Airborne Athletics, Inc. v. Shoot-A-Way, Inc.
- Laura Provinzino
- 0:25-cv-03137
- U.S. District Court · District of Minnesota
- 24
In Airborne Athletics, Inc. v. Shoot-A-Way, Inc., Judge Provinzino confirmed an arbitration award totaling over $4.8 million in favor of Airborne Athletics, rejecting Shoot-a-Way's argument that the arbitrator exceeded her authority, and denied Shoot-a-Way's motion to vacate the award.
Companies that have entered into settlement agreements containing arbitration clauses and fee-shifting provisions, particularly those disputing whether a prior settlement offer was legally valid or whether attorneys' fees from one arbitration proceeding can be recovered in a subsequent arbitration. Also relevant to parties subject to AAA Commercial Rules who wish to understand when all-party requests for fees authorize an arbitral award of fees.
What happened
In Airborne Athletics, Inc. v. Shoot-A-Way, Inc., two companies that both design and manufacture basketball training devices have been in litigation and arbitration for years stemming from a 2010 patent infringement lawsuit that settled in 2013. The 2013 settlement included a clause requiring future disputes to go through arbitration and a fee-shifting provision stating that an unsuccessful arbitration plaintiff must pay the other side's attorneys' fees if the final award is less than the defendant's last settlement offer. After a 2021 arbitration awarded Shoot-a-Way only $51,300 — far less than the $800,000 Airborne had offered during a 2020 mediation — Airborne claimed it was owed attorneys' fees under that provision, leading to a second arbitration in 2024 in which arbitrator Dr. Cheryl Agris awarded Airborne $2,649,737.25 for fees from the first arbitration, $1,233,308.55 for fees from the second arbitration, prejudgment interest, and costs.
Shoot-a-Way moved to vacate the award on three grounds: (1) the arbitrator wrongly concluded that Airborne's 2020 mediation offer was legally valid even though it included a non-monetary demand — a promise not to sue — whose exact scope was undefined; (2) the arbitrator had no authority to award Airborne fees for the second arbitration because the settlement's fee-shifting provision only covered arbitration defendants, not plaintiffs; and (3) the arbitrator improperly awarded prejudgment interest on top of an attorneys' fee award, which Minnesota law prohibits in some circumstances. Airborne responded that the arbitrator correctly applied the law in all three respects and asked the court to confirm the full award.
Judge Provinzino confirmed the entire award and denied Shoot-a-Way's motion to vacate. The court explained that under the Federal Arbitration Act, an arbitration award can only be overturned if the arbitrator clearly identified the correct law and then deliberately ignored it — a very high bar that Shoot-a-Way failed to meet on all three issues. As to the first issue, the arbitrator applied Minnesota contract law and reasonably concluded that the undefined scope of the covenant not to sue was not a material term that invalidated the offer. As to the second issue, the arbitration rules incorporated by the 2013 settlement (the American Arbitration Association's Commercial Rules) independently authorized an award of attorneys' fees when both sides request them — which both parties did here. As to prejudgment interest, the arbitrator reasonably interpreted Minnesota law to allow such interest because the underlying claim was for attorneys' fees that were the subject matter of the dispute, not fees added by the arbitrator on top of another award. The court entered judgment for Airborne totaling $2,649,737.25 plus $1,233,308.55 plus $861,702.65 in prejudgment interest plus $86,423.25 in costs, with postjudgment interest to accrue from the date of judgment.
The detailed version
CASE: Airborne Athletics, Inc. v. Shoot-A-Way, Inc., No. 25-cv-3137 (LMP/SGE), U.S. District Court, District of Minnesota. JUDGE: Laura M. Provinzino. DATE: March 23, 2026.
BACKGROUND: Both parties manufacture basketball training equipment. In 2010, Airborne sued Shoot-a-Way for patent infringement. The case settled in 2013 (the '2013 Settlement'). The settlement included a ten-year arbitration clause requiring future disputes to proceed first through mediation and then through arbitration under the American Arbitration Association (AAA) Commercial Rules. The settlement also included a fee-shifting provision (Paragraph 6(e)) stating that if the arbitration plaintiff does not prevail — defined as receiving a final award less than the defendant's last offer at mediation — the plaintiff must pay the defendant's attorneys' fees and costs.
FIRST ARBITRATION (2021): In 2020, Shoot-a-Way accused Airborne of infringing six patents and asserted trademark and false advertising claims. The parties mediated on December 2, 2020, before retired U.S. Magistrate Judge Robert Faulkner. Airborne's final monetary offer was $800,000, but the parties disputed whether Airborne also conditioned that offer on Shoot-a-Way agreeing not to sue Airborne again (a 'covenant not to sue'). Mediation failed, and Arbitrator Roger W. Parkhurst issued an award on December 20, 2021, finding that Airborne infringed one of Shoot-a-Way's patents and awarding Shoot-a-Way $51,300. Airborne then argued it was entitled to attorneys' fees under Paragraph 6(e) because the $51,300 award was less than its $800,000 offer. Arbitrator Parkhurst declined to consider the request as procedurally untimely but stated the issue could be separately arbitrated. U.S. District Judge Nancy E. Brasel confirmed the 2021 award on November 30, 2022, and similarly noted the availability of further proceedings.
SECOND ARBITRATION (2024): Airborne filed a demand for arbitration in October 2023 seeking approximately $3 million in attorneys' fees. The parties selected Dr. Cheryl Agris as arbitrator. After mediation failed, the 2024 arbitration addressed three main questions.
1. ATTORNEYS' FEES FOR THE 2021 ARBITRATION: Arbitrator Agris first had to determine the value of Airborne's final offer at the December 2020 mediation. The factual dispute was whether the offer included a covenant not to sue. Airborne's CEO testified he did not include such a condition; Shoot-a-Way presented a letter sent to the mediator days after the mediation describing its understanding that the offer included a covenant not to sue covering all past, present, and future Airborne products. Arbitrator Agris found as a factual matter that the offer did include a covenant not to sue, partly because Airborne's CEO admitted he had told the mediator he was 'seeking a covenant not to sue.' She then considered whether the offer was a legally valid offer — specifically whether the imprecisely defined scope of the covenant not to sue meant the offer lacked material terms. Applying Minnesota contract law (citing Goddard, Inc. v. Henry's Foods, Inc., 291 F. Supp. 2d 1021 (D. Minn. 2003)), she found that only terms 'upon which the settlement hinges' are material, and that the exact scope of the covenant was not material because it could have been negotiated later. She valued the covenant not to sue at $150,000–$300,000 to Airborne, making the effective offer worth $500,000–$650,000 — well above the $51,300 award. She therefore awarded Airborne $2,649,737.25 in fees and costs for the 2021 arbitration.
2. ATTORNEYS' FEES FOR THE 2024 ARBITRATION: Both parties requested attorneys' fees during the 2024 arbitration — Airborne in its initial demand and supplemental briefing, Shoot-a-Way in its answer and counterclaim. Arbitrator Agris awarded Airborne $1,233,308.55 in fees for the 2024 arbitration on three grounds: (a) Minnesota law allows recovery of fees in fee-petition proceedings; (b) equitable principles support awarding fees to a prevailing plaintiff even if the settlement only explicitly addressed prevailing defendants; and (c) AAA Commercial Rule 49(d)(ii) authorizes an arbitrator to award attorneys' fees when all parties have requested them.
3. PREJUDGMENT INTEREST: Airborne sought prejudgment interest on its $2,649,737.25 fee award from December 19, 2022 (the date of written notice of its claim) under Minn. Stat. § 549.09. Shoot-a-Way argued that § 549.09, subd. 1(b)(5) bars prejudgment interest on attorneys' fees 'added by the court or arbitrator.' Arbitrator Agris rejected this argument, reasoning that the fees from the 2021 arbitration were the subject matter of the dispute — not fees added on top of another award — and therefore the bar did not apply. She also relied on AAA Commercial Arbitration Rule 49(d)(1), which allows the arbitrator to award interest at a rate and from a date she deems appropriate.
PROCEDURAL POSTURE IN THIS COURT: Airborne petitioned under 9 U.S.C. § 9 to confirm the award and moved to confirm under 9 U.S.C. § 6. Shoot-a-Way moved to vacate under 9 U.S.C. § 10(a)(4), arguing the arbitrator exceeded her powers.
LEGAL STANDARD: The Federal Arbitration Act (FAA) establishes a strong policy favoring arbitration. Under § 10(a)(4), vacatur is permissible only in two 'extremely narrow' circumstances: (1) when an award fails to 'draw its essence from the contract' — meaning the arbitrator imposed her own notions of justice rather than applying the agreement; or (2) when the award 'evidences manifest disregard for the law' — meaning the arbitrator clearly identified the correct governing law and then deliberately ignored it. Mere legal or factual error, even serious error, is not grounds for vacatur.
COURT'S ANALYSIS AND HOLDINGS:
1. 2021 ARBITRATION FEES: The court confirmed the $2,649,737.25 award. Shoot-a-Way argued Arbitrator Agris manifestly disregarded Minnesota law because the scope of the covenant not to sue was material and the offer therefore lacked all material terms. The court rejected this argument because Arbitrator Agris did not ignore the applicable law — she cited and applied it — and simply reached a conclusion Shoot-a-Way disagreed with. Under controlling Eighth Circuit authority (Beumer Corp. v. ProEnergy Servs., LLC, 899 F.3d 564 (8th Cir. 2018); Industrial Steel Constr., Inc. v. Lunda Constr. Co., 33 F.4th 1038 (8th Cir. 2022)), error in applying the law is not sufficient to vacate. The court noted it expressed no opinion on whether the arbitrator's conclusion was correct.
2. 2024 ARBITRATION FEES: The court confirmed the $1,233,308.55 award. Arbitrator Agris based this award on three independent grounds, and the court found at least one — AAA Commercial Rule 49(d)(ii) — clearly sufficient. Both parties had requested attorneys' fees in their submissions. The court cited Wells Fargo Bank, N.A. v. WMR e-PIN, LLC, 653 F.3d 702 (8th Cir. 2011) for the proposition that parties bound by AAA Commercial Rules are bound by Rule 49(d)(ii), and that when both parties request fees, the arbitrator is authorized to award them. Shoot-a-Way's argument that its fee requests were 'tied to the contract' rather than 'general' requests under the Rule was unsupported by any legal authority — a fatal deficiency given that manifest disregard requires clear law that was ignored. Because Rule 49(d)(ii) independently supported the award, the court declined to address Shoot-a-Way's challenges to the other two bases (the 2013 Settlement and Minnesota case law).
3. PREJUDGMENT INTEREST: The court confirmed the prejudgment interest award and calculated the amount itself. Shoot-a-Way presented no authority showing Arbitrator Agris manifestly disregarded § 549.09 and essentially repeated its arguments from the arbitration. At the hearing, Shoot-a-Way acknowledged its argument rested primarily on equitable principles — an insufficient basis to vacate. The court computed interest at the mandatory Minnesota rate of 10% per year: $2,649,737.25 × 0.10 ÷ 365 = $725.95/day × 1,187 days (from December 19, 2022) = $861,702.65.
4. COSTS AND POSTJUDGMENT INTEREST: The court confirmed $86,423.25 in arbitration costs and granted mandatory postjudgment interest under 28 U.S.C. § 1961(a), neither of which Shoot-a-Way opposed.
FINAL JUDGMENT: Airborne's motion to confirm (ECF No. 10) GRANTED. Shoot-a-Way's motion to vacate (ECF No. 21) DENIED. Total confirmed award: $2,649,737.25 + $1,233,308.55 + $861,702.65 + $86,423.25 = $4,831,171.70, plus postjudgment interest accruing from the date of judgment.
Reviewer note from the AI+
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