Bloom Energy Corp. v. Badger
| Decision Date | 08 September 2021 |
| Docket Number | 21-cv-02154-PJH |
| Parties | BLOOM ENERGY CORPORATION, Petitioner, v. DWIGHT BADGER, et al., Respondents. |
| Court | U.S. District Court — Northern District of California |
ORDER DENYING COUNTER MOTION FOR VACATUR OF FINAL AWARD, GRANTING PETITION TO CONFIRM THAT AWARD, AND DENYING REQUESTS TO SEAL RE: DKT. NO. 1, 2, 19, 29, 29-3, 30 34
Before the court is petitioner Bloom Energy Corporation's (“petitioner”) petition to confirm arbitration award (the “petition”) and for entry of judgment. Dkt. 1. Also before the court is respondents' counter motion for vacatur of the subject arbitration award (the “counter motion”). Dkt. 19; Dkt. 29-3. Further before the court are petitioner's requests to seal various documents filed in support of the petition and counter motion. Dkt. 2 (); Dkt. 34 ().
The matter is fully briefed and suitable for decision without oral argument. Having read the parties' papers and considered their arguments and the relevant legal authority the court DENIES the counter motion GRANTS the petition, and DENIES the requests to seal.
Petitioner is a company that provides electricity. Dkt. 1 ¶ 1. Advanced Equities, Inc. (“AEI”) was an investment advisory firm. Id. ¶ 2. AEI was the parent company of Advanced Equities Financial Corp., Inc. (“AEFC”). Id. Respondents Dwight Badger (“Badger”) and Keith Daubenspeck (“Daubenspeck”) (collectively, “respondents”) were, respectively, an officer and director of AEFC. Id.
In March 2009, petitioner engaged AEI to raise money for petitioner. Id. ¶ 6. Respondents led AEI in that effort. Id. When raising that money, respondents purportedly made misrepresentations concerning petitioner's business. Compare Id. with Dkt. 19 ¶ 6. The Securities and Exchange Commission (“SEC”) caught wind and initiated an investigation. Dkt. 1 ¶ 6. In 2012, the SEC issued an order sanctioning respondents. Id. The SEC did not take any action against petitioner. Id. The relationship between petitioner and respondents soured. Id. ¶ 7. The parties disputed responsibility for the misrepresentations. Id.
In 2014, the parties were thought to have settled that fight. Id. Two writings reflect that settlement, namely the Confidential Agreement (“CA”) (Dkt. 1-3) and the Securities Acquisition Agreement (“SAA”) (Dkt. 1-4) (collectively, the “settlement agreements”). Id. Those agreements include provisions requiring the parties to arbitrate any future dispute between them (without qualification) before the American Arbitration Association (“AAA”) in Santa Clara, California. Dkt. 1 ¶ 7. Those provisions are materially similar. Id. ¶ 8. Neither party disputes the validity of either provision.
Fast-forward a few years. On July 20, 2018, respondents initiated an arbitration proceeding against petitioner. Dkt. 1 ¶ 9. That proceeding is marked AAA “case no. 01-18-0002-7891.” Id. at 1. In that proceeding, respondents allege that they were fraudulently induced into signing the CA and SAA. Id. On May 2019, the AAA appointed a three-member arbitration panel (the “panel”) to the proceeding. Id. ¶ 10. In relevant part, the panel included a Loyola Law School professor, Hiro Aragaki (“Aragaki”). Id.
On March 16, 2021, the panel issued the subject arbitration award (the “Final Award”). Id. ¶ 11; Dkt. 2-4 (sealed version of Final Award). In it, the panel (1) dismissed respondents' claims with prejudice and (2) ordered respondents to pay petitioner $966, 760.31 in attorneys' fees and costs pursuant to the settlement agreements' fee-shifting conditions. Dkt. 1 ¶ 11; Dkt. 2-4 at 28.
On March 17, 2021, petitioner served respondents with a copy of the Final Award. Id. ¶ 11 n.2. On March 26, 2021, petitioner filed the instant petition asking the court to confirm the Final Award under the Federal Arbitration Act, Title 9 U.S.C. § 9. Id. ¶¶ 12-15. Petitioner requests that the court enter judgment in conformity with that award. Id. ¶¶ 16-17. Petitioner further requests pre- and post-judgment interest on the $966, 760.31 awarded in attorney's fees and costs. Id. ¶ 18.
On June 9, 2021, respondents filed a 13-page response (the “initial response”) to the petition. Dkt. 19.[1] In their initial response, respondents argue that the court should deny the petition, vacate the Final Award, and direct the AAA to continue the arbitration with a new panel. Id. at 1-2. Respondents failed to file any evidence in support of their initial response.
On July 15, 2021, the court held a case management conference in this action. Dkt. 27. At that conference, counsel for respondents, Andrew Munro (“Counsel Munro”), requested an opportunity to supplement the initial response. Dkt. 28. Counsel Munro indicated that such supplement would serve as a viable substitute for some unspecified “counter petition” that respondents suggested (in their initial response) they intended to later file. Dkt. 28. The court permitted respondents to file a supplemental brief with accompanying evidence and, correspondingly, petitioner to file a reply to that brief. Id.
On July 23, 2021, respondents filed their supplemental brief (the “supplemental response”). Dkt. 29-3. In it, they re-characterize paragraph 13 of their initial response (and only that paragraph) as a “counter motion” for vacatur. Id. at 4. They further state that they file their supplemental response both in opposition to the petition and in support of their counter motion. Id. On July 30, 2021, petitioner filed its reply to the supplemental response (the “supplemental reply”).
In this order, the court will construe respondents' responses as both an opposition to the petition and an independent counter motion to vacate the Final Award. Given that respondents rely on identical arguments in support of both their opposition and counter motion, the court will simultaneously address the counter motion and petition. The court will detail additional facts and procedural events concerning the arbitration as necessary below.
Title 9 U.S.C. § 9 provides that a party to an arbitration may apply for an order confirming an arbitration award within one year after such award is made. 9 U.S.C. § 9. If the parties' arbitration agreement does not specify a court in which to file that application, then the applying party may file it in the district court within which such award was made. Id.
When presented with an application to confirm an arbitration award, the district court “must grant an order unless the award is vacated, modified, or corrected.” Id. “There is nothing malleable about ‘must grant,' which unequivocally tells courts to grant confirmation in all cases, except when one of the ‘prescribed' exceptions applies.” Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 587 (2008).
The Ninth Circuit has explained that “judicial review of an arbitrator's decision is both limited and highly deferential.” Barnes v. Logan, 122 F.3d 820, 821 (9th Cir. 1997). As succinctly put by another court in this district, “grounds for vacating an award are limited to those specified by statute.” Int'l Petroleum Prod. & Additives Co., Inc. v. Black Gold, S.A.R.L., 418 F.Supp.3d 481, 487 (N.D. Cal. 2019). “Neither erroneous legal conclusions nor unsubstantiated factual findings justify federal court review of an arbitral award.” Bosack v. Soward, 586 F.3d 1096, 1102 (9th Cir. 2009). Rather, “[t]he confirmation of an arbitration award is meant to be a summary proceeding.” Int'l Petroleum Prod. & Additives Co., Inc., 418 F.Supp.3d at 487.
Pursuant to Title 9 U.S.C. § 10, a district court may vacate an award only if one of the following four conditions are present:
9 U.S.C. § 10(a)(1)-(4). The Ninth Circuit has explained that this section's “limited grounds are designed to preserve due process but not to permit unnecessary public intrusion into private arbitration procedures.” U.S. Life Ins. Co. v. Superior Nat. Ins. Co., 591 F.3d 1167, 1173 (9th Cir. 2010). Finally, “[t]he burden of establishing grounds for vacating an arbitration award is on the party seeking it.” Id.
In their filings, respondents primarily assert that the court should vacate the Final Award under Title 9 U.S.C. § 10(a)(2). To a lesser extent, the parties add that vacatur is proper under § 10(a)(3) and § 10(a)(1). The court analyzes each argument in turn.
To show “evident partiality” within the meaning of Title 9 U.S.C. § 10(a)(2), a litigant challenging an arbitration award must either (1) “establish specific facts indicating actual bias toward or against a party” or (2) “show that [the arbitrator] failed to disclose . . . information that creates ‘a reasonable impression of bias.'” Lagstein v. Certain Underwriters at Lloyd's, London, 607 F.3d 634, 645-46 (9th Cir. 2010).
In their responses, respondents do not articulate whether vacatur is proper on grounds of actual bias, a reasonable impression of bias, or both. Respondents cite four cases as the...
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