PHILADELPHIA (CN) – The 3rd Circuit allowed CooperNeff to compel arbitration in its ongoing legal dispute with former hedge fund manager Steven Zimmer, who wants the company to stop using his copyrighted trading model now that he works for another hedge fund.
The judges concluded that Zimmer, who holds a Ph.D. in economics from Harvard University and has worked for the Federal Reserve, is a “highly educated party with various employment opportunities” and “did not lack a meaningful choice in accepting the challenged arbitration clause.”
CooperNeff’s CEO, Zimmer discussed his stock trading model that he planned to use in his new job. He was hired in February 2003 and was asked to sign an employment agreement that included an arbitration clause.
He claimed that he initially balked at the agreement because of an intellectual property provision, but signed it in order to land the job. While working at CooperNeff, Zimmer said he tried to keep his model isolated from the company system by, for example, bringing the model to work each day on a portable hard drive instead of installing it in CooperNeff’s system.
After nearly 15 months on the job, Zimmer told CooperNeff that he was resigning to go work for QVT. Immediately after he left, CooperNeff and Zimmer swapped lawsuits that resulted in two temporary restraining orders – each enjoining the other from disclosing or using Zimmer’s trading model.
CooperNeff filed a motion to compel arbitration, which the district court dismissed on the basis that the arbitration clause was unconscionable.
The federal appeals court disagreed, saying Zimmer knew exactly what he was signing. Vacated and remanded.