Car Wash Advisory LLC v. May

Background

Car Wash Advisory LLC, described in the opinion as a seller’s-side business broker for car wash companies, sued John-Michael Tamburro, a former employee, and Colin May, a former independent contractor. Car Wash Advisory alleged that Tamburro and May improperly accessed and misused its proprietary data to contact customers and interfere with its business relationships. It asserted federal statutory claims and state tort-law claims.

Tamburro moved under the Federal Arbitration Act to compel arbitration and stay the case against him. He relied on an employment-agreement provision requiring arbitration of “any dispute that arises out of or is related to” the agreement.

Arbitration analysis

The court explained that it had to determine whether the parties agreed to arbitrate and whether the agreement covered these claims. Because Car Wash Advisory conceded that the parties had agreed to arbitrate and did not argue that Congress made its federal statutory claims nonarbitrable, the dispute centered on the arbitration clause’s scope.

The court held that the clause was broad enough to cover all of Car Wash Advisory’s claims against Tamburro. Those claims were based on allegations that Tamburro misappropriated and misused Car Wash Advisory’s proprietary information in violation of, or related to, his employment agreement. The court therefore concluded that the claims were subject to arbitration.

The court rejected Car Wash Advisory’s argument that its related claims against May allowed it to avoid arbitration against Tamburro. May was not a party to Tamburro’s employment agreement, but that did not relieve Car Wash Advisory of its obligation to arbitrate claims against Tamburro. The court also rejected Car Wash Advisory’s reliance on a contract provision concerning court proceedings for alleged violations of noncompetition and nonsolicitation covenants. The court found that provision did not authorize bringing these claims in federal court and that the claims did not concern those covenants.

Stay and disposition

The court granted Tamburro’s motion to compel arbitration and stayed the claims against him pending arbitration. Although the claims against May were not subject to arbitration, the court exercised its discretion to stay those claims as well because continuing the case against May alone would involve issues common to the claims against Tamburro and affect Tamburro’s interests. The court noted that Car Wash Advisory had requested such a stay if arbitration were required.

The court rejected Tamburro’s request for attorneys’ fees and costs because he provided no evidence that Car Wash Advisory had acted in bad faith, vexatiously, wantonly, or oppressively. The Clerk was directed to terminate the motion and administratively close the case, without prejudice to either side seeking to reopen it by letter motion within thirty days after the arbitration proceedings conclude.