Standard of Review, As Well As JAMS Rules, Largely Determine The Outcome
As the Court of Appeal explains in the next case, “[w]e apply a highly deferential standard of review to the award itself, insofar as our inquiry encompasses the arbitrators’ resolution of questions of fact or law.” Put even more succinctly, “it is the general rule that, ‘The merits of the controversy between the parties are not subject to judicial review.’” That standard previews the outcome of the appeal in our next case, involving an employment dispute, a settlement agreement, contractual confidentiality obligations, liquidated damages provisions, and an attorney’s signature on the settlement agreement.
Appellants Kaufman and Godelman challenged the trial court’s confirmation of an arbitration award in favor of respondent Diskeeper. Earlier, Godelman and LeShay, employees of Diskeeper, initiated a lawsuit against Diskeeper involving Godelman’s wrongful termination claims. Attorney Kaufman represented the two employees who settled with Diskeeper, later representing other employees in separate suits. The Godelman/LeShay settlement included a confidentiality provision requiring the return of property to Diskeeper, as well as a liquidated damages provision in case of breach.
Diskeeper contended the settlement agreement was breached when Kaufman used confidential documents in other litigation. The dispute was arbitrated, and Kaufman was hit with liquidated damages, as well as attorney’s fees. After the arbitrator’s award was confirmed by the trial court, this appeal followed. Kaufman v. Diskeeper Corporation, B247315 (2nd Dist. Div. 4 April 28, 2014) (Manella, Epstein, Willhite) (unpublished).
First, appellants argued the award should be vacated because the arbitrator refused to hear material evidence. In particular, after Godelman failed to show up at the arbitration hearing, and the parties stipulated to the use of his deposition, the arbitrator refused to hear the Godelman’s testimony when he later agreed to testify. However, JAMS rules give an arbitrator discretion regarding evidentiary hearings. Also, there was no offer of proof regarding the missing testimony, and thus no way to show resulting prejudice.
Second, appellants argued that the arbitration award was unenforceable because it ordered the return of certain employee documents to the employer that the employee had a right of access to. However, the Court of Appeal held that the trial court’s conclusion that appellants forfeited the argument by not raising it timely before the arbitrator as not erroneous.
Third, appellants argued that the arbitrator fashioned an improper remedy by imposing liquidated damages of $70,000, and attorney’s fees of $297,000 upon Kaufman. It appears that Kaufman may not have been named as a party to the settlement. However, he had signed it, and the arbitrator found him bound by its confidentiality provisions. However, a challenge to the arbitrator’s interpretation of the settlement agreement would be rejected, because mistakes of law are not a basis for overturning an arbitrator’s award. And in the area of remedies, “arbitrators have broad authority to fashion remedies.”
Affirmed.
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