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Medidata Solutions, Inc. v. Veeva Systems Inc.

United States District Court, S.D. New York

February 27, 2018

MEDIDATA SOLUTIONS, INC., et al., Plaintiffs,
v.
VEEVA SYSTEMS INC., Defendant.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, UNITED STATES DISTRICT JUDGE.

         Plaintiffs Medidata Solutions, Inc. and MDSOL Europe Limited (collectively, "Medidata") bring this action against Defendant Veeva Systems Inc. ("Veeva") for alleged violations of the Defend Trade Secrets Act, 18 U.S.C. § 1836, misappropriation of trade secrets, tortious interference with contractual relations, unfair competition, aiding and abetting breach of fiduciary duties and unjust enrichment. Defendant moves to compel arbitration and stay the case. For the following reasons, Defendant's motion is denied.

         I. BACKGROUND

         A. Factual Background

         For purposes of this Opinion, all reasonable inferences are drawn in Plaintiffs' favor. See Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016). Familiarity with the underlying facts is assumed.

         B. Procedural History

         Plaintiffs initially sued Veeva and Defendants Alan Mateo, Michelle Marlborough, Sondra Pepe, Jason Rizzo and Richard Young, who were Plaintiffs' former employees (the "Former Employees"). On February 21, 2017, Plaintiffs filed a First Amended Complaint (the "FAC"). On March 1, 2017, Plaintiffs voluntarily dismissed the Former Employees, leaving Veeva as the sole defendant in this case.

         On March 3, 2017, Defendant filed a motion to compel arbitration and stay this action based on Plaintiffs FAC. On August 16, 2017, Defendant's motion to compel arbitration was denied because "Plaintiffs and Defendant have no contractual or other relationship that would lead to the conclusion that Plaintiffs should be compelled to arbitrate their dispute with Defendant."

         On August 30, 2017, Defendant filed a motion to dismiss the FAC. On September 8, 2017, Plaintiffs requested leave to file a Second Amended Complaint (the "SAC") in lieu of responding to Defendant's motion to dismiss, and this request was granted. On September 20, 2017, Plaintiffs filed an SAC. The SAC made the same claims against the same defendants as the FAC, but included additional factual allegations surrounding the nature of the employment agreements between the Former Employees and Plaintiffs, Defendant's hiring practices, Defendant's recruitment of the Former Employees, the identity of the Former Employees and Defendant's inducement of the Former Employees into divulging Medidata's trade secrets and confidential information.

         On October 5, 2017, Defendant filed a letter motion requesting a leave to renew their motion to compel arbitration in light of the SAC. Plaintiffs filed a letter response objecting to the request. Defendant's letter was construed as a renewed motion to compel arbitration. Defendant filed a reply to Plaintiffs response.

         II. STANDARD

         The Federal Arbitration Act ("FAA") "embod[ies] [a] national policy favoring arbitration." Id. at 228 (quoting AT&TMobility LLC v. Concepcion, 563 U.S. 333, 346 (2011)). However, "a court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute'' Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 297 (2010) (emphasis in original); accord Nicosia, 834 F.3d at 229 ("[T]he FAA does not require parties to arbitrate when they have not agreed to do so.") (citation and internal quotation marks omitted). The court considers two factors when deciding if a dispute is arbitrable: "(1) whether the parties agreed to arbitrate, and, if so, (2) whether the scope of that agreement encompasses the claims at issue." Holick v. Cellular Sales of N.Y., LLC, 802 F.3d 391, 394 (2d Cir. 2015).

         The FAA "does not require parties to arbitrate when they have not agreed to do so, " Nicosia, 834 F.3d at 229, but a non-signatory to an arbitration agreement may enforce that agreement under the principle of equitable estoppel where (1) "the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed" and (2) there is "a relationship among the parties of a nature that justifies a conclusion that the party which agreed to arbitrate with another entity should be estopped from denying an obligation to arbitrate a similar dispute" with the non-signatory. Ragone v. Ail. Video at Manhattan Ctr., 595 F.3d 115, 127 (2d Cir. 2010); accord Barreto v. Jec II, LLC, No. 16 Civ. 9729, 2017 WL 3172827, at *6 (S.D.N.Y. July 25, 2017).

         In deciding a motion to compel arbitration, courts apply a "standard similar to that applicable for a motion for summary judgment." Nicosia, 834 F.3d at 229 (citation omitted). Courts must "consider all relevant, admissible evidence submitted by the parties and contained in pleadings, depositions, answers to interrogatories, and admissions on file, together with . . . affidavits, " and must ...


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