Merriann Panarella, Author at Merriann Panarella - Dispute Resolution Services

Second Circuit Vacates, In Part, An Injunction in Aid of Arbitration

May 13, 2015 by Merriann Panarella

The Second Circuit holds that the district court went too far when it enjoined a party from arguing to the arbitral panel for an extended cure period in the event it was determined to have breached a license agreement. Benihana, Inc. v. Benihana of Tokyo, LLC. No. 14-841, (2nd. Cir. April 28, 2015). When a dispute is properly before an arbitral panel, a district court should not interfere with the arbitral process on the ground that, in its view of the merits, a particular remedy would not be warranted.

Benihana alleged that Benihana of Tokyo breached the License Agreement by offering Beniburgers at its Honolulu location. The Agreement between the parties required an approval of new menu items and burgers were not on the approved list. After numerous legal skirmishes, and in spite of its agreement to stop selling burgers, Benihana of Tokyo blatantly continued to do so. When Benihana discovered that Benihana of Tokyo was now selling ‘Tokyo Burgers’, it terminated the Agreement for good cause claiming that Benihana had failed to cure within thirty days, and had received three notices of default within twelve months. Not to be deterred, Benihana of Tokyo continued its quest to ‘wait to cure’ if, as a result of the arbitration, it was found to have breached the license agreement by selling burgers. [Read more…]

Filed Under: Uncategorized

First Circuit Reverses Vacatur, Finding the Arbitral Panel Did Not Exceed Its Authority

March 16, 2015 by Merriann Panarella

The First Circuit, citing numerous instances in which the arbitral panel’s decisions may have been erroneous and at least one that left the Court ‘perplexed’, nonetheless reversed the district court’s vacatur and remanded for entry of an order confirming the award. Raymond James Financial Services, Inc. v. Robert Michael Fenyk, No. 14-1252, (1st Cir. March 11, 2015). While the First Circuit may not have ‘squarely’ disavowed the doctrine of manifest disregard, if the doctrine isn’t applicable when the arbitrators ignored Florida’s one-year statute of limitations, has it been practically disavowed? [Read more…]

Filed Under: Arbitration

Third Circuit Finds FAA Preempts Pennsylvania Statute

March 11, 2015 by Merriann Panarella

In a non-precedential opinion, the Third Circuit recently found that the Federal Arbitration Act preempts a Pennsylvania statute that precludes parties who are not registered to do business in Pennsylvania from maintaining any action in any court of the Commonwealth. Generational Equity, LLC v. Schomaker et al, 2015, No. 14-1291 (3d Cir. Feb.23, 2015).

Generational Equity sought to confirm an arbitration award in U.S.D.C. for the Western District of Pennsylvania. The FAA provides that the parties may specify a court in which an arbitration award may be confirmed. Here, the parties agreed that the arbitration would be administered pursuant to the Commercial Arbitration Rules of the AAA; Rule 48(c) provides that “[p]arties to an arbitration…shall be deemed to have consented that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.”. [Read more…]

Filed Under: Arbitration

Second Circuit Reverses Vacatur Based on Manifest Disregard

February 12, 2015 by Merriann Panarella

The Second Circuit, in a Summary Order, reversed a decision of a district court in Connecticut which found an arbitral panel’s award in manifest disregard of a Connecticut statute. Sotheby’s Int’l Realty, Inc. v. Relocation Group. LLC, 2015 WL 64265 (2nd. Cir. Jan. 6, 2015). Applying the great deference given to arbitral awards, the Court stated, “[a] motion to vacate filed in federal court is not an occasion for a de novo review of an arbitral award.” The district court appeared to have done just that, engaging in an extensive analysis of the Connecticut statute, including reference to numerous unpublished opinions, which the Second Circuit found “problematic”. [Read more…]

Filed Under: Arbitration

A Pitch for Patent Mediation

January 14, 2015 by Merriann Panarella

Mediation has been center stage in dispute resolution processes; it affords parties and their counsel many well known advantages: privacy, informality, an opportunity for a frank evaluation of the merits, and control including the ability to manage the costs and risks of litigation as well as the outcome. All these factors become even more pronounced when the dispute in question involves patents.

First and foremost, are the costs associated with patent litigation. Patent cases take an average of 2.5 years to resolve, according to PWC’s 2014 Patent Litigation Study, taking valuable time away from ‘business as usual’. And it is expensive: according to the AIPLA Report of the Economic Survey 2013, when $1-10 million is at stake, the median litigation costs through discovery amount to $1 million and total costs to $2 million. If $10-25 million is at stake, these figures jump to $2 million and $3.325 million respectively, and for matters with over $25 million at stake, the figures are $3 million and $5.5 million. Moreover, parties often head to larger law firms when their IP is at risk, ratcheting up each of these figures. For example, if over $25 million is at stake and the firm hired has over 60 employees, the litigation costs increase to $4.7 million through discovery and $7 million in total. [Read more…]

Filed Under: IP Mediation, Mediation

Second Circuit Finds Goldman Can’t Compel Arbitration in an NCUA Case

January 5, 2015 by Merriann Panarella

Despite several creative arguments and “artful Monday-morning quarterbacking”, Goldman Sachs can not compel the National Credit Union Administrative Board (“NCUA”) to arbitrate a dispute over a failed credit union’s purchase of residential mortgage backed securities (“RMBS”).

In National Credit Union Administration Board v. Goldman Sachs & Co., No. 14-312-cv (2nd Cir. Dec. 23, 2014), NCUA sued Goldman in September 2013 alleging violations of federal and state securities laws in the offering and sale of the RMBS. NCUA is a federal agency which regulates federal credit unions and has the power to place a financially precarious credit union under conservatorship or liquidation. As liquidating agent, NCUA has the right to bring suit on behalf of the credit union. In 2010, NCUA placed Southwest Corporate Federal Credit Union (“Southwest”) into conservatorship and then involuntary liquidation after Southwest suffered substantial losses as a result of purchasing triple A-rated RMBS from Goldman which were later downgraded to below investment grade. [Read more…]

Filed Under: Arbitration

First Circuit Finds Plaintiff Waived Its Right To Arbitrate

December 20, 2014 by Merriann Panarella

After litigating for nine months, including engaging in active discovery, the plaintiff sought an “eleventh-hour stay” in favor of litigation. Not condoning “the use of an arbitration clause as a parachute when judicial winds blow unfavorably”, the First Circuit found the plaintiff waived its right to arbitrate.

In Joca-Roca Real Estate, LLC v. Brennan, No. 14-1353 (1st Cir. Dec. 1, 2014), the plaintiff alleged claims for fraud and breach of contract arising from an asset purchase agreement. While the agreement contained a broad arbitration clause, the plaintiff made no effort to pursue arbitration, instead filing claims in federal court. For eight months, the parties engaged in extensive discovery including sixteen depositions, interrogatories, and the exchange of thousands of pages of documents, as well as several telephone conferences to resolve discovery disputes and scheduling conflicts. On December 6, 2013, with trial scheduled for February 3, 2014, and without explanation, plaintiff moved to stay the proceedings pending arbitration; defendant objected. [Read more…]

Filed Under: Arbitration