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A New York federal district court ruled that an exemption for claims for specific performance precluded a determination that the arbitration clause “clearly and unmistakably” delegated questions of arbitrability to the arbitrator.
In Eaton Vance Management v. ForstmannLeff Associates, LLC, 2006 WL 2331009 (S.D.N.Y. Aug. 11, 2006), Tooke worked for ForstmannLeff as an investment portfolio manager. Tooke’s employment agreement prohibited her from soliciting any ForstmannLeff clients within a year of ending her employment.
The agreement also contained an expansive arbitration clause that exempted any claims by ForstmannLeff for specific performance of the agreement’s restrictive covenants, including the non-solicitation provision.
When Tooke resigned from ForstmannLeff to work for Eaton Vance, ForstmannLeff filed an arbitration demand, seeking to prevent Tooke from soliciting any of her former clients. In response, Eaton Vance and Tooke filed a declaratory judgment action, seeking a determination that the non-solicitation provision was unenforceable. ForstmannLeff moved for dismissal of Tooke’s claims pursuant to the arbitration clause.
In support of its motion, ForstmannLeff argued that the arbitrator, not the Court, should decide whether Tooke’s claims were within the scope of the arbitration clause. As the Court noted, “the question of arbitrability is an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.” Citing Katz v. Feinberg, 290 F.3d 95, 97 (2d Cir. 2002), the Court found that ForstmannLeff’s right to sue for specific performance and other injunctive relief precluded a determination that the arbitration clause “clearly and unmistakably” delegated questions of arbitrability to the arbitrator.
The Court then turned to the arbitrability question. Since Tooke’s claims pertained to the enforceability of the non-solicitation provision, and since the arbitration clause applied to any claim “arising out of or relating to” the employment agreement, the Court concluded that her claims fell within the arbitration clause. Accordingly, the Court dismissed Tooke’s claims.
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