Kathryn B. Dickson

Things looked bad for Dickson in 2014 when a federal judge vacated a $5.4 million award to her clients in a wrongful termination case. U.S. District Judge Cormac J. Carney of Santa Ana held that a former state Court of Appeal justice, Richard C. Neal, the JAMS arbitrator who heard the case, "demonstrated evident partiality" in retaliation for a move by Dickson's opposing counsel, representing the medical device maker defendant Masimo Corp., to disqualify him.

Carney — agreeing with Masimo's lawyers — held that Neal was biased because his brother Stephen Neal, the chairman of Cooley LLP, had litigated cases against Masimo in the past, Dickson said. She reacted to Carney's ruling by taking the case to the 9th U.S. Circuit Court of Appeals, appearing at oral argument herself to defend the $5.4 million award and Richard Neal's integrity. "It was a case in which two salesmen were wrongfully terminated," Dickson said. "And Justice Neal was a careful, thoughtful, highly respected guy." Richard Neal died in January 2015.

The underlying case centered on claims that Masimo forced Dickson's clients to misrepresent the performance of the company's products to make sales. Dickson, a veteran employment law litigator, said that allowing Carney's ruling to stand would raise the prospect of more challenges to arbitrators. "[Masimo] wanted arbitration, but they didn't like the result and turned it into a 51/2-year court battle."

In February, a circuit panel reversed Carney and restored the award in an unpublished opinion. Ruhe v. Masimo Corp., 14-55556 (9th Cir., filed April 7, 2014) Though Neal mishandled Masimo's recusal request and did not follow proper precedent when awarding damages, his ruling did not amount to "manifest disregard for the law" and therefore did not violate the Federal Arbitration Act, the panel ruled.

"So I thought, OK, it's over," Dickson said. "It was tremendously unusual for a district judge to vacate an arbitration award, and the circuit got it right. The award with interest had grown to $6.3 million, and they paid us. Then Masimo petitioned for cert."

Dickson said that was a surprise. "Isn't six years long enough for what is supposed to be a fast, efficient, non-appealable arbitration?" she said. "Masimo never knew until it lost that Justice Neal was not a credible arbitrator. After all, they selected him to hear the case from a list of 13 names we proposed. And his connection to his brother was well known."

She said she doubts that the U.S. Supreme Court will have any interest in hearing the case. "If you're going to petition for cert, why pay us first?" she said. "I just think the whole thing is bizarre."

— John Roemer