Mars Incorporated v. Szarzynski ( 2021 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
MARS, INCORPORATED,
Plaintiff,
Vv.
Civil Case No. 20-01344 (RJL)
JACEK SZARZYNSKLI, et al.,
Nee’ Nee’ Nee ee Nee Ne ee” Nee” Nee”
Defendants.
MEMORANDUM OPINION
(July & , 2021) [Dkt. #20]
Plaintiff Mars, Inc. (“plaintiff’ or “Mars”) brings this action against its former
executive, Jacek Szarzynski, and two companies in the corporate family for which he now
works—Pret Panera Holding Co. Inc. (“Panera”) and JAB Holding Co. LLC (“JAB”)—to
remedy the theft of trade secrets and fraudulent reimbursement of business expenses that
allegedly occurred during Szarzynski’s departure from Mars. See Compl. [Dkt. #1].
Plaintiff claims defendants violated the Defend Trade Secrets Act and the D.C. Uniform
Trade Secrets Act (collectively the “trade secrets claims”). Jd. {§ 90-124 (Counts I and
Il). Plaintiff also alleges fraud, conversion, and unjust enrichment arising from
Szarzynski’s wrongful submission of JAB- and Panera-related business expenses to Mars
(collectively the “reimbursement-related claims”).' Jd. §§ 125-43 (Counts III, IV, and V).
' Counts III (fraud) and IV (conversion) are brought against only Szarzynski. Compl. § 125-38. All other
Counts in the Complaint are brought against all defendants. Jd. { 90-124, 139-43.
I
Presently before the Court is defendants’ Motion to Dismiss (““Defs.’ Mot.”) [Dkt.
#20], seeking dismissal of the claims against Szarzynski in favor of arbitration under the
mandatory arbitration clause in his employment contract.” Defs.’ Mot. at 3-15. I agree
that the claims against Szarzynski must be resolved through arbitration. Accordingly, upon
consideration of the parties’ pleadings, relevant law, the entire record herein, and for the
reasons stated below, I GRANT defendants’ motion and DISMISS the claims against
Szarzynski. Plaintiff's remaining claims against JAB and Panera are STAYED pending
resolution of the arbitration proceedings.*
BACKGROUND
Szarzynski, a polish national, worked for Mars and its subsidiaries from 1994 to
2019. See Compl. ff 1, 27. According to the Complaint, Szarzynski began his career as
an employee but grew into a “trusted executive.” Jd. 927. Throughout his time with Mars,
Szarzynski held executive positions in three different Mars businesses, serving as Global
Chief Financial Officer (“CFO”) of Mars Drinks from 2007 through 2012, Global CFO of
Mars Food from 2012 through 2015, and Global CFO of Mars Petcare from 2016 through
2019. Id.
For his final two roles, Szarzynski relocated to Belgium, where he continues to
? Defendants also seek dismissal based on the Court’s lack of personal jurisdiction over Szarzynski and the
: doctrine of forum non conveniens. See Defs.’ Mot. at 16-28. Because I find dismissal warranted under the
mandatory arbitration clause in Szarzynski’s employment contract, I do not address these alternative
arguments.
> JAB and Panera indicate they would voluntarily participate in arbitration proceedings “so that all of Mars’
claims can be adjudicated at the same time and in the same forum.” Defs.’ Mot. at 15. Nothing in this
Opinion restricts the parties’ ability to resolve Mars’ claims against JAB and Panera through arbitration
should the parties agree to do so.
reside. Id. J 17; see also Declaration of Jacek Szarzynski (“Szarzynski Decl.”’) [Dkt. #20-1]
4 12-13. Mars paid for the costs of Szarzynski’s relocation, see Ex. E to Szarzynski Decl.
[Dkt. #20-6], and Szarzynski avers that in these roles, he served “functionally .. . [as] an
officer and senior executive of Mars divisions.” Szarzynski Decl. § 14, 20-35.
A. Szarzynski’s Employment Agreements
During his tenure, Szarzynski executed numerous overlapping contracts with Mars
and its subsidiaries. Most relevant here are his last general employment contract (the “SED
Contract”) and a series of agreements governing bonus payments paid to Szarzynski as a
senior Mars executive (collectively the “Incentive Agreements”).
1. The SED Contract
The terms of Szarzynski’s day-to-day employment in his last role with Mars—
Global CFO of Mars Petcare—were governed by the SED Contract.* Szarzynski executed
the agreement with Mars Belgium NV (“Mars Belgium”), a Belgium subsidiary of Mars.
See Ex. D to Szarzynski Decl. [Dkt. #20-5]. Belgium law governs the SED Contract, which
provides that “[a]ny disputes arising out of or in relation with this Agreement and its
termination shall be finally settled by arbitration in Brussels under the CEPANI Rules of
Arbitration.” Jd. at arts. 13.1, 13.2. The agreement also addresses Szarzynski’s
confidentiality and reimbursement obligations. Article 5.5 provides that Szarzynski will
be reimbursed for normal business expenses:
Expenses incurred . . . in connection with the normal execution of this
Agreement, such as representation, restaurant, hotel or travel costs, shall be
“Mars does not dispute the accuracy or authenticity of the SED Contract, conceding it is a valid, enforceable
contract. PI.’s Opp. to Defs.’ Mot. to Dismiss (“PI.’s Opp.”) [Dkt. #25] at 3 n.1 (“Mars does not dispute
the SED Contract is enforceable as between Szarzynski and Mars Belgium.”).
3
reimbursed provided that such expenses are supported by proper evidence
and are reasonable.
Id. at art. 5.5.
Article 9.1 provides a nondisclosure agreement, requiring Szarzynski to maintain
confidentiality:
The Director shall not either during or after [his employment] divulge .. .
any secret or confidential or private information relating to the business or
affairs of [Mars Belgium] or any Group Company? ....
Id. at art. 9.1.
Although executed by only Szarzynski and Mars Belgium, numerous provisions in
the SED Contract reference other Mars-affiliated companies. For example, Article 2.2
provides a non-compete clause preventing Szarzynski from working for any company in
competition with Mars Belgium or “any Group Company” during the term of the contract.
Id. at art. 2.2. Article 7 prohibits the solicitation of the customers of “any Group Company”
for a year following the termination of Szarzynski’s employment. Jd. at art. 7(i). Article
8 provides that the work created by Szarzynski during the contract “shall belong to the
Company or, as relevant, any Group Company.” Jd. at art. 8. And, as already mentioned,
Article 9 protects against the divulgence of confidential information relating to Mars
Belgium “or any Group Company.” Jd. at art. 9.1.
2. The Incentive Agreements
In addition to the SED Contract, from 2014 to 2019, Szarzynski executed a series
> The SED Contract defines a “Group Company” as one that is “affiliated” with Mars Belgium under
Article 11, 1 of the Belgium Companies Code. See Ex. D to Szarzynski Decl. at art. 2.1. Mars does not
dispute that it falls within this definition.
of agreements directly with Mars under which he received incentive-based compensation
as a Mars executive.® See Ex. H to Szarzynski Decl. [Dkt. #20-9]; Ex. I to Szarzynski Decl.
[Dkt. #20-9]; Exs. 1-7 to Pl.’s Opp. [Dkts. ##25-3 to 25-9]. Like the SED Contract, the
Incentive Agreements address confidentiality, conditioning Szarzynski’s entitlement to an
incentive-based bonus on his acceptance of a nondisclosure provision, which states,
Non-Disclosure of Confidential Information. You may not use or disclose
“Confidential Information” outside of your employment with Mars and for
any purpose other than for the benefit of Mars. “Confidential Information”
includes information about the Mars businesses (including products, trade
secrets and finances) ... and Mars Family members... .
See, e.g., Ex. H to Szarzynski Decl. at App’x A, art. 3.
Unlike the SED Contract, the Incentive Agreements do not mention arbitration.
Instead, they contain provisions entitling Mars to seek court orders under certain
circumstances. For example, one “summary” provision states,
Effect__of _ Non-Compliance — Injunctive Remedies and ___Non-
Entitlement/Repayment of Awards. If you do not comply with [the non-
compete, non-solicitation, non-disclosure, and non-disparagement]
provisions, Mars will suffer damages that entitle it to pursue injunctive
remedies, which. include court orders to enforce the non-compete, non-
solicitation, non-disclosure, and non-disparagement provisions of the MSOP
Plus legal plan rules.
Id. at App’x A, art. 5.
Another provision elaborates on this right to seek court orders:
Supplement B - Restrictive Covenants. Award payments are conditioned on
the Participant’s adherence to the non-compete, non-solicitation,
confidentiality, and non-disparagement provisions .... If such a breach or
potential breach [of these provisions] should occur, the Participant agrees
° The Incentive Agreements have similar, although not identical, terms. For efficiency and convenience,
the parties quote and rely on a single representative example. See PI.’s Opp. at 11 n.4; Defs.’ Reply at 7. I
follow that practice here.
that a Mars Group Member may immediately pursue temporary or permanent
injunctive relief or a decree of specific performance by any court of
competent jurisdiction enjoining any such breach or potential breach, in
addition to enforcing the entitlement and clawback provisions under
Subsections 4.2 and 4.4 and any other right or remedy to which they might
be entitled.
Id. at App’x B, art. 4.1.
B. Szarzynski’s Departure from Mars
In 2018, Szarzynski received an offer to join the family of companies that includes
JAB and Panera.’ Compl. { 28. Szarzynski announced that he would be leaving Mars
early the following year. Jd. Mars permitted Szarzynski to attend JAB-related meetings
during the last few months prior to his formal departure. Jd. 431. Thus, in the fall of 2018,
Szarzynski met with JAB’s CEO in Belgium, Washington, D.C., and several times over
FaceTime. Jd. {9 51-53. In January 2019, Szarzynski began participating in business
meetings. See id. J] 57-69. On January 9 and 10, he attended JAB and Panera meetings
in Washington, D.C. Jd. J§] 58-61. He then travelled to London for meetings on January
11 and January 24. Jd. J 61, 64. Finally, immediately prior to his formal departure from
Mars, Szarzynski returned to D.C. to attend additional JAB and Panera-related meetings
from February 4 through 8. Id. | 67.
Plaintiff alleges that during this transitional period, Szarzynski sought to benefit his
future employers at Mars’ expense. Jd. 433. Most critically, plaintiff alleges Szarzynski
’ There is a fact dispute regarding the precise entity for which Szarzynski works. Plaintiff alleges, based
on representations on Szarzynski’s LinkedIn page, that Szarzynski is “a partner in DC-based JAB Holding
Company, LLC and the Chief Operating Officer of DC-based Pret Panera Holding Company, Inc.” Compl.
| 17. Szarzynski, however, avers that he “joined the Pret Panera Company Inc.,” which is a Delaware
corporation with “its executive leadership team” in London. Szarzynski Decl. {J 43-44.
6
downloaded thousands of confidential Mars documents and shared these with his future
colleagues at JAB, Panera, and their associated companies. Jd. J§ 33, 35-69.
Through forensic analysis of Szarzynski’s company laptop, Mars identifies several
instances where Szarzynski emailed confidential documents to his personal email account
or downloaded them to personal external hard drives. Id. { 13-14, 15-69. On September
16, 2018, for example, Mars alleges that Szarzynski downloaded 6,166 documents to a
personal external hard drive. Jd. { 38. Mars contends these documents were “carefully
curated” by Szarzynski and contained trade secrets relating to multiple global business
sectors. Id. J] 38-42.
Mars asserts that additional instances of theft likely occurred as well. Id. ¥ 46. In
addition to the September 16 incident, Mars alleges Szarzynski connected an external hard
drive to his computer on three separate occasions in the fall of 2018. Jd. 4 47. Mars
contends that, due to the limits of forensic analysis, it cannot identify whether additional
documents were downloaded at these junctures.® Jd. § 47 n.1. But due to the timing of
events, Mars alleges additional theft is likely. See id. J§| 47-48, 52. For example, on one
occasion, Szarzynski installed a personal hard drive on his computer just hours before
meeting with JAB’s CEO in Washington, D.C. Id. 452.
In addition to the theft of its trade secrets, Mars also contends Szarzynski wrongfully
caused Mars to pay for JAB and Panera-related business expenses. Jd. J 125-43.
Accordingly, Mars seeks compensation for the dining, hotel, and travel expenses incurred
® Mars alleges it requires access to Szarzynski’s personal external hard drives to determine whether any
documents were downloaded on these occasions. Compl. 4 47 n.1.
7
on Szarzynski’s trips to Washington D.C. and London in January 2019 to the extent these
were associated with JAB or Panera business activities. Id.
In May 2019, following Szarzynski’s formal departure, Mars wrote to Szarzynski
regarding his ongoing confidentiality obligations. Jd. 71. Over the next year, the parties
communicated with respect to Mars’ confidentiality and reimbursement-related concerns.
Id. ¥§ 72-78; Szarzynski Decl. {§ 4-8. Unable to reach a resolution, Mars brought this
action on May 20, 2020 seeking damages as well as injunctive relief in the form of an order
requiring defendants to purge all of Mars’ confidential business information and enjoining
defendants from using or disclosing this information. See Compl. at 27-28. On August
20, 2020, defendants moved to dismiss, asserting that Mars must arbitrate its claims against
Szarzynski under the mandatory arbitration clause in the SED Contract. Defs.’ Mot. at 1.
ANALYSIS
The Federal Arbitration Act (‘FAA” or “Act”) “was designed to promote
arbitration” and establishes “a liberal federal policy favoring arbitration agreements.”
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 345-46 (2011). Under the Act, written
agreements to arbitrate are “valid, irrevocable, and enforceable.” 9 U.S.C. § 2.
Accordingly, district courts must submit disputes to arbitration “on issues as to which an
arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213,
218 (1985) (citing 9 U.S.C. §§ 3-4).
Courts assess whether a dispute must be submitted to arbitration using the general
tools of contract interpretation. Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 69 (2010)
(“[A]rbitration is a matter of contract.”). Compelled arbitration is appropriate only where
8
the contract in question demonstrates an agreement to arbitrate the dispute. Granite Rock
Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 297 (2010) (“[A] court may order arbitration
of a particular dispute only where the court is satisfied that the parties agreed to arbitrate
that dispute.”); see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
US. 614, 626 (1985). “[A]ny doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration, whether the problem at hand is the construction of the
contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.”
Wolff v. Westwood Mgmt., LLC, 558 F.3d 517, 520 (D.C. Cir. 2009) (quoting Moses H.
Cone Mem’! Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).
Although framed as a motion to dismiss, defendants’ motion with respect to Mars’
claims against Szarzynski is analogous to a motion to compel arbitration. W. Sur. Co. v.
U.S. Eng’g Co., 211 F. Supp. 3d 302, 305 (D.D.C. 2016). As such, it is reviewed under
the summary judgment standard. Jd. (holding summary judgment standard applied because
motion sought “summary disposition” of the issue of whether or not the parties agreed to
arbitrate the dispute); see also Aliron Int’l, Inc. v. Cherokee Nation Indus., Inc., 531 F.3d
863, 865 (D.C. Cir. 2008).
The normal evidentiary standards for summary judgment apply. Sakyi v. Estee
Lauder Cos., Inc., 308 F. Supp. 3d 366, 375 (D.D.C. 2018). The Court views the facts in
the light most favorable to the nonmovant and draws all justifiable inferences in the
nonmovant’s favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The
“party seeking to stay the case in favor of arbitration bears an initial burden of
demonstrating that an agreement to arbitrate was made.” Hines v. Overstock.com, Inc.,
9
380 F. App’x 22, 24 (2d Cir. 2010). The party opposing arbitration then “must identify a
triable issue of fact concerning the existence of the agreement” to avoid compelled
arbitration. Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002).
1. Jurisdiction to Decide the Question of Arbitrability
As a threshold argument, defendants contend the Court should not consider whether
the SED Contract requires Mars to arbitrate its claims against Szarzynski because that
question is reserved for the arbitrators in the first instance. Defs.’ Mot. at 4-7. Generally,
“courts presume that the parties intend courts, not arbitrators, to decide . . . disputes about
arbitrability, including questions such as whether the parties are bound by a given
arbitration clause.” W&T Travel Servs., LLC v. Priority One Servs., Inc., 69 F. Supp. 3d
158, 166 (D.D.C. 2014) (emphasis added). Parties to an arbitration agreement, however,
may contract out of this general rule if they use “clear and unmistakable” language
demonstrating an intent to submit gateway questions of arbitrability to the arbitral panel.
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (cleaned up); see also
Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 529 (2019) (“[P]arties
may agree to have an arbitrator decide not only the merits of a particular dispute but also
‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to
arbitrate.”); W&T Travel Servs., 69 F. Supp. 3d at 166.
Clear evidence of an intent to arbitrate gateway questions may be found where the
arbitration agreement uses “broad, all-encompassing language” or incorporates arbitral
rules that explicitly reserve gateway questions to the arbitrators. See W&T Travel Servs.,
69 F. Supp. 3d at 167 (holding threshold questions of arbitrability must be submitted to
10
arbitrators where the agreement stated “all claims, disputes and matters in question arising
out of, or relating to, this Subcontract [must be submitted to arbitration]”); see also Sakyi,
308 F. Supp. 3d at 378 (holding threshold question of arbitrability must be submitted to
arbitrators where the agreement incorporated American Arbitration Association (“AAA”)
rules stating that the arbitrators “shall have the power to rule on his or her own
jurisdiction”). But where the party resisting arbitration is a nonsignatory to the agreement,
courts generally independently assess gateway questions of arbitrability. See, e.g., Oehme,
van Sweden & Assocs., Inc. v. Maypaul Trading & Servs. Ltd., 902 F. Supp. 2d 87, 96-97
(D.D.C. 2012). This holds true even where the agreement utilizes broad language or
incorporates arbitral rules reserving such questions for the arbitrators. See Sakyi, 308 F.
Supp. 3d at 382-84 (addressing whether nonsignatories were third-party beneficiaries
under an arbitration agreement without first considering whether that issue was reserved to
the arbitrators).
Here, the arbitration provision in the SED Contract utilizes broad language
mandating arbitration and incorporates the CEPANI rules, which, similar to the AAA rules,
explicitly reserve questions of arbitrability for the arbitrators. See Ex. D to Szarzynski
Decl. at art. 13.2; see also CEPANI Arbitration Rules, art. 7(3), THE BELGIAN CENTRE FOR
ARBITRATION AND MEDIATION (Jan. 1, 2020) (“[If] a party raises one or more please
concerning the existence, validity or scope of the arbitration agreement . . . the Arbitral
Tribunal shall itself rule on its jurisdiction.”). These considerations would ordinarily weigh
in favor of having arbitrators resolve any disputes between the parties regarding
arbitrability. See, e.g., W&T Travel Servs., 69 F. Supp. 3d at 167. But Mars is a
11
nonsignatory to the agreement. Accordingly, the Court cannot hold that the arbitration
provision’s broad language or its incorporation of the CEPANI rules constitutes “clear and
unmistakable” evidence of Mars’ intent to arbitrate gateway questions of arbitrability. See
Oehme, 902 F. Supp. 2d at 97 (“A signatory to a contract has clearly and unmistakably
agreed to its terms, but that is not necessarily true of a nonsignatory.”). Instead, I must
independently assess whether Mars is bound to arbitrate its claims against Szarzynski.
2. Whether Mars is Bound by the SED Contract
Whether Mars is required to arbitrate its claims against Szarzynski depends on
whether Mars, despite being a nonsignatory, is bound by the SED Contract.’ This question
is governed by the law of contract—in this case, Belgium law.!° See Arthur Andersen LLP
v. Carlisle, 556 U.S. 624, 630 (2009) (holding the FAA does not “alter background
principles of state contract law”); National R.R. Passenger Corp. v. ExpressTrak, L.L.C.,
330 F.3d 523, 529-30 (D.C. Cir. 2003) (applying law of contract to determine whether the
parties must arbitrate); Sakyi, 308 F. Supp. 3d at 383 (same); Kelleher v. Dream Catcher,
LLC, 278 F. Supp. 3d 221, 224-25 (D.D.C. 2017) (same); Oehme, 902 F. Supp. 2d at 100
(same). Defendants assert that Mars is bound by the SED Contract either as a third-party
” Mars does not dispute that the SED Contract is a valid and enforceable agreement. PI.’s Opp. at 3 n.1.
Nor does Mars meaningfully dispute that it preserits claims “arising out of or in relation with,” Ex. D to
Szarzynski Decl. at art. 13.2, the SED Contract such that they would be covered by the scope of the
arbitration clause therein if the agreement binds Mars. See Pl.’s Opp. at 8-20 (stating that “none of Mars’
claims are based in the SED Contract” but declining to address whether Mars’ claims are “in relation with”
the SED Contract); John Wyeth & Bro. Lid. vy. CIGNA Int’l Corp., 119 F.3d 1070, 1074-75 (3d Cir. 1997)
(holding that in order for a dispute to “aris[e] in relation to” an agreement, the dispute must only have a
“logical or causal connection” to the agreement—it need not be “based upon” the agreement).
'° Defendants state that either federal common law or Belgium law should apply but contend that the Court
need not engage in a choice-of-law analysis because under either the outcome is the same. See Defs.’ Mot.
at 9 n.2.
12
beneficiary or under Belgium law principles equivalent to estoppel. Defs.’ Mot. at 10. I
agree that Mars is bound by the SED Contract as a third-party beneficiary and plaintiff's
claims against Szarzynski must therefore be resolved through arbitration. How so?
a. Third-party Beneficiary
Under Belgium law, a nonsignatory may be bound by an arbitration agreement as a
third-party beneficiary.'' See Declaration of Hanotiau (“Hanotiau Decl.”’) [Dkt. #20-15] 4
31; Report of Catherine Longeval (“Longeval Report’) [Dkt. #25-13] 9 54-55. To
become a third-party beneficiary, a nonsignatory must demonstrate acceptance or consent
to the agreement containing an arbitration clause. Hanotiau Decl. § 39 (“[W]hen a third
party accepts a stipulation included in a contract in its favor, it becomes part of that
contract.”); Longeval Report § 39 (“Under Belgian law, the extension of an arbitration
agreement to a non-signatory requires that this party had agreed (at least implicitly) to be
bound by the arbitration agreement.” (emphasis in original)).
This acceptance or consent may be implied by the actions of the nonsignatory. See
Longeval Report {§ 56-57; see also BERNARD HANOTIAU, COMPLEX ARBITRATIONS:
MULTI-PARTY, MULTI-CONTRACT AND MULTI-ISSUE 22—24 (2d ed. 2020). Merely being
a parent of a signatory or in the same group of companies as a signatory is, without more,
insufficient. _HANOTIAU, COMPLEX ARBITRATIONS, at 102. Instead, Belgium law
considers the totality of the circumstances and assesses whether the nonsignatory
' The same holds true under U.S. law. See Arthur Andersen, 556 U.S. at 631 (noting that “traditional
principles of state law allow a contract to be enforced by or against nonparties to the contract through
assumption, third-party beneficiary theories, waiver and estoppel” (internal quotation marks and citations
omitted)).
13
“consciously participated” in the performance of the contract to a sufficient degree that an
intent to be bound can be inferred from the nonsignatory’s conduct. See Longeval Report
457. As one legal commentator states,
The idea of extending the effects of the arbitration clause to the non-signatory
having participated in the performance can... only be followed to the extent
that the extension is based on the tacit consent of the non-signatory to be
bound by the contract. This consent can be inferred from its conscious
participation in the performance of the contract, and not from the objective
situation consisting only of the implication of the non-signatory in the
performance.
Id. (quoting M. Philippet, L implication dans l’execution du contrat comme indicateur du
consentement tacite d’un non-signataire a etre lie par une clause compromissoire,
J.L.M.B., 2017-18 (translated from French)).
Defendants assert Mars is a third-party beneficiary because the SED Contract
explicitly benefits Mars as a “Group Company” and Mars was consciously involved in the
performance of the contract through its direction and control of Szarzynski’s employment.
Defs.’ Mot. at 10-13; see also Szarzynski Decl. {ff 20-35. I agree.
The SED Contract contains numerous provisions explicitly benefiting Mars as a
“Group Company,” including by prohibiting Szarzynski from joining Mars’ competitors,
soliciting its clients, misappropriating its intellectual property, or divulging its confidential
information. See Ex. D to Szarzynski Decl. at arts. 2, 7-9. These provisions demonstrate
an explicit intent to benefit Mars and generated protections which Mars enjoyed both
during and after Szarzynski’s employment. See HANOTIAU, COMPLEX ARBITRATIONS, at
22 (“[I]t appears to be a fundamental principle in all jurisdictions that if a third-party
beneficiary wishes to benefit from the rights it has been conferred in a contract, it must also
assume the obligations thereunder and in particular, the obligation to arbitrate any disputes
14
arising thereunder.”).
Moreover, the SED Contract does not implicate Mars merely incidentally. Instead,
the provisions inuring to Mars’ benefit are necessary given the reality of Szarzynski’s
employment, which, although formally structured as a “self-employed director” of Mars
Belgium, was in practice, at least to a substantial degree, directed and controlled by Mars.
See Szarzynski Decl. § 15-16, 20-35. Plaintiff does not dispute that Szarzynski
functioned in practice as a Mars employee who worked on global brands that were not
limited to any specific Mars subsidiary.!* Szarzynski Decl. { 27. Nor does it dispute that
this work involved organizing major acquisitions of assets on Mars’ behalf and frequently
meeting with and taking direction from Mars’ CEO and other senior Mars’ executives. Jd.
{ 29. Indeed, plaintiff itself characterizes Szarzynski as a trusted Mars executive in the
Complaint. Compl. § 27.
This close coordination in the direction and control of Szarzynski’s activities,
combined with the explicit protections inuring to Mars’ benefit in the SED Contract, render
Mars a third-party beneficiary under Belgium law. See HANOTIAU, COMPLEX
ARBITRATIONS, at 22; Hanotiau Decl. 4] 28-36; accord THOMAS H. OEHMKE AND JOAN
M. BROVINS, COMMERCIAL ARBITRATION § 8:11 (Dec. 2020 update) (“[E]vidence of the
intent to make a third party the beneficiary of an arbitral contract may include: .. .
referencing the third party in the contract . . . [circumstances where] a contracting party
assumes a direct obligation to the intended beneficiary when entering into the contract...
"2 Plaintiff criticizes statements to this effect in Szarzynski’s declaration as “products of Szarzynski’s
‘understanding’” but does not otherwise dispute the factual proffer. See Pl.’s Opp. at 18.
15
{and circumstances where] performance under the contract . . . directly benefits that third
party.”). Put differently, it is evident that Mars “consciously participated” in the
performance of the SED Contract and accepted the benefits of that contract. See Longeval
Report § 57. As a result, Mars must abide by the terms of the agreement, including the
obligation to arbitrate its disputes with Szarzynski.
Mars and its expert oppose this conclusion by arguing that Mars does not bring
claims under the SED Contract and therefore should not be viewed as consenting to it. Pl.’s
Opp. at 17; Longeval Report §§] 56-59 (arguing that Mars was only “implicated” by the
SED Contract and did not consciously participate in its performance in part “because Mars
has not ‘based its Claims’ against Mr. Szarzynski on the SED Contract”). But there is no
requirement under Belgium law that a third-party beneficiary must base its claims on the
contract at issue in order to be bound by an arbitration agreement therein. See HANOTIAU,
COMPLEX ARBITRATIONS, at 22—24. Neither Mars’ expert nor the Belgium law cases she
cites suggest otherwise. See Longeval Report §] 54-63. Thus, the fact that Mars did not
frame its claims as breach of contract claims under the SED Contract does not insulate it
from being considered a third-party beneficiary.
b. Estoppel
Defendants assert arbitration is also warranted based on equitable principles. Defs.’
Mot. at 13-15. Under this theory, principles equivalent to estoppel exist under Belgium
law and preclude Mars from premising its case on Szarzynski’s confidentiality and
reimbursement obligations stemming from his employment under the SED Contract while
simultaneously avoiding the obligation to arbitrate thereunder. See Hanotiau Decl. 4§ 36—
16
38. Even assuming that equitable principles equivalent to estoppel exist under Belgium
law, !3 I find no basis for their application here.
Under U.S. law, a nonsignatory may be compelled to arbitrate under the doctrine of
equitable estoppel “ifhe or she knowingly seeks and obtains direct benefits from a contract,
seeks to enforce the terms of that contract, or asserts claims that must be determined by
reference to that contract.” See Oehme, 902 F. Supp. 2d at 98 (cleaned up). When a
nonsignatory embraces a contract and receives direct benefits from that agreement, the
nonsignatory will be estopped from avoiding arbitration under the agreement when
litigation ensues. See id. at 99 (citing Hellenic Inv. Fund, Inc. v. Det Norske Veritas, 464
F.3d 514, 517-18 (Sth Cir. 2006)). However, when a nonsignatory plaintiff brings claims
not based on the contract containing the arbitration clause, courts are reluctant to apply
equitable principles to compel arbitration. See id. (“In the mine run of cases holding a
nonsignatory bound under equitable estoppel, including those doing so based on the receipt
of ‘direct benefits’ rather than the assertion of contract-based claims, the nonsignatory had
sued the signatory based in part on the agreement at issue.” (quoting Bridas S.A.P.L.C. v.
Gov’t of Turkmenistan, 345 F.3d 347, 362 (Sth Cir. 2003)). “The mere fact of a
nonsignatory’s affiliation with a signatory will not suffice to estop the nonsignatory from
avoiding arbitration, no matter how close the affiliation is.” See Oppenheimer & Co. Inc.
v. Deutsche Bank AG, No. 09 Civ. 8154, 2010 WL 743915, at *2 (S.D.N.Y. Mar. 2, 2010).
Here, Mars does not bring claims based on the SED Contract. Instead, it alleges
13 The parties’ experts engage in a jurisprudential debate regarding the existence and prevalence of
principles equivalent to estoppel under Belgium law. Compare Longeval Report J 69-76 with Hanotiau
Reply Decl. {f 17-19. The Court assumes, without deciding, that such principles exist.
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statutory and tort theories of liability against Szarzynski. As such, contrary to defendants’
suggestion, this is not a case where Mars seeks to “‘stand[] in the shoes of Mars Belgium”
or “premises its entire case on” the SED Contract. Defs.’ Mot. at 14-15. There is,
accordingly, no equitable basis on which to compel arbitration."
c. Incentive Agreements
Mars’ primary argument against compelled arbitration relies on the Incentive
Agreements. To plaintiff, these agreements show that “Mars and Szarzynski expressly
chose to resolve their confidentiality disputes in court—and plainly did not opt for
arbitration.” Pl.’s Opp. at 10. Accordingly, Mars argues the Court cannot compel
arbitration with respect to its trade secrets claims under any theory.'° Jd. Unfortunately
for Mars, the plain meaning of the Incentive Agreements fails to support its interpretation.
How so?
As an initial matter, the Incentive Agreements solely govern the bonus program in
which Szarzynski, as a Mars executive, was enrolled. See, e.g., Ex. H to Szarzynski Decl.
The agreements do not govern his day-to-day employment from which Mars’ present
claims arise. Nor do they contain forum-selection clauses or any requirement that all
disputes between Mars and Szarzynski be resolved through court adjudication. Instead,
‘4 The cases defendants rely on do not suggest otherwise. See Defs.’ Mot. at 13-15. Life Techs. Corp. v.
AB Sciex Pte. Ltd.—the single case defendants cite in which the court held a nonsignatory estopped—is
dissimilar because there, unlike here, the nonsignatory plaintiff brought, inter alia, contract-based claims
and directly invoked the agreement containing an arbitration clause. 803 F. Supp. 2d 270, 271-73
(S.D.N.Y. 2011).
'S Plaintiff does not make the same argument with respect to its reimbursement-related claims. See Pl.’s
Opp. at 11 (arguing the Incentive Agreements “demonstrate that Mars and Szarzynski expressly chose to
resolve their confidentiality disputes in court” (emphasis added)).
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the agreements permit Mars to pursue remedies in court only in certain limited
circumstances—none of which have occurred here.
Plaintiff first relies on Appendix A of the most recent Incentive Agreement. PI.’s
Opp. at 11. This provision authorizes pursuit of court orders “to enforce the . . . provisions
of the MSOP Plus legal plan rules.” Ex. H to Szarzynski Decl. at App’x A, art 5. But
plaintiff's Complaint never mentions the MSOP Plus legal plan and, as plaintiff reiterates
in its briefing, none of its claims are based in contract—whether those be the Incentive
Agreements or otherwise. Pl.’s Opp. at 17 (“Here, none of Mars’ claims are based in the
SED Contract (or contract generally).” (emphasis added)). Because the present claims do
not seek to enforce the provisions of the MSOP Plus legal plan rules, this provision fails to
confer the authority plaintiff seeks to read into it.
Plaintiff next cites Appendix B of the same agreement, but its argument fails for a
similar reason. The language there states that “[i]f... a breach or potential breach should
occur,” Mars may seek “temporary or permanent injunctive relief or a decree of specific
performance by any court of competent jurisdiction enjoining any such breach or potential
breach... .” Ex. H to Szarzynski Decl. at App’x B, art. 4.1. Again, although it had the
opportunity to do so, plaintiff elected not to bring any breach of contract claims based on
the Incentive Agreements. See generally Compl.; Pl.’s Opp. at 17 (“The trade-secrets
claims are statutory, existing irrespective of a contract ....”). Accordingly, plaintiff cannot
rely on this provision to avoid its otherwise applicable duty to arbitrate. See Hanotiau
Reply Decl. J 11-13.
Finally, Mars argues the “‘court-litigation terms” in the Incentive Agreements that
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were signed after the SED Contract “supersede any arbitration requirement.” PI.’s Opp. at
12 (citing Longeval Report § 53). To replace a contract under Belgium law, however, a
successor contract must manifest a specific intent to do so. See Hanotiau Reply Decl. {ff
15-16. Here, no such intent is evident from either the face of the Incentive Agreements or
otherwise. See, e.g., Ex. H to Szarzynski Decl.; Hanotiau Reply Decl. 4 16.'° Accordingly,
the Incentive Agreements do not permit Mars to avoid arbitration.
CONCLUSION
For all of the foregoing reasons, the Court GRANTS defendants’ motion to dismiss
as to Jacek Szarzynski and DISMISSES plaintiffs claims against him in favor of
arbitration pursuant to the SED Contract. The Court further STAYS this case with respect
to plaintiff's remaining claims against JAB and Panera, pending the outcome of the
arbitration proceedings. An Order consistent with this decision accompanies this
(tba Qsen/
RICHARD J. L4s@N
United States District Judge
Memorandum Opinion.
'6 Even if the Incentive Agreements did revoke the SED Contract’s arbitration provision, this revocation
would be limited by the terms of the Incentive Agreements. As I have already held, the terms of the
Incentive Agreements are inapplicable here. Thus, any potential revocation does not affect the outcome
with respect to arbitration.
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