Appeals court allows arbitration in TIBCO Software, RapidMiner case

By Nicholas Gueguen | May 19, 2017

SAN FRANCISCO — The California First District Court of Appeal recently overturned the San Mateo County Superior Court's decision in a case involving allegations of inappropriately using trade secrets and will allow two defendants the chance for arbitration.

In its May 3 decision on TIBCO Software Inc. v. RapidMiner Inc., Peter Lee and Steven Ruggieri, the appeals court decided that RapidMiner and Lee had rights to arbitration stemming from the allegations that TIBCO brought against them. The appeals court said TIBCO said RapidMiner, Lee and Ruggieri improperly used "TIBCO trade secrets" and also accused the defendants of being responsible for TIBCO workers leaving TIBCO for RapidMiner. Lee and Ruggieri worked for TIBCO until they began working for RapidMiner.

Lee quit working at TIBCO in January 2014 and then began working for RapidMiner, according to court documents. Other TIBCO employees went to work for RapidMiner in 2015. The appeals court said TIBCO investigated the employees leaving and decided "that Lee had raided TIBCO’s employees on behalf of RapidMiner, and that employees solicited by RapidMiner had taken TIBCO’s trade secrets and confidential information."

TIBCO then sued RapidMiner, Lee and Tarlock Sagoo, who was leaving TIBCO. TIBCO sought to block the defendants from "using TIBCO’s trade secrets and confidential information" or taking TIBCO employees, even though the company's contracts prohibited those kinds of actions. TIBCO also wanted "damages, restitution and other relief," according to the appeals court decision.

The appeals court said TIBCO then changed its lawsuit and also sought action against Ruggieri, Lars Bauerle and Monica Hart. TIBCO made nine accusations against the defendants in the adjusted lawsuit.

The appeals court explained that RapidMiner, Lee, Ruggieri and Hart asked the superior court to compel arbitration in September 2015 on the basis "that TIBCO had entered into enforceable arbitration agreements with Ruggieri and Hart, and the claims asserted against Ruggieri and Hart were therefore arbitrable."

The appeals court said that those who sought the arbitration argued that TIBCO’s accusations "were arbitrable because those claims were based on a breach of Ruggieri’s employment agreement... [and] a breach of Hart’s arbitration agreement, which contained an applicable arbitration provision."

TIBCO argued that the allegations it made against Hart and Ruggieri could go to arbitration, but the allegations against RapidMiner or Lee could not, according to the appeals court.

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California 1st District Court of Appeal RapidMiner Inc. TIBCO Software Inc.

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