United States District Court, D. New Jersey
before me is the motion of defendant Justin Lieberman to
compel arbitration and stay this action as against all
defendants. (DE 44). Also before me is the motion (DE 45) of
defendant Crosscountry Mortgage, Inc.
("Crosscountry") joining in Lieberman's motion
to compel arbitration and requesting that the claims against
Crosscountry be stayed pending the outcome of that
arbitration. The motion to compel arbitration of the claims
against Lieberman is granted to the extent that those claims
are referred to the arbitrator, who will decide the issue of
arbitrability. Only the claims against Lieberman in this
action are stayed. CrossCountry's motion to stay the
claims against itself in this action is denied.
26, 2018, loanDepot.com ("loanDepot") filed a
Complaint (DE 1), attaching an application for temporary
restraints and injunctive relief. (DE 1-2, 1-3). On July 27,
2018, this Court denied loanDepot's application for
temporary restraints, but ordered defendants Crosscountry,
Matthew Reid, and Andrea Manara to appear before the Court to
show cause why the Court should not enter an order granting
loanDepot its requested preliminary injunction. (DE 5, 6, 7).
On August 1, 2018, loanDepot withdrew its application for a
preliminary injunction, and the scheduled hearing was
cancelled. (DE 9, 10, 11).
October 19, 2018, loanDepot filed its (1st)
Amended Complaint. (DE 33, cited herein as "1AC")
The Amended Complaint brings claims against Lieberman for
breach of the duty of loyalty by acquiring adverse interests
and taking action against loanDepot, his employer (Count
Five); aiding and abetting breach of the duty of loyalty by
violating employer policy on customer privacy (Count Six);
aiding and abetting breach of the duty of loyalty by
misappropriating of trade secrets and confidential
information (Count Seven); tortious interference with the
contracts of Reid, Christopher Albanese, Peter Costakos, and
Peter Lucia with loanDepot (Count Eight); tortious
interference with contractual relationships and prospective
economic advantage (Count Nine); employee piracy (Count Ten);
common law misappropriation of trade secrets and confidential
information (Count Eleven); actual and threatened
misappropriation under the New Jersey Trade Secrets Act
(Count Twelve); violation of the Defend Trade Secrets Act
(Count Thirteen); unfair competition (Count Fifteen); and
civil conspiracy (Count Seventeen). (1AC)
Amended Complaint seeks permanent injunctive relief.
(Id. p. 43). loanDepot has not, however, sought
temporary restraints or a preliminary injunction against
Lieberman to "protect its rights pending the outcome of
arbitration" as provided for in the Branch Operator
Agreement, discussed infra.
November 27, 2018, Lieberman filed this motion to compel
arbitration and stay the entire action. (DE 44). On November
27, 2018, defendant Crosscountry filed a motion supporting
Lieberman's motion to compel arbitration and seeking to
stay this action as against itself, pending the outcome of
Liberman's arbitration. (DE 45). On December 19, 2018,
loanDepot filed an opposition to Lieberman's motion. (DE
47). On January 2, 2019, Lieberman filed a reply in support.
15, 2011, Lieberman signed a Branch Operator Agreement in
connection with becoming branch supervisor of the Aberdeen,
New Jersey branch of loanDepot. (1AC ¶ 64). loanDepot
did not attach Lieberman's Branch Operator Agreement to
the Amended Complaint. Even so, "a document integral to
or explicitly relied upon in the complaint may be considered
without converting the motion to dismiss into one for summary
judgment." In re Burlington Coat Factor Sec.
Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).
Branch Operator Agreement is "explicitly relied
upon" or "integral" to the Amended Complaint.
Id. The Amended Complaint expressly refers to
Lieberman's Branch Operator Agreement several times. In
the facts section, the Complaint lists the individual
defendants' post-employment obligations, including those
found in the non-solicitation provisions in Lieberman's
Branch Operator Agreement. (1AC ¶ 64). Discussing
loanDepot's "strict confidentiality policies"
(id. ¶ 66), the Amended Complaint lists the
confidentiality and enforcement provisions in the Branch
Operator Agreement (id. ¶ 71). In addition, the
Amended Complaint alleges that after Lieberman left the
company and became an employee of Crosscountry (id.
¶ 77), loanDepot sent a letter to Lieberman reminding
him of his post-employment obligations to loanDepot,
including the obligation under the Branch Operator Agreement
to preserve Confidential Information and not to solicit
loanDepot's employees (id. ¶ 78). The
substantive Counts expressly incorporate the preceding
factual allegations, including those relating to the Branch
Operator Agreement. (See e.g., Count Five, Am.
Compl. p. 25). There is apparently no dispute as to the
existence or authenticity of the Branch Operator Agreement. I
may therefore consider it without converting Lieberman's
motion to one for summary judgment.
Branch Operator Agreement includes an arbitration clause,
located at Section 16(f):
(f) Arbitration. In the event that any dispute should arise
between the parties hereto as to the validity of this
Agreement, or as to the construction, enforcement or
performance of this Agreement, such dispute shall be settled
by arbitration before a single arbitrator conducted at
Norfolk County, Massachusetts, in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association. The full rules of discovery shall apply to any
such proceeding. The decision of the arbitrator shall be
final and binding on all parties thereto, and judgment upon
any award entered in such arbitration shall pay to the
successful party all costs and expenses, including actual
attorneys' fees, incurred therein by such successful
party and such costs, expenses and attorneys' fees shall
be included in and as part of such judgment or award. The
determination of the arbitrator shall be conclusive on the
matter of which party is successful for purposes hereof. In
no event, however, shall this paragraph be deemed to preclude
a party hereto from instituting legal action seeking relief
in the nature of a restraining order, an injunction[sic] or
the like in order to protect his or its rights pending the
outcome of an arbitration hereunder. With respect to matters
submitted to arbitration other than claims for payment of
monies due, the parties shall continue to perform their
obligation hereunder relative to said matters pending
resolution of the dispute by arbitration.
(Branch Operator Agreement, §16(f)).
Circuit's case law has meandered somewhat in defining the
proper standard of review of a motion to compel arbitration.
The upshot, however, is fairly clear. Where the issue can be
decided without evidence, it will be, based on an application
of the familiar Rule 12(b)(6) standard to the face of the
pleadings. Failing that, however, the Court will permit
discovery and decide the issue on a summary judgment
standard, pursuant to Rule 56. If there is a genuine issue of
fact, summary judgment will be denied and the issues will be
arbitration is a "matter of contract" between two
parties, "a judicial mandate to arbitrate must be
predicated upon the parties' consent." Guidotti
v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764,
771 (3d Cir. 2013) (quoting Par-Knit Mills, Inc. v.
Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir.
1980)). Pursuant to the Federal Arbitration Act
("FAA"), a court may enforce a contract to
arbitrate, but only if the court is satisfied that the
"making of the agreement" to arbitrate is not
"in issue." Id.
Guidotti v. Legal Helpers Debt Resolution, the Third
Circuit stated the approach a court must take on a motion to
compel arbitration. The judiciary must balance the competing
goals of the FAA: the speedy and efficient resolution of
disputes, and the enforcement of private agreements.
Id. at 773. Reconciling sometimes murky precedent in
light of those competing interests, the Guidotti
court reasoned that where "the affirmative defense of
arbitrability of claims is apparent on the face of a
complaint (or . . . documents relied upon in the complaint),
. . . the FAA would favor resolving a motion to compel
arbitration under a motion to dismiss standard without the
inherent delay of discovery." Id. at 773-74.
Such an approach "appropriately fosters the FAA's
interest in speedy dispute resolution. In those
circumstances, '[t]he question to be answered . . .
becomes whether the assertions of the complaint, given the
required broad sweep, would permit adduction of proofs that
would provide a recognized legal basis' for rejecting the
affirmative defense." Id. at 774 (quoting
Leone v. Aetna Cas. & Sur. Co., 599
F.2d 566, 567 (3d Cir. 1979).
many cases, however, a more deliberate pace is required, in
light of both the FAA's insistence that private
agreements be honored and the judicial responsibility to
interpret the parties' agreement, if any, to
[The Rule 12(b)(6) standard will not be appropriate] when
either the motion to compel arbitration does not have as its
predicate a complaint with the requisite clarity to establish
on its face that the parties agreed to arbitrate or the
opposing party has come forth with reliable evidence that is
more than a naked assertion . . . that it did not intend to
be bound by the arbitration agreement, even though on the
face of the pleadings it appears that it did. Under the first
scenario, arbitrability not being apparent on the face of the
complaint, the motion to compel arbitration must be denied
pending further development of the factual record. The second
scenario will come into play when the complaint and
incorporated documents facially establish arbitrability but
the non-movant has come forward with enough evidence in
response to the motion to compel arbitration to place the
question in issue. At that point, the Rule 12(b)(6) standard
is no longer appropriate, and the issue should be judged
under the Rule 56 standard.
Under either of those scenarios, a restricted inquiry into
factual issues will be necessary to properly evaluate whether
there was a meeting of the minds on the agreement to
arbitrate and the non-movant must be given the opportunity to
conduct limited discovery on the narrow issue concerning the
validity of the arbitration agreement. In such circumstances,
Rule 56 furnishes the correct standard for ...