Smith v. VMware, Inc. et al

Northern District of California, cand-4:2015-cv-03750


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4 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DANE SMITH, Case No.15-cv-03750-HSG Plaintiff, 8 ORDER DENYING MOTION TO v. VACATE ARBITRATION AWARD 9 10 VMWARE, INC., et al., Re: Dkt. No. 96 Defendants. 11 12 Northern District of California United States District Court 13 Pending before the Court is Plaintiff Dane Smith's motion to vacate the arbitration award 14 he received on July 17, 2017. Dkt. No. 96. For the reasons set forth below, Plaintiff's motion is 15 DENIED.1 16 I. BACKGROUND 17 Plaintiff filed the operative Third Amended Complaint in the U.S. District Court for the 18 Eastern District of Virginia on April 8, 2014. Dkt. No. 39 (Third Amended Complaint or "TAC"). 19 Against Defendants VMware, Inc. and Carahsoft Technology Corp., Plaintiff alleged several 20 violations of the False Claims Act, 31 U.S.C. §§ 3729 et seq. ("FCA"), in addition to retaliation 21 causes of action against his former employer, VMware. See TAC ¶¶ 121-83. On June 23, 2015, 22 the parties entered a settlement agreement, under which Plaintiff dropped Carahsoft as a party. 23 See Dkt. No. 59 at 3. From that point on, Plaintiff was bringing only "individual claims" against 24 VMware, under the FCA and California employment law. See id. at 4. As such, Plaintiff moved 25 for transfer to this district, which the court granted on August 12, 2015. See Dkt. No. 60. 26 Once in this Court, VMware ("Defendant") moved to compel arbitration of Plaintiff's 27 1 28 The Court finds this matter appropriate for disposition without oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). 4 1 claims. See Dkt. No. 76. On January 5, 2016, the Court granted Defendant's motion and 2 dismissed the action without prejudice. See Dkt. No. 83 at 12. The parties proceeded to engage in 3 arbitration proceedings before Judge William Cahill of JAMS. Dkt. No. 97 (Declaration of Jeffrey 4 F. Ryan, or "Ryan Decl.") ¶ 4. Plaintiff filed his arbitration complaint on January 22, 2016. Id., 5 Ex. A. The hearing took place from January 17 to January 23, 2017 in San Francisco. Id., Ex. I 6 ("Scheduling Order") ¶ 8(a). On July 17, 2017, Judge Cahill entered a final award, granting 7 Plaintiff $305,421.66 in compensatory damages, $4,546 in interest, $1,016,684.85 in attorney's 8 fees, and $244,178 in costs, for a total award of $1,570,830.51. Id., Ex. B, at 00012.2 9 On September 21, 2017, after the arbitration had taken place, Plaintiff moved to re-open 10 the case so that he could file a motion to vacate the arbitration award. Dkt. No. 84. The Court 11 granted his request over Defendant's objection on September 25, 2017. Dkt. No. 86. 12 On October 13, 2017, Plaintiff filed this motion to vacate the arbitration award. Dkt. No. Northern District of California United States District Court 13 96 ("Mot."). Defendant filed its opposition on November 1, 2017, Dkt. No. 100 ("Opp."), and 14 Plaintiff replied on November 10, 2017, Dkt. No. 101 ("Reply"). 15 II. LEGAL STANDARD 16 A party seeking vacatur of an arbitration award under the Federal Arbitration Act, 9 U.S.C. 17 §§ 1 et seq. ("FAA"), "must clear a high hurdle." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 18 559 U.S. 662, 671 (2010). "It is not enough. . . to show that the [arbitration] panel committed an 19 error—or even a serious error." Id. Rather, a district court may vacate an arbitration award under 20 the FAA on only four grounds, three of which are at issue to this case: (1) "where the arbitrators 21 were guilty of misconduct. . . in refusing to hear evidence pertinent and material to the 22 controversy; (2) "where the arbitrators exceeded their powers"; and (3) where the arbitrators 23 demonstrated "evident partiality or corruption." 9 U.S.C. § 10(a) ("section 10"). These are the 24 "exclusive grounds" for vacatur of an arbitration award, see Hall Street Assocs., LLC v. Mattel, 25 Inc., 552 U.S. 576, 584 (2008), and are "designed to preserve due process but not to permit 26 unnecessary public intrusion into private arbitration procedures," U.S. Life Ins. Co. v. Superior 27 2 28 References to Exhibit B of the Ryan Declaration use the exhibit's Bates numbering system, as it contains multiple documents. 2 4 1 Nat'l Ins. Co., 591 F.3d 1167, 1173 (9th Cir. 2010) (citation omitted). As such, if there is no 2 section 10 issue, "confirmation [of the award] is required even in the face of erroneous findings of 3 fact or misinterpretations of law." Lagstein v. Certain Underwriters at Lloyd's, London, 607 F.3d 4 634, 640 (9th Cir. 2010) (citation omitted). 5 "The burden of establishing grounds for vacating an arbitration award is on the party 6 seeking it." U.S. Life Ins., 591 F.3d at 1173 (citation omitted). 7 III. DISCUSSION 8 Plaintiff asserts three grounds for vacatur, none of which are meritorious. The Court 9 considers each in turn. 10 A. Judge Cahill's Evidentiary Decisions Did Not Render the Arbitration Unfair to Plaintiff. 11 12 To begin, Plaintiff contends that Judge Cahill failed to consider "pertinent and material" Northern District of California United States District Court 13 evidence within the meaning of section 10(a)(3), thus denying him "a fair opportunity to present 14 his evidence and argue it." See Mot. at 1. First, he argues that Judge Cahill improperly excluded 15 his declaration and its exhibits at the arbitration hearing. Id. at 15. Second, Plaintiff contends that 16 Judge Cahill improperly excluded certain exhibits that Plaintiff believed would be admitted. See 17 id. at 15-16. Neither contention is persuasive. 18 "A hearing is fundamentally fair if the minimal requirements of fairness—adequate notice, 19 a hearing on the evidence, and an impartial decision by the arbitrator—are met." Carpenters 46 N. 20 Cal. Counties Conference Bd. v. Zcon Builders, 96 F.3d 410, 413 (9th Cir. 1996) (citation 21 omitted); see also U.S. Life Ins., 591 F.3d at 1173 (stating that the primary role of federal courts in 22 reviewing arbitration awards "is to ensure that the FAA's due process protections were afforded"). 23 Accordingly, a court may vacate an arbitration award where an arbitrator "refus[es] to hear 24 evidence pertinent and material to the controversy." 9 U.S.C. § 10(a)(3). Arbitrators, however, 25 are accorded "wide discretion to require the exchange of evidence, and to admit or exclude 26 evidence, how and when they see fit." U.S. Life Ins., 591 F.3d at 1175 (citation omitted).3 A party 27 3 28 Until recently, the Ninth Circuit held that "a showing of prejudice is a prerequisite to relief based on an arbitration panel's rulings." See U.S. Life Ins., 591 F.3d at 1174 n.9 (quoting Emplr's Ins. of 3 4 1 need not receive a perfect hearing—just a fair one. See Emplr's Ins. of Wasau, 933 F.2d at 1491 2 ("In short, perhaps [the defendant] did not enjoy a perfect hearing; but it did receive a fair 3 hearing."). 4 Plaintiff has not shown that Judge Cahill failed to consider pertinent evidence within the 5 meaning of section 10(a)(3). His argument seems to be that he "had been led to believe by Judge 6 Cahill's Scheduling Order and the JAMS Rules" that his 81-page declaration and certain exhibits 7 would be admitted. See Ryan Decl. ¶ 12. The Scheduling Order, as relevant here, directed 8 counsel to "identify all non-rebuttal percipient and expert witnesses expected to testify at the 9 Hearing and indicate the manner in which each witness is expected to testify (in-person, 10 telephonically or by affidavit or declaration), not later than December 23, 2016." Scheduling 11 Order ¶ 7(i). It also ordered the parties to prepare a joint exhibit list in advance of the hearing, and 12 to "indicate any objection to the introduction of any exhibit." Id. ¶ 8(c). It further stated that Northern District of California United States District Court 13 "[e]xhibits not objected to shall be deemed admitted at the commencement of the hearing unless 14 otherwise ordered by the arbitrator." Id. Plaintiff appears to believe that these rules, in 15 conjunction with the events of the arbitration hearing, render Judge Cahill's failure to consider 16 pertinent evidence self-evident. The Court disagrees. 17 At the arbitration hearing, counsel for Defendant objected to Plaintiff's attempt to enter his 18 declaration into the record: "I think it's completely crazy to put in [the] declaration when your 19 client's the claimant and he's here to testify. I've never seen it permitted, but it sounds to me like 20 you're going to permit it." Dkt. No. 99 (arbitration hearing transcript, or "Tr.") at 233:24-234:2. 21 When Judge Cahill suggested the parties might stipulate to entering the declaration into evidence, 22 defense counsel refused. See id. at 234:3-5. Judge Cahill then asked whether Plaintiff intended to 23 read the declaration into the record, to which Plaintiff's counsel responded that he was "prepared 24 25 Wasau v. Nat'l Union Fire. Ins. Co. of Pittsburgh, 933 F.2d 1481, 1490 (9th Cir. 1991)). The court appeared to slightly revise that holding in U.S. Life Insurance, however, noting that the 26 provision "necessarily implies prejudice to the rights of a party, without regard to" section 10(a)(3), which included a "final catch-all phrase" that held vacatur appropriate where an 27 arbitrator's "misbehavior" prejudiced the rights of any party. Id. (citing 9 U.S.C. § 10(a)(3)). Regardless, the Court need not reach the question of prejudice because Plaintiff has failed to show 28 that Judge Cahill is "guilty of. . . refusing to hear evidence pertinent and material to the controversy." See 9 U.S.C. § 10(a)(3). 4 4 1 to ask him all the questions." See id. at 234:6-15. Plaintiff's counsel further noted to Judge Cahill 2 that [w]hat you told us to do in the scheduling order is to let the other 3 side know how we are going to do it, if it's going to be depo, excerpts, declaration, affidavit or live testimony. We did that. We 4 let them know we would be submitting a declaration for Mr. Smith as well as live testimony. We put them on notice. This is the first 5 time I heard they were objecting. 6 Id. at 234:18-25. Judge Cahill suggested "see[ing] how this goes," to which Plaintiff's counsel 7 responded, "No problem." Id. at 235:2-5. As Plaintiff tells it, what followed over the course of 8 several days was a frantic attempt to get the content of his declaration—a crucial piece of 9 evidence—into the record via direct examination of witnesses. See Mot. at 12-13. Further 10 complicating matters was the fact that counsel for Defendant made numerous "time-consuming 11 objections" to exhibits which Plaintiff believed had been admitted under paragraph 8(c) of the 12 Scheduling Order, given that Defendant had not objected them prior to the hearing. See id. at 13- Northern District of California United States District Court 13 14. The crux of Plaintiff's claim under section 10(a)(3) is that [b]ecause the time allocated for the Arbitration was being consumed 14 by having to walk [Plaintiff] through the facts contained in his Declaration [on direct examination], and identify the applicable 15 exhibits, and respond to [counsel for Defendant's] copious objections—after VMware, the respondent/defendant, had fully 16 presented its case in chief—the evidence bearing on most of the 2009 "protected activity" [relevant to Plaintiff's claims] never saw 17 the light of day. 18 Mot. at 15 (original emphasis). 19 The Court summarizes the events above to make one point: Plaintiff's objection sounds 20 more in regret that his litigation strategy did not work at the arbitration hearing than it does in a 21 genuine attack on any evidentiary decision by Judge Cahill. Nothing in the Scheduling Order 22 comes close to supporting Plaintiff's position. Section 7(i) does not guarantee that a party will be 23 able to proffer a declaration if he discloses it, and section 8(c) makes abundantly clear that 24 "[e]xhibits not objected to shall be deemed admitted at the commencement of the hearing unless 25 otherwise ordered by the arbitrator." Scheduling Order ¶¶ 7(i), 8(c) (emphasis added). In fact, 26 one of rules cited by Plaintiff is JAMS Rule 22(e), which states that "[t]he Arbitrator may limit 27 testimony to exclude evidence that would be immaterial or unduly repetitive, provided that all 28 Parties are afforded the opportunity to present material and relevant evidence." Ryan Decl., Ex. F 5 4 1 (JAMS Employment Arbitration Rules & Procedures, or "JAMS Rules"), at 19. Judge Cahill 2 properly exercised that discretion here, and provided Plaintiff with a more than sufficient 3 opportunity to present his evidence. Indeed, Plaintiff points to no actual examples of Judge Cahill 4 refusing to consider certain evidence, and admits that he was permitted to examine witnesses to 5 get the contents of his declaration into the record (and that he elected to do so). Instead, Plaintiff's 6 counsel describes a litigation strategy that did not go as anticipated because he ran out of time: [W]hen I was pressed by Judge Cahill to curtail my examination of 7 Smith in order to afford [defense counsel] ample time to cross- examine him, even though VMware's case-in-chief had already been 8 fully presented, I chose to accept the one[] hour he offered rather than risk getting no more time at all. I rushed myself and my client 9 to authenticate exhibits that I had been led to believe were already admitted, and to elicit oral testimony that I thought had already been 10 introduced by way of Smith's declaration. 11 Ryan Decl. ¶ 13; see also Mot. at 12-13. 12 In light of the above, Plaintiff has not met his heavy burden to show that Judge Cahill Northern District of California United States District Court 13 failed to consider pertinent evidence. Nor is the case law he provided in support of his argument 14 under section 10(a)(3) applicable.4 Accordingly, Plaintiff's motion for vacatur of the arbitration 15 on the ground that Judge Cahill violated section 10(a)(3) is denied. 16 B. Judge Cahill Did Not Act in "Manifest Disregard of the Law." 17 Plaintiff next contends that Judge Cahill acted in "manifest disregard of the law" when he 18 "ignored the procedural rules that were part of the arbitration agreement, and. . . the settled 19 authority mandating that he order all relief necessary to make [Plaintiff] whole on account of 20 4 21 Plaintiff contends that Iran Aircraft Industries v. Avco Corp., 980 F.2d 141 (2d Cir. 1992) is "instructive on the precise issue presented here." See Mot. at 16. The Court finds that case to be 22 inapposite. In Iran Aircraft, the Iran-United States Claims Tribunal issued an award in a dispute between two Iranian companies and Avco, an American corporation, which the Iranian parties 23 subsequently sought to enforce in federal court. 980 F.2d at 142. The judge presiding over the pre-hearing conference for the tribunal "specifically advised" Avco "not to burden the Tribunal by 24 submitting kilos and kilos of invoices." Id. at 146 (internal quotation marks omitted). That presiding judge was later replaced, at which point the Tribunal began "requir[ing] the actual 25 invoices to substantiate Avco's claim"—but because Avco was proceeding according to the "earlier understanding," the tribunal ultimately "rejected Avco's claim for lack of proof." Id. The 26 court found "that by so misleading Avco, however unwittingly, the Tribunal denied Avco the opportunity to present its claim in a meaningful manner." Id. This case is nothing like Iran 27 Aircraft. Judge Cahill did not affirmatively represent that Plaintiff would be permitted to enter his declaration, and then later change course. Nor did he provide any basis for Plaintiff to believe that 28 his exhibits would admitted under section 8(c) of the Scheduling Order, given the "unless otherwise ordered" language of that provision. 6 4 1 [Defendant's] retaliation." Mot. at 17 (original emphasis). Plaintiff asserts three specific grounds 2 for this argument. First, he argues that "Judge Cahill ignored the JAMS Rules and the Scheduling 3 Order procedure that 'became part and parcel of the arbitration contract,' thereby denying Smith 4 the opportunity to present his evidence." Id. at 18. Second, he contends that Judge Cahill 5 "completely ignored" the reputational damages to which he was entitled. See id. at 18-19. And 6 third, Plaintiff contests Judge Cahill's reduction of his attorney's fee award, casting it as "willful" 7 ignorance of his "mandatory duty to make Smith whole." Id. at 20. The Court finds none of these 8 arguments to be persuasive. 9 Arbitrators "exceed[] their powers" under section 10(a)(4) when they issue an award that 10 "exhibits manifest disregard of the law." Lagstein, 607 F.3d at 641 (citation and internal quotation 11 marks omitted). Manifest disregard of the law is "more than just an error in the law or a failure on 12 the part of the arbitrators to understand or apply the law"—rather, "it must be clear from the Northern District of California United States District Court 13 record that the arbitrator[] recognized the applicable law and then ignored it." Id. (citations, 14 internal quotation marks, and brackets omitted). In this way, "[it] is only when [an] arbitrator 15 strays from interpretation and application of the [arbitration] agreement and effectively 16 'dispense[s] his own brand of industrial justice' that his decision may be unenforceable." Stolt- 17 Nielsen, 559 U.S. at 671 (citation omitted) (second and fourth brackets in original). 18 1. Plaintiff fails to show that Judge Cahill ignored procedural rules within the meaning of section 10(a)(4). 19 20 Plaintiff's first argument that Judge Cahill ignored the applicable procedural rules is 21 without merit. He bases his argument on JAMS Rules 22(d) and 22(e), as well as paragraphs 7(i) 22 and 8(c) of the Scheduling Order. See Mot. at 10, 18. As relevant here, JAMS Rule 22(d) 23 provides that an arbitrator "may limit testimony to exclude evidence that would be immaterial or 24 unduly repetitive, provided that all Parties are afforded the opportunity to present material and 25 relevant evidence." JAMS Rules at 19. Rule 22(e) states: 26 The Arbitrator shall receive and consider relevant deposition testimony recorded by transcript or videotape, provided that the 27 other Parties have had the opportunity to attend and cross-examine. The Arbitrator may in his or her discretion consider witness 28 affidavits or other recorded testimony even if the other Parties have 7 4 not had the opportunity to cross-examine, but will give that evidence 1 only such weight as he or she deems appropriate. 2 JAMS Rules at 20. And, as detailed above, paragraphs 7(i) and 8(c) of the Scheduling Order 3 govern how the parties are expected to identify their witnesses in advance of the arbitration 4 hearing, as well as the general procedure for admitting exhibits. Plaintiff contends that "[t]he 5 effect of Judge Cahill's wholly unexpected rule change was to slow down the presentation of 6 Smith's case, making it impossible for him to fairly present the testimonial and demonstrative 7 evidence he, and his counsel, had been assured was, in large part, already admitted." Mot. at 18 8 (original emphasis). 9 Plaintiff's position is based on an unreasonable reading of the applicable rules, not to 10 mention a mischaracterization of Judge Cahill's exercise of discretion. As the Court has already 11 explained, Judge Cahill did not contravene the Scheduling Order in not allowing Plaintiff to enter 12 his declaration or in excluding certain exhibits. Moreover, with respect to JAMS Rules 22(d) and Northern District of California United States District Court 13 (e), Plaintiff points to nothing in the record showing "that the arbitrator[] recognized the 14 applicable law and then ignored it." See Lagstein, 607 F.3d at 641. Instead, he cites one early 15 exchange as an example of defense counsel "cajol[ing] Judge Cahill, after her opening statement, 16 to simply, but radically, change the rules." See Mot. at 18. There, defense counsel asked the court 17 to "keep an eye out for the lack of foundation in the parade of disgruntled employees' testimony," 18 notwithstanding "the relaxed Rules of Evidence which you and other arbitrators often apply in 19 arbitration." Tr. at 105:16-22. In response, Judge Cahill stated, "I think I've told people, maybe I 20 haven't told you guys, that the more you're close to the Evidence Code requirements, the more 21 reliable it is for me." Id. at 105:23-106:1. Judge Cahill's statement did not constitute a "wholly 22 unexpected rule change," or a "change" at all. See Mot. at 18. Rather, it was simply an indicator 23 of how he intended to apply the discretion conferred upon him by JAMS Rules 22(d) and (e). 24 Nor is Kashner Davidson Securities Corp. v. Mscisz, 531 F.3d 68 (1st Cir. 2008) "clearly 25 analogous" or "on-point," as Plaintiff contends. See Mot. at 17. There, the court found it "clear" 26 that an arbitration panel of the National Association of Securities Dealers had "disregarded" the 27 "unambiguous language" of the relevant arbitration rules when it dismissed a case with prejudice 28 without first "demonstrating that sanctions short of a dismissal were ineffective." Mcisz, 531 F.3d 8 4 1 at 76. Based on the principle that an arbitrator who "ignores the plainly stated procedural rules 2 incorporated in the agreement to arbitrate. . . is subject to a manifest disregard of the law 3 challenge," id. at 77 (citation omitted), as well as the panel's previous rejections of "numerous 4 requests for sanctions," the court found that the panel's "misapplication of the clear language of 5 the rule [could] only be deemed an intentional and willful disregard of the law," id. at 78. This 6 case is plainly distinguishable: Plaintiff essentially challenges Judge Cahill's exercise of 7 discretion, rather than pointing to an example of his "recogniz[ing] the applicable law and then 8 ignor[ing] it." See Lagstein, 607 F.3d at 641. Here again, Plaintiff fails to carry his heavy burden 9 in showing that vacatur is warranted. 10 2. Plaintiff fails to provide any meaningful support for his contention that Judge Cahill ignored the reputational damages to which Plaintiff 11 believes he was entitled. 12 Plaintiff's argument with respect to reputational damages—which amounts to a contention Northern District of California United States District Court 13 that Judge Cahill "completely ignored" that component of relief, despite the evidence before 14 him—is similarly meritless. Because Plaintiff does little to develop this argument, it comes close 15 to seeking a "judicial review" of the arbitration's merits and "whether or not the [arbitrator's] 16 findings are supported by the evidence in the record," both of which are impermissible under 17 section 10. See Lagstein, 607 F.3d at 640-41 (citations, internal quotation marks, and brackets 18 omitted). Even assuming that Plaintiff's contention is that Judge Cahill recognized that Plaintiff 19 was entitled to reputational damages and then affirmatively ignored that entitlement, however, the 20 motion for vacatur again fails—not least because Plaintiff does not carry his heavy burden by 21 engaging the relevant standard or citing the record in support of his assertion.5 22 5 23 Even if this were not the case, Defendant correctly points out that the record demonstrates that Judge Cahill considered (and subsequently rejected) Plaintiff's claims to reputational damages. 24 See Opp. at 13-14. On March 13, 2017, Judge Cahill entered an interim arbitration award, concluding in part that Plaintiff had failed to establish that Defendant's "decision to terminate him 25 January 2010 was substantially motivated by [Plaintiff's] protected activity under the FCA." Ryan Decl., Ex. B, at 00034. Judge Cahill then granted the parties leave to provide further 26 briefing regarding damages. Id. at 00035. In Plaintiff's damages brief, filed on March 21, 2017, Plaintiff divided the relief he sought into two categories: the "direct reduction in salary and 27 compensation from October 1, 2008 to the end of his tenure at VMware on March 15, 2010," and "[l]ost post-termination earnings due to," among other things, "diminished reputation." Id., Ex. J, 28 at 1. In a second interim arbitration award, Judge Cahill stated that he would "not award any post- termination losses because, as found in the [first] Interim Award and adopted fully herein, 9 4 3. Judge Cahill's reduced attorney fee award did not evince manifest 1 disregard for the law. 2 Plaintiff's final argument under section 10(a)(4) is that Judge Cahill "willfully ignored the 3 pertinent law with respect to the 'make-whole' provisions of the FCA" when he reduced 4 Plaintiff's attorney's fee award. See Mot. at 20. He specifies that he "is not claiming that Judge 5 Cahill erred in the interpretation or application of the law with respect to the lodestar fee amount, 6 but rather than he ignored the mandatory duty to make Smith whole, as required by the FCA." Id. 7 (original emphasis). 8 Plaintiff again misapprehends the purpose and scope of section 10(a). His argument on 9 this point amounts to a contention that because Judge Cahill reduced the lodestar amount by 55 10 percent, see Ryan Decl., Ex. B, at 00010, he necessarily failed to provide Plaintiff with "all relief 11 necessary to make [him] whole" within the meaning of the FCA, see 31 U.S.C. § 3703(h)(2). 12 Plaintiff again provides no legal authority for that position—presumably because the law supports Northern District of California United States District Court 13 Judge Cahill's actions. The FCA provides that "all relief necessary to make [an] employee, 14 contractor, or agent whole" includes "reasonable attorneys' fees." Id. § 3703(h). The Ninth 15 Circuit has said that Congress, in the FCA, "adopted a standard for fees that is directly analogous 16 to that of 42 U.S.C. § 1988." Pfingston v. Ronan Eng'g Co., 284 F.3d 999, 1006 (9th Cir. 2002). 17 It is well settled that the amount of a reasonable fee award under section 1988 must be determined 18 on a case-by-case basis in light of twelve factors, see Hensley v. Eckerhart, 461 U.S. 424, 429-30 19 (1983) (citation omitted), the "most critical" of which "is the degree of success obtained," id. at 20 436. Here, Judge Cahill found that "[w]hile [Plaintiff] ultimately succeeded, his degree of success 21 was not what he wanted," which in turn "compel[led] a reduction of 55 percent to the lodestar 22 amount." Ryan Decl., Ex. B, at 00010. 23 The only support Plaintiff provides in support of his assertion that Judge Cahill disregarded 24 the law in his award of attorney's fees is a vague citation to Neal v. Honeywell, 995 F. Supp. 889 25 (N.D. Ill. 1998). While that 20-year-old, non-binding district court case did evaluate the FCA's 26 27 [Plaintiff] was not terminated in violation of the FCA." Id., Ex. B, at 00039. The record thus 28 belies Plaintiff's assertion that Judge Cahill "completely ignored [the reputational] component of damages." See Mot. at 19. 10 4 1 attorney's fee provision, it considered a question that is inapposite here: namely, whether an 2 attorney's fee award under the FCA is "limited to those paid or incurred by" the prevailing party. 3 See id. at 897. Plaintiff appears to cite Neal for its statement that "[r]easonable attorneys' fees are 4 part of [the prevailing party's] compensation as a successful plaintiff in an employment 5 discrimination case [under the FCA]," see id. at 899, but fails to articulate how that is relevant to 6 Judge Cahill's Hensley analysis. 7 Accordingly, Plaintiff's motion for vacatur of the arbitration on the ground that Judge 8 Cahill violated section 10(a)(4) is denied. 9 C. Plaintiff Waived Any Objection That Judge Cahill Demonstrated "Evident Partiality" Under Section 10(a)(2). 10 11 Last, Plaintiff argues that Judge Cahill demonstrated "evident partiality" in failing to 12 disclose his relationship with a JAMS colleague who once represented Defendant. See Mot. at 21. Northern District of California United States District Court 13 Defendant contends that Plaintiff has waived any objection on this ground—and that even if that 14 were not true, Plaintiff has failed to satisfy the applicable "reasonable impression of partiality" 15 standard. See Opp. at 15. The Court agrees that Plaintiff has waived this objection. 16 Section 10(a)(2) provides that courts may vacate an arbitration award "where there was 17 evident partiality or corruption in the arbitrators." In Fidelity Federal Bank, FSB v. Durga Ma 18 Corp., the Ninth Circuit considered "whether a party with constructive knowledge of potential 19 partiality of an arbitrator waives its right to challenge an arbitration award based on evident 20 partiality. . . if it fails to object to the arbitrator's appointment or his failure to make disclosures 21 until after an award is issued." 386 F.3d 1306, 1313 (9th Cir. 2004) (emphasis added). It held 22 that the waiver doctrine does apply to such a party who "fails to timely object." Id. 23 Plaintiff's basis for asserting that Judge Cahill has demonstrated "evident partiality" is 24 attenuated at best, and focuses on the role of Patricia Gillette, who was former lead outside 25 counsel for Defendant before becoming an arbitrator at JAMS. See Ryan Decl. ¶ 4. Plaintiff's 26 counsel, Jeffrey Ryan, states that he first met Gillette in August 2009 while representing another 27 employee of Defendant in an unrelated case. Id. In the course of that representation, Ryan 28 deposed Plaintiff, who was then represented by Gillette and who would later become Ryan's 11 4 1 client. Id. ¶ 5. In 2010, when Ryan took up this case, he "learned from [his] client that he had 2 confided to Ms. Gillette. . . a great deal of specific information" related to his whistleblower 3 claims. See id. Ryan further states that after consenting to JAMS and Judge Cahill as the 4 arbitrator for this matter, he became concerned when presented with information showing that 5 Defendant's firm, Orrick, provided JAMS and Judge Cahill "substantially more business" than all 6 of Plaintiff's attorneys combined, and "became even more uncomfortable" after "receiv[ing] 7 several disclosures indicating that even though we were involved in arbitration with VMware and 8 the Orrick firm, Judge Cahill was continuing to accept assignments as a neutral in cases in which 9 Orrick, and sometimes [defense counsel], were involved." Id. ¶¶ 3, 7. 10 Most relevant here are the events of October 2016, when Ryan received "a 'blast,' or mass- 11 market email from J.A.M.S. announcing that Ms. Gillette had joined the organization." Id. ¶ 8. 12 Ryan noted that the blast was unlike "the usual and customary disclosure notices" he received with Northern District of California United States District Court 13 respect to Judge Cahill's other cases involving Orrick. Id. ¶ 8; see also Dkt. No. 98 (Declaration 14 of Dane Smith, or "Smith Decl.") ¶ 10 (stating that Plaintiff learned in October 2016 that Gillette 15 was joining JAMS, "almost a full 10 months after JAMS had been selected and Judge Cahill had 16 been assigned"). Both Plaintiff and Ryan represent that they would not have participated in 17 arbitration with JAMS had they known that Gillette would later join the organization. See Ryan 18 Decl. ¶ 6 ("[I]f I had known that Ms. Gillette would be joining the J.A.M.S. organization, and in 19 the same office as Judge Cahill, prior to the conclusion of Smith's arbitration of his employment 20 retaliation claims against VMware, I would have declined [defense counsel's] suggestion that we 21 agree to use J.A.M.S. instead of [a competing arbitration provider]."); Smith Decl. ¶ 9 ("I can say 22 without equivocation that had I known that Patricia Gillette was going to become Judge Cahill's 23 partner in the JAMS organization, and in the very same office, during the time that my arbitration 24 was still pending, there is absolutely no way that I would have consented to allowing JAMS to 25 conduct the arbitration."). 26 Here, Plaintiff and Ryan have both conceded that they knew about Gillette's joining 27 JAMS prior to the arbitration hearing. It is not material whether the notice regarding Gillette was 28 in the form Ryan had come to expect, as in any event, both he and Plaintiff admit to having 12 4 1 constructive knowledge of the potential basis for objection. Crucially, this motion is the first time 2 Plaintiff has raised the issue. The Ninth Circuit unambiguously held that "the waiver doctrine 3 applies where a party to an arbitration has constructive knowledge of a potential conflict but fails 4 to timely object"—i.e., fails to object "until after an award is issued." See Fidelity Fed. Bank, 386 5 F.3d at 1313. Plaintiff fails to meaningfully respond to Defendant's waiver argument in reply, 6 asserting only that the October 2016 blast regarding Gillette's move to JAMS "was also 6 months 7 after Judge Cahill had been acquainted, by VMware's April 4, 2016 letter brief[,] with facts 8 revealing the deep involvement of Patricia Gillette in this case." Reply at 10 (citation omitted) 9 (original emphasis). Nowhere does Plaintiff address why he did not object to Judge Cahill as a 10 mediator before the end of arbitration and the filing of this motion. Additionally, Plaintiff further 11 admits that he "does not have any smoking-gun facts proving 'actual bias.'" See id. at 11. That 12 concession is highly relevant under Fidelity Federal Bank. There, in applying the waiver doctrine Northern District of California United States District Court 13 to an argument under section 10(a)(2), the court noted that 14 [t]here is no charge or evidence of actual bias and no indication that the arbitration award was anything but fair. A rule that places the 15 burden on parties to obtain disclosure statements from arbitrators who were initially party-appointed but later agree to act neutrally is 16 consistent with our policy favoring the finality of arbitration awards. It is also consistent with our policy favoring arbitration as a 17 speedy and cost-effective means of resolving disputes. 18 386 F.3d at 1313. So too here. 19 Accordingly, the Court finds that Plaintiff has waived his argument for vacatur of the 20 arbitration award under section 10(a)(2).6 21 // 22 // 23 // 24 // 25 // 26 27 6 For this reason, the Court need not reach Plaintiff's assertion that Judge Cahill's professional 28 relationship with Gillette, a JAMS colleague, demonstrated "evident partiality" within the meaning of section 10(a)(2). 13 4 IV. CONCLUSION 1 2 For the foregoing reasons, Plaintiff's motion to vacate the arbitration award is DENIED. 3 The Clerk is directed to close the case. 4 IT IS SO ORDERED. 5 Dated: 8/7/2018 6 7 HAYWOOD S. GILLIAM, JR. 8 United States District Judge 9 10 11 12 Northern District of California United States District Court 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14