Splendid Film GmbH v. WWKG, LLC

At a glance

Parties

Splendid Film GmbH (Germany), petitioner, v. WWKG, LLC (Delaware), respondent

Case no.

LA CV18-09482 JAK (JPRx)

Court

U.S. District Court, Central District of California (Judge John A. Kronstadt)

Underlying award(s)

IFTA arbitration seated in Los Angeles: claims dismissed on 20 April 2018; award on the counterclaim on 28 July 2018

Treaty

1958 New York Convention, applied through 9 U.S.C. §§ 201 et seq.

Sector

Film distribution licensing

Outcome

Motion to remand granted. The court held it had no federal jurisdiction over a removed petition to vacate and sent the case back to the Los Angeles County Superior Court.

Amount

Awarded to WWKG in the arbitration: $714,781 (minimum guaranteed sub-licensing fee, interest and attorney's fees)

The dispute

WWKG, LLC produced the film Why We're Killing Gunther. It appointed Freeway Entertainment Kft. as its primary distributor, and Freeway sub-licensed European distribution rights to Splendid Film GmbH. Splendid agreed to an initial payment of $65,000 and a minimum sub-licensing fee of $650,000. The sub-licence was assigned to the film's lenders. Splendid's Acceptance of that assignment is governed by English law and provides for IFTA arbitration in Los Angeles. Splendid started arbitration in September 2017 to recover its $65,000. The arbitrator dismissed its claims and awarded WWKG $714,781 on its counterclaim. Splendid then petitioned the Los Angeles County Superior Court to vacate the award. WWKG removed the case to federal court under 9 U.S.C. § 205, and Splendid moved to remand.

Key holdings

1. Under 9 U.S.C. § 203 the Convention covers only two kinds of proceedings: actions to compel arbitration and actions to confirm an award. It makes no provision for vacatur. A petition to vacate therefore does not fall under the Convention, and it gives no original federal jurisdiction that would support removal under § 205. pp. 3–4
2. The court adopted the reasoning of Lander Co. v. MMP Investments and Virginia Surety Co. v. Certain Underwriters at Lloyd's. It declined to follow the Second Circuit's view in Scandinavian Reinsurance Co., which finds federal jurisdiction over both confirmation and vacatur, because that decision did not analyse the text of the statute. p. 4
3. Infuturia Global Ltd. v. Sequus Pharm. does not support removal on § 205 alone. Its broad reading of § 205 rested on a finding of diversity jurisdiction. p. 4, n. 1
4. Jurisdiction is judged on the pleadings at the time of removal. WWKG's motion to enforce the award, filed after removal, cannot create jurisdiction, even though a separate federal action to confirm would have been within federal jurisdiction. p. 5
5. Motion to remand granted. The action was remanded to the Los Angeles County Superior Court, Stanley Mosk Courthouse (Case No. 18STCP02488). p. 5

Procedural history

1. September 2017Splendid starts IFTA arbitration to recover its $65,000 initial payment.
2. 20 April 2018The arbitrator dismisses Splendid's claims on the pleadings, with prejudice.
3. 28 July 2018The arbitrator awards WWKG $714,781 on its counterclaim.
4. 10 October 2018Splendid files a petition to vacate in the Los Angeles Superior Court (Case No. 18STCP02488).
5. 8 November 2018WWKG removes the case to federal court under 9 U.S.C. § 205 and 28 U.S.C. §§ 1331 and 1441.
6. 13–14 November 2018Splendid moves to remand (13 November). The next day WWKG moves to enforce the award.
7. 4 February 2019Hearing on the motion to remand.
8. 12 February 2019Order granting remand to the state court.

Tribunal, counsel and experts

Decided by

• John A. Kronstadt Judge, U.S. District Court, Central District of California

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Keywords

• New York Convention
• Federal Arbitration Act
• 9 U.S.C. § 205
• 9 U.S.C. § 203
• removal jurisdiction
• motion to remand
• vacatur
• petition to vacate
• subject matter jurisdiction
• IFTA arbitration
• film distribution
• Why We're Killing Gunther
• time-of-filing rule
• Scandinavian Reinsurance
• Virginia Surety
• Infuturia

Summary generated with AI from the published documents — refer to the award for the authoritative text.