HealthPlanCRM, LLC v. AvMed, Inc.

458 F.Supp.3d 308

HEALTHPLANCRM, LLC d/b/a Cavulus, Plaintiff,

v.AVMED, INC. d/b/a AvMed Health Plans and NTT Data Services, LLC, Defendants.

2:19-cv-1357-NR

United States District Court, W.D. Pennsylvania.

Signed April 28, 2020

Haig M. Sakoian, Ronald J. Chleboski, Dingess, Foster, Luciana, Davidson & Chleboski LLP, Pittsburgh, PA, Kevin J. English, Pro Hac Vice, Elizabeth Ann Bove, Pro Hac Vice, Phillips Lytle LLP, Buffalo, NY, for Plaintiff.

Christina M. Schwing, Pro Hac Vice, Holland & Knight, Jacksonville, FL, Christina T. Tellado, Holland & Knight, LLP, Los Angeles, CA, for Defendant AvMed, Inc.

William Harvey, Glenn A. Weiner, Pro Hac Vice, Paige Willan, Pro Hac Vice, Klehr Harrison Harvey Branzburg LLP, Philadelphia, PA, for Defendant NTT Data Services, LLC.

OPINION

J. Nicholas Ranjan, United States District Judge

Plaintiff Cavulus is in the business of licensing cloud-based "customer relation management" software to insurance companies managing Medicare Advantage plans. In this lawsuit, Cavulus seeks to compel a licensee (Defendant AvMed) and sub-licensee (Defendant NTT) to arbitrate trade-secret claims arising from their use of Cavulus's software. Cavulus argues that AvMed and NTT are bound by its License and End-User Agreements, which each include an identical arbitration clause. Both Defendants oppose Cavulus's motion, but for different reasons. AvMed admits that it is bound by the Agreements but argues that this Court lacks personal jurisdiction over it and that the parties delegated questions of arbitrability to the arbitrator. NTT, on the other hand, argues that it never contracted with Cavulus, and thus never agreed to arbitrate anything at all.

After carefully considering the parties’ arguments, the Court largely agrees with Cavulus. First, the Court can exercise personal jurisdiction over AvMed. By agreeing to arbitrate disputes in Allegheny County, AvMed has waived any jurisdictional objection to litigating disputes related to the parties’ arbitration agreement in this District. Second, both AvMed and NTT are bound by the arbitration clause in the Agreements. AvMed is bound because it negotiated and entered into the Agreements and does not dispute their validity. NTT, on the other hand, is bound by equitable estoppel and also because it independently accepted the End-User Agreement by accessing and using Cavulus's software in the face of conspicuous browsewrap language.

On one issue, however, AvMed makes a good point—the parties’ incorporation of AAA arbitration rules in their contract is, based on the precise contractual language here, a "clear and unmistakable" delegation of arbitrability issues to the arbitrator. While the Court rejects the notion that incorporation of AAA rules always operates as a "clear and unmistakable" delegation of that authority, the explicit language of the parties’ contract leaves no room for ambiguity here. AvMed must raise any objections to the arbitrability of Cavulus's claims in arbitration.

Thus, the Court holds that a valid arbitration agreement exists between the parties and will, therefore, grant Cavulus's motion; except that the arbitrator, not the Court, must decide any objections to the arbitrability of specific claims.

BACKGROUND

In September 2008, Cavulus and AvMed entered into a License Agreement. [ECF 21 at ¶¶ 18-19 & Ex. 1 § 3 ]. NTT was not a party to the Agreement and had no relationship with AvMed when the License Agreement was executed. Cavulus and AvMed extended and amended the License Agreement several times, until the last extended term expired on September 30, 2019. [Id. at ¶ 23 & Exs. 3, 4, 5].

Under the License Agreement, Cavulus granted AvMed a license to use its "MedicareCRM" software platform for AvMed's Medicare Advantage business. [Id. at ¶¶ 13, 18-19]. Cavulus describes its software as a cloud-based "customer relation management platform." The License Agreement came with a related "End-User Agreement," attached to the License Agreement as Exhibit A and incorporated-by-reference into that Agreement. [Id. at ¶ 18 & Ex. 1 § 1(a) ]. Both the License and End-User Agreements included a section entitled "Controlling Law; Arbitration," which provided that Pennsylvania law would govern the Agreements, and that any "dispute, claim or controversy of any kind ... shall be resolved exclusively by binding arbitration in Allegheny County, Pennsylvania in accordance with the Commercial Arbitration Rules of the American Arbitration Association." [Id. at ¶¶ 22, 36, Ex. 1 § 11(e), Ex. 2 § 8]. This arbitration clause reads in full:

Controlling Law; Arbitration. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to its choice of law provisions. Any dispute, claim or controversy of any kind arising in connection with or relating to this Agreement or performance hereunder shall be resolved exclusively by binding arbitration in Allegheny County, Pennsylvania in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect, by one (1) arbitrator appointed in accordance with said rules. Judgment on the award rendered by the arbitrator may be entered into any court of competent jurisdiction. Notwithstanding the foregoing, it is understood and agreed that any breach of Section 7 of this Agreement by either party will cause irreparable harm and damage to the non-breaching party which may not adequately be compensated by money damages and, therefore, the non-breaching party shall be entitled to injunctive relief in addition to any other remedies provided by law or in equity for any such breach.

[Id. at Exs. 1 § 11(e) & 2 § 8].

The arbitration clause contained in the End-User Agreement differs only in that the last sentence refers to "any breach of Section 4 of this Agreement by End-User," [Id. at Ex. 2 § 8], rather than "Section 7 of this Agreement by either party." [Id. at Ex. 1 § 11(e) ].¹

At some point in 2018, AvMed decided to replace Cavulus as its CRM platform provider and contracted with another company, Salesforce, to provide a replacement CRM product. [Id. at ¶ 25]. As part of this transition, AvMed needed to transfer customer information stored on Cavulus's platform to the new Salesforce platform. [Id. at ¶ 27].

Typically, in such situations, Cavulus provides its customers with the stored information in an electronic format requested by the customer. [Id. ]. Cavulus does not allow customers to discover, transfer, or export the "unique characteristics of the Cavulus MedicareCRM platform." [Id. ]. This time, however, AvMed insisted on engaging NTT to transition its historical data. [Id. at ¶ 28]

To do so, it granted NTT a sublicense to access Cavulus's software. [Id. ]. This sublicensing was contemplated by Section 1(a) of the License Agreement, which authorized AvMed to "sub-license" use of Cavulus's software to "its employees, independent contractors or agents," who the Agreement defines as "End-Users." [Id. at Ex. 1 § 1(a) ]. The same provision specifies that such "End-Users shall be bound for the benefit of [Cavulus] to the terms of the End-User Agreement ... by executing a ‘click-on’ version of the same agreement." [Id. at ¶¶ 19-20].

On November 26, 2018, AvMed sent Cavulus a "Limited Letter of Agency," providing notice that it intended to authorize NTT to access Cavulus's software. [Id. at ¶ 29 & Ex. 6]. Specifically, the letter advised Cavulus that NTT was "authorized to act on behalf of AvMed with regard to the products and/or services that are owned, leased, or licensed by AvMed," including "supporting and operating the products and/or services provided to AvMed from [Cavulus] ... under the current agreement(s) ... between [Cavulus] and [AvMed]." [Id. at ¶ 29 & Ex. 6]. AvMed copied NTT's "Senior IT Executive," Fouad Bensellam, and "Senior Business Development Executive," Viji Shankar, on its letter. [Id. at ¶ 31 & Ex. 6].

On March 11, 2019, NTT began accessing Cavulus's software platform to identify AvMed's historical customer data and transfer it to Salesforce. [Id. at ¶ 32]. Between March 11, 2019 and June 12, 2019, NTT employees accessed the Cavulus platform over 75 times. [Id. at ¶¶ 32, 35, Ex. 8]. Each time NTT employees accessed the Cavulus software platform they were directed to a secure log-in page, which required them to enter their individual user ID and password to access the software. [Id. ].

The secure log-in page states: "Use of Cavulus constitutes acceptance of the End User License Agreement." [Id. at ¶ 34 & Ex. 7] (emphasis original). Clicking on the "End User License Agreement" hyperlink takes the user to the same End-User Agreement referenced in the AvMed License Agreement. [Id. at ¶ 35]. This language was displayed on the log-in page each time it was visited and accessed by an NTT employee (or any other user). [Id. at ¶ 33]. And Cavulus's software cannot be accessed without first visiting the log-in page. [Id. at ¶ 34].

At some point, Cavulus "uncovered" NTT employees "reviewing the platform to copy its customized and proprietary workflows and functionalities and recreate them on a generalized CRM platform, such as Salesforce, for AvMed or other clients." [ECF 27 at p. 7; ECF 21 at ¶¶ 39-52]. After making this discovery, Cavulus initiated AAA arbitration by filing a Demand for Arbitration against AvMed and NTT on July 19, 2019. [ECF 21 at ¶ 55 & Ex. 9]. In its Demand, Cavulus sought relief for: (1) AvMed's alleged breach of the License Agreement and End-User Agreement; (2) NTT's alleged breach of the End-User Agreement; (3) AvMed and NTT's alleged theft of Cavulus's trade secrets, and; (4) violations of the Pennsylvania Uniform Trade Secrets Act.

After NTT refused to participate in arbitration and AvMed raised an objection to the arbitrability of Cavulus's claims, Cavulus filed this suit to compel arbitration in the Allegheny County Court of Common Pleas. [Id. at ¶¶ 57-59]. AvMed and NTT jointly removed the case to this...