## Facts

- Pre-Paid Legal Services, Inc. (Pre-Paid) marketed legal-service plans through independent sales associates.
- Percy Darin Kidd was a former Pre-Paid associate who had agreed to written agreements with Pre-Paid, including an Associate Agreement and a confidentiality/non-disclosure agreement.
- The agreements required that disputes between the parties be arbitrated in Oklahoma City under the American Arbitration Association (AAA) Commercial Arbitration Rules, expressly including the AAA’s optional rules for emergency measures of protection.
- On October 10, 2011, Pre-Paid sued Kidd in Oklahoma state court, asserting claims that included misappropriation of trade secrets and seeking injunctive relief.
- The state court entered a temporary restraining order (TRO) barring Kidd from soliciting Pre-Paid associates, disparaging Pre-Paid to solicit associates, and using Pre-Paid’s trade secrets. The TRO was set to last until October 21, 2011, when a preliminary-injunction hearing was scheduled.
- Before the preliminary-injunction hearing occurred, Kidd removed the case to the U.S. District Court for the Eastern District of Oklahoma and moved (on October 14, 2011) to stay the action pending arbitration.
- Pre-Paid did not dispute that its claims fell within the arbitration provisions, but asked the federal court to rule on its request for a preliminary injunction despite arbitration.
- The district court extended the TRO until it ruled on Kidd’s motion to stay.

## Issues

1. Must the court stay the case under the Federal Arbitration Act when the parties’ arbitration agreements apply to the asserted claims and arbitrability is not contested?
2. Should the court decide Pre-Paid’s request for preliminary injunctive relief, or should interim emergency relief be sought through the AAA emergency-measures process referenced in the arbitration agreements?

## Decision

- The court granted Kidd’s motion and stayed the action pending arbitration.
- Because the parties’ agreements called for arbitration under AAA rules that provide an emergency-arbitrator process, the court declined to proceed with deciding the preliminary-injunction request in parallel with arbitration.
- The court’s prior extension of the TRO was limited to the period needed to decide the stay motion; after granting the stay, the court left any request for further interim relief to the arbitral forum.

## Legal Principles

- Under FAA § 3, when a suit involves issues that are subject to a written arbitration agreement, the court must stay judicial proceedings while arbitration is pursued.
- Broad arbitration language requiring arbitration of “all disputes and claims” between the parties can reach contract, tort, and statutory claims arising from the parties’ business relationship, including trade-secret and solicitation disputes.
- Incorporating the AAA Commercial Arbitration Rules, including the optional rules for emergency measures of protection, reflects an agreement that urgent interim relief may be requested from an emergency arbitrator before a full panel is constituted.
- When the parties have provided a contractual mechanism for prompt interim protection in arbitration, a federal court generally should not continue separate judicial litigation over preliminary injunctive relief that would duplicate or displace the agreed arbitral process, absent a clear contractual basis to do so.
- Doubts about the scope of an arbitration agreement are resolved in favor of arbitration.

## Conclusion

The district court enforced the parties’ arbitration agreements by staying Pre-Paid’s trade-secret and related claims pending arbitration and, given the agreements’ adoption of AAA emergency procedures, directed that any further interim injunctive relief be pursued through the arbitral emergency-measures process rather than through continued federal-court adjudication of a preliminary injunction.


Pre-Paid Legal Services, Inc. v. Kidd, 2011 WL 5079538 (2011)