Hart Surgical Inc. v. Ultracision

Issue Discussed: “Interim” v. “Final” Decisions

Submitted by Aluyah I. Imoisili, H. Josh Ji*

Date Promulgated: April 5, 2001

Hart Surgical Inc. v. Ultracision, Inc., 244 F.3d 231 (1st Cir. 2001)

Court: United States Court of Appeals, First Circuit

Issues Decided: Whether a partial arbitration award on the issue of liability in a bifurcated proceeding is a final award subject to judicial review.     

Key Holding

Plaintiff and defendant entered into a contract, pursuant to which plaintiff became the exclusive distributor for defendant’s products.  Defendant terminated plaintiff’s distributorship for non-performance, and plaintiff demanded arbitration proceedings.  Both parties agreed to bifurcate the arbitration into liability and damages phases, and the arbitration panel approved the phased schedule.  After a hearing, the arbitration panel issued an award finding defendants liable for wrongfully terminating the distribution agreement.  Defendants sought to vacate the award.  The district court denied the motion.

The First Circuit vacated the district court’s ruling and held that the liability award was final, because the parties had agreed to a discrete proceeding for all of the evidence pertaining to liability and expressed an intent to bifurcate, which evidenced that the parties and the arbitrator understood the determination of liability to be a final award.  The Fifth Circuit limited its holding to situations in which there is a formal, agreed-to bifurcation.

Key Takeaways

Although the general rule is that an arbitral award is deemed final only if it evidences the arbitrator’s intent to conclusively resolve all claims submitted in the demand for arbitration, a claim or issues for which the parties have agreed to bifurcate may become final, subject to immediate judicial review.

* Aluyah I. Imoisili is a Partner and H. Josh Ji is an Associate at Greenberg Gross LLP, where they specialize in commercial litigation and arbitration.