United States District Court, D. Nevada
MIRANDA M. DU, CHIEF UNITED STATES DISTRICT JUDGE.
Products, Inc. (“Plaintiff”) alleges that Ryze
Capital Partners, LLC (“Ryze”) and other
defendants utilized confidential information that Plaintiff
provided them pursuant to a joint venture agreement, but Ryze
later excluded Plaintiff from the ventures. (ECF No. 44 at
9-13.) Before the Court is Defendants' motion to stay
this case pending arbitration (“Motion”) (ECF No.
51),  pursuant to an arbitration clause in a
Mutual Non-disclosure Agreement (“NDA”) between
Plaintiff and Ryze. Plaintiff concedes in its Response that
it must arbitrate its claims against Ryze, but it insists
that the other Defendants cannot invoke the arbitration
clause because they never signed the NDA. (ECF No. 78.) For
the reasons explained below, the Court will grant the Motion
and stay this action as to all Defendants
following facts are taken from Plaintiff's First Amended
Complaint (“FAC”) (ECF No. 44) unless otherwise
is a Texas-based, petrochemical corporation that produces
diesel fuel from renewable feedstock (“HDRD”).
(Id. at 4.) In late 2015, private-equity company
Ryze hired Plaintiff as a subject matter expert for the
construction of a new gas-to-liquids facility in Port Arthur,
Texas. (Id. at 5-6.) In November 2015, both parties
signed the NDA to protect confidential information shared
between the parties. (Id. at 6.) This NDA contains
an arbitration clause that applies to “[a]ny dispute,
claim or controversy . . . arising out of or related to [the
NDA] or to the breach . . . interpretation or validity [of
the NDA].” (ECF No. 51-1 at § 3.5.) Ultimately,
Ryze decided to not invest in the construction project. (ECF
No. 44 at 7.)
early 2016, Plaintiff, Ryze and Defendant Randy Soule, the
sole owner of Defendant Encore D.E.C., LLC
(“Encore”), began discussing the re-purposing of
Encore's petrochemical terminal located in Reno, Nevada.
(Id. at 9.) In early February 2016, all parties
reached a joint venture agreement regarding their ownership
percentages in NewCo, which was not yet formed.
(Id.) Plaintiff acted as the venture's subject
matter expert and provided the venture confidential
information on, inter alia, the process and
logistics of producing HDRD, a list of suppliers and
customers for HDRD, how to generate regulatory and tax
credits, and how to sell those credits. (Id. at 10.)
Meanwhile, Ryze allegedly lied to Plaintiff that it was in
the process of securing funding for the venture.
(Id. at 12-13.) In fact, Ryze conspired with Soule
and Encore to pursue the business opportunity through Ryze
Renewables, LLC, which excluded Plaintiff and is also
presently constructing an HDRD facility in Las Vegas using
the same confidential information. (Id.)
February 20, 2019, Plaintiff filed this action against Ryze
and the following: (1) entities in which Plaintiff claims to
have an ownership interest in, such as Ryze Renewables, LLC,
Ryze Renewables Reno, LLC and Ryze Renewables Las Vegas, LLC;
(2) Ryze employees Matt Pearson, Michael Brown and Chris
Dancy (collectively, “Ryze Employees”); and (3)
entities that allegedly formed the Reno venture with Ryze,
namely Soule, Encore and RESC, LLC. (ECF No. 44.) The FAC
alleges the following claims: (1) trade secret
misappropriation against all Defendants; (2) breach of
contract against Ryze and Encore; (3) fraud against Ryze,
Encore, and Soule; (4) breach of fiduciary duty against Ryze
and Encore; (5) participation of breach of fiduciary duty and
fraud against all Defendants; (6) and declaratory judgment.
(Id. at 14-20.)
28, 2019, Defendants Ryze, Pearson, Dancy, and Ryze
Renewables Las Vegas, LLC filed this Motion (ECF No. 51),
which the remaining Defendants later joined (ECF Nos. 52, 58,
and 121). Aside from Ryze, the other Defendants are
not signatories to the NDA (collectively
Federal Arbitration Act “reflects ‘an emphatic
federal policy' in favor of arbitration.”
Ferguson v. Corinthian Colleges, Inc., 733 F.3d 928,
932 (9th Cir.2013) (quoting Marmet Health Care Ctr. Inc.
v. Brown, 132 S.Ct. 1201, 1203 (2012)). The FAA applies
to arbitration agreements that, like the NDA here, are
“contract[s] evidencing a transaction involving
commerce.” See 9 U.S.C. § 2;
Greystone Nevada, LLC v. Anthem Highlands Cmty.
Ass'n (Greystone), 549 Fed.Appx. 621, 624
(9th Cir. 2013) (holding that construction contracts
involving out-of-state parties and materials evidenced
commerce for purposes of the FAA); Airbus S.A.S. v.
Aviation Partners, Inc., 2012 WL 5295145, at *2 (W.D.
Wash. 2012) (holding that the FAA applied to a non-disclosure
agreement in which both parties agreed to share confidential
information for the purpose of designing an aircraft). Under
the FAA, an agreement to arbitrate is “valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. If a party files an
application to stay proceedings involving an issue that is
subject to arbitration, generally a court must grant the stay
until such arbitration has been conducted in accordance with
the agreement. 9 U.S.C. § 3; Chiron Corp. v.
Ortho Diagnostic Sys., Inc., 207 F.3d 1126,
1130 (9th Cir. 2000) (quoting Dean Witter Reynolds Inc.
v. Byrd, 470 U.S. 213, 218 (1985)).
Plaintiff has conceded that its claims against Ryze are
subject to arbitration. (ECF No. 78 at 3.) Having reviewed
the NDA, the Court agrees. (ECF No. 51-1 at § 3.5.)
Thus, Plaintiff's claims against Ryze must be stayed
Court will next address whether Plaintiff's claims
against the Nonsignatories should be similarly stayed.
Defendants contend that the Court has authority to do so
under equitable estoppel and its inherent power to stay
proceedings in its own court. (ECF No. 51 at 19-25.) Because
the Court only agrees with the latter point, the Court
declines to address Defendants' equitable estoppel
district court has an inherent and discretionary power to
stay proceedings in its own court. Landis v. N. Am.
Co., 299 U.S. 248, 254-55 (1936); see also Lockyer
v. Mirant Corp., 398 F.3d 1098, 1109 (9th Cir. 2005). A
district court may stay proceedings “pending resolution
of independent proceedings which bear upon the case.”
Leyva v. Certified Grocers of California,
Ltd., 593 F.2d 857, 863 (9th Cir. 1979). In
determining whether a stay is appropriate, a court
“must weigh competing interests and maintain an even
balance.” Landis, 299 U.S. at 254-55; see
also Lockyer, 398 F.3d at 1110. These competing
interests include: (1) possible damage resulting from
granting a stay; (2) hardship or ...