Tibco Software, Inc. v. Rapidminer, Inc.
| Decision Date | 03 May 2017 |
| Docket Number | A147556 |
| Parties | TIBCO SOFTWARE, INC., Plaintiff and Respondent, v. RAPIDMINER, INC., ET AL., Defendants and Appellants. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(San Mateo County Super. Ct. No. CIV534404)
RapidMiner, Inc., Peter Lee, and Steven Ruggieri appeal from an order denying their petition to compel arbitration. They contend that (1) RapidMiner and Lee are entitled to arbitrate respondent's claims against them, because the claims rely on other defendants' contracts that contain arbitration provisions; (2) the court erred by declining to compel arbitration of the arbitrable claims against Ruggieri (Code Civ. Proc., § 1281.2, subd. (c)); (3) the court did not have jurisdiction to determine the arbitrability issues; (4) respondent must pay the arbitrator's fees and related costs and expenses; and (5) the action should be stayed pending completion of arbitration.
We agree that RapidMiner and Lee are entitled to arbitrate the claims asserted against them by respondent. Accordingly, we will reverse the trial court's order denying the petition to compel arbitration and remand for further proceedings.
Appellants Lee and Ruggieri were employees of respondent TIBCO Software, Inc. (TIBCO) until 2015, when they left to join appellant RapidMiner, Inc. (RapidMiner), a software company. This litigation arose when TIBCO believed that RapidMiner, Lee, Ruggieri, and others were liable for the misappropriation of TIBCO trade secrets and the defection of TIBCO employees to RapidMiner.
TIBCO creates analytics software, which helps professionals organize and utilize data about their business. According to TIBCO's allegations, the analytics market is highly competitive, and TIBCO's success in the market depends on, among other things, hiring and retaining skilled employees capable of maintaining strong relationships with customers and partners. TIBCO's confidential information about its employees (including skillsets, sales performance, compensation, and client relationships) assists the company in developing a competitive workforce. To remain competitive, TIBCO also gathers and maintains confidential information concerning its product strategies, plans, market intelligence, and customer-related information.
TIBCO's relevant employment agreements include a non-solicitation provision. Under this provision, employees are prohibited, during employment with TIBCO and for one year thereafter, from soliciting any TIBCO employee to leave TIBCO's employ, or to use its proprietary information to "divert or solicit" TIBCO's customers.
The employment agreements also contain a non-disclosure provision, which prohibits employees from disclosing any of TIBCO's trade secrets or confidential information.
And the employment agreements contain an arbitration clause. For appellants Lee and Ruggieri, the arbitration clause excepted disputes related to trade secret misappropriation claims: (Italics added.) These agreements provided that California law applied.
TIBCO's employment agreement with another employee—Monica Hart—contained an arbitration provision that was different in that it (1) did not contain the language italicized above excepting misappropriation-related claims from arbitration and (2) provided that the arbitration clause was an "agreement to arbitrate under the Federal Arbitration Act []."
In January 2014, Lee left TIBCO and became the Chief Executive Officer of RapidMiner. About a year later, a number of TIBCO employees left TIBCO to join RapidMiner, arousing TIBCO's suspicions that RapidMiner was poaching TIBCO's employees. TIBCO conducted an internal investigation, which led it to conclude that Lee had raided TIBCO's employees on behalf of RapidMiner, and that employees solicited by RapidMiner had taken TIBCO's trade secrets and confidential information.
TIBCO filed a lawsuit in superior court against RapidMiner, Lee, and one of the defecting employees, Tarlock Sagoo (Sagoo), seeking an injunction preventing them from using TIBCO's trade secrets and confidential information and from interfering with TIBCO's contracts, as well as damages, restitution, and other relief.
In essence, TIBCO's complaint alleged that Lee persuaded TIBCO's employees to steal TIBCO's confidential information for RapidMiner, encouraged former TIBCO employees to recruit other TIBCO employees despite knowing that their contracts with TIBCO forbade it, and directed the departing TIBCO employees to conceal their intention to join RapidMiner so they could continue to access TIBCO's systems and data.1
In its first amended complaint filed in July 2015, TIBCO added three defendants: Ruggieri, Lars Bauerle (Bauerle), and Hart. The amended complaint alleges that Ruggieri had been recruiting TIBCO employee Nathaniel Masih on behalf of RapidMiner, in violation of the non-solicitation clause in his employment agreement. It alleges that Bauerle had attached mass-storage devices to his TIBCO-issued laptop before he left TIBCO's employ and, like Sagoo, covered his tracks by wiping the hard drive on his laptop. And it alleges that Hart deceived TIBCO about her intentions to join RapidMiner, enabling her to send to Sagoo materials that Sagoo took with him to RapidMiner.
In total, the first amended complaint asserts nine counts. Count one, against RapidMiner, Hart, and other former employees, alleges misappropriation of TIBCO's trade secrets based in part on Hart's violation of the terms of her employment agreement. Specifically, it alleges that "RapidMiner knowingly induced and solicited TIBCO employees, including . . . Hart . . . to leave TIBCO and to join RapidMiner with full access and knowledge to TIBCO's trades secrets . . . with the intent to use and exploit TIBCO's trade secrets for RapidMiner's benefit."
Counts two, three and five allege that Lee and Ruggieri breached their own employment agreements: respectively, Lee and Ruggieri (and others) breached the non-disclosure provision; Ruggieri breached his non-solicitation provision; and Ruggieri breached his implied covenant of good faith and fair dealing. (Count four, not directly at issue in this appeal, alleged that Sagoo and Bauerle breached their fiduciary duties.)
Count six, asserted against RapidMiner, Lee, Ruggieri, and others, alleges unfair competition based on activities that included, among other things, encouraging the violation of non-disclosure and non-solicitation obligations that they knew other employees owed to TIBCO under their employment agreements.
Counts seven and eight similarly allege that RapidMiner and Lee intentionally interfered with the non-disclosure and non-solicitation provisions that were containedin TIBCO's employment agreements with other TIBCO employees. Specifically, count seven contends that RapidMiner interfered with Lee's obligation not to disclose confidential information, and RapidMiner and Lee interfered with Sagoo's obligation not to disclose such information. And count eight asserts that RapidMiner and Lee induced Ruggieri to solicit Masih.
In the same vein, count nine alleges that RapidMiner, Lee, and Ruggieri interfered with TIBCO's prospective economic advantage by inducing employees to breach their TIBCO employment relationships and leave TIBCO with TIBCO's trade secrets.
In September 2015, RapidMiner, Lee, Ruggieri, and Hart (but not Bauerle or Sagoo) filed a joint petition requesting the trial court to compel arbitration. They asserted that TIBCO had entered into enforceable arbitration agreements with Ruggieri and Hart, and the claims asserted against Ruggieri and Hart were therefore arbitrable. They did not contend that TIBCO had entered into an applicable agreement with RapidMiner and Lee, but that "the doctrine of equitable estoppel applies to require TIBCO to also arbitrate" its claims against RapidMiner and Lee "because many of TIBCO's claims in the [complaint] against Lee and RapidMiner are intimately founded in and intertwined with arbitrable claims against Hart and Ruggieri."
In particular, appellants argued, TIBCO's claims against RapidMiner and Lee for unfair competition, interference with the non-solicitation provision of the employment agreement, and interference with prospective economic advantage were arbitrable because those claims were based on a breach of Ruggieri's employment agreement, which contained an applicable arbitration provision. And TIBCO's claims against RapidMiner and Lee for misappropriation of trade secrets and interference with the employment agreement's non-disclosure provision were arbitrable because those claims were based on a breach of Hart's arbitration agreement, which contained an applicable arbitration provision.
RapidMiner, Lee, Ruggieri and Hart also asked the trial court to stay the entire action against all defendants "until the arbitration is completed."
TIBCO opposed the petition to compel arbitration...
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