Zuber v. Vandalia Research, Inc. et al

Filing 16

MEMORANDUM OPINION AND ORDER denying 7 MOTION to Dismiss; denying 7 MOTION to Compel; terminating 7 MOTION to Stay. Signed by Judge Robert C. Chambers on 10/16/2012. (cc: attys; any unrepresented party) (dcm)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION

MOHAMMED ZUBER,
Plaintiff,
v.

CIVIL ACTION NO. 3:12-0942

VANDALIA RESEARCH, INC. and
DEREK GREGG,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants Vandalia Research, Inc. and Derek Gregg‟s
Motion to Dismiss this Proceeding and Compel Arbitration or, in the Alternative, to Stay this
Proceeding Pending Arbitration. (ECF No. 7). For the Following reasons, the Court DENIES the
motion.

On April 2, 2012, Plaintiff Mohammed Zuber filed his Complaint in this Court
based upon diversity of jurisdiction. In his Complaint, Plaintiff asserts he was hired by Vandalia
Research, Inc. (VRI) in October of 2010, to serve as the Principal Scientist at the company.
Plaintiff states he was supervised by Defendant Gregg, who is the Chief Executive Officer of the
VRI. During the summer of 2011, Plaintiff asserts a subordinate harassed him because of his
race, color, age, and national origin. Plaintiff states he complained to Defendant Gregg on three
occasions about the subordinate‟s actions, but Defendant Gregg failed to conduct any investigation
or take corrective action. The day following his third complaint, Plaintiff contends he was
abruptly terminated for alleged performance issues.

However, Plaintiff contends that his

termination was pretextual and in violation of the West Virginia Human Rights Act. He also
asserts a claim for unlawful retaliation.

Defendants now have filed a motion to compel arbitration and either dismiss or stay
this case in the interim. In support of their motion, Defendants state that Plaintiff executed three
contractual agreements with VRI when he began his employment. Their agreements consist of
(1) an “Employment Agreement” (ECF No. 7-1), (2) “a Non-Competition, Non-Solicitation,
Confidentiality and Assignment Agreement” (hereinafter referred to as the Non-Compete
Agreement) (ECF No. 7-2), and (3) “Developments and Non-Disclosure Agreement” (ECF No.
7-3). Defendants insist that the arbitration provision contained in the Non-Compete Agreement is
a valid and enforceable agreement and, in light of a supersession clause also contained in the
Non-Compete Agreement, the arbitration provision should be read to apply to Plaintiff‟s
Employment Agreement. Plaintiff disagrees and argues that the arbitration provision is irrelevant
to the claims he is making in this case as his claims do not arise under, or relate to, the
Non-Compete Agreement.

At the heart of the parties‟ dispute is whether they agreed to arbitrate the claims
made by Plaintiff in this case. “[A] court may order arbitration of a particular dispute only where
the court is satisfied that the parties agreed to arbitrate that dispute.” Granite Rock Co. v. Int’l Bhd.
of Teamsters, 130 S. Ct. 2847, 2856 (2010) (emphasis original; citations omitted). In order to
determine whether or not “such agreement exists, the court must resolve any issue that calls into
question the . . . applicability of the specific arbitration clause that a party seeks to have the court
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enforce.” Id.1 “Arbitration is strictly „a matter of consent,‟ and thus „is a way to resolve those
disputes—but only those disputes—that the parties have agreed to submit to arbitration[.]‟” Id. at
2857 (emphasis original; citations omitted).

Although there is a presumption in favor of

arbitration, this presumption does not “override[] the principle that a court may submit to
arbitration „only those disputes . . . that the parties have agreed to submit.‟” Id. at 2859 (citations
omitted).

The arbitration provision in the Non-Compete Agreement provides, in relevant
part: “Arbitration. Any and all disputes or controversies whether of law or fact of any nature
whatsoever arising from or respecting this Agreement shall be decided by arbitration . . . .”
Non-Compete Agreement, at ¶12 (emphasis added). The subject matters encompassed in the
Non-Compete Agreement include disclosures and assignments of inventions, confidentiality,
non-competition provisions, and assignment of the agreement. Although the claims Plaintiff
brought in this action are not based on any of these recitals, Defendants assert the supersession
clause contained in the Non-Compete Agreement makes the arbitration provision applicable and
supplemental to his Employment Agreement. The supersession clause provides:
Supersession. To the extent any provisions of this
Agreement are in conflict with a provision of my
Employment Agreement, or other agreement
between Company and me, such provisions as stated
herein shall supersede and replace such other
provision. To the extent any provision of this
Agreement relates generally to a like subject of a
1

The parties do not argue that the question before the Court is delegated to the arbitrator to
decide. See, e.g., Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772, 2777 (2010) (recognizing
that parties can enter into delegation provisions, in which they Aagree to arbitrate >gateway=
questions of >arbitrability=@).
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provision, or provisions, in my Employment
Contract, or other agreement between Company and
me (but not in conflict therewith), then such
provisions shall be supplemental each to the other.
Id. at ¶ 13. Defendants argue that because the Non-Compete Agreement and the Employment
Agreement both contain provisions regarding termination, the Non-Compete Agreement “relates
generally to a like subject of a provision, or provisions, in . . . [the] Employment Contract” and,
therefore, the arbitration provision in the Non-Compete Agreement should be integrated into the
Employment Agreement. Upon review, the Court disagrees that the supersession clause applies
in this case.

In comparing the Non-Compete and Employment Agreements, the Court agrees
that they both mention terminations. In the Non-Compete Agreement, paragraph 2 provides:
Character of Employment. My employment shall
be pursuant and subject to the rules and regulations
of the Company. The Company reserves the right
to terminate my employment at any time in the event
of default or nonperformance by me of any of the
provisions of this Agreement subject to the terms of
any employment agreement between the Company
and me.
Id. at ¶2 (emphasis added).

This paragraph makes it clear, however, that it covers those

terminations in which the employee defaults or does not perform in accordance with “any of the
provisions of this [Non-Compete] Agreement subject to the terms of any employment agreement
between the Company and me.” Id. In other words, the default or nonperformance must relate to
the subject matters covered by the Non-Compete Agreement, i.e., disclosures and assignments of
inventions, confidentiality, non-competition, and assignment of the agreement. If the termination
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relates to such conduct, then the terms of the Employment Agreement and the supersession clause
become relevant to the Employment Agreement.

The problem with Defendants‟ argument in this case is that Plaintiff‟s allegations
do not relate to any of those provisions. Thus, although both the Non-Compete Agreement and
the Employment Agreement discuss terminations, the two agreements do not conflict or “relate
generally” to one another with respect to claims under the West Virginia Human Rights Act or for
unlawful termination based upon reporting harassing conduct of another employee. These types
of claims are simply not covered by the Non-Compete Agreement.

Defendants ask this Court to paint a very broad stroke and apply the supersession
clause in the Non-Compete Agreement to the Employment Agreement whenever there is a
termination, regardless of whether the termination involves a matter covered by the Non-Compete
Agreement. The Court finds, however, the scope of the “relates generally” provision does not go
that far under the express language of the contracts. The Court recognizes there are provisions in
the Employment Agreement that specifically mention confidentiality and non-competition. If
either of those areas were raised in this case, then Defendants would have a compelling argument
that the two Agreements “relate generally” to one another on those subject matters and arbitration
should be enforced when such claims are brought. Nevertheless, it is not the situation in this case.

In fact, the Employment Agreement has its own jurisdictional provision which does
not require arbitration and specifically states: “The parties agree that all courts included within
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the state court system of the State of West Virginia shall have personal jurisdiction over it in all
lawsuits relating to or arising out of this Agreement and hereby waives any defense they may have
of lack of personal jurisdiction in any such lawsuits filed in these courts.” Employment Agreement,
at ¶22. Although the arbitration clause in the Non-Compete Agreement may supersede the
jurisdiction clause in the Employment Agreement when a cause of action “relates generally” to a
termination under the provisions of Non-Compete Agreement, the Court finds the supersession
clause does not apply when the termination is based upon grounds not contemplated by the
Non-Compete Agreement.

Indeed, the arbitration provision itself provides that arbitration

controls “[a]ny and all disputes or controversies whether of law or fact of any nature whatsoever
arising from or respecting this [Non-Compete] Agreement . . . .” Non-Compete Agreement, at ¶12.
Thus, the arbitration provision—which expressly applies to disputes and controversies arising
under or respecting the Non-Compete Agreement—does not conflict with the jurisdictional
provision contained in the Employment Agreement with respect to disputes and controversies not
covered by the Non-Compete Agreement. Therefore, the arbitration provision does not supersede
or replace the jurisdictional provision when, as in this case, the action is not based upon a dispute
or controversy arising under the Non-Compete Agreement. The parties simply have not agreed to
arbitrate claims which fall outside of the subject matters covered by the Non-Compete
Agreement.2 Thus, the Court DENIES Defendants‟ motion to compel arbitration in this case.

2

Defendants cite four cases in support of their supersession argument. However, the
Court finds those cases are factually distinct from the present case. See Drews Distrib., Inc. v.
Silicon Gaming, Inc., 245 F.3d 347, 350-51 (4th Cir. 2001) (finding the lawsuit “related to” a
Distributor Agreement which contained an arbitration clause); Estate of Campana v. Comerica
Bank & Trust, N.A., Civ. Action No. 1:10CV194, 2012 WL 13714, *3 (N.D. W. Va. Jan. 4, 2012)
(holding the plaintiff‟s dispute fell within the broad language of the arbitration clauses); Jefferson
Pilot Life Ins. Co. v. Griffin, No. 1:07CV0096, 2008 WL 2485598, *6 (M.D. N.C. June 16, 2008)
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The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to
counsel of record and any unrepresented parties.

ENTER:

October 16, 2012

ROBERT C. CHAMBERS
UNITED STATES DISTRICT JUDGE

(finding the arbitration clause encompassed the employment related claims); and American
Graphics Inst., Inc. v. Darling, No. Civ. A. 03-374, 2003 WL 21652246, *8 (E.D. Pa. May 22,
2003) (determining, where there was nothing incompatible with arbitration in an Employment
Agreement, the arbitration clause in the Purchase Agreement should be given effect as it was part
of the parties‟ entire agreement).
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