that even if the complaint were dismissed, the
Court’s prior Decision and Order directing Vuzix Corporation to:
[P]reserve all electronically stored information contained on its email
server, including halting the routine destruction or overwriting of any log
files, including transaction, client access, and mailbox audit logs;
database files; or similar files maintained on the email server or any
separate disk containing any such files from the email server…
[P]reserve all archive, backup, or disaster recovery copies of its email
server created from June 15, 2012, to the present date…[and]
[P]reserve all communications between Vuzix Corporation and any
military, defense, security, commercial, or industrial organizations…
ECF No. 10 at 2, would remain in effect.
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CONCLUSION
Accordingly, Defendants’ motion to dismiss the complaint in its entirety, ECF No.
13, is granted. The Clerk of the Court is directed to close the case.
IT IS SO ORDERED.
Dated: May 8, 2013
Rochester, New York
ENTER:
/s/ Charles J. Siragusa
CHARLES J. SIRAGUSA
United States District Judge
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