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Court Declines to Extend Monster Energy

Mark A Kantor

Court Declines to Extend Monster Energy
bhofack2 via Getty Images

In EHM Productions, Inc. DBA TMZ v. Starline Tours of Hollywood, Inc., No. 20-55426, 9th Cir., June 24, 2021, a unanimous three-member panel of the U.S. Court of Appeals for the Ninth Circuit addressed compliance with Monster Energy Company v. City Beverages, LLC, in the course of remanding a case back to the district court to determine whether JAMS and the arbitrator had complied with the arbitral institution and arbitrator disclosure requirements of Monster Energy.

What makes the EHM Production (TMZ) v. Starline Tours decision quite interesting is that all three members of the appellate panel also joined in a separate concurrence urging the Ninth Circuit to revisit Monster Energy.

VANDYKE, Circuit Judge, with whom GOULD and LEE, Circuit Judges join, concurring:
In Judge Friedland’s Monster Energy Company v. City Beverages, LLC dissent, she predicted the majority’s decision was “likely to generate endless litigation over arbitrations that were intended to finally resolve disputes outside the court system.” 940 F.3d 1130, 1141 (9th Cir. 2019) (Friedland, J., dissenting). This case is certainly some evidence that her warning was warranted. The result here was required by Monster Energy, which the opinion faithfully applies. But because I share many of the same reservations about the Monster Energy decision that Judge Friedland so aptly articulates in her dissent, I encourage my colleagues to reconsider Monster Energy en banc.

We shall have to see whether this highly unusual statement by the appellate panel triggers action by a disputing party to seek en banc review or any change in the posture of the Ninth Circuit regarding the arbitral institution and arbitrator disclosure measures required by Monster Energy

It is noteworthy that the appellate panel rejected Starline’s effort to vacate the arbitration award on “evident partiality” grounds due solely to “for-profit” JAMS’ prior business dealings with TMZ and counsel for TMZ, not on the basis that the arbitrator in the matter had an equity interest in JAMS. That, said the appeals court, would be a “significant and unwarranted extension” of the disclosure requirements recently set out in Monster Energy. The court of appeals declined to consider a “repeat player” situation alone as sufficient under Monster Energy. The appellate panel also rejected Starline’s argument that the number of times counsel, rather than the disputing party itself, is involved in a JAMS matter should be a basis for disclosure and vacatur under Monster Energy. The court instead said in its footnote that, “If being ‘repeat players’—without the additional financial relationship emphasized by Monster Energy—was alone sufficient to create concerns about ‘evident partiality,’ that would cast an ethics pall on any court that has a specialized bar.”