Sixel, LLC v. Penning, III et al
OPINION AND ORDER: The Petition to Compel Arbitration 28 is GRANTED. Further, the parties' Stipulated Motion for Extension of Discovery and Pretrial Deadlines 60 is GRANTED. Plaintiff's responses to the pending Motions to Dis miss 56 , 57 , and 58 as well as plaintiff's response to Defendant Gregory's Counter Claim 59 shall be due 14 days following this order. Initial disclosures as well as discovery responses to all pending requests to all parties shall be due 21 days from the date of this order. The parties may submit further proposed scheduling orders as needed. Signed on 1/24/2019 by Judge Ann L. Aiken. (ck)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
SIXEL, LLC, an Oregon limited liability
JOHN A. PENNING III, MICHAEL LUM,
MICHAEL W. MOONEY, KRISTOPHER
NICHTER, ROBERT J. HAYES, MELISSA A.
GALVAN PETERSON, ELIZABETH M.
FLORES, LAUREN F. MISHLER, JEREMIAH
GERALD, ILONA CAMBRON, MARTIN A.
KAMMERMAN, THERESA F. (TERRI)
CAMPBELL, ERICKA L. GREGORY,
NEPTUNE A. LYNCH XI, KATHERINE
JONES and KYLE ELLIOTT, individuals,
VOLAIRE AVIATION CONSULTING, INC., an
Indiana corporation, UMB, INC., a Delaware
c01poration, AIRPORT STRATEGY AND
MARKETING, LIMITED, a United Kingdom
corporate entity, doing business in Oregon as UMB, LLC,
Page 1 - OPINION AND ORDER
Case No. 6:17-cv-01846-AA
OPINION AND ORDER
AIKEN, District Judge:
Plaintiff, Sixel, LLC, brings this action against a number of former employees, alleging
that the employees misappropriated trade secrets after termination of their employment in violation
of the Defend Trade Secrets Act ("DTSA ") (18 U.S.C. § 1836). Plaintiff also brings a number of
related claims, including Breach of Confidentiality Agreement, Breach of Covenant Not to
Compete, Breach of the Duty of Good Faith and Fair Dealing, Breach of the Duty of Loyalty,
Breach of Fiduciary Duty and Intentional Interference with Prospective Economic Advantage.
Defendants, John A. Penning III, Robert J. Hayes, Michael Lum, Michael Mooney, Kristopher
Nichter, Melissa Galvan Peterson, Elizabeth Flores, and Lauren Mishler ("Petitioners"), have filed
a Petition to Compel Arbitration (doc. 28) pursuant to the te1ms of their Employee Handbook and
Employee Contract (the "Employment Agreement") with plaintiff. For the reasons set forth herein,
the petition is granted.
Plaintiff is the successor to Sixel Consulting Group, Inc. ("SCG") which employed
defendants. SCG, located in Eugene, Oregon, was established by Mark Sixel in 2001, and en gaged
in consulting, marketing, and air-service development specializing in using proprietary technology
to help determine the most profitable airline routes for clients to pursue and how to optimally
allocate their resources.
As a condition of employment, petitioners were required signed the Employment
Agreement, which included various provisions such as a covenant not to compete, as well as
confidentiality and non-solicitation provisions. The Employment Agreement also included a
provision whereby the parties agreed to settle disputes through an arbitration process. Crucially, .
for the present motion, Section 7 of the Employment Agreement for each of the petitions contains
Page 2 - OPINION AND ORDER
a subsection dealing with "Arbitration and Equitable Relief." Specifically, Section 7-lO(a) in each
of the Employment Agreements provides:
"Except as provided in Section 7-1 0(b) below, [Petitioner] agrees that any dispute,
claim or controversy concerning [Petitioner'sJ employment or the termination of
[Petitioner's} employment or any dispute, claim or controversy arising out of, or
relating to, any interpretation, construction, performance or breach of this
Agreement, shall be settled by arbitration to be held in Eugene, Oregon, in
accordance with the rules then in effect of the American Arbitration Association.
The arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction. The Company and [Petitioner] shall each pay one-half of the
costs and expenses of such arbitration, and each party shall separately pay that
party's counsel fees and expenses."
( emphasis added).
In late 2016, plaintiff claimed to experience financial difficulties, which resulted in several
employee layoffs and voluntary resignations. Following this period, petitioners established an
aviation consulting business. Plaintiff now alleges that defendants and others conspired in starting
these companies to improperly take several of plaintiff's clients and make use of plaintiff's
protected intellectual property. Plaintiff pursued these allegations by filing a complaint in the
Circuit Court of the State of Oregon. Defendants then removed the case to this Court pursuant to
28 U.S.C. §§ 1331, 1367, 1441 , 1446, and Fed R. Civ. P. 81(c).
Petitioners now seek to compel arbitration under the terms of the Employment Agreement
mentioned above. 1
The Comt recognizes that disposition of this petition has fallen outside the typical under
advisement period. The Court notes that due to the nature of the filing, normal procedures in
CM/ECF did not pick up the document for motion tracking and reporting purposes. The Court
apologizes for any inconvenience. This issue has been resolved moving forward.
Page 3 - OPINION AND ORDER
Under the Federal Arbitration Act ("FAA"), at'bitration agreements are "valid, irrevocable,
and enforceable, save upon such grounds as exist at law or equity for the revocation of any
contract." 9 U.S.C. § 2. Any doubts concerning the scope of arbitrable issues should be resolved
in favor of arbitration. Moses H Cone M emorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 2425 (1983). An order to arbitrate should not be denied unless it may be said with positive assurance
that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.
United Steelworkers ofAmerica v. Wan·ior & GulfNavigation Co., 363 U.S. 574, 582-583 (1960).
When considering arbitrability, the court determines (1) whether a valid agreement to arbitrate
exists, and if it does, (2) whether the agreement encompasses the dispute at issue. Cox v. Ocean
View Hotel Co1p. , 533 F.3d 1114, 1119 (9th Cir. 2008).
Pursuant the FAA, the interpretation of an arbitration agreement is generally a matter of
state law. Stolt-Nielsen S.A. v. Animal Feeds Int'[ C01p., 559 U.S. 662, 681, (2010). Oregon, like
the federal courts, recognizes a presumption in favor of arbitrability. See Livingston v. Metro.
Pediatrics, LLC, 234 Or. App. 137, 147 (2010), citing to United Steelworkers of America v.
Warrior & GulfNavigation Co., 363 U.S. at 582.
Here, the parties agree that a valid arbitration agreement exists; the specific language is
contained in the Employment Agreement. Because there is a valid agreement, the only remaining
question is whether the agreement encompasses the disputes at issue-including whether the
parties agreed to arbitrate arbitrability. Petitioners argue that the language contained in the
Employment Contract is plain and, thus, any claims arising out of their employment or termination
of employment must settled in arbitration pursuant to Section 7-10(a) of the Employment Contract.
Page 4 - OPINION AND ORDER
Plaintiff contends that the present claims fall outside of the scope of the arbitration
agreement. To support this contention, plaintiff points to a carve-out provision (Section 7-1 0(b))2
in the Employment Agreement, which generally preserves plaintiff's right to seek injunctive relief
from a court under certain circumstances (e.g., breach of confidentiality agreement). Plaintiff
argues that the carve-out provision protects not only its ability to pursue injunctive remedies in
court- but also the underlying causes of action.
To detelmine whether the parties intended their arbitration agreement to include the present
controversy, courts examine the text and context of the provision. Livingston v. Metro. Pediatrics,
LLC, 234 Or. App. at 147, citing Yogman v. Parrott, 325 Or. 358, 361 (1997). If a provision is
unambiguous, then the analysis is complete, and the court gives effect to the parties' intentions.
In reviewing Section 7-1 0(b), the Court holds the that the plain language of the provision
does not bar arbitration for the present claims. The clause is explicitly couched, even in its title,
in te1ms of remedies, not any specific cause of action.
Moreover, this interpretation of the Employment Agreement does not nullify plaintiff's
ability to seeking the injunctive relief described in Section 7-I0(b), while also pursuing the
underlying claims through arbitration proceedings. Indeed, the right to seek injunctive relief under
§§ 7-1 0(b), titled "Equitable Remedies" provides, in pertinent part:
[Petitioner] agrees that it would be impossible or inadequate to measure and
calculate the Company's damages from any breach of the covenants set forth in
Section 7, Subsections 2, 3, 5, 7 and, 9 herein. Accordingly, [Petitioner] agrees that
if [Petitioner] breaches any of such Sections, or Subsections, the Company will
have available, in addition to any other right or remedy available, the right to obtain
an injunction from a court of competent jurisdiction restraining such breach or
threatened breach and to specific perfo1mance of any such provision of this
Agreement. [Petitioner] further agrees that no bond or other security shall be
required in obtaining such equitable relief and [Petitioner] hereby consents to the
issuance of such injunction and to the ordering of specific performance.
Page 5 - OPINION AND ORDER
these circumstances is protected both by Oregon statute and the plain language in the Employment
Agreement. See ORS 36.470(1), (3)(b) (stating "[i]t is not incompatible with an arbitration
agreement for a paity to request from a court, before or during arbitral proceedings, an interim
measure ... [including a] preliminary injunction granted in order to protect trade secrets ... ").
Plaintiff also contends that its statutory claims as well as those based on torts principles are
not arbitrable under the Employment Agreement, because that agreement is limited to claims
related to "employment or the termination of [Petitioner' s] employment or any dispute, claim or
controversy arising out of, or relating to, any interpretation, construction, perfo1mance or breach
of this Agreement." Employment Agreement§§ 7-lO(a). Specifically, plaintiff argues that its
claims pursuant to the DTSA and Oregon's' Unif01m Trade Secrets Act, as well as its tort claims
for interference with business relationships and breach of duties owed from the employment
relationships do not arise from the terms of the Employment Agreement.
Petitioners respond that any questions as to the arbitrability of certain claims should be left
to the arbitrator pursuant to the language of the Employment Agreement. Moreover, they respond
that even if this Court does examine whether certain claims are arbitrable, it should hold that all
disputes are covered by the intent of the parties and the broad language of the Employment
Agreement. Each of the petitioners have submitted declarations, attesting that they intended all
disputes to be subject to arbitration. ·
As to the issue of whether the parties agreed to subject the arbitrability of certain claims to
arbitration, the Court finds it highly significant that in Section 7-lO(a) of the Employment
Agreement the parties included that disputes "shall be settled by arbitration [...], in accordance
with the rules then in effect of the American Arbitration Association." Notably, the Ninth Circuit
has joined "every circuit to consider the issue" when it held that "incorporation of the AAA rules
Page 6 - OPINION AND ORDER
(in the agreement) constitutes clear and unmistakable evidence that contracting parties agreed to
arbitrate arbitrability." Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). To reiterate,
Section 7-lO(a) of the employment contract clearly provides that disputes will "be settled by
arbitration ... in accordance with the rules then in effect of the American Arbitration Association."
Thus, under Brennan, the parties' incorporation of the AAA rules shows a clear and unmistakable
intent that an arbitrator determine the question of arbitrability.
Further, even setting aside the parties' explicit intent to arbitrate arbitrability, plaintiff's
claims appear to fall squarely within the scope of the arbitration clause, thereby triggering
While defendant relies on out district court orders to suggest that
intellectual property claims should not be subject to arbitration under the present Employment
Agreement, plaintiffs con-ectly note that Ninth Circuit and Oregon state case law broadly favor
arbitration even when claims arise in toti or from statute. See Simula, Inc. v. Autoliv, Inc., 175
F.3d 716, 725 (9th Cir. 1999), citing Mitsubishi Motors, 473 U.S. 614, 627, 105 S. Ct. 3346;
Livingston v. Metro. Pediatrics, LLC, 234 Or. App. at 148 (2010). Similarly, in this case the broad
language of Section 7-l0(a) explains that "any dispute, claim or controversy concerning
[petitioners] employment or termination of  employment" or "any dispute claim or controversy
arising out of any interpretation, construction, pe1formance or breach of the [employment
agreement]." All of plaintiffs' claims against petitioners arise from the same set of facts, namely
that petitions during the course and at the termination of their employment misappropriated
protected information and then tortuously made use of this information in setting up rival
businesses. These claims touch on the broad language of the Employment agreement.
Given the FAA and Oregon state law's emphatic preference for enforcing arbitration
agreements, as well as the broad language of the arbitration agreement and specific claims at issue,
Page 7 - OPINION AND ORDER
the Court finds that compelling arbitration in the present case is not inconsistent with the plain
language of the Employment Agreement. Thus, the petition to compel should be granted.
For the reasons stated above, the Petition to Compel Arbitration (doc. 28) is GRANTED.
Further, the parties Stipulated Motion for Extension of Discovery and Pretrial Deadlines (doc. 60)
is GRANTED. Plaintiffs responses to the pending Motions to Dismiss (docs. 56, 57, and 58) as
well as plaintiffs' response to Defendant Gregory's Counter Claim (doc. 59) shall be due 14 days
following this order. Initial disclosures as well as discovery responses to all pending requests to
all pai1ies shall be due 21 days from the date ofthis order. The parties may submit f1.111her proposed
scheduling orders as needed.
IT IS SO ORDERED.
day of January 2019.
United States District Judge
Page 8 - OPINION AND ORDER
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?