MEDCAM, INC., a WASHINGTON CORPORATION, NOW KNOWN AS OPTIMEMS, INC., v. MCNC, a NORTH CAROLINA NON-FOR-PROFIT CORPORATION, MCNC ENDOWMENT, a NORTH CAROLINA NON-FOR-PROFIT CORPORATION MCNC ENTERPRISE FUND, L.P., a NORTH CAROLINA LIMITED PARTNERSHIP MCNC RESEARCH AND DEVELOPMENT INSTITUTE, a NORTH CAROLINA NON-FOR-PROFIT CORPORATION MCNC VENTURES, LLC, a NORTH CAROLINA LIMITED LIABILITY CORPORATION JDS UNIPHASE, a DELAWARE CORPORATION, AS SUCCESSOR OF CRONOS INTEGRATED MICROSYSTEMS, INC. CRONOS MICROSYSTEMS, INC., a DELAWARE CORPORATION CRONOS MEMS, INC., a NORTH CAROLINA CORPORATION MCNC CRONOS EQUITY ASSOCIATES, LLC, a NORTH CAROLINA LIMITED CORPORATION WHOSE STATUS IS LISTED AS DISSOLVED

Citations: 414 F.3d 972; 2005 U.S. App. LEXIS 14434Docket: 04-2572

Court: Court of Appeals for the Eighth Circuit; July 18, 2005; Federal Appellate Court

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MedCam, Inc., now known as OptiMEMS, Inc., is the plaintiff in a legal dispute with MCNC and several associated entities, including other non-profit corporations and limited partnerships. The United States Court of Appeals for the Eighth Circuit reviewed an appeal by MCNC concerning a District Court's order that denied its motion to dismiss claims made by MedCam and granted MedCam's motion to compel arbitration on those claims. The case originated from a contract between MedCam and MCNC aimed at developing medical imaging technology, which included a non-disclosure clause and a non-compete agreement preventing MCNC from competing in the 'MedCam Field' for two years post-termination of the agreement. Following MCNC's termination of the contract, MedCam accused MCNC of improperly transferring developed technologies to third parties and violating the non-compete terms. The District Court ruled to compel arbitration under the Federal Arbitration Act (FAA), dismissing claims against other companies but allowing MedCam's claims against MCNC to proceed to arbitration. The appeals court affirmed the District Court's orders, reiterating the FAA's intent for arbitration agreements to be enforced expeditiously without judicial interference, limiting the court’s role to assessing whether an agreement for arbitration exists.

The inquiry regarding the validity and applicability of the arbitration agreement involves two key questions: 1) whether the agreement was validly made, and 2) whether it applies to the current dispute. This adheres to the legal precedent set in cases such as Bob Schultz Motors, Inc. v. Kawasaki Motors Corp. and Twin City Monorail, Inc. v. Robbins, Myers, Inc., emphasizing that arbitration is fundamentally a matter of contract law, requiring a specific agreement for arbitration regarding the dispute in question. The arbitration clause is interpreted broadly, with any ambiguities favoring arbitration, as established in Lyster v. Ryan's Family Steak Houses, Inc. and AT&T Technologies v. Communications Workers of America.

The focus here is on whether MedCam's claims fall within the scope of the arbitration clause, which covers "all disputes, controversies or differences arising out of or in connection with this Agreement." MedCam's allegations against MCNC involve potential breaches related to the Agreement, necessitating a technical interpretation of terms defined within the document, such as the 'MedCam Field,' and whether actions occurred within the specified noncompete period.

MCNC contends that there are material factual disputes, arguing that the District Court erred by compelling arbitration instead of allowing a jury trial to resolve these issues. The factual questions raised by MCNC pertain to the scope of the 'MedCam Field' and the implications of the Agreement's expiration on MedCam's rights. Ultimately, the court agrees with the District Court's interpretation that the arbitration clause applies to MedCam's claims.

MCNC's arguments are rejected as they conflate factual questions relevant only to the merits of MedCam's arbitration claims with the interpretation of the arbitration clause. The Supreme Court standard stipulates that an order to compel arbitration should only be denied if it can be positively assured that the arbitration clause does not cover the dispute. The arbitration clause in the Agreement is interpreted broadly and encompasses the claims made by MedCam against MCNC. No material fact issues are found that would change this conclusion. MCNC's assertions regarding the technology's relevance to the 'MedCam Field' and the expiration of the noncompete clause do not affect the enforceability of the arbitration agreement; they pertain to the merits of the claims and are to be addressed in arbitration. MedCam alleges that MCNC breached the Agreement in various ways, and since these claims arise from the Agreement, they are subject to binding arbitration. The District Court's order to compel arbitration is affirmed.