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January 13, 2021 Practice Points

Monster and Olympic: Still in a JAM?

After learning of a conflict of interest between JAMS and Monster, Olympic Eagle has sought an order compelling the arbitration to be held before a neutral provider other than JAMS.

By Mitchell L. Marinello

In 2006, Monster Energy Co. (Monster) and City Beverages LLC d/b/a Olympic Eagle Distributing (Olympic Eagle) entered into a 20-year distribution agreement. In 2015 Monster terminated Olympic Eagle, and the parties’ resulting dispute was arbitrated before JAMS. Ultimately, the JAMS arbitrator issued an award in favor of Monster for approximately $3 million in legal fees.

Monster obtained confirmation of the award in a California federal court, but on appeal the Ninth Circuit reversed and vacated the award because JAMS had not sufficiently disclosed that its neutral had an ownership interest in JAMS and that JAMS had done substantial business with Monster in the past. In that regard, JAMS had handled 97 arbitrations in which Monster was a party over the previous five years. Petitions for hearing in banc to the Ninth Circuit and for certiorari to the United States Supreme Court were denied. 

Presently, the parties are faced with having to arbitrate their dispute all over again. Monster wants the arbitration to be before JAMS, but Olympic Eagle wants the case to proceed before another ADR provider such as the American Arbitration Association. On December 21, 2020, Olympic Eagle filed a motion in the California federal court arguing that JAMS cannot provide a neutral forum, because JAMS filed amicus briefs supporting Monster’s efforts to reverse the Ninth’s Circuits ruling. Olympic seeks an order compelling the arbitration to be held before a neutral provider other than JAMS.

Olympic Eagle’s motion is scheduled for hearing on February 1, 2021. 

Mitchell L. Marinello is a partner at Novack and Macey LLP in Chicago, Illinois.

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