Lifescan, Inc. v. Premier Diabetic Services, Inc., a Florida Corporation

What happens when a party to an arbitration is unable to pay its pro-rata share of the arbitration fees?

Background

Premier Diabetic Services, Inc., is a Florida-based company that purchases diabetic products from manufacturers and resells them across the country to customers. In 1997, Premier contracted with Li-fescan, Inc., a Johnson & Johnson subsidiary, to buy glucose monitoring strips and meters at a discount, on the condition that all products be sold to Medicare patients. In early 1998, Lifescan stopped shipping because it became convinced that Premier was selling to non-Medicare customers.

Pursuant to the terms of their agreement, the parties submitted the dispute to arbitration before a panel of three arbitrators from the American Arbitration Association (AAA). The parties participated in the initial stages of the arbitration process but, a few days before the final hearings, Premier announced that it would be unable to pay its pro-rata share of the arbitrators’ estimated fees and costs for the remainder of the proceedings. The arbitrators gave Lifescan the option of advancing the fees owed by Premier so' the final arbitration hearings could proceed, with an…