Flexible Manufacturing Systems Pty. Ltd. v. Super Products Corporation

Super Products Corporation (defendant) and Flexible Manufacturing Systems (Flexible) (plaintiff) entered into a licensing agreement. The agreement contained an arbitration clause stating that arbitration would occur in the United States and the state law of Wisconsin would govern. A dispute arose, and both Super Products and Flexible attempted to terminate the licensing agreement. Flexible filed an action in United States federal district court regarding the dispute. The district court referred the matter to arbitration at Super Products’ request pursuant to the arbitration clause. Arbitration was conducted by a three-member panel of the American Arbitration Association (AAA) over a period of 17 days. The panel heard 16 witnesses and received over 400 exhibits. The arbitration ultimately resulted in an award in favor of Flexible. Super Products filed a motion with the district court, arguing that the award should be set aside because the arbitrators failed to enforce the arbitration clause and manifestly ignored the law. The district court found that the award was valid and enforceable and denied Super Products’ motion. Super Products’ arguments were primarily directed at which party’s termination was valid. This issue had been fully considered and decided by the arbitration panel. Super Products appealed to the court of appeals. In response, Flexible filed a motion seeking a declaration that Super Products’ appeal was frivolous and an order awarding double costs to Flexible because of the appeal’s frivolousness.