Schoeduve Corp. v. Lucent Technologies ( 2006 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SCHOENDUVE CORPORATION, a 
California corporation,
No. 04-15529
Petitioner-Appellee,
v.  D.C. No.
CV-03-03523-RMW
LUCENT TECHNOLOGIES, INC., a
OPINION
Delaware corporation,
Respondent-Appellant.

Appeal from the United States District Court
for the Northern District of California
Ronald M. Whyte, District Judge, Presiding
Argued and Submitted
November 17, 2005—San Francisco, California
Filed March 22, 2006
Before: Diarmuid F. O’Scannlain, Sidney R. Thomas, and
Richard C. Tallman, Circuit Judges.
Opinion by Judge Tallman
3067
3070 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
COUNSEL
Jeffrey K. Riffer, Jeffer, Mangels, Butler & Marmaro, Los
Angeles, California, for the respondent-appellant.
Jack Russo, Russo & Hale, Palo Alto, California, for the
petitioner-appellee.
SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES 3071
OPINION
TALLMAN, Circuit Judge.
Lucent Technologies (“Lucent”) appeals the district court’s
order confirming an arbitration award entered in favor of
Schoenduve Corporation (“Schoenduve”). Lucent asks this
Court to vacate or modify the arbitration award claiming that
the arbitrator (1) exceeded his authority by ruling on an issue
not submitted by the parties, (2) modified or expanded the
unambiguous language of the agreement requiring arbitration,
and (3) failed to provide Lucent an opportunity to rebut
Schoenduve’s claim for commissions under a quasi-contract
or estoppel theory. Lucent also asks us to vacate the portion
of the arbitrator’s decision awarding attorneys’ fees to
Schoenduve as a manifest disregard of the law. Because the
arbitrator stayed within the bounds of his authority in apply-
ing New York substantive law as the parties had contractually
agreed, and made a good faith effort to apply the applicable
provisions of the California Civil Code to the award of attor-
neys’ fees, we affirm.
I
A
Lucent is a manufacturer of wireless communication prod-
ucts and Schoenduve is a manufacturer’s sales representative.
On August 14, 1996, Lucent entered into a Manufacturer’s
Representative Agreement (“MRA”) with Schoenduve, autho-
rizing Schoenduve to solicit orders for Lucent’s wireless com-
munication products from Original Equipment Manufacturers
(“OEMs”) in Northern California and Nevada.
Beginning in December 1997, Schoenduve worked to pro-
cure a sale of Lucent’s wireless communication products to
Apple Computer.1 On December 15, 1998, two days before it
1
The facts surrounding Schoenduve’s role in the Apple transaction are
not in contention nor are they relevant to the disposition of this appeal.
3072 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
signed an initial agreement with Apple Computer, Lucent ter-
minated the MRA and its relationship with Schoenduve.2
Lucent and Apple Computer finalized the agreement for the
sale and purchase of Lucent’s wireless communication prod-
ucts in July 1999. The supply contract was worth millions of
dollars to Lucent.
Schoenduve filed suit in Santa Clara County Superior Court
on May 18, 2001, seeking unpaid commissions for its role in
procuring the Apple transaction. The MRA contained an arbi-
tration clause that applied to any “dispute aris[ing] out of or
relat[ing] to th[e] [MRA], or its breach.”3 Lucent removed the
case to federal court, where the district court granted Lucent’s
motion to compel arbitration.
B
As required by the Commercial Arbitration Rules of the
AAA, Schoenduve filed a Demand for Arbitration in order to
initiate the arbitration proceedings. The Demand for Arbitra-
tion was very broad, describing the nature of the dispute as
“an action to recover those commissions, interest and other
damages arising from the wrongful conduct of [Lucent].”
Schoenduve claimed to “ha[ve] substantial damages arising
from breach of contract and other claims against [Lucent],
including [Lucent’s] failure to disclose and account for sub-
stantial monies owed to [Schoenduve].”
Throughout the arbitration, Lucent argued that the MRA
governed the entire transaction and that, pursuant to the termi-
2
Section 13(a) of the MRA allowed either party to “terminate th[e]
[MRA] without cause upon thirty (30) days’ prior written notice to the
other party given at any time.”
3
Pursuant to the MRA, the parties were first required to submit their dis-
pute to a mediator. If mediation was unsuccessful, the case then went to
an arbitrator selected by the parties or to binding arbitration before the
American Arbitration Association (“AAA”).
SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES 3073
nation provisions of the MRA, Schoenduve was not entitled
to any post-termination commissions for the Apple transac-
tion. Schoenduve disagreed. It argued that the “boilerplate”
provisions of the MRA did not apply to the “design win”
Apple transaction; rather, it argued that only the appendices
of the MRA, which contained no termination provision, gov-
erned this transaction.
The parties participated in 11 days of arbitration hearings
spread out over approximately eight months in New York,
New York, the venue established by the MRA. The arbitrator
issued his 19-page written opinion on July 3, 2003. He
rejected Schoenduve’s claim for post-termination commis-
sions under the unambiguous terms of the MRA. Furthermore,
the arbitrator ruled that Lucent had an unfettered contractual
right to terminate Schoenduve’s representation on 30 days’
notice and that this precluded any argument that Lucent acted
in “bad faith” or had breached a duty of good faith and fair
dealing.
Although Lucent prevailed on all claims specifically arising
out of the MRA, the arbitrator subsequently concluded that
the MRA did not apply to this type of “whale sized” transac-
tion. Consequently, he found that “since Lucent’s form of
MRA was not intended to cover this type [of] transaction, and
did not in fact cover it[,] [Schoenduve] [wa]s entitled to
recover compensation pursuant to the legal doctrine recog-
nized in New York of quasi-contract.” Alternatively, the arbi-
trator ruled that because Lucent had excluded Schoenduve
from the negotiations only after Lucent’s Sales Manager had
become involved, “Lucent should be estopped to deny
Schoenduve’s entitlement to commissions it worked for and
earned.”
The arbitrator held that although Lucent did not willfully
fail to enter into a written contract, it did fail to enter into a
written contract that covered the Apple transaction. Lucent
therefore violated California Civil Code § 1738.13, which
3074 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
requires all manufacturers to enter into a written contract with
their representatives. Because Schoenduve was the prevailing
party, the arbitrator also awarded Schoenduve attorneys’ fees
and costs under California Civil Code § 1738.16.
II
The district court had jurisdiction pursuant to 28 U.S.C.
§ 1332(a) and we have jurisdiction under 28 U.S.C. § 1291.
We review the district court’s decision to confirm an arbitra-
tion award de novo. Poweragent Inc. v. Elec. Data Sys. Corp.,
358 F.3d 1187, 1193 (9th Cir. 2004). However, review of the
actual award is “both limited and highly deferential.” Id.
(internal quotation marks omitted). We are also mindful of
long-settled jurisprudence that encouraging alternative dispute
resolution outside the courtroom was the principal motivation
behind passage of the Federal Arbitration Act (“FAA”). See
E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 289 (2002)
(“[The FAA’s] ‘purpose was to reverse the longstanding judi-
cial hostility to arbitration agreements . . . and to place arbitra-
tion agreements upon the same footing as other contracts.’ ”
(quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.
20, 24 (1991))); Ingle v. Circuit City Stores, Inc., 328 F.3d
1165, 1170 (9th Cir. 2003) (same); Sink v. Aden Enters., Inc.,
352 F.3d 1197, 1201 (9th Cir. 2003) (“One purpose of the
FAA’s liberal approach to arbitration is the efficient and
expeditious resolution of claims.” (citing H.R. REP. NO. 68-96
(1924))).
The strict procedural requirements that govern litigation in
federal courts do not apply to arbitration. Arbitration offers
flexibility, an expeditious result, and is relatively inexpensive
when compared to litigation. Gilmer, 500 U.S. at 31 (“[B]y
agreeing to arbitrate, a party ‘trades the procedures and oppor-
tunity for review of the courtroom for the simplicity, infor-
mality, and expedition of arbitration.’ ” (quoting Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,
628 (1985))); Kyocera Corp. v. Prudential-Bache Trade
SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES 3075
Servs., Inc., 341 F.3d 987, 998 (9th Cir. 2003) (en banc) (stat-
ing that arbitration was designed “to respond to the wishes of
the parties more flexibly and expeditiously than the federal
courts’ uniform rules of procedure allow”); Pack Concrete,
Inc. v. Cunningham, 866 F.2d 283, 285 (9th Cir. 1989)
(describing “congressional policy in favor of expeditious and
relatively inexpensive means of settling [disputes]” (internal
quotation marks omitted)).
To protect the overall purpose of arbitration and avoid any
tendency of a court to impute its own strict and rigid practices
onto arbitration proceedings, Congress has limited the ability
of federal courts to review arbitration awards. See 9 U.S.C.
§ 9; see also Pack Concrete, Inc., 866 F.2d at 285 (stating that
permitting a plenary review of arbitration would undermine
Congress’s policy of favoring arbitration as an expeditious
and relatively inexpensive means of resolving disputes);
Kyocera Corp., 341 F.3d at 998 (“Congress’s decision to per-
mit sophisticated parties to trade the greater certainty of cor-
rect legal decisions by federal courts for the speed and
flexibility of arbitration determinations is a reasonable legisla-
tive judgment that we have no authority to reject.”).4
We must affirm an order to confirm an arbitration award
unless it can be vacated, modified, or corrected as prescribed
by the FAA. 9 U.S.C. §§ 9-11; see Kyocera Corp., 341 F.3d
at 1000 (“hold[ing] that a federal court may only review an
arbitral decision on the grounds set forth in the [FAA]” and
that the “parties have no power to alter or expand those
grounds”). A federal court may vacate an award if the arbitra-
4
This case underscores why federal courts must play a limited role in
reviewing disputes resolved through arbitration. Lucent terminated the
MRA in December 1998. This dispute continues to fester even though the
arbitrator rendered his decision two and one-half years ago. If arbitration
is meant to be swift and final, federal courts must respect the informal
nature of arbitration proceedings. Seven years of litigation is not what
Congress and the courts expect when arbitration is the mutually chosen
remedy to resolve disputes between the parties.
3076 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
tor engages in misbehavior that prejudices a party, or if the
arbitrator exceeds his powers in rendering such an award. 9
U.S.C. § 10(a)(3)-(4). “[A]rbitrators exceed their powers in
this regard not when they merely interpret or apply the gov-
erning law incorrectly, but when the award is completely irra-
tional, or exhibits a manifest disregard of law.” Kyocera
Corp., 341 F.3d at 997 (internal quotation marks and citations
omitted).
Alternatively, a federal court may modify or correct an
award “[w]here the arbitrators have awarded upon a matter
not submitted to them.” 9 U.S.C. § 11(b). A court may “strike
all or a portion of an award pertaining to an issue not at all
subject to arbitration.” Kyocera Corp., 341 F.3d at 997-98.
This limited review “is designed to preserve due process”
without “unnecessary public intrusion into private arbitration
procedures.” Id. at 998.
III
[1] The scope of the arbitrator’s authority is determined by
the contract requiring arbitration as well as by the parties’ def-
inition of the issues to be submitted in the submission agree-
ment. Piggly Wiggly Operators’ Warehouse, Inc. v. Piggly
Wiggly Operators’ Warehouse Indep. Truck Drivers Union,
Local No. 1, 611 F.2d 580, 583-84 (5th Cir. 1980) (holding
that the court must look at both the contract requiring arbitra-
tion as well as the submission agreement to determine the
arbitrator’s authority); see also Executone Info. Sys., Inc. v.
Davis, 26 F.3d 1314, 1323 (5th Cir. 1994) (“[T]he parties may
agree to arbitration of disputes that they were not contractu-
ally compelled to submit to arbitration.”). In other words, the
“initial contract to arbitrate may be modified [or expanded] by
the submission agreement.” Piggly Wiggly Operators’ Ware-
house, Inc., 611 F.2d at 584. The Demand for Arbitration
served as Lucent’s and Schoenduve’s submission agreement.
Because Lucent did not object to the breadth of the Demand
for Arbitration, the scope of the arbitrator’s authority is deter-
SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES 3077
mined not only by the MRA, but also by the Demand for
Arbitration. See id. at 583-84.
[2] Intending to reach all aspects of their relationship,
Lucent required the parties to arbitrate any dispute arising out
of or relating to the MRA. See Valentine Sugars, Inc. v.
Donau Corp., 981 F.2d 210, 213 n.2 (5th Cir. 1993) (stating
that when the arbitration clause calls for “any dispute ‘relating
to or arising out of’ the agreement” to be submitted to arbitra-
tion, the parties “intend the clause to reach all aspects of the
relationship”). Here, the MRA, which required arbitration “if
a dispute arises out of or relates to this Agreement,” was
broad enough to include a claim for commissions based on
quasi-contract or estoppel. Therefore, we turn to the Demand
for Arbitration to determine whether the parties chose to limit
the scope of the arbitrator’s authority. See id. at 213 (rejecting
the argument that the arbitrator exceeded his authority when
the parties submitted everything related to the dispute to the
arbitration panel and there was no contractual provision
removing the issue from the arbitrator’s jurisdiction).
[3] In the Demand for Arbitration, Schoenduve identified
its claim as “an action to recover those commissions, interest
and other damages arising from the wrongful conduct of
[Lucent].” It sought “substantial damages arising from breach
of contract and other claims against [Lucent], including
[Lucent’s] failure to disclose and account for substantial
monies owed to [Schoenduve].” By not objecting to the
Demand for Arbitration, Lucent essentially agreed to arbitrate
all issues surrounding Schoenduve’s claim for commissions.
The arbitrator necessarily had the authority to decide whether
Schoenduve was entitled to damages based on quasi-contract
or estoppel because those issues were implicit within the sub-
mission agreement. See Mich. Mut. Ins. Co. v. Unigard Sec.
Ins. Co., 44 F.3d 826, 830 (9th Cir. 1995) (holding that the
arbitration panel did not exceed its authority when the “ques-
tion of the conditions of reimbursement was implicit in the
submission [agreement]” and the contract requiring arbitration
3078 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
“did not preclude the arbitration panel from resolving issues
implied in the submission [agreement] and did not limit the
form or content of the award”).
The scope of the arbitrator’s jurisdiction extends to issues
not only explicitly raised by the parties, but all issues implicit
within the submission agreement. Mich. Mut. Ins. Co., 44
F.3d at 830. Schoenduve sought the commissions for which
it claimed it was entitled. It argued, among other theories, that
only a portion of the MRA applied to the transaction. The
arbitrator found that the MRA did not apply to the Apple
transaction. Consequently, with no applicable written agree-
ment, the question of quasi-contract necessarily arose. It was
implicit within the issues presented in the Demand for Arbi-
tration.
Furthermore, the arbitrator’s interpretation of the scope of
his powers is entitled to the same level of deference as his
determination on the merits. Pack Concrete, Inc., 866 F.2d at
285; see also Valentine Sugars, Inc., 981 F.2d at 213 (“In
determining whether the arbitrator exceeded his jurisdiction,
we resolve all doubts in favor of arbitration.”). The policy
concerns requiring deference to the arbitrator’s decision on
the merits are equally applicable when reviewing the arbitra-
tor’s interpretation of the submission agreement. Pack Con-
crete, Inc., 866 F.2d at 285-86 (stating that permitting a
plenary review would impede the expeditious and inexpensive
nature of arbitration proceedings and, “[f]urthermore, inter-
preting the issue submitted often requires construction of the
agreement itself, a job clearly for the arbitrator”).
[4] While we recognize that the Demand for Arbitration
was broad, “[t]he parties agreed to arbitration . . . and must
accept the loose procedural requirements along with the bene-
fits which arbitration provides.” Valentine Sugars, Inc., 981
F.2d at 213; see also Gilmer, 500 U.S. at 31. “Federal law . . .
does not impose any requirements as to how specific a notice
of arbitration must be.” Valentine Sugars, Inc., 981 F.2d at
SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES 3079
213. Accordingly, we will follow the lead of the Fifth Circuit:
“[i]n the absence of a congressional mandate, we will not
develop a code of pleading here.” Id.5 The arbitrator’s quasi-
contract award arose implicitly from Schoenduve’s claim for
commissions. Therefore, we hold that the arbitrator did not
exceed his authority by awarding Schoenduve damages based
on quasi-contract or estoppel, both theories recognized under
New York commercial law.
IV
[5] Lucent also challenges the arbitration award on the
5
Lucent continues to argue that Schoenduve submitted only three claims
to the arbitrator: breach of contract, tortious termination of the MRA, and
willful failure to pay commissions under the MRA in violation of Califor-
nia Civil Code § 1738.15. However, in its closing brief submitted to the
arbitrator, Schoenduve argued that it was entitled to receive commissions
not only under the written agreement, but also because of the “many oral
representations” Lucent had made regarding commissions. Schoenduve
argued that it continued to perform services for Lucent and “did not termi-
nate the agreement and offer Apple computer to other wireless providers”
because it relied in part upon Lucent’s oral representations. Schoenduve
believed it “[wa]s entitled to the benefit of the promises made by Lucent
even if such promises were not considered oral agreements modifying the
written contract.” In making this argument to the arbitrator, Schoenduve
cited Farash v. Sykes Datatronics, Inc., 59 N.Y.2d 500 (1983).
Lucent argues that Schoenduve’s citation to this case did not put the
issue of quasi-contract before the arbitrator “because detrimental reliance
is not a claim for quasi-contract.” While we recognize that there are differ-
ences between the theories of quasi-contract, estoppel and detrimental reli-
ance, the Farash court dismissed arguments over nomenclature, and
discussed the plaintiff’s action as if it were based in quasi-contract. See 59
N.Y.2d at 504-06. We also decline any invitation to discuss the intricate
differences between these three theories. Nonetheless, this argument illus-
trates why we must give the arbitrator’s interpretation of the scope of his
authority a great deal of deference. See Pack Concrete, Inc., 866 F.2d at
285 (stating that deference is even more appropriate when the argument
“is not that the discharge issue was not arbitrable or even factually unre-
lated to the dispute, but rather that the [claimant] mislabeled the issue
when it requested [arbitration]”).
3080 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
basis that the arbitrator deprived it of the opportunity to be
heard “at a meaningful time and in a meaningful manner” by
ruling on a “claim” not properly presented by the parties.
Under 9 U.S.C. § 10(a)(3), we may vacate an arbitration
award if the arbitrator was guilty of misconduct in “refusing
to hear evidence pertinent and material to the controversy; or
of any other misbehavior by which the rights of any party
have been prejudiced.”
[6] As discussed above, the quasi-contract and estoppel
issues were properly before the arbitrator. Lucent was never
denied an opportunity to argue these claims; in fact, it did so
not only in its opening statement, but also in a pre-hearing let-
ter to the arbitrator requesting summary judgment.6 Because
the arbitrator did not abuse his powers by ruling on a issue
implicitly submitted to him, and because Lucent was never
denied an opportunity to present evidence as to that issue, the
arbitrator did not engage in any misbehavior under 9 U.S.C.
§ 10(a)(3). We see no due process violation here where the
dispute has always been whether Schoenduve was entitled to
commissions from the Lucent-Apple transaction.
V
In addition to arguing that the arbitrator exceeded his
authority by ruling on an issue not submitted to him, Lucent
claims that the arbitrator exceeded his authority by ignoring
the plain language of the MRA. Because the MRA stated that
the arbitrator “may not limit, expand or otherwise modify the
terms of the Agreement,” Lucent argues that the arbitrator
6
Lucent states that it did not “argue” or “brief” the quasi-contract the-
ory, pointing out that it made only a “one phrase reference” to this theory
and that it was “buried in a quotation from an out-of-state case.” However,
this reference was not only made in the summary judgement letter, but
again during Lucent’s opening statement. Despite being a minor reference,
it supports the argument that the quasi-contract theory was implicitly inter-
twined in the issue of entitlement to commissions submitted to the arbitra-
tor, and that Lucent had an opportunity to present its case.
SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES 3081
exceeded his authority by awarding Schoenduve commissions
on a quasi-contract theory after ruling that the limited circum-
stances in which Schoenduve could recover post-termination
commissions under the MRA did not apply.
[7] The arbitrator did not modify, change or expand the
agreement. Instead, he ruled that the MRA simply did not
apply to the Apple transaction. “The fact that the arbitrator
lacks the power to modify the agreement does not compel the
conclusion that he also lacks the power to determine which
provisions are in fact a part of the contract.” Leyva v. Certi-
fied Grocers of Cal., Ltd., 593 F.2d 857, 860 (9th Cir. 1979)
(holding that the arbitrator does have the power to determine
whether various provisions in the contract are void). As rec-
ognized by our Court in Leyva:
[a] necessary first step in interpreting any contract is
to determine exactly what language is controlling in
the case. Absent a clear limitation on the arbitrator’s
authority, [the court should] decline to read the
exception clause in this contract to limit the arbitra-
tor’s power in the manner suggested by appellants.
Id.
The arbitrator did not change the terms of the MRA. He did
not award Schoenduve commissions under the MRA because
Schoenduve was not entitled to commissions under the terms
of that agreement.7 Cf. Roadway Package Sys., Inc. v. Kayser,
257 F.3d 287, 300 (3d Cir. 2001) (finding that the arbitrator
exceeded his powers when, although he acknowledged that
the written agreement applied, he nonetheless ignored the
written provisions and grounded his decision on notions of
fairness and equity). Here, both parties agreed that New York
7
Specifically, the arbitrator ruled that “recovery on the MRA is fore-
closed in light of [Lucent’s] meritorious and complete legal defenses to
the claims under the MRA.”
3082 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
law applied. After hearing the evidence, the arbitrator ruled
that the MRA did not govern the resolution of this dispute, but
granted Schoenduve relief under a different New York legal
theory: quasi-contract or estoppel.
[8] Contrary to Lucent’s argument, both parties did not
agree that the transaction was covered by the MRA in its
entirety. Schoenduve argued that only the appendices to the
MRA applied to this transaction, and if the arbitrator deter-
mined otherwise as a matter of law, it argued that it should
recover in equity because of its reliance on Lucent’s oral rep-
resentations. Moreover, the Demand for Arbitration contained
sufficiently broad language to support equitable recovery of
commissions. See supra, § III. Although Lucent may now be
arguing that the MRA’s arbitration clause limited what could
and could not be presented to the arbitrator, by not objecting
to the Demand for Arbitration, Lucent agreed to arbitrate all
issues surrounding Schoenduve’s claim for commissions. See
Piggly Wiggly Operators’ Warehouse, Inc., 611 F.2d at 584
(“[O]nce the parties have gone beyond their promise to arbi-
trate and have actually submitted an issue to an arbit[rator],
we must look both to their contract and to the submission of
the issue to the arbitrator to determine his authority.”).
VI
Finally, Lucent asks this Court to vacate the arbitrator’s
award of attorneys’ fees. Review of the merits of an arbitra-
tion award is extremely limited. G.C. & K.B. Invs., Inc. v.
Wilson, 326 F.3d 1096, 1105 (9th Cir. 2003).
Confirmation of an arbitration award is required
even in the face of erroneous misinterpretations of
law. “It is not even enough that the [arbitrator] may
have failed to understand or apply the law. An arbi-
trator’s decision must be upheld unless it is com-
pletely irrational or it constitutes a manifest
disregard of the law.”
SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES 3083
Id. (alteration in original) (quoting French v. Merrill Lynch,
784 F.2d 902, 906 (9th Cir. 1986)). Lucent contends that
“[w]here an arbitrator recognizes that a statute providing
attorneys [sic] fees is not applicable, but awards such fees
anyway, the arbitrator manifestly disregards the law.” While
that is a correct statement of the law, that is not what the arbi-
trator did in this case.
During the arbitration proceedings, Schoenduve argued that
it was entitled to treble fees, attorneys’ fees and costs. Califor-
nia Civil Code § 1738.15 provides that a manufacturer who
“willfully fails to enter into a written contract” or “willfully
fails to pay commissions as provided in the written contract
shall be liable to the sales representative in a civil action for
treble the damages proved at trial.” Further, “[i]n a civil
action brought by the sales representative pursuant to this
chapter, the prevailing party shall be entitled to reasonable
attorney’s fees and costs in addition to any other recovery.”
Cal. Civ. Code § 1738.16.
[9] Contrary to Lucent’s argument, the arbitrator did not
reject Schoenduve’s claim for treble damages pursuant to
§ 1738.15 but then award it attorneys’ fees as a prevailing
party under that provision. Rather, the arbitrator determined
that § 1738.15 did not apply because Lucent did not willfully
fail to enter into a contract. However, the arbitrator found that
Lucent violated § 1738.13(a)8 by failing to enter into a written
contract as to the Apple transaction.9 Because the arbitrator
8
California Civil Code § 1738.13(a) requires any manufacturer doing
business in California to enter into a written contract with its sales repre-
sentatives when the contemplated method of payment involves commis-
sions.
9
Again, the arbitrator found that the MRA did not apply to the Apple
transaction. Because Lucent entered into the MRA for smaller transac-
tions, the arbitrator determined that Lucent did not willfully fail to enter
into a written contract; however, because Lucent did not enter into a writ-
ten contract that applied specifically to the Apple transaction, the arbitra-
tor found that Lucent did violate the general rule in § 1738.13(a).
3084 SCHOENDUVE CORP. v. LUCENT TECHNOLOGIES
ruled that Lucent violated § 1738.13(a), not § 1738.15 as
Lucent argues, the arbitrator did not manifestly disregard the
law by ruling that Schoenduve was the prevailing party and
awarding it attorneys’ fees and costs pursuant to § 1738.16.
Furthermore, even though the MRA stated that each party
shall bear its own arbitration expenses, this provision of the
California Civil Code may not be waived by any sales repre-
sentative or manufacturer doing business in California. Cal.
Civ. Code § 1738.13(e).
[10] The arbitrator did not modify or change the MRA, nor
did he ignore an applicable statutory provision. The arbitrator
made a “good faith” attempt to apply the California Civil
Code. Consequently, there are no grounds to vacate or modify
his decision under the FAA. See Kyocera Corp., 341 F.3d at
1003 (“The risk that arbitrators may construe the governing
law imperfectly in the course of delivering a decision that
attempts in good faith to interpret the relevant law . . . is a risk
that every party to arbitration assumes . . . .”).
VII
The arbitration clause contained within the MRA was suffi-
ciently broad to include claims under quasi-contract or estop-
pel. The Demand for Arbitration did not limit the arbitrator’s
authority to rule on any such claims and the arbitrator did not
engage in any misbehavior by preventing Lucent from making
its arguments. By interpreting the terms of the MRA and sub-
sequently ruling that it did not apply to the Apple transaction,
the arbitrator did not modify or change the terms of that
agreement. Furthermore, the arbitrator made a good faith
effort to apply both New York and California law. Therefore,
because the arbitrator did not exceed the scope of his author-
ity nor manifestly disregard the law, we affirm the district
court’s decision to confirm the arbitration award.
AFFIRMED.