A New York federal court has sided with Valentino in the latest round of a multi-pronged legal battle that pits it against a high-fashion textile firm accusing it of “taking, using and copying” copyright-protected designs and swatches, passing them off as its own designs, and failing to pay for them. In a recently issued opinion and order, Judge Mary Kay Vyskocil of the U.S. District Court for the Southern District of New York handed Valentino a win in one of two currently-pending U.S. cases, granting its petition to confirm and enforce the final arbitration award that was previously entered in its favor in Milan in connection with its clash with its longtime textile supplier, Mrinalini.
Some Background: Valentino and Mrinalini ended up at odds beginning in 2019 when Mrinalini first accused Valentino of misappropriating trade secrets from it, including ones that protect its proprietary sewing techniques. The accusations prompted Valentino to initiate a contract-centric arbitration against Mrinalini in Italy in February 2022. A month later, while the Milan arbitration was pending, Mrinalini responded by filing suit in the U.S. District Court for the Southern District of New York, in which it alleged that Valentino employees shared its proprietary stitching techniques with “other suppliers, including Mrinalini competitors, in an unscrupulous effort to source … large quantities of clothing for Valentino … [from] the cheapest supplier, all without permission from Mrinalini.”
Valentino moved to dismiss Mrinalini’s stateside complaint – or alternatively, stay the case and compel arbitration – primarily on the grounds that there was a mandatory arbitration clause in a 2014 purchasing agreement between the parties. In a partial win for Valentino, the SDNY found in March 2023 that the broad mandatory arbitration clause in the purchase agreement reflected “clear intent” by the parties to arbitrate “at least some disputes,” and that in light of their disagreement about what constitutes an arbitrable matter under the agreement, the court compelled arbitration to determine the arbitrability of Mrinalini’s claims.
Shortly thereafter, the Milan arbitrator issued a final arbitration award in favor of Valentino, which led Mrinalini to file an appeal with Court of Appeals of Milan and Valentino to file a lawsuit of its own in the U.S. (the case at hand) in order to enforce the arbitration agreement.
Confirming the Arbitration Award
Fast forward to February 26 and Judge Vyskocil held that Mrinalini failed to prove any grounds on which the court should refuse or defer recognition or enforcement of the final arbitration award. Setting the stage here, the court stated (in a nutshell) that an application to confirm a foreign arbitral award “is [essentially] a summary proceeding that merely makes what is already a final arbitration award a judgment of the court,” and therefore, “the review of foreign arbitral awards overall is ‘extremely deferential’ to the findings of the arbitration panel.”
Against that background, the court delved into the arguments that Mrinalini made on this front, holding that …
> The Award Does Not Contain Decisions on Matters Beyond the Scope of the Submission to Arbitration. While Article V(1)(c) of the New York Convention provides that confirmation of an arbitration award may be denied if “[t]he award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration,” Mrinalini’s argument that the award contains decisions on issues that were not properly before the arbitrator falls short. “In essence, Mrinalini seeks a third bite at the apple to argue that the parties did not agree to submit questions of arbitrability to an arbitrator,” Judge Vyskocil stated, holding that this argument is “unpersuasive, meritless, and has already been rejected by this Court multiple times.”
Nonetheless, the court “reiterate[d] its prior holding that the ‘parties clearly and unmistakably assigned to the arbitrator the question of whether Mrinalini’s claims set out an arbitrable dispute,” and that the arbitrator’s final award was “entirely consistent” with the court’s determination that the question of arbitrability was one for the arbitrator.
> The Award is Binding on the Parties and Has Not Been Set Aside or Suspended. Mrinalini also argues that the court can deny or adjourn enforcement of the award (under Article V(1)(e)) in the event that the final award has not yet become binding on the parties. The court was again unpersuaded, finding that Mrinalini had previously filed an appeal challenging the award decision in Italy, but that the Court of Appeals of Milan has dismissed Mrinalini’s petition to suspend the final award.
“While the parties agree that a further appeal to the Supreme Court of Cassation (the highest court of appeal in Italy) would be possible,” the court asserted that since Mrinalini has submitted nothing to the court to indicate that it has or ever intends to appeal further in the Italian courts, its argument under Article V(1)(e) is moot.
> Respondent Fully Participated in the Arbitration and Was Able to Present Its Case Fully. Finally, Mrinalini unsuccessfully pointed to Article V(1)(b), which provides that confirmation may be denied if “[t]he party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.” Judge Vyskocil held that it is undisputed that Mrinalini was represented by both Italian and U.S. counsel and made several appearances, both in-person and remotely, in connection with the parties’ clash. In light of these undisputed facts, the Judge held that the court “cannot find that Mrinalini was unable to present its case in violation of Article V(1)(b), [and] instead, was provided ample opportunity to present its evidence and arguments.”
The Bottom Line: With the foregoing in mind, the court granted Valentino’s petition and subsequent motion to confirm and enforce the final arbitration award (but not its request for attorneys’ fees) and closed the case. The parties’ other case before the SDNY is still underway – albeit it has been stayed since the court compelled arbitration in March.
The case is Mrinalini, Inc v. Valentino S.p.A., et al., 1:23-cv-02319 (SDNY).
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