Ninth Circuit Panel Refuses To Extend Reach Of Monster Energy.
Boris Karloff in Bride of Frankenstein (1935). Wikipedia. Public domain.
Monster Energy Co. v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019) concluded that "[G]iven the Arbitrator's failure to disclose his ownership in JAMS, coupled with the fact that JAMS had administered 97 arbitrations for Monster over the past five years, . . . vacatur of the Award is necessary on the ground of evident partiality." The majority opinion in Monster Energy drew a dissent from Judge Friedland. (See my 12/23/19 post). And a California Court of Appeal opinion distinguished the facts of Monster Energy, and also pointed out that it did not need to apply Monster Energy in a state court proceeding. (See my 4/29/21 post).
The Ninth Circuit again confronts the application of disclosure requirements to JAMS, addressing the rule in Monster Energy. EHM Productions, Inc., DBA TMZ, v. Starline Tours of Hollywood, No. 20-55426 (9th Cir. 6/24/21) (VanDyke, Gould, Lee).
First, it applies the rule in Monster Energy again to JAMS disclosures. The court summarizes the holding in Monster Energy: "prior to performing arbitrations, 'arbitrators must disclose their ownership interests, if any, in the arbitration organizations with whom they are affiliated in connection with the proposed arbitration, and those organizations' nontrivial business dealings with the parties to the arbitration.'" (my emphasis). Thus, it is the arbitrator's ownership interest and the organization's nontrivial business dealings that require disclosure.
Second, the court refuses to extend the rule to require disclosure of JAMS' nontrivial business dealings with the attorney, as opposed to the client. The court also refuses to extend the rule to require disclosure of nontrivial business dealings with the client alone, absent the arbitrator's ownership interest in JAMS.
Third, the court applies the Monster Energy rule retroactively, as long as the time (90 days) to challenge an arbitration award has not expired. The Monster Energy decision was issued after a final award was made by the arbitrator in EHM Productions, but before the time limit allowing for challenge of the award. Thus, the time had not expired to apply the Monster Energy disclosure rule.
Fourth, the court did not like JAMS' response, after receiving a request for further disclosures, that it had nothing further to disclose. "But saying you have nothing further to disclose is markedly different than simply refusing to provide any further disclosures based on the shifty reasoning that the Arbitrators no longer have jurisdiction over the case, which is deliberately evasive on the key question of whether they have something to disclose or not." As a result, the court remanded the disclosure issue so the district court could consider "how the parties can obtain from JAMS the information required by Monster Energy."
Fifth, a concurring opinion, sharing reservations about the Monster Energy decision, encourages reconsideration of Monster Energy en banc.
COMMENT: The panel opinion was authored by Judge VanDyke and joined by Judges Gould and Lee. The concurring opinion suggesting en banc reconsideration of Monster Energy, was authored by Judge VanDyke, joined by Judges Gould and Lee!
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