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Godhart v. Direct Alliance Corporation

United States District Court, Ninth Circuit

May 29, 2013


ORDER AND OPINION [Re Motions at Dockets 61 and 63]

JOHN W. SEDWICK, District Judge.


The plaintiff, Joshua J. Godhart ("Mr. Godhart"), is an individual who was formerly employed by Direct Alliance Corporation ("Direct Alliance"). Ravanna, Inc. is the successor to Direct Alliance. For the sake of simplicity and consistency in the record, the court will continue to refer to the defendant as Direct Alliance.


In the order at docket 22, the court granted the motion filed by Direct Alliance to stay these proceedings and compel arbitration. The arbitration has been concluded and an award made by arbitrator Charles W. Herf ("Award").[1] Direct Alliance moves at docket 61 for an order lifting the stay and confirming the Award. Mr. Godhart opposes the motion at docket 62 and in an identical filing moves at docket 63 to vacate the arbitration Award. Direct Alliance's combined reply in support of its motion and in opposition to Mr. Godhart's motion is at docket 65. No reply supporting the motion at docket 63 was filed. Oral argument was not requested and would not assist the court.


The parties are familiar with the allegations which gave rise to Mr. Godhart's complaint. Readers unfamiliar with those allegations are directed to the court's order at docket 22.

As explained in that earlier order, the Federal Arbitration Act ("FAA") allows a party, in this case Direct Alliance, "aggrieved by the alleged... refusal of another [in this case Mr. Godhart] to arbitrate under a written agreement for arbitration [to] petition any United States district court... for an order directing that such arbitration proceed in the manner provided for in such agreement."[2] The FAA "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed."[3] "The court's role under the Act is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue."[4]

The arbitration agreement in this case covered "any disputes arising during [Mr. Godhart's] employment with Direct Alliance or after termination of [Mr. Godhart's] employment by Direct Alliance."[5] In the section titled "Scope of Arbitration" the agreement includes "disputes regarding [Mr. Godhart's] employment with Direct Alliance and termination thereof, employment discrimination, harassment and retaliation, [and] wrongful discharge."[6] In opposing Direct Alliance's request for an order compelling arbitration, Mr. Godhart contended that the arbitration agreement was procured by fraud and was not enforceable. He advanced two main arguments. First, he contended that his signature on the agreement was forged. Second, he argued that the agreement was procedurally and substantively unconscionable. In the order at docket 22, the court evaluated and rejected both arguments. Mr. Godhart also argued that the agreement was unsupported by consideration, because Direct Alliance's promise was illusory. This argument failed as the court explained in the earlier order because both parties promised to arbitrate their claims and forbear exercising their right to sue. Thus, there was consideration given by both parties. Moreover, as the court also explained in the earlier order, Direct Alliance's reservation of the right to change its policies and procedures did not apply to its obligation to arbitrate established by the agreement.


The arbitrator ruled in favor of Direct Alliance on all of the claims presented by Mr. Godhart. Direct Alliance's motion asks this court to lift the stay it earlier imposed for the purpose of confirming the Award pursuant to section 9 of the FAA, 9 U.S.C. § 9, and the parties' arbitration agreement. In support of its request, Direct Alliance has submitted all of the materials required by 9 U.S.C. § 13 for the court's consideration. In response Mr. Godhart does not point to any shortcoming in what has been submitted to support confirmation of the Award. Instead, he contends that Direct Alliance "procured the Arbitration Award in question by corruption, fraud, and/or undue means."[7] Mr. Godhart also contends that the arbitrator was partial to Direct Alliance.[8]

Mr. Godhart is correct to say that under some circumstances, a district court which has referred a dispute to arbitration may vacate the arbitrator's award. Section 10 of the FAA, 9 U.S.C. § 10, sets out the grounds which may support vacation of an award. As pertinent to Mr. Godhart's assertions, the grounds consist of circumstances "where the award was procured by corruption, fraud or undue means" or "where there was evident partiality or corruption."[9]

With respect to the proposition that the award was procured by corruption, fraud or undue means, Mr. Godhart simply essentially relies on the same arguments he made unsuccessfully in opposing Direct Alliance's motion to compel arbitration. Those arguments are foreclosed by the court's previous decision finding they lacked merit.

Mr. Godhart also seeks relief on the alternative ground that the Arbitrator was evidently partial to Direct Alliance. The burden falls on Mr. Godahart to establish the ...

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