Who Says Arbitration Cannot Be Costly? Not Us.
This next illustrates that arbitrations can be costly affairs.
In Kent v. The Wine Group, LLC, Case No. A145104 (1st Dist., Div. 1 Aug. 19, 2016) (unpublished), former CEO who did grow the company in extraordinary fashion filed an arbitration demand against his former employer defendant after his behavior became “increasingly mercurial” and despite the company agreeing to pay him $29 million under a separation agreement over time. Former CEO claimed he was entitled to $95 million, but the arbitrator went with the $29 million separation figure. Because the defense prevailed on all claims, the arbitrator awarded company $3,249,773.82 (out of a requested $3.5 million) in attorney’s fees and $356,617.49 in costs.
CEO’s appeal of the fee award was not found persuasive. The arbitration clause in the agreement was broad and allowed submission of all disputes to arbitration, with the arbitrator having broad leeway to award reasonable fees and costs to the prevailing party as defined under Civil Code section 1717. CEO, although awarded $29 million, fell far short of his $95 million demand such that company indeed prevailed.
Just goes to show you that arbitration proceedings can be very, very expensive for the losing party.
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