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AHERN v. NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

May 24, 2002

DAVID AHERN, PLAINTIFF,
V.
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND G. PATRICK LYNCH, DEFENDANTS.



The opinion of the court was delivered by: David G. Larimer, Chief Judge.

DECISION AND ORDER

Defendant Northern Technologies International Corporation ("NTI") and its president, Patrick Lynch ("Lynch") (collectively, "defendants") move to stay the instant action and compel plaintiff to submit to arbitration or, in the alternative, to transfer venue to the United States District Court, District of Minnesota, pursuant to 28 U.S.C. § 1404. Plaintiff opposes those motions and cross-moves for costs and fees associated with service. Defendants' motions are denied, and plaintiff's cross-motion is granted in part and denied in part.

Defendants' Motion to Compel Arbitration

Plaintiff commenced this action, in diversity, alleging wrongful discharge, false representations and fraud in connection with NTI's hiring. In essence, plaintiff claims that the information supplied to him concerning NTI's sales was grossly overstated and misled Ahern to his detriment in accepting the position. The August 23, 2000 two-page employment letter contained several attachments. These are attached as Exhibit "A" to Exhibit "4" of defendants' motion (Dkt. #4). The attachments include a statement setting forth the job description as well as other papers relating to a summary of employment benefits. In addition, there was a document entitled "Confidentiality and Non Competition Agreement" that Ahern was directed to sign if he accepted the offer of employment. It is this document that is the heart of the dispute concerning the motion to compel arbitration. Defendants contend that this document, which does speak to arbitration, requires that the claims plaintiff raises in the instant lawsuit must be submitted to arbitration.

The arbitration clause in pertinent part reads as follows:

With the exception of the right to seek injunctive relief and relief against third parties pursuant to Section 6.1 of this Agreement, any controversy or claim arising out of or relating to this Agreement, including the making and entering into thereof, shall be subject to final and binding arbitration in Minneapolis, Minnesota, in accordance with the rules of the American Arbitration Association then in effect. . . .

Id., Ex. 4A. In a nutshell, defendants claim that this arbitration provision should be enforced and plaintiff required to arbitrate the claims advanced in this lawsuit. I disagree with that interpretation.

First of all, it is clear that defendant NTI prepared the agreement in question and submitted it to Ahern for his signature. There is no evidence that Ahern had any function in preparing the document or in negotiating its terms. It is clear that he was required to sign the document as a condition of his employment. It appears, therefore, that to the extent that there are ambiguities in the contract at issue, they should be interpreted against the maker, NTI. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62 (1995) (it is a "common-law rule of contract interpretation that a court should construe ambiguous language against the interest of the party that drafted it").

Plaintiff contends, and I agree, that this agreement to arbitrate is not as broad and expansive as defendants contend. Although I recognize that generally agreements to arbitrate should be broadly construed to effectuate the purpose behind the Federal Arbitration Act, 9 U.S.C. § 1, et seq., nevertheless, the parties can only be compelled to arbitrate a dispute if in fact they agreed to do so. The necessary inquiry then is whether in fact the parties before the court agreed to arbitrate the dispute contained in this lawsuit. See Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 478 (1989) ("the FAA does not require parties to arbitrate when they have not agreed to do so"); State of N.Y. v. Oneida Indian Nation of New York, 90 F.3d 58, 62 (2d. Cir. 1996) (holding that claim was not subject to mandatory arbitration because the parties specifically excluded it from the general arbitration clause); see also Oldroyd v. Elmira Savings Bank, F.S.B., 134 F.3d 72, 75-76 (2d Cir. 1998) (first issue to be resolved in deciding a motion to compel arbitration and to stay proceedings pending arbitration is whether the parties agreed to arbitrate).

In my view, this agreement is a narrow agreement to arbitrate certain specific issues and no more. First of all, the agreement itself is styled "Confidentiality and Non Competition Agreement." That title alone suggests a narrow interpretation dealing with two general topics: confidentiality concerning proprietary information and a promise not to compete. I believe a fair reading of that agreement establishes that arbitration related to disputes concerning those matters and nothing more.

It is clear that the employment contract and the agreement to arbitrate could have spelled out more clearly the nature of the disputes to be arbitrated. The agreement at issue here, in my view, covers two discrete topics and cannot be read as requiring all employment disputes of any nature to be submitted to arbitration. I find this to be so even though this separate agreement relating to confidentiality and competition was attached to the original employment letter presented to Ahern.

The basic rudimentary principle concerning arbitration agreements is that the court must be satisfied that the parties entered into such an agreement and that they intended their disputes to be covered by it. Although the Federal Arbitration Act favors arbitration, it cannot be read as compelling individuals to do something that they never intended to do. See Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. at 478.

In sum, defendants have failed to convince me that the agreement at issue requires plaintiff to arbitrate the claims involved in this lawsuit and, ...


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