this arbitration was not potentially tainted with any conflicting interests.
This case does not present any compelling reasons not to afford Judge McGarr's unconfirmed arbitration judgment preclusive effect on the subsequent proceedings before this court. The issues in this case do not implicate federally protected interests.
Both parties consented to resolve controversies arising out of the license agreement in arbitration. The contract provides that claims for breach of the agreement will be "finally settled" by an arbitrator and that judgment upon the arbitration award shall be "binding upon the parties." (License Ag. P R.) Both parties received an extensive opportunity to fully litigate the breach of contract issue before Judge McGarr. Judge McGarr carefully considered the facts and did not disregard the law.
Under the facts of this case, the court finds that the previously issued but unconfirmed arbitration award has a preclusive effect on the subsequent proceedings before this court. Since Judge McGarr's March 19, 1997 arbitration award has a preclusive effect on subsequent proceedings in this court, this court now vacates all aspects of the March 31, 1997 Memorandum Opinion and Order that are inconsistent with Judge McGarr's arbitration award.
The court also notes that several other courts have given preclusive effect to unconfirmed arbitration awards where contractual or state law rights are at issue. See, e.g., Jacobson v. Fireman's Fund Ins. Co., 111 F.3d 261, 266-68 (2d Cir. 1997) (unconfirmed arbitration precludes subsequent litigation of contract and fraud claims under New York law); Wellons, Inc. v. T.E. Ibberson Co., 869 F.2d 1166, 1169 (8th Cir. 1989) (contract case where court stated "the fact that the award in the present case was not confirmed by a court and was modified by a subsequent settlement does not vitiate the finality of the award"); Drexel Burnham Lambert Group, Inc. v. DBL Liquidating Trust, 161 B.R. 902, 906-07 (S.D.N.Y. 1993) (holding that unconfirmed arbitration award has preclusive effect under federal common law); Sewell v. New York City Transit Auth., 809 F. Supp. 208, 213-14 (E.D.N.Y. 1992) (finding that final judgment entered on an arbitration award is not required for preclusive effect); Kowalski v. Chicago Tribune Co., 1990 U.S. Dist. LEXIS 3812, Nos. 88 C 172 & 88 C 321, 1990 WL 43273, at *5 (N.D. Ill. April 4, 1990) (noting in breach of contract case that "there is also no question that even an unconfirmed arbitration award is generally entitled to be given preclusive effect"); Associated Constr. Co. v. Camp, Dresser & McKee, Inc., 646 F. Supp. 1574, 1578 (D. Conn. 1986) (breach of contract case applying Connecticut law held that "an arbitration award, whether or not sustained by a court judgment constitutes finality for res judicata"); Monmouth Public Schools v. Pullen, 141 Ill. App. 3d 60, 489 N.E.2d 1100, 1105, 95 Ill. Dec. 372 (Ill. App Ct. 1985) (under Illinois law the confirmation of an arbitration award is not necessary to accord that award finality for res judicata purposes in wage dispute); Corral v. State Farm Mut. Auto. Ins. Co., 92 Cal. App. 3d 1004, 155 Cal. Rptr. 342, 347 (Cal. Ct. App. 1979) (noting that under California law an unconfirmed arbitration award should be protected by res judicata in dispute over contractual insurance coverage); see also Ian R. MacNeil, Richard E. Speidel, and Thomas J. Stipanuwich, Federal Arbitration Law, § 39.65 ("courts have held repeatedly and authoritatively that confirmation is not required to apply preclusion so long as the award is final under the applicable arbitration rules"). Based on the reasoning employed by these authorities, affording a preclusive effect to the previously rendered but unconfirmed arbitration judgment is entirely appropriate in this case.
The court finds defendants' cited authorities distinguishable from this case because those decisions vacated arbitration judgments decided after preclusive court rulings. See, e.g., Kelly v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 985 F.2d 1067, 1068 (11th Cir. 1993) (plaintiffs initiated arbitration proceedings after district court granted summary judgment); Miller Brewing Co. v. Forth Worth Distrib. Co., 781 F.2d 494, 495-96 (6th Cir. 1986) (plaintiff instituted arbitration after state court proceedings dismissed for want of prosection); Telephone Workers Union of New Jersey v. New Jersey Bell Tel. Co., 584 F.2d 31, 32-33 (3d Cir. 1978) (arbitration brought after entry of court approved consent decree). In contrast, the arbitration judgment in this case preceded the court's March 31, 1997 ruling. Thus, the subsequent court ruling cannot preclude the prior arbitration decision.
The court also finds SSIH Equipment S.A. v. United States Int'l Trade Comm'n, 718 F.2d 365 (Fed. Cir. 1983) distinguishable. In SSIH Equipment, the International Trade Commission ("ITC") declared three patents valid and infringed by SSIH's imported product. Id. at 368. Accordingly, the ITC issued an order under 19 U.S.C. § 1337 excluding importation of SSIH's goods. Id. About one month later, a federal district court held two of the three patents invalid. Id. After learning of the district court's judgment, the ITC voluntarily modified its previous exclusion order to suspend that portion of the previous order relating to the patents the district court invalidated. Id. at 369.
The Federal Circuit approved, but did not mandate, the ITC's action. Id. at 370-71. The court specifically pointed out that " the issue of whether the [ITC] had to modify its order . . . is reserved. We hold only that there was a justifiable basis for the modification here ." Id. at 371 n.8 (emphasis added).
The court also emphasized that the ITC's action was appropriate "given the nature of a § 1337 investigation" and stressed that the ITC has an "obligation to terminate orders." Id. at 370 (quoting SSIH Equipment S.A. v. USTIC, 69 C.C.P.A. 140, 673 F.2d 1387, 1390 n.8 (C.C.P.A. 1982)). In fact, the court even highlighted that "the dissent's view that the . . . litigation could only be brought into the case as an affirmative defense of collateral estoppel by SSIH fails to appreciate that proceedings under § 1337 are in the nature of investigations with only limited aspects of inter party cases." SSIH Equipment, 718 F.2d at 371 n.8.
In contrast to SSIH Equipment, this case does not concern the exclusively federal issues of patent validity and enforceability. Nor does this case invoke the procedural particularities of § 1337 of the Tariff Act of 1930. Rather, this case deals with the applicability of judicially fashioned preclusion rules to a private contract dispute. Additionally, this case arises out of an arbitration judgment that the parties agreed would finally settle their dispute. SSIH Equipment, on the other hand, addressed an ITC exclusion order that the law requires be terminated if circumstances change. Finally, SSIH Equipment is not persuasive because that court did not hold that the previous ITC order had to be modified; rather, the court specifically disavowed such a holding. Any argument that SSIH Equipment prohibits this court from giving Judge McGarr's arbitration award preclusive effect is, at worst contrived, and, at best dicta.
In sum, the facts of this case make it appropriate to give Judge McGarr's previous arbitration award preclusive effect over this court's subsequently rendered summary judgment. The court therefore vacates all portions of the March 31, 1997 Memorandum Opinion and Order that are inconsistent with Judge McGarr's arbitration award as precluded by the arbitration judgment. The arbitration award preceded the summary judgment and resolved the issue of whether defendants' failure to return certain assets and technology breached the parties' licensing agreement. The doctrine of collateral estoppel therefore prevents the court from rendering another judgment on that identical issue.
C. Law of the Case
Defendants also assert that the "law of the case" doctrine prohibits the court from entering judgment on the arbitration award. (Defs.' Rep. at 10.) The law of the case doctrine prevents parties from relitigating the same issues in subsequent stages of the same lawsuit. Donohoe v. Consol. Operating & Prod. Corp., 30 F.3d 907, 910 (7th Cir. 1994). In light of this court's ruling that the arbitration award has preclusive effect on this court's summary judgment, the law of the case doctrine does not apply to this case. By vacating those parts of the March 31, 1997 Memorandum Opinion and Order that are inconsistent with the arbitration judgment, the court has eliminated the possibility of two decisions on the same issue in this case. Accordingly, the law of the case doctrine does not prohibit the court from entering judgment on the arbitration award.
IV. The Stulbergs' Motion to Add Sulzermedica
Plaintiffs ask the court to add Sulzermedica USA, Inc. as an additional party to this action. (Pls.' Pet.
P B.) Defendants do not oppose plaintiffs' motion to add Sulzermedica as an additional party. (Defs.' Opp'n
P 1.) Therefore, the court grants the Stulbergs' unopposed motion to add Sulzermedica USA, Inc. as an additional party to this action.
For the reasons set forth above, the court grants plaintiffs' motion for entry of judgment pursuant to arbitration. The court also grants plaintiffs' motion to add Sulzermedica USA, Inc. as an additional party. The court denies defendants' cross-motion to vacate the arbitration award.
Ann Claire Williams,
Dated: MAR 16 1998