Aixtron, Inc. v. Veeco Instruments Inc.

• Citation: 265 Cal.Rptr.3d 851,52 Cal.App.5th 360
• Decision Date: 16 July 2020
• Docket Number: H045464,H045126
• Court: California Court of Appeals
• Parties: AIXTRON, INC., Plaintiff and Appellant, v. VEECO INSTRUMENTS INC. et al., Defendants and Respondents. Veeco Instruments Inc., Plaintiff and Respondent, v. Aixtron, Inc., et. al., Defendants and Appellants.

52 Cal.App.5th 360

265 Cal.Rptr.3d 851

AIXTRON, INC., Plaintiff and Appellant,

v.VEECO INSTRUMENTS INC. et al., Defendants and Respondents.

Veeco Instruments Inc., Plaintiff and Respondent,

v.Aixtron, Inc., et. al., Defendants and Appellants.

H045126

H045464

Court of Appeal, Sixth District, California.

Filed July 16, 2020

Bryan Alexander Merryman, Los Angeles, John Taylor Akerblom, White & Case LLP, for Plaintiff and Appellant, Aixtron, Inc.

Bradford Korey Newman, Baker & McKenzie, LLP, Palo Alto, for Defendants and Respondents, Veeco Instruments Inc., et al.

Bradford Korey Newman, Baker & McKenzie, LLP, Palo Alto, for Plaintiff and Respondent, Veeco Instruments Inc.

Bryan Alexander Merryman, Los Angeles, John Taylor Akerblom, White & Case LLP, for Defendants and Appellants, Aixtron Inc., et al.

Greenwood, P.J. Miguel Saldana is a former employee of respondent Veeco Instruments, Inc. (Veeco). In 2017, Saldana resigned from his position at Veeco and went to work for a competitor, appellant Aixtron, Inc. (Aixtron). Veeco initiated arbitration proceedings against Saldana pursuant to an arbitration clause in his employee confidentiality agreement, alleging causes of action for breach of contract, breach of the duty of loyalty, and conversion, including alleged data theft. Aixtron was not a party to the arbitration. The arbitrator granted Veeco's application for a pre-hearing discovery subpoena for Aixtron's business records, which included a demand that Aixtron produce any computers that Saldana had used for forensic examination by "an agreed-upon third-party neutral expert." Over Aixtron's objections, the arbitrator granted Veeco's motion to compel and ordered Aixtron to comply with the subpoena. Aixtron initiated a special proceeding in the superior court seeking judicial review of the arbitrator's discovery order. The superior court denied that petition. Veeco filed a separate petition in the superior court to enforce the arbitrator's discovery order, which the court granted. Aixtron appeals both orders.

On appeal, we reject Veeco's contention that the superior court's orders are not appealable. We find it unnecessary to resolve the parties' dispute over whether this case is governed by the Federal Arbitration Act (FAA) or the California Arbitration Act (CAA), since we conclude that under either statutory scheme, the arbitrator did not have the authority to issue a discovery subpoena to Aixtron in the circumstances of this case. We agree with federal appellate cases that hold there is no right to pre-hearing discovery under the FAA. As part of our analysis, we construe Code of Civil Procedure section 1282.6¹ and address, as an issue of first impression, whether it granted the arbitrator broad powers to issue pre-hearing discovery subpoenas. We conclude that it did not and hold that the arbitrator's discovery subpoena to Aixtron was not authorized under the CAA since the parties to the arbitration did not provide for full discovery rights in their arbitration agreement (§ 1283.1). Since we conclude the arbitrator did not have the authority to issue the discovery subpoena, we reverse the superior court's orders.

I. FACTS AND PROCEDURAL HISTORY

A. Parties & Saldana's Employment with Veeco and Aixtron

Aixtron is a global technology company that manufactures equipment for use in the semiconductor industry; its headquarters are in Herzogenrath, Germany, with an office in Sunnyvale, California. Veeco is a global electronics, semiconductor and data storage company; it is a Delaware corporation with offices in New York, New Jersey, California, and other locations. Aixtron and Veeco are competitors with respect to a technology known as the Metal Organic Chemical Vapor Deposition (MOCVD) process, which involves layering atoms on a semiconductor wafer to create materials used to manufacture LED's, sensors, compound semiconductors, and other products.

Miguel Saldana worked for Veeco from September 2, 2014, until May 6, 2016, as its Senior Director of Hardware Engineering in Somerset, New Jersey. Weeks before starting his employment with Veeco, he signed an Employee Confidentiality and Inventions Agreement (Veeco Confidentiality Agreement), which contained an arbitration clause. Saldana decided to leave Veeco because of alleged discriminatory acts by Veeco in its hiring process. Around March 8, 2016, Saldana accepted an offer of employment from Aixtron. He resigned from Veeco seven weeks later, on April 25, 2016.

B. Text of Arbitration Clause

The arbitration clause provided in its entirety: "Arbitration of Disputes. Except as provided under ‘Equitable Remedies’ above, any claim or controversy arising out of my employment or the cessation thereof, including any claim relating to this Agreement, shall be settled by binding arbitration, in accordance with the National Rules for Resolution of Employment Disputes of the American Arbitration Association, to be held in the county and state in which my place of employment is located, or any other location mutually agreed upon by the parties. In such arbitration, each party shall bear its own legal fees and related costs, except that the parties shall share equally the fee of the arbitrator, provided that my portion of the arbitrator's fee shall not exceed the amount of the filing fee for commencing an action in the court of general jurisdiction in the judicial district in which my place of employment is located. The decision or award of the arbitrator shall be final and binding upon the parties. The arbitrator shall have the power to award any type of legal and/or equitable relief available in a court of competent jurisdiction, including, but not limited to, the costs of arbitration and attorney's fees, to the extent such damages are available under law. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. [¶] To the extent that any claim between the parties is found not to be subject to arbitration and with respect to claims described under ‘Equitable Remedies’ above, such claim shall be decided either by the U.S. District Court or the state court of general jurisdiction in and for the judicial district in which my place of employment is located." (We shall hereafter refer to this clause as the "Arbitration Clause.")

C. Dispute Between Saldana and Veeco

When Saldana submitted his resignation to Veeco, he made it effective May 6, 2016. Saldana's declaration suggests he traveled back and forth between California and New Jersey between the time he accepted the job at Aixtron and the day he resigned from Veeco. After he resigned, someone at Veeco directed him to return to New Jersey to return Veeco's physical property, including a laptop and a tablet computer.

According to Saldana, before submitting his resignation, "with the sole intention of continuing to contribute to Veeco" as part of his continuing employment, he stored and used relevant work information on his personal electronic devices, including a laptop and a cloud storage account, so that he could work remotely from his home in California, as he had done several times before. He declared that such use of personal computing devices was a "common practice" that was "sanctioned by Veeco." Around the time he resigned, Saldana shipped his personal property, including his electronic devices, to California. Veeco alleges Saldana "deliberately and purposefully concealed the fact that he had accepted employment with Aixtron for over a month" to have continued access to Veeco's confidential information.

On May 3, 2016, Saldana went through the first phase of his exit interview from Veeco in Plainview, New York, where he met with Greg Robbins (Veeco's general counsel) and Robert Bradshaw (Veeco's senior vice president for human resources). According to Bradshaw, during that interview, Saldana initially stated that he had not copied any Veeco data. But after they confronted him with forensic evidence that he had retained data on at least one device, Saldana admitted that he had copied Veeco data onto several personal electronic storage devices that were in the process of being shipped to California. He promised to return them immediately. According to Saldana, he did not admit to stealing any company data during his exit interview; he contends he told Bradshaw he backed up data with the sole intention of continuing to work for Veeco remotely until May 6, his last day at work. He also told them he would allow Veeco to access his personal computing devices. Bradshaw later characterized Saldana's statement as an "outright lie" and an "after-the-fact alibi." Veeco alleges that "after months of plotting and disloyal conduct," Saldana went to "its largest competitor ..., while in possession of significant amounts of stolen ... confidential data."

The day after his exit interview, Saldana asked Veeco's human resources director what to do about the data on his electronic devices. She told him to follow the instructions on his exit interview forms, which required him to confirm in writing that all Veeco confidential information had been deleted from his personal electronic devices. In a declaration, Saldana stated that on May 7 and May 8, 2016—before he started working for Aixtron—he followed those instructions and deleted any remaining Veeco data from his personal electronic storage devices, laptop, and online accounts.

Saldana started working for Aixtron on May 9, 2016. When hired, Aixtron required Saldana to sign its Confidential Information and Inventions Assignment Agreement, in which Saldana represented that "during his employment with Aixtron, he would not improperly make use of, or disclose, any information or trade secrets of any former employer" bring any former employer's property onto Aixtron's premises, or use any former employer's unpublished documents. Saldana also met with Aixtron's general manager, Bill Bentinck, and assured him that he would not bring any information belonging to Veeco to Aixtron...