Arbitration Award of Half Billion Dollar Rendered vs. WD

Western Digital Corp. reported that, on November 18, 2011, an arbitration award of $525 million was rendered against the company by a sole arbitrator in a pending confidential arbitration action in Minnesota.

The amount of the award does not include prejudgment interest, which will be subsequently determined. The award involves claims brought by Seagate Technology LLC against WD and one employee who was formerly employed by Seagate, alleging misappropriation of confidential information and trade secrets.

"We do not believe there is any basis in law or fact for the damage award of the arbitrator," said John Coyne, president and chief executive officer. "We believe the company acted properly at all times and we will vigorously challenge the award. This does not affect our ability to conduct our operations, to complete the recovery and recommencement of our Thailand operations or, subject to obtaining the required regulatory approvals, to consummate our planned acquisition of Hitachi GST."

Comments

This is an old story.

In July 30, 2004 Pete Goglia left Seagate, most recently as executive director of its recording head operation, joining WD to lead its read/write head development and after serving at Seagate for 17 years.

Remember that in July 2003 WD acquired head maker Read-Rite for $180 million.

Seagate attempted to block the hire of Goglia, claiming that he will not be able to avoid disclosing Seagate confidential information in the course of his new job.

On October 4, 2006, plaintiff Seagate filed a complaint against WD and Goglia in the Minnesota Fourth Judicial District Court. The complaint alleges claims based on supposed misappropriation of trade secrets and seeks injunctive relief and unspecified monetary damages, fees and costs. On June 19, 2007,Goglia filed a demand for arbitration with the American Arbitration Association. A motion to stay the litigation as against all defendants and to compel arbitration of all Seagate's claims was granted on September 19, 2007. On September 23, 2010, Seagate filed a motion to amend its claims and add allegations based on the supposed misappropriation of additional confidential information, and the arbitrator granted Seagate’s motion. The arbitration hearing commenced on May 23, 2011 and concluded on July 11, 2011. The parties were filing post-arbitration briefs in August 2011. The arbitrator were expected to render a decision in the fall of 2011.