IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

360 CAMPAIGN CONSULTING, 

LLC, a New York limited liability 

company, on behalf of itself and 

derivatively on behalf of The 

Outreach Team, LLC,

Plaintiff,

v. 

DIVERSITY COMMUNICATION, 

LLC, a Wyoming limited liability 

company, GRASSROOTS TEAM 

LLC, a Delaware limited liability 

company, STEVEN RUFO, and an 

individual known as DIVERSITY 

PRINCIPAL,

Defendants,

and 

THE OUTREACH TEAM, LLC, a 

Delaware limited liability company,

Nominal Defendant. 

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C.A. No. 2019-0807-MTZ

MEMORANDUM OPINION

Date Submitted: December 5, 2019

Date Decided: March 20, 2020
2

Martin S. Lessner and Alberto E. Chávez, YOUNG CONAWAY STARGATT & 

TAYLOR, LLP, Wilmington, Delaware; Steven J. Cohen and Stella L. Sainty, 

WACHTEL MISSRY LLP, New York, New York; Attorneys for Plaintiff 360 

Campaign Consulting, LLC.

Raymond J. DiCamillo, Brock E. Czeschin, and Megan E. O’Connor, 

RICHARDS, LAYTON, & FINGER, P.A., Wilmington, Delaware; Attorneys for 

Defendants Diversity Communication, LLC, Grassroots Team LLC, Philip 

Radford and Steven Rufo.

Mariam W. Tadros and Roya Vasseghi, REES BROOME, PC, Tysons Corner, 

Virginia; Attorneys for Defendants Diversity Communication, LLC, Grassroots 

Team, LLC, and Philip Radford.

Kellie Budd, DOUMAR MARTIN, PLLC, Arlington, Virginia; Attorneys for 

Defendant Steven Rufo.

ZURN, Vice Chancellor
3

This opinion decides whether a governing limited liability company (“LLC”) 

agreement requires the claims asserted in this action to be arbitrated. The 

defendants argue that all of the claims must be arbitrated; the plaintiff argues that 

none should be. The language of the LLC agreement guides the Court to a middle 

place. The agreement provides that “dispute[s], controvers[ies] or claim[s]

between Members arising out of or relating to this Agreement” are subject to 

arbitration. Some of the claims asserted in this action are between the LLC’s 

members and “aris[e] out of or relat[e] to” the LLC agreement, but other claims do 

not meet those criteria. I find that the only claims to be arbitrated are the claims 

between the LLC’s members that arise out of or relate to the LLC agreement, as

contemplated by the arbitration clause’s plain language. Because resolution of the 

claims to be arbitrated may affect or moot the claims remaining before this Court, 

this action will be stayed pending arbitration of those claims. 

I. BACKGROUND 

This action arises from a dispute between the two members of The Outreach 

Team, LLC (“TOT” or the “Company”).1 TOT is a Delaware limited liability 

company that conducts face-to-face fundraising canvassing.2 TOT’s two members 

were Plaintiff 360 Campaign Consulting, LLC (“360”) and Defendant Diversity 

 

1 Docket Item (“D.I.”) 1 ¶¶ 1, 28 [hereinafter “Compl.”].

2

Id. ¶¶ 1, 10.
4

Communication, LLC (“Diversity”), until November 16, 2019, when Diversity 

effectively resigned as a member of the Company.

3

 Before then, 360 and Diversity 

each held 50% of the membership interests of TOT.4 Non-party Clayt Freed is 

360’s sole member and manager.

5 Defendant Philip D. Radford is Diversity’s sole 

member.6 Defendant Steven Rufo allegedly served as TOT’s Manager and 

National Canvass Director until he resigned on August 14, 2019.7 

360 alleges that, after Diversity failed to force a buyout of 360’s interest in 

TOT, Diversity formed Defendant Grassroots Team LLC (“Grassroots”) to strip 

TOT of its assets and continue TOT’s business under the Grassroots name.

8

 

According to 360’s Complaint, Defendants deprived TOT of a major client 

contract and took TOT’s management, employees, intellectual property, leases, 

 

3 Pl.’s Answering Br. 1–2, 13 & Ex. B (noting that Diversity resigned on October 17, 

2019 and that the resignation would be effective as of November 16, 2019, subject to a 

determination that Diversity’s breaches terminated Diversity’s Membership Interest); 

Defs.’ Reply Br. 24 (acknowledging that Diversity resigned on October 17, 2019 and that 

the resignation would be effective as of November 16, 2019). 

4 Compl. Ex. A at Schedule A. 

5 Compl. ¶ 7.

6

Id. ¶ 9.

7

Id. ¶ 12; Defs.’ Opening Br. 2 n.3 (“Rufo disputes that he was the Manager of TOT”).

8 Compl. ¶¶ 2–4. 

6

360 filed motions to expedite and for a status quo order with its Complaint.

11

 

On October 25, I granted the motion to expedite and denied the motion for a status 

quo order.12 On October 17, Defendants moved to dismiss the Complaint for lack 

of subject matter jurisdiction under Court of Chancery Rules 12(b)(1) and 12(b)(3),

and to compel arbitration of each of the Counts in the Complaint in view of the 

arbitration provision in TOT’s Limited Liability Company Agreement, dated May 

1, 2017 (the “LLC Agreement”).

13

 The parties briefed the motion, and I heard oral 

argument on December 4.14 

II. ANALYSIS

Defendants seek dismissal of 360’s claims in favor of the arbitration 

provision at Section 7.07 (the “Arbitration Provision”) of the LLC Agreement. 

“[A] Rule 12(b)(1) motion will be granted if the parties contracted to arbitrate the 

claims asserted in the complaint.”

15

 The Court of Chancery lacks subject matter 

jurisdiction to adjudicate disputes that the parties have contractually agreed to 

arbitrate.16 In reviewing whether the Court has subject matter jurisdiction in view 

 

11 D.I. 2, 3. 

12 D.I. 45 at 17:17–19.

13 D.I. 27.

14 D.I. 66. 

15 Li v. Standard Fiber, LLC, 2013 WL 1286202, at *4 (Del. Ch. Mar. 28, 2013).

16 NAMA Hldgs., LLC v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 429 (Del. Ch. 

2007) (citing Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286, 295 (Del. 1999)).
7

of an arbitration clause, the Court may consider documents outside the complaint.17 

“A strong presumption exists in favor of arbitration and, accordingly, contractual 

arbitration clauses are generally interpreted broadly by the courts. However, this 

presumption will not trump basic principles of contract interpretation[.]”18

The Arbitration Provision states: 

Section 7.07 Deadlock. In the event of any dispute, controversy or 

claim between Members arising out of or relating to this Agreement, 

the parties shall attempt to resolve such dispute among themselves 

within thirty (30) calendar days from the date either party sends 

written notice of such dispute to the other party (“Dispute Notice 

Date”). If the parties fail to resolve the dispute within such period, 

the dispute shall be settled by binding arbitration, before three (3) 

arbitrators, which shall be the sole and exclusive procedure for the 

resolution of any such dispute. Within fifteen (15) calendar days after 

receipt of a notice of intention to arbitrate sent by one party, each 

party shall designate in writing one (1) arbitrator to resolve the 

dispute, which two (2) arbitrators shall, in turn, jointly select a third 

arbitrator within twenty (20) calendar days of their designation, failing 

which, the third arbitrator shall be appointed by the American 

Arbitration Association (the “AAA”) in accordance with the 

Commercial Arbitration Rules of the AAA (the “Commercial AAA 

Rules”) . . . . The arbitration proceedings shall be governed by the 

Commercial Rules of the AAA but need not be administered by that 

organization. The parties hereto shall request the arbitrators to use 

their best efforts to rule on each disputed issue within thirty (30) 

calendar days after the completion of the hearings; provided, however, 

that the failure of the arbitrators to so rule during such period shall not 

affect or impair the validity of any arbitration award. The 

 

17 Id. at 429 n.15.

18 Id. at 430 (citations omitted). 
8

determination of the arbitrators as to the resolution of any dispute 

shall be final, binding and conclusive upon all parties hereto . . . . The 

venue of the arbitration shall be the District of Columbia, and the seat 

of the arbitration shall be the state of Delaware. Any arbitration 

award may be entered in and enforced by any court having 

jurisdiction thereof and the parties hereby consent and submit to the 

jurisdiction of the courts of any competent jurisdiction for purposes of 

the enforcement of any arbitration award. The parties agree that after 

a clear and specific result or factual finding has been made with 

respect to a particular matter by the arbitrators pursuant to this Section 

7.07, such clear and specific result or factual finding shall be deemed 

to have been finally determined by the parties for all purposes under 

this Agreement and, thereafter, no party shall have the right to seek 

any contrary determination in connection with any later arbitration 

procedure hereto.19

A. The LLC Agreement Does Not Clearly And Unmistakably 

Demonstrate That Arbitrability Should Be Decided By An

Arbitrator. 

The Court must first determine the threshold issue of whether arbitrability 

should be decided by the Court or the arbitrators.

20

 This is a “gateway question[] 

about the scope of an arbitration provision and its applicability to a given 

 

19 Compl. Ex. A § 7.07 (emphasis in original). Defendants argue that the Court cannot 

consider the heading of the Arbitration Provision because the LLC Agreement expressly 

deprives the headings in the LLC Agreement of any interpretive weight. See id. § 12.05 

(stating headings are “in no way intended to describe, interpret, define, or limit the scope, 

extent or intent of this Agreement or any provisions of this Agreement.”). I agree. I have 

not considered the heading of the Arbitration Provision in my analysis, but included it for 

completeness. 

20 Legend Nat. Gas II Hldgs., LP v. Hargis, 2012 WL 4481303, at *4 (Del. Ch. 

Sept. 28, 2012).
9

dispute.”

21 Such gateway questions are referred to as questions of “substantive 

arbitrability.”22 Arbitrability is “an issue for judicial determination [u]nless the 

parties clearly and unmistakably provide otherwise.”23 Contracting parties reserve

the question of arbitrability for arbitrators only where (1) “the arbitration clause 

generally provides for arbitration of all disputes”; and (2) the contract 

“incorporates a set of arbitration rules that empower arbitrators to decide 

arbitrability.”24 The parties do not dispute that the Arbitration Provision 

incorporates the Commercial Rules of the AAA, which satisfies the second 

prong.

25

 

This Court must nevertheless decide arbitrability because the Arbitration 

Provision does not “generally provide for arbitration of all disputes.”26 The only 

disputes to be arbitrated are those “between Members arising out of or relating to 

this Agreement.”

27

 “Member” is defined as “(a) Diversity and [360] and (b) each 

Person who is hereafter admitted as a Member in accordance with the terms of this 

 

21 James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 76, 78 (Del. 2006).

22 Id. 

23 Id. at 79 (alteration in original) (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 

79, 83, 123 (2002)).

24 Id. at 80. 

25 Compl. Ex. A § 7.07 (“The arbitration proceedings shall be governed by the 

Commercial Rules of the AAA[.]”). 

26 Willie Gary, 906 A.2d at 80. 

27 Compl. Ex. A § 7.07.
10

Agreement and the Act.”

28

 Under this plain language, only disputes between 

Diversity and 360 arising out of or relating to the LLC Agreement must be 

arbitrated.

The structure of the LLC Agreement underscores the conclusion that the

LLC Agreement does not mandate arbitration for all disputes. The Arbitration 

Provision appears in Article VII of the LLC Agreement, which defines the 

authority and responsibilities of the Company’s Members, Managers, and Officers.

Article VII requires unanimous or majority29 approval of the Members for 

numerous actions necessary to conduct the business of the Company.

30 As a few 

examples, the Members must provide unanimous written approval to amend the 

annual budget, enter into contracts exceeding a specified level of materiality, and 

 

28 Id. at 6. The prefatory language of the LLC Agreement also defines Diversity and 360 

as the “Members,” without provision for future Members. Id. at 1. 

29 Because there are only two Members of the Company, actions requiring majority 

approval would still require unanimity. Id. at 5 (defining “Majority Interest” to mean 

“one (1) or more members whose Membership Interests, when combined, exceed fifty 

percent (50%) of all Membership Interests held by the Members”). 

30 See, e.g., id. §§ 7.01(a) (requiring unanimous approval by Members to designate one or 

more Managers), 7.01(b) (requiring the Manager to manage pursuant to the direction of 

the Members “as approved unanimously” by the Members), 7.01(d) (requiring a majority 

of membership interests to approve actions by any Manager or agent “with respect to all 

decisions affecting the business of the Company, including, but not limited to” waiving 

any rights under the LLC Agreement or admitting any other person as a Member), 7.02(a) 

(providing that an attorney-in-fact, employee or other agent of the Company may only 

bind the Company with unanimous approval of the Members, except where otherwise 

provided by the LLC Agreement), 7.02(c) (listing actions requiring unanimous written 

approval of all Members).
11

settle any lawsuit on behalf of the Company.31 Because the LLC Agreement 

requires unanimity with respect to a variety of critical business decisions, an 

inability to reach consensus between two co-equal Members could cause the 

Company to be unable to operate. The Arbitration Provision governs the 

resolution of such disputes between Members.

The LLC Agreement contemplates that other disputes—i.e., disputes not 

between Members or not arising out of the LLC Agreement—will be adjudicated 

by courts, not arbitrators. Section 12.13 generally submits disputes “arising out of”

the LLC Agreement to the jurisdiction of Delaware’s courts:

 

31 Id. §§ 7.02(c)(iii), (iv), (xiii). 
12

Section 12.13 Submission to Jurisdiction. The parties hereby agree 

that any suit, action or proceeding seeking to enforce any provision of, 

or based on any matter arising out of or in connection with, this 

Agreement or the transactions contemplated hereby, whether in 

contract, tort or otherwise, shall be brought in the United States 

District Court for the District of Delaware or in the Court of Chancery 

of the State of Delaware (or, if such court lacks subject matter 

jurisdiction, in the Superior Court of the State of Delaware), so long 

as one of such courts shall have subject-matter jurisdiction over such 

suit, action or proceeding, and that any case of action arising out of 

this Agreement shall be deemed to have arisen from a transaction of 

business in the State of Delaware. Each of the parties hereby 

irrevocably consents to the jurisdiction of such courts (and of the 

appropriate appellate courts therefrom) in any such suit, action or 

proceeding and irrevocably waives, to the fullest extent permitted by 

law, any objection that it may now or hereafter have to the laying of 

the venue of any such suit, action or proceeding in any such court or 

that any such suit, action or proceeding that is brought in any such 

court has been brought in an inconvenient for[u]m.32

The LLC Agreement also provides that parties may receive equitable relief from “a 

court of competent jurisdiction”:

Section 12.15 Equitable Relief. Each party hereto acknowledges that 

a breach or threatened breach by such party of any of its obligations 

under this Agreement would give rise to irreparable harm to the other 

parties, for which monetary damages would not be an adequate 

remedy, and hereby agrees that in the event of a breach or a threatened 

breach by such party of any such obligations, each of the other parties 

hereto shall, in addition to any and all other rights and remedies that 

may be available to them in respect of such breach, be entitled to 

equitable relief, including a temporary restraining order, an injunction, 

specific performance and any other relief that may be available from a 

court of competent jurisdiction (without any requirement to post 

bond).33

 

32 Id. § 12.13 (emphasis added). 

33 Id. § 12.15.
13

Taken together, Sections 12.13 and 12.15 provide that any dispute “arising out of 

or in connection with, this Agreement” shall be heard in the courts of the state of 

Delaware or in federal courts within Delaware and that such courts may provide 

broad equitable relief to the litigants. 

Delaware courts have previously interpreted similar provisions to be 

evidence that an arbitration provision does not require an arbitrator to determine 

the threshold question of arbitrability. In James & Jackson, LLC v. Willie Gary, 

LLC, the Delaware Supreme Court confirmed that a contractual provision 

permitting courts to provide equitable relief (similar to Section 12.15) was 

evidence that not all disputes must be referred to arbitration.34 Similarly, in 

evaluating the arbitrability of a contract claim, the Delaware Supreme Court in 

Kuhn Construction, Inc. v. Diamond State Port Corporation held that a forum 

 

34 Willie Gary, 906 A.2d at 81; see also Medicis Pharm. Corp. v. Anacor Pharm., Inc., 

2013 WL 4509652, at *3 (Del. Ch. Aug. 12, 2013) (holding that the court was 

responsible for determining arbitrability because, in part, the contract permitted the 

parties to “institute judicial proceedings” to enforce its rights through equitable relief). 

The contractual provision permitting equitable relief in the LLC Agreement bears more 

similarity to the provision analyzed in Willie Gary than the equitable relief provision in 

BAYPO Limited Partnership v. Technology JV, LP, 940 A.2d 20, 26–27 (Del. Ch. 2007), 

which was limited to providing equitable and injunctive relief in aid of arbitration. Id. at 

27 (finding that the equitable relief provision “provide[d] the parties with limited 

ancillary relief to protect their interests during the pendency of the arbitration process”). 

Section 12.15 is not limited to equitable relief in aid of arbitration.
14

selection clause selecting Delaware courts (similar to Section 12.13) was evidence

that an arbitration provision did not cover “all disputes” arising from the contract.35 

Here, as in Willie Gary and Kuhn, the LLC Agreement does not require “all 

disputes” to be arbitrated because it includes a general forum selection clause for 

disputes to be resolved in courts and because it contemplates that courts may

generally provide equitable relief. The Arbitration Provision carves out only 

disputes specifically “between Members” and arising out of the LLC Agreement 

from those general provisions. 

In an effort to avoid this outcome, Defendants argue that the Arbitration 

Provision expressly provides for resolution of “all disputes,” that Section 12.13 and 

Section 12.15 conflict with the Arbitration Provision, and that any ambiguity must

be resolved in favor of arbitration. These arguments fall to the language of the 

LLC Agreement.

36

 Holding that the Arbitration Provision requires all disputes to 

be arbitrated would impermissibly read Sections 12.13 and 12.15 out of the 

 

35 990 A.2d 393, 395–97 (Del. 2010).

36 To the extent that 360’s argument is premised on the assumption that any arbitration 

cannot provide equitable relief, that logic does not hold. The Commercial Rules of the 

AAA, which are incorporated into the Arbitration Provision, permit arbitrators to provide 

any and all relief within the scope of the parties’ agreement, including equitable relief. 

See AAA Commercial Rule 47 (as amended and effective Oct. 1, 2013) (“The arbitrator 

may grant any remedy or relief that the arbitrator deems just and equitable and within the 

scope of the agreement of the parties, including, but not limited to, specific performance 

of a contract.”).
15

contract, while also expanding the Arbitration Provision beyond its plain terms.37 

As described above, the Arbitration Provision only requires arbitration of disputes 

“between Members.” Further, under the LLC Agreement, Section 12.16 provides 

that all rights and remedies “are cumulative and are in addition to and not in 

substitution for any other rights and remedies[.]”

38 It would be inconsistent with 

Section 12.16 to read the Arbitration Provision as supplanting the provisions 

selecting Delaware courts for disputes and agreeing to the availability of equitable 

relief from “courts of competent jurisdiction.”

In sum, although it is accurate that “[a]ny doubt as to arbitrability is to be 

resolved in favor of arbitration,”

39 there is no reasonable interpretation of the LLC 

 

37 Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012) (“[A] court 

interpreting any contractual provision . . . must give effect to all terms of the instrument, 

must read the instrument as a whole, and, if possible, reconcile all the provisions of the 

instrument.” (quoting Elliott Assoc., L.P. v. Avatex Corp., 715 A.2d 843, 854 (Del. 

1998)). Defendants argue that Section 12.13 would not be rendered surplusage if all 

disputes were subject to arbitration because the contract would still require the parties to 

adjudicate confirmations of arbitration awards in Delaware courts. But Section 12.13 is 

not, by its terms, limited to confirmations of arbitration awards; and the Arbitration 

Provision already provides that any arbitration award may be “enforced by any court 

having jurisdiction thereof and the parties hereby consent and submit to the jurisdiction 

of the courts of any competent jurisdiction for purposes of the enforcement of any 

arbitration award.” Compl. Ex. A § 7.07. See also Willie Gary, 906 A.2d at 81 

(affirming the Court of Chancery’s rationale that a provision permitting a party to obtain 

injunctive relief in any court of the United States was not only intended for confirmations 

of arbitration awards where the contract elsewhere stated that “judgment upon the . . . 

award may be entered in any court having jurisdiction concerning the matter”).

38 Compl. Ex. A § 12.16.

39 SBC Interactive, Inc. v. Corp. Media P’rs, 714 A.2d 758, 761 (Del. 1998). 
16

Agreement that requires “all disputes” to be arbitrated. Arbitrability is a question 

for this Court to resolve. 

B. The Arbitration Provision Is Narrow In Scope And Only Requires 

Arbitration Of Disputes Between Members Arising Out Of Or 

Relating To The LLC Agreement. 

The parties contest the arbitrability of all eleven counts of the Complaint.

To determine whether the counts are subject to arbitration, I must engage in a twopart inquiry, as set forth by the Delaware Supreme Court in Parfi Holding AB v. 

Mirror Image Internet, Inc.:

When the arbitrability of a claim is disputed, the court is faced with 

two issues. First, the court must determine whether the arbitration 

clause is broad or narrow in scope. Second, the court must apply the 

relevant scope of the provision to the asserted legal claim to determine 

whether the claim falls within the scope of the contractual provisions 

that require arbitration. If the court is evaluating a narrow arbitration 

clause, it will ask if the cause of action pursued in court directly 

relates to a right in the contract. If the arbitration clause is broad in 

scope, the court will defer to arbitration on any issues that touch on 

contract rights or contract performance.40

The Arbitration Provision is narrow in scope. It compels arbitration with 

respect to “any dispute, controversy or claim between Members arising out of or 

relating to this Agreement.”41 The LLC Agreement sends disputes not between 

Members, or not arising out of that Agreement, to the courts. Because the 

 

40 817 A.2d 149, 155 (Del. 2002).

41 Compl. Ex. A § 7.07.
17

Arbitration Provision is narrow, I will evaluate “if the cause of action pursued in 

court directly relates to a right in the contract” to determine whether each count 

should be arbitrated.42

1. The Claims Arising From Alleged Breaches Of The LLC 

Agreement Between The Members Are Subject To 

Arbitration (Counts III, VII, and X). 

Counts III, VII, and X of the Complaint must be arbitrated because they are 

claims between the Company’s Members that relate to the LLC Agreement. Count 

III alleges that Diversity breached the provisions of the LLC Agreement by (1) 

improperly transferring assets without 360’s approval; (2) forming Grassroots to 

directly compete with the Company; and (3) misappropriating the Company’s 

confidential information.

43

 Count X seeks declaratory relief for the same breaches, 

as well as a declaratory judgment that 360 is not in material breach of the LLC 

Agreement.

44 Count VII alleges, in part, that Diversity tortiously interfered with 

the LLC Agreement.45 That aspect of Count VII facially “relate[s] to” the LLC 

 

42 Parfi, 817 A.2d at 155. Even where an arbitration clause is determined to be broad, if a 

cause of action does not touch on contract rights or contract performance, that claim 

cannot be arbitrated even if the claim “arise[s] from some or all of the same facts that 

relate to the transactions that provide[] the basis for [the] contract claims.” Id. at 155–60. 

43 Compl. ¶¶ 112–27 (citing Compl. Ex. A §§ 7.02, 7.08, 12.03 and 12.15). 

44 Id. ¶¶ 161–68.

45 In addition to alleging that Diversity tortiously interfered with the LLC Agreement, 

Count VII alleges that Diversity tortiously interfered with the Company’s contracts with 

third parties and that Rufo, Radford, and Grassroots tortiously interfered with the LLC 

Agreements and contracts between the Company and third parties. Id. ¶¶ 146–51. 
18

Agreement.46 These claims are “between Members” and “aris[e] out of or relat[e] 

to this Agreement,”

47 and so fall within the scope of the Arbitration Provision.

360 argues that Diversity cannot invoke the Arbitration Provision because 

Diversity ceased to be a Member on or around November 16, 2019, after the 

alleged events, after 360 filed its Complaint, and after Diversity filed the present 

motion to dismiss in favor of arbitration. Diversity invoked the Arbitration 

Provision while it was still a Member. The provision regarding Member 

resignation does not provide that a Member that subsequently resigned cannot 

arbitrate disputes that arose before its resignation.

48

 

360 has not cited any statutory or case law to support the argument that 

Diversity forfeited its rights to arbitration upon its resignation. Instead, 360 argues 

that (1) because Section 12.03(d) imposes confidentiality obligations on a Member, 

the remainder of the LLC Agreement does not survive a Member’s withdrawal; and 

(2) the parties agreed to jurisdiction in the Court of Chancery. Neither argument 

bears weight. Section 12.03(d) says nothing about arbitrability or a Member’s 

right to seek arbitration of a claim pursuant to the Arbitration Provision after it has 

 

46 Id. ¶¶ 147–48. 

47 Compl. Ex. A § 7.07. Plaintiff conceded that there is “something in Count III that falls 

under [Section] 7.07” of the agreement, and I agree. See D.I. 65 at 39:8–11.

48 Compl. Ex. A §§ 4.03(a), 4.04. The Delaware LLC Act is also silent regarding the 

rights of a member that resigns. See 6 Del. C. § 18-603. 
19

resigned.

49

 And, in keeping with how Section 12.15 and the Arbitration Provision 

work together, the fact that Diversity generally consented to jurisdiction in 

Delaware does not deprive Diversity of its specific right to seek arbitration of 

claims governed by the Arbitration Provision. As explained, to hold that Diversity 

generally cannot arbitrate claims because of the forum selection clause would 

render the Arbitration Provision a dead letter. 

More broadly, in the absence of any language in the LLC Agreement 

regarding the effect of a Member’s resignation on the Arbitration Provision, the 

Arbitration Provision governs 360’s agreement-based disputes with Diversity 

based on actions taken when they were both Members. Resignation does not 

automatically render an arbitration provision in an LLC agreement inapplicable to 

the resigned member. In Julian v. Julian, this Court ordered that a member of an 

LLC who resigned was required to submit his claims for the fair value of his 

membership interests to arbitration based on the arbitration clauses in the LLC 

agreements of the LLCs from which he resigned.50 Indeed, with respect to claims 

for conduct during the pendency of the original agreement, arbitration clauses may 

 

49 To the extent Section 12.03(d) is relevant to arbitration at all, a Member may more 

easily maintain confidentiality in arbitration than in a public court. 

50 2009 WL 2937121, at *2–8 (Del. Ch. Sept. 9, 2009). 
20

even survive the termination of an LLC agreement.

51 Under the logic of these 

cases, the Arbitration Provision continues to govern applicable disputes between 

Diversity and 360 arising from events that occurred before Diversity resigned. 360 

remains bound to arbitrate those disputes as it agreed to do under the LLC 

Agreement. Had the Members of the LLC wanted to require Members to forfeit all 

rights to arbitration upon resignation, they could have easily contracted for that

result.

52 In the absence of contractual language providing otherwise, I conclude 

Diversity’s resignation does not permit 360 to disclaim its agreement to arbitrate 

disputes between itself and Diversity as Members. 

For the foregoing reasons, Counts III and X must be arbitrated, and Count 

VII must be arbitrated to the extent that it claims that Diversity tortiously interfered 

with the LLC Agreement. 

 

51 “Courts . . . have found that arbitration provisions can continue to apply to actions 

taken while the original contract was effective, even if the original has since been 

replaced by another.” 3850 & 3860 Colonial Blvd., LLC v. Griffin, 2015 WL 894928, at 

*5 (Del. Ch. Feb. 26, 2015) (citing Primex Int’l Corp. v. Wal-Mart Stores, Inc., 679 

N.E.2d 624, 626 (N.Y. 1997)); see also id. (“Generally, a broad arbitration clause in an 

agreement survives and remains enforceable for the resolution of disputes arising out of 

that agreement subsequent to the termination thereof and the discharge of obligations 

thereunder, irrespective of whether the termination and discharge resulted from the 

natural expiration of the term of the agreement, a unilateral termination under a notice of 

cancellation provision or the breach of the agreement by one of the parties.”) (citations 

omitted)). 

52 I note that such a provision would have been consistent with Article VII’s focus on 

efficient resolution of Member conflict in the context of Company governance. But I see 

no basis to limit the Arbitration Provision to disputes between present Members. 
21

2. The Non-Contract Claims Between The Members Are Not 

Subject To Arbitration (Counts I, II, V, VII, VIII, and XI).

Counts I, II, V, VII, VIII, and XI contain claims that do not “directly relate[] 

to a right in the contract” and are not arbitrable under the Arbitration Provision.

53

Counts I and II address Diversity’s appropriation of the Company’s assets. 

Count I alleges that Diversity tortiously converted the Company’s assets.

54 Count 

II alleges that 360, as a creditor of the Company, is entitled to relief from Diversity 

under the Delaware Uniform Fraudulent Transfer Act.

55

 This claim centers on the 

allegation that Diversity and the other defendants misappropriated the Company’s 

assets “for the purpose of evading and denying 360’s and TOT’s claims against 

them.”56 The claim that Diversity converted Company assets does not arise from 

the LLC Agreement.57 Neither Count I nor Count II directly relates to a right 

under the LLC Agreement; they are not arbitrable. 

Count V alleges that Diversity aided and abetted Rufo’s breach of fiduciary 

duties to the Company. This claim does not arise out of or relate to the LLC 

Agreement. None of the elements of aiding and abetting a breach of fiduciary duty 

 

53 See Parfi, 817 A.2d at 155.

54 Compl. ¶¶ 96–101.

55 Id. ¶¶ 102–111.

56 Id. ¶ 105.

57 Triton Constr. Co., Inc. v. Eastern Shore Elec. Servs., Inc., 2009 WL 1387115, at *24 

(Del. Ch. May 18, 2009) (“Conversion is the act of dominion wrongly exerted over the 

property of another, in denial of his right, or inconsistent with it.”) (quotation omitted)). 
22

requires analysis of any right under the LLC Agreement.

58

 In other circumstances, 

a claim for aiding and abetting a breach of fiduciary duty could require analysis of 

an underlying LLC agreement. Here, the LLC Agreement is silent as to the scope 

of Rufo’s fiduciary duties, and there is no need to consider the LLC Agreement 

when adjudicating whether Rufo breached his fiduciary duties. Rufo’s fiduciary

duties arise from common law, not the LLC Agreement.

59

 Further, as explained 

below, the underlying breach of fiduciary duty claim against Rufo is itself not 

arbitrable because Rufo was never a Member. Neither the underlying claim of 

breach of fiduciary duty nor the aiding and abetting claim relates to the LLC 

Agreement. The aiding and abetting against Diversity claim is not arbitrable. 

Counts VII and VIII assert tortious interference with obligations and 

relationships other than the LLC Agreement. Count VII alleges that Diversity 

 

58 The elements of an aiding and abetting claim are (1) the existence of a fiduciary 

relationship; (2) a breach of fiduciary duty; (3) knowing participation in the breach; and 

(4) damages proximately caused by the breach. Malpiede v. Townson, 780 A.2d 1075, 

1096 (Del. 2001). 

59 Feeley v. NHAOCG, LLC, 62 A.3d 649, 661 (Del. Ch. Nov. 28, 2012) (“Like the 

Delaware General Corporation Law, the LLC Act does not explicitly provide for 

fiduciary duties of loyalty or care; consequently, the traditional rules of law and equity 

govern.”). See also 6 Del. C. §§ 18-1101(c) (“To the extent that, at law or in equity, a 

member or manager or other person has duties (including fiduciary duties) to a limited 

liability company . . . the member’s or manager’s or other person’s duties may be 

expanded or restricted or eliminated by provisions in the limited liability company 

agreement.” (emphasis added)), 18-1104 (“In any case not provided for in this chapter, 

the rules of law and equity, including the rules of law and equity relating to fiduciary 

duties . . . shall govern.”). 
23

tortiously interfered with contractual relations relating to contracts that are not the 

LLC Agreement.60 Count VIII alleges that Diversity tortiously interfered with a 

prospective business relationship with a Company customer.61 These claims do not 

arise out of or relate to the LLC Agreement and are not arbitrable.

Finally, Count XI alleges that Diversity was unjustly enriched as a result of 

360’s monetary and non-monetary contributions to the Company prior to the 

alleged heist.62 As 360 recognizes, an unjust enrichment claim only applies in the 

event that the LLC Agreement does not govern.63 Because the unjust enrichment 

claim does not relate to any contract right in the LLC Agreement, it is not 

arbitrable. 

3. Claims Not Between The Members Are Not Subject to 

Arbitration (Counts I, II, IV, VI, VII, VIII, IX, and XI). 

Counts I, II, IV, VI, VII, VIII, IX, and XI, which contain claims against the 

non-Member Defendants, are not arbitrable under the plain language of the 

Arbitration Provision because they are not claims between Members.

64

 The 

 

60 Compl. ¶¶ 146–51. 

61 Id. ¶¶ 152–56.

62 Id. ¶¶ 169–73.

63 See Nemec v. Shrader, 2009 WL 1204346, at *6 (Del. Ch. Apr. 30, 2009) (“Delaware 

courts . . . have consistently refused to permit a claim for unjust enrichment when the 

alleged wrong arises from a relationship governed by contract.”); Compl. ¶ 172 

(“Plaintiff is without a remedy at law if the LLC Agreement does not govern.”). 

64 Compl. Ex. A § 7.07.
24

Arbitration Provision does not require arbitration of claims against Grassroots or 

Radford.65 Nor does it provide for arbitration of claims against Rufo, an alleged 

Manager of the Company. As noted above, Article VII of the LLC Agreement 

defines the rights and obligations of Members, Managers, and Officers.66 Had the 

parties to the LLC Agreement sought to submit disputes between Members, 

Managers, and Officers to arbitration, they easily could have contracted to do so.

Accordingly, I will not expand the Arbitration Provision beyond its terms.

67

4. Claims Remaining Before This Court Are Stayed.

This action will be stayed until the completion of the arbitration or if either 

party can demonstrate good cause to lift the stay. “[T]he granting . . . of a stay by a 

trial court lies within the discretion of the trial court . . . . The circumstances of the 

litigation may be such as to make it desirable to stay the first action, and to permit 

 

65 Id. at 6 (defining “Member” as “(a) Diversity and [360] and (b) each Person who is 

hereafter admitted as a Member in accordance with the terms of this Agreement and the 

Act”). 

66 See id. §§ 7.01 (defining “Manager”), 7.03 (defining “Officer”). 

67 Parfi, 817 A.2d at 156 (“The policy that favors alternate dispute resolution 

mechanisms, such as arbitration, does not trump basic principles of contract 

interpretation.”). See also Vintage Rodeo Parent, LLC v. Rent-A-Center, Inc., 2019 WL 

1223026, at *21 (Del. Ch. Mar. 14, 2019) (“As a matter of contractual interpretation, I 

should refrain from writing a provision into a contract when the parties could have done 

so themselves, but chose not to.”). Although the parties briefed the question of whether 

Rufo, Radford, and Grassroots may invoke the arbitration provision, that question is not 

relevant because I find that the plain language of the LLC Agreement does not permit 

arbitration of disputes between non-Members. 
25

the subsequent action to proceed to conclusion.”68 That is the case here. Because 

the breach of contract claims to be resolved by the arbitrators may affect the 

remaining claims before this Court, it is appropriate to stay this action pending the 

completion of the arbitration in the interests of judicial economy and to avoid 

potential inconsistencies between the decisions of this tribunal and those of the 

arbitrators. The parties may use discovery obtained in this action in the arbitration. 

III. CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss and compel 

arbitration is granted in part and denied in part. Counts III and X must be 

arbitrated under the Arbitration Provision. Counts I, II, IV, V, VI, VIII, IX, and XI 

must be adjudicated by this Court, rather than by an arbitrator. Count VII is in the 

province of arbitration only to the extent that the claim alleges that Diversity 

tortiously interfered with the LLC Agreement; claims that Diversity tortiously 

interfered with other agreements, and that Radford, Rufo, and Grassroots tortiously 

interfered with the Company’s agreements, are before this Court. This action is 

stayed pending the results of the arbitration.

The parties shall submit a conforming implementing order.

 

68 Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681, 683 (Del. 1964), overruled on 

other grounds by Pepsico, Inc. v. Pepsi-Cola Bottling Co. of Asbury Park, 261 A.2d 520 

(Del. 1969).