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John Loughlin v. Ventraq

April 4, 2011


The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court


Presently before the Court is Defendant's motion to dismiss Plaintiff's claims or to compel arbitration. [Doc. No. 6.] For the reasons stated herein, the Court GRANTS Defendant's motion and dismisses Plaintiff's complaint.


Unless otherwise indicated, the following facts come from Plaintiff's complaint [Doc. No. 1] or his declaration. [Pl.'s Opp'n, Doc. No. 8, Ex. A ("Loughlin Decl.").]

Plaintiff John Loughlin moved from London to California in 1993 and since has remained a legal resident of California. Plaintiff thereafter founded a consulting business, Ruby White Enterprises, Inc. ("Ruby White"). In 1996, IDT/Alston contracted with Plaintiff for consulting services. In 1998, Telesciences, Inc. ("Telesciences") acquired IDT/Alston. Telesciences also contracted for Plaintiff's consulting services.

In December 1999, EDB Business Partners ASA ("EDB"), a Norwegian company, acquired Telesciences. Plaintiff became an employee of Telesciences in 2002. Plaintiff's consulting company continued doing in business in San Diego, and he remains President and CEO of Ruby White.

In 2003, Plaintiff entered into an employment contract with Telesciences. In 2004, EDB decided to sell its telecom interests. Telesciences' U.S. management team agreed to purchase the U.S. portion of EDB's business in 2005. A new company, Telesciences Acquisition Corporation ("TAC") was organized to purchase Telesciences from EDB. Plaintiff was a principal of TAC.

In September 2005, EDB sold Telesciences to TAC for cash and a promissory note to be repaid by the end of March 2006. TAC agreed operate under a Share Purchase Agreement with EDB until it repaid the promissory note.

In 2005 Plaintiff's and several other TAC executives' employment contracts were amended. TAC's legal counsel drafted the agreements. While negotiating his new employment agreement, Plaintiff consulted personal legal counsel in San Diego. A proposed version of Plaintiff's employment agreement included a clause stating that any dispute arising under the contract will be submitted upon either party's request to binding arbitration, and specifying the venue for such arbitration as Mt. Laurel, New Jersey. After seeking advice from his personal counsel, Plaintiff requested the arbitration clause and venue provision be removed. Greg Fegley, then-CEO of TAC, consulted with TAC's legal counsel and refused Plaintiff's request.

On December 23, 2005, Plaintiff signed an employment agreement with TAC (the "Agreement"), which included a mandatory arbitration clause, a venue provision, and a choice-of-law clause specifying that New Jersey law governs the Agreement.*fn1 [Complaint, Ex. A (the Agreement), §§ 22, 23.] The Agreement also included a non-competition clause, which precluded Plaintiff from competing with Ventraq "during the Term of Employment and for a period of (1) year thereafter." [Id. § 9.] Additionally, the Agreement required the company to provide notice to Plaintiff at least ninety days prior to any termination of Plaintiff's employment without cause, non-renewal of the Agreement, or "Adverse Change,"*fn2 during which time Plaintiff would continue to receive his full salary and all medical, pension, and other employment benefits. [Id. §§ 1, 12.] Plaintiff would continue to receive his base annual salary of $225,000 and all employment benefits for a period of nine months following any such occurrence. [Id. § 12.] The Agreement bound all successors and assigns of the Company. § 19.]

In March 2006, Spire Capital Partners, LLC ("Spire"), acquired Telesciences from TAC. Telesciences changed its name to Ventraq in 2009.

Although Ventraq is based in New Jersey, Plaintiff claims he continued to reside in San Diego during his employment with the company. Plaintiff generally worked from San Diego, though he traveled often during the course of his employment with Ventraq. When in New Jersey, he worked in a cubicle in Ventraq's office assigned for visitors.*fn3

On August 17, 2010, Plaintiff received a call from Bruce Hernandez, chairman of the board for Ventraq. Mr. Hernandez informed Plaintiff that he and two other executives, CEO Trudeau and Senor Vice President of Global Sales and Marketing, Richard Evans, were being terminated. Hernandez told Plaintiff that his termination was part of an economic reduction in force at Ventraq.

On August 27, 2010, Plaintiff received an email from Ventraq stating that the company had terminated Plaintiff's employment "for cause," alleging Plaintiff had violated the covenant not to compete with Ventraq during the course of his employment. Ventraq claimed that Plaintiff authored a presentation to "WeDo Technologies," an alleged competitor of Ventraq. *fn4

Plaintiff subsequently filed the instant action, arguing that he did not violate the Agreement and is thus entitled to the severance benefits outlined therein. Plaintiff also alleges that, at the time of his termination, he had accrued forty-nine unused vacation days and one additional "personal day" and is therefore entitled to payment of approximately $44,000 and statutory damages of approximately $18,500. Plaintiff asserts claims for breach of contract, for failure to pay wages and benefits under California Labor Code sections 201 and 203, and for declaratory judgment that the Agreement's mandatory arbitration and non-competition clauses are unenforceable under California law.


Defendant moves to dismiss these proceedings or compel arbitration. Defendant argues the Agreement requires arbitration of Plaintiff's claims. Plaintiff does not dispute that his claims fall within the scope of the Agreement's arbitration clause. Instead, Plaintiff argues the arbitration clause, ...

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