Powershare, Inc. v. Syntel, Inc.
| Decision Date | 01 December 2008 |
| Docket Number | Civil Action No. 08-11342-NG. |
| Citation | 607 F.Supp.2d 240 |
| Parties | POWERSHARE, INC., Plaintiff, v. SYNTEL, INC., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Sharleen Joy Davis, K & L Gates LLP, Rory J. Fitzpatrick, Cetrulo & Capone LLP, Boston, MA, Robert B. Levin, Paul Mark Sandler, Shapiro Sher Guinot & Sandler, Baltimore, MD, Pro Hac Vice, for Plaintiff.
John R. Bauer, Claire E. Newton, Steven P. Perlmutter, Robinson & Cole LLP, Boston, MA, for Defendant.
The plaintiff, PowerShare, Inc., has brought an action against the defendant, Syntel, Inc., alleging that Syntel is liable for breach of contract and committed unfair and deceptive acts and practices in violation of Mass. Gen. Laws ch. 93A. PowerShare is seeking monetary damages, an accounting, and a declaratory judgment, and has demanded a jury trial. Syntel denies any liability, and has commenced an arbitration proceeding against PowerShare which is pending in Michigan.
The parties' contracts contain an arbitration clause. PowerShare contends that the clause gives it the option of resolving its disputes either through arbitration or court proceedings, while Syntel contends that arbitration is mandatory. Consequently, this matter is presently before the court on "Defendant's Motion to Order a Stay Pending Arbitration" (Docket No. 12) and on "Plaintiff's Motion to Stay Arbitration Initiated by Defendant and for Determination that the Disputes Set Forth in the Complaint are not Referable to Arbitration" (Docket No. 15).
For the reasons detailed herein, this court concludes that arbitration is optional under the agreements. Therefore, the Defendant's motion seeking to stay this litigation (Docket No. 12) is DENIED, and the Plaintiff's motion seeking to stay arbitration proceedings initiated by Syntel (Docket No. 15) is ALLOWED.
Both parties have asked the court to determine whether arbitration is mandatory or optional under the contracts which govern their relationship. Both parties have informed the court that they do not intend to offer any extrinsic evidence concerning the meaning or intent of the contract, nor do they want the opportunity to engage in any discovery. They further have informed the court that while Syntel drafted the agreement, it was done with considerable input from PowerShare so, despite some language to the contrary in PowerShare's memorandum, neither party is claiming that the agreement should be construed against the other as a matter of law. See Paul Revere Variable Annuity Ins. Co. v. Kirschhofer, 226 F.3d 15, 25 (1st Cir.2000) (). Thus, the parties have asked the court simply to interpret the following provision which is found in the two contracts at issue in this litigation:
All disputes, controversies and claims directly or indirectly arising out of or in relation to this Agreement or the validity, interpretation, performance, breach, enforceability of the Agreement (collectively referred to as "Dispute") shall be resolved amicably between Syntel and PowerShare at an operational level in consultation with the top management of both companies. If any such Dispute cannot be resolved, as stated above, the same shall be settled in accordance with the principles and procedures of the American Arbitration Association and per the decision of an accredited arbitrator acceptable to both parties. Nothing in this clause shall prejudice Syntel or PowerShare's right to seek injunctive relief or any other equitable/legal relief or remedies available under law. Neither party may assign or transfer this Agreement without the prior written consent of the other party. This Agreement shall be governed in all respects by the prevailing laws of the United States of America.
(Emphasis added). The parties agree that the issues in dispute between them fall within the scope of the arbitration clause—the sole issue raised by the present motions is whether arbitration is mandatory under the above-quoted provision.
PowerShare commenced this action on August 6, 2008. On September 12, 2008, Syntel filed a Demand for Arbitration with the American Arbitration Association ("AAA") in Michigan. PowerShare is based in Massachusetts, while Syntel is based in Michigan. PowerShare has filed a response to the Arbitration Demand, and has objected to proceeding in Michigan. However, the Michigan AAA has determined that the arbitration is appropriate in that state. See Seguro de Servicio de Salud de P.R. v. McAuto Sys. Group, Inc., 878 F.2d 5, 9 n. 6 (1st Cir.1989) () (internal citation omitted).
Concurrent with filing its demand for arbitration, Syntel, on September 12, 2008, filed its motion seeking to stay the litigation pending arbitration. (Docket No. 12). On September 26, 2008, PowerShare filed its motion to stay the arbitration. (Docket No. 15). After briefing was completed, a hearing on the motions was held on November 12, 2008.
The relevant legal principles are well established, and while easy to recite they are more difficult to apply in the instant case. Thus, the purpose of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 2, is "to reverse the longstanding judicial hostility to arbitration agreements and to place arbitration agreements upon the same footing as other contracts." Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 89, 121 S.Ct. 513, 521, 148 L.Ed.2d 373 (2000) (internal punctuation and citation omitted). "[A]s a matter of federal policy, `any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration[.]'" Paul Revere Variable Annuity Ins. Co., 226 F.3d at 19 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983)). While arbitration agreements are to be placed on an equal footing with other contracts, the FAA "`does not require parties to arbitrate when they have not agreed to do so.'" BCS Ins. Co. v. Wellmark, Inc., 410 F.3d 349, 351 (7th Cir.2005) (quoting EEOC v. Waffle House, Inc., 534 U.S. 279, 293, 122 S.Ct. 754, 764, 151 L.Ed.2d 755 (2002)). It is for the court to interpret the contract to determine if the parties have agreed to submit a matter to arbitration, "and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Municipality of San Juan v. Corporacion Para El Fomento Economico De La Ciudad Capital, 415 F.3d 145, 149 (1st Cir.2005) (quotations and citation omitted). Similarly, a party "cannot be forced to arbitrate against its will because the arbitration clause permits, but does not require, arbitration." Summit Packaging Sys., Inc. v. Kenyon & Kenyon, 273 F.3d 9, 12 (1st Cir.2001). Pursuant to the FAA, 9 U.S.C. §§ 3, 4, "a court must stay its proceedings if it is satisfied that an issue before it is arbitrable under the agreement," and must "issue an order compelling arbitration if there has been a `failure, neglect, or refusal' to comply with the arbitration agreement[.]" Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987).
In the instant case, the language this court finds critical is the sentence "Nothing in this clause shall prejudice Syntel or PowerShare's right to seek injunctive relief or any other equitable/legal relief or remedies available under law." Up until that sentence, the parties had expressed their intention to attempt to resolve their disputes as informally as possible, first through discussion and then arbitration if necessary. If the paragraph had ended prior to the critical sentence, it would have seemed clear that the parties wanted all possible disputes which could not be resolved amicably to be resolved through arbitration as a last resort. By adding the sentence, however, the parties were expressing their intention not to be limited to the earlier sentences. Even more importantly, they were expressing their intention not to give up any rights or remedies they may otherwise have had. The additional sentence does not further restrict the parties' options, but rather expands them. As a matter of fact, to obtain all possible "equitable/legal relief or remedies available under law," a party must be able to have access to the courts.1 Thus, this court finds that the parties intended to allow suit to be brought in court.
Syntel argues that this language merely confirms the arbitrator's right to grant all types of legal or equitable relief. This argument is not persuasive. First of all, there does not seem to be any reason to confirm that an arbitrator has the rights that an arbitrator has—such an interpretation would make the sentence pointless. "[I]t is a basic principle of contract law that constructions that render contract terms meaningless should be avoided[.]" Summit Packaging Sys., 273 F.3d at 12. Second of all, Syntel's argument is limited to "relief" and ignores the reference to "remedies available under law." A "remedy is the means employed to enforce a right or redress an injury," and includes jury trials. Curcuru v. Rose's Oil Serv., Inc., 441 Mass. 12, 18, 802 N.E.2d 1032, 1037 (2004) (internal quotation omitted) ( that the "remedy of a jury trial for maritime claims brought in State...
To continue reading
Request your trial
-
Powershare, Inc. v. Syntel, Inc.
...denied Syntel's motion to stay the litigation and granted PowerShare's cross-motion to stay the arbitration. PowerShare, Inc. v. Syntel, Inc., 607 F.Supp.2d 240, 244 (D.Mass. 2008). In her rescript, the magistrate judge concluded that, under the Agreement, arbitration was optional. Id. at 2......