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Latinamerican Theatrical Group LLC v. Swen International Holding

United States District Court, Ninth Circuit

August 5, 2013

LATINAMERICAN THEATRICAL GROUP LLC,
v.
SWEN INTERNATIONAL HOLDING

CIVIL MINUTES - GENERAL

CHRISTINA A. SNYDER, District Judge.

Proceedings: PETITION TO CONFIRM INTERNATIONAL ARBITRATION AWARD (Docket #1, filed February 21, 2013) MOTION TO VACATE THE ARBITRATION AWARD (Docket #16, filed April 25, 2013)

I. INTRODUCTION

Petitioner Latinamerican Theatrical Group, LLC ("LATG") filed the instant petition on February 21, 2013. LATG's petition seeks to confirm an arbitration award made in January 2013. The arbitration award was entered in favor of LATG and against respondent Swen International Holding ("Swen").

On April 25, 2013, Swen filed a motion to vacate the arbitration award.[1] LATG filed an opposition on May 17, 2013, and Swen replied on May 24, 2013. After considering the parties' arguments, the Court finds and concludes as follows.

II. BACKGROUND

LATG and Swen are companies that conduct business in the distribution of motion pictures. On December 1, 2008, the parties executed the Distribution Agreement, which concerned distribution rights for the motion picture "13" ("the film"). Additionally, the Distribution Agreement contains a mandatory arbitration clause.

A dispute arose between the parties regarding payment due under the contract. In brief, LATG took the position that it was not obligated to make a $292, 800 minimum guarantee payment to obtain distribution rights for the film because there was no planned United States theatrical release for the film. Swen, in contract, contended that LATG had improperly refused to pay for the distribution rights for the film, and that due to LATG's breach of the agreement, Swen had the right to resell the distribution rights.

An arbitrator held a hearing regarding the dispute on December 5-6, 2012, and on January 10, 2013, issued an award in favor of LATG. The arbitrator's award concluded that LATG's minimum guarantee payment was only due in the event that it received a "tangible assurance" that there would be a United States theatrical release for the film. Arbitration Award, Dkt. #1 Ex. 2 § D.2. The arbitrator therefore concluded that Swen breached the Distribution Agreement by reselling the distribution rights. Id . § E.3. The arbitrator awarded damages in the amount of $433, 867. Id . § D.3.g. This amount was computed by taking the difference between the minimum guarantee payment, which would have been due had the contracted been fully performed, and the amount of licensing fees generated by Swen's improper use of the distribution rights. This measure was proper, the arbitrator reasoned, because the fees generated by Swen were a good approximation of the economic value LATG could have derived from the distribution rights had the contract been performed. Id . The arbitrator also awarded post-judgment interest at the rate of ten percent per annum, and attorney's fees in the amount of $76, 296.54. Id . § E.4-5. Finally, the arbitrator granted LATG title to the distribution rights that were the subject of the Distribution Agreement. Id . § E.6.

III. LEGAL STANDARD

Under the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., there are limited grounds upon which a federal court may vacate, modify, or correct an arbitration award. Lagstein v. Certain Underwriters at Lloyd's, London , 607 F.3d 634, 640 (9th Cir. 2010). "Neither erroneous legal conclusions nor unsubstantiated factual findings justify federal court review of an arbitral award under the statute, which is unambiguous in this regard." Kyocera Corp. v. Prudential-Bache Trade Services, Inc. , 341 F.3d 987, 994 (9th Cir. 2003).

(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior ...

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