Opinion
Case No. SA CV 04-687-GLT (RZx), Calendar Item # 10.
July 26, 2004
ORDER ON PETITIONER'S MOTION FOR CONFIRMATION OF ARBITRATION AWARD
Petitioner's motion for confirmation of the arbitration award is GRANTED.
I. BACKGROUND
In an earlier action in this Court, Respondent's corporate predecessor accused Petitioner's predecessor of infringing United States Patent No. 4,960,381 ("the '381 patent"). As part of a settlement of that case, the parties agreed to arbitrate disputes arising from the settlement and related licensing agreement.
In 1999, a dispute arose in which Respondent again accused Petitioner of infringing the '381 patent. Respondent initiated arbitration pursuant to the settlement agreement. The parties mutually selected a panel of three patent attorneys, and arbitrated the dispute before the panel. In a series of detailed orders, the panel found non-infringement of the '381 patent, and awarded Petitioner $2,163,543.12 in attorney's fees and costs. Respondent twice moved for reconsideration of the panel's orders. The panel denied each in detailed opinions.
Petitioner now moves for confirmation of the arbitration award. Respondent opposes, arguing the arbitration panel manifestly disregarded governing patent law.
II. DISCUSSION
Under the Federal Arbitration Act, the Court's "review of arbitration awards is extremely limited." A.G. Edwards Sons, Inc. v. McCollough, 967 F.2d 1401, 1403 (9th Cir. 1992);accord 9 U.S.C. § 10. The Court may vacate the decision of the arbitration panel only if the panel's decision was influenced by corruption or undue influence, or the panel exceeded its power under the terms of the arbitration agreement. See 9 U.S.C. § 10. Although § 10 is to be interpreted narrowly, in light of Supreme Court authority strictly limiting review of arbitration decisions, the Court may also set aside the arbitration award if it shows a "manifest disregard for law." See generally United Steelworkers v. American Manufacturing Co., 363 U.S. 564 (1960); United Steelworkers v. Warrior Gulf Navigation Co., 363 U.S. 574 (1960); United Steelworkers v. Enterprise Wheel Car Co., 363 U.S. 593 (1960).
"`Manifest disregard of the law' means something more than just an error in the law or a failure on the part of the arbitrators to understand or apply the law. It must be clear from the record that the arbitrators recognized the applicable law and then ignored it." Mich. Mut. Ins. Co. v. Unigard Sec. Ins. Co., 44 F.3d 826, 832 (9th Cir. 1995); see also French v. Merrill Lynch, 784 F.2d 902, 906 (9th Cir. 1986) ("We review the Panel's award mindful that confirmation is required even in the face of `erroneous . . . misinterpretations of law.' . . . It is not even enough that the Panel may have failed to understand or apply the law.") (internal citations omitted). The Ninth Circuit has reaffirmed this limited view of "manifest disregard" twice in the last three months. Carter v. Health Net of California, Inc., ___ F.3d ___, 2004 WL 1487141, *7 (9th Cir. 2004); Luong v. Circuit City Stores, Inc., 368 F.3d 1109, 1112 (9th Cir. 2004).
Respondent contends the arbitration award must be vacated because the panel made a number of legal errors, showing its "manifest disregard" of governing patent law: (1) the panel's non-infringement ruling was contrary to prior judicial constructions of the relevant patent claims; (2) the panel failed to give the patent terms their ordinary meanings; (3) the panel disregarded Federal Circuit law on direct infringement; and (4) the panel did not make the required finding of an "exceptional case" to justify an attorney's fees award.
The Court need not decide the merits of each of these claimed errors because the review Respondent seeks is essentially an appeal or even a de novo review of the panel's decisions. The extensive and detailed decisions of the arbitration panel, totaling approximately 170 pages, reveal in-depth discussions of each of the arguments Respondent now raises as legal error, and the reasons the panel rejected each of these arguments during arbitration. The panel cited, discussed and applied the relevant law throughout their decisions. There is no indication the panel "recognized the applicable law and then ignored it." Mich. Mut. Ins. Co., supra, 44 F.3d at 832.
The review Respondent seeks is inconsistent with the Court's limited role under 9 U.S.C. § 10 because it "`would make [the] award the commencement, not the end, of litigation.'" San Martine Compania De Navegacion, S.A. v. Saguenay Terminals Limited, 293 F.2d 796, 800 (9th Cir. 1961) (quoting Burchell v. Marsh, 17 (How.) 344, 58 U.S. 344, 349 (1854)). The Court has "no authority to re-weigh the evidence," Coutee v. Barington Capital Group, L.P., 336 F.3d 1128, 1134 (9th Cir. 2003), and the panel's award will be confirmed.
III. DISPOSITION
Petitioner's motion for confirmation of the arbitration award is GRANTED.