Hyatt Franchising, L.L.C. v. Shen Zhen New World I, LLC

Shen Zhen was to renovate a Los Angeles hotel and operate it using Hyatt’s business methods and trademarks. Later, Hyatt declared that Shen Zhen was in breach. An arbitrator concluded that Shen Zhen owes Hyatt $7.7 million in damages plus $1.3 million in attorneys’ fees and costs. The Seventh Circuit affirmed an order of enforcement, Shen Zhen stated that it is unwilling to reimburse Hyatt's legal expenses unless Hyatt prevails in a separate arbitration, then asked the American Arbitration Association to dismiss on the ground that the award of fees is exclusively a judicial matter. Shen Zhen also petitioned the Central District of California to relieve it of any obligation to comply with the award and “countermand a final decision of the Seventh Circuit.” The court stated “it is hard to find words to describe the conduct of a party that refuses to accept not only the arbitrator’s decision but also a final judicial outcome and scours the nation in search of a different opinion” and ordered Shen Zhen to pay Hyatt’s fees and costs in the district court and on appeal as a sanction for unnecessary and pointless litigation. The court ordered Shen Zhen’s lawyers to show cause why they should not be held jointly and severally responsible for these fees under 28 U.S.C. 1927. View "Hyatt Franchising, L.L.C. v. Shen Zhen New World I, LLC" on Justia Law