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Atkinson v. Grindstone Capital, LLC

United States District Court, D. Columbia.

February 5, 2014

GRINDSTONE CAPITAL, LLC, et al., Respondents

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[Copyrighted Material Omitted]

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For GRINDSTONE CAPITAL LLC, Respondent: Alec W. Farr, Ian L. Barlow, LEAD ATTORNEYS, BRYAN CAVE LLP, Washington, DC.


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AMY BERMAN JACKSON, United States District Judge.

Pending before this Court is respondent Grindstone Capital, LLC's motion to dismiss or stay petitioner Michael Kent Atkinson's petition to confirm the June 6, 2013 arbitration award that Atkinson obtained against respondents Grindstone and RDI Holdings, LLC.[1] Resp't Grindstone Capital's Mem. in Support of Mot. to Dismiss or Stay Pet. to Confirm Arbitration Award (" Resp's Mem." ) [Dkt. # 3]; see also Pet. to Confirm Arbitration Award [Dkt. # 1]. Grindstone concedes that this Court has jurisdiction over this case but argues that the Court should exercise its discretion and abstain from hearing this matter because there is a parallel proceeding in a Maryland state court. See Resp's Mem. at 1-2. For the reasons that follow, the Court concludes that abstention is proper under Colorado River Water Conservation District v. United States, 424 U.S. 800, 817-18, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), and the Court will therefore exercise its discretion to dismiss this case.[2]


Three years ago, petitioner Atkinson filed a complaint in the Circuit Court for Howard County, Maryland against his then employer Raptor Detection, Inc. (" Raptor" ). Pet.'s Mem. in Opp. to Resp's Mot. (" Pet.'s Mem." ) at 3 [Dkt. # 7]; Resp's Mem. at 1. He alleged that Raptor failed to pay wages due to him under an employment agreement and sought to recover those unpaid wages based two theories: breach of contract and a violation of the Maryland Wage Payment Act. Resp's Mem. at 2. Raptor filed a motion to dismiss based on an arbitration clause in Atkinson's employee agreement, but the state court denied the motion. Id. As a result, Raptor answered the complaint, and Atkinson served discovery on Raptor. Id.

Two months into the state court litigation, Raptor went out of business and shut down operations. Pet.'s Mem. at 3. Raptor's assets were transferred to Grindstone - which was one of Raptor's secured lenders at the time - in satisfaction of Raptor's debt.[3] Resp's Mem. at 5; see also

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Pet.'s Mem. at 3. Upon learning of Raptor's status and the asset transfer to Grindstone, Atkinson amended his state court complaint to add Grindstone and RDI Holding as defendants, asserting that those companies were liable for his unpaid wages as successors in interest to Raptor.[4]

From October 2010 to February 2011, Atkinson's case proceeded in state court until RDI Holdings removed the case to the United States District Court for the District of Maryland. Atkinson filed a motion to remand, which the district court granted because Raptor - then still a party to the case and a citizen of Maryland - defeated removal. Pet.'s Mem. at 4. Two months after the remand, Grindstone and RDI Holdings filed a motion to stay litigation and compel arbitration, and the state court granted it. As a result, the state court case was quiet from September 2011 until June 2013, when the final arbitration decision was issued.

The arbitrator decided the case in favor of Atkinson and awarded him $693,712.33 on June 6, 2013. Id. at 2. The arbitrator based his decision on his finding that Grindstone and RDI Holdings were " successors" in interest to Raptor under Maryland law and that Maryland law permitted the piercing of the corporate veil between the two companies. Resp's Mem. at 4-5. Both parties acknowledge that the issues presented to the arbitrator were complex questions of first impression under Maryland law. Resp's Mem. at 4-5; see also Pet.'s Mem. at 11.

On June 10, 2013, four days after the final arbitration award decision was issued, Atkinson filed a petition in this Court to confirm the arbitration award. Two days later, on June 12, 2013, Grindstone filed a motion in the pending state case to vacate the arbitration award.

Taken together, these actions gave rise to the current issue that is before this Court: whether this Court should exercise its jurisdiction under the Federal Arbitration Act, 9 U.S.C. § 9 (2012), and review Atkinson's petition to confirm his arbitration award, or exercise its discretion under the Colorado River doctrine and decline ...

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