Biller v. Toyota Motor Corp.
668 F.3d 655
9th Cir.2012Background
- Biller served as in-house counsel for Toyota Motor Sales from 2003–2007 and faced a claim including constructive wrongful discharge; settlement included a broad release and confidentiality obligations for Toyota information.
- The Severance Agreement required arbitration of known and unknown claims related to the Severance Agreement and governed by FAA unless Competent Jurisdiction opted for California law.
- Biller formed LDTC after leaving TMS and allegedly used confidential Toyota information inappropriately, leading to state and federal actions and a consolidated JAMS arbitration.
- The arbitration consolidated federal and state claims against Biller, with claims including breach of contract, conversion, and civil RICO, and Biller’s cross-claims were largely withdrawn.
- The arbitrator found the Severance Agreement valid, granted injunctive relief and damages to TMS, and issued a Final Award and Permanent Injunction in late 2010; the district court confirmed the award under the FAA and denied vacatur, with Biller appealing.
- Biller also sought contempt regarding document handling, which the district court denied; the Ninth Circuit reviews the FAA-confirmation de novo and contempt for abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Governing review framework | Biller argues CAA should govern merits review; FAA framework is too narrow. | FAA governs review unless a competent jurisdiction decides otherwise; no such decision occurred. | FAA governs review; no basis to apply CAA merits review. |
| Scope of review under FAA | FAA permits merits review due to expansive clause in the Severance Agreement. | Kyocera/Hall Street limit FAA review to §10 grounds; no merits review. | FAA provides limited review; no merits review permitted. |
| Sufficiency of arbitrator's written decision | Arbitrator failed to provide a written discussion adequate for limited review. | Arbitrator provided sufficient written reasoning to permit review under FAA. | Written decision adequate for FAA-limited review; vacatur not warranted. |
| Manifest disregard of California law (unclean hands/equitable estoppel) | Arbitrator ignored California law on unclean hands and equitable estoppel. | Arbitrator implicitly addressed defenses; no manifest disregard. | No manifest disregard; defenses not vacatur-grounded under FAA. |
| Contempt of the Permanent Injunction | TMS violated the injunction by improper handling of documents. | Document handling fell within protections; no violation. | District court did not err; no contempt shown. |
Key Cases Cited
- Comedy Club, Inc. v. Improv West Assoc., 553 F.3d 1277 (9th Cir. 2009) (limited FAA review; deference to arbitral conclusions)
- Kyocera Corp. v. Prudential-Bache Trade Serv., Inc., 343 F.3d 987 (9th Cir. 2003) (FAA grounds are exclusive for vacatur; limited review)
- Hall Street Assoc., LLC v. Mattel, Inc., 552 U.S. 576 (Supreme Court 2008) (FAA exclusive grounds for vacatur; no merits review)
- Lagstein v. Certain Underwriters at Lloyd's, London, 607 F.3d 634 (9th Cir. 2010) (manifest disregard standard requires clear record of law ignored)
- Bosack v. Soward, 586 F.3d 1096 (9th Cir. 2009) (arbitrators are not required to provide reasoning; writing aids review)
- Cable Connection, Inc. v. DirecTV, Inc., 44 Cal.4th 1334 (Cal. 2008) (CAA merits review; Hall Street does not bar state-law review realities)
- Mich. Mut. Ins. Co. v. Unigard Sec. Ins. Co., 44 F.3d 826 (9th Cir. 1995) (describes manifest disregard standard)
- Comedy Club, Inc. v. Improv West Assoc., 553 F.3d 1277 (9th Cir. 2009) (reiterates standard for manifest disregard)