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IP LitigationFederal Circuit

Mediator’s failure to meet his disclosure obligation is not automatic ground for rule 60(B) relief

June 25, 2014

IP LitigationFederal Circuit

Mediator’s failure to meet his disclosure obligation is not automatic ground for rule 60(B) relief

June 25, 2014

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CEATS, Inc. v. Continental Airlines, Inc. et al., __ F.3d __ (Fed. Cir. June 24, 2014) (Prost, Rader, O’MALLEY) (E.D.Tex.: Schneider) (1 of 5 stars)

Federal Circuit affirms denial of Rule 60(b) motion, refusing to set aside a jury verdict of invalidity based upon a mediator’s failure to disclose a previous relationship with a lawyer at the law firm that represented the defendant at trial.

The Federal Circuit held that the mediator should have disclosed a prior unrelated case in which the law firm argued to uphold his award as an arbitrator, against a challenge that he knew an attorney in the law firm, because “mediators have disclosure obligations which are similar to the recusal requirement imposed on judges,” slip op. at 11, and the firm’s defense of the mediator’s actions in the state case “reasonably could give rise to the appearance of impropriety.” Id. at 15. Nevertheless, Rule 60 relief was unwarranted. Rule 60(b)(3) was inapplicable because the patentee conceded “that there is nothing in the record that shows it was not given a full and fair opportunity to present its case.” Id. at 8. Likewise, Rule 60(b)(6) was inapplicable under the three factors from Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847 (1988): (i) there was no risk of injustice because the patentee “ultimately was able to fully and fairly present its case before an impartial judge and jury,” id. at 18; (ii) “[t]he mere fact that the final judgment after a full jury trial will not be overturned every time a mediator fails to disclose a potential conflict is not likely to affect the disclosure decisions of other mediators,” id. at 19; and (iii) although “public confidence in the mediation process will be undermined to some extent by our failure to put greater teeth in the mediators’ disclosure obligations,” it would not “undermine public confidence in the judicial process as a whole” to deny the “extraordinary relief” of setting aside “judgment by an impartial jury after litigating the matter before an unbiased judge.” Id. at 19-20.

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