U.S. District Judge Susan Wigenton of the District of New Jersey (Courtesy photo)

U.S. District Judge Susan Wigenton of the District of New Jersey (Courtesy photo)

A federal judge in New Jersey has ruled that a former tech employee accused of stealing trade secrets from a Wall Street trading company cannot force the company into arbitration based on a contract that says the parties “may litigate” certain disputes.

U.S. District Judge Susan Wigenton, sitting in Newark, said that despite policies favoring arbitration, it is “‘strictly a matter of contract. If a party has not agreed to arbitration, the courts have no authority to mandate that they do,’” Wigenton said Tuesday in Virtu KCG Holding v. Li, quoting another District of New Jersey ruling from 2017 in Ranieri v. Banco.

The lawsuit stems from a high-frequency trading company, Virtu KCG, a subsidiary, Virtu Americas, and the now-former employee, Min Li. Virtu markets itself as a company providing quick-time advice to clients in various markets.

According to the decision, Virtu Americas, which is based in New York but has offices in New Jersey and other locations in the United States, hired Li as a “quantitative strategist” on Dec. 19, 2013. His job was to develop algorithms and provide clients with predictions on market activity.

He signed an employment agreement with the company on Jan. 15, 2014, which provided that employment disputes were to be subject to alternative dispute resolution where required by the Financial Industry Regulatory Authority. But the contract, the decision noted, also contained a provision that the parties “may litigate disputes pertaining to the Agreement’s restrictive covenants, including those concerning ‘Confidentiality’ … and ‘Access to and Retrieval of KCG Property.’”

In March 2017, the company began investigating the possible thefts of trade secrets, the decision said. In the course of that investigation, the company allegedly discovered that Li had copied other employees’ “predictors,” which are mathematical predictions of market fluctuations, and stored them on his own server.

The company fired him on July 5, and later filed a lawsuit against him in U.S. District Court, alleging theft of trade secrets, breach of contract and other related counts.

Li moved to compel arbitration, but Virtu objected.

Wigenton agreed with Virtu.

The contract “specifically creates an exception to the agreement to arbitrate,” Wigenton said. ”Because plaintiffs’ claims relate to the alleged misuse of confidential and proprietary information … the parties may continue to litigate their dispute.”

Li’s attorney, New York solo Michael Pappas, said he would appeal the ruling, but declined to comment further.

Virtu’s attorney, Kevin Walsh of Gibbons in Newark, didn’t return a call about the decision.