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All for Kidz, Inc. v. Around The World Yoyo Entertainment Co.

United States District Court, W.D. Washington, Seattle

May 8, 2014

ALL FOR KIDZ, INC., Plaintiff,
v.
AROUND THE WORLD YOYO ENTERTAINMENT COMPANY, et al., Defendants.

ORDER

RICHARD A. JONES, District Judge.

I. INTRODUCTION

This matter comes before the court on Plaintiff's motion for a preliminary injunction and Defendants' motion to compel arbitration. For the reasons stated below, the court GRANTS the motion to compel arbitration (Dkt. #18) and STAYS this action. The court DENIES Plaintiff's motion for a preliminary injunction. Dkt. #4.

II. BACKGROUND

All for Kidz, Inc. ("AFK") and Around the World Yoyo Entertainment Company ("ATW") both perform shows in elementary schools featuring, among other things, yo-yo tricks. All for Kidz, whose principal is Arne Dixon and whose corporate predecessor was Arne Dixon Entertainment, Inc., has staged these performances for almost 25 years.

Defendant John Fox worked for Arne Dixon Entertainment for about a year in 1996 and 1997. He was primarily responsible for booking new shows, but he also began training as a performer. AFK fired him. Not long after, he founded ATW and began performing yo-yo shows, initially with the cooperation of Mr. Dixon. That cooperation soured. By 2004, Arne Dixon Entertainment sued ATW in this District, alleging that ATW's shows infringed its copyrights and violated the Lanham Act's prohibition on false or misleading designations of origin, that Mr. Fox misappropriated AFK's trade secrets, that he breached his employment agreement, that he tortiously interfered with Mr. Dixon's business, and that his shows violated the Washington Consumer Protection Act.

The first suit ended in a January 2005 settlement agreement. That agreement contained a clause requiring arbitration of "any and all disputes arising between [AFK and ATW, Mr. Fox, and his wife], including but not limited to any dispute arising out of the Settlement Agreement or the drafting thereof...." Fox Decl. (Dkt. #19), Ex. A.

Since then, both ATW and AFK have continued their performances. In recent years, ATW has used at least three performers who once worked for AFK. Melvin Beresford was a performer at AFK from 1996 to 2006. Mel Steinmeyer was an AFK performer from 1996 to 2008. Leslie Laas performed for AFK from 2005 to 2006. During their employment at AFK, all three employees signed an "Associate Intellectual Property Agreement" in which they agreed not to disclose confidential information and agreed not to compete with AFK for three years after termination. ATW hired Mr. Beresford in 2011, Ms. Laas in 2010, and Mr. Steinmeyer in 2011. All three of them performed in ATW shows. Ms. Laas left ATW in 2012; Mr. Steinmeyer no longer works at ATW; it is not clear whether Mr. Beresford still works at ATW.

What is clear is that Mr. Dixon, through AFK, has once again sued ATW and Mr. Fox and his wife. This time, he sued Mr. Beresford, Ms. Laas, and Mr. Steinmeyer (collectively the "Employee Defendants") as well. The complaint is remarkably similar to Mr. Dixon's 2004 complaint, except that it names the Employee Defendants and contends that in addition to their liability for copyright infringement, trade secret misappropriation, and the like, they are liable for breaching their employment agreements with AFK. Unlike the 2004 complaint, there are no allegations of Lanham Act violations or violations of the Washington Consumer Protection Act. At the same time that AFK sued, it moved for a sweeping preliminary injunction that would prohibit ATW and all of the individual Defendants from performing shows. AFK's motion for an injunction did not mention the prior lawsuit, the 2005 settlement agreement, or its arbitration clause.

ATW moved to compel arbitration. It brought its motion on behalf of itself and Mr. Fox and his wife, the signatories to the settlement agreement. It noted, however, that AFK had refused to stipulate to arbitration in part because it believed it had no obligation to arbitrate its claims against the Employee Defendants. In opposition to the motion, AFK conceded that its claims against ATW and Mr. Fox and his wife were arbitrable, but insisted that its claims against the Employee Defendants were not. It also insisted that the court should grant a preliminary injunction pending the conclusion of arbitration.

The court now considers the parties' requests.

III. ANALYSIS

A. Arbitration

Everyone agrees that AFK's claims against ATW and Mr. Fox and his wife must proceed to arbitration. The Employee Defendants, however, are not signatories to the 2005 settlement agreement or its arbitration clause. ATW asserts that the Federal Arbitration Act ("FAA") governs its motion to compel arbitration, and AFK does not contend otherwise. ATW argues that the FAA mandates arbitration not only ...


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