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December 26, 2002


The opinion of the court was delivered by: Jerome B. Simandle, District Judge.


Presently before the Court is defendants' motion to dismiss plaintiff's action in this Court for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), Fed.R. Civ. P, for failure to arbitrate pursuant to the Federal Arbitration Act, 9 U.S.C. § 1-16. The parties do not contest that they are subject to a binding arbitration agreement that covers this dispute. Plaintiff, however, argues that the agreement does not divest this Court's subject matter jurisdiction to consider equitable issues raised in the arbitrable dispute. For the reasons that follow, this Court finds that its equitable jurisdiction in arbitrable disputes is limited to the consideration of claims for temporary injunctive relief pending arbitration. Because plaintiff has not sought such temporary injunctive relief in this action, this Court will grant defendants' motion to dismiss.


In 1998, plaintiff Alfred Thompson, defendant Gary Nienaber, and defendant Joseph Musike were all employed by Fluor Daniel Enterprises and decided to capitalize on their knowledge of regulatory compliance and validation services for the pharmaceutical industry by forming their own corporation. (Compl. ¶¶ 7-9.) They named their corporation Millennium Validation Services ("MVS") and incorporated it in the State of Delaware. (Id. ¶ 9.) Thompson and Nienaber continued working for Fluor Daniels, but Musike left and became the first MVS employee. (Id. ¶¶ 10-11, 18.)

MVS grew and after about a year, Thompson, Nienaber, and Musike decided to enter into a shareholder agreement for MVS. (Id. ¶ 12.) Each was issued 500 shares. (Id. ¶ 15.) The agreement included an arbitration provision which stated:

15. Disputes to Terms or Provisions of This Agreement

All disputes arising from this Agreement which cannot be resolved through action of the Board of Directors or by majority vote of the Stockholders shall be resolved by mediation in accordance with the mediation rules of the American Arbitration Association ("AAA") and, if mediation fails, then by binding arbitration with a panel of three arbitrators in accordance with the Commercial Arbitration rules of the AAA. The arbitrators' written award shall state which party is in breach of this Agreement and the amount of money to be awarded, if any, and the terms of payment. The sole exception shall be the right of the Company to seek an injunction and/or damages against any departing Shareholder violating Paragraph 8 or 22 above.*fn1

(Id., Ex. A, ¶ 15.)

As the company continued to grow, the shareholders decided that Nienaber should also leave Fluor Daniels to join MVS as an employee. (Id. ¶ 18.) By the end of 2000, with defendants Musike and Nienaber working for MVS and plaintiff Thompson still working for Fluor Daniels at its Ireland site, MVS had exceeded 3 million dollars in revenue. (Id. ¶¶ 18, 19.)

During 2001, defendants Nienaber and Musike approached plaintiff Thompson and asked to buy his shares. (Id. ¶ 27.) Thompson agreed to meet with them and discuss the proposal. (Id. ¶ 29.) At the meeting on November 12, 2001, Thompson says that Nienaber and Musike gave him a document that, if he signed, would have caused him to alienate his shares immediately without knowing the consideration that he would be paid for them and in a way that would not be compliant with the shareholder agreement. (Id.) As a result, Thompson says, he refused to sign the document and left the meeting. (Id. ¶¶ 30, 31.) The parties met again on November 20, 2001 and Thompson says he again refused to sign the document because he did not know the value of his shares and left the meeting. (Id. ¶¶ 34-37.)

Thompson then received a letter dated November 20, 2001 stating that "you are no longer a director, officer or employee of Millennium," (id., Ex. C), a copy of the minutes of the November 20, 2001 meeting stating that "[i]t was determined that Mr. Thompson . . . shall be compelled to withdraw from the Corporation," (id., Ex. D), and a document indicating the consent of the shareholders to his termination with cause, (id., Ex. E). Each document was signed by defendants Nienaber and Musike and indicated two reasons for the action. First, the Board of Directors had decided "that your employment (and your continued employment) by Fluor Enterprises has created and continues to create a conflict of interest in violation of Section 8 of the Agreement."*fn2 (Id., Ex. C at 1, Ex. D. ¶ 1, Ex. E ¶ 1.) Second, the Board decided that Thompson was:

unwilling[] to perform agreed-upon and promised duties and responsibilities to Millennium in that you (a) refused to become a full-time or other substantial employee of Millennium; (b) refused to become involved in the day-to-day operations of Millennium; (c) refused to become involved in the direct marketing of Millennium; and (d) refused to disclose or reveal your involvement in Millennium in order to foster and develop the good will of Millennium.

(Id., Ex. C at 1-2, Ex. D ¶ 2, Ex. E ¶ 2.)

Thompson, through his attorney, requested mediation with the AAA on March 11, 2002 in accordance with the terms of the shareholder agreement. (Id. ¶ 40.) Carole Green, Esquire was appointed as AAA mediator for the case and on May 3, 2002, she conducted an initial telephone conference with the ...

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