Seagate Technology Wins $630 Million Award Reinstatement

Seagate Technology LLC won court reinstatement of a $630 million arbitration judgment against Western Digital Corp. (WDC) over allegations of misappropriation of trade secrets.

A Minnesota state appeals court today ruled an arbitrator didn’t exceed his authority in awarding Dublin-based Seagate $525 million plus interest in its dispute with Western Digital and one of its employees who previously worked at Seagate.

The arbitrator found in 2011 that some of the defendants’ evidence was fabricated regarding three trade secrets and entered the judgment against Western and the employee, Sining Mao, as a sanction.

A lower court threw out the award, finding in October that the arbitrator failed to fully consider Western Digital’s defenses.

Minnesota’s Court of Appeals reversed that decision.

“The district court erred by determining that the arbitrator did not have authority to impose sanctions,” the appellate court said. “The district court should not have reviewed the merits of the arbitrator’s decision.”

Mao left hard-drive manufacturer Seagate to accept a position at Irvine, California-based Western Digital, a competitor, in 2006. Seagate sued Western Digital and Mao in an effort to prevent the disclosure of trade secrets.

Fabricated PowerPoint

The arbitrator found that Mao fabricated PowerPoint presentation slides in an attempt to disprove allegations that he might reveal sensitive information, according to the state appeals court opinion. As a sanction, the arbitrator declined to consider any defense to claims that Western Digital and Mao were liable for misappropriating those secrets, according to the opinion.

Steve Shattuck, a Western Digital spokesman, didn’t immediately return a call seeking comment on the decision. George W. Soule, a lawyer for Mao, also didn’t immediately return a call.

The appellate case is Seagate Technology LLC v. Western Digital Corp., A12-1944, Minnesota Court of Appeals (St. Paul). The lower-court case is Seagate Technology LLC v. Western Digital Corp., 27-cv-06-1900, District Court, Hennepin County, Minnesota (Minneapolis).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Christie Smythe in Brooklyn federal court at csmythe1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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