Future Energy Overseas Group v. Entravision Communications Corp. CA2/4

INTRODUCTION

Appellant Entravision Communications Corp. purchased a digital-media advertising business from respondent Future Energy Overseas Group, Inc. and others, with Future Energy serving as the sellers’ representative.1 As part of the transaction, the parties executed an “Earn-Out” agreement, under which Entravision was to pay the sellers additional sums if the business met certain performance thresholds during defined periods. Under the agreement, Entravision was to provide periodic Earn-Out statements setting forth its calculations of the business’s performance and the sellers’ entitlement to an earn-out payment, if any, for the relevant period. If the sellers disagreed, they were to submit their “Disputed Items” to Entravision. An alternative dispute resolution (ADR)

Entravision made this acquisition through its subsidiary, appellant Headway Spain Digital Technology Services, S.L.U. For the sake of simplicity, we refer to both entities as Entravision.

2 provision in the agreement instructed that unresolved Disputed Items be submitted to an accounting firm. Disputes subsequently arose between the parties regarding the sellers’ entitlement to Earn-Out payments.…