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Arnold v. D'Amato

United States District Court, S.D. New York

July 23, 2015

MARY ARNOLD, Plaintiff,


PAUL A. ENGELMAYER, District Judge.

In this diversity action, Mary Arnold brings breach of contract and other claims against Precision Discovery, LLC ("Precision") and its affiliates. Arnold's principal claim is that she was retained to generate business for Precision under an independent contractor agreement (the "Agreement"), but was denied commissions and the opportunity to earn other commissions to which she was entitled under that Agreement. She separately claims that she was party to an unwritten joint-venture agreement with the defendants, which was breached when the defendants attempted to involve her in a scheme to solicit, by means of fraudulent representations, contracts from a government agency.

The defendants - Precision, Alfonse D'Amato ("Alfonse"), Armand D'Amato ("Armand"), Jerry Barbanel, and Park Strategies, LLC ("Park Strategies") - now move to compel arbitration pursuant to a binding arbitration clause in the Agreement. For the following reasons, the Court grants that motion, and stays this action pending the outcome of arbitration.

I. Background[1]

A. The Parties

Precision, originally, founded as a Delaware limited liability company, is a New York corporation that provides its clients with eDiscovery, computer forensics, and software solutions. Pearson Letter, Ex. A ¶ 3. Park Strategies, a Delaware limited liability company and affiliate of Precision, raises money for Precision. Compl. ¶ 14; Pearson Letter, Ex. B ¶ 2.

Alfonse and Armand, both New York citizens, are managing directors of Park Strategies and were equity partners of Precision when it was a limited liability company. Id., Ex. A ¶ 4, Ex. B ¶ 3. Barbanel, a New Jersey citizen, is Precision's current president and chief executive officer ("CEO"), and a member of its board of directors. Id., Ex. A ¶ 2.

Arnold, a Florida resident, was an independent contractor for Precision between December 1, 2009 and October 18, 2013. Compl. ¶ 10; Pearson Decl., Ex. B, at 1.

B. Factual Background

In 1981, Arnold, a congressional aide, met Alfonse, then a United States Senator from New York; she worked with him in Congress until 1992. Id. ¶¶ 16-17. That year, Arnold received a law degree, and became a senior government relations consultant at Black, Manafort, Stone & Kelley ("BMSK"). Id. ¶ 18. While working as a lobbyist at BMSK, Arnold took on AT&T as a client; later, in 1998, she joined AT&T as its vice president for congressional affairs and federal government affairs. Id. ¶¶ 19, 21. In 2004, Arnold joined SAG AG, a multinational software corporation, as vice president of government relations; in that role, she hired Park Strategies, which aids clients in "business policy, development and regulatory issues." Id. ¶¶ 23-24.

In 2009, Armand, Alfonse's brother, encouraged Arnold to meet with Barbanel, Precision's president and CEO. Id. ¶ 27. In December 2009, as detailed below, Arnold entered into the Agreement to serve as a business generator, or "rainmaker, " for Precision. Arnold claims, however, that defendants (1) deprived her of commissions she was owed under the Agreement, and (2) attempted to involve her in a fraudulent scheme to gain special contracts from a government agency, which was in breach of a joint-venture agreement she had orally entered into with them. More specifically, Arnold alleges the following:

1. Deprivation of Commissions

On December 1, 2009, after negotiating with Barbanel, Armand, and other Precision executives, Arnold entered into the Agreement to work as an independent contractor for Precision. Id. ¶ 27. The parties to the Agreement were Arnold and Precision; Barbanel signed on behalf of Precision. Alfonse Decl., Ex. A, at 4.

Under the Agreement, Arnold was to "assist Precision... [in] win[ning] engagements" by "facilitating introductions to potential Precision... clients, coordinating meetings between Precision... representatives and potential clients, making necessary follow-up contacts with potential clients, and providing such additional services, as requested by Precision..., that are designed to secure client engagements." Id. at 1. Arnold alleges that Armand and Barbanel told her that their goal was for her to bring in clients - specifically, AT&T and the Federal Deposit Insurance Corporation ("FDIC") - as accounts for Precision. Compl. ¶¶ 28-29. Under the Agreement, Arnold was to be paid a "straight ten (10) percent of the fees earned and collected by Precision... for any engagement awarded to Precision... due to [her] efforts, specifically [her] efforts in referring the client and assisting [Precision] to close the engagement." Id.

Arnold thereafter secured several clients for Precision. For example, on January 24, 2011, Precision, as a result of Arnold's connections and her meetings with representatives from AT&T, signed a contract with AT&T worth between $15 million and $25 million for Precision. Id. ¶ 46. Arnold also helped Precision gain Nestle Waters M.T., Kimberly-Clark Corporation, and Reynolds Consumer Products, LLC, as clients. Id. ¶ 56.

In February 2010, Arnold began to express concern to Precision officials, including Alfonse and Armand, about her compensation. Id. ¶¶ 59-62. She alleges that she had given Precision a list of potential clients and their contact information, which Precision had assigned to other sales associates for development. Id. However, Precision did not tell her how, or whether, she would be compensated for business generated from those client leads. Id. In 2010 and 2011, Arnold repeatedly asked defendants about her commissions. Id. ¶¶ 60, 78, 81.

On December 5, 2011, Arnold, by email, told Barbanel that he, and Precision, were in breach of contract because Precision had failed to pay her commissions for client accounts she had assisted Precision in obtaining, and specifically for failing to pay her commissions on the AT&T account within 10 days of receiving payments from AT&T, as the Agreement required. Id. ¶ 84. In November 2012, Arnold obtained copies of the documents reflecting AT&T's payments to Precision from AT&T; these, she states, revealed that Precision had underpaid her commissions between January 2011 and November 2012. Id. ¶ 105.

In August 2013, defendants terminated the Agreement. Id. ¶ 156. Arnold alleges that Precision continues to receive millions of dollars in payments from AT&T and other clients that Arnold brought in, and that she is entitled to, but ...

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