California Federal Court Allows Non-Signatory to Arbitration Agreement to Compel Arbitration in Trade Secrets Dispute

A federal district court in the Northern District of California recently found that a non-signatory to an arbitration agreement may enforce that agreement against a signatory and compel arbitration under the doctrine of equitable estoppel.

Semin, a software developer, worked for Torbit, Inc. He signed an employment agreement containing a proprietary information non-disclosure provision, and a commitment not to compete while employed. The agreement mandated arbitration “of any dispute or claim relating to or arising out of the employment relationship.” Before resigning, Semin allegedly used Torbit’s computer network to download the company’s trade secrets onto his personal computer, and he created his own company to use Torbit’s proprietary information in competition with Torbit.

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