United States ex rel. Dorsa v. Miraca Life Scis., Inc.

UNITED STATES OF AMERICA ex rel. PAUL DORSA, Plaintiff, v. MIRACA LIFE SCIENCES, INC., Defendant.

Civil Action No. 3:13-CV-01025

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

February 22, 2021

HON. BERNARD A. FRIEDMAN

OPINION AND ORDER DENYING DEFENDANT'S MOTION TO STAY THIS ACTION AND TO COMPEL ARBITRATION

This matter is presently before the Court on defendant's motion to stay the proceedings and to compel arbitration [ECF 113]. Plaintiff has responded and defendant has replied. Pursuant to Fed. R. Civ. P. 78(b), the Court shall decide this motion without a hearing.

The court of appeals recently summarized the gist of this case, and the relevant procedural history, as follows:

Paul Dorsa filed suit under the False Claims Act against Miraca Life Sciences, Inc., alleging unlawful retaliation. Miraca sought to dismiss the retaliation claim because Dorsa—a former Miraca executive—had agreed to binding arbitration as a provision of his employment agreement with the company. The district court denied Miraca's motion to dismiss because it found that the arbitration clause did not cover Dorsa's retaliation claim. Miraca appeals the district court's order and Dorsa seeks to dismiss the appeal. Because the district court's order was not a final order, and because the narrow provision of the Federal Arbitration Act that authorizes immediate appeals of certain interlocutory orders does not apply here, the court lacks jurisdiction.

Dorsa was working as an executive of Miraca when he learned of a purported scheme to defraud the government. On September 20, 2013, Dorsa filed a qui tam action under seal against Miraca, alleging two counts of violations of the False Claims Act ("FCA"), payment by mistake of fact, and unjust enrichment. Dorsa was fired on September 24, 2013, and his first amended complaint, filed under seal in November 2013, alleged an additional claim for retaliation under the FCA pursuant to *887 31 U.S.C. § 3730(h); so did his second amended complaint, which was filed under seal in March 2017. The United States intervened as a party in November 2018; the district court partially unsealed the case in January 2019; and Dorsa and the government dismissed the qui tam claims in May 2019.

Miraca then moved to dismiss the remaining retaliation claim "under Federal Rules of Civil Procedure 12(b)(1), (3), and (6), and the Federal Arbitration Act, 9 U.S.C. § 1 et seq." Miraca argued that Dorsa had failed to state a cause of action through the retaliation claim because Dorsa had "agreed to resolve all claims ... arising out of his employment through binding arbitration." Miraca also argued in the alternative that, because of the arbitration agreement, the district court did not have subject matter jurisdiction over the claim, and the suit had been brought in an improper venue.

The district court denied the motion to dismiss. The employment agreement's arbitration clause requires that,

in the event of any dispute, claim or disagreement arising out of or in connection with this Agreement ... the parties shall first submit the dispute, claim or disagreement to non-binding mediation [and if that is unsuccessful,] ... then either party may submit the dispute, claim or disagreement to binding arbitration.

The district court held that the arbitration clause did not cover the FCA retaliation claim because "an FCA retaliation claim does not arise from, or have any connection with, an employment agreement, or any provision thereof, even if it may, as in the present case, have a connection with plaintiff's employment relationship." Miraca subsequently filed a notice of appeal stating that it was appealing "as a matter of right pursuant to 9 U.S.C. § 16 ... the Opinion and Order denying [its] Motion to Dismiss[,] ... which declined to require Plaintiff to pursue his retaliation claim in arbitration."

Dorsa filed a motion to dismiss the appeal for lack of jurisdiction, arguing that neither 28 U.S.C. § 1291 nor 9 U.S.C. § 16, a provision of the Federal Arbitration Act ("FAA"), "suppl[ies] jurisdiction herebecause Miraca filed a Rule 12(b)(6) Motion to Dismiss and never asked the District Court for a stay or an order compelling arbitration." A three-judge panel of this court issued an order noting that "[t]he denial of Miraca's motion to dismiss is not a final order," but otherwise referring the motion to dismiss the appeal to the merits panel.

United States ex rel. Dorsa v. Miraca Life Scis., Inc., 983 F.3d 885, 886-87 (6th Cir. 2020). The court of appeals dismissed the appeal for lack of jurisdiction because defendant sought dismissal of the action, rather than a stay of proceedings while arbitration proceeded or an order compelling arbitration. Id. at 887-89.

On cue, defendant has now filed a motion "to stay this action and compel arbitration." Defendant makes the same argument as before, albeit with a different request for relief. Defendant again maintains that plaintiff's retaliation claim is covered by the arbitration clause in his employment agreement. Instead of seeking dismissal of plaintiff's complaint, defendant now asks that the Court "stay this action pursuant to Section 3 of the Federal Arbitration Act ("FAA") and compel arbitration pursuant to Section 4 of the FAA. 9 U.S.C. §§ 3, 4." Def.'s Mem. at 1 (ECF 114, PageID.1002). Plaintiff opposes the motion for the same reason as before, namely, that the arbitration clause does not apply to his retaliation claim because this claim has nothing to do with his employment agreement, even if it is related, in a broad sense, to his employment relationship with defendant.

The Court shall deny defendant's motion for same reasons as it indicated previously. As the Court explained in denying defendant's motion to dismiss,

[d]efendant points to ¶ 5.10 of the parties' Employment Agreement, which states, in relevant part:

Dispute Resolution. Except as provided below, in theevent of any dispute, claim or disagreement arising out of or in connection with this Agreement, including, without limitation, the negotiation, execution, interpretation, performance or non-performance of this Agreement, the parties shall first submit the dispute, claim or disagreement to non-binding mediation [and if that is unsuccessful] . . . then either party may submit the dispute, claim or disagreement to binding arbitration administered by the AAA in accordance with the provisions of its Employment Arbitration Rules (the "Rules") and, except as otherwise provided in this Agreement, such arbitration shall be the sole means of dispute resolution.

Plaintiff acknowledges that he signed this agreement, but he argues that it does not apply to his FCA retaliation claim. While the parties' briefs discuss various issues relating to the arbitrability of plaintiff's remaining claim, the straightforward answer is provided by the Sixth Circuit's decision in U.S. ex rel. Paige v. BAES vs. Tech. Sols. & Servs., Inc., 566 F. App'x 500 (6th Cir. 2014).

* * *

The arbitration clause in the present case is slightly broader than those at issue in Paige. In Paige, the clause covered disputes "arising from this Agreement" and those "which arise[]under the terms of this Agreement," while the clause in the present case covers disputes "arising out of or in connection with this Agreement, including . . . the negotiation, execution, interpretation, performance or non-performance of this Agreement." Nonetheless, in both cases the clause fails to cover FCA retaliation claims because such claims have nothing to do with the employment agreements themselves. Rather, the FCA's anti-retaliation provision applies to all employees, regardless of whether they are working pursuant to an employment agreement, as well as to contractors and agents. That is to say, an FCA retaliation claim does not arise from, or have any connection with, an employment agreement, or any provision thereof, even if it may, as in the present case, have a connection with plaintiff's employment relationship, as it was his status as an employee that allowed him to learn of defendant's alleged violations of the FCA. Further, as in Paige, "the Employment Agreement nowhere refers to the FCA, retaliation or statutory claims," Paige, 566 F. App'x at 504,a fact the Sixth Circuit noted in further support of its conclusion that the arbitration clause did not cover the FCA retaliation claims in that case. Defendant's argument might well have prevailed if the arbitration clause were worded more broadly to encompass "any dispute between us" or "any dispute having any connection with our employment relationship." But it is not for the Court to rewrite such clauses. Rather, the Court enforces them as written by the parties themselves, and the arbitration clause in the present case, which covers only disputes arising from or connected with the Employment Agreement, plainly does not cover plaintiff's FCA retaliation claim.

Op. & Order Denying Def.'s Mot. to Dismiss at 2, 6-7 (footnote omitted) (ECF 103, PageID.867, 871-72).

The Court stands by this ruling and denies the instant motion for the same reasons. Plaintiff's retaliation claim is not a claim the parties agreed to arbitrate. They agreed to mediate, and then arbitrate, "any dispute, claim or disagreement arising out of or in connection with this Agreement." Plaintiff's retaliation claim does not "aris[e] out of or in connection with" the parties' Employment Agreement because the claim has nothing to do with the parties' agreement. Rather, plaintiff claims that defendant discharged him in retaliation for filing an FCA claim. The parties' Employment Agreement is not implicated.

This alone settles the issue of whether plaintiff's claim is subject to the parties' arbitration agreement. Any lingering doubt is eliminated by the "carve out" sentence in the agreement's Dispute Resolution section, which states:

Notwithstanding anything in this Section 5.10 to the contrary, each party shall be entitled to seek injunctive

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