Hasbro, Inc. v. Catalyst USA, Inc.

Hasbro, Inc. (plaintiff) entered into a software-licensing contract with Catalyst USA, Inc. (Catalyst) (defendant), and the agreement provided that in accordance with the Federal Arbitration Act (FAA), the parties would arbitrate any disputes that could not be resolved amicably. Hasbro was dissatisfied with Catalyst’s software and initiated arbitration proceedings. A hearing was conducted before a panel of arbitrators from the American Arbitration Association (AAA) and concluded in July 2001. The parties did not hear from the panel until October 2001 when the AAA sent a bill to the parties for the arbitration panel’s services. Catalyst requested an explanation of the bill, and later that month, AAA provided an itemized list of expenses. After reviewing the bill, Catalyst formally notified the AAA of concerns regarding the arbitration process. Catalyst stated that under the AAA’s rules, an arbitrator had 30 days from the conclusion of the hearing to issue an award and that because the arbitrator did not issue an award by August 2001, the validity of the process was in question. After further communication regarding the bill, Catalyst formally objected to the untimeliness of the arbitration award in November 2001. Within the next month, the panel issued an award in favor of Hasbro, and Catalyst filed suit in federal district court to have the award vacated, arguing that the arbitrators exceeded their authority under the FAA by issuing an untimely award. The district court vacated the award, and Hasbro appealed to the Seventh Circuit.