The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge
ORDER DENYING PLAINTIFFS' MOTION TO VACATE, MODIFY, OR AWARD; AND GRANTING
CORRECT ARBITRATION DEFENDANTS' CROSS-PETITION TO CONFIRM
Plaintiffs ValueSelling Associates, LLC ("VSA") and Sales Vision, LLC ("SVL") filed the instant suit in federal court on July 9, 2009 against Defendants Kevin Temple and Enterprise Selling Group ("ESG"), alleging various causes of action related to Plaintiffs' purchase of certain trademarked and copyrighted materials from Defendants and the subsequent dissolution of the working relationship between the parties. (Doc. No. 1.) After Defendants successfully moved to compel arbitration in the matter, the parties submitted their dispute to an arbitrator, who issued a final award in favor of Defendants. (Doc. No. 64-1 pp. 5-6.) Plaintiffs now move this court for an order vacating, modifying, or correcting the arbitrator's award. (Doc. No. 64.) Defendants have filed a cross-petition requesting that the court confirm the arbitration award. (Doc. No. 63.) In addition, Defendants have filed a motion to strike certain portions of the arbitration hearing transcript submitted by Plaintiffs in support of their motion. (Doc. No. 66.)
Pursuant to CivLR 7.1(d)(1), the court determines this matter is appropriate for disposition without oral argument. For the reasons set forth below, the court upholds the arbitrator's decision, DENYING Plaintiffs' motion and GRANTING Defendants' cross-petition. In addition, because the hearing transcript is irrelevant to deciding Plaintiffs' motion, the court also DENIES Defendants' motion to strike as moot.
Plaintiffs are the owners of certain trademarked and copyrighted materials comprising a sales training process known as the ValueSelling Program. (Doc. No. 1, "Complaint," ¶¶ 11, 35, 37-41.) The ValueSelling Program is a collection of several separately trademarked components, including the ValuePrompter-a one-page form summarizing the ValueSelling approach that is designed to be filled out by end users of the ValueSelling system-and the Qualified Prospect ("QP") Formula-a tool for identifying and diagnosing prospective customers. (Id. ¶¶ 19-20, 23, 24-26.)
Plaintiffs initially signed a contract to acquire the ValueSelling Program from Defendant Temple and his co-owners (the "Purchase Agreement") in June 2003, as part of which Temple was permitted to continue training businesses on the ValueSelling methodology as a licensee (the "License Agreement"). (Id. ¶¶ 36-42.) Temple also agreed to remain on as an independent consultant to SVL for the next three years (the "Consultancy Agreement"). (Id. ¶ 43.) However, a dispute arose between Plaintiffs and Temple in July 2007, and the parties agreed to a settlement that would terminate their relationship (the "Settlement Agreement"). (Id. ¶¶ 47-48.)
Plaintiffs brought suit against Temple and ESG-a company that Temple formed in 2007-on July 9, 2009, claiming that Defendants misappropriated Plaintiffs' trade secrets and infringed upon certain of Plaintiffs' intellectual property rights. (Id. ¶¶ 51-64.) Specifically, Plaintiffs claim that Temple, through ESG, began marketing a product in 2007 called the Enterprise Value Selling program, which is substantially identical to the ValueSelling Program. (Id. ¶¶ 55-58.) Plaintiffs therefore sought injunctive relief as well as compensatory and punitive damages. (Id. at pp. 23-29.)
On September 3, 2009, Defendants moved for an order compelling Plaintiffs to submit their dispute to arbitration and dismissing the case. (Doc. No. 4.) Defendants' motion was based on the arbitration clauses contained in the Purchase Agreement, Consultancy Agreement, and Confidential Settlement Agreement. (Id.) On November 5, 2009, the court granted Defendants' motion and dismissed the case. (Doc. No. 11.)
Plaintiffs subsequently commenced arbitration proceedings against Defendants on January 5, 2010. (Doc. No. 64-1 p.4.) Defendants in turn filed several counterclaims against Plaintiffs. (Id.) The arbitration proceeded over the course of the next year, during which time the parties had the opportunity to submit arguments, offer evidence, and explain their version of the facts to the arbitrator in the form of both pre- and post-hearing briefs, as well as at a fifteen-day evidentiary hearing. (Id. at pp. 4-5.) In addition, after unsuccessfully moving for a preliminary injunction, Plaintiffs were permitted to file a Specification of Claims with the arbitrator, describing their claims in greater detail. (Id. at p.4.) On January 6, 2011, the arbitrator issued his Interim Award, concluding that Defendants had not infringed on any of Plaintiffs' copyrights. (Id. at p.5.) In addition, the Interim Award found that neither the ValuePrompter nor the QP Formula was entitled to copyright protection, and that Plaintiffs had no standing to assert a claim for copyright infringement based on Defendants' alleged copying of certain client-specific ValuePrompters. (Id. at pp. 5-6.)
Plaintiffs filed a motion requesting that the arbitrator reconsider his Interim Award, which Defendants moved to dismiss, arguing lack of jurisdiction. (Id. at p.6.) The arbitrator ultimately declined to hear the motion, claiming that the motion "request[ed] major substantive modifications of the Interim Award" which he could not address. (Id.) The arbitrator's Final Award was issued on March 16, 2011, affirming the substance of the Interim Award. (Id.)
Plaintiffs now move this court to vacate, modify, or correct the arbitrator's Final Award. (Doc. No. 64.) Defendants oppose this motion, and have filed a cross-petition to affirm the Award, as well as a motion to strike certain portions of the arbitration hearing transcript filed by Plaintiffs. (Doc. Nos. 63 & 66.)
As a preliminary matter, the parties disagree as to whether this court should apply federal or state law in deciding whether to confirm the arbitration award. While Plaintiffs' motion is based on the standards set forth in the Federal Arbitration Act ("FAA") (Doc. No. 64-1 pp.6-7), Defendants argue that the award ...