Biller v. Toyota Motor Corp., et al

Review of arbitration awards under arbitration agreements governed by the Federal Arbitration Act is limited to the standards specified in the Act, and awards may be vacation only on grounds listed in Section 10 of the Act; an arbitrator's written explanation of the rulings need only be sufficient enough to allow for this limited review. Furthermore, an arbitrator's recognition of applicable law in a written explanation is enough to overcome the allegation that the award should be vacated for manifest disregard of the law.

Former in-house counsel Dmitrios Biller entered into a Severance Agreement with his former employer, Toyota Motor Sales (TMS). The Agreement specified that disputes arising under it would be resolved via arbitration, using the Federal Arbitration Act (FAA) as governing law. After an arbitrator awarded liquidated damages, punitive damages, and a permanent injunction in favor of TMS, TMS sought and obtained a confirmation of the award in District Court. Biller then appealed the affirmation of the arbitrator's award, alleging in part that the arbitrator showed a manifest disregard for California law and did not explain his rulings with proper sufficiency so as to allow for judicial review. The Ninth Circuit held that the FAA does not permit review of an arbitration award on the merits, but instead allows for vacatur of an award only on the grounds specified in Section 10 of the act. Thus, the arbitrator's limited writing was sufficient enough to allow for the limited review available under the FAA. Biller also claimed that the arbitrator showed manifest disregard for the law by not expressly addressing his affirmative defenses of unclean hands and equitable estoppel under California state law. The Ninth Circuit agreed with the District Court that the arbitrator's discussion of the lack of any justification for some of Biller's unethical actions was "probative that the Arbitrator was aware of the relevant unclean hands law and did not in fact ignore it", despite the fact that the arbitrator gave no credit to Biller's evidence of TMS' alleged improper conduct. This recognition of the applicable law was enough to show that the arbitrator did not manifestly disregard the law; any manifest disregard of the facts is not enough, alone, to vacate the award. AFFIRMED.