Ruhe

ORDER GRANTING DEFENDANT’S MOTION TO VACATE FINAL ARBITRATION AWARD

I. INTRODUCTION

In September 2011, the Court ordered the parties to arbitrate Plaintiffs Michael Ruhe and Vicente Catala’s claims that they were constructively discharged from Defendant Masimo Corporation because of undue pressure Masimo placed on them to sell its medical devices despite allegedly knowing that the devices were inaccurate and defective. Thirty-six hours before the final hearing in the arbitration, Masimo’s counsel made a for-cause challenge to the continued service of the arbitrator, Retired Justice Richard C. Neal (the “Arbitrator”) of Judicial Arbitration and Mediation Services (“JAMS”). The challenge was based on Masimo’s recent discovery that the Arbitrator’s brother had represented its chief competitor in two highly contentious litigation losses to Masimo with liability verdicts totaling over half a billion dollars. Instead of having the challenge heard by JAMS as required by JAMS’s rules, the Arbitrator himself determined that he was not subject to disqualification and issued his final award, imposing $5 million in punitive damages against Masimo. This large punitive damage award, more than…