Arbitration & Mediation

Mattel, Inc. Not Toying Around at the U.S. Supreme Court

By Christopher B. Hopkins, Esq.

We pick up a curious Ninth Circuit case which is pending before the U.S. Supreme Court because, of course, it involves an issue of arbitration. Moreover, while we are not SCOTUS-watchers like some people, it seems unusual that the High Court took up an unpublished federal court case.

The procedural history and facts of Hall Street Associates, LLC v. Mattel, Inc. and Tyco Industries, Inc.; Tyco Manufacturing Corp., Tyco Toys, Inc. and View Master Ideal Group, Inc. are lengthy but, suffice it to say, the underlying dispute involves the lease of a building owned by Hall and used by Mattel to make toys. Allegedly, there was some violations of federal water regulations of some kind. A breach of the lease was alleged and, mid-stream (pun intended) of litigation, the parties agreed to arbitrate under the Federal Arbitration Act.

We've mentioned before that successful challenges vacating or modifying arbitration awards are few and far between. Our own 11th Circuit has gone so far as to threaten "sore losers." The twist in this case is that the parties WANTED to broaden the Court's right to review the arbitrator's award and the pact included a provision that a party could appeal if the award was clearly erroneous, a standard of review which is lower than the FAA. Indeed, they put it in their arbitration agreement.

Argument on one side is that you cannot re-write the federal arbitration law, particularly when it leads to more litigation (appeal of the arbitration award). Argument on the other side is that there is nothing to prevent broadening the right of appeal and it may relax concerns about an unmoored arbitration award.

The Ninth Circuit opinion is here (they declined to broaden the FAA rules on modification). You can review the Petition and Response or... just wait for the ruling between now and June.

Full post as published by Florida Arbitration Law on March 06, 2008 (boomark / email).