U.S. District Judge J. Paul Oetken granted the motion to compel arbitration filed by former employees Hirsh Jain, Radha Jain, and Joanna Cohen, staying the case pending the arbitration process.
Palantir had argued that Section 1.D of the employees’ arbitration agreements exempted the company from mandatory arbitration because it sought only injunctive relief. The company contended that the clause, which allows parties to petition the court for injunctive relief where there is an alleged violation of the Proprietary Information and Inventions Agreement (PIIA), created a carve-out arbitration mandate.
The defendants urged the court to read Section 1.D more narrowly, arguing it only permits injunctive relief in aid of arbitration, not as a substitute for it.
Oetken agreed with the defendants, holding that Section 1.D does not exempt all actions for injunctive relief from the expansive scope of the Arbitration Agreement.
Section 1.A requires that any claim arising out of the defendants’ employment with Palantir be subject to arbitration, and Section 1.C clarifies that arbitration is the “sole, exclusive, and final remedy” for any dispute, except as provided in the New York Civil Practice Law and Rules (CPLR) and the agreement itself.
“Section 1.D does not carve out an exception for such claims: Instead, it provides that, ‘[i]n addition to the right under the Rules to petition the court for provisional relief,... any party may also petition the court for injunctive relief where either party alleges or claims a violation of... the [PIIA],’” Oetken wrote.
The judge noted that an equitable relief provision that does not explicitly state that all claims seeking equitable relief are exempted from arbitration does not serve as a wholesale carveout. He cited prior Southern District of New York precedent holding that such language merely confirms an independent legal right to seek injunctive relief in aid of arbitration.
Palantir argued that the term “injunctive relief” in Section 1.D could not mean the same thing as “provisional relief” referenced elsewhere, invoking canons of interpretation that disfavor redundancy.
Oetken rejected this, explaining that the reference to “provisional relief” incorporates CPLR Article 75, which allows for preliminary injunctions in connection with pending arbitration but expires if arbitration is not commenced within 30 days. The “injunctive relief” clause, by contrast, allows for other forms of relief, such as preliminary injunctions that do not automatically expire or permanent injunctions to effectuate an arbitrator’s decision.
“The most reasonable construction of the Arbitration Agreement harmonizes the various provisions,” Oetken wrote, adding that the defendants’ reading complies with New York law requiring that effect be given to every term of the contract.
The ruling comes after Oetken previously granted in part and denied in part Palantir’s motion for a preliminary injunction in March, temporarily enjoining the former employees from soliciting Palantir employees and using confidential information.
The case is stayed pending arbitration.