Medcam, Inc. v. Mcnc

• Decision Date: 18 July 2005
• Docket Number: No. 04-2572.,04-2572.
• Citation: 414 F.3d 972
• Parties: MEDCAM, INC., a Washington corporation, now known as OptiMEMS, Inc., Plaintiff — Appellee, v. MCNC, a North Carolina non-for-profit corporation, Defendants — Appellant, MCNC Endowment, a North Carolina non-for-profit corporation; MCNC Enterprise Fund, L.P., a North Carolina limited partnership; MCNC Research and Development Institute, a North Carolina non-for-profit corporation; MCNC Ventures, LLC, a North Carolina limited liability corporation; JDS Uniphase, a Delaware corporation, as successor of Cronos Integrated Microsystems, Inc.; Cronos Microsystems, Inc., a Delaware corporation; Cronos MEMS, Inc., a North Carolina corporation; MCNC Cronos Equity Associates, LLC, a North Carolina limited corporation whose status is listed as dissolved, Defendants.
• Court: U.S. Court of Appeals — Eighth Circuit

414 F.3d 972

MEDCAM, INC., a Washington corporation, now known as OptiMEMS, Inc., Plaintiff — Appellee, v.MCNC, a North Carolina non-for-profit corporation, Defendants — AppellantMCNC Endowment, a North Carolina non-for-profit corporation; MCNC Enterprise Fund, L.P., a North Carolina limited partnership; MCNC Research and Development Institute, a North Carolina non-for-profit corporation; MCNC Ventures, LLC, a North Carolina limitedliability corporation; JDS Uniphase, a Delaware corporation, as successor of Cronos Integrated Microsystems, Inc.; Cronos Microsystems, Inc., a Delaware corporation; Cronos MEMS, Inc., a North Carolina corporation; MCNC Cronos Equity Associates, LLC, a North Carolina limitedcorporation whose status is listed as dissolved, Defendants.

No. 04-2572.

United States Court of Appeals, Eighth Circuit.

Submitted: February 16, 2005.

Filed: July 18, 2005.

David F. Herr, argued, Minneapolis, MN (William Z. Pentelovitch, Justin H. Perl, Haley Schaffer, Robert H. Shulman and Lara A. Degenhart, on brief), for appellant.

Corey J. Ayling, argued, Minneapolis, Minnesota, for appelle.

Before MORRIS SHEPPARD ARNOLD, BOWMAN, and GRUENDER, Circuit Judges.

BOWMAN, Circuit Judge.

MCNC appeals from the District Court's¹ order denying MCNC's motion to dismiss certain claims asserted by MedCam, Inc.(MedCam) against MCNC and granting MedCam's motion to compel arbitration of those claims.We affirm.

I.

The essential facts of this case can be stated briefly.²MedCam and MCNC sought to develop medical imaging technology together, and they entered into a contract (the Agreement) to govern the terms of their joint development.The Agreement restricted the parties' ability to disclose or transfer the technology developed under the Agreement.The Agreement also contained a clause that restricted MCNC from competing with MedCam for a period of two years beyond the termination of the Agreement.Specifically, the noncompete clause barred MCNC from designing or producing devices in the "MedCam Field," which was an area of imaging technology defined in the Agreement.Agreement¶¶ 1.16, 6.5.Most importantly, the Agreement specified that "[a]ll disputes, controversies or differences arising out of or in connection with this Agreement" would be finally settled by binding arbitration.Id.¶ 9.5.

After several years of jointly developing technology under the Agreement, MCNC terminated the Agreement and began working with other companies to develop optical technology.MedCam claimed that MCNC improperly transferred technologies developed under the Agreement to other companies and that the technologies MCNC developed with and through these other companies violated the noncompete clause of the Agreement.MedCam asked the District Court to compel arbitration of its claims against MCNC and several other companies under the Federal Arbitration Act (FAA),9 U.S.C. §§ 1-16(2000).The District Court dismissed MedCam's claims against the other companies, but entered an order denying MCNC's motion to dismiss MedCam's claims against MCNC and granting MedCam's motion to compel arbitration of those claims.MCNC appeals the order denying its motion to dismiss and granting MedCam's motion to compel arbitration.

II.

When it enacted the FAA, Congress intended for parties who have agreed to arbitrate disputes to do so in a speedy manner without delay or obstruction by the courts.Prima Paint Corp. v. Flood & Conklin Mfg. Co.,388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270(1967).Accordingly, the FAA limits a district court's initial role in any challenge to an arbitration agreement to deciding whether "the making of the agreement for arbitration or the failure to comply therewith" is at issue.9 U.S.C. § 4(2000).As to whether "the making of the agreement for arbitration" is in issue, id., our Circuit has refined this inquiry to asking 1) whether the agreement for arbitration was validly made and 2) whether the arbitration agreement applies to the dispute at hand, i.e., whether the dispute falls within the scope of the arbitration agreement.SeeBob Schultz Motors, Inc. v. Kawasaki Motors Corp., U.S.A.,334 F.3d 721, 726(8th Cir.2003)(citingHoulihan v. Offerman & Co.,31 F.3d 692, 694-95(8th Cir.1994)), cert. denied,540 U.S. 1149, 124 S.Ct. 1147, 157 L.Ed.2d 1042(2004);Twin City Monorail, Inc. v. Robbins & Myers, Inc.,728 F.2d 1069, 1072(8th Cir.1984)(stating that arbitration is a matter of contract law and that, absent an arbitration agreement regarding the particular dispute, a party may not be required to submit the dispute to arbitration)(citingUnited Steelworkers v. Warrior & Gulf Navigation Co.,363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409(1960)).Here, the dispute is centered on whether MedCam's claims fall within the scope of the arbitration clause contained in the Agreement.

The scope of an arbitration agreement is given a liberal interpretation, with any doubts resolved in favor of arbitration.Lyster v. Ryan's Family Steak Houses, Inc.,239 F.3d 943, 945(8th Cir.2001).An order compelling arbitration "should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute."Id. at 945(quotingAT & T Techs., Inc. v. Comm. Workers of Am.,475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648(1986)(quotingWarrior & Gulf Navigation Co.,363 U.S. at 582-83, 80 S.Ct. 1347)).Moreover, the question of scope asks only whether the parties have agreed to arbitrate a particular claim and does not reach the potential merits of the claim.Kansas City S. Transp. Co. v. Teamsters Local 41,126 F.3d 1059, 1067(8th Cir.1997)(quotingAT & T Techs.,475 U.S. at 649, 106 S.Ct. 1415).Regardless of the scope of the arbitration agreement, the district court's initial inquiry under 9 U.S.C. § 4 remains "an expeditious and summary hearing, with only restricted inquiry into factual issues."Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,460 U.S. 1, 22, 103 S.Ct. 927, 74 L.Ed.2d 765(1983)(emphasis added).We review de novo the District Court's order compelling arbitration.Lyster,239 F.3d at 945.

We hold, as did the District Court, that the arbitration clause contained in the Agreement is susceptible to an interpretation that encompasses MedCam's claims.The arbitration clause applies to "[a]ll disputes, controversies or differences arising out of or in connection with this Agreement or the making thereof."Agreement¶ 9.5(emphasis added).This broadly worded arbitration clause applies to all...