NOWAK v. PENNSYLVANIA PROFESSIONAL SOCCER, LLC et al

Filing 11

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MARY A. MCLAUGHLIN ON 9/26/12. 9/26/12 ENTERED AND COPIES E-MAILED.(kw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
PIOTR NOWAK

:
:
v.
:
:
PENNSYLVANIA PROFESSIONAL
:
SOCCER, LLC and KEYSTONE
:
SPORTS AND ENTERTAINMENT, LLC :

CIVIL ACTION

NO. 12-4165

MEMORANDUM
McLaughlin, J.

September 26, 2012

This case arises out of an employment contract (the
“Agreement”) entered into on June 1, 2009, between the plaintiff,
Piotr Nowak, and Pennsylvania Professional Soccer, LLC (the
“Club”).

The Agreement permitted the Club to terminate the

plaintiff’s employment with written notice upon the occurrence of
certain for-cause events.

On June 13, 2012, the Club invoked its

right to terminate Nowak for cause and issued written notice of
its intent to do so.
The plaintiff filed this suit against the Club and Keystone
Sports and Entertainment LLC, the owner of the Club,
(collectively, “Defendants”) seeking a declaratory judgment that
the defendants failed to satisfy the conditions precedent to
terminate his employment for cause under the Agreement.
The defendant moves to dismiss on the grounds that the
Agreement has an enforceable arbitration clause.

The Court will

grant the defendant’s motion, compel arbitration, and stay the

case pending arbitration.

I.

Facts
The parties agree that Article XIII of the Agreement

contains the following arbitration clause: “Any controversy or
claim arising out of or relating to this Agreement or the breach
hereof, including, without limitation, any claims for wrongful
termination or employment discrimination or disputes regarding
Manager’s right to Severance Payments hereunder, shall be settled
by arbitration in accordance with the rules of the American
Arbitration Association and under the laws of the State of
Pennsylvania (without giving effects to the choice or conflict of
law principles thereof); provided, however, that nothing herein
shall prevent either party from seeking equitable relief from a
court of competent jurisdiction.”

II.

Analysis

A.

The Arbitration Clause Covers the Instant Dispute

Pennsylvania law is clear that when “a party to a civil
action seeks to compel arbitration, the court must employ a twopart test to determine if arbitration is required.”

Apollo

Metals, Ltd. v. Electroplating Tech. Ltd., No. 06-5245, 2009 U.S.
Dist. LEXIS 109382, at *9, (E.D. Pa. Nov. 23, 2009) (citing

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Keystone Technology Group, Inc. v. Kerr Group, Inc., 824 A.2d
1223, 1227 (Pa. Super. Ct. 2003)).

First, it must be determined

whether a valid agreement to arbitrate exists, and second, if
such an agreement does exist, it must be determined if the
dispute involved is within the scope of the arbitration
provision.

Id.

Here, there is no dispute between the parties that the
Article XIII arbitration clause exists in the Agreement, but the
parties disagree about whether the instant dispute falls within
the scope of the arbitration clause.
The Supreme Court has instructed that “any doubts concerning
the scope of arbitrable issues should be resolved in favor of
arbitration.”

Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 24-25 (1983).
Here, the language of Article XIII states that disputes
“arising out of or related to the Agreement” including those
related to “wrongful termination” and “severance pay” shall be
settled in arbitration.

That language speaks to precisely the

type of dispute at issue in the instant case so the only
remaining issue to consider is the arguments over whether the
plaintiff’s declaration judgment action falls under the
arbitration clause’s exception for equitable relief.

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B.

The Plaintiff’s Declaratory Judgment Action Does Not
Fall Under the Exception for Equitable Relief

The law in the Third Circuit is that whether a claim for
declaratory judgment is equitable or legal in nature depends on
what kind of suit the claim would have been if no declaratory
judgment remedy existed.

See AstenJohnson, Inc. v. Columbia Cas.

Co., 562 F.3d 213, 223-224 (3d Cir. 2009).

In AstenJohnson, the

Third Circuit found that a declaratory judgment claim based on a
breach of contract was not equitable in nature.

Id. at 224.

Here, as the plaintiff concedes, if there was no declaratory
judgment remedy, the plaintiff would have brought a claim for
breach of contract, which is a claim that sounds in law, not
equity.

Accordingly, the Court finds that the plaintiff’s

declaratory judgment action does not fall under the exception to
the arbitration clause for equitable relief.1

C.

The Case Should be Stayed Pending Arbitration

Although the defendant requests that the Court dismiss the
case, Third Circuit case law reveals a preference to stay cases
when enforcing arbitration clauses.

Cf Lloyd v. Hovensa, 369

F.3d 263, 269 (3d Cir. 2004) ( “Accordingly, we hold that the

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Because the Court decides that the arbitration clause
applies even assuming the validity of the plaintiff’s declaratory
judgment action, the Court does not address defendant’s arguments
that the plaintiff’s claims do not fall within the scope of the
Declaratory Judgment Act.
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District Court was obligated under 9 U.S.C. § 3 to grant the stay
once it decided to order arbitration.”).
In Lloyd, the Third Circuit articulated three rationales for
overturning the District Court’s decision to dismiss rather than
stay the action.

See id. at 269-271.

The first reason, that the

text of the Federal Arbitration Act requires that result when a
party moves for a stay, is not applicable here because the motion
requests dismissal rather than a stay.

However, the other two

rationales, namely that the Court continues to play a role in
adjudicating disputes in the facilitation of arbitration and that
a stay, unlike a dismissal, does not create an appealable issue
that might further delay an actual arbitration, both apply to
this case.
Accordingly, the Court will enforce the arbitration clause
and place a stay in this case pending arbitration.

An appropriate order follows.

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