Ellen Tracy Holdings LLC v. Daytona Apparel Group LLC

Background

Ellen Tracy Holdings LLC petitioned to confirm an arbitration award against Daytona Apparel Group LLC. The dispute arose from a license agreement under which Daytona agreed to pay royalties and make certain marketing and promotional expenditures. The agreement required disputes arising from or relating to it to be resolved through arbitration in New York City.

Daytona stopped making required payments on January 1, 2022, and unilaterally terminated the license agreement on April 13, 2022. Ellen Tracy then filed an arbitration demand asserting breach-of-contract and account-stated claims. After an arbitrator was appointed with both parties' consent, Daytona's outside counsel withdrew. Daytona did not participate further or attend the December 15, 2022 hearing, although the opinion states that Daytona received notice of the proceedings.

The arbitrator issued the award on January 23, 2023, directing Daytona to pay Ellen Tracy $1,581,591.62. The amount included $1,515,567.67 in breach-of-contract damages, $43,834.95 in attorneys' fees and costs, $16,175 in American Arbitration Association administrative fees and expenses, and $6,014 in arbitrator fees. The arbitrator made no separate award on the account-stated claim because Ellen Tracy acknowledged that those damages duplicated the breach-of-contract damages.

Court's analysis

The court found that it had jurisdiction because the parties were completely diverse and the amount demanded exceeded $75,000. It also found that venue was proper in the Southern District of New York.

Under the Federal Arbitration Act, a court generally must confirm an arbitration award when the parties' agreement permits court confirmation, unless the award is vacated, modified, or corrected under the statute. The court explained that its review is highly limited and that confirmation is ordinarily a summary proceeding that turns an arbitration award into a court judgment. An award should be confirmed when there is at least a minimally reasonable basis for the result.

The court found such a basis here. It noted that the arbitrator considered Ellen Tracy's claims and that Daytona initially appeared through counsel but then failed to participate or attend the hearing despite notice. Daytona neither opposed the petition nor sought to amend, vacate, or set aside the award.

Ruling

Judge P. Kevin Castel granted the petition to confirm the arbitration award. The court confirmed the award in all respects and awarded Ellen Tracy $1,581,591.62, plus interest at 9% per year from January 23, 2023, through the date of judgment. The court directed Ellen Tracy to submit a proposed judgment within 21 days. The opinion also states that Ellen Tracy would not seek attorneys' fees, costs, or disbursements from the court in connection with the petition.