CHRISTINA A. SNYDER, District Judge.
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.
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.
Under the Federal Arbitration Act, 9 U.S.C. §§ 1
9 U.S.C. § 10(a). Similarly, as relevant here, correction of an award is only permitted when there is an "evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award." 9 U.S.C. § 11(a). "Unless the award is vacated as provided in § 10, or modified as provided in § 11 . . . confirmation is required even in the face of erroneous findings of fact or misinterpretations of law."
According to Swen, it was erroneous for the arbitrator to conclude that Swen breached the Distribution Agreement. The alleged key flaw in the arbitrator's ruling was his conclusion that LATG's minimum guarantee payment was not due in the absence of a United States theatrical release. This decision was erroneous, Swen contends, because the Distribution Agreement provides that LATG's minimum guarantee payment was due "before delivery of material of each picture and announcement of US theatrical release." Distribution Agreement ¶ F. Since the payment was purportedly made prior to a United States theatrical release, Swen concludes that such a release could not be a required condition of payment, and that the arbitrator's contrary decision exceeded his powers.
The Court cannot accept this argument. "Arbitrators exceed their powers not when they merely interpret or apply the governing law incorrectly, but when the award is completely irrational or exhibits a manifest disregard of law."
Additionally, Swen argues that even if the award should not be vacated, the award should be amended to correct the arbitrator's purportedly erroneous calculation of damages. Swen claims that there were two errors in the arbitrator's calculation of damages. First, Swen argues that the arbitrator essentially awarded LATG lost profits, which is a measure of damages purportedly prohibited by the Distribution Agreement. Distribution Agreement, Standard Terms § 15.4. Second, Swen argues that even if the arbitrator's method of computing damages was appropriate, this method should have resulted in a far lower damages award. According to Swen, the Distribution Agreement provides that LATG must share half of its gross receipts with Swen. Distribution Agreement ¶ H. Moreover, Swen contends, the arbitrator's method of computing damages was to approximate the gross receipts that LATG would have received through use of the distribution rights to the film and award it those receipts. The arbitrator's calculation did not reflect, however, the fact that half of the gross receipts are due to Swen under the Distribution Agreement, and Swen concludes that the Court should correct this flaw by reducing the arbitrator's award accordingly.
The Court finds that neither of Swen's arguments are persuasive. First, regarding lost profits, the parties' agreement provides that "in no case may Distributor [LATG] collect any consequential damages including `lost profits.'" Distribution Agreement, Standard Terms § 15.4. There is no reason to believe that the arbitrator improperly awarded consequential damages or improper lost profits of the kind forbidden by this agreement. The arbitrator never claimed to be awarding lost profits or consequential damages, and the contention that this was the basis for the arbitrator's award is belied by the fact that the arbitrator cited California Civil Code § 3300—which forbids the award of consequential damages for breach of contract—in the damages portion of the award.
Accordingly, the Court finds no grounds for vacating or correcting the arbitrator's award, and therefore concludes that the award should be confirmed.
In accordance with the foregoing, the Court hereby GRANTS LATG's motion to confirm the arbitration award, and DENIES Swen's motion to vacate, modify, or correct the arbitration award.
IT IS SO ORDERED.