Monster Energy Co. v. City Beverages, dba Olympic Eagle Distributing

City Beverages, doing business as Olympic Eagle Distributing (Olympic) (plaintiff), entered into an agreement with Monster Energy Company (Monster) (defendant) to get exclusive distribution rights for Monster’s products. The agreement included an arbitration provision. Monster was also contractually allowed to terminate the agreement early if it paid a severance fee. Monster terminated the agreement early and offered Olympic the agreed-upon severance fee. Olympic invoked a Washington state law that prohibited termination of a franchise contract without good cause. Monster filed a motion in federal district court to compel arbitration, which the district court granted. Arbitration was compelled before Judicial Arbitration and Mediation Services, Inc. (Judicial). The parties selected the arbitrator from Judicial’s list, and the arbitrator provided a standard disclosure statement to Monster and Olympic. The statement disclosed that due to the size of Judicial, the parties should assume that one or more of Judicial’s arbitrators had participated in a dispute involving the parties in the case. The arbitrator disclosed that he had served as an arbitrator for one of the parties previously and that he had arbitrated a dispute and issued an award against Monster. The disclosure also stated that each of Judicial’s arbitrators had a financial interest in the company. After the arbitration hearings, the arbitrator issued an award in favor of Monster. Olympic discovered that the arbitrator was a co-owner of Judicial. As an owner, the arbitrator received profits from all arbitrations. Olympic requested that Judicial provide information about the arbitrator’s specific financial interest in the company and the company’s relationship with Monster. Judicial refused. Monster’s form contracts designated Judicial as its arbitrator of choice, and Judicial had arbitrated nearly 100 times in Monster’s disputes. Olympic petitioned the federal district court to vacate the award and compel Judicial to produce the requested information. The district court denied the petition and found the motion to compel moot. Olympic appealed.