Lapine Technology Corp. v. Kyocera Corp.

Kyocera Corporation appeals the district court’s judgment in favor of LaPine Technology Corporation, LaPine Holding Company, Inc. and Prudential-Baehe Trade Services, Inc. 1 The district court determined that it could not review an arbitration award under a substantial evidence and error of law standard, even though that standard was part of the arbitration agreement made by the parties. The court, therefore, confirmed the arbitration award against Kyocera by using the much more deferential standard authorized in the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 10-11 . See Lapine Technology Corp. v. Kyocera Corp., 909 F.Supp. 697 (N.D.Cal.1995) (Lapine I). We affirm in part and reverse and remand in part.

BACKGROUND

In 1984, Kyocera, LaPine, and Prudential-Baehe began a venture to manufacture and market computer disk drives. LaPine had a drive design, which it licensed to the manufacturer, Kyocera. Prudential-Baehe provided financing for the venture: it would purchase Kyocera’s entire output of drives and sell those drives to LaPine, which would then market them to its customers. However, that arrangement lasted for a relatively short time because LaPine’s fortunes took a…

concurring.

While I join Judge Fernandez’s opinion, I find the question presented closer than most. The Supreme Court cases on which the opinion relies are helpful, maj. op. at 888-889, but they don’t get us all the way there. As Judge Mayer points out, they say that parties may set the time, place and manner of arbitration; none says that private parties may tell the federal courts how to conduct their business. In general, I do not believe parties may impose on the federal courts burdens and functions that Congress has withheld. A partial answer is that any case properly in district court under the Federal Arbitration Act must have an independent jurisdictional basis. See Garrett v. Merritt Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 882, 883 (9th Cir.1993). Thus, enforcing the arbitration agreement-even with enhanced judicial review-will consume far fewer judicial resources than if the case were given plenary adjudication. The rub is that the work the district court must perform under this arbitration clause is not a subset of what it would be doing if the case were brought directly under diversity or federal question jurisdiction. It’s not just less work, it is different…

Dissenting:

Whether to arbitrate, what to arbitrate, how to arbitrate, and when to arbitrate are matters that parties may specify contractually. See Volt Info. Sciences v. Board of Trustees, 489 U.S. 468, 478-479 , 109 S.Ct. 1248, 1255-1256 , 103 L.Ed.2d 488 (1989). However, Kyocera cites no authority explicitly empowering litigants to dictate how an Article III court must review an arbitration decision. Absent this, they may not. Should parties desire more scrutiny than the Federal Arbitration Act, 9 U.S.C. §§ 10-11 (1994), authorizes courts to apply, “they can contract for an appellate arbitration panel to review the arbitrator’s award[;] they cannot contract for judicial review of that award.” Chicago Typographical Union v. Chicago Sun-Times, 935 F.2d 1501, 1505 (7th Cir.1991). I would affirm the district court’s self-restraint.