Dining Management Services

Client

Our client is a dining management services company (“DMS”) based in the Greater Boston area that manages the food service operations for organizations such as long-term care facilities, hospitals and corporations.

Situation

One of DMS’s customers, a long-term care facility in Western New York, had terminated the parties’ 5-year contract after only four months, asserting “just cause.”  At the long-term care facility’s insistence, DMS vacated the premises and discontinued performance.  The facility subsequently refused to pay outstanding invoices for services rendered prior to termination.

DMS came to YSR, and on their behalf, we filed a demand for arbitration with the AAA in Boston, as required by the parties’ contract.

Solution

We discussed a strategy with DMS focused on obtaining a quick resolution.  However, given that DMS’s client had failed to terminate the contract in accordance with its terms and that it could not demonstrate just cause for termination, we asserted a claim in the low-to-mid six figure range for breach of contract, based on the unpaid invoices and lost profits over the balance of the 5-year term.  We were hopeful that we could negotiate a settlement in relatively short order that would meet our client’s objectives without incurring substantial legal fees.

Upon selection of the arbitrator, we asked for the evidentiary hearing to occur within three months of the administrative scheduling conference and obtained agreement that discovery would be limited and that there would be no depositions.  We believed that scheduling the hearing to occur within a short period of time would encourage settlement discussions.  To that end, we proposed mediation, provided that the arbitration hearing date not be postponed.  The long-term care facility rejected our proposal. 

Little more than one month before the scheduled hearing date, the long-term care facility proposed mediation, in lieu of the scheduled arbitration hearing.  DMS rejected that proposal, as it had been made clear that delays would not be accepted.  Additionally, the long-term care facility had not even seen fit at least to couple its request for mediation with an offer of settlement. 

Therefore, though it was not our and DMS’s first choice, we found ourselves on a straight line to the arbitration hearing, which was scheduled for three consecutive days before a single arbitrator.  Working closely with DMS’s general counsel, we prepared our three witnesses, all executives with DMS, as thoroughly and efficiently as possible and selected what we considered the 20 most essential documents as exhibits.  In contrast, the respondent offered 80-100 exhibits.  

After the conclusion of the evidentiary hearing, at the direction of the arbitrator, both sides submitted affidavits of attorney’s fees incurred in connection with this case.  Attorney’s fees incurred by the opposing party, which hired a large national law firm, were almost three times the fees charged to DMS.

Result

The arbitration award was issued two weeks later and DMS was awarded almost everything that it had requested, including the amount of the unpaid invoices, lost profits for the term of the contract, attorney’s fees and arbitration fees.  Our client received a check in the full amount of the award three business days later.

A focused strategy, perseverance, and a cooperative, responsive client and general counsel who knew her company’s business well, turned what was expected to be a satisfactory result into an excellent result  --  all for about one-third of what it cost the adversary.