Tuesday, March 27, 2012
Ex-Toyota Lawyer Loses Another Challenge to Arbitration Award
By a MetNews Staff WriterBy a MetNews Staff Writer
A former in-house lawyer for Toyota Motor Corporation, who recently lost a federal appeal of a judgment requiring him to pay the company $2.6 million and enjoining him from disclosing confidential company information, has lost a state appeal involving the same issues.
Div. Eight of this district’s Court of Appeal ruled Friday that the Ninth U.S. Circuit Court of Appeals ruling in Biller v. Toyota Motor Corporation, 11-55587, precludes Dimitrios Biller from challenging the arbitrator’s ruling in state court.
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. The term 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, and retired U.S. District Judge Gary L. Taylor of the Central District of California was appointed as arbitrator.
About eight months after the state action was filed, Biller sued Toyota in federal court, charging the company with racketeering, constructive wrongful discharge, intentional infliction of emotional distress, and defamation.
District Judge George H. King dismissed the racketeering claim, and ordered arbitration of the remaining claims, following which the parties agreed to consolidate those claims into the pending arbitration.
Taylor rejected Biller’s claims against Toyota. He 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.
King confirmed the arbitration award, and the Ninth Circuit affirmed.
Los Angeles Superior Court Judge John Segal also confirmed the award. While the appeal of Segal’s order was pending, the Ninth Circuit handed down its ruling affirming King’s order of confirmation.
Justice Elizabeth Grimes, in her unpublished opinion Friday for the Court of Appeal, said Segal’s order must be affirmed under the doctrine of res judicata.
All of the doctrine’s requisites are met, the justice said—the parties in the state and federal litigation were the same, and the federal judgment was based on the merits and is now final.
“Defendant had a full and fair opportunity in federal court to litigate the same claims of alleged defects in the arbitration award that he asserts here, including that the arbitrator failed to correctly apply California law, failed to address his affirmative defenses to Toyota’s claims, and failed to issue a written decision sufficient to permit review under paragraph 8.4 of the Severance Agreement,” Grimes wrote.
The justice dismissed as a “red herring” Biller’s argument that the federal judgment is not dispositive of his contention that California law provides a broader scope of judicial review of arbitration awards than the Federal Arbitration Act does, so that Segal was not precluded from ruling on the merits of his claims of legal error by the arbitrator.
The scope of review under California law is irrelevant, Grimes said, because the parties agreed that the arbitration was to be governed by the FAA. The justice also noted that the U.S. Supreme Court has ruled that parties to an arbitration governed by the FAA cannot contractually expand the scope of judicial review.
The case is Toyota Motor Sales, U.S.A, Inc. v. Biller, B234763.
Copyright 2012, Metropolitan News Company