United States District Court, D. New Mexico
EMPLOYBRIDGE, LLC et al., a California Limited Liability Company, and EMPLOYMENT SOLUTIONS MANAGEMENT, INC., a Georgia Corporation, Plaintiffs,
RIVEN ROCK STAFFING, LLC et al., a Nevada Limited Liability Company, LARRY SHAUN SHEPHERD, an individual, CATHERINE OLINGER, an individual, TERRY MILLER, an individual, TIMOTHY JACQUEZ, an individual, and Does 1 through 25, inclusive, Defendants.
MEMORANDUM OPINION AND ORDER IMPOSING A STAY ON
RULING ON DEFENDANTS' SUMMARY JUDGMENT MOTIONS PENDING
RESOLUTION OF ARBITRATION
MATTER comes before the Court upon Plaintiffs' Motion to
Stay Ruling on Summary Judgment Motions Pending Resolution of
Arbitration, filed May 30, 2017 (Doc. 108). Having reviewed
the parties' pleadings and the applicable law, the Court
finds that Plaintiffs' motion is well-taken and,
therefore, is granted.
EmployBridge, LLC and Employment Solutions Management, Inc.
(collectively “EmployBridge”) provide staffing
and workforce management services throughout the United
States, including Albuquerque, in a variety of staffing
sub-markets. Defendants are former employees currently
operating a competing business under the name Riven Rock
Staffing, LLC (“Riven Rock”) which is located
only three miles from their previous work location at
EmployBridge. Plaintiffs are suing Defendants for breaching
their employment agreements which include provisions relating
to non-competition, non-solicitation and nondisclosure of
trade secrets/confidential information.
addition to seeking damages and injunctive relief, the
Amended Complaint is also a demand for arbitration. Doc. 23
at 1 and 40 (seeking as relief “an order compelling
Shepherd and Olinger to submit to binding arbitration
pursuant to their contractual obligations to
EmployBridge”). According to the amended complaint, the
written agreements (“Agreements”) entered into by
Larry Shaun Shepherd and Catherine Olinger state that both of
them agree to have any dispute between themselves and
EmployBridge “submitted and determined by binding
arbitration in conformity with the procedures of the Federal
Arbitration Act and the California Arbitration Act. . .
.” Doc. 23, ¶39.
initially consented to arbitrate the claims against Shepherd
and Olinger. In the Joint Status Report, Defendants contended
that “[t]he legal claims against Shepherd and Olinger,
and most if not all discovery related to them, are subject to
binding and enforceable arbitration” and that a
“stay Order is therefore warranted.” Doc. 34 at
4. On September 21, 2016, the Court adopted the parties'
Joint Status Report. Doc. 39. Plaintiffs observe that the
Court's adoption of the parties' stipulation to a
stay effectively stayed this case, although a stay was never
specifically ordered by the Court.
this stipulation to arbitrate, Employbridge, Shepherd and
Olinger engaged the services of a private arbitrator who has
ordered the parties to mediate their claims. The parties are
now in the process of scheduling dates for their mediation
and are attempting to resolve all claims (both those before
the arbitrator and those before this Court) in a global
settlement. If the claims are not resolved through mediation,
the claims against Shepherd and Olinger will be resolved by a
hearing on the merits that will be scheduled following
completion of mediation.
motion, Plaintiffs seek a stay on the Court's ruling on
the two pending summary judgment motions filed by Defendants
(Docs. 104 and 105) until the claims before the arbitrator
have been decided.
3 of the Federal Arbitration Act (“FAA”) mandates
that, upon an application of one of the parties, courts stay
all aspects of litigation during an arbitration, including
pre-trial proceedings and trial. 9 U.S.C. §3; see
also EEOC v. Waffle House, Inc., 534 U.S. 279, 289
(2002) (stating that FAA provides for stays of proceedings in
courts “when an issue in the proceeding is referable to
also have discretion to stay nonarbitrable claims pending the
determination of arbitrable claims. Chelsea Family
Pharmacy, PLLC v. Medco Health Solutions, Inc., 567 F.3d
1191, 1196 (10th Cir. 2009). In exercising its discretion a
Court should “consider whether resolution of the
arbitrable claims will have a preclusive effect on the
nonarbitrable claims that remain subject to litigation.
Discretionary stays are appropriate when the arbitrable
claims predominate the lawsuit. Riley Mfg. Co., Inc. v.
Anchor Glass Container Corp., 157 F.3d 775, 785 (10th
Cir. 1998) (citing Genesco, Inc. v. T. Kakiuchi &
Co., 815 F.2d 840, 856 (2d Cir.1987) (holding that
“[b]road stay orders are particularly appropriate if
the arbitrable claims predominate the lawsuit and the
nonarbitrable claims are of questionable merit”).
“On the other hand, the mere fact that piecemeal
litigation results from the combination of arbitrable and
nonarbitrable issues is not reason enough to stay [the]
entire case.” Riley, 157 F.3d at 785 (citing
Coors Brewing Co. v. Molson Breweries, 51 F.3d 1511,
1517 (10th Cir. 1995) (holding that “litigation must
proceed in a ‘piecemeal' fashion if the parties
intended that some matters, but not others, be
arbitrated”)). Also, where the determination of a
nonarbitrable issue would depend on the determination of an
arbitrable issue, a stay of the nonarbitrable issue is
appropriate. See Summit Contactors, Inc. v. Legacy
Corner, LLC, 147 Fed. App'x 798, 802 (10th Cir.
2005) (noting that it may be advisable to stay litigation
pending the outcome of arbitration); see also Summer Rain
v. The Donning Co./Publishers Inc., 964 F.2d 1455, 1461
(4th Cir. 1992) (“[W]e are of the opinion that
litigation on the non-arbitrable issues which depend on the
arbitrable issues should be stayed pending
contend that both rationales for discretionary stay-the
predominance of the arbitrable claims and the dependence of
the non-arbitrable issues on the arbitrable issues-are
present here. While Defendants have brought their motions for
summary judgment only on behalf of Riven Rock, Miller and
Jacquez, Plaintiffs point out that Defendants have dedicated
large portions of their summary judgment motions to arguing
that Shepherd and Olinger did not breach their Employment
Agreements or otherwise unlawfully compete with EmployBridge:
Doc. 104 at 17-21 (arguing that “Shepherd and Olinger
did not violate their non-solicitation provisions”);
id. at 21-22 (“Shepherd did not have an
enforceable non-competition provision”); Doc. 105 at 10
(“Shepherd did nothing to solicit Ink
Impressions.”); id. (“Olinger did
nothing to influence, or attempt to influence, Ink to cease
business with Plaintiffs.”) id. at 19
(“There is no evidence Shepherd did anything with
RAC.”). Defendants themselves appear to recognize
that the non-arbitrable claims in this case are intertwined
with the arbitrable claims. In their response to this motion,
Defendants state that the non-arbitrable claims for which
Defendants seek summary judgment and for which plaintiffs
seek a stay “are entirely duplicative of the arbitrable
claims . . . for which Plaintiffs seek resolution by an
Arbitrator.” Doc. 121 at 7.
contend that Plaintiffs could have asked for a stay before
this point in the litigation, and point out that not once
during Plaintiffs' request for equitable and injunctive
relief did they ever request a stay pursuant to the FAA.
These objections are meritless. First, Defendants do not
dispute that both parties agreed to arbitrate their claims
against Defendants Shepherd and Olinger. Second, the
completion of discovery does not affect whether the
parties' agreement to arbitrate those claims should not
be enforced; the information gleaned from discovery may have
some value for the mediation process. Third, Plaintiffs'
invocation of this Court's injunctive powers at the
inception of this case has no bearing on Plaintiff's
request for a stay. Those efforts were directed to stemming
the damage resulting from Defendants' alleged continued
violation of the employment agreements pending a judicial
resolution. To that end, the parties entered into a
Stipulated Preliminary Injunction that remains in place until
either a final ruling on the merits by this Court or an
arbitrator or “until such time as an Order is issued
pursuant to any Motion filed by either party requesting a
modification to this stipulated Order.” Doc. 32 at 5.
do not seek a wholesale stay of the case and do not ask the
Court to refrain from ruling on non-arbitrable issues.
However, because Defendants' summary judgment motions
focus largely on issues that are central to the claims before
the arbitrator, a stay may well have the practical effect of
a global stay on the case. Also, because Defendants have
chosen to present in their dispositive motions for the
Court's consideration some of the same issues now before
the arbitrator, any rulings by this Court on those issues
would have a preclusive effect on the claims before the
arbitrator. Denying the request for a stay would render moot
the parties' agreement to arbitrate those claims and the
Court finds that the better course is to grant
Plaintiffs' request for a stay. See, e.g., Riley v.
Anchor Glass, 157 F.3d 775, 785 (10th Cir. 1998) (noting
that if “resolution of [the] arbitrable claims will
have a preclusive effect on the nonarbitrable claims that
remain subject to litigation, ” then those
non-arbitrable claims should be stayed). As Plaintiffs point
out, allowing the parties to proceed with the arbitration
course may result in a successful mediation, which may in
turn result in the resolution of all the claims in this case.
The Court therefore finds that there is no good reason to
deny the request for a stay, and every reason to grant it.
IT IS ORDERED that Plaintiffs' Motion to Stay Ruling on
Summary Judgment Motions Pending Resolution of Arbitration
(Doc. 108) is hereby GRANTED in that the Court hereby STAYS
any rulings on Defendants' pending summary judgment