The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court
In this diversity action, Plaintiff, Extra Mile Transportation, LLC ("Extra Mile") alleges that its former employee, Donald Diffey, and the business that he owns, USLC Transportation ("USLC"), are liable for breaches of contract and loyalty, misappropriation of trade secrets, and usurpation of corporate opportunity. Presently before this Court are Defendants' motions to compel arbitration (Docket No. 24) and to dismiss USLC from this suit for lack of personal jurisdiction (Docket No. 29). For the following reasons, both motions are denied.
Extra Mile, a freight brokerage business, located in Buffalo, New York, assists manufacturers and distributors (i.e. businesses that need to transport products) in locating trucking companies who can ship their goods. (Id. ¶ 10.) For this service it earns a fee. (Id.)
From 2003 to 2010, Diffey worked as a branch manager at Extra Mile's Houston office. (Id. ¶ 18.) Extra Mile alleges that throughout the year 2009, Diffey took the necessary steps to begin his own freight brokerage company, which he named USLC, and that thereafter, he began to transfer Extra Mile customers away from Extra Mile and to USLC. (Id. ¶¶ 27-35.) Among these customers was GAF Materials Corporation ("GAF"), a major Extra Mile client. (Id. ¶¶ 23, 26.)
Extra Mile alleges that at the same time Diffey was displacing its customers, the Houston office saw a significant decrease in revenue. (Id. ¶ 34.) This prompted Diffey to downsize the office's staff. (Id.) Some of those staff members, Extra Mile alleges, began to work for USLC instead. (Id. ¶ 35.) Extra Mile believes that this conduct violated Diffey's employment contract, which prohibited him from, inter alia, competing with Extra Mile for one year after leaving the company and using certain proprietary and confidential information for his gain. (Id. ¶ 41-42.)
Extra Mile commenced this suit on May 19, 2010 by filing a complaint in this Court. (Docket No. 1.) On the same day, Extra Mile moved for a preliminary injunction, which Diffey opposed. Defendants then moved to compel arbitration, citing the employment contract in support. (Docket No. 24.) The parties eventually stipulated to an Order imposing a mutually agreeable injunction. It was signed by District Judge Richard Arcara on June 1, 2010. (Docket No. 28.) Subsequently, on June 11, 2010, Defendants moved for USLC's dismissal for lack of subject matter jurisdiction. Six months later, Extra Mile moved to compel discovery seeking various documents and authorizations. (Docket No. 72.) Each side has filed a memorandum of law regarding the discovery dispute (Docket Nos. 81, 82), which is to be decided by Magistrate Judge Schroeder.
On January 15, 2004 Diffey signed an employment contract, the "Extra Mile Transportation, LLC, Associate Agreement ("Agreement"), which was drafted by Extra Mile (Agreement; Docket No. 1.)*fn1 Although the type of dispute at issue here is excluded from arbitration under the Agreement, Defendants claim that ...