FILED: NEW YORK COUNTY CLERK 07/16/ :27 PM INDEX NO /2018 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 07/16/2018

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK PHILIPPE SELENDY, FAITH GAY, DAVID ELSBERG, JENNIFER SELENDY, ANDREW DUNLAP, MARIA GINZBURG, SEAN BALDWIN, CHRISTINE CHUNG, JORDAN GOLDSTEIN, AND YELENA KONANOVA ' Index No /18 Petitioners, Part 39 Justice Scarpulla QUINN EMANUEL URQUHART & SULLIVAN, LLP, Respondent. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS APPLICATION TO STAY ARBITRATION QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Avenue New York, New York Tel: (212) Fax: (212) Richard I. Werder, Esq. Jennifer A. Barrett, Esq. Attorneys for Respondent Quinn Emanuel Urquhart & Sullivan, LLP 1 of 19

2 TABLEOFCONTENTS PRELIMINARY STATEMENT... 1 BACKGROUND... 3 ARGUMENT... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 5 I. The Arbitration Clause In The Partnership Agreement Requires The Dismissal Of ~ ~ Petition... 6 A. The S&G Competition" ~ ~ Jurisdiction Partners' Mere Assertion of a "Forfeiture for Defense Does Not Deprive the Arbitrator of Over This Dispute... 7 B. The S&G Partners' Attempt To Avoid the Hackett Decisions Fails... 9 II. The Forum-Selection Clause In The Partnership Agreement Requires The ~ ~ Dismissal Of The Petition CONCLUSION... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ of 19

3 TABLE OF AUTHORITIES Page Cases ABF Capital Corp. v. Berglass, 130 Cal. App. 4th 825 (Cal. Ct. App. 2005) fiden Global Recovery Master Fund, L.P. v. KeyBank Nat'l Ass'n, 159 A.D.3d 618 (1st Dep't 2018)... 6 QFitish W. Indies Guar. Tr. Co. v. Banque Internationale a Luxembourg, 172 A.D.2d 234 (1st Dep't 1991) Cohen v. Lord, Day & Lord, 75 N.Y.2d ~ ~ 95 (1989)... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 11 penburg v. Parker Chapin Flattau & Klimpl, 82 N.Y.2d ~ ~ 375 (1993)... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 11 Qi Ruocco v. Flamingo Beach Hotel & Casino, 163 A.D.2d 270 (2d Dep't 1990) First Options of Chicago, Inc. v. Kaplan, 514 U.S. ~ ~ 938 (1995)... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~7 f dl House Entertainment, Inc. v. Auto Life RX, 31 Misc.3d 64, 2011 N.Y. Slip Op (App. Term 2011) Garthon Bus. Inc. v. Stein, 30 N.Y.3d ~ ~ 943 (2017)... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~7 ffackett v. Milbank, Tweed, Hadley & McCloy, 181 A.D.2d 519 (1st Dep't 1992)... 7 ffackett v. Milbank, Tweed, Hadley & McCloy, (" 80 N.Y.2d 870 (1992) ("Hackett I")... 8, 9, 10 ffackett v. Milbank, Tweed, Hadley & McCloy, (" 86 N.Y.2d 146 (1995) ("Hackett II")... 8, 9, 10, 11,L.P.,. arry Casper, Inc. v. Pines Assoc., L.P., 53 A.D.3d 764 (3d Dep't 2008) Horton v. Concerns of Police Survivors, Inc., 62 A.D.3d 836 (2d Dep't 2009) Howard v. Babcock, 6 Cal. 4th 409 (1993) Lischinskaya v. Carnival Corp., 56 A.D.3d 116 (2d Dep't 2008) of 19

4 LSPA Enter., Inc. v. Jani-King of N.Y., Inc., 31 A.D.3d 394 (2d Dep't 2006) Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Benjamin, 1 A.D.3d 39 (1st Dep't 2003)... 9 Monarch v. Nat. Union, 26 N.Y.3d ~ ~ 659 (2016)... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~7 People ex rel. Schneiderman v. Orbital Pub. Grp., Inc., 50 Misc.3d 811, 21 N.Y.S.3d 573 (applying CPLR Port Washington Union Free Sch. Dist. v. Port Washington Teachers Ass'n, 45 N.Y.2d 411, 408 N.Y.S.2d 453 (1978)... 8 Scarcella v. America Online, Inc., 11 Misc.3d 19, 2005 N.Y Slip Op (1st Dep't 2005) Matter of Silverberg, 75 A.D.2d 817 (2d Dep't 1980) Sud v. Sud, 211 A.D.2d 423 (1st Dep't 1995)... 6 U.S. Merchandise, Inc. v. L & R Distribs., Inc., 122 A.D.3d 613 (2d Dep't 2014) Statutory Authorities ~~ N.Y..Y. Civ. Prac. L. & R. 8.5(b)(2)(ii)... 10, 11 N.Y..Y. Civ. Prac. L. & R. 404(a)... 1, 5, 15 N.Y..Y. Civ. Prac. L. & R N.Y..Y. Civ. Prac. L. & R. 3211(a)... 1 N.Y..Y. Civ. Prac. L. & R. 3211(a)(1)... 6 N.Y..Y. Civ. Prac. L. & R. 3211(a)(7)... 6 N.Y..Y. Civ. Prac. L. & R. 7502(a) of 19

5 PRELIMINARY STATEMENT Respondent Quinn Emanuel Urquhart & Sullivan, LLP ("Respondent" or "QE") submits this memorandum of law in support of its motion, pursuant to CPLR 404(a) and 3211(a), to dismiss the Verified Petition to Stay Arbitration Pursuant to CPLR Article 75 filed by Petitioners Partners" Philippe Selendy, et al. (the "S&G Partners"). As discussed below, the Petition should be dismissed, without reaching its merits, because it was filed in clear violation of two unambiguous provisions of the QE Partnership Agreement: (i) Section 7.6, which requires the parties to arbitrate their disputes in a California arbitration, including threshold issues regarding whether a dispute is arbitrable, and (ii) Section 7.5, which, subject to the arbitration clause, requires the parties to litigate any disputes over the Partnership Agreement in Cali fornia. On either or both grounds, the Petition should be dismissed and this matter returned to a California forum where it belongs. In January 2018, after months of secretive planning, a group of 10 QE partners announced they were withdrawing from the QE partnership and forming a new firm, Selendy & Gay ("S&G"). The withdrawing partners' conduct in connection with their withdrawal from QE and the formation of S&G raised a number of issues for which QE has, to date, chosen not to pursue legal redress. Instead, QE seeks only to recover from the S&G Partners the financial compensation they agreed to provide upon their withdrawal from the QE partnership pursuant to Section â 5.1(a)(iii) of the QE Partnership Agreement-a document that by its terms is governed by California law, and that all of the highly skilled, sophisticated partners who have now formed S&G willingly signed and benefited from (in some cases for more than a decade). When the S&G Partners refused to honor their contractual â commitment, QE-in accordance with the exclusive dispute resolution procedure in Section 7.6 of the Partnership Agreement-commenced â a confidential arbitration in California to enforce Section 5.1(a)(iii). 1 5 of 19

6 The S&G Partners responded by seeking to forum shop this dispute to New York and try this matter publicly, in blatant violation of the confidential arbitration requirement in Section 7.6, as well as the forum-selection clause in Section 7.5. As QE will show at the proper time, the S&G Partners' attempt to avoid their contractual obligations under Section 5.1(a)(iii) is meritless. Contrary to the S&G Partners' Partners argument, California law, not New York law, governs this interstate (and international) partnership dispute, and Section 5.1(a)(iii), under either state's law, is valid and enforceable as a matter of public policy because it does not have any anti-competitive impact on the S&G Partners. This Court need not, and should not, reach the merits of that issue, however, because the Petition is subject to dismissal now. First, even if the S&G Partners' "public policy" argument against the enforceability of Section 5.1(a)(iii) had any merit, and it does not, the S&G Partners fail to show why that question should not be decided by a California arbitrator in the first instance. Section 7.6 of the Partnership Agreement expressly provides that it is the arbitrator who has the "jurisdiction to determine the arbitrability of any dispute." Contractual provisions delegating the threshold question of arbitrability to an arbitrator are enforceable under controlling New York authority, even when the challenge to arbitration is based on the same "forfeiture for competition" defense the S&G Partners assert here. Second, even if they could show that this dispute need not be decided in a California arbitration, the S&G Partners fail to show why it must not be decided in a California state or federal court, in accordance with the plain language of Section 7.5 of the Partnership Agreement. The Petition provides no allegations or arguments even remotely suggesting that the forum-selection clause is unenforceable. Nor is there any reason why, as a matter of equity or 6 of 19

7 fairness, this Court should not enforce that provision. QE is a California-based partnership with a wide network of U.S. and international offices that greatly benefited the S&G Partners. The harm caused by the S&G Partners' breaches of their contractual obligations will impact QE and its partners around the world, and particularly at the firm's headquarters in Los Angeles. The S&G Partners should be required to comply with their agreement to resolve disputes of this kind in California, as all other QE partners are contractually obligated to do. For these reasons, as discussed more fully below, QE respectfully requests that the Court dismiss the Petition in favor of the California arbitration that QE has already initiated.1 BACKGROUND The QE Partnership Agreement. As the S&G Partners acknowledge, each of them signed the Second Amended and Restated Partnership Agreement of Quinn Emanuel Urquhart & (" Agreement" Sullivan, LLP ("Partnership Agreement"), a true and correct copy of which is attached as Exhibit 1 to the Affirmation of Richard I. Werder, Jr., dated July 16, 2018 ("Werder Aff."). The S&G Partners do not allege that they were defrauded or coerced into signing the Partnership Agreement or that it is unenforceable as a whole or otherwise void. For purposes of this motion, the two most relevant provisions of the Partnership (" Agreement are Section 7.5 ("Governing Law"), which acts as both a choice-of-law and forum- (" Arbitration" selection clause, and Section 7.6 ("Arbitration"), which obligates all QE partners, current and former, to arbitrate disputes relating to the Partnership Agreement. In full, Section 7.5 of the Partnership Agreement states: Governing Law. This Agreement is to be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed wholly within such State, and without regard to the conflicts 1 Despite the complete lack of legitimacy of the S&G Partners' attempt to avoid arbitration and litigate in this Court, QE has, in the interests of judicial efficiency, agreed to stay the arbitration pending the resolution of this Petition. 7 of 19

8 of laws principles thereof. Subject to the provisions of Section 7.6, any suit brought hereon, whether in contract, tort, equity or otherwise, shall be brought in the state or federal courts sitting in Los Angeles, California, the parties hereto hereby waiving any claim or defense that such forum is not convenient or proper. Werder Aff., Ex. 1 (emphasis added). Section 7.6 states, in relevant part: Arbitration. In the event of any dispute between or among any partners or between any one or more partners, on the one hand, and the Partnership on the other, with respect to this Partnership Agreement, the conduct of the affairs of the Partnership or any other matter related thereto, whether in contract, tort, equity or otherwise, and whether arising from facts or circumstances first existing before or after the adoption of this arbitration provision by the partners, such dispute shall be resolved exclusively through an arbitration proceeding conducted pursuant to the Commercial Rules of the American Arbitration Association and the supplementary Procedures for Large Complex Cases. The arbitration shall be conducted before a single arbitrator appointed either by agreement of the parties (to be made not later than 20 days after the filing of a response to the last-filed arbitration demand), or, failing that, from the Commercial Large Complex Case Panel of the American Arbitration Association. The arbitration shall be conducted on a confidential basis in a private office or other private facility in Los Angeles, California and shall be agreed to by the parties (or selected by the arbitrator if the parties cannot agree). All matters pertaining to the arbitration shall be kept strictly confidential, and any party may have an interim order to that effect made by the arbitrator, or as appropriate a court having jurisdiction during the pendency of the arbitration proceeding.... The arbitrator shall have jurisdiction to determine the arbitrability of any dispute.... The final award in the arbitration shall be binding on the parties and may be specifically enforced by legal proceedings, including but not limited to entry of a judgment on the award by any court of appropriate jurisdiction.... The obligation to arbitrate any such dispute will survive any partner's disassociation from the Partnership. Id. (emphases added). The S&G Partners' Breach o f the QE Partnership Agreement. On January 16, 2018, Petitioners Philippe Selendy, Gay, Elsberg, Jennifer Selendy, and Dunlap gave notice by of their intention to withdraw from the QE partnership effective February 15, 2018, and declared their intention to form S&G. In the following week, Petitioners Ginzburg, Baldwin, Chung, Goldstein, and Konanova also provided notice of their intention to withdraw and join S&G. 8 of 19

9 Section 5.1(a)(iii) of the Partnership Agreement provides that if, within eighteen months of a partner's voluntary withdrawal, he or she: performs any legal services in any case or other matter venued within 100 miles of any office of the Partnership for any client who was a client of the Partnership prior to the effective date of such withdrawal, and for which he [or she] or his [or her] new enterprise performed no legal services prior to the date the withdrawing partner first became an employee or partner of the Partnership, then the partner so withdrawing shall pay to the Partnership, as a reasonable estimate of the harm caused to the Partnership and the other partners..., a sum equal to 10% of the total fees billed by him [or her] and/or his [or her] new enterprise from that client for services rendered by them, or any of them, during the eighteen (18) month date" period following the effective of the withdrawal. Id. Following the S&G Partners' departure, QE, as was its right, demanded that the S&G Partners comply with their obligations under Section 5.1(a)(iii) of the Partnership Agreement. Werder Aff. 4. On March 30, 2018, the S&G Partners stated that they refused to honor their obligations under Section 5.1(a)(iii), asserting that the provision was unenforceable under New York law as a matter of public policy. Id. 5. On April 28, 2018, pursuant to Section 7.6 of the Partnership Agreement, QE commenced a confidential AAA arbitration in California seeking to enforce Section 5.1(a)(iii). Rather than respond to the arbitration on the merits, the S&G Partners tried to forum shop what should be a confidential dispute in California to a public forum in New York by filing this Petition seeking to stay the arbitration. Because they did so in blatant violation of Sections 7.5 and 7.6 of the Partnership Agreement, the Court should dismiss the S&G Partners' Partners publicity gambit and return this dispute to the parties' agreed forum in California. ARGUMENT Petitions to stay arbitration under Article 75 are "special proceeding[s]," CPLR 7502(a), which are governed by Article 4. CPLR 404(a) states that a respondent in a special proceeding 9 of 19

10 may "raise an objection in point of law by setting it forth in his answer or by a motion to dismiss the petition, made upon notice within the time allowed for answer." Any such motion to dismiss is analyzed under the same standard as a motion to dismiss brought pursuant to CPLR See, e.g., People ex rel. Schneiderman v. Orbital Pub. Grp., Inc.,, Misc. 3d 811, , 21 N.Y.S.3d 573, 579 (Sup. Ct. N.Y. Co. 2015) (applying CPLR 3211 standard to motion to dismiss special proceeding). In addition, "[a] party may move for judgment dismissing one or more causes of action asserted against him on the ground that... a defense is founded upon documentary evidence" and "the pleading fails to state a cause of action." CPLR 3211 (a) (1), (7). A motion to dismiss pursuant to CPLR 3211(a)(1) will be granted if "the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law." Alden Global Recovery Master Fund, L.P. v KeyBank Nat'l Ass'n, 159 A.D.3d 618, 621 (1st Dep't 2018) (quotation and citation omitted). "Although on a motion addressed to the sufficiency of a complaint pursuant to CPLR 3211(a)(7), the facts pleaded are presumed to be true and accorded every favorable inference, nevertheless, allegations consisting of bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, are not entitled to such consideration." Sud v. Sud, 211 A.D.2d 423, 424 (1st Dep't 1995). As discussed below, the Court should dismiss the Petition, without reaching its merits, because it contravenes the clear language of the QE Partnership Agreement's arbitration clause and forum-selection clause. I. The Arbitration Clause In The Partnership Agreement Requires The Dismissal Of The Petition Section 7.6 of the Partnership Agreement gives an arbitrator "jurisdiction to determine the arbitrability of any dispute" between QE and the S&G Partners. "Such 'delegation clauses' 10 of 19

11 are enforceable where," as here, "'there is 'clea[r] and unmistakabl[e]' evidence' that the parties intended to arbitrate arbitrability issues." Monarch v. Nat. Union, 26 N.Y.3d 659, 675 (2016) (citing First Options of Chicago, Inc. v..kaplan, 514 U.S. 938 (1995)); see Garthon Bus. Inc. v. Stein, 30 N.Y.3d 943 (2017) (where arbitration clause so provides, "the issue of whether the dispute is arbitrable should be resolved by the arbitrator"). The S&G Partners do not contend they were defrauded into entering the arbitration clause, or that it is unenforceable on its terms. As shown below, the S&G Partners fail to raise any argument that would support abrogating the express arbitration clause to which they agreed in the Partnership Agreement. A. The S&G Partners' Mere Assertion of a "Forfeiture for Competition" etition" Com Defense Does Not Deprive the Arbitrator of Jurisdiction Over This Dispute The S&G Partners' Petition should be dismissed because it violates controlling precedent that recognizes the strength of New York's public policy favoring arbitration. Specifically, the Court of Appeals has ruled that "forfeiture for competition" arguments, such as those the S&G Partners now bring, do not fall into an exception to an arbitrator's jurisdiction. In Hackett v. Milbank, Tweed, Hadley & McCloy, a withdrawing partner argued-just as the S&G Partners do here-that â a provision of Milbank's partnership agreement was an unenforceable "forfeiture-forcompetition." See Hackett v. Milbank, Tweed, Hadley & McCloy, 181 A.D.2d 519, 520 (1st Dep't 1992). The â withdrawing partner in Hackett-again, like the S&G Partners here-filed an Article 75 petition to stay the arbitration on public policy grounds. Reversing the lower court decisions that had stayed the arbitration, the Court of Appeals dismissed the petition, and awarded costs to the respondent law firm, because the "[p]etitioner's claim that an arbitrator's award denying him benefits would be contrary to public policy is insufficient to preemptively stay arbitration and may be addressed subsequently on a motion to vacate or confirm the award, 11 of 19

12 if such an award is in fact made." Hackett v. Milbank, Tweed, Hadley & McCloy, 80 N.Y.2d (" 870, (1992) ("Hackett I"). The Hackett I decision is consistent with the rule that "a stay of arbitration on policy grounds is premature and unjustified" before the arbitrator considers and rules on the arbitrable issues. See Port Washington Union Free Sch. Dist. v. Port Washington Teachers Ass'n, 45 N.Y.2d 411, 418, 408 N.Y.S.2d 453, 456 (1978). Thus, even if the relief requested by one of the parties "might, if granted in toto by the arbitrator, ultimately lead to an award which would be subject to vacatur," such a "consideration does not, standing alone, justify judicial interference with the arbitration process at this stage." Id. (noting that any "review by the courts" at this stage of the arbitration process would improperly "rest on speculation or assumption"). Following the Court's decision in Hackett I, the parties arbitrated the dispute and the arbitrator found in Milbank's favor. When the former partner subsequently moved to vacate the award, the Court of Appeals, citing "the strong public policy favoring arbitration," reiterated that it was for the arbitrator to decide the public policy challenge to the Milbank provision in the first instance. This is because the policy against anticompetitive "forfeiture for competition" clauses must give way to "a second, and arguably stronger, policy concern... the public policy favoring arbitration." Hackett v. Milbank, Tweed, Hadley & McCloy, 86 N.Y.2d 146, 149 (1995) (" ("Hackett II") (emphasis added). On review, the relevant question was simply whether the award "on its face clearly violate[s] public policy." The Court of Appeals held that it did not. Hackett II, 86 N.Y.2d at 150, 158. The S&G Partners' Partners Petition is barred by the Hackett decisions. Just as in Hackett, the S&G Partners filed this Petition seeking to avoid arbitration by invoking a "public policy" challenge to Section 5.1(a)(iii). They argue that this provision violates the New York Rules of 12 of 19

13 Professional Conduct as an impermissible "forfeiture for competition," and that this Court, not an arbitrator, must assess the viability of Section 5.1(a)(iii), because a "threshold question" is whether this dispute falls into one of the "'exceptions which have been recognized as so interlaced with strong public policy considerations that they have been placed beyond the reach of the arbitrators' discretion.'" Mem. of Law, at 9-10 (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v Benjamin, 1 A.D.3d 39, 44 (1st Dep't 2003)). This is precisely the procedural end run around arbitration that was rejected in Hackett. Accordingly, regardless of the merits of the S&G Partners' Partners â public-policy challenge to Section 5.1(a)(iii)-and there is no merit to that argument-this Court should apply the "stronger" public policy favoring arbitration, and dismiss the Petition so that the threshold question of arbitrability can be decided in arbitration. B. The S&G Partners' Attempt To Avoid the Hackett Decisions Fails In their brief supporting the Petition, the S&G Partners try to argue around the Court of Appeals' binding precedent in Hackett I & II in two unpersuasive ways. First, the S&G Partners imply that the question here is one of "attorney discipline and disqualification," disqualification, which they claim is a category of dispute that must be resolved in court. Mem. of Law, at 12 (citing Merrill Lynch, Pierce, Fenner & Smith, Inc, 1 A.D.3d at 44'). That argument is specious. This is a contract dispute, and the S&G Partners' Partners contract defense is based on the Rules of Professional Conduct. The Court of Appeals has expressly ruled that this exact type of dispute-even â if defended on public policy grounds-is a type that must first be addressed and decided in arbitration, if that is what the partnership agreement requires, as it does here. See Hackett I, 80 N.Y.2d at ; Hackett II, 86 N.Y.2d at , Second, the S&G Partners argue that the arbitrator "[cannot] grant any relief without violating public policy." Mem. of Law, at 12. As a threshold matter, this circular argument simply ignores Hackett I's central holding that "forfeiture for competition" public policy 13 of 19

14 challenges are to be considered after (or during) the arbitration, not before. See 80 N.Y.2d at It also ignores Hackett II's explanation that the "stronger public policy" in favor of arbitration clearly controls at this stage of the proceedings, notwithstanding any public policy challenge to a portion of the controlling partnership agreement. See Hackett II, 86 N.Y.2d at (emphasis added). This argument also fails because it presupposes both that New York law applies to the question of the enforceability of Section 5.1(a)(iii), and that the provision is facially invalid under New York law. To the contrary, at best for the S&G Partners, these are both disputed questions that the arbitrator can and should decide in the first instance. With respect to choice of law, the parties' parties express contractual election of California law will control in this dispute. As the Court of Appeals observed in Hackett II, an interstate partnership dispute such as this is governed by the Federal Arbitration Act, which, as applied here, requires strict adherence to the Partnership Agreement's choice of California law. See Hackett II, 86 N.Y.2d at 154 (noting that, because the matter involved an interstate partnership dispute, the Federal Arbitration Act required that "an explicit and unambiguous choice of law in [the partnership's] arbitration agreement must be given effect"). Moreover, even apart from the parties' parties clear contractual election, it is appropriate to apply California law to this partnership dispute involving a California-based firm with hundreds of partners around the world-the vast majority of whom are located outside of New York. The S&G Partners also cite New York Rule of Professional Conduct 8.5(b)(2)(ii) for the proposition that, in the case of conduct having effects in dueling jurisdictions, the rules of professional conduct from the jurisdiction where the "predominant effect" is felt shall apply. Mem. of Law, at 9. But this argument focuses solely on the location of the S&G Partners for its 1 14 of 19

15 premise that the "predominant effect" will be in New York. To the contrary, this is a dispute about the QE partnership, which is headquartered in California and exists worldwide, with only 30% of firm partners based in New York. Werder Aff., 6. The "predominant effect" of the S&G Partners' breaches of the Partnership Agreement will occur outside of New York. Rule 8.5 thus undercuts, not supports, the S&G Partners' argument for applying of the New York Rules of Professional Conduct to this dispute. S&G hardly attempts to dispute that clauses such as Section 5.1(a)(iii) are valid and enforceable under California law. See, e.g., Howard v. Babcock, 6 Cal. 4th 409 (1993) (agreement to impose reasonable cost on departing partners who compete with law firm in limited geographical area is enforceable). Accordingly, if California law applies to the merits of this dispute, and it does, then the S&G Partners' Partners argument is simply wrong. Likewise, even if New York law applies, the S&G Partners' challenge to the enforceability of Section 5.1(a)(iii) would still present factual inquiries into the circumstances and effects of the challenged clause that must be decided by an arbitrator in the first instance. See, e.g., Hackett II, 86 N.Y.2d at , (noting the arbitrator's factual findings supporting its finding that the clause at issue was not an impermissible "forfeiture for competition"); Denburg v. Parker Chapin Flattau & Klimpl, 82 N.Y.2d 375, (1993) (invalidating challenged clause only after making factual findings that it effected a forfeiture and that its "principal function" was to discourage competition); see also Cohen v. Lord, Day & (" Lord, 75 N.Y.2d 95, 102 (1989) expressly caution[ing] against a categorical interpretation or application" of clauses such as Section 5.1(a)(iii), which must instead be assessed "in the context relationship" of this litigation and this professional relationship") of 19

16 Here, such a factual inquiry will favor the enforceability of Section 5.1(a)(iii). That provision applies to all departing QE partners, regardless of where they go, and it is reasonable in scope and duration. It requires payments "as a reasonable estimate of the harm caused to the Partnership" by departing partners taking firm clients with them, and is facially not punitive in nature. Discovery in the arbitration will undoubtedly prove that S&G has not turned away any work because of this clause, nor has the vigor of its efforts to compete with QE and other firms been constrained in any way by this binding contractual obligation. Matter of Silverberg, 75 A.D.2d 817 (2d Dep't 1980), on which the S&G Partners rely to argue that Section 5.1(a)(iii) is "invalid on its face," Mem. of Law, at 13, is distinguishable-and â only highlights why Section 5.1(a)(iii) of the QE Partnership Agreement is enforceable (or, at the very least, subject to a reasonable dispute that should be decided by an arbitrator). The provision at issue in Silverberg entitled a law firm to 80% of its former partners' partners revenues for certain services they rendered. 75 A.D.2d, at 818. Section 5.1(a)(iii) requires only a 10% share of certain fees generated by S&G during a limited time, and plainly will not have (and has not had) any comparable impact on the S&G Partners. The other cases the S&G Partners cite do not fare any better. See Mem. of Law, at None of them involved "forfeiture for competition" claims or a contractual provision that expressly delegates the threshold question of arbitrability to an arbitrator. Thus, regardless of which law applies to this dispute, there is no basis for this Court to make a presumptive determination that Section 5.1(a)(iii) is unenforceable, or to deprive QE of its contractual right to have a California arbitrator make that determination in the first instance. The S&G Partners' "public policy" argument therefore provides no basis for this Petition to be heard on its merits now rather than dismissed so that arbitration in California can proceed of 19

17 II. The Forum-Selection Clause In The Partnership Agreement Requires The Dismissal Of The Petition Independently, the Petition should be dismissed because it was filed in direct contravention of Section 7.5 of the Partnership Agreement, which requires the S&G Partners to file suit â relating to the agreement-including, of course, a lawsuit relating to the conduct of an arbitration under Section 7.6-inâ California. Section 7.5 states that, "[s]ubject to the provisions of Section 7.6 [requiring arbitration], any suit brought hereon, whether in contract, tort, equity or otherwise, shall be brought in the state or federal courts sitting in Los Angeles, California, the parties hereto hereby waiving any claim or defense that such forum is not convenient or proper." A forum-selection clause, such as Section 7.5, is "prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court." LSPA â Enter., Inc. v. Jani-King.King of N.Y., Inc.,,3131 A.D.3d 394, 395 (2d Dep't 2006), abrogated on other grounds, Lischinskaya v. Carnival Corp., 56 A.D.3d 116 (2d Dep't 2008); Harry Casper, Inc. v. Pines.Assoc., L.P., 53 A.D.3d 764, (3d Dep't 2008). Accordingly, a forum-selection clause will be given effect in the absence of a "strong showing" that it should be set aside. Horton v. Concerns of Police Survivors, Inc.,,6262 A.D.3d 836, 836 (2d Dep't 2009) (quoting Di Ruocco v. Flamingo Beach Hotel & Casino, 163 A.D.2d 270, 272 (2d Dep't 1990)). The most prominent example of such a "strong showing" occurs when forcing the parties to proceed in the selected forum would effectively deprive the plaintiff of its day in court due to the small dollar amounts at issue and/or the constraints of litigating in the alternative forum. See, e.g., Scarcella v. America Online, Inc.,,1111 Misc.3d.19, 2005 N.Y Slip Op , at *20 (1st 1 17 of 19

18 Dep't 2005) (declining to compel plaintiff to proceed with $5,000 small claims case in Virginia where doing so would cap his recovery at $2,000 and substantially inconvenience him in light of the amount of the claim); Full House Entertainment, Inc. v..auto Life RX, 31 Misc.3d 64, 2011 N.Y. Slip Op , at *66 (App. Term 2011) (declining to enforce forum selection clause where doing so would make pursuing the claim "prohibitively expensive for plaintiff and would act to discourage or deter potential claimants from seeking arbitration"). Another "strong showing" occurs when the selected forum has absolutely no connection to the contracting parties or the dispute. See, e.g., U.S. Merchandise, Inc. v. L.&& R Distribs., Inc.,, A.D.3d 613 (2d Dep't 2014) (refusing to enforce forum selection clause where "plaintiff has contended, without contradiction, that neither the parties nor the agreement has any connection to the State of Delaware: none of the parties is located in Delaware, the nondisclosure agreement was not Delaware" executed in Delaware, and performance of the agreement was not to take place in Delaware"). The S&G Partners do not, and cannot, identify a single reason why abiding by their contractual obligation to litigate disputes regarding the Partnership Agreement in California is "unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or... so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court." These are lawyers who were highly compensated as QE partners; they are sophisticated, experienced and successful attorneys used to litigating in courts around the country and world. They also traveled to California each year at least once for the QE partnership meeting, and had a number of other California contacts on a near daily basis during their tenure as QE partners. Werder Aff., 6. The public policy arguments the S&G Partners raise apply to Section 5.1(a)(iii) only, not to the Partnership Agreement as a whole, nor to Section 7.5. Furthermore, even if the S&G Partners are correct that New York law applies to this 1 18 of 19

19 dispute, then California courts would be fully able to apply that law. See, e.g., ABF Capital Corp. v. Berglass, 130 Cal. App. 4th 825 (Cal. Ct. App. 2005) (California appellate court affirming application of New York law to partnership dispute, and deciding merits based on that law). In short, there is a prima facie valid forum-selection clause at issue here; at the very least, this Court should require the S&G Partners to abide by that baseline obligation and dismiss this action accordingly. See British W. Indies Guar. Tr. Co. v. Banque Internationale a Luxembourg, 172 A.D.2d 234 (1st Dep't 1991) (affirming dismissal based on forum-selection clause where plaintiff could not show any reason why doing so was unreasonable, unjust, fraudulent, overreaching, or would effectively deny them their day in court). CONCLUSION For the foregoing reasons, QE respectfully requests that the Court grant this motion and dismiss the S&G Partners' Petition.2 Petition. Dated: New York, New York QUINN EMANUEL URQUHART & July 16, 2018 SULLIVAN, LLP By : Richard I. Werder Richard I. Werder Jennifer A. Barrett 51 Madison Avenue New York, New York Tel: (212) Fax: (212) Attorneys for Respondent Quinn Emanuel Urquhart & Sullivan, LLP 2 For the reasons set forth above, this Court should dismiss the Petition in its entirety. In the event this Court denies QE's motion to dismiss, QE respectfully requests that it be provided two weeks from the date of the Court's ruling to file an answer or other response that addresses "merits" the of the Petition. See CPLR 404(a) of 19