Drug Company Calls Arbitrator Biased

LOS ANGELES (CN) – A pharmaceutical company claims in court that its attorney’s history of legal fights with the American Arbitration Association requires that the AAA be barred from refereeing its dispute with Merck.
     Pericor Therapeutics sued the AAA and Merck in Superior Court.
     It seeks an injunction blocking the dispute resolution service from ruling on Merck’s objection to Pericor’s appointment of the Hon. Peter Lichtman, a retired Superior Court judge, to sit on a panel of three arbitrators
     New York-based Pericor also wants AAA to recuse itself from ruling on the dispute, on Pericor’s claims that Merck breached a licensing agreement to develop and market acadesine, a drug for open-heart surgery patients.
     The AAA should not have a say on whether to remove Litchman because of the adversarial history between Pericor’s counsel and AAA, Pericor says.
     “Specifically, plaintiff contends that the AAA has a conflict because it was previously involved in a very heated and highly publicized litigation in which plaintiff’s counsel obtained a high-profile reversal of an arbitration award, and also successfully prosecuted a claim against the AAA for improprieties in connection with its arbitrator’s appointment to a case known as O’Flaherty v. Belgum,” the complaint states.
     In that partnership dispute between several attorneys, Pericor claims, AAA did not mention that arbitrator Edward Costello was “involved in a virtually identical law partnership dispute,” in which he sued his partners and made claims “extremely similar” to defendant Belgum.
     Costello ruled in favor of Belgum and awarded $7.2 million against Pericor’s counsel’s clients, though the award was vacated and Belgum’s claims dismissed, according to the complaint.
     “At around this same time, plaintiff’s counsel discovered Costello’s deceit and the certain improprieties by the AAA. Plaintiff’s counsel commenced a lawsuit against the AAA who, among other things, failed to include any information in Costello’s biography regarding his partnership dispute (or even the existence of his prior partnership relationship),” the complaint states.
     “This lawsuit against the AAA was vigorously opposed by high-profile law firms retained by the AAA. At the trial court level, plaintiff’s counsel defeated attacks on the pleading and, following a seemingly successful argument before the court of appeal, the AAA opted to a confidential settlement. Needless to say, this is one of the only lawsuits against the AAA and an arbitrator that was successfully prosecuted.”
     AAA refused to recuse itself from deciding Merck’s objections to Lichtman’s appointment, according to Pericor, which says that could result in a “gross miscarriage of justice.”
     “Especially given the close parallels between the issues that arose from this prior litigation against the AAA and its appointment of Edward Costello, the AAA is not able to resolve respondent’s objections to Judge Lichtman’s appointment in the instant matter in a fair and impartial matter,” the complaint states.
     Pericor is represented by Brian Kabateck with Kabateck Brown Kellner.

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