Airborne Athletics, Inc. v. Shoot-A-Way, Inc.

Background

Airborne Athletics, Inc. and Shoot-A-Way, Inc. both design and manufacture basketball training devices. In 2010, Airborne sued Shoot-a-Way in the District of Minnesota for patent infringement. The case settled in 2013 (the "2013 Settlement"). The settlement included a broad ten-year arbitration clause requiring the parties to resolve disputes first through informal discussion, then mediation, and finally arbitration under the American Arbitration Association ("AAA") Commercial Rules. The settlement also contained a fee-shifting provision: if the arbitration plaintiff did not succeed — defined as receiving a result less than the defendant's final mediation offer — the plaintiff would be liable for the defendant's attorneys' fees and costs.

The First Arbitration (2021)

In 2020, Shoot-a-Way claimed Airborne infringed six of its patents and also asserted trademark infringement and false advertising claims. Mediation in December 2020 was unsuccessful. A subsequent arbitration before Arbitrator Roger W. Parkhurst concluded on December 20, 2021, with Shoot-a-Way awarded $51,300 in damages and an injunction against future infringement. Airborne then argued it was entitled to attorneys' fees because its final settlement offer during the December 2020 mediation had exceeded $51,300, thereby triggering the fee-shifting provision in its favor. Arbitrator Parkhurst declined to address the request on procedural grounds but noted the claim could be pursued through a separate mediation and arbitration. Airborne then sought to partially vacate the 2021 award in federal court; U.S. District Judge Nancy E. Brasel confirmed it in November 2022 and likewise noted Airborne could pursue its fee claim separately.

The Second Arbitration (2024)

After Judge Brasel's ruling, Airborne notified Shoot-a-Way of a claim for $3,012,683.11 in attorneys' fees. When Shoot-a-Way declined to pay, Airborne filed a demand for arbitration on October 12, 2023. The parties selected Dr. Cheryl Agris as arbitrator. Three main issues were addressed.

Issue 1: Attorneys' Fees from the 2021 Arbitration

The central question was whether Airborne's final offer in the December 2020 mediation exceeded the $51,300 Shoot-a-Way won, thereby making Shoot-a-Way the losing party under the fee-shifting clause. Both sides agreed the monetary component of Airborne's offer was $800,000. The dispute was whether Airborne had also conditioned that offer on receiving a "covenant not to sue" (a promise by Shoot-a-Way not to bring future patent or trademark claims against Airborne). Airborne denied conditioning the offer on such a covenant; Shoot-a-Way asserted that the mediator had communicated this condition to Shoot-a-Way multiple times during the December 2020 mediation.

Arbitrator Agris found as a factual matter that Airborne had indeed demanded a covenant not to sue, relying in part on the admission of Airborne's CEO that he had sought such a covenant from the mediator. She then considered whether the offer — including that covenant — was a valid, legal offer. Shoot-a-Way argued it was not because it lacked certain material terms (including the precise scope of the covenant), did not comply with Federal Rule of Civil Procedure 68 (a procedural rule governing settlement offers in litigation), and was not in writing. Arbitrator Agris rejected those arguments: Rule 68 does not apply in arbitration; the AAA Commercial Rules applied; and under Minnesota contract law, only terms "upon which the settlement hinges" are material, while details that "could be worked out later" do not invalidate an offer. She concluded the offer contained all material terms.

Because the covenant not to sue had monetary value to Airborne, Arbitrator Agris valued it at between $150,000 and $300,000 and subtracted that amount from the $800,000 Airborne offered to pay, producing a net offer value of $500,000 to $650,000 — well above the $51,300 Shoot-a-Way received. She therefore awarded Airborne $2,649,737.25 in fees and costs from the 2021 arbitration.

Issue 2: Attorneys' Fees from the 2024 Arbitration

As the 2024 arbitration proceeded, both parties separately requested their own attorneys' fees for that proceeding. Airborne argued it was entitled to fees for the 2024 arbitration under Minnesota law and equity. Shoot-a-Way argued the 2013 Settlement's fee-shifting clause only protected defendants, not claimants like Airborne. Arbitrator Agris found three independent grounds to award Airborne its 2024 arbitration fees: (1) Minnesota case law allowing fee recovery in fee-petition proceedings; (2) equity and fairness under the 2013 Settlement; and (3) AAA Commercial Rule 49(d)(ii), which authorizes an arbitrator to award attorneys' fees "if all parties have requested such an award." Because both parties had in fact requested attorneys' fees — Airborne in its initial demand and supplemental briefing, Shoot-a-Way in its answer and counterclaim — Rule 49(d)(ii) was satisfied. She awarded Airborne $1,233,308.55 in fees for the 2024 arbitration.

Issue 3: Prejudgment Interest

Airborne sought prejudgment interest (interest accruing before a judgment is entered) on the 2021 arbitration fee award under Minn. Stat. § 549.09, calculated from December 19, 2022, the date it provided written notice of its fee claim. Shoot-a-Way argued that the same statute bars prejudgment interest on attorneys' fees "added by the court or arbitrator" under subdivision 1(b)(5). Arbitrator Agris rejected that argument, reasoning the 2021 fees were the subject matter of the arbitration itself rather than supplemental amounts "added" by her decision, and also relied on AAA Commercial Rule 49(d)(1), which allows the arbitrator to award interest at a rate and from a date she deems appropriate. She awarded prejudgment interest on the 2021 fee award.

The Federal Court Proceedings

On August 5, 2025, Airborne petitioned this court under 9 U.S.C. § 9 of the Federal Arbitration Act ("FAA") to confirm the 2024 arbitration award. On August 22, 2025, Shoot-a-Way moved to vacate the award under 9 U.S.C. § 10(a)(4), arguing Arbitrator Agris exceeded her powers on all three of the above issues.

Legal Standard

The FAA establishes a strong federal policy favoring arbitration. A court must confirm an arbitration award unless the award is vacated, modified, or corrected under FAA Sections 10 or 11. The scope of judicial review of an arbitration award is described as "among the narrowest known to the law." Under Section 10(a)(4), a court may vacate or modify an award only in two "extremely narrow" circumstances: (1) where the award fails to "draw its essence from the contract" — meaning the arbitrator did not merely interpret the agreement but imposed her own views outside it; or (2) where the award "evidences manifest disregard for the law" — meaning the arbitrator clearly identified the governing law and then proceeded to ignore it. An arbitrator's error of law or fact, even a serious one, is not sufficient grounds for vacatur.

Court's Analysis

Attorneys' Fees for the 2021 Arbitration

Shoot-a-Way argued Arbitrator Agris manifestly disregarded Minnesota law by finding the final offer legally valid despite the scope of the covenant not to sue being undefined. Judge Provinzino rejected this argument. The court explained that "manifest disregard" would require Arbitrator Agris to identify the correct rule and then contradict her own application of it — which she did not do. She applied established Minnesota contract law on material terms correctly and reached a conclusion about the facts. Even if that conclusion were wrong, the court lacks power to overturn it: under established Eighth Circuit precedent, errors of law or fact, even grave ones, do not justify vacatur. The court confirmed the $2,649,737.25 award.

Attorneys' Fees for the 2024 Arbitration

Shoot-a-Way argued it never made a "general" request for attorneys' fees triggering Rule 49(d)(ii) but only sought fees specifically authorized by the 2013 Settlement's fee-shifting clause. Judge Provinzino found Shoot-a-Way's distinction unpersuasive and unsupported by any legal authority. Because Shoot-a-Way cited no authority showing Arbitrator Agris ignored applicable law, it could not meet the manifest disregard standard. Moreover, the court found that both parties plainly requested attorneys' fees broadly in their respective filings, satisfying Rule 49(d)(ii). Because at least one valid basis for the fee award existed, the award was properly confirmed. The court confirmed the $1,233,308.55 award and noted it need not address the other two grounds Arbitrator Agris relied upon.

Prejudgment Interest

Shoot-a-Way's argument — that Minn. Stat. § 549.09 bars prejudgment interest on attorneys' fees added by an arbitrator — was the same argument it made before Arbitrator Agris, who rejected it with citation to Minnesota authority. Shoot-a-Way cited no legal authority showing Arbitrator Agris's conclusion was in manifest disregard of the law. At the hearing, Shoot-a-Way acknowledged its argument was largely grounded in equity rather than law. The court confirmed the prejudgment interest award. It then calculated the amount independently: at the mandatory Minnesota rate of 10% per year on damages over $50,000, the daily interest on $2,649,737.25 is $725.95. Multiplied by 1,187 days from December 19, 2022, to the date of the order, the total prejudgment interest is $861,702.65.

Postjudgment Interest and Costs

Shoot-a-Way did not oppose Airborne's request for postjudgment interest (interest accruing after judgment under federal law, 28 U.S.C. § 1961) or confirmation of Arbitrator Agris's award of $86,423.25 in arbitration-related costs. The court granted both.

Disposition

The court granted Airborne's motion to confirm the arbitration award and denied Shoot-a-Way's motion to vacate. The total award confirmed is: - $2,649,737.25 in attorneys' fees from the 2021 arbitration - $1,233,308.55 in attorneys' fees from the 2024 arbitration - $861,702.65 in prejudgment interest - $86,423.25 in costs - Postjudgment interest accruing under 28 U.S.C. § 1961 from the date judgment is entered