In Angus v. Ajio, C.A. No. 11895-VCG (Del. Ch. May 13, 2016), the plaintiffs sought to enjoin an arbitration initiated against them as officers of MoGo Sport. In the arbitration, certain members of the company (who were defendants in the court proceeding) asserted claims for breach of fiduciary duty, fraud and violations of the company’s operating agreement, arising from the alleged misappropriation of an opportunity presented to the company. The plaintiffs argued, among other things, that the arbitration provision was too narrow to encompass the breach of fiduciary duty claims, as it covered “all disputes among members or former members over the provisions of [the operating agreement].” Applying the holdings in James & Jackson v. Willie Gary, C.A. No. 59 (March 14, 2006),and McLaughlin v. McCann, C.A. No. 3067-VCS (Feb. 21, 2008), the court found that, because the defendants’ argument for arbitrability of the claim for breach of fiduciary duty was not frivolous, it should be decided by the arbitrator. Thus, the plaintiffs’ request for injunctive relief was denied and the question of arbitrability of the breach of fiduciary claim was referred to arbitration.
Analysis
The defendants alleged in the arbitration that the plaintiffs had misappropriated a concussion prevention program initially presented to the company. In particular, the defendants alleged that, after they introduced the plaintiffs to the doctor who ultimately developed the program and related products, the plaintiffs “repeatedly and secretly communicated with [the doctor] without disclosing material information regarding those communications to the defendant-members.” After such communications, according to the defendants, the plaintiffs formed a separate company for purposes of diverting the “unique opportunity” presented by the concussion products, which subsequently “entered into a multimillion-dollar licensing agreement” that was not disclosed to the defendants.
