United States Court of Appeals
For the First Circuit
No. 01-1122
DEV VRAT GUPTA,
Petitioner, Appellant,
v.
CISCO SYSTEMS, INC.,
Respondent, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
Before
Lipez, Circuit Judge,
Bownes, Senior Circuit Judge,
and Barbadoro,* District Judge.
Michael E. Norton, with whom Robinson Murphy & McDonald,
David C. Casey, and Bingham Dana LLP were on brief for
appellant.
Thomas M. Peterson, with whom Franklin Brockway Gowdy, Brian
L. Johnsrud, Brett M. Schuman, and Brobeck, Phleger & Harrison
LLP were on brief for appellee.
December 3, 2001
______________________
*Of the District of New Hampshire, sitting by designation.
BOWNES, Senior Circuit Judge. Petitioner-appellant Dev
Vrat Gupta is an engineer and former employee of respondent-
appellee Cisco Systems, Inc. At issue is the ownership of
several million dollars’ worth of stock in Maxcomm Technologies,
Inc., a company Gupta founded while employed by Cisco. An
arbitrator issued an award upholding Cisco's right to repurchase
the stock, and the District Court for the District of
Massachusetts denied Gupta's motion to vacate the award. We
affirm the decisions below.
I. Background
Gupta began working for Cisco in July, 1997. In March,
1998, he founded Maxcomm. Gupta remained employed by Cisco
while serving as Maxcomm's President and Chief Executive
Officer. On July 17, 1998, the parties signed a Founder’s
Agreement in which Gupta, in exchange for financing, gave
Maxcomm or its successors the right to repurchase Gupta’s shares
if he left Maxcomm before January of 2002.
On September 9, 1999, Gupta and Cisco entered into an
Employment Agreement. 1 The Employment Agreement contained an
integration clause providing that the Agreement superceded and
1
Cisco and Gupta had executed an earlier Employment
Agreement on July 25, 1997, as well as a Proprietary Information
and Invention Agreement and agreements concerning stock and
stock options. None of these agreements is directly at issue in
this case.
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replaced all prior agreements between Gupta and Maxcomm, as well
as Gupta and Cisco, "relating to the subject matter hereof,
including, but not limited to, any and all prior employment
agreements." The integration clause explicitly excepted certain
other agreements, but did not mention the Founder's Agreement.
The Employment Agreement also contained an arbitration clause
and a choice-of-law provision specifying California law.
Also on September 9, 1999, Gupta signed an amendment
to the Founder's Agreement referring to Maxcomm's right to
repurchase "unvested shares" in the event of the termination of
his employment. The amendment provided, inter alia, that absent
shareholder approval Gupta "shall not be entitled to any
accelerated vesting of the Shares in connection with the
acquisition of the Company by Cisco."
On September 13, 1999, Cisco acquired Maxcomm.
Effective that date, Maxcomm and Cisco entered into a Merger
Agreement providing, inter alia, that Cisco could exercise
repurchase rights equivalent to those held by Maxcomm under the
Founder's Agreement. Gupta had negotiated that contract on
behalf of Maxcomm, with the assistance of counsel.
On May 24, 2000, Gupta voluntarily resigned from his
employment at Cisco. Cisco repurchased the Maxcomm stock
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pursuant to the Founder's Agreement and compensated Gupta for
the repurchased shares.
The matter proceeded to arbitration in April, 2000.
The arbitrator performed a "contextual analysis" in interpreting
the contract: she examined several other contracts as well as
the plain language of the integration clause to determine the
intent of the parties.2 She concluded that the integration
clause in the Employment Agreement covered only contracts
relating to employment; that the Founder’s Agreement did not
relate to employment; and hence that the Employment Agreement
did not replace or supercede the Founder’s Agreement.
Accordingly, she held that Cisco retained the right to
repurchase the Maxcomm stock.
Gupta filed suit under the Federal Arbitration Act, 9
U.S.C. § 10, to vacate the arbitrator's award. On December 19,
2000, the district court affirmed the award.
II. Discussion
Our review of an arbitrator's decision is “extremely
narrow and exceedingly deferential.” Keebler Co. v. Truck
Drivers, Local 170, 247 F.3d 8, 10 (1st Cir. 2001) (citation
omitted); Bull HN Info. Sys., Inc. v. Hutson, 229 F.3d 321, 330
2
The arbitrator cited California law, pursuant to the
choice-of-law provision in the Employment Agreement, in support
of this analysis.
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(1st Cir. 2000) (citation omitted). We recently emphasized that
“disputes that are committed by contract to the arbitral process
almost always are won or lost before the arbitrator. Successful
court challenges are few and far between.” Keebler, 247 F.3d at
10 (quoting Teamsters Local Union No. 42 v. Supervalu, Inc., 212
F.3d 59, 61 (1st Cir. 2000)) (interpreting collective bargaining
agreement). Indeed, "judicial review of an arbitration award is
among the narrowest known to the law.” Coastal Oil v. Teamsters
Local A/W, 134 F.3d 466, 469 (1st Cir. 1998) (citation omitted).
In this Circuit, arbitral awards are subject to review
only in two relevant instances: (1) where an award is contrary
to the plain language of the contract or (2) where it is clear
from the record that the arbitrator recognized the applicable
law, but ignored it. Bull HN Info. Sys., 229 F.3d at 330-31.
"In the parlance of this and other circuits, a reviewing court
may vacate an arbitral award if it was made in 'manifest
disregard' of the law." Id. at 331. Thus, we will affirm the
arbitrator’s interpretation of the Employment Agreement if it is
in any way plausible, even if we think she committed serious
error. See Coastal Oil, 134 F.3d at 469; Dorado Beach Hotel
Corp. v. Union de Trabajadores de La Industria Gastronomica de
Puerto Rico Local 610, 959 F.2d 2, 4 (1st Cir. 1992). “[I]t is
the arbitrator’s view of the facts and of the meaning of the
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contract that [the parties] have agreed to accept." Bull HN
Info. Sys., 229 F.3d at 330 (internal quotation marks omitted).
Gupta maintains that the arbitrator and district court
erred in concluding that the Founder’s Agreement did not relate
to employment. He contends that the very purpose of that
agreement was to secure his continued relationship with Cisco,
and points out that his employment was explicitly mentioned
several times therein. This argument is not without force.
We are constrained, however, by the standard of review. See
Wheelabrator Envirotech Operating Serv. Inc. v. Mass. Laborers
Dist. Council Local 1144, 88 F.3d 40, 48 (1st Cir. 1996)
(affirming arbitrator’s award even though “as a matter of first
impression we might well have decided the case otherwise”).
Even if we disagree with the arbitrator's interpretation of the
integration clause in the Employment Agreement, it does not
amount to manifest disregard of the law. See Bull HN Info.
Sys., 229 F.3d at 330-31. The arbitrator's determination that
the parties did not intend to cut off Cisco's repurchase rights
is sufficiently grounded in the record such that we cannot say
it is contrary to the plain language of the Employment
Agreement. See id. Nor is this a situation wherein the
arbitrator recognized but ignored the applicable law. See id.
Hence, we defer to her conclusion that the Employment Agreement
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does not supercede or replace the Founder’s Agreement, and
affirm the award in favor of Cisco.
Affirmed.
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