252 F. Supp. 3d 934
N.D. Cal.2017Background
- Waymo sued Uber, Ottomotto, and Otto Trucking for trade secret misappropriation and unfair competition; Levandowski (former Waymo employee) signed 2009 and 2012 Waymo employment agreements that include broad arbitration clauses.
- Waymo separately initiated arbitration against Levandowski (claims about employee poaching); those arbitrations do not involve the present trade-secret claims against defendants.
- Defendants (nonsignatories to Levandowski’s agreements) moved to compel arbitration of Waymo’s claims against them, invoking equitable estoppel based on Waymo’s agreements with Levandowski.
- Defendants also filed an arbitration seeking a declaration that Waymo’s claims are subject to arbitration and meritless.
- The parties agree California law governs whether nonsignatories may enforce the arbitration agreements; the controlling test derives from Goldman and was adopted by the Ninth Circuit in Kramer and Murphy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether nonsignatories can compel arbitration by equitable estoppel | Waymo: its trade-secret claims do not depend on or require enforcement of Levandowski’s arbitration agreements; Waymo can prove secrecy and improper acquisition independent of those contracts | Defendants: Waymo’s claims rely on the confidentiality and duties in Levandowski’s agreements and allege interdependent misconduct with Levandowski, so equitable estoppel should bind Waymo to arbitrate | Denied — equitable estoppel does not apply because Waymo’s claims do not rely on or are not intertwined with the arbitration agreements, nor are the misconduct allegations founded on contractual obligations |
| Application of Goldman/Kramer two-prong test | Waymo: neither Goldman prong is satisfied; Waymo expressly disavowed reliance on the employment contracts to prove misappropriation | Defendants: Waymo invokes contract terms (confidentiality) and alleges concerted misconduct with Levandowski, satisfying Goldman prongs | Denied — court finds Waymo need not rely on the agreements to establish misappropriation and the alleged concerted misconduct is not founded in the agreements |
| Relevance of “broad” arbitration clause language | Waymo: broad language alone cannot bind nonsignatories under California law | Defendants: the clause’s broad wording supports compelling arbitration | Held: California law rejects binding nonsignatories based solely on broad contract language; must meet Goldman/Kramer principles |
| Effect of federal pro-arbitration policy and conflicting pre-Carlisle cases (e.g., Torbit) | Waymo: California precedent controls; the federal “touches” test is inapplicable when asking whether a party is bound | Defendants: rely on cases using more liberal “touches matters” standard | Held: Federal liberal-scope precedents do not override California equitable-estoppel framework; pre-Carlisle cases (Torbit) are distinguishable |
Key Cases Cited
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (limits FAA enforcement to situations permitted by applicable state contract law)
- Kramer v. Toyota Motor Corp., 705 F.3d 1122 (9th Cir. 2013) (adopts Goldman two-prong equitable estoppel framework)
- Goldman v. KPMG LLP, 173 Cal.App.4th 209 (Cal. Ct. App. 2009) (articulates the two circumstances in which a nonsignatory may invoke equitable estoppel to enforce arbitration)
- Murphy v. DirecTV, Inc., 724 F.3d 1218 (9th Cir. 2013) (confirms Kramer/Goldman standard controls in Ninth Circuit)
- Metalclad Corp. v. Ventana Environmental Organizational Partnership, 109 Cal.App.4th 1705 (Cal. Ct. App. 2003) (equitable estoppel applied where claims against nonsignatory were inseparable from contract benefits sought)
- Uptown Drug Co., Inc. v. CVS Caremark Corp., 962 F.Supp.2d 1172 (N.D. Cal. 2013) (trade-secret claims required proof that use exceeded contractual permission, so nonsignatory could compel arbitration)