# SMARTSKY NETWORKS, LLC v. WIRELESS SYSTEMS SOLUTIONS, LLC

> District Court, M.D. North Carolina · February 7, 2022

URL: https://www.frixlaw.com/law-library/cases/10253999

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** February 7, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10253999

## How later opinions describe it (automated extraction)

- noting “[t]he party moving to vacate the award bears the burden of proof and the showing required to avoid summary confirmation is high” (internal quotations omitted)
- noting “a court must defer to the arbitrators’ factual findings on attorneys’ fees even if the arbitrators do not explain a basis for the precise amount.”
- noting “[c]ourts are not free to overturn an arbitral result because they would have reached a different conclusion if presented with the same facts.”
- noting that “even a mistake of fact or misinterpretation of law by an arbitrator provides insufficient grounds for the modification of an award.”
- noting documents could “be sealed even given the public access requirements because they contain Defendants’ trade secrets, confidential business information, or information protected by attorney-client privilege”

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

SMARTSKY NETWORKS, LLC, a )
Delaware limited liability )
company, )
)
Plaintiff, )
)
v. ) 1:20-cv-000834
)
WIRELESS SYSTEMS SOLUTIONS, )
LLC, a Delaware limited )
liability company; DAG WIRELESS )
LTD, an Israeli company; DAG )
WIRELESS USA, LLC, a North )
Carolina limited liability )
company; LASLO GROSS, a North )
Carolina resident; SUSAN GROSS, )
a North Carolina resident; )
DAVID D. GROSS, a resident of )
Israel )
)
Defendants. )
)

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief United States District Judge.
This matter comes before the court following an American
Arbitration Association (“AAA”) Tribunal’s (“Tribunal”) final
Arbitration Award issued on October 1, 2021 (the “Final Award”).
(Doc. 166-1.) Plaintiff SmartSky Networks, LLC (“SmartSky”) filed
the present Motion to Confirm Arbitration Award and for Entry of
Final Judgment pursuant to the Federal Arbitration Act (“FAA”), 9
U.S.C. § 9. (Doc. 166.) Defendants DAG Wireless, Ltd., DAG
Wireless, USA, and David Gross (collectively “the DAG Defendants”)
then moved to vacate the arbitration award pursuant to FAA § 10(a).
(Doc. 167.) Separately, Defendants Wireless Systems Solutions,
LLC (“Wireless Systems”), Laslo Gross, and Susan Gross
(collectively “the Wireless Systems Defendants”) filed a similar

Motion to Vacate and Modify the Final Arbitration Award. (Doc.
170.) The parties have also separately filed motions to seal
certain documents. (Docs. 177, 181.) In addition, the DAG
Defendants have filed a Motion to Dismiss or Compel Arbitration
dated June 30, 2021. (Doc. 160.)
For the reasons to follow, the motion to confirm the
Arbitration Award will be granted, the motions to vacate will be
denied, and because the arbitration has been completed, the motion
to dismiss will be denied as moot.
I. BACKGROUND
SmartSky develops air-to-ground wireless communications
networks. (Doc. 5 ¶¶ 9, 23.) Wireless Systems, controlled by

Susan and Laslo Gross, focuses on developing cellular capabilities
and producing components for use in wireless transmissions. (Id.
¶¶ 10, 30-31; Doc. 145 at 1-2.) Wireless Systems entered several
agreements with SmartSky to develop and build proprietary
components for use in SmartSky’s communications network. Central
to this case is the parties’ Teaming Agreement, which set forth
the contractual terms between SmartSky and Wireless Systems. (Doc.
5 ¶¶ 34-38, 44; Doc. 104 at 3.) During that same period, Susan
and Laslo Gross, along with their son David Gross, established DAG
Wireless Ltd., which is engaged in developing technology for
wireless communication. (Doc. 5 at ¶¶ 39-42.) This business
relationship between SmartSky and Wireless Systems soon soured,

and on September 10, 2020, SmartSky filed this lawsuit against the
Wireless Systems and DAG Defendants alleging ongoing breaches of
the intellectual property and confidentiality provisions of the
Teaming Agreement as well as misappropriation of trade secrets.
(Docs. 1, 5.)
Soon thereafter, pursuant to the Teaming Agreement -- which
required “disputes relating to or arising under this agreement” to
be resolved by binding arbitration -- SmartSky filed a Statement
of Claims with the AAA on September 14, 2020, asserting claims for
breach of contract. (Doc. 166 at 2.) On September 30, 2020,
Wireless Systems filed counterclaims against SmartSky in the
arbitration for various alleged breaches of the parties’

agreements and breach of the implied contractual duty of good faith
and fair dealing. (Id. at 3.) Wireless Systems later amended its
counterclaims to include claims against SmartSky for unfair and
deceptive trade practices and fraudulent inducement to contract.
(Id.)
On December 11, 2020, Wireless Systems filed a brief with the
Tribunal arguing that all claims and counterclaims between the
parties were subject to arbitration. Agreeing with Wireless
Systems, the Tribunal entered Procedural Order 8, stating that the
Teaming Agreement required all claims and counterclaims between
SmartSky and Wireless Systems be arbitrated. (Doc. 166-2.) On
January 13, 2021, following Procedural Order 8, the parties agreed

to consolidate all pending claims and counterclaims into the
arbitration, and all Defendants agreed to submit to the
jurisdiction of the Tribunal and to be bound by the arbitration.
(Doc. 166-1 at ¶ 48; Doc. 166-3.) On January 19, 2021, SmartSky
amended its claims against the Defendants to include claims for
breach of the Teaming Agreement, breach of non-disclosure
agreements between SmartSky, Wireless Systems, and DAG,
misappropriation of trade secrets, unfair and deceptive trade
practices, false advertising under the Lanham Act, and alter ego
and estoppel liability against DAG as an alter ego of Wireless
Systems. (Doc. 166-1 at ¶ 50.)
On January 18, 2021, the Wireless Systems Defendants moved to

stay this case pending arbitration. (Doc. 144.) On March 11,
2021, this court stayed the case pending arbitration, denied a
motion to dismiss filed by DAG USA, and denied without prejudice
a motion filed by SmartSky seeking a preliminary injunction because
arbitration was rapidly approaching. (Doc. 149.) On January 22,
2021, the Tribunal issued Procedural Order 11, which set forth an
expedited discovery process for the arbitration. (Doc. 166-1 at
¶ 53.) Discovery resulted in the exchange of “hundreds of
thousands of pages of documents” and more than ten depositions,
including those of expert witnesses. (Doc. 166 at 5.)
The Tribunal scheduled the final arbitration hearing to begin
on May 10, 2021. (Doc. 166-1 at ¶ 77.) However, by as late as

April 14, the Defendants had not paid their share of deposits to
the AAA for the costs of the arbitration. (Id. at ¶ 70.) SmartSky
advanced the costs and moved to strike or dismiss Wireless Systems’
counterclaims with prejudice because of nonpayment. (Id.) In
response, Wireless Systems withdrew all counterclaims against
SmartSky. (Id. at ¶ 72.) The Tribunal then issued Procedural
Order 24 directing Wireless Systems to advise the Tribunal whether
the withdrawal of its counterclaims was with or without prejudice.
(Id. at ¶ 74; Doc. 166-4.)
Somewhat confusingly, Wireless Systems advised the Tribunal
that withdrawal of its counterclaims “was not with or without
prejudice.”1 (Doc. 166-1 at ¶ 75.) This prompted the Tribunal to

1 The practical effect of Wireless Systems’ withdrawal of its
counterclaims is clear. The Teaming Agreement required all claims
arising from the agreement to be heard in arbitration as the Tribunal
determined. (Doc. 166-4 at ¶ 7.) If Wireless Systems were allowed to
withdraw its counterclaims without prejudice, it would then be able to
attempt to revive those claims before an entirely different arbitration
panel, thus restarting the arbitration process anew. This scenario would
defeat the purpose of arbitration, which is “the quick resolution of
disputes and the avoidance of the expense and delay associated with
litigation.” Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142
F.3d 188, 193 (4th Cir. 1998). Moreover, Wireless Systems does not
contend that the Tribunal lacked the legal authority to enter legal
determinations such as this, which the Tribunal was clearly authorized
to do. See Rule 33 AAA Commercial Rule (“The arbitrator may allow the
filing of and make rulings upon a dispositive motion”); Sherrock Bros.,
Inc. v. DaimlerChrysler Motors Co., LLC, 260 F. App’x 497, 502 (3d Cir.
2008) (noting that arbitration panels can make determinations on
issue Procedural Order 25, which declared that, because the Teaming
Agreement did not contemplate “serial or overlapping
arbitrations,” Wireless Systems’ “withdrawal of its counterclaims

was thus effectively with prejudice.” (Doc. 166-4 at ¶ 7.) The
Tribunal stated plainly, “[t]his arbitration, as [Wireless
Systems] itself argued at the start of these proceedings, is the
sole mechanism for deciding such disputes.” (Id.)
Arbitration then proceeded as scheduled. Between May 10 and
May 21, 2021, the parties participated in in-person arbitration in
Charlotte, North Carolina, presenting over ten days of evidence,
348 exhibits and thirteen witnesses, including four experts. (Doc.
166 at 6; Doc. 166-1 at ¶ 77-79.) At the close of arbitration on
May 21, the Tribunal entered an order “temporarily restraining
Respondents and each of them from the conduct set forth in the
Proposed Interim Injunction Order” filed by SmartSky. (Id. at

¶ 81.) On June 7, 2021, the Tribunal advised that the May 21 Order
would remain in effect until it was superseded by the Final Award.
(Id. at ¶ 83.) In the following months, all parties submitted
post-hearing briefing, exhibits, applications for attorneys’ fees
and costs, and responses to those applications. (Id. at ¶ 87, 88-
89.)

dispositive motions, including on motions for summary judgment, and
collecting cases). Therefore, the Tribunal’s determination that
Wireless Systems’ dismissal was with prejudice was within its purview.
On October 1, 2021, the Tribunal issued the Final Award
denying in part and granting in part SmartSky’s claims. (Doc.
166-1 at ¶ 347.) The Final Award is 81 single-spaced pages

consisting of 427 findings of fact and conclusions of law. On
SmartSky’s claim for breach of contract, the Tribunal awarded
SmartSky $10,000,000 against Wireless Systems. (Id. at ¶ 276.)
The Tribunal awarded the following relief against all Defendants
jointly and severally:
1. $1,963,676.59 for legal fees and expenses
2. $525,215.45 for AAA arbitration costs
3. $60,000 in sanctions for violating interim Orders of the
Tribunal
(Id. at ¶¶ 353-424, 427(B)-(C).) The Tribunal ordered these sums
to be paid on or before fifteen (15) business days from the date
of the Final Award, or by October 22, 2021. (Id. at ¶ 427(C)(2).)

The Tribunal also ordered that within the same time period, the
Defendants “ensure that the Federal Communications Commission
(“FCC”) expeditiously transfers control of any and all FCC
certification grants with grantee code 2AWXX” to SmartSky and
“destroy all ‘Confidential Information’ of SmartSky Networks, LLC,
‘SSN IP,’ and ‘Developed IP’ (as those terms are defined in the
Teaming Agreement . . . ) currently in their possession . . . and
provide written certification” to SmartSky that the material was
destroyed. (Id. at ¶ 427(A)(3).)
In addition, the Tribunal awarded a permanent injunction
against the Defendants, enjoining them and any “entities acting in
concert or participation with them” as well as any successors or

assigns from:
a. making, causing to be made, developing, certifying or
attempting to certify with any government agency, using,
copying, modifying, marketing, promoting, offering to
sell, selling, or distributing any or all “Product” or
“Developed IP” (as those terms are defined in the Teaming
Agreement executed by SmartSky Networks, LLC and
Wireless Systems Solutions, LLC) developed or produced
by Wireless Systems Solutions, LLC, DAG Wireless Ltd.,
and/or DAG Wireless USA, LLC pursuant to or in connection
with any agreement executed between by SmartSky
Networks, LLC and Wireless Systems Solutions, LLC, or
derivatives of such “Product” or “Developed IP,” for use
within the “SSN Field of Use” (as that term is defined
in the Teaming Agreement executed by SmartSky Networks,
LLC and Wireless Systems Solutions, LLC);

b. making or causing to be made any use or disclosure of
any or all “Confidential Information” of SmartSky
Networks, LLC, “SSN IP,” or “SSN Tools” (as those terms
are defined in the Teaming Agreement executed by
SmartSky Networks, LLC and Wireless Systems Solutions,
LLC), or derivatives thereof;

c. making or causing to be made any use or disclosure of
information of SmartSky Networks, LLC subject to a non-
disclosure agreement which they, or any of them,
executed with SmartSky Networks, LLC, including that
Non-Disclosure Agreement dated January 15, 2019;

d. passing off all or any part of SmartSky Networks, LLC’s
“Confidential Information,” “Product,” “SSN IP,” “SSN
Tools,” or “Developed IP” (as those terms are defined in
the Teaming Agreement executed by SmartSky Networks, LLC
and Wireless Systems Solutions, LLC), including
derivatives thereof, as the property of Wireless Systems
Solutions, LLC, DAG Wireless Ltd., DAG Wireless USA,
LLC, Laslo Gross, Susan Gross, and/or David D. Gross,
including their successors and assigns; and/or
e. engaging in any other false or misleading commercial
advertising, promotions, or representations, including
but not limited to statements made directly or
indirectly through the use of pseudonyms or proxies, on
websites, in press releases, or in interviews, which:

i. state or suggest that Wireless Systems Solutions,
LLC, DAG Wireless Ltd., DAG Wireless USA, LLC,
Laslo Gross, Susan Gross, and David D. Gross, or
any of them or their successors or assigns, have
developed, have obtained regulatory certification
of, or have or will have available for purchase or
sale any air-to-ground wireless communications
system or product that uses or is based upon
SmartSky Networks, LLC’s “Confidential
Information,” “Product,” “SSN IP,” “SSN Tools,” or
“Developed IP,” or derivatives thereof, in the “SSN
Field of Use” (as those terms are defined in the
Teaming Agreement executed by SmartSky Networks,
LLC and Wireless Systems Solutions, LLC);

ii. attempt to pass off or represent any “Confidential
Information” of SmartSky Networks, LLC, “SSN IP,”
“SSN Tools,” “Developed IP,” or “Product” (as those
terms are defined in the Teaming Agreement executed
by SmartSky Networks, LLC and Wireless Systems
Solutions, LLC), or derivatives thereof, as
developed by or belonging to Wireless Systems
Solutions, LLC, DAG Wireless Ltd., DAG Wireless
USA, LLC, Laslo Gross, Susan Gross, and/or David D.
Gross, or their successors or assigns; and/or

iii. disparage SmartSky Networks, LLC or attempt to
discourage any person or entity from doing business
with SmartSky Networks, LLC.

(Id. at ¶¶ 427(A)(2)-(2)(e)(iii).)
SmartSky filed the present motion to confirm the Final Award
and enter final judgment pursuant to the FAA, 9 U.S.C. § 9. (Doc.
166.) The DAG Defendants and the Wireless Systems Defendants move
to vacate the Final Award (Docs. 167, 170.)
II. ANALYSIS
A party moving to vacate a final arbitration award faces a
“heavy burden.” Three S Del., Inc. v. DataQuick Info. Sys., Inc.,

492 F.3d 520, 527 (4th Cir. 2007). The scope of judicial review
for an arbitrator’s decision “is among the narrowest known at law
because to allow full scrutiny of such awards would frustrate the
purpose of having arbitration at all — the quick resolution of
disputes and the avoidance of the expense and delay associated
with litigation.” Apex Plumbing Supply, Inc. v. U.S. Supply Co.,
Inc., 142 F.3d 188, 193 (4th Cir. 1998). This court “is limited
to determine whether the arbitrators did the job they were told to
do — not whether they did it well, or correctly, or reasonably,
but simply whether they did it.” Remmey v. PaineWebber, Inc., 32
F.3d 143, 146 (4th Cir. 1994) (internal quotations omitted). The
FAA provides only four limited grounds on which a court may vacate

an arbitration award: (1) where the award was procured by
corruption, fraud, or undue means; (2) where there was evident
partiality or corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing
to hear evidence pertinent and material to the controversy; or of
any other misbehavior by which the rights of any party have been
prejudiced; or (4) where the arbitrators exceeded their powers, or
so imperfectly executed them that a mutual, final, and definite
award upon the subject matter submitted was not made. 9 U.S.C.
§ 10(a). The Defendants do not allege the Final Award was procured
by corruption or that the Tribunal itself was corrupt, but

principally that the Tribunal exceeded its powers.
Beyond the FAA, common law grounds for vacating a final
arbitration award “include those circumstances where an award
fails to draw its essence from the contract, or the award evidences
a manifest disregard of the law.” Patten v. Signator Ins. Agency,
Inc., 441 F.3d 230, 234 (4th Cir. 2006). This high bar is reached
only where the disputed legal principle is “clearly defined” and
“not subject to reasonable debate,” and “the arbitrator refused to
apply that legal principle.” Jones v. Dancel, 792 F.3d 395, 402
(4th Cir. 2015). A district court may not overturn an arbitration
award “just because it believes, however strongly, that the
arbitrators misinterpreted the applicable law.” Wachovia Sec.,

LLC v. Brand, 671 F.3d 472, 478 n. 5 (4th Cir. 2012). As the
parties seeking relief from the Final Award, the Defendants “bear[]
the heavy burden of showing that the arbitrator acted outside the
scope of authority granted by the parties in their contract, by
issuing an award that simply reflects his own notions of economic
justice.” Jones, 792 F.3d at 405 (internal quotations omitted);
Jih v. Long & Foster Real Estate, Inc., 800 F. Supp. 312, 317 (D.
Md. 1992) (noting “[t]he party moving to vacate the award bears
the burden of proof and the showing required to avoid summary
confirmation is high” (internal quotations omitted)). Absent a
showing of the four limited grounds for vacating the award pursuant
to the FAA or a showing of a manifest disregard of the law, a

district court may not vacate an arbitration award. See 9 U.S.C.
§ 9; Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492 F.3d
520, 527 (4th Cir. 2007).
With these high burdens in mind, the court now addresses the
pending motions, beginning with those seeking to alter or vacate
the Final Award.
A. DAG Defendants’ Motion to Vacate Final Award
The DAG Defendants argue the Tribunal exceeded its authority
in finding DAG liable for SmartSky’s attorneys’ fees, because DAG
cannot be liable for: 1) attorneys’ fees incurred before DAG was
a party to the arbitration; 2) unallocated fees which contain fees
for claims against other parties; or 3) attorneys’ fees where no

damages were awarded against DAG. (Doc. 168 at 5-7.)
Additionally, the DAG Defendants argue the Tribunal exceeded its
authority in finding DAG liable for SmartSky’s legal costs and
expenses as well as in assessing the costs of arbitration against
DAG. (Id. at 9-11.) SmartSky responds, arguing that the Tribunal
did not exceed its authority. (Doc. 184 at 4.)
1. Attorneys’ fees before DAG was a party to the
Arbitration

The DAG Defendants argue that DAG is not liable for attorneys’
fees assessed prior to January 13, 2021, when the DAG Defendants
were first included as parties to the arbitration. (Doc. 168 at
5.) According to the DAG Defendants, “[i]t goes without saying

that DAG can not be responsible for attorneys’ fees of [SmartSky]
in the arbitration prior to DAG being parties to the Arbitration.”
(Id.) SmartSky responds noting the “Tribunal had substantial
discretion to award fees, and this Court is not free to substitute
its judgment for that of the arbitrators.” (Doc. 184 at 6.)
Pursuant to AAA Rule-47(a), “the arbitrator may grant any
remedy or relief that the arbitrator deems just and equitable and
within the scope of the agreement of the parties.” It is not for
this court to question the allocation of attorneys’ fees by the
Tribunal. See Wells Fargo Advisors, LLC v. Watts, 540 F. App’x
229, 232 (4th Cir. 2013) (noting “a court must defer to the
arbitrators’ factual findings on attorneys’ fees even if the
arbitrators do not explain a basis for the precise amount.”)2 This

is especially true where the Tribunal considered and rejected the
same arguments the DAG Defendants provide in their motion to
vacate. See Wells Fargo Advisors, LLC v. Watts, 858 F.Supp.2d
591, 599 (W.D.N.C. 2012) (deferring to arbitrators as the “issue
raised by Watts in support of his motion to vacate was raised

2 While the Fourth Circuit does not ordinarily accord precedential value
to its unpublished opinions, it has noted that they “are entitled only
to the weight they generate by the persuasiveness of their reasoning.”
See Collins v. Pond Creek Mining Co., 468 F.3d 213, 219 (4th Cir. 2006)
(citation omitted).
before and decided by the panel.”) rev’d in part on other grounds,
540 F. App’x 229 (4th Cir. 2013).
Specifically, the Tribunal found that the DAG entities

“operated as alter egos of Respondent [Wireless Systems].” (Doc.
166-1 at ¶ 385.) No Defendant disputes this “alter ego” finding
that DAG and Wireless Systems are “one and the same operational
enterprise” and the DAG Defendants are “mere instrumentalities of
[Wireless Systems].” (Id. at ¶ 300.) Moreover, the Tribunal held
all Defendants jointly and severally liable for the underlying
misconduct that sparked this dispute and awarded attorneys’ fees
as it deemed proper. (See id. at ¶ 259) (“[T]he Tribunal holds
that [Wireless Systems] (and any alter egos), . . . breached the
restrictions in the Teaming Agreement.”) Holding an alter ego
liable for the same attorneys’ fees as the parent enterprise fails
to rise to the threshold of requiring vacatur of the Final Award.

The DAG Defendants have not alleged any facts showing, nor do the
Tribunal’s holdings evince, any corruption, misconduct, abuse of
power, or manifest disregard for the law. As such, there is no
basis upon which to vacate the Final Award’s allocation of
attorneys’ fees.
2. Unallocated fees
The DAG Defendants next argue that the Tribunal erroneously
awarded $1,496,473.65 in attorneys’ fees, “despite [SmartSky] not
specifically allocating its time in pursuit of any claim against
DAG or any other party.” (Doc. 168 at 6.) After receiving
SmartSky’s requested attorneys’ fees of $1,731,147.50, the
Tribunal then reduced that amount based on certain fees it deemed

unreasonable, resulting in a fee amount of $1,662,748.50. (Doc.
166-1 at ¶ 389.) The Tribunal then imposed a ten percent reduction
in that amount because the performance breach claims “are not
subject to statutory fee-shifting and involved development and
presentation of certain evidence, even if quite limited, that did
not overlap with the statutory claims.” (Id. at ¶ 398.) According
to the DAG Defendants, “the Tribunal was required to apportion
fees in pursuit of [SmartSky’s] claims,” because the breach of
contract claim against Wireless Systems and the statutory claims
against all Defendants were not derived from a common nucleus of
facts. (Doc. 168 at 6.) SmartSky responds by noting that the
Tribunal did find that the claims arose from a common nucleus of

facts, the Tribunal is in the best position to determine the
allocation of attorneys’ fees, and its “decision is due significant
deference.” (Doc. 184 at 10.)
Again, the DAG Defendants have failed to allege any
corruption, abuse of power, or manifest disregard for the law.
The Tribunal found that there was a “quite limited” amount of
evidence presented for the breach of contract claims that did not
overlap with the statutory claims. (Doc. 166-1 at ¶ 398.) In an
effort to account for that limited amount, the Tribunal reduced
the overall award of attorneys’ fees by ten percent. (Id.) In
reaching that decision, the Tribunal considered “the record before
[it] and all circumstances of the case, including [its] own review

of how the evidence and arguments submitted by the parties related
to individual counts stated by [SmartSky.]” (Id.) This
discretionary reduction in attorneys’ fees is within the purview
of the Tribunal and is accorded significant deference. See Jones
v. Dancel, 792 F.3d 395, 405 (4th Cir. 2015) (rejecting an argument
that an arbitrator impermissibly disregarded the law in failing to
award attorneys’ fees, because “[w]hile it may be debatable whether
the arbitrator performed this task ‘well,’ the record in this case
shows that the arbitrator undertook careful analysis of the
applicable legal principles”); Okwara v. Dillard Dep’t Stores,
Inc., 525 S.E.2d 481 (N.C. Ct. App. 2000) (noting that under North
Carolina law, a trial court need not apportion attorneys’ fees

where the plaintiff’s claims were inextricably interwoven because
“much of counsel’s time will be devoted generally to the litigation
as a whole, making it difficult to divide the hours expended on a
claim-by-claim basis.”)
For these reasons, the DAG Defendants have not carried their
heavy burden in showing that the Tribunal exceeded its authority
in declining to apportion attorneys’ fees.
3. Attorneys’ fees absent damages
The DAG Defendants’ third alleged ground for vacating the
Final Award is that DAG cannot be liable for any attorneys’ fees
because no monetary damages were awarded against DAG. (Doc. 168
at 7.) According to the DAG Defendants, the Tribunal “lacked any

authority to find that [SmartSky] was the prevailing party on its
[Unfair Deceptive Trade Practices Act] claim where it was not
awarded damages.” (Id.) SmartSky responds by contending the
Unfair Deceptive Trade Practices Act (“UDTPA”) does not require an
award of monetary damages for a party to be recognized as the
prevailing party and the Tribunal’s decision is thus consistent
with North Carolina law. (Doc. 184 at 12.)
The UDTPA authorizes awards of attorneys’ fees as follows:
In any suit instituted by a person who alleges that the
defendant violated G.S. 75-1.1, the presiding judge may,
in his discretion, allow a reasonable attorney fee to
the duly licensed attorney representing the prevailing
party, such attorney fee to be taxed as a part of the
court costs and payable by the losing party, upon a
finding by the presiding judge that:

(1) The party charged with the violation has
willfully engaged in the act or practice, and there
was an unwarranted refusal by such party to fully
resolve the matter which constitutes the basis of
such suit; or (2) The party instituting the action
knew, or should have known, the action was
frivolous and malicious.

N.C. Gen. Stat. 75-16.1.
A prevailing party must have “suffered actual injury as a
result of the violation” of the UDTPA. See Mayton v. Hiatt’s Used
Cars, Inc., 262 S.E.2d 860, 864 (N.C. App. 1980). The DAG
Defendants have pointed to no authority that states “actual injury”
requires an award of monetary damages. Rather, showing actual
injury is a step before and separate from recovering damages. In
order to recover damages for a claim pursuant to the UDTPA,

SmartSky must prove it “suffered actual injury as a result of
defendants’ unfair and deceptive act.” Belcher v. Fleetwood Ent.,
Inc., 590 S.E.2d 15, 18 (N.C. App. 2004). Therefore, while the
Tribunal did not award monetary damages based on SmartSky’s UDTPA
claim against all Defendants, it did note that SmartSky “is clearly
the prevailing party and indeed prevailed on virtually all counts
stated in its Amended Statement of Claims.” (Doc. 166-1 at ¶ 390.)
As a reflection of SmartSky’s prevailing claims, the Tribunal
entered a permanent injunction against the Defendants. (Id. at ¶
331.) The Tribunal found SmartSky suffered actual injury as a
result of the Defendants’ actions and awarded attorneys’ fees
pursuant to the UDTPA upon that basis. (See id. at ¶ 330) (listing

the harms which SmartSky suffered because of the Defendants’
practices). The Final Award does not reflect a manifest disregard
for the law, as the Tribunal’s decision to award attorneys’ fees
to SmartSky, having determined that SmartSky was “clearly the
prevailing party,” is consistent with North Carolina law and
similarly deserves significant deference. (Id. at ¶ 390.)
The DAG Defendants present similar arguments for the
Tribunal’s award of attorneys’ fees for SmartSky’s false
advertising claims, contending this is not an “exceptional case”
as required by the Lanham Act. (Doc. 168 at 8); see 15 U.S.C.
§ 1117(a). The DAG Defendants point out that “DAG has made clear
. . . that DAG would stipulate that they would not violate the

Lanham Act in the future,” which makes this case unexceptional.
(Id.) SmartSky in response argues the Tribunal found this to be
an exceptional case and the Tribunal did not exceed its authority
in so finding. (Doc. 184 at 16.)
Pursuant to the Lanham Act, courts “in exceptional cases may
award reasonable attorney fees to the prevailing party.” 15 U.S.C.
§ 1117(a). An exceptional case “is simply one that stands out
from others with respect to the substantive strength of a party’s
litigating position (considering both the governing law and the
facts of the case) or the unreasonable manner in which the case
was litigated.” Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 572 U.S. 545, 554 (2014); see Ga.-Pac. Consumer Prods. LP v.

von Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015) (noting that
while Octane Fitness centered on § 285, “there is no reason not to
apply the Octane Fitness standard when considering the award of
attorneys’ fees under § 1117(a)”). When determining the
exceptionality of a case, “[t]here is no precise rule or formula
for making these determinations, but instead equitable discretion
should be exercised in light of the considerations [the Supreme
Court] ha[s] identified.” Fogerty v. Fantasy, Inc., 510 U.S. 517,
534 (1994) (internal quotations omitted); see Octane Fitness, 572
U.S. at 554 (noting that, while Fogerty focused on the meaning of
exceptional in terms of the Copyright Act, the Lanham Act’s fee-
shifting provision is a “comparable context”).

Here, the Tribunal found that the Defendants engaged in
numerous instances of misconduct and, based on those findings,
concluded “this is an ‘exceptional case’ of false advertising.”
(Doc. 166-1 at ¶ 342.) Specifically, the Tribunal found that the
Defendants’ false advertising “goes well beyond simply overstating
an attribute or making a false statement about a competing
product.” (Id. at ¶ 366.) The Defendants’ actions resulted in
“confusion in the marketplace as to the availability of competing
[air-to-ground] Systems, interference with important negotiations
[SmartSky] was having with [potential investors], and loss of
investor confidence in [SmartSky].” (Id. at ¶ 367.) The Tribunal
determined there was sufficient evidence to support a finding that

this was an “exceptional case” for purposes of the Lanham Act, and
the Defendants have failed to carry their burden in showing that
this conclusion reflects a manifest disregard of the law. See
Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188,
194 (4th Cir. 1998) (noting that “even a mistake of fact or
misinterpretation of law by an arbitrator provides insufficient
grounds for the modification of an award.”).
Additionally, as SmartSky points out, while DAG would
stipulate to not violating the Lanham Act in the future, “agreeing
to not break the law in the future has no bearing” on whether the
current misconduct is exceptional. (Doc. 184 at 17.) Because the
DAG Defendants have failed to carry their heavy burden and the

Tribunal’s conclusion shows no manifest disregard for the law, the
Tribunal did not exceed its authority in awarding attorneys’ fees
for SmartSky’s Lanham Act claim.
The DAG Defendants present an ancillary argument that the
Tribunal erred in awarding SmartSky attorneys’ fees for its
statutory misappropriation claims as the Tribunal found those
claims were waived against DAG. (Doc. 168 at 8.) SmartSky
contends in response that the Tribunal awarded no attorneys’ fees
against the DAG entities for misappropriation, but rather awarded
fees against the individual members of the Gross family and found
that all of the Defendants willfully misappropriated SmartSky’s
intellectual property such that the Defendants were liable for

attorneys’ fees under the UDTPA and the Lanham Act. (Doc. 184 at
15.)
The Tribunal found that, pursuant to the Teaming Agreement,
the parties had waived any statutory claims for misappropriation.
(Doc. 166-1 at ¶ 315.) This waiver applied to claims between
SmartSky and Wireless Systems as signatories to the Teaming
Agreement as well as DAG Israel and DAG USA as alter egos of
Wireless Systems. (Id. at ¶ 316.) The Teaming Agreement waiver
does not apply to the Gross family, and claims for misappropriation
“may, however, be asserted against the Grosses who were not party
to the Teaming Agreement.” (Id. at ¶ 360.)
Although DAG is not liable for claims of misappropriation

beyond the Teaming Agreement, it may still be held liable for
attorneys’ fees pursuant to the UDTPA (if SmartSky is the
prevailing party) and the Lanham Act (if this is an “exceptional
case”) even if SmartSky received no monetary damages from DAG. As
discussed above, the Tribunal found that SmartSky was the
prevailing party and that this is an exceptional case. Therefore,
while the DAG entities are not liable for damages for the statutory
misappropriation claims, the Teaming Agreement does not absolve
them of joint and several liability for the attorneys’ fees.
Additionally, there is no evidence that the Tribunal’s decision to
allocate the attorneys’ fees represents a manifest disregard for
the law or results from corruption or partiality. As such, the

DAG Defendants’ motion to vacate on this ground is denied.
4. Liability for legal costs and arbitration
The DAG Defendants lastly contend that the court should vacate
the Final Award because the Tribunal exceeded its authority in
finding DAG liable for SmartSky’s costs and for the cost of
arbitration. (Doc. 168 at 9-10.) SmartSky responds that AAA Rule
47 authorizes the Tribunal to grant the relief it deems just and
that the allocation of costs is the result of the Tribunal
determining an equitable outcome. (Doc. 184 at 19.)
The Tribunal awarded SmartSky $467,202.94 in legal costs and
expenses against all Defendants. (Doc. 166-1 at ¶ 402.) That
award consists of:
1. $265,934.00 for SmartSky’s technical expert, Jim

Proctor;
2. $115,894.28 for SmartSky’s damages expert, Bryce Cook;
3. $46,570.18 for SmartSky’s hotel expenses;
4. $21,056.35 in deposition expenses; and
5. $17,748.12 in court reporter fees for the arbitration.3
(Doc. 168 at 10.)
The DAG Defendants argue that under North Carolina law
SmartSky is only entitled to expert fees for the time the expert
spent providing testimony at trial. (Doc. 168 at 10); N.C. Gen.
Stat. 7A-305(d). Alternatively, the DAG Defendants argue, if
federal law were to apply, SmartSky cannot recover expert fees

because they cannot be assessed as a cost. (Id.); 28 U.S.C.
§ 1920. SmartSky responds, noting that neither statute applies;
rather, the AAA Rules govern the ability of the Tribunal to award
fees and costs.
North Carolina law cited by the DAG Defendants only applies
to “civil action in the superior or district court.” N.C. Gen.
Stat. 7A-305(d). As this is a Final Award entered after a private

3 The DAG Defendants concede that court reporter fees for depositions
and the arbitration would be recoverable. (Doc. 168 at 10.)
arbitration hearing outside of a superior or district court, the
statute is inapplicable. The same is true for 28 U.S.C. § 1920,
which only relates to costs that a “judge or clerk of any court in

the United States may tax.” Arbitration proceedings are governed
by the FAA, the AAA Commercial Rules, and any agreements made
between the parties.
SmartSky points to AAA Rule 47(a) as setting forth the
Tribunal’s ability to award costs. Rule 47(a) provides:
(a) The arbitrator may grant any remedy or relief that
the arbitrator deems just and equitable and within the
scope of the agreement of the parties, including, but
not limited to, specific performance of a contract.

By its express language, Rule 47(a) itself places no limits on the
relief the Tribunal may provide other than that such relief be
within the scope of the agreement of the parties. The DAG
Defendants offer no counter to Rule 47(a)’s broad language other
than directing the court to Rule 47(c) which provides:
(c) In the final award, the arbitrator shall assess the
fees, expenses, and compensation provided in Sections R-
53, R-54, and R-55. The arbitrator may apportion such
fees, expenses, and compensation amount the parties in
such amounts as the arbitrator determines is
appropriate.

(Doc. 191 at 2.)

Rule 47(c) appears to be an additional consideration to Rule
47(a, providing that the Tribunal may grant “any remedy or relief
that it deems just” pursuant to Rule 47(a) and must also assess
any applicable “fees, expenses, and compensation provided in
Sections R-53, R-54, and R-55” pursuant to Rule 47(c). Rule 53
focuses on administrative fees and is thus inapplicable here.
Similarly Rule 55 relates to the compensation of the arbitrators

and is inapplicable. The DAG Defendants’ argument thus rests on
Rule 54, which provides:
The expenses of witnesses for either side shall be paid
by the party producing such witnesses. All other
expenses of the arbitration, including required travel
and other expenses of the arbitrator, AAA
representatives, and any witness and the cost of any
proof produced at the direct request of the arbitrator,
shall be born equally by the parties, unless they agree
otherwise or unless the arbitrator in the award assesses
such expenses or any part thereof against any specified
party or parties.

The DAG Defendants thus argue that the Tribunal lacked
authority under North Carolina law, Federal law, and the AAA Rules
to award expert fees and “[a]s a result, the entire arbitration
award must be vacated.” (Doc. 191 at 3.) However, the Tribunal
informed the parties well before entering the Final Award that it
would “exercise its authority to allocate the costs of arbitration
in its final award in light of the full factual record established
at the hearing as well as the circumstances of these proceedings.”
(Doc. 166-4 at ¶ 8.) Because of the Defendants’ actions, the
Tribunal found that SmartSky was required “to prove through
percipient and expert witnesses and voluminous documents, inter
alia, its ownership of the [air-to-ground] Products and
derivatives, Respondents’ improper use of [SmartSky’s]
Intellectual Property, and [SmartSky’s] need for temporary and
permanent injunctive relief.” (Doc. 166-1 at ¶ 393.) As permitted
by Rule 47(a), and consistent with the Tribunal’s factual findings,

the Tribunal determined awarding expert fees and costs was a just
and equitable form of relief. Rule 54 functions in the event
expenses of witnesses are not considered under Rule 47(a). For
instance, had the Tribunal not determined that an award of expert
fees to SmartSky was just and equitable pursuant to Rule 47(a), it
would be prohibited from assessing those costs pursuant to Rules
47(c) and 54. However, the Tribunal determined that shifting those
costs to the Defendants was warranted in this case, and it is not
for this court to determine whether the Tribunal’s allocation of
costs is correct. It “is enough that the Arbitrator grappled with
and resolved [the issue at hand] at all,” and nothing indicates
the Tribunal baselessly allocated these costs. Goins v. TitleMax

of Va., Inc., No. 1:19CV489, 2021 WL 3856149, at *2 (M.D.N.C.
Aug. 27, 2021).
For the foregoing reasons, because the DAG Defendants have
failed to carry their heavy burden of showing one of the limited
grounds for vacating an arbitration award provided by the FAA or
by showing any manifest disregard of the law as required at common
law, the DAG Defendants’ Motion to Vacate the Final Award (Doc.
167) is denied.
B. Wireless Systems Defendants’ Motion to Vacate Final
Award

The Wireless Systems Defendants’ contentions can be separated
into two categories. First, the Wireless Systems Defendants argue
that the Tribunal did not properly consider evidence they presented
and erred in refusing to allow the Defendants to engage in
discovery and obtain evidence on certain claims. (Doc. 174 at 6-
23.) Second, they present nearly identical arguments as the DAG
Defendants, arguing that the Tribunal exceeded its power in finding
that Wireless Systems’ dismissal of counterclaims was with
prejudice, in awarding SmartSky’s expenses and costs, and by not
properly allocating SmartSky’s attorneys’ fees amongst claims and
between defendants. (Id. at 23-25.) SmartSky responds by arguing
that the Tribunal did not disregard the law in denying the Wireless
Systems Defendants’ attempt to engage in discovery and that the
Tribunal’s decision should receive significant deference. (Doc.
180 at 14.) As to the Wireless Systems Defendants’ second category
of claims, SmartSky presents the same arguments as set forth in
its opposition to the DAG Defendants’ motion to vacate the award
discussed above. (Id. at 18.)
To the extent the Wireless Systems Defendants argue the

Tribunal erred in denying various procedural motions, their motion
to vacate the Final Award must be denied, as it is not for this
court to relitigate the claims presented in the arbitration.4 A
court “must defer to the [arbitration] panel’s discovery and
evidentiary rulings even if the court would have ruled

differently.” Wells Fargo Advisors, LLC v. Watts, 858 F.Supp.2d
591, 599 (W.D.N.C. 2012) (citing Remmey v. PaineWebber, Inc., 32
F.3d 143, 146 (4th Cir. 1994) (noting “[c]ourts are not free to
overturn an arbitral result because they would have reached a
different conclusion if presented with the same facts.”)) rev’d in
part on other grounds, 540 F. App’x 229 (4th Cir. 2013). An
“arbitrator’s procedural ruling may not be overturned unless it
was in bad faith or so gross as to amount to affirmative
misconduct.” Wachovia Sec., LLC v. Brand, 671 F.3d 472, 479 (4th
Cir. 2012). Vacatur of a final award based on the procedural
orders issued by the Tribunal during arbitration requires proof
that the Tribunal “intentionally contradicted the law,” rather

4 Specifically, the Wireless Systems Defendants challenge the Tribunal’s
decision to deny their application to file a cease-and-desist motion and
a motion to compel discovery relating to allegations that SmartSky had
“hacked” products purportedly belonging to Wireless Systems. (Doc. 174
at 6.) The Tribunal reached this determination because DAG had filed
the motion well into the discovery process just weeks before the hearing.
Nevertheless, the Tribunal did allow DAG to put on extensive evidence
on the issue of hacking during the hearing and ultimately concluded that
SmartSky had not hacked Wireless Systems’ software, but rather SmartSky
“overwrote” some of Wireless Systems’ software. (Doc. 166-1 at ¶ 338.)
Importantly, the motion to compel discovery was filed by DAG, not
Wireless Systems; therefore, it is unclear why Wireless Systems seeks
to vacate the Final Award based on a motion it did not file. (Doc. 166-
1 at ¶ 74.) The Wireless Systems Defendants also argue that the Tribunal
erroneously found that Wireless Systems’ dismissal of its counterclaims
was with prejudice. (Doc. 174 at 21.) The court addressed this
contention earlier. See n. 1 supra.
than simply made a “mistake.” (Id.) To allow the Wireless Systems
Defendants to participate in a thorough arbitration hearing and
then relitigate the same procedural issues in this court “would

frustrate the purpose of having arbitration at all.” Apex Plumbing
Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188, 193 (4th Cir.
1998). To be sure, the Wireless Systems Defendants assert no
factual allegations of intentional misconduct undertaken by the
Tribunal. See Wachovia Sec., LLC, 671 F.3d at 479 (“Wachovia’s
challenge to the Panel’s procedure would nevertheless fail because
it does not allege misconduct.”)
Because the Tribunal’s decision on procedural issues such as
discovery disagreements and the presentation of evidence garners
significant deference and the Wireless Systems Defendants have
alleged no specific instances or facts tending to show the Tribunal
engaged in affirmative misconduct, the Wireless Systems

Defendants’ motion to vacate based on the procedural category of
their arguments is denied.
As to the second category of grievances put forth by the
Wireless Systems Defendants, they are identical to the arguments
raised by the DAG Defendants in relation to the Tribunal’s award
of expenses, costs, and attorneys’ fees to SmartSky. (Doc. 174 at
23-25.) Specifically, the Wireless Systems Defendants argue the
Tribunal exceeded its power in imposing expert fees in
contravention of North Carolina and federal law and by not
separately allocating attorneys’ fees to each party for each claim.
(Id.) To the extent the Wireless Systems Defendants’ motion is
based on the same arguments presented by the DAG Defendants, it is

denied for the reasons set forth above.
C. Smartsky’s Motion to Confirm Final Award
SmartSky argues there is no basis to modify, vacate, or
correct the Final Award and, because the court has jurisdiction to
confirm the Final Award, it should do so. (Doc. 166 at 11.)
Pursuant to the FAA, to prevail on a motion to confirm a final
award, the movant must petition the court within one year of the
arbitration award, provide notice to the adverse party, and file
the award order, the arbitration agreement, and any time extension
with the motion. See 9 U.S.C. §§ 9, 13. Here, SmartSky filed its
motion containing all required documents four days after the Final
Arbitration Order. (Doc. 166.) Notice of this motion was provided

to the Defendants. (Id. at 16.)
Having reviewed the Final Award, and finding no evidence of
fraud, corruption, misconduct, or manifest disregard of the law,
the court must confirm the award. See 9 U.S.C. § 9; Benchmark
Elecs., Inc. v. Myers, No. GJH-19-242, 2019 WL 6528587, at *7 (D.
Md. Dec. 3, 2019) (“Because the Court will not vacate the
arbitration award, it must confirm it.”); JTH Tax LLC v. Pitcairn
Franchise Dev., LLC., No. 2:21cv135, 2021 WL 3173572, at *9 (E.D.
Va. July 27, 2021) (“Therefore, the court must grant an arbitration
award unless the award is vacated, modified, or corrected.”
(internal quotations and alterations omitted)). Because there is
no cause to vacate the Final Award, SmartSky’s motion is granted.

Smiley v. Forcepoint Fed., LLC, No. 3:21CV500, 2021 WL 5143898, at
*3 (E.D. Va. Nov. 3, 2021) (confirming arbitration award because
it was not vacated).
D. Motions to Seal
The Wireless Systems Defendants seek to seal certain exhibits
filed with their Brief in Support of Their Motion to Vacate and
Modify the Arbitrators’ Final Award “and to seal the Brief that
quotes the exhibits.” (Doc. 177.) SmartSky responds by agreeing
that the Proposed Sealed Documents included in the Wireless Systems
Defendants’ motion “should be sealed by the Court to the extent
necessary to avoid disclosure on the public docket,” but that many
of the documents are “irrelevant to the pending Motion to Vacate,

and should therefore be struck,” pursuant to Local Rules 5.4 and
5.5. (Doc. 179 at 2.) SmartSky separately moves for leave to
file sealed portions of its reply in opposition to the Wireless
Systems Defendants’ motion to vacate the arbitrator’s Final Award.
(Doc. 182.)
When a party makes a request to seal judicial records, a
district court “must comply with certain substantive and
procedural requirements.” Va. Dep’t of State Police v. Washington
Post, 386 F.3d 567, 576 (4th Cir. 2004). Procedurally, the court
must (1) give the public notice and a reasonable opportunity to
challenge the request to seal; (2) “consider less drastic
alternatives to sealing”; and (3) if it decides to seal, make

specific findings and state the reasons for its decision to seal
over the alternatives. Id. “As to the substance, the district
court first must determine the source of the right of access with
respect to each document, because only then can it accurately weigh
the competing interests at stake.” Id. (internal quotation marks
and alteration omitted). “While the common law presumption in
favor of access attaches to all judicial records and documents,
the First Amendment guarantee of access has been extended only to
particular judicial records and documents.” Stone v. Univ. of Md.
Med. Sys. Corp., 855 F.2d 178, 180 (4th Cir. 1988) (internal
quotations and citations omitted). Generally, the public interest
in disclosure heightens as the underlying motions are directed

more to the merits and as the case proceeds toward trial. See
Washington Post, 386 F.3d at 578–79 (observing that the public has
a First Amendment right of access to materials submitted in
connection with a summary judgment motion in a civil action (citing
Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir.
1988)).
“The burden to overcome a First Amendment right of access
rests on the party seeking to restrict access, and that party must
present specific reasons in support of its position.” Id. at 575;
see Press–Enterprise Co. v. Superior Ct. of Ca. for Riverside
Cnty., 478 U.S. 1, 15 (1986) (“The First Amendment right of access
cannot be overcome by [a] conclusory assertion.”). The public's

right of access “may be abrogated only in unusual circumstances.”
Stone, 855 F.2d at 182. Evaluating whether these “unusual
circumstances” exist in a particular case is a fact-based inquiry
conducted in light of the “specific facts and circumstances” of
the case at issue. See Washington Post, 386 F.3d at 579.
“One exception to the public's right of access is where such
access to judicial records could provide a ‘source[] of business
information that might harm a litigant's competitive standing.’”
Woven Elecs. Corp. v. Advance Grp., Inc., 1991 WL 54118, at *6
(4th Cir. Apr. 15, 1991) (quoting Nixon v. Warner Commc’ns, Inc.,
435 U.S. 589, 598 (1978)). “[M]any courts have considered the
trade secret status of testimony or materials submitted to a court

a significant private interest to be weighed against the common
law, or even the First Amendment, right of public access that would
otherwise apply to them.” Level 3 Commc'ns, LLC v. Limelight
Networks, Inc., 611 F. Supp. 2d 572, 581–82 (E.D. Va. 2009)
(collecting cases)); Woven Elecs. Corp., 1991 WL 54118, at *6-7
(holding the district court erred in denying motion to close the
courtroom to prevent disclosure of trade secrets at trial and
remanding the case for determination as to what portions of the
district court record must be sealed in order to prevent further
disclosure); ATI Indus. Automation, Inc. v. Applied Robotics,
Inc., 801 F. Supp. 2d 419, 427-28 (M.D.N.C. 2011) (finding the
public had a First Amendment right of access to documents submitted

in connection with motions to dismiss for lack of personal
jurisdiction and improper venue, but holding that the sealing of
eight exhibits was appropriate in order to protect trade secrets
contained therein); Longman v. Food Lion, Inc., 186 F.R.D. 331,
335 (M.D.N.C. 1999) (noting documents could “be sealed even given
the public access requirements because they contain Defendants’
trade secrets, confidential business information, or information
protected by attorney-client privilege”).
The Wireless Systems Defendants assert that many of the
exhibits listed, while not necessarily confidential themselves,
included testimony or references to otherwise confidential
exhibits. (Doc. 177 at 2.) At the start of arbitration, all

parties agreed that the entire arbitration hearing and the
resulting transcript would be treated as confidential pursuant to
a Protective Order governing confidential information. (Id.) The
claims forming the basis of this case revolve around trade secrets
and closely held and highly valuable intellectual property, and
from the beginning both parties maintained the importance of
confidentiality. For instance, the Wireless Systems Defendants
advise that they seek to seal the listed exhibits because they “do
not want to inadvertently violate the Protective Order,”
especially because SmartSky had already “filed a motion against
them for sanctions during the arbitration proceeding for violating
the Protective Order.” (Id.)

SmartSky contends that many of these documents are irrelevant
to the pending motion and should be struck. (Doc. 179 at 2.)
However, motions to strike are appropriate only for pleadings and
not for these documents. See 5A C. Wright and A. Miller, Federal
Practice and Procedure: Civil, § 1380 (3d ed. 2021); Charleston
Waterkeeper v. Frontier Logistics, L.P., 488 F. Supp. 3d 240, 260
(D.S.C. 2020); Delta Consulting Grp., Inc. v. R. Randle Const.,
Inc., 554 F.3d 1133 (7th Cir. 2009). Furthermore, because the
court considered these documents in ruling on the cross motions to
vacate or confirm the award and relied on some of the background
information provided by the designated exhibits in deciding the
motions to vacate, it cannot say these documents are irrelevant.

Therefore, the Wireless Systems Defendants’ motion to seal certain
exhibits (Doc. 177) is granted and SmartSky’s request to strike
documents is denied.5
SmartSky seeks to file under seal portions of its brief in
opposition to the Wireless Systems Defendants’ motion to vacate
the arbitrator’s Final Award, and for similar reasons its motion

5 SmartSky also recognizes that to the extent the court does not strike
the documents, they should be sealed “to ensure the sensitive and
confidential business information contained therein is not publicly
displayed.” (Doc. 179 at 2.)
is granted. (Doc. 182.) The Defendants have filed no brief in
opposition. SmartSky advises that its opposition brief includes
“confidential, proprietary, and sensitive business information,”

and disclosure “would potentially violate a contractual
confidentiality agreement” between SmartSky and Wireless Systems.
(Id. at 1-2.) The information contained in SmartSky’s opposition
brief details confidential information, including names of
prospective clients, SmartSky’s customer solicitation efforts, and
its overall business strategy in a highly competitive and fast-
moving industry. Because sealing is necessary to protect the
confidentiality of the proprietary business information contained
in SmartSky’s opposition brief, Smartsky’s motion to seal (Doc.
181) is granted. See LifeNet Health v. LifeCell Corp., No.
2:13cv486, 2015 WL 12516758, at *2 (E.D. Va. Jan. 9, 2015) (stating
“in a case involving trade secrets, [] the record should ‘be sealed

to the extent necessary to prevent the release of trade secrets.’”
(quoting Woven Elecs., 1991 WL 54118, at *6.)); Valley Broad. Co.
v. United States Dist. Court for Dist. of Nev., 798 F.2d 1289,
1294 (9th Cir. 1986) (noting the presence of “trade secret
materials” would “counsel[] against” the common law right of public
access); Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165,
1179 (6th Cir. 1983) (“[c]ourts have carved out several distinct
but limited common law exceptions to the strong presumption in
favor of openness, including trade secrets which are a recognized
exception to the right of public access to judicial records”
(internal quotations omitted)).
III. CONCLUSION

For the foregoing reasons,
IT IS HEREBY ORDERED that the DAG Defendants’ Motion to
Dismiss or Compel Arbitration of Complaint and Amended Complaint
(Doc. 160) is DENIED as moot; the DAG Defendants’ Motion to Vacate
Arbitration Award (Doc. 167) is DENIED, and the Wireless Systems
Defendants’ Motion to Vacate and Modify the Arbitrators Final Award
(Doc. 170) is DENIED.
IT IS FURTHER ORDERED that the Wireless Systems Defendants’
Motion to Seal Exhibits (Doc. 177) is GRANTED, and SmartSky’s
Motion to Seal (Doc. 181) SmartSky’s Opposition to the Wireless
Systems Defendants’ Motion to Vacate and Modify the Arbitrators’
Final Award (Doc. 180) is GRANTED.

IT IS FURTHER ORDERED that SmartSky’s Motion to Confirm
Arbitration Award and for Entry of Final Judgment (Doc. 166) is
GRANTED and the Final Award is CONFIRMED.
IT IS FURTHER ORDERED that in accordance with the confirmation
of the Award, FINAL JUDGMENT BE ENTERED AS FOLLOWS in favor of
SmartSky and against the Defendants Wireless System Solutions, LLC
(“Wireless Systems”), DAG Wireless Ltd. (“DAG Wireless”), DAG
Wireless USA, LLC (“DAG Wireless USA”), Laslo Gross, Susan Gross,
and David Gross (collectively “Defendants”):
1. SmartSky is awarded a judgment for damages and other
monetary relief against the Defendants as follows
a. Ten Million Dollars ($10,000,000.00) in damages

against Wireless Systems on SmartSky’s claims for breach of
the April 11, 2019 Teaming Agreement (the “Teaming
Agreement”) between SmartSky and Wireless Systems and for
breach of other agreements between SmartSky and Wireless
Systems; and
b. the following amounts are awarded to SmartSky
against all of the Defendants (Wireless Systems, DAG
Wireless, DAG Wireless USA, Laslo Gross, Susan Gross, and
David Gross), jointly and severally:
i. $1,963,676.59 for legal fees and expenses
incurred by SmartSky;
ii. $525,215.45 for Arbitration costs incurred by

SmartSky; and
iii. $60,000.00 in sanctions for the Defendants’
violations of interim orders of the Tribunal appointed
in the Arbitration.
2. Wireless Systems, DAG Wireless, DAG Wireless USA, Laslo
Gross, Susan Gross, and David Gross, and each of them, as well as
persons or entities acting in concert or participation with them
or otherwise on their behalf, including their successors or
assigns, shall immediately cease and desist and are hereby
permanently enjoined from engaging, directly or indirectly, in any
of the following activities or conduct:
a. making, causing to be made, developing, certifying
or attempting to certify with any government agency, using,
copying, modifying, marketing, promoting, offering to sell,
selling, or distributing any or all “Product” or “Developed
IP” (as those terms are defined in the Teaming Agreement and
as the definitions are incorporated below) developed or
produced by Wireless Systems, DAG Wireless, or DAG Wireless
USA pursuant to or in connection with any agreement executed
by SmartSky and Wireless Systems, or derivatives of such
“Product” or “Developed IP,” for use within the “SSN Field of
Use” (as those terms are defined in the Teaming Agreement and
as the definitions are incorporated below);
b. making or causing to be made any use or disclosure
of any or all “Confidential Information” of SmartSky, “SSN
IP,” or “SSN Tools” (as those terms are defined in the Teaming
Agreement and as the definitions are incorporated below), or
derivatives thereof;
c. making or causing to be made any use or disclosure
of information of SmartSky subject to a non-disclosure
agreement which they, or any of them, executed with SmartSky
including that Non-Disclosure Agreement dated January 15,
2019;
d. passing off all or any part of SmartSky’s
“Confidential Information,” “Product,” “SSN IP,” “SSN Tools,”
or “Developed IP” (as those terms are defined in the Teaming
Agreement and as the definitions are incorporated below),
including derivatives thereof, as the property of Wireless
Systems, DAG Wireless, DAG Wireless USA, Laslo Gross, Susan
Gross, and/or David D. Gross, including their successors and
assigns; and/or
e. engaging in any other false or misleading
commercial advertising, promotions, or representations,
including but not limited to statements made directly or
indirectly through the use of pseudonyms or proxies, on
websites, in press releases, or in interviews, which:
i. state or suggest that Wireless Systems, DAG
Wireless, DAG Wireless USA, Laslo Gross, Susan Gross, and
David Gross, or any of them or their successors or assigns,
have developed, have obtained regulatory certification of, or
have or will have available for purchase or sale any air-to-
ground wireless communications system or product that uses or
is based upon SmartSky’s “Confidential Information,”
“Product,” “SSN IP,” “SSN Tools,” or “Developed IP,” or
derivatives thereof, in the “SSN Field of Use” (as those terms
are defined in the Teaming Agreement and as the definitions
are incorporated below);
ii. attempt to pass off or represent any
“Confidential Information” of SmartSky, “SSN IP,” “SSN
Tools,” “Developed IP,” or “Product” (as those terms are
defined in the Teaming Agreement and as the definitions are
incorporated below), or derivatives thereof, as developed by
or belonging to Wireless Systems, DAG Wireless, DAG Wireless
USA, Laslo Gross, Susan Gross, and/or David Gross, or their
successors or assigns; and/or
iii. disparage SmartSky or attempt to discourage
any person or entity from doing business with SmartSky.
3. The Court sets forth the following definitions from the
Teaming Agreement as referenced in the permanent injunction above:
a. “Product” is defined as “the production units
[SmartSky] commissions [Wireless Systems] to develop,
procure, integrate, produce, deliver, and support exclusively
for [SmartSky] for the SSN Field of Use as defined herein.”
b. “SSN Field of Use” is defined as “communications
networks, information exchange, and enabling information
tools, all for use in aviation related operations including
air-to-surface, surface-to-air, and air-to-air
communications.”
c. “SSN IP” is defined as follows:
“(a) all Intellectual Property of [SmartSky] existing prior
to, or invented or developed by, for, or on behalf of
[SmartSky] independent of this Agreement, (b) Work Product
and Developed IP (except as otherwise provided in a SOW), (c)
any Intellectual Property as described in the applicable SOW
[Statement of Work] as SSN IP and owned by SSN, and (c) any
Intellectual Property set forth in the attached Exhibit A.”
d. “Intellectual Property” is defined as:
“Intellectual Property means all of the following, whether
protected, created or arising under the laws of any domestic
or foreign jurisdiction: (a) patents, patent applications
(along with all patents issuing thereon), statutory invention
registrations, and divisions, continuations, continuations-
in-part, and substitute applications of the foregoing, and any
extensions, reissues, restorations and reexaminations of the
foregoing, and all rights therein provided by international
treaties or conventions including, without limitation, the
exclusive right to make, use and sell, (b) know-how, ideas,
processes, discoveries, methods, copyrights, mask work rights,
database rights and design rights, whether or not registered,
published or unpublished, and registrations and applications
for registration thereof, and all forms of intellectual
property rights therein whether provided by international
treaties or conventions or otherwise, (c) trade secrets, (d)
Marks, (e) all rights arising from or in respect of domain
names and domain name registrations and reservations, and (f)
all other applications and registrations related to any of the
rights set forth in the foregoing clauses (a)-(f) above.”

e. “Developed IP” is defined as:
“For each SOW [Statement of Work agreed to by {SmartSky} and
{Wireless Systems}], the Parties agree to cooperate in good
faith to identify and detail the scope of the work to be
performed under the applicable SOW and to specify the
ownership rights to all Work Product. The Parties agree that
in the absence of any such specification of ownership in the
applicable SOW, any Work Product (and all Intellectual
Property rights contained therein) produced for such SOW,
excluding any WSS IP, shall be owned by [SmartSky]. Any Work
Product, and Intellectual Property rights contained therein,
owned by [SmartSky] shall be referred to hereafter as
‘Developed IP’. Further, [Wireless Systems] hereby
acknowledges and agrees that [SmartSky] shall own all right,
title and interest in and to the Product, and all Intellectual
Property rights contained therein, except for [Wireless
Systems’] ownership rights in any WSS IP incorporated into
the Product, which [SmartSky] shall have a license to pursuant
to Section 8.03. Additionally, and notwithstanding anything
in the Agreement or a SOW that may be interpreted to the
contrary, [Wireless Systems] hereby acknowledges and agrees
that [SmartSky] shall be the exclusive owner of all right,
title and interest in and to any and all developments,
improvements, enhancements, or derivatives to any SSN IP,
including without limitation, [SmartSky’s] patent portfolio
set forth in Exhibit A.”

f. “Work Product” is defined as follows:
“all inventions, including improvements/enhancements,
discoveries, ideas, technologies, know-how, work product,
concepts, material, methods, processes, disclosures,
Software, firmware, Materials, molds, fixtures, test
equipment, computer language, programming aids,
documentation, or any other property conceived, developed,
originated, fixed or reduced to practice in connection with,
or as a result of, the services as ordered through a Purchase
Order and performed under a SOW, whether or not patentable,
copyrightable or subject to mask work rights or other forms
of protection.“
g. “Confidential Information” is defined as:
“... the terms and conditions of this Agreement, the existence
of the discussions between the Parties, any information
disclosed in connection with the development and integration
projects being undertaken as described above, and any
proprietary information a Party considers to be proprietary,
including but not limited to, information regarding each
Party’s product plans, product designs, product costs,
product prices, finances, marketing plans, business
opportunities, personnel, research and development
activities, know-how and pre-release products; provided that
information disclosed by the disclosing Party (‘Disclosing
Party’) in written or other tangible form will be considered
Confidential Information by the receiving Party (‘Receiving
Party’) if such information is conspicuously designated as
‘Confidential,’ ‘Proprietary’ or a similar legend, or if the
circumstances of disclosure would reasonably indicate such
treatment. Information disclosed orally shall only be
considered Confidential Information if: (i) identified as
confidential, proprietary or the like at the time of
disclosure, and (ii) confirmed in writing within thirty (30)
days of disclosure.”
h. “SSN Tools” is defined as:

“Any such Materials, tools, equipment or facilities furnished
to [Wireless Systems] by or on behalf of [SmartSky] or
purchased by [SmartSky] from [Wireless Systems] (through a
separate Purchase Order or as an item under a SOW) for use in
connection with the performance by [Wireless Systems]
hereunder (collectively the ‘SSN Tools’) shall be held by
[Wireless Systems] as [SmartSky’s] property and shall not be
used by [Wireless Systems] except for the purpose of [Wireless
System’s] performance under the applicable Purchase Order and
SOW.”
4. The Award also required the Defendants to do the
following within fifteen (15) business days from the date of the
Award (or by October 22, 2021), which is also confirmed as part of
this Order and Final Judgment:
a. take all actions necessary to ensure that the
Federal Communications Commission (“FCC”) expeditiously
transfers control of any and all FCC certification grants
associated with the grantee code 2AWXX to SmartSky pursuant
to the procedures set forth in 47 C.F.R. § 2.929(d) and FCC
Office of Engineering and Technology Knowledge Database
publication no. 204515; and provide SmartSky with the
current, valid Grantee Code Registration Number for grantee
code 2AWXX; and
b. at their own expense, destroy all “Confidential
Information” of SmartSky, “SSN IP,” and “Developed IP” (as
those terms are defined in the Teaming Agreement) currently
in their possession or in the possession of entities
controlled by, affiliated with, or directed by them, and
provide written certification to SmartSky that all such
material has been destroyed.
It IS FURTHER ORDERED that all of Wireless Systems’
counterclaims alleged against SmartSky in this lawsuit are
DISMISSED WITH PREJUDICE.
/s/ Thomas D. Schroeder
United States District Judge

February 7, 2022

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10253999. Public record. Not legal advice.