Bartlit Beck LLP v. Okada

Bartlit Beck LLP v. Okada

Opinion

MEMORANDUM OPINION AND ORDER

In mid-2017, Respondent Kazuo Okada—a titan of the gaming industry—faced a crisis. Universal Entertainment Company ("UEC"), an entity in which Respondent held a substantial and valuable interest, was floundering in Nevada-based litigation in which Respondent himself was also a party. At stake was a financial interest valued in the hundreds of millions of dollars. Faced with long odds, Respondent needed a game-changer. But rather than beseeching Lady Luck, Respondent tried something more prosaic: he beefed up his legal team. Enter Bartlit Beck LLP, a nationally-recognized, Chicago-based law firm and the Petitioner in this case.

Petitioner and Respondent's new relationship, however, [*2]  was not founded on a handshake or a few scribblings on a cocktail-lounge napkin. Both parties engaged in a lengthy, lawyer-driven, eyes-wide-open negotiation that ended in a comprehensive written agreement. Perhaps unsurprisingly, given the sheer magnitude of the underlying litigation, no aspect of the engagement was more heavily negotiated or essential to both sides than the nature and amount of Petitioner's fees. Under the engagement agreement, Petitioner was to receive a monthly fee, expenses, and, depending upon the outcome, a success bonus of up to $50 million. Of particular relevance, the agreement contained an arbitration provision.

Five months and a great deal of legal work later, Respondent's fortunes improved when the Nevada case settled with a roughly $700 million recovery in UEC and Respondent's favor. But when Petitioner sought its $50 million success bonus, Respondent refused to pay up. That refusal led Petitioner to invoke the arbitration clause to which Respondent had earlier agreed.

After months of preliminary proceedings, the stage was set for an October 2019 evidentiary hearing before a panel (the "Panel") convened under the auspices of the International Institute [*3]  for Conflict Prevention & Resolution. But late on the Friday before the Monday start of the hearing, Respondent told the Panel that he refused to attend because the engagement agreement was "invalid and therefore unenforceable." In Respondent's view, if Petitioner did not agree ab initio that the agreement was invalid, there was "no reason for me [Respondent] to attend the proposed arbitration." Respondent also alleged that he was "ill" and "unable to make the long journey to the USA," but then, as if to drive home the point, Respondent directed his counsel to tell the Panel that they were "not authorized to attend the arbitration because [Respondent] rejects the validity of the engagement agreement." Unimpressed, the Panel found Respondent in default, proceeded to the merits, and entered a judgment in Petitioner's favor.

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