Monday, February 6, 2012
Ninth Circuit Upholds Judgment Against Former Toyota Lawyer
Panel Affirms Ruling That Attorney Who Claimed to Be Whistleblower Stole Employer’s Property
By KENNETH OFGANG, Staff Writer
The Ninth U.S. Circuit Court of Appeals Friday affirmed a judgment requiring a former in-house lawyer for Toyota Motor Corporation to pay the company $2.6 million and enjoining him from disclosing confidential company information.
The court Friday rejected Dimitrios Biller’s claims that retired U.S. District Judge Gary Taylor, the arbitrator in the case, showed a “manifest disregard for the law” by failing to make explicit rulings on Biller’s defenses, including his claim that Toyota was guilty of unclean hands because some of the documents described illegal activities and other misconduct during the discovery process in its products liability litigation.
Biller worked for Toyota Motor Sales from 2003 to 2007. After leaving, he claimed that he was a whistleblower who had been constructively discharged because he complained about unethical discovery practices.
The parties reached a severance agreement, in which Toyota agreed to pay a reported $3.7 million and Biller agreed to release all claims against the company and to protect and not disclose all “confidential information” in his possession, a term that was broadly defined in the agreement to include intellectual property, information about employment practices, and litigation-related information, including attorney work product.
After leaving Toyota, Biller founded LDT Consulting in Pacific Palisades, which conducts legal seminars. In 2008, Toyota sued in Los Angeles Superior Court, claiming that Biller was using confidential information in his seminars.
Biller cross-complained, alleging that his former employer was interfering with his new business. The claims were ordered to arbitration pursuant to a clause in the severance agreement.
Biller then sued in federal court, accusing the company of racketeering, defamation, inflicting emotional distress, and wrongful termination. Judge George H. King ordered arbitration, following which the parties agreed to consolidate the state and federal claims into a single arbitration proceeding.
Taylor ruled in March 2010 that the severance agreement was valid and enforceable. In October of that year he granted summary judgment for Toyota on the racketeering and emotional distress claims, and a month later, he held a two-week hearing on the remaining claims.
The arbitrator found that Biller had breached the severance agreement, converted company property to his personal use, and accessed the company’s computers for unauthorized purposes. He awarded Toyota $2.5 million in liquidated damages, plus $100,000 in punitive damages, along with injunctive relief.
As part of that relief, Toyota was given the right to search Biller’s computers for, and to delete from those computers, confidential information as defined by the severance agreement.
Taylor also rejected Biller’s claims of fraud and defamation.
King confirmed the arbitration award and denied Biller’s motion to vacate. He held that the arbitrator was not required by the Federal Arbitration Act to provide written reasons for his rulings, that the written explanations that he gave were adequate, and that Biller did not show bias on the part of the arbitrator or any other ground to vacate the award under Sec. 10 of the FAA.
Judge Ronald Gould, writing for the Ninth Circuit, said the district judge was correct.
Gould rejected Biller’s claims that California state law and language in the severance agreement required the district judge to review the arbitrator’s ruling on the legal and factual merits, and not merely for “manifest” legal error.
The appellate jurist noted unambiguous language in the parties’ agreement providing that the FAA applied. To the extent that the agreement might be construed as broadening the grounds for vacatur, he added, it is in conflict with the FAA, under which the sole grounds on which an award may be vacated are those in Sec. 10.
Taylor, he went on to say, did not ignore the law in failing to make specific factual findings with regard to Biller’s unclean hands defense, or the claim that the company, because it had itself permitted some disclosures of confidential information in Biller’s possession, was subject to equitable estoppel.
The arbitrator, Gould noted, found that Biller betrayed the confidences of his client “in violation of ethical, statutory, and contractual prohibitions, as well as court and arbitration injunctions.” This was an implicit rejection of Biller’s defenses, Gould said, and the arbitrator was under no obligation to expressly state that the equities did not support a ruling in Biller’s favor.
Senior Judge John T. Noonan and Judge Sandra S. Ikuta joined in the opinion.
David L. Schrader and Roger K. Smith of the Los Angeles office of Morgan, Lewis & Bockius represented Toyota. Biller represented himself on appeal.
The case is Biller v. Toyota Motor Corporation, 11-55587.
Copyright 2012, Metropolitan News Company