Perfect Fit LLC v. Aronowitz

          ORDER ON DEFENDANT'S MOTION TO COMPEL ARBITRATION

          NANCY TORRESEN UNITED STATES DISTRICT JUDGE.

         Before me is Defendant Edward Aronowitz's motion dismiss or stay and to compel arbitration. (ECF No. 14). For the reasons that follow, the Defendant's motion is GRANTED.

         BACKGROUND

         On December 31, 2003, Plaintiff Perfect Fit, LLC (“Perfect Fit”)-then named Foster & Levesque-acquired a duty-gear distribution business called Perfect Fit/Shield Wallets, Inc. from Defendant Aronowitz and his brother. Compl. ¶¶ 18-20, 22. (ECF No. 1). As part of that transaction, Perfect Fit agreed to employ Aronowitz as a salesperson for ten years. Compl. ¶ 26. Perfect Fit also purchased “all rights and privileges in and to the name ‘Perfect Fit Shield Wallets,' and all other general intangibles associated with the sale of products and operation of the company.” Compl. ¶ 23. According to Perfect Fit, this included an email account created by Aronowitz named “pfsw@aol.com.” Compl. ¶¶ 19, 24.

         Perfect Fit employed Aronowitz until December 31, 2013, when his employment agreement expired. Compl. ¶ 31. Perfect Fit and Aronowitz then extended their relationship by entering into a five-year Independent Contractor Agreement dated December 31, 2013 (the “IC Agreement”). Compl. Ex. 2 (ECF No. 1-2). In addition to setting out Aronowitz's responsibilities as an independent sales representative for Perfect Fit, the IC Agreement included a covenant through which Aronowitz agreed not to compete with or solicit customers from Perfect Fit when his contract with Perfect Fit terminated. Compl. ¶¶ 33-37. The IC Agreement also included an arbitration provision, which stated in relevant part that “[a]ny controversy or claim arising out of, or relating to this Agreement, or the breach thereof, shall be settled by mediation . . . and if mediation does not resolve the dispute, by binding arbitration.” IC Agreement ¶ 11.

         Aronowitz worked as an independent contractor for Perfect Fit until December 31, 2018. Compl. ¶ 42. Throughout his time as an employee and as a contractor for Perfect Fit, Aronowitz had access to a broad array of customer information maintained by Perfect Fit, including Perfect Fit's customer lists. Compl. ¶ 49. Aronowitz also regularly made use of the “pfsw@aol.com” account to arrange sales and to conduct other company business. Compl. ¶ 43.

         Shortly after Aronowitz left Perfect Fit, the company learned that Aronowitz had emailed Perfect Fit's customer lists and other confidential information to his personal email account. Compl. ¶¶ 55-58. Perfect Fit has since discovered that Aronowitz is now working as a salesperson for a competitor and is attempting to solicit Perfect Fit's customers on the competitor's behalf. Compl. ¶¶ 63-64, 73-80. Perfect Fit has also determined that Aronowitz is the only person who knows the login credentials for the “pfsw@aol.com” account, which Perfect Fit believes continues to receive emails related to Perfect Fit's business. Compl. ¶ 60. Aronowitz has refused to provide Perfect Fit access to the account. Compl. ¶¶ 61-62.

         On April 15, 2019, Perfect Fit filed suit against Aronowitz for breach of the parties' noncompetition agreement (Count V), misappropriation of trade secrets (Counts III, IV), and conversion of the “pfsw@aol.com” account (Count VII).^[1] Along with its Complaint, Perfect Fit filed a motion for a temporary restraining order (“TRO”) or a preliminary injunction to prevent Aronowitz from soliciting additional Perfect Fit customers. (ECF No. 3). On April 16, 2019, I declined to grant Perfect Fit's request for a TRO and directed the Defendant to inform the court within three days whether it intended to pursue arbitration under the IC Agreement. (ECF No. 10). The Defendant duly responded that it intended to move to compel arbitration of the Plaintiff's claims (ECF No. 11), and on April 24, 2019, filed the motion at bar.

         DISCUSSION

         The Federal Arbitration Act provides that “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. The FAA also provides for the stay of suits already in federal court pending arbitration. Id. § 3.

         Federal courts will grant a motion to compel arbitration pursuant to the FAA when “(i) there exists a written agreement to arbitrate, (ii) the dispute falls within the scope of that arbitration agreement, and (iii) the party seeking an arbitral forum has not waived its right to arbitration.” Combined Energies v. CCI, Inc., 514 F.3d 168, 171 (1st Cir. 2008)).

         The Defendant argues that the factors required to compel arbitration are present, and that I should dismiss this case because the Plaintiff's claims all are arbitrable. The Plaintiff concedes that the parties are bound by a written agreement to arbitrate and that at least some of the Plaintiff's claims fall within the scope of that agreement. The Plaintiff argues, however, that the Defendant has waived his right to arbitration. The Plaintiff further argues that only some of its claims are arbitrable, and that therefore if any of its claims are sent to arbitration, then this action should be stayed rather than dismissed in its entirety. I address each of these arguments in turn.

         I. Whether the Defendant has Waived His Right to Arbitrate

         “[A]rbitration clauses are not set in cement: such clauses can be waived, either expressly or through conduct.” Joca-Roca Real Estate, LLC v. Brennan, 772 F.3d 945, 946-47 (1st Cir. 2014). ...