ORDER DENYING MOTION TO COMPEL ARBITRATION
INTRODUCTION
Defendants seek to steer this case into arbitration even though they have no agreement with anyone to arbitrate the case. Instead, they rely on a non-party’s employment agreements with plaintiff, which contained an arbitration clause, and attempt to invoke “equitable estoppel.” This order holds that defendants have not shown the elements necessary to justify application of equitable estoppel.
STATEMENT
In 2009 and 2012, while working at Way-mo LLC, Anthony Levandowski signed two “At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement[s].” Each contained an arbitration clause that provided in relevant part (Dkt. No. 138-1 at 38, 50 (originals in all caps, emphasis added)):
In consideration of my employment with the Company, its promise to arbitrate all employment-related disputes, and my receipt of the compensation, pay raises and other benefits paid to me by the Company, at present and in the future, I agree that any and all controversies, claims, or disputes with anyone (including the Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such or otherwise), whether brought on an individual, group, or class basis, arising out of, relating to, or resulting from my employment with the Company or the termination of my employment with the Company, including any breach of this agreement, shall be subject to binding arbitration under the arbitration rules set forth in California Code of Civil Procedure Section 1280 through 1294.2, including section 1283.05 (the “Rules”) and pursuant to California law....I further understand that this agreement to arbitrate also applies to any disputes that the Company may have with me.
Pursuant to the 2009 and 2012 agreements, Waymo initiated two arbitration proceedings against Levandowski on October 28, 2016, asserting claims for breach of contract, breach of fiduciary duties or duties of loyalty, fraud-deceit, tortious interference with contract, tortious interference with prospective economic advantage, unfair competition, and unjust enrichment (Dkt. Nos. 138-1,138-3). The gravamen of those proceedings is Waymo’s allegations of employee poaching by Levandowski. Neither proceeding has anything to do with Waymo’s claims of trade secret misappropriation against defendants here. As of the date of this order, those arbitration proceedings remain the only proceedings by Waymo against Levandowski.
Although our defendants — Uber Technologies, Inc., Ottomotto LLC, and Otto Trucking LLC — are not signatories to either the 2009 or the 2012 agreement, they now wish to take advantage of those agreements to compel Waymo to arbitrate this case based on “equitable estoppel.” In addition to the instant motion to compel arbitration of Waymo’s trade secret misappropriation and unfair competition claims, defendants initiated a new arbitration proceeding against Waymo on March 31 of this year, seeking a declaration that said claims are (1) subject to arbitration and (2) meritless (Dkt. No. 243-1 ¶ 9).
ANALYSIS
Both sides agree that, under the Federal Arbitration Act, defendants may enforce the 2009 and 2012 agreements only if the relevant state contract law permits them to do so (Dkt. Nos. 204 at 9; 243 at 2). See
Contrary to defendants’ suggestion, California law does not hold that a nonsignatory may enforce the terms of an arbitration agreement merely because the agreement uses broad language (see Dkt. No. 125 at 10-12). Actually, California law recognizes that nonsignatories may enforce arbitration agreements only based on certain enumerated principles, none of which turn on the broadness of an agreement’s language. See Goldman v. KPMG LLP,
Under California law, a party that is not otherwise subject to an arbitration agreement will be equitably estopped from avoiding arbitration only under two specific circumstances. Murphy v. DirecTV, Inc.,
Where a nonsignatory seeks to enforce an arbitration clause, the doctrine of equitable estoppel applies in two circumstances:
(1) when a signatory must rely on the terms of the written agreement in asserting its claims against the nonsigna-tory or the claims are intimately founded in and intertwined with the underlying contract, and (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and another signatory and the allegations of interdependent misconduct are founded in or intimately connected with the obligations of the underlying agreement.
Kramer,
Significantly, the policy underlying the two Goldman prongs is intended to prevent a' plaintiff from having it both ways, i.e., seeking to hold a nonsignatory liable via duties imposed by an agreement, while resisting arbitration called for by the same agreement on the ground thát the defendant is a nonsignatory. Murphy,
With respect to the first Goldman prong, this order holds that Waymo need not rely on the 2009 and 2012 agreements to prove its case against defendants, and that Waymo’s claims are not intimately founded in or intertwined with those agreements. With respect to the second Goldman prong, Waymo’s allegations of interdependent conduct by Levandowski and defendants are not founded in or intimately connected with the obligations of the 2009 and 2012 agreements. Indeed, it appears Waymo can make out its case-in-
With respect to the first Goldman prong, defendants argue that Waymo relies on the 2009 and 2012 agreements in asserting claims for trade secret misappropriation here (Dkt. No. 243 at 6-7). Specifically, defendants point out that Waymo “repeatedly invokes the confidentiality provisions of its employment contracts” to show reasonable efforts to maintain secrecy (id, at 6). But Waymo need not rely on the terms of its written agreements merely because it makes reference to such agreements. See Goldman,
Next, and in' a similar vein, defendants claim Waymo must “show that Mr. Levan-dowski acquired the trade secrets through improper means, or that Uber derived its knowledge from Mr. Levandowski, who owed a duty to Waymo to maintain the secrecy over (or limit the use of) those alleged trade secrets. Thus, the [2009 and 2012] Agreements are central to Waymo’s ability to prove liability under its trade secret claims” (Dkt. No. 243 at 8). Improper means, however, are not limited to the violation of contractual obligations. See 18 Ú.S.C. 1839(6); Cal. Civ. Code § 3426.1. As stated, Waymo has expressly forsworn reliance on its agreements with Levandow-ski. If Waymo can assert its misappropriation claims independent of the existence of the 2009 and 2012 agreements, then it does not rely on those agreements for purposes of equitable estoppel under Goldman. See Kramer,
Indeed, Waymo contends its misappropriation claims here are based, not on any contractual obligation, but on Levandow-ski’s duty of loyalty under California law (Dkt. No. 204 at 13-14). See Huong Que, Inc. v. Luu,
Here, as stated, Waymo’s claims against defendants are not “dependent on or inextricably bound up with the contractual obligations of the agreements] containing the arbitration clause,” See id. at 1232. At bottom, defendants have not shown that Waymo relies on the 2009 or 2012 agreements to assert its claims against defendants while simultaneously seeking to avoid the arbitration clauses of- those agreements. The inequities that equitable estoppel is designed to address are simply not present. Accordingly, equitable estop-pel does not apply. See id. at 1231-32; Kramer,
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In their reply brief, defendants unfairly and for the first time identify “an- entire body of case law holding that a nonsignato-ry may compel a signatory to arbitrate its claims” (Dkt. No. 243 at 2-3,11-13). Every decision cited by defendants, however, is inapposite or readily distinguishable. As illustrative examples, this order addresses four.
In Metalclad Corp. v. Ventana Environmental Organizational Partnership, Ven-tana proposed to Metalclad that Ventana subsidiary Geologic would acquire Metal-clad subsidiary Esconsa, the holding company for Metalclad’s -planned waste disposal project, in exchange for Ventana’s investment in the project,
In Metalclad, equitable estoppel applied because Metalclad’s claims against Venta-na and Geologic, whether cast in tort or contract, were “based on the same facts and.. .inherently' inseparable” such that Metalclad effectively “[sought] the benefit of [its contract with Geologic] in the form of damages from Ventana while avoiding its arbitration provision.” Under those circumstances, equitable estoppel prevented Metalclad'from having it both ways. Id. at 1717-18,
In Turtle Ridge Media Group, Inc. v. Pacific Bell Directory, equitable estoppel
In Uptown Drug Co., Inc. v. CVS Caremark Corp., the plaintiffs trade secret misappropriation claims were “founded [in] and intertwined with the underlying contract obligations” of an agreement containing an arbitration clause because, to prevail on those claims, the plaintiff would have had to prove that a defendant’s use of information exceeded the scope of use expressly permitted under that agreement.
In Torbit, Inc. v. Datanyze, Inc., Torbit asserted trade secret misappropriation claims against a former employee, Ilya Semin, and his competing company, Data-nyze, alleging that Semin had downloaded and stolen Torbit’s trade secrets and proprietary information for Datanyze’s use. No. 5:12-CV-05889-EJD,
Defendants claim “Torbit compelled arbitration based on facts that are virtually identical to those presented here” but gloss over the fact that Torbit relied on federal case law predating the Supreme Court’s holding in Carlisle. Torbit did not mention California law, Murphy, Kramer, or Goldman. Defendants attempt to overcome this problem with a footnote that says, “Kramer did not cite Torbit or say anything that was inconsistent with the holding and rationale in Torbit” (Dkt. No. 243 at 11-12 & n.7). But Kramer did not cite Torbit for the simple reason that it predated Torbit by approximately two weeks.
Significantly, the legal framework set forth by Goldman and adopted by our
As explained, however, Goldman rejected this “touch matters” approach under California law.
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One final point of equity deserves mention. Defendants have repeatedly accused Waymo of using “artful” or “tactical” pleading to evade its arbitration obligations by omitting Levandowski as a defendant (see, e.g., Dkt. Nos. 125 at 9; 243 at 12). These accusations are unwarranted. Waymo has honored its obligation to arbitrate against Levandowski by arbitrating its claims (concerning employee poaching) against Levandowski. Its decision to bring separate claims against defendants in court was not only reasonable but also the only course available, since Waymo had no arbitration agreement with defendants. Even though he is not a defendant here, moreover, Levandowski’s assertion of his Fifth Amendment privilege has obstructed and continues to obstruct both discovery and defendants’ ability to construct a complete narrative as to the fate of Waymo’s purloined files. As a practical matter, it is hard to imagine how consolidating proceedings as to Levandowski and defendants, whether here or in arbitration, could alleviate these difficulties.
CONCLUSION
For the foregoing reasons, defendants’ motion to compel arbitration is Denied.
IT IS SO ORDERED.