1 – OPINION & ORDER

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

VESTA CORPORATION, 

No. 3:14-cv-1142-HZ

Plaintiff,

OPINION & ORDER

v.

AMDOCS MANAGEMENT 

LIMITED and AMDOCS, INC., 

Defendants.

Erick J. Haynie

Daniel T. Keese

Joanna T. Perini-Abbott

Stephen English

Julia E. Markley

Meredith Price

PERKINS COIE, LLP 

1120 NW Couch Street, 10th Floor 

Portland, OR 97209

Andrew Ong

ORRICK, HERRINGTON & SUTCLIFFE LLP

1000 Marsh Road

Menlo Park, CA 94025

Attorneys for Plaintiff

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2 – OPINION & ORDER

Andrew G. Klevorn

Bruce G. Vanyo

Yonaton M. Rosenzweig

Christina Lucen Costley

KATTEN MUCHIN ROSENMAN, LLP

2029 Century Park East, Suite 2600 

Los Angeles, CA 90067

Kristin J. Achterhof

Meegan I. Maczek

Richard H. Zelichov

KATTEN MUCHIN ROSENMAN, LLP

525 West Monroe Street

Chicago, IL 60661

Joshua L. Ross 

Robert A. Shlachter

Timothy S. DeJong

STOLL STOLL BERNE LOKTING & SHLACHTER, PC

209 SW Oak Street, Fifth Floor 

Portland, OR 97204 

Attorneys for Defendants

HERNÁNDEZ, District Judge:

Defendants Amdocs Management Limited and Amdocs, Inc. move to dismiss Plaintiff 

Vesta Corporation’s Third Amended Complaint. Defendants’ motion is denied. 

FACTUAL BACKGROUND

Plaintiff is an electronic payments solution and fraud prevention technology company. 

TAC Intro, ECF 222. Defendants are telephone billing software and services companies. Id.

Both Plaintiff and Defendants provide services to national and international mobile phone 

network operators (MNOs). Id. at ¶¶ 7-8. Until recently, Defendants were not providers of 

payment solutions. Id. at ¶ 10.

Over the years, the parties have shared many of the same customers because MNOs 

generally require both a payment solution and a billing platform to serve their end-users. Id. at ¶ 

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11. Beginning in 2009, the parties’ relationship became more strategic. Id. at ¶ 12. The parties 

began working together to integrate their services and platforms in order to appeal to their shared 

customer base. Id. In addition, since 2010, Defendants twice approached Plaintiff about the 

possibility of Defendants acquiring Plaintiff. Id.

In the course of jointly collaborating on marketing and the possibility of acquisition, the 

parties shared detailed technical information with each other. Id. at ¶ 13. Plaintiff shared 

information with Defendants including proprietary information about Plaintiff’s payment 

solution (the “Confidential Solutions Methods”) and detailed financial, pricing, profitability, and 

statistical information about the prevalence of fraudulent payment transactions in the prepaid 

mobile device marketplace and how Plaintiff uses fraud data to price its payment solutions (the 

“Confidential Risk Information”). Id. at ¶¶ 20, 49. 

Given the proprietary nature of such information, the parties entered into a series of 

confidentiality and non-disclosure agreements (the “NDAs”). Id. at ¶ 13. The first such NDA 

was signed on or about October 18, 2006. Id. at ¶ 14. Additional NDAs were entered into on 

June 24, 2009; March 31, 2010; and July 3, 2012. Id. In addition, every time one of Defendants’ 

employees visited Plaintiff’s headquarters, the employee had to sign-in and agree that all of the 

information acquired while on the premises was confidential and proprietary to Plaintiff. Id. ¶ 18 

(describing the “Sign-In NDAs”).

The first round of acquisition discussions took place in 2010. Id. at ¶ 25. In connection 

with these discussions, Plaintiff shared proprietary information, including detailed financial, 

pricing, and profitability data that had not been previously shared. Id. at ¶ 23. While the initial 

acquisition attempt fell apart in early April 2010, the parties continued to work together on 

jointly pitching Plaintiff’s payment solution proposal to MetroPCS, a large MNO now affiliated 

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4 – OPINION & ORDER

with T-Mobile. Id. at ¶ 27. The parties collaborated on a joint proposal providing for Plaintiff to 

supply a payment solution to MetroPCS that would be integrated into Defendants’ billing 

platform, which MetroPCS was already using. Id. at ¶¶ 27, 29. Ultimately, the joint pitch to 

MetroPCS was not successful in adding Plaintiff’s payment solution. Id. at ¶ 33. 

In the spring of 2012, the parties again discussed the possibility of acquisition. Id. at ¶ 36. 

Once again, Plaintiff shared confidential information with Defendants but the acquisition effort 

was not successful. Id. at ¶¶ 40-41.

In July of 2013, Plaintiff learned that, during or shortly after the failed joint pitch to 

MetroPCS, Defendants sold MetroPCS an integrated payment solution and billing platform, 

thereby excluding Plaintiff from the sale. Id. at ¶ 34. Plaintiff claims that Defendants used 

Plaintiff’s Confidential Solutions Methods and Confidential Risk Information to enter into an 

exclusive contract to become the provider of the payment processing solution for the prepaid 

wireless services of MetroPCS. Id. at ¶ 56. According to Plaintiff, there is no way that 

Defendants could have built a payment solution for MetroPCS in such a short time frame without 

using some significant portion of the confidential information provided to Defendants by 

Plaintiff in connection with the MetroPCS collaboration project. Id. at ¶ 35. 

Plaintiff further alleges that Defendants are actively marketing their “copycat payment 

solution” to other potential buyers. Id. at ¶ 48. In March or April of 2014, Sprint (another MNO) 

indicated to Plaintiff that it was considering migrating its prepaid wireless payment processing 

solution from Plaintiff to an in-house solution. Id. at ¶ 58. However, in or about September 2014, 

Plaintiff learned from Sprint that Sprint had changed its decision and, instead, selected 

Defendants as Plaintiff’s replacement. Id. at ¶¶ 58-59. According to Plaintiff, Defendants used 

their knowledge of Plaintiff’s Confidential Solutions Methods and Confidential Risk Information 

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to displace Plaintiff and take over payment processing services for all of Sprint’s prepaid brands 

(Sprint, Boost Mobile, Virgin Mobile, and Assurance). Id. at ¶ 60. 

Plaintiff also alleges that Defendants used the confidential information they learned from 

Plaintiff in order to underbid Plaintiff in a proposal to provide a single payment processing 

solution for all of T-Mobile’s wireless services. Id. at ¶ 61. While Plaintiff ultimately won the 

bid, it had to significantly lower its price to compete with Defendants and avoid being foreclosed 

from the marketplace. Id. at ¶ 63. 

PROCEDURAL BACKGROUND

Plaintiff filed this action in state court in June of 2014 and Defendants removed the case 

to federal court on July 17, 2014. Notice of Removal, ECF 1. The original complaint brought 

claims of breach of contract, theft of trade secrets, and fraud. Compl., ECF 1-1. On January 13, 

2015, this Court dismissed Plaintiff’s fraud claim. Opinion & Order, Jan. 13, 2015, ECF 42. 

On April 7, 2015, Plaintiff filed a First Amended Complaint (FAC), in which Plaintiff 

made several changes to the original complaint. FAC, ECF 52. Plaintiff omitted the fraud claim, 

added three antitrust claims, and made changes to the damages allegations. Id. In September of 

2015, this Court granted Defendants’ motion to dismiss Plaintiff’s antitrust claims. Opinion & 

Order, Sept. 3, 2015, ECF 97.

On December 2, 2015, this Court granted Plaintiff leave to file an amended complaint to 

remove an inaccurate statement in the First Amended Complaint. Order, Dec. 2, 2015, ECF 146. 

In that order, the Court noted:

Plaintiff’s proposed complaint still includes claims which were dismissed by this Court 

on September 3, 2015. . . Plaintiff is directed to file an amended complaint which 

accurately reflects the claims that remain in this case within 7 days of this Order. 

Id.

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On December 9, 2015, Plaintiff filed a Second Amended Complaint (SAC) in which 

Plaintiff removed the inaccurate statement in ¶ 40 of the FAC and removed all of the antitrust

claims. However, Plaintiff did not remove all of the factual allegations relating to the antitrust 

claims, which spurred Defendants to file a motion to strike allegations in the SAC. Mot. Strike, 

Dec. 21, 2015, ECF 159.

On December 29, 2015, the Court entered an order striking several paragraphs of the 

SAC because Plaintiff did not have leave of Court or consent of Defendants to convert its prior 

antitrust allegations into trade secret misappropriation allegations. Order, Dec. 29, 2015, ECF 

162. Plaintiff was directed to file an amended complaint within 10 days that complied with the 

order and removed “factual allegations and claims that were included in Plaintiff’s First 

Amended Complaint as part of Plaintiff’s now-dismissed antitrust claims.” Id. Plaintiff was 

further directed that, if it wished to amend its complaint in any other way, it must seek leave to 

amend pursuant to Rule 15. Id. Pursuant to the Court’s order, Plaintiff filed a Corrected Second 

Amended Complaint (CSAC) on January 8, 2015. CSAC, ECF 166. 

On April 1, 2014, the Court granted Plaintiff leave to amend to file a Third Amended 

Complaint (TAC). Plaintiff filed the TAC, which expands the allegations of damages to include 

lost profits and royalties stemming not only from the MetroPCS deal, but also Sprint and TMobile accounts. Defendants now move to dismiss the TAC to the extent it includes new 

allegations regarding Sprint, T-Mobile, and Vodafone.

STANDARDS

I. Rule 10(b)

Where a plaintiff's claims are founded upon separate transactions or occurrences, they are 

properly “stated in a separate count ... [because] a separation facilitates the clear presentation of 

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7 – OPINION & ORDER

the matters set forth.” Bautista v. Los Angeles Cty., 216 F.3d 837, 840-41 (9th Cir. 2000)

(quoting Fed. R. Civ. P. 10(b) and citing James Wm. Moore, et al., Moore's Federal Practice § 

10.03(2)(a) (3d ed. 1997)). “Separate counts will be required if necessary to enable the defendant 

to frame a responsive pleading or to enable the court and the other parties to understand the 

claims.” Moore, supra, § 10.03 (2)(a). “Courts have required separate counts where multiple

claims are asserted, where they arise out of separate transactions or occurrences, and where 

separate statements will facilitate a clear presentation.” Id. (citing 5 Charles Alan Wright & 

Arthur R. Miller, 5A Federal Practice and Procedure § 1324 (3d ed.)).

“In such cases, separate counts permit pleadings to serve their intended purpose to frame 

the issue and provide the basis for informed pretrial proceedings.” Id. “Experience teaches that, 

unless cases are pled clearly and precisely, issues are not joined, discovery is not controlled, the 

trial court's docket becomes unmanageable, the litigants suffer, and society loses confidence in 

the court's ability to administer justice.” Id. (quoting Anderson v. District Bd. of Trustees, 77 

F.3d 364, 367 (11th Cir. 1996)).

II. Rule 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency 

of the claims. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “All allegations of material 

fact are taken as true and construed in the light most favorable to the nonmoving party.” Am. 

Family Ass'n, Inc. v. City & Cnty. of S.F., 277 F.3d 1114, 1120 (9th Cir. 2002). However, the 

court need not accept conclusory allegations as truthful. See Warren v. Fox Family Worldwide, 

Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) (“[W]e are not required to accept as true conclusory 

allegations which are contradicted by documents referred to in the complaint, and we do not 

necessarily assume the truth of legal conclusions merely because they are cast in the form of 

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factual allegations.”) (internal quotation marks, citation, and alterations omitted). Rather, to state 

a plausible claim for relief, the complaint “must contain sufficient allegations of underlying 

facts” to support its legal conclusions. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 

A motion to dismiss under Rule 12(b)(6) will be granted if a plaintiff alleges the 

“grounds” of his “entitlement to relief” with nothing “more than labels and conclusions, and a 

formulaic recitation of the elements of a cause of action[.]” Bell Atl. Corp. v. Twombly, 550 

U.S. 544, 555 (2007). “Factual allegations must be enough to raise a right to relief above the 

speculative level on the assumption that all the allegations in the complaint are true (even if 

doubtful in fact)[.]” Id. (citations and footnote omitted).

To survive a motion to dismiss, a complaint “must contain sufficient factual matter, 

accepted as true, to state a claim to relief that is plausible on its face[,]” meaning “when the 

plaintiff pleads factual content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 

(internal quotation marks omitted). A complaint must contain “well-pleaded facts” which 

“permit the court to infer more than the mere possibility of misconduct[.]” Id. at 679.

III. Rule 12(b)(1)

Where the court lacks subject-matter jurisdiction, the action must be dismissed. Fed. R.

Civ. P. 12(b)(1). A motion to compel arbitration is appropriately raised pursuant to Rule 

12(b)(1). See Geographic Expeditions. Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 

1104 (9th Cir. 2010). In considering a Rule 12(b)(1) motion, the court may consider evidence 

outside the pleadings to resolve factual disputes. Robinson v. United States, 586 F.3d 683, 685 

(9th Cir. 2009).

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9 – OPINION & ORDER

DISCUSSION

Defendants argue that this Court should dismiss the TAC because (1) the TAC fails to 

comply with Federal Rule of Civil Procedure 10(b); (2) the TAC fails to state a claim for breach 

of contract or theft of trade secrets in connection with the parties’ dealings with Sprint and TMobile; and (3) Plaintiff’s allegations regarding Sprint, T-Mobile, and Vodafone are subject to 

arbitration. For the reasons that follow, Defendants’ arguments are unavailing.

Before delving into the specifics of each of Defendants’ arguments, the Court notes a 

fundamental difference between how Defendants and this Court characterize Plaintiff’s TAC. 

Defendant contends that Plaintiff has added “new claims” related to Sprint, T-Mobile, and 

Vodafone. Defs.’ Mot. Dismiss 6, ECF 236. The Court disagrees. While Plaintiff’s complaints 

have evolved over the course of almost two years of litigation, the essential claims of breach of 

contract and theft of trade secrets have remained the same. When the case was filed in June of 

2014, Plaintiff alleged that Defendants had obtained confidential solution methods and risk 

information over the course of acquisition discussions and collaborating on a joint pitch to 

MetroPCS, and then had used such information, in violation of the parties’ NDAs, to secure the 

MetroPCS business without involving Plaintiff. The complaint pled damages as to the lost 

revenue on the MetroPCS account as well as “other damages . . . including lost revenue on other 

accounts.” Compl. ¶¶ 70, 77, 86, 97, ECF 8.

During the course of litigation, the business dealings with Sprint and T-Mobile at issue in 

the present complaint developed. Now, Plaintiff adds allegations that Defendants used their 

knowledge of this confidential information to replace Plaintiff’s provision of services to Sprint 

and to threaten Plaintiff’s business with T-Mobile. Thus, Plaintiff contends that it has now 

suffered damages not only due to lost business with MetroPCS but also due to lost profits and 

royalties on the Sprint and T-Mobile accounts. 

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10 – OPINION & ORDER

As this Court explained in its Opinion & Order granting Plaintiff leave to file the TAC, 

Plaintiff is now, for the first time, expressly seeking to include the Sprint and T-Mobile

allegations as part of the breach of contract and theft of trade secrets claims. Opinion & Order, 

April 1, 2016, ECF 220. Plaintiff’s additional allegations, however, are not “new claims.” 

Instead, they expand the existing claims to encompass a wider range of behavior and, thus, 

potential damages.

Finally, Defendants assert that Plaintiff brings claims related to Vodafone. See Defs.’ 

Mot. 6, ECF 236 (“Vesta’s claims related to Sprint, T-Mobile, and Vodafone are subject to 

arbitration.”). Vodafone is mentioned only once in the TAC as part of an allegation that “[a] 

substantial portion of the confidential information provided to Amdocs by Vesta was provided in 

connection with joint projects for specific MNO customers shared by Amdocs and Vesta, such as 

MetroPCS (as discussed further below), Vodafone, T-Mobile, and Boost Mobile.” TAC ¶ 21.

The TAC does not allege any damages suffered in connection with a Vodafone account. The 

Court does not find any plausible reading of the TAC under which it would conclude that 

Plaintiff brings independent claims as to Vodafone.

I. Rule 10(b)

Defendants ask the Court to dismiss the TAC pursuant to Federal Rule of Civil Procedure 

10(b), which requires that “each claim founded on a separate transaction or occurrence . . . be 

stated in a separate count,” if doing so would promote clarity. Defendants contend that Plaintiff’s 

TAC adds two additional transactions—Defendants’ development of a payment solution for 

Sprint and Defendants’ pitch to T-Mobile—without stating each transaction in a separate count 

within the TAC’s claims. Defendants contend that the allegations “just appear out of nowhere in 

the middle of the Third Amended Complaint, thereby failing to provide Amdocs with fair notice 

as to what it allegedly did wrong in connection with Sprint and T-Mobile.” Defs.’ Mot. 12.

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The Court agrees with Plaintiff that Defendants “invent[] confusion where there is none.”

Pl.’s Opp. 18, ECF 241. The TAC sets out two claims—breach of contract and theft of trade 

secrets. The essential allegations in the TAC remain the same as in all of the previous iterations 

of the complaint—Plaintiff alleges that Defendants misappropriated its confidential and 

proprietary information, in “direct breach of the 2009 NDA and/or the 2012 NDA.” TAC ¶ 73(a), 

80(a). As a result of Defendants’ alleged breach and theft of trade secrets, Plaintiff suffered lost 

profits and royalties on various accounts, including MetroPCS, Sprint, and T-Mobile. Id. at ¶¶ 

75, 82, 92, 104.

The Court finds the TAC sufficiently clear to frame the issue and put Defendants on 

notice as to the claims being brought against them. There is no need for Plaintiff to further 

separate the claims.

II. Rule 12(b)(6)

Defendants argue that Plaintiff fails to state a claim for breach of contract related to 

Sprint or T-Mobile. Defendants contend that Plaintiff fails to identify the governing contract or 

contractual provisions. Furthermore, Defendants contend that Plaintiff cannot rely on its 

allegations regarding MetroPCS (which this Court already found sufficient to withstand a motion 

to dismiss) to state a claim regarding Sprint and T-Mobile. Finally, Defendants argue that 

Plaintiff fails to plead a cognizable damages claim with respect to Sprint or T-Mobile.

Defendants also argue that Plaintiff fails to state a claim for theft of trade secrets as to 

Sprint or T-Mobile. Defendants contend that Plaintiff alleges only legal conclusions and that 

Plaintiff has not pled any facts supporting a theory that Defendants had access to Plaintiff’s 

Solution Methods or Risk Information relating to Sprint or T-Mobile.

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12 – OPINION & ORDER

As explained at the beginning of this Opinion, the Court rejects Defendants’ proposed 

interpretation of Plaintiff’s TAC. The Court reads the TAC to allege that Defendants breached 

the 2009 and/or 2012 NDAs and stole trade secrets from Plaintiff. As a result, Plaintiff suffered 

damages on various accounts, including MetroPCS, Sprint, and T-Mobile. Taking the facts as 

alleged by Plaintiff, Plaintiff sufficiently states a claim for all of the reasons this Court already 

explained in declining to dismiss Plaintiff’s breach of contract and theft of trade secrets claims 

over a year ago. See Opinion & Order, January 13, 2015, ECF 42. 

III. Arbitration agreement

Defendants argue that the Court should dismiss or strike Plaintiff’s allegations related to 

Sprint, T-Mobile, and Vodafone for lack of subject matter jurisdiction due to the parties’ 

agreement to arbitrate.

The Federal Arbitration Act, 9 U.S.C. §§ 1–16 (“FAA”), removes the court's subject 

matter jurisdiction to hear a claim when there is a valid, enforceable arbitration clause. 

Therefore, Defendants’ motion to dismiss is “one means to raise its arbitration defense. In effect, 

[Defendants’] motion is a petition to this court within the meaning of § 4 of the FAA.” Rogue v. 

Applied Materials, Inc., No. 03:03–cv–1564–ST, 2004 WL 1212110, at *4 (D. Or. Feb. 20, 

2004).

The FAA limits the district court's role to determining whether a valid arbitration 

agreement exists, and whether the agreement encompasses the disputes at issue. Nguyen v. 

Barnes & Noble Inc., 763 F.3d 1171, 1175 (9th Cir. 2014). Written agreements to arbitrate 

arising out of transactions involving interstate commerce “shall be valid, irrevocable, and 

enforceable, save upon such grounds as exist at law or in equity for the revocation of any 

contract.” 9 U.S.C. § 2. If the issue is referable to arbitration under the agreement, then the court 

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13 – OPINION & ORDER

must direct the issue to arbitration and stay the trial. 9 U.S.C. § 3. An agreement to arbitrate is to 

be “rigorously enforce[d.]” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985).

Courts strongly favor arbitration and broadly construe arbitration clauses. E.g., 

Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 626 (1985) (“any 

doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration”) 

(internal quotation marks omitted); Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir.

1999) (“The standard for demonstrating arbitrability is not high.”).

While public policy favors arbitration, such a presumption does not apply if the 

contractual language is clear that arbitration of a particular controversy is not within the scope of 

the arbitration provision. Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1044-45 (9th Cir. 

2009); see also United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582

(1960) (“[A]rbitration is a matter of contract and a party cannot be required to submit to 

arbitration any dispute which he has not agreed so to submit.”) In other words, the policy 

favoring arbitration cannot displace the necessity for a voluntary agreement to arbitrate. Id.

a. Scope of the arbitration provision

Defendants contend that the entire TAC is subject to dismissal pursuant to the arbitration 

provision contained in a Memorandum of Understanding (“MOU”) the parties signed on 

September 30, 2010. Rosenzweig Decl. Ex. A (“MOU”), ECF 238. However, Defendants move 

only to dismiss Plaintiff’s “new claims” as to Sprint, T-Mobile, and Vodafone. Defendants 

explain: “Amdocs is only moving to dismiss with respect to the non-MetroPCS claims in light of 

the Court’s extensive experience and understanding of that claim.” Defs.’ Mot. 9, n.3; see also

Defs.’ Reply 7, ECF 250 (reiterating that Defendants do not invoke the arbitration provision with 

respect to the claims involving MetroPCS). 

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14 – OPINION & ORDER

The parties entered into the MOU “to provide the Parties with a commercial framework 

for marketing and reselling [Plaintiff’s] and its Affiliates’ services . . . by [Defendants] and its 

Affiliates to their respective customers and prospective customers.” MOU at 3. Thirty-nine 

customers and prospective customers, including Vodafone, MetroPCS, Sprint, and T-Mobile, 

were listed in an attachment to the MOU. Id. at 12-13; see also TAC ¶ 60 (noting that Boost 

Mobile is a Sprint brand). The attached document stated: “[Plaintiff] retains the right to 

determine if [Defendants] will be involved in any sales opportunity. Parties will agree in writing 

via an Opportunity Registration before joint selling activity is undertaken.” Id.

The MOU provided a framework by which the parties could opt-in, on a customer-bycustomer basis, to have Defendants sell or recommend Plaintiff’s services in exchange for a 

percentage of Plaintiff’s profits from that customer, also referred to as an “end-user.” MOU § 

1.1. The MOU detailed “two contracting models”: resale and referral. MOU § 3.1.1. In a resale, 

Plaintiff’s services would be provided to the end-user pursuant to a written service agreement 

between Defendants and the end-user. In a referral, Defendants would refer the end-user to 

Plaintiff for services and the written agreement would be executed between Plaintiff and the enduser. MOU § 1.2. In either case, the written agreement would include the services’ terms and 

provisions as approved by Plaintiff “in its sole reasonable discretion.” Id. The MOU also 

provided for the amount of the service fees that Defendants would receive, depending on 

whether the transaction was a resale or referral. Id. at Sched. B.

By the terms of the MOU, prior to engaging an end-user in a sales process, the parties 

would execute an “Opportunity Registration Form.” Id. at § 3.2.1. A sample form was attached 

to the MOU. Id. at § 3.2.2. The form provided for the terms jointly offered to the end-user, 

including services, roles, and services fees. Id. at Sched. C. 

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The MOU contained a “Confidentiality” provision, which stated “that exchange and 

treatment of confidential information shall be treated in accordance with the Non-Disclosure 

Agreement between [the parties] dated June 24, 2009.” Id. at § 10.1. 

The MOU also provided a “dispute resolution” process for “any dispute under this 

MOU.” MOU § 10.9. The dispute resolution process provided that:

§ 10.9.1. Either party may apply ex part[e] to courts having jurisdiction in the matter to 

obtain an injunction to prevent disclosure of its confidential information. 

§ 10.9.2. Notwithstanding Section 10.9.3, intellectual property indemnification claims for 

court proceedings initiated by a third party against either Party (or its Affiliate) may be 

brought in the court in which such Party (or its Affiliate) is being sued.

§ 10.9.3. For all other disputes arising under or in connection with this MOU, these 

disputes shall be exclusively referred to and finally resolved by binding arbitration 

conducted in accordance with the rules of the American Arbitration Association 

(“AAA”). . . .The arbitration award and/or determination shall be final and binding and 

judgment may be entered thereon in any court of competent jurisdiction. 

MOU at 8-9 (emphasis added). 

Defendants contend that Plaintiff’s allegations in the TAC regarding Sprint, T-Mobile, 

and Vodafone “arise under” or are “in connection with” the MOU and, thus, are subject to 

arbitration. According to Defendants, the MOU establishes a framework to address the parties’ 

rights before, during, and after a joint pitch to customers such as Sprint, T-Mobile, and 

Vodafone. Furthermore, the MOU incorporates confidentiality duties from the 2009 NDA, which 

is the “umbrella confidentiality agreement governing all of the parties’ communications,” as 

referenced in the TAC. TAC ¶ 17.

The Court recognizes that the parties chose broad language in the MOU to describe the 

kinds of disputes the arbitration provision would encompass. The use of “arising under or in 

connection with this MOU” requires the Court interpret the language broadly and apply the 

arbitration provision to “every dispute between the parties having a significant relationship to the 

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contract and all disputes having their origin or genesis in the contract.” Simula, 175 F.3d at 721 

(“Every court that has construed the phrase ‘arising in connection with’ in an arbitration clause 

has interpreted that language broadly.”) To require arbitration, Plaintiff’s factual allegations need 

only “touch matters” covered by the MOU and all doubts are to be resolved in favor of 

arbitrability. Id.

However, no matter how broad the parties framed the language in the MOU’s arbitration 

provision and no matter how “emphatic [the] federal policy [is] in favor of arbitral dispute 

resolution,” Toyo Tire Holdings Of Americas Inc. v. Cont'l Tire N. Am., Inc., 609 F.3d 975, 980 

(9th Cir. 2010), nothing changes the basic principle that an arbitration provision does not apply 

to a dispute not within the scope of the provision. See Mundi, 555 F.3d at 1044-45. Here, the 

parties’ MOU established a commercial framework for how the parties would work together to 

pitch Plaintiff’s services to potential clients. The parties did not, and could not, actually engage a 

client, however, without executing an Opportunity Registration Form. MOU § 3.2.1. The fact 

that the parties include an attachment which listed potential clients does not mean that every 

client listed in that attachment was automatically subject to the terms of the MOU.

The dispute that has arisen between the parties as to Sprint and T-Mobile relates to 

conduct allegedly taken by Defendants that had nothing to do with this MOU. The parties never 

executed an Opportunity Registration Form regarding Sprint or T-Mobile. Fieldhouse Decl. ¶ 2, 

ECF 242. Plaintiff’s allegation is that Defendants took actions to secure or attempt to secure 

Sprint and T-Mobile’s business, not as a resale or referral in partnership with Plaintiff, but as a 

replacement of Plaintiff. Such conduct cannot be said to have any connection to the MOU, nor 

did it arise under the MOU. Accordingly, the dispute regarding Sprint and T-Mobile is not 

subject to the arbitration provision. 

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As to Vodafone, it appears based on the parties’ arguments that the parties may have 

executed an Opportunity Registration Form. However, as discussed at the beginning of this 

Opinion, the Court fails to see how the TAC can be construed to state an independent claim 

regarding Vodafone, such that there would be any dispute to refer to arbitration. Most 

importantly, nowhere does Plaintiff allege that it suffered any damages due to Defendants’ 

behavior in relation to Vodafone.

b. Waiver of arbitration

Plaintiff contends that, even if the allegations regarding Sprint and T-Mobile are 

arbitrable, Defendants waived their right to compel arbitration. Because the Court finds that the 

allegations regarding Sprint and T-Mobile are not subject to the arbitration provision, there is no 

need to reach the waiver argument.

CONCLUSION

The Court denies Defendants’ Motion to Dismiss [236]

IT IS SO ORDERED.

Dated this ____________day of ________________________, 2016.

________________________________________________

MARCO A. HERNÁNDEZ

United States District Judge

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