Lifecare International, Inc. v. CD Medical, Inc.

CD Medical, Inc. (defendant) was a manufacturer of medical products. Lifecare International, Inc. (Lifecare) (plaintiff) independently marketed CD Medical’s products outside the United States. In 1990, Lifecare sued CD Medical in district court for breach of contract and other claims. CD Medical moved to compel arbitration, which was granted. In June 1992, Lifecare initiated arbitration, claiming in large part that CD Medical had breached certain agreements by failing to give Lifecare a specified marketing territory. The law firm White & Case represented CD Medical at the arbitration. The 17-day liability portion of the arbitration hearing occurred in February 1993, and one of the three arbitrators was attorney Craig Stein. During the hearing, Stein recounted an incident that had occurred at least 18 months before the arbitration in which he had had a scheduling dispute with opposing counsel. In April 1993, the arbitration panel indicated that it intended to rule in Lifecare’s favor. Thereafter, White & Case discovered that Stein’s prior scheduling-dispute incident with “opposing counsel” had been with a White & Case attorney not involved in the arbitration. CD Medical’s request to disqualify Stein was denied. A majority of the panel awarded damages to Lifecare. In district court, CD Medical moved to vacate the arbitration award based on Stein’s failure to disclose the incident as well as two other contacts between CD Medical and the law firm Greenberg Traurig: in 1988, CD Medical had asked Greenberg Traurig to review an agreement between CD Medical and Lifecare, and in 1990, CD Medical had interviewed the firm to possibly represent CD Medical in its dispute with Lifecare. Stein became “of counsel” at the firm in 1992, a few months before he was selected as arbitrator. The court denied CD Medical’s motion to vacate and instead confirmed the arbitration award. CD Medical appealed.