United States District Court, D. Minnesota
Fred Mitschele; Jason Mitschele; and Michael Minor, Plaintiffs,
Municipal Parking Services; Travis Carter; Joseph Caldwell; Mark Evenstad; Richard C. Gage; Thomas G. Hudson; Tony Jacobson; Kurt Lange; Thomas Lowe; Robert G. Parish; and Robert Samson, Defendants.
S. Doty, Judge.
matter is before the court upon defendant Municipal Parking
Systems' (MPS) motion to compel arbitration. Based on a
review of the file, record, and proceedings herein, and for
the following reasons, the court grants the motion.
contract dispute arises out of MPS' alleged failure to
abide by the terms of the parties' agreements regarding
the use of plaintiffs' patented parking meter technology
and related shareholder rights.
a Minnesota Corporation that sells parking meters and other
parking enforcement technologies to businesses and
municipalities. Compl. ¶¶ 9, 22. Plaintiffs Fred
Mitschele, Jason Mitschele, and Michael Minor are Canadian
citizens. Id. ¶ 4. Plaintiffs collectively own
patented solar-powered parking meter technology invented by
Fred Mitschele. Id. ¶ 1. Plaintiffs'
parking meter technology incorporates digital cameras,
internet connectivity, touchscreen user interface, and other
digital and wireless features to facilitate parking payment
options and enforcement. Id. ¶ 21.
The Original Agreements
April 1, 2010, plaintiffs agreed to sell forty-nine percent
of their interest in the parking meter technology to MPS (the
Original Agreement). Id. MPS, in exchange, agreed to
make monthly royalty payments and to pay $300 for each new
parking meter it installed using plaintiffs' technology.
Id. MPS also agreed to share a percentage of its
monthly net operating income or five percent of any
third-party investment with plaintiffs, provided it achieved
certain sales figures. Id. MPS further agreed to
give plaintiffs a percentage of common stock and an option to
purchase a percentage of its private placements on a pro-rata
basis. Id. In addition, MPS agreed to bind any
future third-party investors to certain terms and to copy
plaintiffs on all correspondence relating to plaintiffs'
parking meter technology. Id. ¶¶ 26, 35,
Original Agreement provided that “[a]ny dispute arising
under this [a]greement shall be determined by arbitration
[sic] shall be determined by a single arbitrator.”
Cassady Decl. Ex. 1 ¶ 4. The Original Agreement further
provided that the “arbitration shall be initiated and
conducted in accordance with the provisions of the Commercial
Arbitration Act of British Columbia” and that it
“shall be construed under the laws of British Columbia,
Canada and ... that any dispute shall be resolved [sic]
arbitration as set forth herein.” Id.
¶¶ 4, 9 (emphasis removed).
parties amended the Original Agreement twice thereafter.
Id. Ex. 2; Ex. 4. Neither amendment altered the
Original Agreement's arbitration provision. See
id. Ex. 2 ¶ 13; Ex. 4 ¶ 8.
March 12, 2012, plaintiffs agreed to license their remaining
fifty-one percent interest in the parking meter technology to
MPS, in exchange for, among other things, a $2, 000, 000 CDN
payment and the right to periodically conduct third-party
audits of MPS' revenues (the Patent License).
Id. Ex. 3 ¶ 12; Compl. ¶ 46. Under the
Patent License, MPS further agreed to maintain
plaintiffs' patent portfolio in good standing, market the
patents, and place a patent identifier on each parking meter
that it sold. Compl. ¶¶ 58-64. The Patent License
provided that “[a]ny breach of this Agreement shall be
subject to the notice and cure provisions set forth in the
[Original Agreement] including the arbitration provision
....” Cassady Decl. Ex. 3 ¶ 30.
October 12, 2012, the parties consolidated the Original
Agreement and its amendments and the Patent License into a
Binding Letter Agreement. Id. Ex. 5. The Binding
Letter Agreement is “governed by the laws of the
Province of British Columbia” and expressly states that
“the dispute resolution procedures set out in the
[Original Agreement] shall apply ....” Id.
¶ 30. The Binding Letter Agreement further provides that
in the event of any conflict between it and the previous
agreements “the terms of the Binding Letter Agreement
shall govern.” Id. ¶ 29.
The Shareholder and Stock Redemption Agreements
October 16, 2012, Fred Mitschele and Jason Mitschele entered
into an agreement with MPS regarding, among other things,
their stock voting rights and obligations and the sale and
purchase of MPS transfer stock (the Shareholder Agreement).
Id. Ex. 6. The Shareholder Agreement also allowed
Fred Mitschele and Jason Mitschele, as MPS shareholders, to
select a member of MPS' board of directors until MPS
purchased the remaining fifty-one percent interest in
plaintiffs' parking meter technology. Id. ¶
6.1. The Shareholder Agreement provides that the parties must
“submit to the jurisdiction of the federal and state
courts located within the geographic boundaries of [sic] the
Hennepin County, Minnesota for the purpose of any suit,
action or other proceeding arising out of or based upon this
Agreement ....” Id. ¶ 7.4. The parties
also agreed “not to commence any suit, action or other
proceeding arising out of ... this Agreement except in the
federal and state courts located within the geographic
boundaries of Hennepin County, Minnesota, and ... waive any
claim that it is not subject personally to the ...