Nikola Founder Loses 9th Cir. Appeal to Vacate Arbitration Award

The US Court of Appeals for the Ninth Circuit affirmed a $167 million arbitration award against founder Trevor Milton in favor of bankrupt Nikola Corp. related to a US Securities and Exchange Commission fine.

The court rejected Milton’s bid to vacate the award under the Federal Arbitration Act, concluding that his challenges to the arbitrators’ allocation of fault essentially asked judges to reconsider the facts, which isn’t a basis to overturn the judgment, a three-judge panel said Thursday.

Milton’s contention that the arbitrators disregarded the “burden of proof” for causation, though framed as a challenge to their interpretation of Delaware law, “is actually an argument that the arbitrators’ factual determinations about causation were erroneous,” Judges Consuelo M. Callahan, John B. Owens, and Michelle T. Friedland held.

Courts can’t use disagreement with an arbitrator’s findings as grounds to vacate an award, the panel added.

The award followed Nikola’s claims that Milton breached his fiduciary duties as CEO by making exaggerated statements about the company’s financial outlook. Milton was found guilty of securities and wire fraud in 2022 and was later pardoned by President Donald Trump.

Arbitrators found his misstatements caused tens of millions of dollars in damages, including a $125 million fine from the SEC and $46 million in legal fees and expenses, and ordered him to pay around 97% of those losses.

Milton is separately appealing a bankruptcy court ruling in Delaware that lowered the priority of his nearly $70 million claim, effectively wiping out his chances of recovery in the company’s Chapter 11 case. He has argued that a presidential pardon wipes away the underlying misconduct.

Milton argued in Jan. 30 court documents that the bankruptcy court relied on his conviction and the arbitration award, which he characterized as “non-final” because it was on appeal in the Ninth Circuit. He said in the court documents that he reserved his right to seek review of the arbitration award by the US Supreme Court.

The circuit judges also rejected Milton’s claim that the arbitrators applied the wrong causation standard, noting Delaware law sets loose causation standards for proving damages in fiduciary duty cases.

Milton lawyers didn’t immediately respond to a comment request.

Frost LLP and Kasowitz Benson Torres LLP represent Nikola. Tiffany & Bosco PA represent Milton.

Nikola Corporation v. Milton, 9th Cir., No. 24-6210, memorandum 2/5/26.