United States of America et al v. Miraca Life Sciences, Inc.

Filing 118

ORDER denying 113 Motion to Compel and denying 113 Motion to Stay. IT IS ORDERED that defendant's motion to stay this action and compel arbitration is denied. Signed by Senior Judge Bernard A. Friedman on 2/22/2021. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(bs)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
UNITED STATES OF AMERICA ex rel.
PAUL DORSA,
Plaintiff,
vs.

Civil Action No. 3:13-CV-01025
HON. BERNARD A. FRIEDMAN

MIRACA LIFE SCIENCES, INC.,
Defendant.
__________________________________/
OPINION AND ORDER DENYING DEFENDANT’S
MOTION TO STAY THIS ACTION AND TO COMPEL ARBITRATION
This matter is presently before the Court on defendant’s motion to stay the
proceedings and to compel arbitration [ECF 113]. Plaintiff has responded and defendant has replied.
Pursuant to Fed. R. Civ. P. 78(b), the Court shall decide this motion without a hearing.
The court of appeals recently summarized the gist of this case, and the relevant
procedural history, as follows:
Paul Dorsa filed suit under the False Claims Act against Miraca Life
Sciences, Inc., alleging unlawful retaliation. Miraca sought to dismiss
the retaliation claim because Dorsa—a former Miraca executive—had
agreed to binding arbitration as a provision of his employment
agreement with the company. The district court denied Miraca's
motion to dismiss because it found that the arbitration clause did not
cover Dorsa's retaliation claim. Miraca appeals the district court's
order and Dorsa seeks to dismiss the appeal. Because the district
court's order was not a final order, and because the narrow provision
of the Federal Arbitration Act that authorizes immediate appeals of
certain interlocutory orders does not apply here, the court lacks
jurisdiction.
Dorsa was working as an executive of Miraca when he learned of a
purported scheme to defraud the government. On September 20,
2013, Dorsa filed a qui tam action under seal against Miraca, alleging

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two counts of violations of the False Claims Act (“FCA”), payment
by mistake of fact, and unjust enrichment. Dorsa was fired on
September 24, 2013, and his first amended complaint, filed under seal
in November 2013, alleged an additional claim for retaliation under
the FCA pursuant to *887 31 U.S.C. § 3730(h); so did his second
amended complaint, which was filed under seal in March 2017. The
United States intervened as a party in November 2018; the district
court partially unsealed the case in January 2019; and Dorsa and the
government dismissed the qui tam claims in May 2019.
Miraca then moved to dismiss the remaining retaliation claim “under
Federal Rules of Civil Procedure 12(b)(1), (3), and (6), and the
Federal Arbitration Act, 9 U.S.C. § 1 et seq.” Miraca argued that
Dorsa had failed to state a cause of action through the retaliation
claim because Dorsa had “agreed to resolve all claims ... arising out
of his employment through binding arbitration.” Miraca also argued
in the alternative that, because of the arbitration agreement, the
district court did not have subject matter jurisdiction over the claim,
and the suit had been brought in an improper venue.
The district court denied the motion to dismiss. The employment
agreement's arbitration clause requires that,
in the event of any dispute, claim or disagreement
arising out of or in connection with this Agreement ...
the parties shall first submit the dispute, claim or
disagreement to non-binding mediation [and if that is
unsuccessful,] ... then either party may submit the
dispute, claim or disagreement to binding arbitration.
The district court held that the arbitration clause did not cover the
FCA retaliation claim because “an FCA retaliation claim does not
arise from, or have any connection with, an employment agreement,
or any provision thereof, even if it may, as in the present case, have
a connection with plaintiff's employment relationship.” Miraca
subsequently filed a notice of appeal stating that it was appealing “as
a matter of right pursuant to 9 U.S.C. § 16 ... the Opinion and Order
denying [its] Motion to Dismiss[,] ... which declined to require
Plaintiff to pursue his retaliation claim in arbitration.”
Dorsa filed a motion to dismiss the appeal for lack of jurisdiction,
arguing that neither 28 U.S.C. § 1291 nor 9 U.S.C. § 16, a provision
of the Federal Arbitration Act (“FAA”), “suppl[ies] jurisdiction here
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because Miraca filed a Rule 12(b)(6) Motion to Dismiss and never
asked the District Court for a stay or an order compelling arbitration.”
A three-judge panel of this court issued an order noting that “[t]he
denial of Miraca's motion to dismiss is not a final order,” but
otherwise referring the motion to dismiss the appeal to the merits
panel.
United States ex rel. Dorsa v. Miraca Life Scis., Inc., 983 F.3d 885, 886-87 (6th Cir. 2020). The
court of appeals dismissed the appeal for lack of jurisdiction because defendant sought dismissal of
the action, rather than a stay of proceedings while arbitration proceeded or an order compelling
arbitration. Id. at 887-89.
On cue, defendant has now filed a motion “to stay this action and compel arbitration.”
Defendant makes the same argument as before, albeit with a different request for relief. Defendant
again maintains that plaintiff’s retaliation claim is covered by the arbitration clause in his
employment agreement. Instead of seeking dismissal of plaintiff’s complaint, defendant now asks
that the Court “stay this action pursuant to Section 3 of the Federal Arbitration Act (“FAA”) and
compel arbitration pursuant to Section 4 of the FAA. 9 U.S.C. §§ 3, 4.” Def.’s Mem. at 1 (ECF 114,
PageID.1002). Plaintiff opposes the motion for the same reason as before, namely, that the
arbitration clause does not apply to his retaliation claim because this claim has nothing to do with
his employment agreement, even if it is related, in a broad sense, to his employment relationship
with defendant.
The Court shall deny defendant’s motion for same reasons as it indicated previously.
As the Court explained in denying defendant’s motion to dismiss,
[d]efendant points to ¶ 5.10 of the parties’ Employment Agreement,
which states, in relevant part:
Dispute Resolution. Except as provided below, in the
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event of any dispute, claim or disagreement arising
out of or in connection with this Agreement,
including, without limitation, the negotiation,
execution, interpretation, performance or
non-performance of this Agreement, the parties shall
first submit the dispute, claim or disagreement to
non-binding mediation [and if that is unsuccessful] .
. . then either party may submit the dispute, claim or
disagreement to binding arbitration administered by
the AAA in accordance with the provisions of its
Employment Arbitration Rules (the “Rules”) and,
except as otherwise provided in this Agreement, such
arbitration shall be the sole means of dispute
resolution.
Plaintiff acknowledges that he signed this agreement, but he argues
that it does not apply to his FCA retaliation claim. While the parties’
briefs discuss various issues relating to the arbitrability of plaintiff’s
remaining claim, the straightforward answer is provided by the Sixth
Circuit’s decision in U.S. ex rel. Paige v. BAES vs. Tech. Sols. &
Servs., Inc., 566 F. App’x 500 (6th Cir. 2014).
*

*

*

The arbitration clause in the present case is slightly broader than those
at issue in Paige. In Paige, the clause covered disputes “arising from
this Agreement” and those “which arise[]under the terms of this
Agreement,” while the clause in the present case covers disputes
“arising out of or in connection with this Agreement, including . . .
the negotiation, execution, interpretation, performance or
non-performance of this Agreement.” Nonetheless, in both cases the
clause fails to cover FCA retaliation claims because such claims have
nothing to do with the employment agreements themselves. Rather,
the FCA’s anti-retaliation provision applies to all employees,
regardless of whether they are working pursuant to an employment
agreement, as well as to contractors and agents. That is to say, an
FCA retaliation claim does not arise from, or have any connection
with, an employment agreement, or any provision thereof, even if it
may, as in the present case, have a connection with plaintiff’s
employment relationship, as it was his status as an employee that
allowed him to learn of defendant’s alleged violations of the FCA.
Further, as in Paige, “the Employment Agreement nowhere refers to
the FCA, retaliation or statutory claims,” Paige, 566 F. App’x at 504,
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a fact the Sixth Circuit noted in further support of its conclusion that
the arbitration clause did not cover the FCA retaliation claims in that
case. Defendant’s argument might well have prevailed if the
arbitration clause were worded more broadly to encompass “any
dispute between us” or “any dispute having any connection with our
employment relationship.” But it is not for the Court to rewrite such
clauses. Rather, the Court enforces them as written by the parties
themselves, and the arbitration clause in the present case, which
covers only disputes arising from or connected with the Employment
Agreement, plainly does not cover plaintiff’s FCA retaliation claim.
Op. & Order Denying Def.’s Mot. to Dismiss at 2, 6-7 (footnote omitted) (ECF 103, PageID.867,
871-72).
The Court stands by this ruling and denies the instant motion for the same reasons.
Plaintiff’s retaliation claim is not a claim the parties agreed to arbitrate. They agreed to mediate, and
then arbitrate, “any dispute, claim or disagreement arising out of or in connection with this
Agreement.” Plaintiff’s retaliation claim does not “aris[e] out of or in connection with” the parties’
Employment Agreement because the claim has nothing to do with the parties’ agreement. Rather,
plaintiff claims that defendant discharged him in retaliation for filing an FCA claim. The parties’
Employment Agreement is not implicated.
This alone settles the issue of whether plaintiff’s claim is subject to the parties’
arbitration agreement. Any lingering doubt is eliminated by the “carve out” sentence in the
agreement’s Dispute Resolution section, which states:
Notwithstanding anything in this Section 5.10 to the contrary, each
party shall be entitled to seek injunctive or other equitable relief in
any court of competent jurisdiction without first submitting the matter
to mediation or arbitration in accordance with the provisions of this
Section 5.10, even if a similar or related matter has already been
referred to mediation or arbitration in accordance with the terms of
this Section 5.10.

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Def.’s Mem. Ex. 1 (ECF 114-1, PageID.1026). Plaintiff seeks equitable relief (front and back pay)
to remedy his retaliation claim. See Second Am. Compl. at 45-46 (ECF 59, PageID.346-47). Even
if this claim were subject to the mediation/arbitration provision of the parties’ Employment
Agreement, they expressly agreed that either party could seek injunctive or equitable relief without
first submitting the matter to these alternative dispute resolution procedures. The arbitration
agreement simply does not apply to plaintiff’s retaliation claim.
The Court also rejects defendant’s argument that the issue of arbitrability itself should
be arbitrated. Defendant waived this argument by not presenting it in its motion to dismiss. In that
motion, defendant sought dismissal of the complaint and argued that the Court should determine the
arbitrability of plaintiff’s claim. It is too late now for defendant to change its tack and argue instead
that an arbitrator must make this determination and that the Court, in fact, lacks authority to do so.
See Forby v. One Techs., L.P., 909 F.3d 780 (5th Cir. 2018) (defendant’s right to compel arbitration
deemed waived where defendant unsuccessfully sought dismissal, caused plaintiff significant delay
and litigation expense, and then sought to compel arbitration); In re Mirant Corp., 613 F.3d 584 (5th
Cir. 2010) (same).
Even if defendant had not waived this argument, it fails on the merits. Defendant
relies on the Sixth Circuit’s recent decision in Blanton v. Domino's Pizza Franchising LLC, 962 F.3d
842, 846 (6th Cir. 2020), for its statement that if an arbitration clause indicates that arbitration will
proceed in accordance with the rules of the American Arbitration Association (“AAA”), this
“provides ‘clear and unmistakable’ evidence that the parties agreed to arbitrate ‘arbitrability.’” But
the arbitration agreement in the present case is distinguishable from those in Blanton because here
the parties specifically exempted requests for “injunctive or equitable relief” from the clause
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requiring arbitration in accordance with AAA rules.1 In Blanton, the court of appeals noted that
“some courts have read similar provisions more narrowly when an arbitration agreement carves out
certain claims from the very provision that incorporates the AAA Rules,” 962 F.3d at 847, citing
Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019), as an example.
The arbitration agreement in the present case bears a much closer resemblance to the
one in Henry Schein than to either of the agreements at issue in Blanton. In Henry Schein, the
critical clause stated, “[a]ny dispute arising under or related to this Agreement (except for actions
seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual
property of Pelton & Crane), shall be resolved by binding arbitration in accordance with the
arbitration rules of the American Arbitration Association.” 935 F.3d at 277. Interpreting this clause,
the Fifth Circuit stated:
We cannot re-write the words of the contract. The most natural
reading of the arbitration clause at issue here states that any dispute,
except actions seeking injunctive relief, shall be resolved in
arbitration in accordance with the AAA rules. The plain language
incorporates the AAA rules—and therefore delegates
arbitrability—for all disputes except those under the carve-out. Given
that carve-out, we cannot say that the Dealer Agreement evinces a
“clear and unmistakable” intent to delegate arbitrability. . . . The
1

Two similar arbitration agreements were at issue in Blanton, one signed by plaintiff
Harley Blanton and another signed by plaintiff Derek Piersing. Blanton’s agreement required the
arbitration of all “covered claims” (defined in section II.A.), but did not apply to “claims
excluded” (defined in section II.B.). Section III of the agreement stated that “any arbitration
pursuant to the Arbitration Agreement shall be initiated with and conducted by the American
Arbitration Association (‘AAA’) . . . in accordance with the Employment Arbitration Rules.”
Blanton v. Domino’s Pizza Franchising LLC, No. 18-cv-13207 (E.D. Mich.) (ECF 61-3,
PageID.974-76). Likewise, Piersing’s agreement required arbitration of all covered claims,
which were identified in section 2. “Claims not covered” were identified in section 3. Section 4
of the agreement stated that “[t]he American Arbitration Association (‘AAA’) will administer the
arbitration and the arbitration will be conducted in accordance with then-current AAA National
Rules for the Resolution of Employment Disputes (‘AAA Rule’).” Id. ECF 61-4, PageID.982).
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parties could have unambiguously delegated this question, but they
did not, and we are not empowered to re-write their agreement.
935 F.3d at 281-82. Because plaintiff sought damages and injunctive relief, see id. at 277, the court
of appeals concluded that the parties had not agreed to arbitrate the arbitrability of plaintiff’s claim.
Just as in Henry Shein, the parties in the present case drafted their arbitration
agreement to specifically exempt certain disputes – namely, those in which a party seeks injunctive
or equitable relief – from arbitration in accordance with AAA rules. The agreement requires
arbitration “[e]xcept as provided below . . . [to be] administered by the [AAA],” and later in the same
paragraph the exception is plainly described as actions in which either party seeks injunctive or
equitable relief. This wording of the parties’ agreement aligns this case with Henry Shein and
distinguishes it from Blanton.
The Supreme Court has stated that “[c]ourts should not assume that the parties agreed
to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so,” First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (alterations omitted), and that
“[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 Techs., Inc. v. Commc’ns
Workers of Am., 475 U.S. 643, 649 (1986). In the present case, the Court concludes that there is no
“clear and unmistakable evidence” that the parties agreed to arbitrate the issue of whether a claim
seeking injunctive or equitable relief is arbitrable. To the contrary, the parties specifically exempted
such claims from arbitration. Therefore, this issue is for the Court to decide. And for the reasons
stated above, the Court finds plaintiff’s FCA retaliation claim to be non-arbitrable under the parties’
agreement. Accordingly,

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IT IS ORDERED that defendant’s motion to stay this action and compel arbitration is denied.

s/Bernard A. Friedman
BERNARD A. FRIEDMAN
SENIOR UNITED STATES DISTRICT JUDGE
SITTING BY SPECIAL DESIGNATION
Dated: February 22, 2021
Detroit, Michigan

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