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Johnson v. Dentsply International, Inc.

United States District Court, N.D. Oklahoma

September 27, 2017




         Now before the Court is defendant Dentsply Sirona Inc.'s (Dentsply) motion (Dkt. # 37) to confirm the arbitrator's ruling on defendant's motion for a preliminary injunction.


         Defendant is a business that manufactures, markets, and sells endodontic products for the dental industry. Dkt. # 16-4, at 22. Plaintiff is an endodontist and “well recognized and respected figure in the dental and endodontic business.” Id. The parties entered into an agreement, effective June 1, 2007 (2007 Agreement), under which plaintiff would perform consulting services for defendant for ten years and receive annual compensation. Id. at 23-25. Defendant would also pay plaintiff royalties for inventions assigned to defendant under the 2007 Agreement. Id. at 25-27. Plaintiff agreed not to disclose any confidential information about defendant's business affairs and not to work in competition with defendant for three years after the termination of the 2007 Agreement, which expires on December 31, 2017. Id. at 27-28; Dkt. 35-1, at 2. The 2007 Agreement also contains a dispute resolution clause that states:

Any dispute or claim relating to this Agreement, other than a claim for equitable relief[, ] or any amendment thereof, including without limitation as to its existence, validity, enforceability, interpretation, performance, breach or damages, including claims in tort, whether arising before or after the termination of this Agreement, shall be settled only by binding arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association (“Rules”); provided, however, that: (a) the arbitration shall take place in Chicago, Illinois; (b) there shall be one (1) arbitrator, who shall be selected under the normal procedures prescribed in the Rules; (c) subject to legal privileges each party shall be entitled to discovery in accordance with the Federal Rules of Civil Procedure; (d) at the arbitration hearing each party may present evidence as prescribed by the arbitrator; (e) the arbitrator shall not have the power to award punitive damages; (f) the arbitrator shall issue a written decision explaining the basis of such decision; (g) such decision shall be final, binding and enforceable in any court of competent jurisdiction; (h) the parties shall share equally any fees and expenses of the arbitrator and of the American Arbitration Association.

Dkt. # 16-4, at 30.

         On July 12, 2016, plaintiff initiated this suit in the District Court for Tulsa County, State of Oklahoma, seeking a declaration that the confidentially and non-compete provisions of the 2007 Agreement are unenforceable and an injunction against defendant from seeking to enforce either provision. Dkt. # 2-1. On August 8, 2016, defendant removed the suit to this Court on the basis of diversity jurisdiction under 28 U.S.C. § 1332(a)(1). Dkt. # 2. Plaintiff moved to remand to Tulsa County, arguing that this Court does not have subject matter jurisdiction because the amount in controversy does not exceed $75, 000 as required under 28 U.S.C. § 1332(a). Dkt. # 23. In response, defendant moved to dismiss, stay, and/or transfer this proceeding, arguing that the 2007 Agreement binds the parties to resolve plaintiff's claims in arbitration. Dkt. # 16. On October 7, 2016, this Court entered an opinion (Dkt. # 33), concluding that it has jurisdiction over this action and that plaintiff's claim is arbitrable under the 2007 agreement. The Court stayed this action pending arbitration, and entered an administrative closing order (Dkt. # 34), directing the Court Clerk to close this case pending either an order of the Court reopening the action, or until this case is dismissed with prejudice by stipulation of the parties.

         On June 19, 2017, the arbitrator issued a ruling (Dkt. # 35-1) on defendant's motion for a preliminary injunction (the Ruling). The arbitrator concluded that, for the purposes of defendant's motion, the 2007 agreement is valid and in effect. Id. at 2. In addition, he concluded that, in order to prevent irreparable harm to defendant, it was necessary to enjoin plaintiff from breaching the 2007 agreement's confidentiality and non-compete provisions, as plaintiff has already taken actions benefitting defendant's competitors and has engaged in other conduct against defendant's best interests. Id. at 3. Accordingly, the arbitrator granted defendant a preliminary injunction prohibiting plaintiff from competing with defendant, revealing any of defendant's confidential information, or intentionally taking action inconsistent with defendant's best interests. Id.

         In the Ruling, the arbitrator stated three things that are particularly relevant to the resolution of the instant motion. First, that there will be a final evidentiary hearing, scheduled for “later this year;” according to the parties, this hearing is now set for sometime in December 2017. Id. at 2; Dkt. # 37, at 2. Second, the arbitrator stated, “[a]ll rulings herein are tentative and based on the record presented thus far. Although some of these conclusions may be less likely to change than others, all of them are subject to revision after the final, evidentiary hearing.” Dkt. # 37, at 2. Finally, the arbitrator stated that at the initial hearing, “[plaintiff] stated that he had no intention of violating the 2007 agreement.” Id. at 3. This fact, the arbitrator continued, “eliminates any hardship the injunction might otherwise impose on [plaintiff] given that the final evidentiary hearing is scheduled to take place before the 2007 agreement expires.” Id.

         On August 11, 2017, defendant filed with this Court a motion to the lift the stay and reopen the case (Dkt. # 35), which the Court granted in an earlier order (Dkt. # 36), and a motion to confirm the arbitrator's ruling for a preliminary injunction (Dkt. # 37), which is currently before the Court.


         The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. (1925), “creates the ‘federal substantive law of arbitrability . . . .'” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). The “principal purpose” of the FAA is to “ensure that private arbitration agreements are enforced according to their terms.” Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 478 (1989). The 2007 Agreement provides that any arbitration will take place pursuant to the Commercial Arbitration Rules of the American Arbitration Association (AAA Commercial Rules). Dkt. # 16-4, at 30. Pursuant to Rule 37, the “arbitrator may take whatever interim measures he or she deems necessary, including injunctive relief, ” and “interim measures may take the form of an interim award . . . .” Am. Arbitration Ass'n, Commercial Arbitration Rules and Mediation Procedures R. 37(a) (Oct. 1, 2013); Dkt. # 42-1, at 25. Pursuant to Rule 47, the “arbitrator may grant any remedy or relief that the arbitrator deems just or equitable and within the scope of the agreement of the parties, ” and “[in] addition to a final award, the arbitrator may make other decisions including interim, interlocutory, or partial rulings, orders, and awards.” Id. R. 47(a)-(b); Dkt. # 42-1, at 29.

         Sections 9-11 of the FAA, “provide for expedited judicial review to confirm, vacate, or modify arbitration awards.” Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 758 (2008). Section 9 provides, in pertinent part:

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration. . .then at any time within one year after the award is made any party to the arbitration may apply to the court . . . for an order confirming the award, and thereupon the court must grant such an order unless the award ...

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