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Dispute Resolution Keyed to Carbonneau, 8th Ed.
Hyatt Franchising v. Shen Zhen New World I
Citation:
876 F.3d 900 (2017)Facts
In September 2012, Hyatt Franchising and Shen Zhen New World I entered into an agreement whereby Shen Zhen would renovate a hotel in Los Angeles and operate it using Hyatt’s business methods and trademarks. Two years later, Hyatt declared that Shen Zhen had breached the agreement. The dispute went to arbitration, where Shen Zhen requested a subpoena for Lynn Cadwalader, who had represented Shen Zhen during contract negotiations but later joined Hyatt’s law firm, DLA Piper. The arbitrator denied this request and also declined to disqualify DLA Piper, finding that the firm’s ethics screen adequately protected Shen Zhen’s confidential information. The arbitrator ultimately awarded Hyatt approximately $7.7 million in damages plus $1.3 million in attorneys’ fees. Shen Zhen challenged the award in federal court, arguing that the arbitrator committed misconduct by refusing to allow Cadwalader’s deposition and by misapplying franchise law.
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