Johnson Controls, Inc., is a Wisconsin company that manufactures building equipment and management systems, and distributes its products worldwide through direct sales, contractors, and distributors. Edman Controls, Inc. is a distribution company incorporated in the British Virgin Islands. Johnson and Edman entered into an agreement that awarded Edman the exclusive rights to distribute Johnson products in the country of Panama. The agreement provided that any dispute arising from the parties’ arrangement would be resolved through arbitration using Wisconsin law and that the losing party would have to pay the prevailing party’s attorney’s fees and costs. Under this arrangement, Edman developed relationships with builders in Panama and distributed Johnson’s products to these builders. Three years later, Edman discovered that Johnson was circumventing Edman by selling its products directly to Panamanian developers, including some that had previously purchased Johnson’s products from Edman. Edman initiated arbitration proceedings against Johnson for breach of contract. The arbitrator found that Johnson had breached its agreement with Edman and awarded Edman $ 733,341 in lost profits and damages, $ 252,127 in attorney’s fees, $ 39,958 in costs, and $ 23,042 in prejudgment interest. Johnson did not accept this result and filed a motion with the U. S. district court asking the court to vacate the arbitrator’s award. The court refused to do so and confirmed the arbitrator’s award. Still not satisfied, Johnson appealed the case to the U. S. court of appeals, asking the court to vacate the arbitrator’s award. Should the U. S. court of appeals vacate the arbitrator’s award? Did Johnson Controls act ethically in this case? Johnson Controls, Inc. v. Edman Controls, Inc., 712 F. 3d 1021, 2013 U. S. App. Lexis 5583 (United States Court of Appeals for the Seventh Circuit, 2013)
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