CG Enterprises Holdings, LLC v. WSP USA, Inc.

Background

The dispute concerns whether noncompete and nonsolicitation clauses in Coon’s employment contract are void under California law. The plaintiffs moved for a temporary restraining order. The defendants moved to stay the case pending arbitration.

Arbitration ruling

The court said the underlying dispute appeared to be covered by the contract’s arbitration provision. The agreement gave the arbitrator exclusive authority to resolve disputes about the agreement’s interpretation, applicability, enforceability, or formation, including disputes about whether a particular claim is subject to arbitration. The court therefore held that the arbitrator should decide in the first instance whether the plaintiffs’ request for interim relief is subject to arbitration.

The court denied the plaintiffs’ motion for a temporary restraining order and granted the defendant’s motion to stay the case pending the arbitrator’s decision on that arbitrability question.

Alternative reason for denying emergency relief

The court added that it would have denied the temporary restraining order even if it had reached the motion. The plaintiffs had not adequately explained what temporary relief they wanted. Their requests to invalidate the contractual provisions and stop WSP from enforcing them sought a permanent injunction on an emergency basis, rather than temporary relief. Their request to stop the arbitration also was not temporary relief, and the plaintiffs had not argued that the arbitration agreement was invalid or that the arbitrator lacked authority over the underlying dispute.

Further proceedings

The parties must file status reports every 90 days. If the arbitrator decides that the plaintiffs’ request for interim relief is subject to arbitration, the court stated that a continued stay would apparently no longer be necessary and that the case could be dismissed without prejudice.