A Texas district court denied Curtis International, Ltd.’s (“Curtis”) counter-motion to vacate an arbitration award in a row over attorney and expert witness fees and expenses. Curtis, a manufacturer and distributor of electronic and home appliances, retained McKool Smith as counsel to handle several patent infringement lawsuits. Upon settlement of these underlying actions, McKool Smith sought over $1.4 million dollars in unpaid legal fees and expert witness expenses. An arbitrator awarded McKool Smith fees and expenses with interest, after the dispute stalled at mediation. Curtis sought to vacate the award based on public policy, arbitrator authority, and manifest disregard of the law concerns.
Curtis argued that the arbitrator award conflicted with the Texas Disciplinary Rules of Professional Conduct in contravene to Texas public policy. The court quickly dismissed this argument finding that “[t]he Fifth Circuit has foreclosed the use of non-statutory grounds for vacatur, including public policy grounds.” The court again invoked the Fifth Circuit regarding manifest disregard of the law, finding the ground invalid when applying for vacatur. The court finally addressed Curtis’ concerns that the arbitrator exceeded his authority. The court noted that the engagement agreement between the parties explicitly stipulated that Curtis would be responsible for the expenses incurred by the use of expert witnesses. The court also found that contrary to Curtis’ assertions, McKool Smith did discuss the use and retention of expert witnesses. For these and other reasons, the court denied Curtis’ motion and confirmed the arbitration award. McKool Smith, P.C. v. Curtis Int’l, Ltd., No. 3:15-cv-01685-M (N.D. Tex. Oct. 14, 2015)