Positive Software Solutions v. New Century Mortgage Corp.

Facts

In January 2001, New Century Mortgage Corporation licensed an automated software support program called LoanForce from Positive Software Solutions. In December 2002, Positive Software alleged that New Century copied the program in violation of their agreement and filed a lawsuit. The district court granted a preliminary injunction and ordered arbitration. Following American Arbitration Association procedures, the parties selected Peter Shurn as arbitrator. Before the arbitration, Shurn stated he had nothing to disclose regarding past relationships with either party or their counsel. After a seven-day hearing, Shurn issued an 86-page ruling in favor of New Century, ordering Positive Software to take nothing on its claims and granting New Century $11,500 on its counterclaims plus $1.5 million in attorney’s fees. After losing, Positive Software investigated Shurn’s background and discovered that years earlier, Shurn and his former law firm had represented the same party (Intel) as New Century’s counsel, Susman Godfrey, in patent litigation. One of Susman Godfrey’s attorneys in the arbitration, Ophelia Camiña, had been involved in the Intel litigation. Although Shurn and Camiña’s names appeared together on pleadings, they never attended meetings, calls, hearings, or trials together. They were two of thirty-four lawyers from seven different firms representing Intel in litigation that ended at least seven years before the arbitration.