Field Intelligence Inc. v. Xylem Dewatering Solutions Inc.

No. 21-2087 (3d Cir. 2022)

Appellant Xylem, a manufacturer and seller of large-capacity water pumps, hired Field in 2012 to develop hardware to interface with pumps and computer software. A Non-Disclosure Agreement was signed in 2013 pertaining to the disclosure and protection of confidential information. This 2013 contract required the parties to settle any disputes arising from “this Agreement” by arbitration. A second contract, signed in 2017, was a Software Subscription Service Agreement establishing a monthly subscription for Xylem to access Field’s software. The 2017 contract required disputes to be litigated and contained an integration clause providing that it “constitutes the entire agreement … concerning its subject matter” and supersedes all prior agreements.

Upon suspicion that Xylem had reverse-engineered Field’s products, Field filed suit for breach of both contracts. Because Field relied on the 2013 contract to support its claims, Xylem filed an arbitration demand. Field moved to enjoin the arbitration, stating that the 2017 contract’s integration clause superseded the 2013 contract and its litigation provision controlled. The District Court agreed.

Upon appeal, the Third Circuit found that the language of the 2017 integration clause limited its effects to agreements regarding the same subject matter as the 2017 contract. The 2017 litigation provision would, therefore, only supersede the 2013 arbitration provision if the contracts involved the same subject matter; because they did not, the differing dispute provisions pertain only to disputes arising from the subject matter of the contract in which they are included. Accordingly, the court determined that Xylem was entitled to arbitrate claims relating to the 2013 contract and reversed the District Court’s judgment enjoining the arbitration proceedings.

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