Henry Technologies Holdings, LLC v. Giordano, Michael
Filing
26
OPINION & ORDER denying 6 Motion to Stay this Action and Compel Arbitration. Signed by District Judge James D. Peterson on 8/5/14. (jat)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
HENRY TECHNOLOGIES HOLDINGS, LLC,
v.
Plaintiff,
OPINION & ORDER
14-cv-63-jdp
MICHAEL GIORDANO,
Defendant.
This case is a dispute about a dispute. At the bottom: the defendant in this case, Michael
Giordano, contends that he is due a bonus from his former employer, Henry Technologies, Inc.
(Henry Technologies), which is not a party here. Henry Technologies apparently does not have
the money, so Giordano has turned to the parent company, Henry Technologies Holdings, LLC
(Henry Holdings). But Giordano does not want to sue; he wants to arbitrate, as provided in his
contract with Henry Technologies. This brings us to the matter before this court: Henry
Holdings, plaintiff here, filed this lawsuit seeking a declaration that it is not bound to arbitrate
with Giordano.
Giordano has not yet answered the complaint, nor has he asserted a counterclaim for the
amounts he thinks are due. He has instead moved to stay this action and compel arbitration.
Dkt. 6. Relying on the Federal Arbitration Act, 9 U.S.C. §§ 1-16, Giordano seeks to compel
arbitration and asks the court to conclude that even though the parent company, Henry
Holdings, did not sign the employment agreement, it is nevertheless bound by the arbitration
clause signed by its subsidiary, Henry Technologies. Based on the parties’ submissions on
Giordano’s motion, it appears unlikely that Henry Holdings is bound by the arbitration
agreement. There is, however, a genuine dispute of material fact on the issue, and thus the court
is prepared to revisit the question of arbitration on a more complete record. For now, the court
will deny Giordano’s motion.
ALLEGATIONS OF FACT
The court treats the parties’ submissions on a motion to compel arbitration like a motion
for summary judgment. See Tickanen v. Harris & Harris, Ltd., 461 F. Supp. 2d 863, 866 (E.D.
Wis. 2006) (citing Par–Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n.9 (3d Cir.
1980)). Thus, the court draws the following facts from the complaint and the parties’ affidavits
in support of and in opposition to Giordano’s motion.
Henry Holdings is a Wisconsin limited liability company whose only member is
Hendricks Holding Company, Inc., a Wisconsin corporation with its principal place of business
in Beloit, Wisconsin. Henry Holdings’s subsidiaries manufacture and market products for the
refrigeration and air conditioning industries. Giordano is a citizen of New Jersey. This court has
diversity jurisdiction because the parties are completely diverse and the amount in controversy
exceeds $75,000. See Am.’s MoneyLine, Inc. v. Coleman, 360 F.3d 782, 787 (7th Cir. 2004)
(“[T]he stakes of the arbitration are the ultimate amount in controversy.”).
In 2008, Henry Technologies hired Giordano to serve as its president and CEO.
Giordano entered into an employment agreement, Dkt. 23-2, which both he and a
representative of Henry Technologies signed. The agreement established a “phantom equity
incentive” that would provide Giordano with a bonus, calculated as a percentage of any increase
in equity value that Henry Technologies experienced during his leadership. The agreement also
included several restrictive covenants, a non-assignment clause, and an arbitration clause that
directed “any controversy or claim arising out of or relating to this contract, or the breach
2
thereof, [to] be settled by arbitration administered by the American Arbitration Association
under its National Rules for the Resolution of Employment Disputes.” Id. at 10.
Although none of the members of Henry Technologies’s corporate family are parties to
this case—except Henry Holdings—a brief summary of the corporate structure is necessary to
frame the underlying dispute. When Giordano joined Henry Technologies, the company had
two wholly owned subsidiaries: Henry Technologies Limited, a Canadian company; and Henry
Technologies Limited, a company incorporated under the laws of the United Kingdom. In
addition to serving as Henry Technologies’s president and CEO, Giordano became the president
of the Canadian company and a director of the United Kingdom company. Henry Technologies
itself was a wholly owned subsidiary of Hendricks Holding Company, whose sole shareholder
was Diane Hendricks. Ms. Hendricks was also the sole member of Henry Technologies’s board
of directors and, for all practical purposes, she was Giordano’s direct supervisor throughout his
employment.
In 2009, Henry Holdings was created as a new wholly owned subsidiary of Hendricks
Holding Company as part of a corporate reorganization. Henry Holdings acquired Henry
Technologies’s stock and thus acquired control of Henry Technologies’s subsidiaries. Ms.
Hendricks was the only member of Henry Holdings’s governing Board of Managers. When
Henry Holdings was created, Giordano became its president and CEO, although he did not sign
a new employment agreement or alter his existing contract with Henry Technologies. Giordano’s
duties with respect to Henry Technologies and the subsidiaries remained unchanged after Henry
Holdings’s creation, and he continued to report to Ms. Hendricks. The one significant change
was that Henry Holdings began paying Giordano’s salary and annual bonuses instead of Henry
Technologies, although the parties dispute whether Giordano or one of the companies’ boards
made the decision to change the source of his salary. Henry Holdings shared the same offices as
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Henry Technologies and had an almost identical group of employees. During the three years
after its creation, Henry Holdings acquired two additional subsidiaries: Heldon Products
Australia Pty., Ltd.; and Shell & Tube, LLC. Giordano was responsible for the operation,
administration, and financial affairs of these companies, too.
On May 30, 2013, Hendricks Holding Company delivered a letter to Giordano
terminating his employment with Henry Technologies. The letter was signed by Hendricks
Holding Company’s president, Jeff Stentz, and it informed Giordano that although he was
technically eligible for a phantom equity bonus, the companies had performed poorly and he
would not receive any payment. On January 14, 2014, Giordano filed a demand for arbitration
with the American Arbitration Association. His demand named Henry Holdings as the only
respondent.
The parties vehemently dispute whether Henry Holdings and its subsidiaries were
successful under Giordano’s leadership. That question is likely relevant to the underlying
dispute that Giordano now seeks to arbitrate because the financial positions of the companies
will determine the amount of his phantom equity bonus. But the question is not relevant to the
matter before the court, which is whether Giordano can compel Henry Holdings to arbitrate.
Two weeks after Giordano filed his demand for arbitration, Henry Holdings filed this
suit seeking a declaratory judgment that it is not bound by the arbitration agreement that
Giordano entered into with Henry Technologies. Giordano countered with a motion to stay this
case and compel arbitration.
OPINION
Giordano moves to compel arbitration under sections 3 and 4 of the Federal Arbitration
Act. Dkt. 6. The FAA does not define a standard for a district court’s determination of a motion
4
to compel arbitration, but other courts have held that such motions “are reviewed under a
summary judgment standard.” Tickanen, 461 F. Supp. 2d at 866 (citing Par–Knit Mills, Inc., 636
F.2d at 54 n.9); see also Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). Because
Giordano is moving to compel arbitration, he bears the burden of demonstrating that the
employment agreement requires Henry Holdings to arbitrate. Fox v. Nationwide Credit, Inc., No.
09-cv-7111, 2010 WL 3420172, at *2 (N.D. Ill. Aug. 25, 2010); Vazquez v. Cent. States Joint Bd.,
547 F. Supp. 2d 833, 868 (N.D. Ill. 2008). If he fails to present sufficient evidence to support
such a conclusion, or if Henry Holdings creates a genuine dispute of material fact on the issue of
arbitrability, the court must deny the motion to compel.
Under the FAA, a court will compel arbitration if three conditions are present: (1) a
written agreement to arbitrate; (2) a dispute within the scope of the arbitration agreement; and
(3) a refusal to arbitrate. 9 U.S.C. § 4; Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682,
687 (7th Cir. 2005). There is a strong federal policy favoring arbitration and “once it is clear the
parties have a contract that provides for arbitration of some issues between them, any doubts
concerning the scope of the arbitration clause are resolved in favor of arbitration.” Miller v.
Flume, 139 F.3d 1130, 1136 (7th Cir. 1998). In this case, however, the parties do not dispute
the scope of the arbitration clause or Henry Holdings’s refusal to arbitrate. Instead, their
disagreement concerns whether Henry Holdings—a non-signatory—can be compelled to
arbitrate an alleged breach of Giordano’s employment agreement. “[W]hen, as in this instance,
it is undisputed that there is a valid arbitration agreement and the issue is whether that
agreement applies to a non-signatory . . . courts look to federal precedent applying the FAA to
determine arbitrability.” S. Ill. Beverage, Inc. v. Hansen Beverage Co., No. 07-cv-391, 2007 WL
3046273, at *10 (S.D. Ill. Oct. 15, 2007) (internal citations omitted).
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The court begins with the central premise that “arbitration is contractual by nature—‘a
party cannot be required to submit to arbitration any dispute which he has not agreed so to
submit.’” Zurich Am. Ins. Co., 417 F.3d at 687 (internal citations omitted). The parties agree that
Henry Holdings did not sign the employment agreement. The Seventh Circuit, however, has
recognized “five doctrines through which a non-signatory can be bound by arbitration
agreements entered into by others: (1) assumption; (2) agency; (3) estoppel; (4) veil piercing;
and (5) incorporation by reference.” Id. Giordano contends that the estoppel, veil piercing, and
assumption doctrines apply in this case and that any one of them is sufficient to require Henry
Holdings to arbitrate the dispute. Dkt. 8, at 19. The court concludes that the record, as it
stands, is insufficient to establish any of Giordano’s proposed theories.
A. The record does not support a theory of direct benefits estoppel.
Giordano first asserts that the court should estop Henry Holdings from using the fact
that it did not enter the employment agreement as grounds for refusing to arbitrate the parties’
dispute.
Under the theory of direct benefits estoppel, “[a] nonsignatory party is estopped from
avoiding arbitration if it knowingly seeks the benefits of the contract containing the arbitration
clause.” Zurich Am. Ins. Co., 417 F.3d at 688; see also E.I. DuPont de Nemours & Co. v. Rhone
Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 200 (3d Cir. 2001) (“[A] party may be
estopped from asserting that the lack of his signature on a written contract precludes
enforcement of the contract’s arbitration clause when he has consistently maintained that other
provisions of the same contract should be enforced to benefit him.”) (internal citations
omitted). To establish direct benefits estoppel, it is not enough to show merely that a nonsignatory is closely affiliated with a signatory or is within the same corporate family. Everett v.
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Paul Davis Restoration, Inc., No. 10-cv-634, 2012 WL 4128016, at *7 (E.D. Wis. Sept. 18,
2012), reconsideration denied, No. 10-cv-634, 2012 WL 6184993 (E.D. Wis. Dec. 11, 2012)
(citing MAG Portfolio Consultant, GMBH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 62 (2d Cir.
2001)).
Instead of mere affiliation, which might well produce indirect benefits to a non-signatory,
there must be “a direct benefit under the contract containing an arbitration clause before a reluctant
party can be forced into arbitration.” Zurich Am. Ins. Co., 417 F.3d at 688 (original emphasis)
(internal citations omitted). If a “benefit is too attenuated and indirect[, the signatory cannot]
force arbitration under an estoppel theory.” Id. Relying on Zurich, other courts have held that
“[t]he touchstone of this form of estoppel . . . is whether the non-signatory has brought suit
against the signatory premised upon the agreement that contains the arbitration clause at issue,
thus seeking the agreement’s direct benefits.” Gersten v. Intrinsic Techs., LLP, 442 F. Supp. 2d
573, 579 (N.D. Ill. 2006).
Henry Holdings has not brought any action under the employment agreement. Giordano
nevertheless identifies two benefits which he asserts give rise to estoppel. First, Giordano argues
that the employment agreement “permitted Henry Technologies’s . . . Board of Members/Board
of Directors to install Mr. Giordano as [Henry Holdings’s] President and CEO as part of his
duties.” Dkt. 8, at 21. Because Giordano actually undertook those roles, he maintains that
Henry Holdings directly benefitted from a provision of his employment agreement. Second,
Giordano argues that he was bound by the restrictive covenants in his employment agreement
which prevented him from competing with, soliciting or contacting the customers of, or inducing
employees to leave “any . . . company which Mr. Giordano serves as an officer and which is
under common control with Henry Technologies and their respective or direct subsidiaries.” Id.
at 22. Giordano suggests that he would not have had these obligations to Henry Holdings but
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for the employment agreement with Henry Technologies, and states that he has so far complied
with these restrictive covenants.
The “benefits” Giordano identifies, however, are not of the kind that typically binds a
non-signatory through a theory of direct benefits estoppel; they are too indirect. “[T]he benefit
derived from an agreement is indirect where the nonsignatory exploits the contractual relation of
parties to an agreement, but does not exploit (and thereby assume) the agreement itself.” Everett,
2012 WL 4128016, at *7 (citing Thomson–CSF v. Am. Arbitration Ass’n, 64 F.3d 773 (2d Cir.
1995)). With respect to Giordano’s appointment to positions within Henry Holdings, any
benefit the company received was indirect because it merely exploited the contractual
relationship Giordano had with Henry Technologies. When Ms. Hendricks appointed Giordano
to his position with Henry Holdings, she was able to do so because of her position as Henry
Technologies’s
director
and
because
Giordano’s
employment
agreement
with
Henry
Technologies authorized him to work for certain other companies. Giordano’s observation that
Ms. Hendricks controlled both Henry Technologies and Henry Holdings is not relevant absent
some evidence that she was acting in the latter capacity when she asked Giordano to take on the
additional responsibilities. But Giordano’s submissions to the court all but concede that this was
not the case. See Dkt. 20, at 13 (“Mr. Giordano was appointed to the position by Diane
Hendricks. She controlled Henry Technologies. She requested that he serve as the President and
CEO of Henry [Holdings]. Under the terms of the Agreement, Mr. Giordano had no choice
whether or not to accept that responsibility.”).
The same is true for the restrictive covenants Giordano identifies. Those conditions were
creatures of his employment agreement with Henry Technologies, and Henry Holdings has not
sued to enforce them or taken an active role in securing Giordano’s continued compliance with
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them. Again, any benefit that Henry Holdings has received from the restrictive covenants is
indirect and not due to the company’s own, direct efforts.
The court’s conclusion that these benefits are indirect is buttressed by other cases where
courts have found the theory of direct benefits estoppel to be inapplicable. In Zurich, for
example, the Seventh Circuit held that a subsidiary did not receive a direct benefit from a
contract its parent company signed. 417 F.3d at 688. The parent company signed a deductible
agreement with an insurance company, and then both the parent and the subsidiary signed
separate insurance contracts with the insurance company. Id. at 684-86. The court concluded
that even if the subsidiary benefitted from the deductible agreement by being able to secure
lower premiums in its own insurance agreement, the benefit was too indirect to give rise to
estoppel. Id. at 688. In Thomson-CSF, S.A., direct benefit estoppel did not apply when two
companies were contractually bound to trade only with each other and a third-party competitor
acquired one of the companies with the intent of squeezing the remaining company out of the
market. 64 F.3d at 778-80. Although the trade agreement was crucial to the benefit that the
competitor gained, the agreement was not the direct source of the benefit. Rather, the benefit
flowed from the competitor’s exploitation of the contractual relation created by the agreement.
Just as in these cases, Giordano lacks evidence that Henry Holdings took some affirmative step
to enforce or apply the employment agreement.
Even if Zurich did not control, Giordano’s situation is distinguishable from cases where
direct benefits estoppel was appropriate. For example, in Hughes Masonry Company, Inc. v. Greater
Clark County School Building Corporation, the Seventh Circuit applied the doctrine to prevent a
signatory to an arbitration agreement from avoiding arbitration with a non-signatory. 659 F.2d
836, 837-38 (7th Cir. 1981). The Hughes court held that it would have been fundamentally
unfair to allow the signatory—the plaintiff in that case—to avoid arbitration when its claims
9
against the non-signatory were grounded in the contract that contained the arbitration
provision. Id. at 838-39. Here, in contrast, Henry Holdings does not bring claims arising under
the agreement; it seeks a declaration that it is not bound by the contract. Henry Holdings may
have benefitted from having Giordano serve as its president and CEO, but not by any
affirmative action or usurpation of authority that the company itself took. The theory of direct
benefits estoppel is therefore not applicable in this case and Giordano cannot use the doctrine to
force Henry Holdings to arbitrate the employment agreement.
B. The record does not support a theory of veil piercing or alter ego.
Giordano next asserts that the court should hold Henry Holdings to the arbitration
clause because Henry Technologies was merely the alter ego of Henry Holdings, thus warranting
piercing the corporate veil. “Piercing the corporate veil is not favored and in general, courts are
reluctant to do so.” Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec, 529 F.3d 371, 379
(7th Cir. 2008). To analyze whether piercing would be appropriate, a federal court uses the
choice of law rules for the state in which it sits. Wachovia Sec., LLC v. Banco Panamericano, Inc.,
674 F.3d 743, 751 (7th Cir. 2012). “The general rule is that a plaintiff’s alter ego theory is
governed by the law of the state in which the business at issue is organized . . . . Courts applying
Wisconsin choice of law rules in recent years have followed this rule.” Rual Trade Ltd. v. Viva
Trade LLC, 549 F. Supp. 2d 1067, 1077-78 (E.D. Wis. 2008) (internal citations omitted). Here,
the court will look to Illinois law because Giordano seeks to pierce through Henry Technologies,
an Illinois corporation. Dkt. 23, ¶ 4.
Under Illinois law, the court can pierce a corporate veil and hold a non-signatory to an
arbitration agreement when: “(1) ‘there [is] such unity of interest and ownership that the
separate personalities of the corporation and the individual’ no longer exist; and (2)
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‘circumstances [are] such that adherence to the fiction of separate corporate existence would
sanction a fraud or promote injustice.’” Wachovia Sec., LLC, 674 F.3d at 751-52 (internal
citations omitted). The analysis is necessarily “fact-intensive.” Laborers’ Pension Fund v. Lay-Com,
Inc., 580 F.3d 602, 610 (7th Cir. 2009).
Giordano has not identified undisputed facts sufficient to support his alter ego theory. At
this point in the case, Giordano relies on three agreed-upon facts: (1) Henry Technologies and
Henry Holdings shared offices; (2) Henry Technologies and Henry Holdings shared corporate
officers; and (3) Henry Holdings did not pay to acquire the stock of Henry Technologies and its
subsidiaries. Compare Dkt. 7 with Dkt. 11-2, Dkt. 11-3, and Dkt. 11-4. But even in combination,
these three facts are insufficient to establish that Henry Technologies is merely the alter ego of
Henry Holdings.
As to the first two facts, sharing offices and officers does not create the “unity of interest
and ownership” required for piercing. See Joiner v. Ryder Sys. Inc., 966 F. Supp. 1478, 1484-85
(C.D. Ill. 1996) (“[T]he fact that [a parent holding company]—instead of the subsidiaries’
directors—elects the officers of the [group of sister subsidiaries] is atypical of whollyindependent companies. But, that fact alone—without more—is insufficient to pierce the
corporate veil.”); Bright v. Roadway Servs., Inc., 846 F. Supp. 693, 700 (N.D. Ill. 1994)
(“[W]ithout more, ‘the separate corporate entities of two corporations may not be disregarded
merely because one owns the stock of another or because the two share common directors or
occupy the same office space.’”) (internal citations omitted); Hornsby v. Hornsby’s Stores, Inc., 734
F. Supp. 302, 308 (N.D. Ill. 1990) (“The fact that the three corporations share directors, office
space and office staff do[es] not suggest that [one corporation] was a mere instrumentality of
the other corporations, nor does it indicate some fraud or injustice.”). Henry Technologies and
Henry Holdings have a close corporate connection, but a simple “parent-subsidiary relationship
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‘does not create the relation of principal and agent or alter ego between the two’ [and a]
corporate relationship is generally not enough to bind a nonsignatory to an arbitration
agreement.” Zurich Am. Ins. Co., 417 F.3d at 688 (internal citations omitted).
Giordano appears to rely most heavily on allegations related to the third fact—that
through a corporate reorganization, Henry Holdings simply assumed ownership of Henry
Technologies and its subsidiaries. Giordano also contends that the subsidiaries were later spun
off from Henry Technologies and that Henry Technologies did not receive appropriate
consideration in return. Dkt. 8, at 25. But none of these facts is sufficient to establish
Giordano’s alter ego theory. There is nothing improper in Hendricks Holding Company
dropping down a subsidiary corporation to hold its interest in Henry Technologies, which was
already a wholly owned subsidiary. And, given that the Canadian and United Kingdom
subsidiaries were also wholly owned, there would be nothing inherently improper in spinning off
these two subsidiaries into separate companies to be owned directly by Henry Holdings, which
already owned them indirectly. Giordano needs more than this.
To establish the alter ego theory under Illinois law, Giordano has to adduce evidence that
these corporate maneuvers were undertaken improperly or for some improper purpose. Such
evidence would include the following well-known indicia: inadequate capitalization; failing to
issue stock; failing to observe corporate formalities; failing to pay dividends; corporate
insolvency; nonfunctioning corporate officers; missing corporate records; commingling funds;
diverting assets to an owner or other entity to a creditor’s detriment; failing to maintain arm’s
length relationships among related entities; and using the corporation as a mere façade for a
dominant owner. Wachovia Sec., LLC, 674 F.3d at 752. Giordano offers only vague assertions
that Henry Holdings and Henry Technologies somehow commingled funds, but those
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unsupported and threadbare allegations are not enough to warrant disregard of the corporate
form.
Giordano’s showing on his alter ego theory falls short. Nevertheless, we are early in the
case, and the parties have not conducted discovery. Giordano’s prospects on the alter ego theory
are not at all promising, but the court will allow Giordano to renew his motion to compel on
this ground if, after discovery, he can adduce evidence to support it.
C. The record does not support a theory of assumption.
Giordano’s final argument for holding Henry Holdings to the arbitration clause is that
the company’s conduct indicates that it has assumed the obligation to arbitrate. Giordano relies
exclusively on Hospira, Inc. v. Therabel Pharma N.V., in arguing that “[a] non-signatory ‘may be
bound by an arbitration clause if its subsequent conduct indicates that it is assuming the obligation
to arbitrate.’” No. 12-cv-8544, 2013 WL 3811488, at *12 (N.D. Ill. July 19, 2013) (original
emphasis) (quoting Invista S.A.R.L. v. Rhodia, S.A., 625 F.3d 75, 85 (3d Cir. 2010)).
Specifically, Giordano argues that Henry Holdings “assumed the obligation to arbitrate by
performing the duties and obligations of Henry Technologies as set forth under the”
employment agreement. Dkt. 8, at 26. He observes that Henry Holdings paid his salary,
benefits, expenses, and annual performance bonuses, and contends that these payments
manifested an assumption of the employment agreement, including the arbitration provision.
Giordano misreads Hospira and misapplies the doctrine of assumption.
In Hospira, the court concluded that assumption did not apply when a parent company
had assumed a licensing agreement but had not manifested its intent to be bound by an
arbitration clause in that agreement. 2013 WL 3811488, at *12. The court found dispositive
the fact that the parent company had actually taken affirmative steps to “distance itself from the
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[a]rbitration [c]lause” by seeking a declaratory judgment that it was not bound by the provision.
Id. at *12-13. The court suggested that the outcome might have changed had the subsidiary
ceased to exist, but concluded that the subsidiary-signatory “maintained its separate legal
identity,” and so using assumption against the parent was not appropriate. Id. at *12 (citing
Fyrnetics (Hong Kong) Ltd. v. Quantum Grp., Inc., 293 F.3d 1023, 1029 (7th Cir. 2002)). Hospira
bears a remarkable resemblance to the present case. Even if Henry Holdings assumed aspects of
the employment agreement, such as compensation, the record lacks any evidence that Henry
Holdings also assumed Henry Technologies’s obligation to arbitrate. Quite the opposite: like the
parent company in Hospira, Henry Holdings has asked the court for a declaratory judgment that
it is not bound by the arbitration clause.
In response to this argument, Giordano asserts that Henry Holdings “interfered with Mr.
Giordano’s contract with Henry Technologies, through divestiture of the subsidiaries and other
assets.” Dkt. 20, at 22. Giordano contends, therefore, that if Henry Holdings “is not compelled
to arbitrate, there will be parallel litigations proceeding in two different forums arising from the
same set of facts:” an action against Henry Holdings for interference with contract; and an
arbitration against Henry Technologies for the underlying dispute. Id. Giordano does not cite
any legal authority in support of this response. Nor does he adequately explain how his point—
even if true—would bear on Henry Holdings’s assumption of the obligation to arbitrate. The
court concludes that the very authority Giordano cites forecloses his position and that the
record does not support applying the doctrine of assumption because Henry Holdings has not
manifested any intent to be bound by the arbitration clause.
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CONCLUSION
The court will deny Giordano’s motion to compel arbitration because he has not
established any of the theories he proposes for binding Henry Holdings to the arbitration clause
agreed to by Henry Technologies. Without any such viable theory, the court cannot compel
Henry Holdings to arbitrate when it did not agree to do so.
But the court will allow Giordano to renew his motion, if discovery yields support for it.
Following the guidance in Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 776 (3d
Cir. 2013), the court will require that any such renewed motion be presented as a motion for
summary judgment, following this court’s established summary judgment procedures. See Dkt.
25. If genuine disputes of material fact prevent the court from deciding the matter on the
motion, the court will hold an evidentiary hearing to resolve the matter conclusively.
A word about timing. The summary judgment deadline in this case is January 23, 2015.
But the arbitration issue should be resolved more promptly than that. The court will not set a
deadline for a renewed motion to compel arbitration, but Giordano should make such a motion
as soon as practical, and he should conduct any discovery he needs on that issue without delay.
Henry Holdings may also move for summary judgment that it is not bound to arbitrate as soon
as Giordano has been afforded a reasonable opportunity for discovery on that issue.
The scheduling order in this case provides that each party may file only one motion for
summary judgment without leave of the court. Dkt. 25, at 2. But in the event that Giordano
renews his motion to compel arbitration, or Henry Holdings moves for summary judgment on
its claim for declaratory relief, the court will allow the parties to file later motions for summary
judgment on the substantive issues in this case, should any arise.
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ORDER
IT IS ORDERED that Defendant Michael Giordano’s Motion to Stay this Action and
Compel Arbitration, Dkt. 6, is DENIED.
Entered this 5th day of August, 2014.
BY THE COURT:
/s/
JAMES D. PETERSON
District Judge
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