Gatx Management Services, LLC v. Weakland

• Decision Date: 14 November 2001
• Docket Number: No. CIV. 01-B-1246.,CIV. 01-B-1246.
• Citation: 171 F.Supp.2d 1159
• Parties: GATX MANAGEMENT SERVICES, LLC, a Delaware limited liability company, and GATX Product Services, LLP, a Delaware limited liability partnership, Plaintiffs, v. Darrell WEAKLAND, an individual, Seminole Transportation and Trading, Inc., an Oklahoma corporation, Defendants.
• Court: U.S. District Court — District of Colorado

171 F.Supp.2d 1159

GATX MANAGEMENT SERVICES, LLC, a Delaware limited liability company, and GATX Product Services, LLP, a Delaware limited liability partnership, Plaintiffs, v. Darrell WEAKLAND, an individual, Seminole Transportation and Trading, Inc., an Oklahoma corporation, Defendants.

No. CIV. 01-B-1246.

United States District Court, D. Colorado.

November 14, 2001.

COPYRIGHT MATERIAL OMITTED

Terence C. Gill, Sherman & Howard, Denver, CO, Hardy Ray Murphy, III, Thelen, Reid & Priest, LLP, Los Angeles, CA, for plaintiffs.

Mark D. Sullivan, Jacobs, Chase, Frick, Kleinkopf & Kelley LLC, Denver, CO, Donald Lee Kahl, John F. Heil, III, Hall, Estill, Hardwick, Gable, Golden & Nelson, Tulsa, OK, for defendants.

MEMORANDUM OPINION AND ORDER

BABCOCK, Chief Judge.

Defendants Darrell Weakland ("Weakland") and Seminole Transportation and Trading, Inc. ("Seminole") move to compel arbitration and stay the proceedings. Additionally, Weakland moves to stay the proceedings pending determination of the motion to compel arbitration. Plaintiffs GATX Management Services, LLC ("GMS") and GATX Product Services, LLP ("GPS")(collectively, "GATX") oppose the motions. The motions are adequately briefed and oral argument was held on November 8, 2001. For the reasons set forth below, Defendants' motions to compel arbitration and stay the proceedings are granted. Because the motion to compel arbitration is resolved, Defendant Weakland's motion to stay the proceedings pending determination of the motion to compel is denied as moot. Jurisdiction is proper under 28 U.S.C. § 1332.

I. Background

Defendant Darrell Weakland was hired by Plaintiff GPS in March 1999. The terms and conditions of his employment were set forth in an Employment Agreement. GMS owned GPS at the time of Weakland's employment with GPS.

The Employment Agreement contains an arbitration clause which states, in pertinent part:

The terms of this Agreement have been carefully considered and agreed upon by the Company and Weakland and represent the sole obligations of the company and Weakland with respect to Weakland's employment with the Company. If a dispute arises out of or related to this Agreement and the dispute cannot be settled through direct discussions, the Company and Weakland agree that they shall first endeavor to settle the dispute in an amicable fashion, including the use of a mediator. If such efforts fail to resolve the dispute, then any and all claims, demands, causes of action, disputes, controversies, and other matters in question arising out of or relating to this Agreement, any of its provisions, or the relationship between the parties created by this Agreement, whether sounding in contract, tort or otherwise, whether provided by statute or the common law, for damages or any other relief (all of which are referred to herein as "Claims"), shall be resolved by binding arbitration pursuant to the Commercial Arbitration Rules then in effect with the American Arbitration Association....

Defendants' Motion, Exhibit 1, Agreement at ¶ 7.13.

Weakland resigned from his employment with GPS effective June 4, 2001. Shortly thereafter, he was hired by Seminole Refined Products, Inc., a company related to Seminole.

Plaintiffs initiated this action on July 3, 2001. An Amended Complaint was filed on July 20, 2001 alleging: (1) breach of contract (by GPS only against Weakland only), (2) breach of fiduciary duty (against Weakland only), (3) inducing breach of contract, and (4) misappropriation of trade secrets.

On August 22, 2001, Plaintiffs filed a motion for preliminary injunction and a motion for expedited discovery. In September 2001, Defendants filed separate motions to compel arbitration and stay the proceedings. Additionally, Defendant Weakland moved for a stay pending determination of his motion to compel arbitration and stay the proceedings.

II. Standard

There is a strong federal policy favoring arbitration for dispute resolution, and this policy "requires a liberal reading of arbitration agreements." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23 n. 27, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). This means that any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. See id. at 24-25, 103 S.Ct. 927; Coors Brewing Co. v. Molson Breweries, 51 F.3d 1511, 1514 (10th Cir.1995) (stating that "[a]ll doubts are to be resolved in favor of arbitrability") (citations omitted). District courts must defer to arbitration "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 v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-583, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). Notwithstanding this strong federal policy, however, "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT & T Techs., Inc. v. Communications Workers, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (internal quotation marks omitted). As a general rule, therefore, "the parties' intentions control, but those intentions are generously construed as to issues of arbitrability." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). The party seeking to compel arbitration and stay the proceeding has the burden of establishing that the matter is subject to arbitration. See McCarthy v. Azure, 22 F.3d 351, 354-55 (1st Cir.1994)("[A] party seeking to substitute an arbitral forum for a judicial forum must show, at a bare minimum, that the protagonists have agreed to arbitrate some claims."); Miletic v. Holm & Wonsild, 294 F.Supp. 772, 774-75 (S.D.N.Y.1968)("The burden is upon the party seeking a stay to satisfy the court that a matter is referable to arbitration.").

II. Defendant Weakland's Motion to Compel Arbitration

Defendant Weakland argues that Plaintiff's four claims against him (breach of contract, breach of fiduciary duty, inducing breach of employment agreement, and misappropriation of trade secrets), as well as the motion for preliminary injunction, are all predicated upon the Employment Agreement and the relationship created by the Employment Agreement and, therefore, are subject to arbitration.

At oral argument, Plaintiffs conceded that their breach of contract and breach of fiduciary duty claims are predicated upon the Employment Agreement and, therefore, are subject to arbitration. However, Plaintiffs argue that the claims for tortious inducement of breach of contract and misappropriation of trade secrets, as well as their motion for preliminary injunction, are not subject to the arbitration provision.

A. Scope of Arbitration Clause

The arbitration provision mandates arbitration for "any and all claims, demands, causes of action, disputes, controversies, and other matters in question arising out of or relating to this Agreement, any of its provisions, or the relationship between the parties created by this Agreement." This is undoubtedly a broad arbitration clause as it covers not only those issues arising out of the employment contract, but even those issues with any connection to the contract or to the relationship between the parties. In other cases, courts have concluded that an arbitration provision which includes the phrase "related to" or "in connection with" an agreement constitutes a broad arbitration clause. Brown v. Coleman Co., 220 F.3d 1180, 1184 (10th Cir.2000)(noting the arbitration clause which covered "all disputes or controversies arising under or in connection with this Agreement" was broad because it covered not only those issues arising under the employment contract but also those issues with any connection to the contract), cert. denied, 531 U.S. 1192, 121 S.Ct. 1191, 149 L.Ed.2d 107 (2001); P & P Indus., Inc. v. Sutter Corp., 179 F.3d 861, 871 (10th Cir.1999)(stating that arbitration clause covering "any controversy, claim, or breach arising out of or relating to this Agreement ... is a `broad' one."). The strong presumption favoring arbitrability "`applies with even greater force' when such a broad arbitration clause is at issue." P & P Indus., 179 F.3d at 871. "[A]ll claims with `a significant relationship to the [Agreement,] regardless of the label attached' to them, arise out of and are related to the Agreement." P & P, 179 F.3d at 871 (quoting American Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 93 (4th Cir.1996)). Likewise, all claims with a significant connection to the parties' relationship which was created by the Employment Agreement are subject to arbitration. In determining the scope of an arbitration clause, I focus on the factual allegations in the Complaint (or the Motion for Preliminary Injunction) rather than the legal causes of action asserted. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 622 n. 9, 625 n. 13, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

1. Inducing Breach of Employment Contract

First, Plaintiffs argue that their claim of inducing breach of employment contract is beyond the scope of the arbitration agreement because such tortious conduct was never contemplated by the arbitration agreement. The claim alleges that Defendant Weakland induced other GMS employees to breach their employment agreements.

In Lee v. Grandcor Med. Sys., Inc., 702 F.Supp. 252 (D.Colo.1988), the court concluded that the plaintiff's claim for tortious interference with business relations was covered by the parties' arbitration clause. The court focused on the plaintiff's specific allegations regarding the claim:

During its management of Memorial Hospital and the Lee Clinic pursuant to the Transfer Agreement and the Management Agreement, the Defendants intentionally operated both facilities in a manner intended to interfere with the relationship between Dr. Miles and the Lee Clinic,...