On Tuesday, the Ninth Circuit Court of Appeals issued a ruling that on its face appears to have absolutely nothing to do with movies, television shows, and music. Wrong. In fact, the decision may have quite an impact in the entertainment sector. It could even shake an ongoing profit dispute over one of the longest-running shows on television.
The dispute involves a company that was distributing Anheuser-Busch beer before coming to an agreement to use its distribution network to promote and sell Monster energy drinks for 20 years in an exclusive territory. Olympic Eagle, that company, alleges that it helped transform Monster into the top-selling energy drink in convenience stores before Monster got a multi-billion dollar investment from the Coca-Cola Company. Afterwards, Monster terminated the distribution agreement.
The full details about the dispute aren't important. What is relevant is how arbitration clauses in the entertainment industry abound. Hollywood studios often appear in arbitration forums like JAMS and AAA and fight over issues like profit participation, executive firings, alleged discrimination, the rights to air or stream entertainment works, and on and on. Most of these disputes are never made public. In fact, studios see secrecy as a plus.
," detailed how major studios were continually using the same arbitration forums and how this led to concern there could be a systemic edge for these big corporations arising from what critics call "repeat player bias." The article addressed certain problem areas. For example, some JAMS arbitrators have a profit interest in matters handled by other arbitrators. And the article called for increased disclosures about conflicts.
Olympic Eagle was shocked by what it read —and took the lack of disclosures as grounds to overturn what had occurred in arbitration."We conclude, given the Arbitrator’s failure to disclose his ownership interest in JAMS, coupled with the fact that JAMS has administered 97 arbitrations for Monster over the past five years, that vacatur of the Award is necessary on the ground of evident partiality," writes the majority opinion from Ninth Circuit Judge Milan D. Smith.
danielleradford MurrellDan joestarr187 Lons I started reading this article and then couldnt get my head around it. Can you guys read this and explain it back to me on SJU in a fun way.
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