Office Create Corporation v. Planet Entertainment, LLC

Background

Office Create Corporation (“OC”) filed a petition to confirm an arbitration award issued by the International Court of Arbitration of the International Chamber of Commerce. The dispute arose from an August 2018 licensing agreement under which Planet Entertainment, LLC could develop, publish, and sell a Cooking Mama game for the Nintendo Switch. The agreement required Planet to make scheduled payments and royalties to OC and required disputes related to the agreement to be resolved through binding arbitration.

OC later terminated the agreement, alleging that Planet had sold unapproved versions of Cooking Mama products for the Nintendo Switch and PlayStation 4. OC began arbitration against Planet and Steve Grossman, Planet’s chief executive officer. Grossman was not an individual signatory to the licensing agreement, but he signed a later submission agreement in his individual capacity. That agreement provided that the tribunal would decide whether it had authority over claims against him, while preserving his objection to being subject to arbitration.

The tribunal first ruled that it had authority to decide the jurisdictional issue and that Grossman was a proper party to the arbitration. After an evidentiary hearing, it issued a final award finding that Planet materially breached the licensing agreement and that OC validly terminated it. The tribunal also ruled that Planet’s corporate veil should be pierced as to Grossman, making Grossman and Planet jointly and severally liable.

The award required the respondents to pay OC $200,000 for unpaid milestone payments, $20,913,200 representing Planet’s profits, ¥61,987,030 and $1,398,318 for OC’s legal costs, and $332,500 for arbitration costs. It also awarded simple interest at 9% per year, ordered the respondents to refrain from certain unauthorized Cooking Mama-related sales and representations, and dismissed the respondents’ counterclaims with prejudice.

The parties’ petitions

OC asked the court to confirm the award, which would make the arbitration award a court judgment. Planet and Grossman filed a cross-petition to vacate, or cancel, the award. They argued that the tribunal had not decided whether the claims against Grossman were arbitrable, applied the wrong standard in finding jurisdiction over him, and manifestly disregarded the law by piercing the corporate veil and imposing individual liability on Grossman.

OC also filed a renewed motion for an order of attachment and a temporary restraining order. An attachment order can preserve property to help secure payment, and a temporary restraining order can provide short-term emergency relief.

Legal standard

The court explained that confirmation of an arbitration award is ordinarily a summary process and that courts must confirm an award unless a legally recognized ground for vacating, modifying, or correcting it exists. Under the Federal Arbitration Act, the grounds for vacatur are very limited, including corruption or fraud, arbitrator partiality, serious procedural misconduct, or arbitrators exceeding their powers. The Second Circuit also recognizes a narrow doctrine allowing vacatur when arbitrators acted in manifest disregard of the law—meaning they deliberately ignored applicable law.

Because the award was subject to the New York Convention, the court also considered the Convention’s limited grounds for refusing recognition or enforcement, including an invalid arbitration agreement, inadequate notice or inability to present a case, an award outside the parties’ submission, improper arbitral procedure, lack of finality, non-arbitrability, or violation of public policy.

Court’s analysis

The court found no basis for vacating the award. It emphasized that the parties had agreed to arbitration through the licensing agreement and submission agreement, participated in the arbitration with counsel, and received detailed explanations from the tribunal.

The court rejected the argument that the tribunal had failed to decide whether it could hear the claims against Grossman. The tribunal held a hearing on that question and issued a detailed jurisdictional award. The court noted that Grossman had agreed that the tribunal could decide whether it had jurisdiction over him, even though he preserved his objection to the tribunal’s ultimate conclusion.

The court also rejected the arguments that the tribunal used the wrong standard or manifestly disregarded the law. The court found that the tribunal carefully considered the applicable New York law and explained its reasons for finding jurisdiction over Grossman and piercing the corporate veil for purposes of liability. The court therefore concluded that the narrow standard for vacatur was not met and that no ground existed under the Federal Arbitration Act or the New York Convention to refuse recognition of the award.

Disposition

The court granted OC’s petition to confirm the arbitration award and denied the respondents’ cross-petition to vacate the award. The court dismissed OC’s renewed application for an order of attachment and a temporary restraining order as moot because of its decision confirming the award. The Clerk was directed to enter judgment in favor of OC under the tribunal’s award, terminate the motions, and close the case.