Docket No. 2017-2130
NEWMAN, WALLACH, STOLL
September 13, 2017
Brief summary: DC denial of Uber’s motion to compel arbitration of litigation with Waymo affirmed.
Summary: Uber appealed DC denial of its motion to compel arbitration of litigation with Waymo. Uber did not have an arbitration agreement with Waymo, but Levandowski has one in his employment agreements with Waymo, which Uber argued is grounds to compel arbitration between Uber and Waymo. The FC panel explained that CA “courts have, in a few situations, compelled arbitration against an entity that was not a party to an arbitration agreement” through equitable estoppel “when necessary ‘to prevent a party from using the terms or obligations of an agreement as the basis for claims against a non-signatory, while at the same time refusing to arbitrate with the non-signatory under another clause of the same agreement” (Goldman, Cal. Ct. App. 2009; Arthur Andersen, US 2009 (“A non-signatory may compel arbitration where the ‘relevant state contract law allows him to enforce the agreement.’”)) The DC relied Kramer (9th Cir. 2013, which relied on Goldman) which “explained that reliance of a contract” (“raising claims that are intimately founded in or intertwined with that agreement”) “containing an arbitration requirement is the key element in the equitable estoppel inquiry.” The FC panel explained that it first looks to the complaint which it found “not [to] rely on or use any terms or obligations of the [Waymo-Levandowski employment] agreements as a foundation for [its] claims.” Uber argued “that Waymo must necessarily rely on its agreements with Levandowski in order to make out its trade secret claim” but “Waymo stresses that its complain does not rely” on those agreements, with the references thereto being only “to show that Waymo h as taken reasonable measures to safeguard its trade secrets.” But the FC panel disagreed, finding the DC correctly concluded CA courts (Kramer) require “Plaintiffs’ claims themselves [to] intimately rely on the existence of” the agreement in question, “not merely reference them.” Waymo also disclaimed reliance on the employment agreement to the DC “provided Uber does not open the door by reference to these agreements or the lack thereof of those agreements”, the reliance on which Uber argued was error by the DC. The FC panel found that “[s]uch a conditional representation does not demonstrate reliance” on the agreements, and found the DC did not err on this point. The FC panel also found that “Uber’s contentions as to the second Kramer/Goldman circumstance, concerted misconduct, are subject to the same deficiencies” discussed above and since “Waymo states that it is not asserting…that Uber…conspired with Levandowski to breach” the agreements. The FC panel also reviewed Uptown Drug (CA 2013), Metalclad (CA 2013), Turtle Ridge (CA 2006), Torbit (CA 2013 (“[a] close analogy”)), and CardioNet (MA 2017) and found no error with the DC’s “balance of precedent”. It noted that “[t]he general rule is that a contract only applies to the parties of the contract”, and affirmed the DC decision.