NY Court of Appeals Affirms Arbitration Award for Kramer Levin Client Sirius XM Radio

Five and a half years after U.S. Electronics brought an arbitration against Sirius seeking over $133 million in damages and three years after the unanimous 149-page award in favor of Sirius was issued, Kramer Levin finished a triple play of victories to sustain the award - confirmed by the Commercial Division, unanimously affirmed by the First Department and now unanimously affirmed by the NY Court of Appeals.

On November 15, 2011, the New York Court of Appeals issued a memorandum decision stating that “we adopt the Second Circuit’s reasonable person standard and apply it when we are asked, as in this case, to consider the federal evident partiality standard.” In so doing, the court noted that the intermediate appellate court had articulated a standard that could not “be gleaned from federal precedent.”

Applying the reasonable person standard, the Court affirmed the lower court rulings confirming the arbitration award. U.S. Electronics had challenged the award on the basis that the chairman of the arbitration panel’s son, a member of Congress, had “publicly advocated a merger between Sirius and XM Satellite Radio, Inc. (XM)” and “was a close political ally of Congressman Darrell Issa, the founder and director of a competitor of U.S. Electronics in radio receiver distribution.” The Court held that evident partiality is not shown “premised on attenuated matters and relationships.” “That Chairman Sessions’ son publicly endorsed the Sirius-XM merger had no impact on the merits of the separate and distinct breach of contract matter. Moreover, the purported connection between Chairman Sessions and Congressman Issa through his son’s political relationship is too tenuous to impute partiality to the chairman…This would be a far different case if USE could allude to a personal or business relationship between Chairman Sessions and Congressman Issa; or if his son had a prominent role at Sirius or DEI….However, absent such a showing, these allegations, without more, amount to speculation of bias.”

Litigation partner Michael S. Oberman, who heads up the firm’s ADR Practice Group, argued the appeal for Sirius with assistance from Intellectual Property partner Peter A. Abruzzese, Litigation special counsel Karen S. Kennedy and associate Ashley Miller.