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Cardionet, LLC v. Infobionic, Inc.

United States District Court, D. Massachusetts

March 24, 2017

CARDIONET, LLC, and BRAEMAR MANUFACTURING, LLC, Plaintiffs,
v.
INFOBIONIC, INC., Defendant.

          MEMORANDUM & ORDER

          Indira Talwani United States District Judge

         Defendant InfoBionic, Inc., moved to dismiss or stay Plaintiff CardioNet, LLC's non-patent claims pending arbitration. Def. InfoBionic's Mot. Dismiss Pl. CardioNet's Non-Patent Claims Because CardioNet Is Obligated to Arbitrate Them, Or, in the Alternative, to Stay Those Claims Pending Arbitration [#190]. Having concluded that dismissal is improper, see Order [#274], the court now turns to InfoBionic's request to stay the claims pending arbitration.

         I. Background

         CardioNet and Braemar Manufacturing, LLC filed this action against InfoBionic alleging patent infringement. CardioNet alleges three additional non-patent claims: misappropriation of trade secrets in violation of Mass. Gen. Laws ch. 93, § 42 and Massachusetts common law (Count VII); violation of the Pennsylvania Uniform Trade Secrets Act, 12 Pa. Cons. Stat. § 5301 et seq. (Count VIII); and unfair competition in violation of Mass. Gen. Laws ch. 93A and Pennsylvania common law (Count IX).[1]

         According to the operative complaint, Dr. Ravi Kuppuraj was employed by CardioNet from 2001 to 2002. During his tenure, Kuppuraj entered into multiple agreements with CardioNet, including a Confidentiality and Non-Disclosure Agreement, an At-Will Employment Agreement, and a Proprietary Information and Inventions Agreement. Kuppuraj subsequently left CardioNet and cofounded InfoBionic, where he became the Chief Technology Officer. As the underlying basis for its non-patent claims, CardioNet alleges that Kuppuraj “improperly accessed, copied, removed, and/or retained” confidential information upon leaving CardioNet in breach of the aforementioned contractual agreements. According to CardioNet, Kuppuraj provided the information to InfoBionic, and InfoBionic used this information in its product, the MoMe® Kardia System, without CardioNet's consent.

         InfoBionic's pending motion seeks to stay the claims on the basis of an arbitration agreement between Kuppuraj and CardioNet. The arbitration agreement, which is attached as an addendum to the At-Will Employment Agreement, reads in pertinent part:

Claims Covered by the Agreement. CardioNet and Employee [Kuppuraj] will settle by arbitration all statutory, contractual, and/or common law claims or controversies (“claims”) that CardioNet may have against Employee . . . . Claims subject to arbitration include . . . (ii) claims for breach of any contract or covenant (express or implied); . . . [and] (iv) tort claims . . . .

         The agreement “remain[s] in full force and effect, ” pursuant to a severance agreement Kuppuraj and CardioNet entered into at the conclusion of his employment in 2002.

         InfoBionic acknowledges that it is not a signatory to the arbitration agreement between Kupparaj and CardioNet but contends that CardioNet's non-patent claims against InfoBionic are referable to arbitration under the agreement on the basis of equitable estoppel. CardioNet responds that InfoBionic is not entitled to rely on the agreement between CardioNet and Kupparaj, that the claims do not fall within the scope of the agreement, [2] and that InfoBionic has waived its rights to arbitration.

         II. Discussion

         A. Standard

         The Federal Arbitration Act, 9 U.S.C. § 3, allows a party to seek a stay on the ground that an issue is referable to arbitration under an agreement in writing for such arbitration. Under this section, the court, “upon being satisfied that the issue involved . . . is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.”

         B. The Court is Satisfied that InfoBionic May Invoke the Arbitration Agreement Between Kupparaj and CardioNet Under the Doctrine of Equitable Estoppel

         “[A] party cannot be required to submit to arbitration any dispute which [it] has not agreed so to submit.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002). Accordingly, a party seeking to enforce an arbitration agreement bears the burden of showing “that a valid agreement to arbitrate exists, that the movant is entitled to invoke the arbitration clause, that the other party is bound by that clause, and that the claim asserted comes within the clause's scope.” Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir. 2011) (quoting InterGen N.V. v. Grina, 344 F.3d 134, 142 (1st Cir. 2003)). A non-signatory to an arbitration ...


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