Computer Forensic Services, Inc. v. BraunHagey & Borden LLC

Background

Computer Forensic Services, Inc. and 360 Security Services LLC entered into an agreement to provide digital-forensic and data-extraction services to BraunHagey & Borden LLC. The plaintiffs received 20 devices from the defendant and attempted to recover data from them. The plaintiffs billed the defendant, and the parties disputed what services the agreement covered and the cost of those services.

The agreement included a clause requiring binding arbitration in Minnesota for disputes arising from or relating to the agreement. It also stated that the arbitrator would decide questions about the arbitration agreement’s scope, jurisdiction, or applicability. The plaintiffs moved to compel arbitration. The defendant argued that the arbitration clause was unenforceable because it did not specify arbitration rules or a method for selecting the arbitrator, and because it appeared to allow the plaintiffs to control the arbitration process.

The defendant also moved for a preliminary injunction—a temporary court order—requiring the plaintiffs to return all devices, documents, data, and client information that remained in their possession.

Arbitration ruling

The court granted the plaintiffs’ motion to compel arbitration. It held that the agreement contained a valid arbitration clause. The absence of specified arbitration rules or a method for selecting an arbitrator did not make the clause invalid because the Federal Arbitration Act allows the court to appoint an arbitrator when the agreement provides no selection method. The court also found no language giving the plaintiffs unilateral authority to change or control the arbitration process.

Because the arbitration clause validly delegated questions about its scope, jurisdiction, and applicability to the arbitrator, the court ruled that those remaining arbitrability questions would be decided in arbitration. The court stayed the case so the parties could proceed with arbitration.

Preliminary-injunction ruling

The court granted in part and denied in part the defendant’s motion for a preliminary injunction. It concluded that a temporary preservation order was necessary under Minnesota law to protect the effectiveness of the arbitration and preserve the existing situation. The plaintiffs therefore must preserve all devices, documents, data, and client information in their possession.

The court did not order the plaintiffs to return the devices and data at that time. It stated that the arbitrator was better suited to decide the manner and terms of any return. The court encouraged the parties to negotiate the return before arbitration. If they could not agree, the dispute would be left to the arbitrator.

Order and effect

The order granted the motion to compel arbitration, granted in part and denied in part the preliminary-injunction motion, stayed the case, and encouraged the parties to jointly select an arbitrator. If they could not agree, they were directed to submit three available arbitrator names to the court within seven days, after which the court would select an arbitrator. Judge Donovan W. Frank signed the order.