Opinion
216-2021-CV-00248
09-15-2021
GTI Spindle Technology, Inc. v. David Bukowitz, Paul Berberian, and Jose Flores
ORDER
DAVID A. ANDERSON, JUDGE
Plaintiff brought this action against Defendants alleging several claims arising out of Defendants' alleged breach of employment agreements and alleged tortious conduct during and subsequent to Defendants' employment. Defendants move to dismiss the action in its entirety for lack of personal jurisdiction over the defendants. Defendants also move to stay the pending action and compel arbitration. Plaintiff objects to both motions. For the reasons that follow, Defendants' motions are DENIED.
Factual Background
The following facts are drawn from the verified complaint, exhibits to the verified complaint, Plaintiff's president's affidavit, and the pleadings of the parties. Plaintiff is a New Hampshire corporation with a principal place of business in Manchester, New Hampshire. Defendants are former employees of Plaintiff and are residents of Texas, in the cases of Mr. Bukowitz and Mr. Flores, and Maryland, in the case of Mr. Berberian. Plaintiff "is one of the oldest and largest spindle repair companies in the United States." (Compl. ¶ 14.)
Plaintiff's services include preventative and predictive spindle maintenance by vibration analysis. (See id. ¶ 14.) Around 2010, Plaintiff began developing technology to conduct such maintenance via a data acquisition box to connect sensors to an iPad. (See id. ¶ 20.) Due to the promise of this technology, in 2011 Plaintiff established GTI Predictive Technology, a division of Plaintiff, to develop and market predictive systems directly to consumers. (See id. ¶ 25.) In June 2011, Plaintiff contracted with Motionics, LLC to develop the necessary software for its predictive maintenance applications for market. (See id. ¶ 26.) Mr. Bukowitz was then-employed by Motionics and executed a non-disclosure agreement between Motionics and Plaintiff. (See id. ¶¶ 30-31.) Per the agreement, Mr. Bukowitz was to maintain all information received by Motionics relating to Plaintiff's confidential and proprietary information in the strictest confidence. (See id. ¶ 32.)
On January 14, 2013, Plaintiff hired Mr. Bukowitz to serve as its chief software developer. (See id. ¶ 40.) On March 15, 2013, Mr. Bukowitz allegedly executed a confidentiality and non-disclosure agreement as a condition of his employment with Plaintiff. (See id., Ex. 1.) Mr. Bukowitz allegedly sent the executed agreement to New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 4.) On January 2, 2014, Plaintiff hired Mr. Berberian as Vice President of Sales and Marketing to lead GTI Predictive's sales and marketing efforts. (See Compl. ¶ 51.) On the same date, Mr. Berberian also allegedly executed a confidentiality and non-disclosure agreement containing the same terms as the agreement Mr. Bukowitz executed. (See Compl., Ex. 2.) Mr. Berberian allegedly sent this executed agreement to New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 10.) On September 4, 2017, Plaintiff hired Mr. Flores to expand its sales and marketing team. (See Compl. ¶ 57.) On August 29, 2017, Mr. Flores allegedly executed a confidentiality and non-disclosure agreement containing the same terms as the agreement Mr. Bukowitz executed and sent it to New Hampshire. (See Compl., Ex. 3; see also Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 15.)
Mr. Bukowitz and Mr. Flores worked out of an office in Austin, Texas. (See Def.'s Mot. Dismiss ¶ 1.) Mr. Berberian worked from his home in Maryland. (See id.) As a condition of their employment, Defendants traveled to Plaintiff's facility in Manchester, New Hampshire several times. (See Compl. ¶ 62.)
Over the course of his employment, Mr. Bukowitz had nearly daily contact with Plaintiff's other employees who were working in New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 5.) Mr. Bukowitz also regularly received information pertinent to his work from New Hampshire. (See id.) The software Mr. Bukowitz worked on was field tested and approved for production in New Hampshire, with his direct involvement conducted by video and phone. (See id.) Mr. Bukowitz's business card listed a Manchester, New Hampshire address. (See Pl.'s Obj. Mot. Dismiss, Ex. A.)
Mr. Berberian routinely communicated with Plaintiff's employees working in New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 11.) Mr. Berberian often traveled to New Hampshire to participate in strategic meetings and other events that he helped plan and facilitate. (See id. ¶ 12.) Plaintiff's records indicated that Mr. Berberian was in New Hampshire on GTI business for multiple days on at least thirteen separate occasions in 2018 and 2019, and at other times in earlier years. (See id.) Mr. Berberian managed three individuals located in New Hampshire. (See id. ¶ 14.) He would also participate in weekly sales calls with others in New Hampshire. (See id.) Mr. Berberian's business card and email signature listed a Manchester, New Hampshire address. (See Pl.'s Obj. Mot. Dismiss, Ex. C.)
Likewise, Mr. Flores communicated with Plaintiff's employees working in New Hampshire on a daily basis. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 16.) He participated in weekly sales calls with others in New Hampshire. (See id.) He also visited New Hampshire as part of his role. (See id. ¶ 17.) Mr. Flores' email signature listed a Manchester, New Hampshire address. (See Pl.'s Obj. Mot. Dismiss, Ex. D.)
Mr. Berberian and Mr. Flores had access to Plaintiff's confidential customer and vendor information. (See Compl. ¶ 63.) Plaintiff alleges that although it moved its customer and vendor information to a secure cloud-based network in 2019, Mr. Berberian downloaded and maintained the information so that he could possess and exploit it. (See id. ¶ 67.) For other reasons, Mr. Berberian was terminated for cause on October 1, 2019. (See id. ¶¶ 74-75.) Mr. Flores gave his notice on July 28, 2020. (See id. ¶ 79.) On July 31, 2020, Mr. Bukowitz stated his intention to resign from Plaintiff, but wanted to maintain the software he had developed. (See id. ¶ 83.) On September 9, 2020, Plaintiff and Mr. Bukowitz entered into a licensing agreement whereby Plaintiff would be granted "a nonexeclusive, worldwide, perpetual, irrevocable, transferrable license to use the framework of the Software including the source code," in exchange for $100,000. (See Compl., Ex. 4. at §§ 2.1 and 3.1(A).) Mr. Bukowitz ceased working for Plaintiff on October 9, 2020. (See Compl. ¶ 95.)
Shortly thereafter, Plaintiff learned that Defendants were all affiliated with SensOS, LLC, serving in various positions. (See id. ¶ 96.) In addition, SensOS was offering applications for commercial sale which directly competed with Plaintiff's vibration analysis system. (See id. ¶ 97.) Plaintiff alleges Defendants misappropriated and/or used the software architecture and source code of Plaintiff's applications. (See id. ¶ 100.) Plaintiff identifies several other instances of efforts by Defendants to misappropriate trade secrets and confidential information including: Mr. Bukowitz creating a rival company, Rotovibes, while employed by Plaintiff; Mr. Bukowitz registering multiple software copyrights while employed by Plaintiff; Mr. Bukowitz developing software for a client of Plaintiff's, without disclosure to Plaintiff, while employed by Plaintiff; SensOS working with a vendor who had previously approached Plaintiff and been rejected on Mr. Bukowitz' recommendation; SensOS and its affiliate companies contacting Plaintiff's sensor vendors; and SensOS and its affiliate companies contacting a number of Plaintiff's customers. (See id. ¶ 102.) Further, SensOS has announced that it will soon be releasing additional applications identical to a number of Plaintiff's applications. (See id. ¶ 106.)
Plaintiff filed the present action on April 22, 2021, alleging six claims. Count I alleges Defendants misappropriated trade secrets related to its applications' source code and software architecture, its hardware's source code and software architecture, and Plaintiff's customer information. (See id. ¶¶ 107-15.) Count II alleges Defendants materially breached confidentiality and non-disclosure agreements. (See id. ¶¶ 116- 19.) Count III alleges Defendants converted Plaintiff's confidential information. (See id. ¶¶ 120-23.) Count IV alleges Defendants breached their fiduciary duty of loyalty in that Defendants used and disclosed Plaintiff's trade secrets and confidential information and by competing against Plaintiff via unfair and deceptive acts while employed by Plaintiff. (See id. ¶¶ 124-27.) Count V alleges Defendants improperly interfered with Plaintiff's established relationships with its customers and vendors by using Plaintiff's customer and vendor information and contacting Plaintiff's customers and vendors for the purpose of improperly competing with Plaintiff. (See id. ¶¶ 128-32.) Count VI alleges violation of the Consumer Protection Act (CPA), RSA ch. 358-A, in that Defendants' actions constitute unfair and deceptive methods of competition in the conduct of trade or commerce. (See id. ¶¶ 133-36.)
Analysis
I. Personal Jurisdiction
Defendants argue that this case must be dismissed for lack of personal jurisdiction over Defendants as they "lacked any substantive contacts with New Hampshire." (Def.'s Mot. Dismiss ¶ 1.) Plaintiff objects, arguing that Defendants have sufficient minimum contacts with New Hampshire for the Court to properly exercise jurisdiction.
The "standard of review for rulings on motions to dismiss for lack of personal jurisdiction varies according to the case's procedural posture." Kimball Union Acad. v. Genovesi, 165 N.H. 132, 136 (2013). When the Court rules upon the motion without holding an evidentiary hearing, as in this case, the Court employs a prima facie standard. See id. Under the prima facie standard, the inquiry is "whether the plaintiff has proffered evidence which, if credited, is sufficient to support findings of all facts essential to personal jurisdiction." Id. (quotation omitted). "The plaintiff ordinarily cannot rest upon the pleadings, but is obliged to adduce evidence of specific facts." Id. The Court "must accept the plaintiff's (properly documented) proffers as true for the purpose of determining the adequacy of the prima facie jurisdictional showing." Id. "The plaintiff's evidentiary proffers must be construed in the light most congenial to the plaintiff's jurisdictional claim and facts put forward by the defendant may be considered only if they are uncontradicted by the plaintiff's submissions." Id. (quotations omitted).
"Determining whether a court may exercise personal jurisdiction over a respondent contemplates a two-part analysis." Petition of Reddam, 170 N.H. 590, 595 (2018). "First, the State's long-arm statute must authorize such jurisdiction." Id. "Second, the requirements of the federal Due Process Clause must be satisfied." Id. "However, because New Hampshire's long-arm statute authorizes the exercise of personal jurisdiction over a non-resident to the extent permissible under the Federal Due Process Clause, the due process analysis is normally dispositive of the matter." Id.; see also Metcalf v. Lawson, 148 N.H. 35, 37 (2002) (stating that, in determining whether a New Hampshire court may exercise personal jurisdiction over a non-resident defendant, "[the Court's] primary analysis relates to due process").
"Pursuant to the Federal Due Process Clause, a court may exercise personal jurisdiction over a nonresident defendant if the defendant has minimum contacts with the forum, such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." State v. N. Atl. Ref. Ltd., 160 N.H. 275, 281 (2010). "Personal jurisdiction can be general, if the [defendant's] contacts with the forum state are continuous and systematic, or specific, if the cause of action arises out of or relates to the [defendant's] forum-based contacts." Reddam, 170 N.H. at 597. Here, Plaintiff argues this court has specific jurisdiction over Defendants.
In determining whether it has specific jurisdiction over a defendant, the Court examines whether: "(1) the contacts relate to the cause of action; (2) the [defendants] ha[ve] purposefully availed [themselves] of the protection of New Hampshire's laws; and (3) it would be fair and reasonable to require the [defendants] to defend the suit in New Hampshire." Id. "Each factor must be evaluated on a case-by-case basis, and all three factors must be satisfied for the exercise of jurisdiction to be constitutional." Id. The New Hampshire Supreme Court has recently stated that in conducting this analysis, the Court must analyze contract and tort-related claims separately. See Seward v. Richards, __ N.H.__, ___(decided September 8, 2021) (slip op. at 5-6) (stating that this is so because "the relevant inquiry . . . [is] whether [the claims] arise out of the same forum contacts" which "must relate to the cause of action" and "that determination requires examining the elements of the cause of action" that differ in tort and contract cases). Here, Plaintiff alleges one claim for breach of contract and a number of common law and statutory claims that sound in tort or are predicated upon Defendants' allegedly tortious conduct. As such, the Court will address each factor in turn, separately considering the contract claim and the tort-related claims, where appropriate.
A. Relation to Causes of Action
The Court begins by examining the first factor: whether Defendants' contacts relate to Plaintiff's causes of action. "This factor involves whether the claim underlying the litigation directly arises out of or relates to the defendant's forum-state activities." Reddam, 170 N.H. at 599. "The relatedness test is a flexible, relaxed standard." Id. "To satisfy the relatedness factor, there must be more than just an attenuated connection between the contacts and the claim; the defendant's in-state conduct must form an important, or at least material, element of proof in the plaintiff's case." Id. "The court's assessment of relatedness is informed by the concept of foreseeability." Id.
"In contract cases, a court charged with determining the existence vel non of personal jurisdiction must look to the elements of the cause of action and ask whether the defendant's contacts with the forum were instrumental either in the formation of the contract or in its breach." Phillips Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284, 289 (1st Cir. 1999). The contracts at issue here are confidentiality and non-disclosure agreements provided by Plaintiff and executed by each defendant. (See Compl., Exs.1, 2, 3.) These agreements were executed with the knowledge that Plaintiff was a New Hampshire company with a principle place of business in Manchester, New Hampshire. The contracts were executed as a pre-condition to employment with Plaintiff and sent to New Hampshire after being executed. Agreements such as these with a New Hampshire company suggest Plaintiff's breach of contract action arises out of Defendants' contacts with New Hampshire. Defendants' contacts with New Hampshire were instrumental to the contracts' formation. Further, Plaintiff alleges that the contracts were breached when Defendants disclosed confidential information. Plaintiff alleges the customer, vendor, and other confidential information that Defendants' had access to, and allegedly misappropriated, was maintained, stored, and controlled in New Hampshire. (See Pl.'s Obj Mot. Dismiss at 7.) As such, Defendants' contacts with New Hampshire were instrumental to Defendants' alleged breach. Thus, the Court finds that Plaintiff's breach of contract claim arises out of or relates to Defendants' contacts with New Hampshire.
The Court finds that, for the purposes of this Order, Plaintiff and Defendants are each party to these agreements. The Court accepts Plaintiff's proffer that the reference to GTI Technologies, Inc. in the agreements was a typographical error due to the use of a template. The Court also accepts Plaintiff's proffer as true that Defendants executed these agreements while recognizing that Defendants reject this notion. See Genovesi, 165 N.H. at 136.
For tort claims, the United States Supreme Court has stated that "[t]he proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant's conduct connects him to the forum in a meaningful way." Walden v. Fiore, 571 U.S. 277, 290 (2014). These claims arise out of Defendants' employment with Plaintiff, a New Hampshire corporation. The work performed under contract was done for the benefit of Plaintiff. Each defendant knowingly worked for a New Hampshire corporation. That work involved frequent communications with employees in New Hampshire. Though relatively small in number, Defendants' physical trips to New Hampshire, as identified in the complaint, all occurred as a result of their employment. That Defendants' alleged misconduct would cause damage in New Hampshire was entirely foreseeable given their employment relationship with Plaintiff. See Genovesi, 165 N.H. at 139 (citing N. Atlantic Ref. Ltd., 160 N.H. 275, 282 (2010) and noting "the court's assessment of relatedness is informed by the concept of foreseeability"). The Court finds that Defendants' conduct, primarily their work for Plaintiff, connects them to New Hampshire in a meaningful way such that Plaintiff's tort-related claims arise out of, or relate to, Defendants' New Hampshire activities. Cf. Genovesi, 165 N.H. at 139 (stating "[a] defendant need not be physically present in the forum state to cause injury (and thus 'activity' for jurisdictional purposes) in the forum state").
B. Purposeful Availment
"With respect to the second part of [the] inquiry, [the Court] must consider whether the defendants purposely availed themselves of the protection of New Hampshire's laws." Fellows v. Colburn, 162 N.H. 685, 694 (2011). "The defendant's instate contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protection of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable." Id. "Purposeful availment requires both foreseeability and voluntariness." Id. "Voluntariness requires that each of the defendant's contacts with the forum state proximately result from the actions by the defendant himself." Id. "Foreseeability requires that the contacts also must be of a nature that the defendant could reasonably anticipate being haled into court there." Id. "This requirement ensures the orderly administration of the laws, and, thus, gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." Id. at 695-96.
As to the breach of contract claim, the Court finds that the purposeful availment prong is met. It is alleged that Defendants voluntarily entered into the confidentiality and non-disclosure agreements with Plaintiff as a condition of their employment with it. Defendants then sent those contracts to New Hampshire after execution. As such, Defendants engaged in voluntary actions where the contacts cannot be said to be based on the unilateral activity of Plaintiff. Defendants' contacts in this regard were not fortuitous. "By voluntarily entering into such agreements with a New Hampshire entity, [Defendants] could reasonably have anticipated being haled into court here." N.H. Bank Comm'r v. Sweeney, 167 N.H. 27, 35 (2014).
Likewise, accepting Plaintiff's proffers as true, the Court finds that, by committing the tortious acts alleged in the remaining counts, Defendants purposely availed themselves of the privilege of conducting activities in New Hampshire. The same factors that led the Court to conclude that the relatedness prong is met-in particular, Defendants' employment relationship with Plaintiff as a New Hampshire company- leads the Court to conclude that the purposeful availment prong is also met. See infra Part I. Defendants allegedly misappropriated trade secrets and confidential customer and vendor information to improperly compete with Plaintiff. That information was controlled, stored, and maintained in New Hampshire. This alleged tortious conduct injures Plaintiff in New Hampshire, where the business resides. Given Defendants' frequent communication with employees in New Hampshire, and their travel to New Hampshire for work obligations, the impact in New Hampshire of their alleged tortious conduct cannot be considered fortuitous. See The Lyme Timber Co. v. DSF Investors LLC, 150 N.H. 557, 562 (2004) (noting "[i]t is settled New Hampshire law that a party commits, for jurisdictional purposes, a tortious act within the state when injury occurs in New Hampshire even if the injury is the result of acts outside the state" but "[t]he impact of those actions . . . must be more than fortuitous").
C. Fair and Reasonable
For the third factor, that it must be fair and reasonable to require Defendants to defend the suit in New Hampshire, the Court considers the following five "gestalt factors":
(1) the burden on the defendant; (2) the forum State's interest in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several States in furthering fundamental substantive social policies.Reddam, 170 N.H. at 603. "The gestalt factors sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required." Id. This factor is not analyzed separately for tort and contract claims. See Richards, __N.H.__ (slip op. at 10) (completing one set of analysis for this factor where there were contract and tort-related claims).
At the outset, the Court notes the first factor weighs against jurisdiction as Defendants, as most non-resident defendants, would face a significant burden in defending this case in New Hampshire. However, the Court finds that this burden is outweighed by the other factors at issue. To the second factor, New Hampshire has a great interest in adjudicating this matter because the state has an inherent interest in enforcing its own laws. See Reddam, 170 N.H. at 604 (stating that the state "has a strong interest in enforcing state laws against unlicensed small loan lenders"). As for the third factor, Plaintiff has asserted that it "has a strong interest in seeking a resolution of its claims in the forum of its choosing and consistent with New Hampshire law." (See Pl.'s Obj to Mot. Dismiss at 10.) Plaintiff argues the fourth factor weighs in favor of New Hampshire exercising jurisdiction in that, because Defendants reside in Texas and Maryland, "there is no one state where Plaintiff could seek adjudication" outside of New Hampshire. (See id.) Rejecting jurisdiction in New Hampshire would compel "the need for multiple lawsuits and potentially inconsistent results" and "pursuing a single litigation in New Hampshire is most efficient." (See id.) The Court agrees with this reasoning and finds the fourth factor weighs in favor of jurisdiction. Finally, as for the fifth factor, the states have a shared interest in enforcing contracts and providing recourse for breach and to discourage misappropriation of trade secrets and unfair competition. See Richards, __ N.H.__ (slip op. at 10). In weighing the five factors, the Court finds it fair and reasonable to require Defendants to defend this suit in New Hampshire.
In sum, the Court finds Defendants have minimum contacts with New Hampshire such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. See N. Atl. Ref. Ltd., 160 N.H. at 281. Having found each specific jurisdiction factor satisfied, the Court finds it proper to exercise personal jurisdiction over Defendants. Thus, Defendants' motion to dismiss for lack of personal jurisdiction is DENIED.
II. Motion to Stay
Defendants argue that this case be stayed and arbitration compelled pursuant to the following clause in the Licensing Agreement:
[The License Agreement] shall be governed by and construed in accordance with the laws of the State of Texas, USA. Any disputes shall be settled by arbitration in accordance with American Arbitration Association commercial arbitration rules; provided that this provision shall not preclude any party from seeking injunctive or equitable relief at any time. The place of arbitration, including the rendering of the award, shall be Austin[, ] Texas USA.(Compl., Ex. 4 § 6.6.) Defendants argue that the "resolution of the Licensing Agreement issues overshadows the entire lawsuit" and that the "outcome of arbitration over the License Agreement will impact the overall complaint." (Def.'s Mot. Stay ¶¶ 4, 11.) Plaintiff objects, arguing that its claims are not disputes brought under the License Agreement and thus the parties did not agree to arbitrate their claims.
The jurisdiction of an arbitrator over a dispute "depends entirely upon the voluntary agreement of the parties." Aetna Life & Cas. Co. v. Martin, 134 N.H. 90, 93 (1991). "It follows that a contractual provision creating a right to arbitration remains subject to the traditional principles of contract law, and its interpretation and construction is therefore a question of law for the court." Id. (quotation omitted).
"The scope of an arbitration provision contained in a contract presents a question of law for this court" and "is to be interpreted so as to make it speak the intention of the parties at the time it was made bearing in mind its purpose and policy." John A. Cookson Co. v. New Hampshire Ball Bearings, Inc., 147 N.H. 352, 355 (2001). "Where, as in this case, no evidence has been presented, the determination of whether or not the dispute between the parties is subject to arbitration must be made from the face of the counts in plaintiffs' writs and the terms of the arbitration clause in the agreement of the parties." J. Dunn & Sons, Inc. v. Paragon Homes of New England, Inc., 110 N.H. 215, 217 (1970). "[T]here is a presumption of arbitrability if the contract contains an arbitration clause"; however, the Court "may conclude that a particular grievance is not arbitrable if it is determined with positive assurance that the contract is not susceptible of an interpretation that covers the dispute." Cookson Co., 147 N.H. at 355-56 (quotation omitted). "[I]n determining whether a claim falls within the scope of an arbitration clause, [the Court] focus[es] on the substance of the factual allegations, not the legal theory asserted." Grand Summit Hotel Condo. Unit Owners' Ass'n v. L.B.O. Holding, Inc., 171 N.H. 343, 347 (2018).
The Court begins by determining the scope of the License Agreement. The License Agreement is an agreement between Mr. Bukowitz as licensor and Plaintiff as licensee, whereby Mr. Bukowitz would grant Plaintiff a license "to use the framework of the Software" in exchange for $100,000. (Pl.'s Compl., Ex. 4 § 2.1.) The term "Software" is defined, in relevant part, as "the software framework and related software code used by the Apps." (Id. § 1.1.2.) The Court interprets this provision to mean that the software contemplated by the Licensing Agreement is distinct from Plaintiff's applications. In other words, Plaintiff's applications have their own architecture and source code but the applications need Mr. Bukowitz's software framework to operate.Thus, for Plaintiff's claims to be disputes under the arbitration provision, they must arise out of the licensing of Mr. Bukowitz's software framework. For the reasons that follow, the Court finds that they do not.
The Court notes that there appears to be a drafting error in the License Agreement in § 4.3.1. It states that "[l]icensee is the owner of all rights in the Software" and that the licensee "has the full right, power and authority . . . to grant the License." (emphasis added). This does not make sense as the purpose of the agreement is for Mr. Bukowitz, as the licensor, to license the Software to GTI, the licensee. As such, the licensee cannot own all of the rights in the Software, nor grant the license to itself. Otherwise, the agreement would be totally unnecessary. Thus, it appears that § 4.3.1 was intended to begin with "Licensor" rather than "Licensee."
At the outset, most of Plaintiff's claims plainly do not relate to the License Agreement. Plaintiff's breach of contract claim arises entirely out of agreements executed years before the License Agreement existed. Plaintiff's conversion and contractual interference claims also relate to Defendants' alleged disclosure of confidential information and improper use of customer and vendor information. The essence of these claims have no relation to the License Agreement.
This leaves Plaintiff's misappropriation of trade secrets and violation of the CPA claims. The Court finds that these also are not governed by the License Agreement. The misappropriation of trade secrets claim specifically contemplates Plaintiff's applications' source code and architecture and Plaintiff's hardware's source code and architecture, along with customer information. As discussed above, the License Agreement governs the software framework upon which Plaintiff's applications are built, not the code of the applications themselves, nor any hardware's source code, and certainly not customer information. As such, the misappropriation of trade secrets claim is not governed by the License Agreement. As for the CPA claim, it references Defendants' "actions" which the Court takes to mean the conduct discussed in the other counts. As the Court has found that this conduct is not governed by the License Agreement, the CPA claim is similarly not governed by the agreement.
The Court further notes that two of the defendants, Mr. Berberian and Mr. Flores, are not parties to the License Agreement. As such, even if the Court were inclined to compel arbitration here, it could not do so with respect to those defendants.
In sum, because Plaintiffs claims are not governed by the License Agreement, the disputes involved in this case are not subject to the License Agreement's arbitration clause. Thus, Defendants' motion to stay and compel arbitration is DENIED.
Conclusion
In light of the foregoing, Defendants' motion to dismiss for lack of personal jurisdiction, and motion to stay and compel arbitration, are DENIED.
SO ORDERED.