CASE BRIEF 3.

American Laser Vision, P.A. v. Laser Vision Institute, LLC

487 F.3d 255 (C.A. 5 (Tex.) 2007)

FACTS: Ophthalmologists Lewis Frazee and Robert Selkin formed American Laser Vision
(ALV), which opened laser vision correction centers in Texas and Oklahoma. ALV signed
contracts with The Laser Vision Institute (LVI) to have LVI operate the eye centers by providing
management, nonmedical staff, and equipment. ALV would provide the surgeons: Drs. Frazee
and Selkin. LVI was to pay ALV a fee for each surgery performed. Their agreement provided that
any disputes would be submitted to arbitration. After a few months, Dr. Selkin complained about
the LVI staff, so he quit performing surgeriesat LVI and began doing surgeries at other clinics in
other states. Dr. Selkin bought out Frazee’s interest in ALV and then filed an arbitration claim
against LVI for $4 million in lost surgery fees and other damages. After a three-day hearing, the
arbitrator awarded Dr. Selkin $1.8 million. LVI filed suit to have the award set aside because the
arbitrator failed to recognize that Dr. Selkin was in breach, was making money elsewhere, and
never gave LVI a chance to deal with staff issues.

DECISIONS BELOW: Arbitrator found for ALV in binding final arbitration. American filed suit
to have it set aside.

ISSUES ON APPEAL: Can an arbitration award be set aside?

DECISION: Arbitration is set aside only on very narrow grounds. So long as there is a rational
relationship, the award stands. The court found the arbitrator considered all issues.

Question:

1. List the areas of arbitrariness LVI raised regarding the arbitrator's decision.

In the mentioned case, LVI is the defendant and ALV is the plaintiff. The plaintiffs have sued the
defendant under breach of contract. Breach of contract: It is violation of any binding contract
between two or more parties without a legitimate lawful excuse. It may be either written or oral.
The following arguments were raised by LVI against the arbitrator’s decision:

 LVI argues that the arbitrator disregarded the basic meaning of the contracts. Arbitrator
interpreted the contract between Dr. Selkin and LVI, not ALV and LVI. Moreover, the
arbitrator considered only the losses of Dr. Selkin personally, not those of ALV.

 LVI argues that the arbitrator completely ignored the notice and cures provisions, since
Dr. Selkin never attempted to provide notice to the LVI and did not accept any cure.

 LVI challenges the actual amount which was awarded to Dr. Selkin. Furthermore, it
argues the arbitrator to clarify the nature of award.

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 2. How does the court respond to the concerns raised about arbitrator's decision? Is there
something a business could put in a contract to hold the arbitrator for more definite findings of
fact?

Decisions taken by an arbitrator or through the process of arbitration are given due importance
by the court. Although any party who feels dissatisfied by the decision can appeal to the court.
Generally courts stand by the decision of the arbitrator, but if a review is needed, case is heard
again by the court again.

3. What is the standard for setting aside an arbitration decision?

Arbitration is set aside only on very narrow grounds. So long as there is a rational relationship,
the award stands. The court found the arbitrator considered all issues.

In every arbitral proceeding, an arbitrator has to be appointed who finally makes an award which
is called the arbitral award. The contents of the award have to be written and signed by the
arbitrator and the reasons for the award have to be stated unless stated otherwise. Section 34 of t
he Arbitration Act provides for provision on the basis of which an arbitral award can be set aside,
and if an award is declared to be void then the whole purpose and object of the act gets nullified.
Thus, the arbitrator has to take extra care while making an award, but how much care should be
taken is the question without the answer. An appeal to set aside an award has to be strictly made
by the aggrieved party within 3 months from the date the award was received by it. A request can
also be made under section 33, provided that the court is satisfied that there was a sufficient
cause for the delay, thereby allowing the appeal to set aside an award to be made within 30 days
after the 3 month period. Hence the award should be challenged timely as per the provision of
section 34 of the Act. According to section 34, an award maybe set aside on the application of an
aggrieved party. Under certain circumstances, the court can set aside the award made by the
arbitral tribunal even without an application made by the party. The grounds, mentioned in
section 34, under which a party can make an application to the court to set aside an award are as
follows:

 When the party making the application was incapacitated to enter the agreement.

 The arbitration agreement, to which the parties are subjected, is not valid under the law.

 A proper notice of appointment of arbitrators, or of the arbitral tribunal was not given to
the party making the application.

 Arbitral award deals with a dispute not contemplated by the parties or beyond the term of
submission.

 Composition of the Arbitral Award was not in accordance with the agreement of the
parties.

 Subject-matter of dispute is not capable of settlement by arbitration under the law for the
time being in force.

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  The arbitral award is in conflict with the public policy of the country.

Once an application of setting aside the arbitral award is preferred under section 34, the
executing court has no jurisdiction to enforce the award, until and unless the application under
section 34 is dismissed or refused. This is a marked departure from even the normal rule under
the Code of Civil Procedure, 1908 where an executing court can execute the decree if there exists
no stay by the appellate court. In the opinion of the author, this ought not to have been the
position under the new Act. Enforcement of the award should be permitted unless there is a stay
by the court hearing an application under section 34.

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 Translation:
BẢN ÁN 3.1

American Laser Vision, P.A. và Laser Vision Institute, LLC

487 F.3d 255 (C.A. 5 (Tex.) 2007)

Phần mở đầu: American Laser Vision (ALV), được thành lập bởi hai bác sĩ nhãn khoa là Lewis
Frazee và Robert Selkin, bao gồm các trung tâm điều chỉnh thị lực bằng laser tại bang Texas và
Oklahoma. ALV đã ký hợp đồng với Laser Vision Institute (LVI), cho phép viện này vận hành
các trung tâm của ALV thông qua việc cung cấp quản lý, nhân viên phi y tế và thiết bị. Về
phía ALV, họ sẽ cung cấp hai bác sĩ phẫu thuật là Tiến sĩ Frazee và Selkin. LVI phải trả cho
ALV một khoản phí nhất định cho mỗi ca phẫu thuật được thực hiện. Thỏa thuận chung của
họ là bất kỳ tranh chấp nào cũng sẽ được đệ trình lên để giải quyết bằng phương thức trọng
tài. Sau vài tháng, bác sĩ Selkin phàn nàn về các nhân viên của LVI; sau đó ông đã bỏ thực hiện
các ca phẫu thuật tại LVI và bắt đầu phẫu thuật tại phòng khám ở các tiểu bang khác. Tiến sĩ
Selkin đã mua lại cổ phần của Frazee đối với ALV và sau đó đệ đơn khiếu nại lên trọng tài,
tố LVI phải chịu trách nhiệm với tổn thất của 4 triệu đô la phí phẫu thuật cũng như các thiệt
hại khác. Sau phiên điều trần kéo dài ba ngày, trọng tài đã trao cho Tiến sĩ Selkin 1,8 triệu đô
la. LVI đã đệ đơn kiện để từ chối phán quyết này của trọng tài vì cho rằng họ đã không nhận
ra và xét đến việc Tiến sĩ Selkin cũng đã vi phạm hợp đồng khi đi phẫu thuật cho các phòng
khám khác và chưa từng cho LVI cơ hội giải quyết các vấn đề về nhân viên của họ.

Phán quyết: Trọng tài viên cho rằng ALV có liên quan như trong đơn kiện gần đây nhất lên
phía trọng tài. ALV đệ đơn từ chối.

Kháng cáo: Phán quyết trọng tài có thể bị từ chối hay không?

Phán quyết: Phán quyết trọng tài có thể bị từ chối nhưng chỉ trong một số ít trường hợp nhất
định. Vậy nên, miễn là có mối quan hệ hợp lý giữa các lý lẽ thì phán quyết của trọng tài vẫn
được giữ nguyên. Tòa án cho rằng bên trọng tài đã xem xét mọi khía cạnh của vấn đề.

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