Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-00963/USCOURTS-cand-4_06-cv-00963-7/pdf.json

Parties Involved:
Kangana Beri
Plaintiff
Tata America International Corporation
Defendant
Tata Consultancy Services, Ltd
Defendant
Tata Sons, Ltd
Defendant
Gopi Vedachalam
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

 

GOPI VEDACHALAM and KANGANA 

BERI,on behalf of themselves 

and all others similarly 

situated,

Plaintiffs, 

 No C 06-0963 VRW

v

 ORDER

TATA AMERICA INTERNATIONAL

CORPORATION, a New York

corporation; TATA CONSULTANCY 

SERVICES, LTD, an Indian 

corporation; and TATA SONS, LTD,

an Indian corporation,

 Defendants. 

_______________________________/

In its order filed March 13, 2007 (Doc #55), the court

denied defendants’ motion to compel arbitration of the claims

asserted in this case by plaintiff Gopi Vedachalam. The court now

addresses defendants’ motion to compel arbitration of the claims

brought by Vedachalam’s co-plaintiff Kangana Beri. For the reasons

stated herein, the court DENIES defendants’ motion to compel

arbitration of Beri’s claims. 

The first amended complaint (Doc # 24) pleads diversity

(28 USC § 1332) as the basis for federal jurisdiction and describes

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two classes of plaintiffs. Plaintiffs Vedachalam and Beri both

describe themselves as members of a “Nationwide Class A” consisting

of individuals employed by defendant TCS who were promised more pay

upon deputation to the United States than they actually received

and of a “California Class A” consisting of TCS employees who were

forced to pay back to defendants, in violation of California Labor

Code provisions, wages they had previously earned. Id ¶¶ 6-10.

Plaintiff Beri seeks also to represent a class described

as “California Class B” consisting of TCS employees working as

technical support workers who were allegedly misclassified as

exempt from overtime pay and, presumably, directed to work overtime

hours without additional compensation. Id ¶ 12. She also seeks to

represent a “California Class C” consisting of discharged TCS

employees who were allegedly made to forfeit unused vacation time

without compensation in violation of California law. 

 Defendants move to compel arbitration under 9 USC § 206

and to dismiss or stay the case pending completion of arbitration

of Beri’s claims. Doc # 74. Because the court concludes that the

arbitration provision on which defendants rely applies only to two

aspects of the parties’ agreement, not here at issue, the claims at

bar are not subject to arbitration. This being the case, it is

unnecessary to reach certain other contentions that Beri raises to

defeat arbitrability, namely: that the agreement is

unconscionable; that claims under Business & Professions Code §

17200 cannot be arbitrated; and that the documents are legally

insufficient under the convention because they lack signatures by

TCS.

\\

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I

Tata America International Corporation, Tata Consultancy

Services, Ltd and Tata Sons, Ltd are named as defendants in this

action. Tata Consultancy Services, Ltd (TCS) is an informationtechnology outsourcing and consulting company incorporated in

India. Doc #24 ¶¶ 15-17. Tata Sons, Ltd is the parent company of

TCS and is also incorporated in India. Id. Tata America

International Corporation is a United States subsidiary of TCS. 

Id. These entities are referred to collectively as “defendants.”

Plaintiff Kangana Beri is a citizen of India who worked

in the United States for TCS as an assistant systems engineer from

April 2003 to September 2004. Doc #24 ¶ 14. She now resides in

California under an H-4 visa, a dependant visa allowing spouses of

those legally working in the United States on H-1B visas to reside

in the United States. Id. Beri worked for TCS in India from 2001

until her deputation to the United States in April 2003. The

complaint pleads claims arising from alleged actions by TCS after

Beri’s deputation to the United States.

As with Vedachalam’s claims, defendants move to compel

arbitration in Mumbai, India based on various documents of

different dates. With regard to Beri, defendants submit: a letter

offering Beri employment with TCS, a “service agreement” Beri

signed upon joining TCS in 2001, a “service agreement addendum,” a

“deputation agreement” and a “deputation terms agreement.” 

Declaration of Kevin Smith (Doc # 75), Exs F, B, C, D, E. The

documents appear, in general, to be more evolved or detailed

iterations of the documents in Vedachalam’s file that were the

subject of the court’s scrutiny in connection with the earlier

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motion to compel. Doc # 55. A description of the documents

relevant to this motion follows, in chronological order.

A

The first document is a letter to Beri dated August 7,

2000 signed on behalf of TCS by “P A Vandrevala, Executive Vice

President.” Doc #75, Ex F. The letter offers Beri a position as

“Assistant Systems Engineer —— Trainee —— 12 months” at a monthly

salary of 11,000 rupees plus benefits. The bulk of the letter

consists of a lengthy paragraph about TCS’s training program,

excerpted as follows: 

On joining TCS, you will be given the benefit of

formal training at any of our offices. The training

forms a critical part of your employment with TCS and

is an ongoing process. TCS would continue to make

investment on [sic] training and continuing education

of its professionals. * * * We would request that

the training be taken very seriously to enable you to

be successful.

 The August 7 letter encloses a two-page “Annexure” listing

“Benefits” and “Terms of Service.” There is no mention of

arbitration or dispute resolution of any kind in the letter or the

annexure. The annexure, however, in part states: 

Service Agreement. On the date of your joining, you

will be required to handover a Service Agreement to

serve TCS for three years, including your initial

training period. The agreement seeks your

reciprocation to TCS’ investment in your training, and

its commitment to your professional development. A

breach of this undertaking would involve payment of

Rs. 50,000/- towards damages to TCS. Accordingly, the

Agreement requires a Surety from an income tax

assessee who can provide a guarantee against this

breach and acceptable to TCS. 

Id. 

\\

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The next document is a form agreement bearing the heading

“ARTICLES OF AGREEENT [sic].” Doc # 75 Ex B. Blanks for day and

month are filled in with “Ninth” and “April,” respectively, by

hand. For the year, “two thousand” is printed while “and one” is

filled in by hand. Defendants refer to this document as a “service

agreement.” Doc # 74, passim. Beri’s attorneys refer to this

document as a “training agreement,” pointing out that Beri is

referred to throughout the document as “Trainee” and the document

contains references to “the training” and the “Training Programme.” 

Doc #84, passim. Indeed, Beri’s name is filled in by hand before

the printed parenthetical in the document text stating “hereinafter

referred to as ‘The Trainee.’” Doc #75 Ex B at 1. Defendants,

emphasize that the “Service Agreement” referred to in the annexure

requires Beri “to serve TCS for three years, including your initial

training period” and that Beri would be required to “handover” such

an agreement on her first day. Id Ex F. Accordingly, the court

will refer to the April 9, 2001 agreement as the service agreement.

The service agreement lists three parties, the first of

which is printed on the form, the other two filled in by hand: 

“Tata Sons Limited acting through its Division Tata Consultancy

Services;” Kangana Beri; and Virendar Beri, described as “The

Surety/Sureties.” Id.

The agreement recites that “the training is of a duration

of [blank] months and is liable to be extended by a further

duration based on the performance of the Trainee during the

Training Program * * *.” “12 (Twelve)” is handwritten in the

blank. Id. The service agreement recites, inter alia, that the

“above mentioned training” “involves considerable expenditure” and

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“substantially improves the Trainee’s professional standing and it

has been imparted by the Division at considerable expenditure as an

investment,” and that “the Division expects a commitment

(elaborated below) from the employee to recover its expenditure or

seek a penalty for non-fulfilment of the same.” Id at 1-2.

Beri undertook “to serve the Division * * * for a period

of [blank] years * * * and he/she agrees not to take employment

with any other person, firm or company during such period.” The

word “three” is handwritten before “years.” Id. Id at page 2. 

“By way of guarantee” of Beri’s performance, the service

agreement required one of two alternatives: (1) giving a refundable

deposit of 50,000 rupees for two years, subject to forfeiture “in

the event of a breach of any of the terms and conditions of this

agreement of which the Division shall be the sole judge,” and (2)

providing the names of “near relatives” to “stand as Surety” to be

liable to pay 50,000 rupees in the event of “failure/neglect to

fulfill any of the terms of this undertaking or of any other form

of breach.” Id at pages 3-4. The paragraph containing the former

choice (the refundable deposit) is stricken out and the latter

contains the name, address and occupation of Virendar Beri as

surety. 

The provision in the service agreement upon which

defendants rely most heavily in bringing the instant motion

provided: “[i]n the event of any dispute or disagreement over the

interpretation of any of the terms hereinabove contained or any

claim of liability of any part including the Surety/Sureties * * *

shall be referred to a person to be nominated by the Division whose

decision shall be final and binding upon the parties hereto,” which

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reference “shall be deemed a submission to arbitration.” Id at 4. 

“The venue of arbitration shall be Mumbai.” Id. The same

paragraph also stated “[s]ubject hereto the Court in Mumbai shall

have exclusive jurisdiction to the exclusion of all other courts.”

Finally, the service agreement provided that if the

trainee “leaves/resigns,” she must pay not only liquidated damages

of 50,000 rupees but also “three months’ calendar notice or salary

in lieu thereof.” Id. 

The copy of the service agreement attached to defendants’

moving papers bears the signatures of Beri and her father Virendar

Beri acting as her surety, but the signature blank for TCS is

empty. Id at 6. 

On April 4, 2003, just five days short of the two-year

mark for Beri’s three-year service agreement, Beri signed three

documents presented to her by TCS in preparation for her deputation

to the United States. 

The first such document was a “Service Agreement Addendum”

(the addendum) signed by Beri and a different surety, Rashim Anand. 

Doc #75 Ex C. The addendum recited, inter alia, that “the Employee

has executed a Service Agreement that, among other things, contains

service commitments by the Employee” and that “the Employee may

require [sic] to embark on an overseas deputation to the United

States” and that “the Employee has agreed voluntarily to accept and

embark upon the overseas deputation.” Id at 1. 

Paragraph one of the addendum provided that Beri “agrees

to return to India after completion of every overseas deputation

provided the deputation was in excess of 30 days and to serve TCS in

India for a minimum period of six months.” Id. It further provided

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that “in the event of the Employee’s breach of the commitment

specified in paragraph 1 [to return to India], above, the matter

will proceed to arbitration in accordance with the provisions of the

Indian Arbitration and Conciliation Act of 1996” and, moreover,

specified two alternative arbitrators: Navroze H Seerval and Keki

Mehta, both of Mumbai, India. Id. A subparagraph provided that TCS

—— but not the employee —— could seek an award of damages from the

arbitrator if the employee should fail to complete the required term

of service in India. Id at 2, ¶ C. A further paragraph stated

TCS’s sole remedy, if the employee’s breach occurred during the

deputation, to be that specified in the deputation agreement

(described infra). Id at 3. 

The addendum also contained a provision addressing the

circumstance present in Beri’s case (but absent from Vedachalam’s)

that the period of service required under the service agreement had

not yet been satisfied before the deputation began:

when an employee proceeds on an overseas deputation for a

TCS assignment at one of its client companies, then the

Employee’s remaining obligations under the Service

Agreement will be as follows:

A. The Employee will be obligated to serve TCS for any

time remaining under the prescribed period of the

Employee’s service commitment as specified in the Service

Agreement. Any such remaining commitment will run

concurrently with any additional service commitment

incurred by the Employee as a result of the deputation to

the United States and the Employee remains subject to

his/her Rs 50,000 obligation with respect to this

commitment. However, in the event that a breach of this

service commitment also constitutes a breach of the

Deputation Agreement that invokes the remedies and damages

specified in the Deputation Agreement if the Employee

leaves any assignment on the deputation before its

conclusion, then TCS’ sole remedy will be to proceed in

accordance with the remedy specified in the Deputation

Agreement.

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B. The Employee will remain obligated to give three

months’ notice of resignation, but there will be no

remaining obligation for the payment of salary in lieu of

notice in the event of the Employee’s resignation. This

continuing obligation to provide three months’ notice of

resignation will run concurrently with any additional

service commitments by the Employee. 

Id at 3.

Beri also signed a document styled “Deputation Agreement

—— United States.” Doc #75 Ex D at 1. The deputation agreement,

much expanded over that signed by Vedachalam, provided that the

“Employee does agree and commit, to complete his/her Deputation in

the Country of deputation and to return to India at the conclusion

of the Deputation in order to impart the experience, knowledge and

skills acquired on the Deputation to employees of the Employer in

India,” to serve TCS exclusively, to safeguard proprietary

information, to comply with United States laws and not to compete

with TCS while employed and for one year following termination of

employment. Id. An initial “general provision” provided, inter

alia, that 

the Employee is an employee of the Employer pursuant

to a Service Agreement entered into in India upon

commencement of the Employee’s employment. The

Service Agreement, and all other current agreements

between the Employee and the Employer regarding the

employment relationship in India, remain in full

force and effect.

Id ¶ 1.1. 

Regarding disputes, Paragraph 8 provided that the Employer

could seek “from any court of competent jurisdiction * * *

injunctive relief, * * * an equitable accounting * * * and any

damages allowed by law.” Paragraph 10.2(a), meanwhile, provided:

any claim or controversy arising out of the

Employee’s breach as specified in paragraph 10.1

[failure by employee to complete the deputation]

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will be submitted to litigation in courts of

competent jurisdiction in the State of Maryland,

Montgomery County * * *. THE PARTIES EXPRESSLY

AGREE TO SUBMIT TO PERSONAL JURISDICTION OVER

HIM/HER IN THE STATE OF MARYLAND ACCORDINGLY. 

Paragraph 10.2(c) contained an acknowledgment that the parties had

entered into the service agreement and the addendum “which contain,

among other commitments, a contractual commitment by the Employee

(i) to serve the Employer as an Employee of the Employer in India

for a minimum stated term and (ii) to return to India after a

Deputation and continue to work for the Employer in India for a

period of six (6) months.” This paragraph concluded with an

acknowledgment that the service agreement and the addendum “contain

a mechanism for an arbitration in India (pursuant to Indian law) in

the event the Employee breaches either of these commitments.” 

Paragraph 10.2(d) stated that “as specified in the Service Agreement

Addendum” the arbitration remedy in the service agreement and the

addendum would not be available to TCS for a breach of paragraph

10.1, for which a suit for civil damages in the state court of

Maryland would be the sole method of redress. 

The Deputation Agreement bore Beri’s signature, together

with a notarial seal, on every one of its nine pages, but, while it

provided blanks for a signature on behalf of TCS and for a witness

to that signature, both blanks were unsigned. Doc #75 Ex D, passim.

The third agreement dated April 4, 2003 was a “Deputation

Terms Agreement for a United States Deputation” containing more

specific terms of Beri’s employment in the United States. Doc #75

Ex E. This, like the other documents, had a signature blank for TCS

but was not signed by TCS. It provided that the deputation term was

for twelve months and that Beri would continue to receive her salary

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and benefits in India during the period of the deputation “subject

to any tax requirements in the United States and its states” and

would also receive a gross salary of $50,000 “less deductions

required by law or otherwise voluntarily authorized by you.” Id at

2. The additional salary was stated to be “for living and other

expenses in the United States.” Id. 

The deputation terms agreement also contained a number of

terms relating to business and travel expenses, leave, visa and

medical issues and other details associated with the deputation. 

Among these additional provisions was the following: “Upon your

return to India, you will continue to be bound by the terms and

conditions of your Service Agreement and Service Agreement Addendum

executed by you. As stated in the [addendum], you agree to return

to India after completion of your Deputation for an additional

period of post-deputation service to TCS in India of 6 months.” Id

¶ 6. This agreement did not address dispute resolution. It

concluded with an affirmation that, among other things, confirmed

“your agreement to the terms and conditions of your deputation

agreement, service agreement, service agreement addendum and

confidentiality agreement” above Beri’s signature. 

B

Beri filed her first amended complaint initiating this

action on June 5, 2006. Doc #24. The amended complaint contains

allegations related to both Vedachalam and Beri. Because the

motions before the court pertain only to Beri’s claims, the

following summary discusses only these claims and not those

pertaining to Vedachalam.

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Beri alleges that TCS promised in her Deputation Terms

Agreement that, for her work in the United States, she would receive

a gross amount of $50,000 in addition to the compensation and

benefits she received in India, but that defendants failed to pay

her the promised amounts. Doc # 24 ¶ 7, 29. 

Beri also alleges that defendants violated various

California Labor Code provisions by requiring her to pay back to

defendants wages that she had previously earned. Id ¶ 10. For

example, Beri alleges that in 2004 TCS unlawfully refused to provide

Beri with her W-2 tax form unless she first paid TCS $2,440 and that

only after Beri wrote a check to TCS in that amount did TCS provide

her with her W-2 forms. Id ¶ 32. 

Beri further alleges that defendants improperly

misclassified her as exempt from overtime pay and that she

consistently worked more than eight hours per workday and forty

hours per workweek without receiving overtime pay. Id ¶ 11. 

And finally, Beri alleges that “at least until July 2005,”

TCS maintained an unlawful “use-it-or-lose-it” vacation policy,

whereby employees who left TCS forfeited vacation time that

they earned but did not use, and that TCS violated California labor

law by failing to pay discharged employees all wages earned and

unpaid within 72 hours of termination. Id ¶ 12. Specifically, Beri

asserts that she never took vacation from TCS during the time that

she worked for the company but was never compensated for the

vacation days that she did not use. Id ¶ 67.

Beri is a plaintiff in eight of the amended complaint’s

nine causes of action: (1) breach of contract for failing to pay

the salary promised in the Deputation Terms Agreement; (2) unjust

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enrichment through retaining tax refunds; (3) violation of

California Labor Code § 221 (which provides that it “shall be

unlawful for any employer to collect or receive from an employee any

part of wages theretofore paid”); (4) violation of California Labor

Code §§ 510, 1194 by failing to pay overtime to non-exempt

employees; (5) violation of California Labor Code §§ 201-203 by

failing to pay employees their earned wages within seventy-two hours

of dismissal; (6) violation of California Labor Code §§ 218.5, 227.3

and 201-203 by failing to pay for unused vacation time accrued by

employees; (7) violation of California Labor Code § 226 and 1174 by

failing to provide accurate statements showing gross wages and

deductions; and (8) “false, unfair, fraudulent and deceptive

business practice within the meaning of [California] Business and

Professions Code §§ 17200.” She seeks actual damages and equitable

relief, exemplary and punitive damages, injunctive and declaratory

relief, fees and costs. 

Defendants move to compel arbitration of all of Beri’s

claims based on the documents described in Part I A, supra. Doc #74.

II

To compel arbitration, defendants must identify a valid,

enforceable agreement to arbitrate and establish that the agreement

to arbitrate covers the claims asserted by Beri. Unless both

conditions are met, the court may not compel arbitration.

The United Nations Convention on the Recognition and

Enforcement of Foreign Arbitral Awards (the convention) requires

parties to the convention, of which the United States is one, to

recognize

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an agreement in writing under which the parties

undertake to submit to arbitration all or any

differences which have arisen or which may arise

between them in respect of a defined legal

relationship, whether contractual or not,

concerning a subject matter capable of settlement

by arbitration.

Convention Art II, ¶ 1, 9 USC § 201. The convention defines “an

agreement in writing” to include “an arbitral clause in a contract

or an arbitration agreement, signed by the parties or contained in

an exchange of letters or telegrams.” Id Art II ¶ 2. 

Courts “shall,” when a party to an arbitration agreement

meeting the above criteria seeks to enforce it, “refer the parties

to arbitration, unless it finds that the said agreement is null and

void, inoperative or incapable of being performed.” Id Art III ¶ 3.

Under article II of the convention, “the first task of a

court asked to compel arbitration of a dispute is to determine

whether the parties agreed to arbitrate that dispute. The court is

to make this determination by applying the ‘federal substantive law

of arbitrability, applicable to any arbitration agreement within the

coverage of the Act.’” Mitsubishi Motors Corp v Soler

Chrysler-Plymouth, Inc, 473 US 614, 626 (1985), quoting Moses H Cone

Memorial Hospital v Mercury Construction Corp, 460 US 1, 24 (1983). 

In so doing, the court applies the federal common law of contracts. 

“In applying federal contract law, we are guided by general

principles of contract law and by the Restatement.” First

Interstate Bank of Idaho v Small Business Administration, 868 F2d

340, 343 (9th Cir 1989).

In response to defendants’ motion, Beri contends that the

documents defendants have presented to the court do not contain a

valid agreement to arbitrate the disputes in her first amended

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complaint. Her primary argument is that, as the court determined in

Vedachalam’s case, no contract to arbitrate the claims in Beri’s

action ever came into being. Secondarily, Beri argues that any

agreement to arbitrate disputes would not be enforceable because it

is “null and void” under the convention in that it is

unconscionable. As the court observed in its order of March 13,

2007 (Doc # 55 at 12), Vedachalam did not argue unconscionability

and the court did not consider such concepts in adjudicating the

motion to compel arbitration of his claims. As a separate argument,

Beri contends that the agreement could not form the basis for

arbitration of her claims for injunctive relief under California’s

Unfair Competition Law. As noted previously, because the court has

determined that Beri’s primary argument suffices to defeat the

motion to compel arbitration, this order does not reach the

remaining arguments. 

III

Defendants move to compel arbitration based primarily on

the service agreement, which they contend was extended and

incorporated by reference into all the subsequent agreements. 

Specifically, they focus on the clause referring to claims of

liability in this provision, contending that these words require

arbitration of any and all claims ever arising in the course of

Beri’s employment with TCS: “[i]n the event of any dispute or

disagreement over the interpretation of any of the terms hereinabove

contained or any claim of liability of any part including the

Surety/Sureties * * * shall be referred to a person to be nominated

by the Division.” (Emphasis added.) Doc # 75 Ex B at 4. 

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They argue that the court should not determine the service

agreement, as it did Vedachalam’s initial agreement, to be primarily

one defining a relationship between “trainer and trainee.” Doc # 55

at 13. They assert that “every reference to the [service agreement]

makes clear that the agreement which contains the arbitration clause

at issue is applicable to Beri’s entire employment relationship with

TCS, not just her training.” Id at 4. 

Understanding that they must distinguish Vedachalam’s

facts from Beri’s in order to prevail on their motion, defendants

point out one difference: in contrast to Vedachalam’s situation, in

which the initial agreement had expired before his deputation began,

Beri’s deputation occurred during the three-year term of her initial

agreement; Beri therefore signed deputation-related agreements while

the service agreement was still in effect. Id at 3. The service

agreement was dated March 2, 2001 and the deputation-related

agreements were dated April 4, 2003. The court agrees that this

distinguishes Beri’s case from Vedachalam’s. The distinction,

however, is not material to the outcome of defendants’ motion. 

Defendants also argue that Beri’s service agreement should

not be regarded as primarily a training agreement because Beri’s

stated training period was one year, but her obligation to work for

TCS continued for two additional years. Doc # 85 at 2-4. “If the

[service agreement] were only a document governing training, it

would make no sense for it to continue beyond the twelve month 

training period.” Id at 3. They also consider it significant that

Beri’s service agreement contains the word “minimum” in connection

with her three-year obligation. Id. Neither of these points,

however, distinguishes Beri’s facts from Vedachalam’s. Nor,

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standing alone, would these points warrant a finding of

arbitrability.

Vedachalam’s initial agreement entitled him to one month

of training in exchange for “a minimum period of” two years’ service

—— a 1:12 ratio of training to service in contrast to Beri’s 1:3. 

The fact that the service obligation extends well beyond the

expiration of the training period does not change the fact that the

stated purpose of the agreement was for Beri to obtain training, the

quid pro quo for which was Beri’s agreement to terms of service that

greatly restricted her freedom in the employment context for “a

minimum period of” three years. Specifically, Beri’s obligation to

work for TCS for three years would never have existed had she not

received the benefit of TCS’s training under the service agreement;

absent this obligation, Beri would presumably have been free to

switch employers (something she was explicitly barred from doing

under paragraph 1 of the service agreement) and her sureties’

capital would not have been at risk of forfeiture for the three-year

period during which Beri was obligated to serve TCS exclusively. 

The presence of the term “minimum” in the service agreement is, by

the same token, not helpful to defendants’ position. 

Article II, section one of the convention requires the

court to recognize an agreement “under which the parties undertake

to submit to arbitration all or any differences * * * in respect of

a defined legal relationship.” Accordingly, the court must

determine whether the claims stated in the complaint are within the

scope of the legal relationship defined in the service agreement.

Like Vedachalam’s claims, Beri’s claims in her suit are

not “in respect of” the training relationship as required by the

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convention. Beri’s claims arise from issues pertaining to her

employment following her deputation to the United States, not the

training period or the training program. Only the service agreement

contains an arbitration clause that could be construed to require

Beri to arbitrate disputes with TCS, but the service agreement is

concerned with the training relationship. The terms and conditions

governing Beri’s deputation to the United States, which was a

significant new and essentially separate development in Beri’s

relationship with TCS, are specified in other documents —— the

addendum, the deputation agreement and the deputation terms

agreement. Although the latter documents contain verbiage such as

“by signing below you * * * confirm your agreement to the terms and

conditions of your deputation agreement, service agreement,

[addendum], and confidentiality agreement,” see, e g, Doc # 75 Ex E

at 4, such boilerplate clauses do not suffice to extend the reach of

the service agreement’s arbitration clause to other agreements that

contain different, superseding or no provisions for dispute

resolution because they do not clearly evidence the required intent

to submit to arbitration disputes arising from the deputation. 

Defendants cite Chloe Z Fishing Co v Odyssey Re (London)

Limited, 109 F Supp 2d 1236, 1254-55 (S D Cal 2000)(Gonzales, J),

which held that arbitration clauses in two sets of insurance

policies could be read broadly enough to encompass collateral

disputes “‘arising out of’ or ‘in connection with’ the parties’

business relationship created by” the insurance policies at issue in

that case. Defendants argue that the arbitration clause in Beri’s

service agreement should be read to apply to all other agreements

and, indeed, all events and issues pertaining to her employment. 

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But Chloe Z is distinguishable in important respects from the

present case. 

At issue in Chloe Z was a dispute over insurance coverage

in which, as is typical in such cases, the outcome of the dispute

hinged on interpreting the language of the policies. The two

policies contained slightly different arbitration clauses, one

providing that “any difference or dispute between the Company and

the Assured concerning any claim under the Policy of Insurance

[would be] referred to arbitration in London,” the other providing

that “any difference between the Company and the Assured arising out

of or in connection with the Policy of Insurance [would be] referred

to arbitration in London * * *.” Id at 1254-55. The court noted

that each of the plaintiffs’ five causes of action —— breaches of

the covenant of good faith and fair dealing, unfair business

practices in connection with the handling of the plaintiffs’ claims,

intentional interference with contractual relations with third-party

lenders and the United States government and declaratory relief

regarding informing plaintiffs of the coverage provided by the

policies —— “either specifically references the interpretation of

the P & I policies * * * or implicitly charges that defendants have

not performed their obligations in light of the coverage provided to

plaintiffs in the P & I policies.” Id at 1256. Finding that all

the claims rested on interpretation of the policies, the court

compelled arbitration of all claims in the suit. 

The clutch of documents before the court on the instant

motion, however, bears little resemblance to the pair of insurance

forms under review in Chloe Z. Like the contracts under review in

Chloe Z, the documents were forms drafted by the party seeking to

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compel arbitration. But the instant motion presents several

complexities not present in Chloe Z. First, in Chloe Z only one

single insurance policy was in effect at any given time, whereas in

the instant matter four documents contained terms purporting to

govern the employment relationship between Beri and TCS at the time

of the events at issue in the amended complaint. Second, and more

importantly, whereas in Chloe Z the policies provided that all

“differences” would be referred to arbitration in London, the

documents at issue here provide for different legal remedies and

forums for different types of breaches of the agreements by Beri ——

liquidated damages, actual and consequential damages, arbitration,

litigation in Indian courts and Maryland state courts and so on. 

Third, moreover, these provisions are not mutual; whereas there are

numerous provisions contemplating different types of breaches by

Beri, only one provision is arguably applicable to TCS: the broad

clause in paragraph 4 of the service agreement (Doc # 75, Ex B)

referring to “any claim of liability of any part including the

Sureties.” These distinctions are critical; Chloe Z provides little

guidance here. 

TCS’s intent in drafting the various provisions is not

expressly stated and is not obvious. The court’s careful review of

the documents presented in support of the motion leads it to several

conclusions about TCS’s intent: (1) because none of the documents

acknowledges the possibility that the employer might breach any

agreement, violate any law or otherwise commit any act that might

give the employee reason to seek redress, such scenarios were not

within TCS’s contemplation at the time it drafted the various

provisions pertaining to dispute resolution; (2) TCS’s primary

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objectives as expressed in the documents Beri signed were to ensure

that Beri would (i) work for TCS for at least three years from her

start date and for six months after returning to India from her

deputation (periods which could in theory run concurrently) and (ii)

complete —— and not leave or abandon —— assignments during her

deputation to the United States; and (3) in the event of the latter

type of breach, TCS planned to seek a judicial remedy in the

Maryland, whereas TCS planned to arbitrate breaches of the former

type (which presumably would occur in India) before its arbitrator

in India. 

As for the “any claim of liability of any part” clause,

this provision is so broad and vague that it is unpersuasive as

evidence that TCS intended to arbitrate disputes not directly

related to the service agreement. While defendants urge that the

breadth of this clause makes it so elastic that it can be stretched

to encompass the entire universe of potential disputes between Beri

and defendants, its very breadth more reasonably suggests that it

was intended to apply to “any claim of liability” by any party to

the service agreement arising from or pertaining to that agreement,

as if a clause such as “in connection with this agreement” had

simply been omitted for the sake of brevity or because it seemed

unnecessary. 

The contractual arrangement at issue simply does not

manifest the mutual assent to arbitrate the instant disputes that

the convention requires. Indeed, while it is nearly certain that

Beri did not intend, in signing the various documents, that claims

such as those set forth in the amended complaint would be subject to

arbitration in India, it is not even apparent that TCS had such

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intent. The service agreement does not provide a basis for

compelling arbitration of the claims in Beri’s amended complaint. 

VI

For the reasons stated herein, defendants’ motion to

compel arbitration of Beri’s claims is DENIED. Pursuant to the

stipulation and order dated May 1, 2007 (Doc #83), the parties are

directed to contact the deputy clerk to arrange a hearing date for

defendants’ motion to stay proceedings (Doc #60) and defendants’

motion to dismiss the amended complaint (Doc #71) to be held within

ninety (90) days. For administrative purposes, the clerk is

directed to terminate these two motions (Doc ## 60, 71) and to reopen them when a hearing date is noticed.

The administrative motion at Doc # 63 is DENIED as moot. 

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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