JED S. RAKOFF, District Judge.
Plaintiff Kannan Ramasamy brings this action asserting claims of breach of contract against defendant Essar Global Ltd. in connection with the compensation he alleges he is due for his employment as the CEO and COO of Aegis Communications, a fully-owned subsidiary of defendant. Pending before the Court is defendant's motion to stay or dismiss the above-captioned case in favor of arbitration, and to dismiss the case for lack of personal jurisdiction over the defendant and for failure to state a claim. After careful consideration of the parties' briefs and oral arguments, the Court hereby grants defendant's motion and dismisses the case in favor of arbitration.
The pertinent allegations, drawn from plaintiff's Amended Complaint ("Am. Compl."), are as follows. In 2004, plaintiff Kannan Ramasamy was hired by Mr. Ravi Ruia, Vice Chairman of Essar Global Ltd. ("Essar"), to be the Chief Operating Officer ("COO") of Aegis Communications ("Aegis Coram."), one of Essar's many wholly-owned subsidiaries. Am. Compl. ¶¶ 12, 16. Mr. Anshuman Ruia, who served on the board of directors of both
In early September 2006, Essar decided to convert Aegis Comm., which until then had been a publicly traded company, into a private company before the end of 2006. Id. ¶ 26. Plaintiff was informed by Anshuman Ruia that his stock options would become worthless once the going-private transaction was complete. Id. ¶ 27. "As an inducement for plaintiff to remain with Aegis Comm. during the going-private transaction, and in consideration of the anticipation devaluation" of plaintiff's stock options, Anshuman Ruia, allegedly on behalf of Essar, promised plaintiff a 1% equity stake in Aegis Ltd. in exchange for remaining as CEO and COO during the going-private transaction. Id. After that transaction was completed, in November 2006, plaintiff entered into another agreement with Anshuman Ruia, allegedly on behalf of defendant Essar, which gave plaintiff an additional .25% equity stake in Aegis Ltd. in exchange for remaining with Aegis Comm. as CEO "past September 2007." Id. ¶¶ 32-38.
The Amended Complaint further alleges that, despite plaintiff's fulfillment of the obligations of these contracts, and despite his attempts to obtain the Aegis Ltd. stock transfer agreements on multiple occasions, Essar has not provided him with stock certificates evidencing the transfer of the 1.25% equity interest in Aegis Ltd. that plaintiff alleges he is due. Id. ¶¶ 41-43. Accordingly, on June 8, 2011, plaintiff commenced this action, asserting breach of contract, promissory estoppel, and violation of Chapter 93A of the Massachusetts General Laws
Defendant argues that the Court must stay or dismiss this action in favor of the arbitration clauses in Ramasamy's original employment agreement and his supplemental employment agreement with Aegis Communications (the "Aegis Employment Agreements"). The relevant provision in those agreements reads:
Declaration of Israel E. Kornstein in Support of Defendant Essar Global, Ltd.'s Motion to Stay or Dismiss This Action ("Kornstein Decl.") Exs. B ¶ 13(j), C ¶ 5(k).
Though defendant Essar seeks to invoke the arbitration clause against plaintiff under § 3 of the Federal Arbitration Act, Essar was not a signatory to either employment contract. But according to the
In particular, since Essar is not a signatory to the Aegis Employment Agreements, it instead seeks to rely on Texas's interpretation of the doctrine of equitable estoppel to force plaintiff to arbitrate his claims. See Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 305-6 (Tex.2006) (citing Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524, 527 (5th Cir.2000)). Under Texas law, equitable arbitration estoppel allows a non-signatory to an arbitration agreement, in limited circumstances, to claim the benefit of the arbitration agreement and force the signatory to the contract to arbitrate the claims against the non-signatory. Grigson, 210 F.3d at 526.
Although defendant intimates that the arbitrator, not this Court, should determine whether equitable arbitration estoppel applies here, Memorandum of Law in Support of Defendant Essar Global, Ltd.'s Motion to Stay or Dismiss This Action ("Def. Br."), at 6 n.2 (citing Contec Corp. v. Remote Solution Co., Ltd., 398 F.3d 205, 211 (2d Cir.2005)), the Court disagrees. The issue here is whether a defendant may force a plaintiff to adhere to an arbitration clause the defendant did not sign. This is a "gateway matter" that is for the Court to determine. In re Rubiola, 334 S.W.3d 220, 224 (Tex.2011) ("Whether a non-signatory can compel arbitration pursuant to an arbitration clause questions the existence of a valid arbitration clause between specific parties and is therefore a gateway matter for the court to decide.").
Different states apply different standards for invoking equitable arbitration estoppel. Grigson, 210 F.3d at 527. Texas, having adopted the opinion of the Fifth Circuit in Grigson, applies the "intertwined claims" standard, which allows a non-signatory to compel arbitration in two different circumstances:
Id. (quoting MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999)) (internal citations and quotations omitted; emphasis removed); accord Meyer,
Ramasamy argues that his fight is with Essar, not Aegis, and that the Court need not rely on his contracts with Aegis to resolve this dispute. See Plaintiff Kannan Ramasamy's Opposition to Defendant Essar Global Ltd.'s Motion to Stay or Dismiss ("Pl. Opp. Br.") at 12-17. But his complaint speaks otherwise. The crux of plaintiff's complaint is that the agreement with Mr. Anshuman Ruia promising plaintiff an equity interest in Aegis Ltd. represented a new promise with Essar Global Limited, separate from and wholly independent of Aegis Communications, his employer. Under the Aegis Employment Agreements, Ramasamy was originally going to receive 6.9 million stock options from Aegis Communications in exchange for serving as Aegis's COO, and later CEO from 2004 to 2006. Am. Compl. ¶¶ 19-23. What the complaint also says, however, is that when Ramasamy learned that Essar was taking Aegis Communications private, and that his stock options would be rendered worthless, he agreed to take a 1% equity interest in Aegis Ltd. as compensation both to remain CEO/COO of Aegis Communications during the going-private transaction and "in substitution for the promised, but soon to be worthless, 6.9 million stock options in Aegis Communications." Id. ¶ 28 (emphasis added).
Since this new agreement with Mr. Ruia substituted for plaintiff's original compensation under the Aegis Employment Agreements, the Court cannot resolve the dispute between the parties without "reference to" or "presum[ing] the existence of" those Agreements. Grigson, 210 F.3d at 524 (quoting MS Dealer, 177 F.3d at 947); accord In re James E. Bashaw & Co., 305 S.W.3d 44, 55 (Tex.App.2009) (citing In re Weekley Homes, L.P., 180 S.W.3d 127, 131-32 (Tex.2005)). Whether plaintiff is entitled to his compensation under this oral contract purportedly agreed to with Essar depends on whether plaintiff has fulfilled his obligations under his original Aegis Employment Agreements.
The second alleged oral contract for an additional .25% stake in Aegis Ltd. presents a closer call, as that contract was not made "in substitution" for the original stock options. Am. Compl. ¶ 38. But the parties entered into this supplemental oral contract so that plaintiff would "continue" as CEO of Aegis Communications "after September 2007." Id. ¶ 38. The obligations and duties that plaintiff had as CEO arise out of the supplemental employment agreement with Aegis Comm., and again whether plaintiff is entitled to compensation cannot be determined without "reference to" or "presuming the existence" of that agreement. Indeed, the other alleged portions of this second oral contract show that both parties presumed the existence of the original agreements, as plaintiff was also promised (and allegedly received) "a $50,000 increase [in salary] over what he had been paid pursuant to the Aegis Communications employment agreements." Id. (emphasis added). The alleged oral contracts with Essar are not novations and do not cancel the original Aegis Employment Agreements.
Indeed, plaintiff's counsel's own submissions to this Court belie his arguments to the contrary. On April 7, 2011, plaintiff's counsel sent a demand letter to Mr. Anshuman Ruia regarding "Stock Options in Aegis Communications Group, Inc. Promised to Kannan Ramasamy." Compl. Ex. A. at 1.
Where a plaintiff's claims are arbitrable, the typical remedy contemplated by the FAA is to stay the instant action. See 9 U.S.C. § 3. Dismissal, however, is appropriate where "all of the issues raised in the Complaint must be submitted to arbitration." Kowalewski v. Samandarov, 590 F.Supp.2d 477, 491 (S.D.N.Y.2008) (quoting Spencer-Franklin v. Citigroup/Citibank N.A., No. 06 Civ. 3475(GBD)(GWG), 2007 WL 521295, at *4 (S.D.N.Y. Feb. 21, 2007)) (internal citations and quotation marks omitted); see also Fedmet Corp. v. M/V BUYALYK, 194 F.3d 674, 678 (5th Cir.1999). Accordingly, since the Court holds all of plaintiff's claims are arbitrable, the Court hereby dismisses this case, in favor of plaintiff asserting his claims in arbitration against Aegis Communications Group, Aegis BPO Limited, or Essar Global Limited. Additionally, plaintiff's presently pending motion to preclude Essar Global Limited from introducing evidence relating to topics listed in plaintiff's Rule 30(b)(6) deposition notice to Essar Global Limited is likewise dismissed as referable to arbitration. The Court will, however, retain jurisdiction for the limited purpose of adjudicating plaintiff's pending motion for contempt and to enjoin parallel litigation in Texas against Aegis Communications Group, Aegis BPO Limited, Essar Global Limited, and their respective counsel, which, in the Court's view, is entirely separate from the merits hereby referred to arbitration. The Clerk of the Court is therefore directed to close document numbers 7, 8, and 15 on the docket sheet of this case.
SO ORDERED.