Mid-South Maintenance Inc., et al. v. Paychex Inc., et al.

This is an arbitration case, wherein plaintiffs and the defendant-signatory expressly agreed to arbitrate any disputes arising from the contract and further agreed that the contract would be governed by New York law. Plaintiffs later filed suit against the defendant-signatory, as well as one of the defendant‘s employees, who had not signed the arbitration agreement, for breach of fiduciary duty, negligence, and aiding and abetting conversion. Defendants filed a motion to compel arbitration. The trial court denied the motion to compel arbitration on the ground that the plaintiff‘s claims were outside the scope of the arbitration agreement, citing Tennessee law. We hold that, pursuant to federal and New York law, because of the delegation clause contained in the arbitration agreement, the arbitrator is the proper tribunal to determine issues regarding the scope and unconscionability of the arbitration agreement. We also hold that because plaintiffs‘ claims against the non-signatory employee are intertwined with the claims against the signatory defendant, all disputes regarding the arbitrability of claims against the non-signatory employee must also be resolved by the arbitrator. Reversed and remanded.