On October 22, 2019, the Ninth Circuit Court of Appeals entered an opinion in Monster Energy Co. v. City Beverages, LLC, No. 17-55813, 2019 WL 5382062 (9th Cir. Oct. 22, 2019) vacating an arbitration award issued by a JAMS arbitrator for failure to disclose that: (1) the arbitrator was a co-owner of JAMS, and (2) the winning party had several prior cases with JAMS. The Ninth Circuit determined that the failure to disclose these points justified vacatur of the resulting arbitration award for “evident partiality” under Section 10(a)(2) of the Federal Arbitration Act (“FAA”).[1]
The case arose from a distribution agreement between Monster Energy Co. (“Monster Energy”) and City Beverages, LLC (d.b.a. “Olympic Eagle”). The agreement provided for arbitration under the JAMS Rules and an arbitrator from the JAMS roster was selected. After the arbitrator ruled in favor of Monster Energy, Olympic Eagle sought vacatur of the award in the U.S. District Court for the Central District of California. Olympic Eagle argued, inter alia, that the arbitrator had failed to disclose his status as a co-owner of JAMS and that coupled with the fact Monster Energy had repeatedly used JAMS services in the past, this omission raised an issue of evident partiality. The District Court rejected Olympic Eagle’s motion and confirmed the award.
[1] The Ninth Circuit concluded that: “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. We therefore reverse the district court and vacate the Award.” Monster Energy Co. v. City Beverages, LLC, No. 17-55813, 2019 WL 5382062, at *2 (9th Cir. Oct. 22, 2019).
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