United States District Court, D. Delaware
before me is Defendant's Motion to Dismiss Plaintiffs
First Amended Complaint Pursuant to Rule 12(b)(6) and 9
U.S.C. § 3. (D.I. 35). The Parties have fully briefed
the issues. (D.I. 36, 43, 54). For the reasons set out below,
I will deny Defendant's motion. I will, however, stay the
case pending further clarification from the arbitrator on the
arbitrability of Plaintiffs request for a preliminary
2017, Defendant hired Plaintiff to build and outfit a data
center. (D.I. 7 at ¶ 4). Their understanding regarding
the terms of the project is memorialized in the Lump Sum
Turnkey Agreement. (D.I. 37 at 16-39
("Agreement")). The project did not go smoothly.
(D.I. 7 at ¶ 6). Defendant terminated the agreement in
July 2018. (Id.).
August 2018, Plaintiff commenced an arbitration proceeding
with the American Arbitration Association ("AAA")
on certain project related claims. (D.I. 43 at 3). Its
decision to arbitrate those claims was compelled by Article 9
of the Agreement. (Id.). Article 9 provides:
9.1 Applicability of Resolution Procedures. Except
for matters requiring immediate injunctive relief, all
claims, disputes or other matters in question between the
Parties arising out of or relating in any way to this
Agreement ("Disputes") will be resolved pursuant to
9.3 further provides that Disputes are to be resolved through
Arbitration conducted by a retired judge or justice from the
AAA "in accordance with AAA's Commercial Arbitration
filed a First Amended Complaint ("FAC") on December
7, 2018, alleging trade secret misappropriation and patent
infringement. (D.I. 7). Plaintiff filed a motion for a
preliminary injunction on December 12, 2018. (D.I. 14).
Defendant filed the present motion to dismiss on January 2,
2019. In response to Defendant's motion, Plaintiff has
consented to arbitrate the claims contained in the FAC. (D.I.
43 at 5). However, Plaintiff does not agree to transfer its
motion for preliminary injunction to arbitration.
reviewing a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), the Court must accept the
complaint's factual allegations as true. See Bell
Ail. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). Rule
8(a) requires "a short and plain statement of the claim
showing that the pleader is entitled to relief."
Id. at 555. The factual allegations do not have to
be detailed, but they must provide more than labels,
conclusions, or a "formulaic recitation" of the
claim elements. Id. ("Factual allegations must
be enough to raise a right to relief above the speculative
level... on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).").
Moreover, there must be sufficient factual matter to state a
facially plausible claim to relief. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). The facial plausibility
standard is satisfied when the complaint's factual
content "allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. ("Where a complaint pleads
facts that are merely consistent with a defendant's
liability, it stops short of the line between possibility and
plausibility of entitlement to relief." (internal
quotation marks omitted)).
Federal Arbitration Act ("F AA") "is a
congressional declaration of a liberal federal policy
favoring arbitration agreements." Moses H. Cone
Mem 7 Hosp. v. Mercury Construction Corp., 460
U.S. 1, 24 (1983). Thus, under the FAA, a court should
generally resolve doubts as to the scope of an arbitration
clause in favor of arbitration. Id. at 24-25. The
liberal policy favoring arbitration stops short of favoring
arbitration of arbitrability. A court should decide that
parties agreed to arbitrate arbitrability only if the
evidence is clear and unmistakable that they did so.
First Options of Chi, Inc. v. Kaplan, 514 U.S. 938,
944 (1995); Rodriguez v. Am. Techs., Inc., 39
Cal.Rptr.3d 437, 446 (Cal.Ct.App. 2006) ("Although the
scope of an arbitration clause is generally a question for
judicial determination, the parties may, by clear and
unmistakable agreement, elect to have the arbitrator, rather
than the court, decide which grievances are
arbitrable."). If a court finds that parties clearly and
unmistakably agreed to delegate the decision of arbitrability
to the arbitrator, the court must abide by that decision
"even if the court thinks that the argument that the
arbitration agreement applies to a particular dispute is
wholly groundless." Henry Schein, Inc. v. Archer
& White Sales, Inc., 139 S.Ct. 524, 529 (2019).
issue at the center of this motion is whether, under the
terms of the Agreement, I have authority to decide whether I
have authority to resolve Plaintiffs preliminary injunction
motion. Defendant argues, based on its understanding of the
language of the Agreement, that the preliminary injunction
motion must be resolved in arbitration. Plaintiff argues that
it understands the Agreement to contain an exception for
"matters requiring immediate injunctive relief and that
this case presents such a matter.
Agreement clearly and unmistakably delegates the issue of
arbitrability to the arbitrator. California Courts regularly
find that agreements that incorporate arbitration rules that
give the arbitrator the power to decide issues of
arbitrability constitute clear and unmistakable evidence that
the parties intended the arbitrator to decide those issues.
Rodriguez, 39 Cal.Rptr.3d at 446; see also
Aanderudv. Superior Court, 221 Cal.Rptr.3d 225, 235
(Cal.Ct.App. 2017). The Agreement incorporates the AAA
Commercial Rules ("AAA Rules"). (Agreement at
§ 9.3). The AAA Rules provide that the arbitrator shall
resolve arbitrability. (D.I. 37 at 5). The Parties'
incorporation of the AAA Rules renders them binding on the
Parties, as if the rules are part of the
contract. There is no indication in the Agreement
that the Parties intended to be bound by only some of the AAA
Rules. Thus, per the clear and unmistakable provision of the
Agreement, any disagreement as to the arbitrability of an
issue must be decided by the arbitrator.
Henry Schein clarifies that there is no judicial
exception available when a contract makes a clear delegation.
Thus, I am entirely without authority to resolve whether I
have authority to resolve Plaintiffs ...