Thursday, March 9, 2006

Employee (Unsuccessfully) Tries to Compel Arbitration

Images_12 A Louisiana appellate court released an opinion yesterday in an unusual case involving a former employee filing a motion to compel arbitration against his former employer.  The employee had signed a nondisclosure/ nonsolicitation agreement containing an arbitration clause with his original employer Horseshoe Casino (pictured at left).  Horseshoe was subsequently acquired by Harrah’s.  The employee then signed a nondisclosure/ nonsolicitation/ noncompete/ stock option agreement with Harrah’s, but the Harrah’s agreement did not contain an arbitration clause.  The employee then quit Harrah’s and began working for a competitor.  Harrah’s and Horseshoe sued for damages and injunctive relief.  The employee moved to compel arbitration, arguing that the arbitration clause in the Horseshoe contract should “carry over” to the Harrah’s contract.  Harrah’s and Horshoe conceded that claims arising under the Horseshoe contract were subject to arbitration, but argued that claims arising under the Harrah’s contract were not.  The court agreed with Harrah’s and Horshoe, finding that they were two distinct corporate entities and that there was no evidence that Harrah’s had assumed the contractual obligations of Horseshoe through its acquisition of Horseshoe.

The case is Horseshoe Entertainment v. Kepinski, No. 40,753-CA, Louisiana Court of Appeal (Second Circuit) (March 8, 2006).


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