951 F. Supp. 2d 729
E.D. Pa.2013Background
- Plaintiffs are former Unisys internal IT employees aged 40+ who were terminated in April 2010.
- Unisys outsourced part of its IT function to Hexaware under a Master Services Agreement; terminated employees were offered Hexaware jobs or told they would resign and lose severance/unemployment benefits.
- Terminated employees who joined Hexaware largely consisted of older, more senior workers; those retained were younger.
- Plaintiffs entered Hexaware Employment Agreements in May 2010 containing arbitration clauses and New Jersey governing law.
- Unisys, a non-signatory to the Hexaware agreements, seeks to compel arbitration under FAA and theories of third-party beneficiary and equitable estoppel.
- The court denied arbitration for Count I (April 2010 terminations) with prejudice and denied Count II without prejudice to renewal after discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Count I falls within the arbitration clause scope. | MacDonald argues no arbitration as terminations preceded Hexaware employment. | Unisys contends terms relate to Hexaware employment disputes. | Count I not within scope; arbitration denied for Count I. |
| Whether Count II can be compelled through non-signatory enforcement. | Plaintiffs contend Pennsylvania law governs estoppel/third-party beneficiary analysis. | Unisys argues non-signatory enforcement under state/federal principles. | Denied without prejudice; may renew after discovery under summary judgment standard. |
| What law governs equitable estoppel and third-party beneficiary analysis. | Pennsylvania law should apply per parties. | Pennsylvania or New Jersey law; choice of law resolved by Pennsylvania application per parties. | Choice-of-law not resolved; Pennsylvania law governs, but factual discovery needed for Count II. |
Key Cases Cited
- Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir.2013) (guidance on when to allow discovery on arbitrability)
- First Liberty Inv. Grp. v. Nicholsberg, 145 F.3d 647 (3d Cir.1998) (arbitration coverage should be read broadly in the presence of uncertainty)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (S. Ct.2009) (nonparties may compel arbitration under state contract law)
- Spence v. ESAB Group, Inc., 623 F.3d 212 (3d Cir.2010) (predict Pennsylvania law when controlling decisions absent; predictive approach for choice of law)
- Century Indem. Co. v. Certain Underwriters at Lloyd’s, London, 584 F.3d 513 (3d Cir.2009) (FAA policy; arbitrability and enforceability)
- Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156 (3d Cir.2009) (issue-by-issue arbitrability analysis under FAA)