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Tempo Shain Corp. v. Bertek, Inc.

United States Court of Appeals for the Second Circuit

January 27, 1997, Argued ; July 21, 1997, Decided

Docket No. 96-9471


 [*17]  PARKER, Circuit Judge:

Neptune Plus Corporation ("Neptune"), an affiliate of Tempo Shain Corporation ("Tempo Shain"), entered into an agreement with Bertek, Inc. ("Bertek") to purchase a license agreement from Gelman Sciences, Inc. ("Gelman") for a patented process to treat materials to enhance their repellency characteristics. Under the agreement, Bertek was to manufacture the treated material, which [**2]  Neptune intended to sell to the apparel and footwear industries. Disagreements arose and the parties entered arbitration to resolve claims brought by Neptune against Bertek for fraudulent inducement to contract and breach of contract. Bertek counterclaimed with its own fraudulent inducement and breach of contract charges.

Bertek intended to call Wayne Pollock, former President of Bertek's Laminated Products Division, as a witness to provide what Bertek considered to be crucial testimony concerning the negotiations and dealings between the parties about which it claims only Pollock could testify. Pollock became temporarily unavailable to testify, however, after his wife was diagnosed with a recurrence  [*18]  of cancer. The arbitration panel was advised that Pollock remained willing to testify, but that the expected duration of his unavailability was indeterminate. Bertek urged the panel to keep the record open until Pollock could testify either in person or by deposition.

After deliberation, the panel concluded the hearings without waiting for Pollock's testimony. The arbitrators stated:

We as arbitrators have to decide does Mr. Pollock have any information that if he was here in [**3]  person and you fellows are banging him with questions that some new information comes out that we haven't heard or is it going to be a rehash of what we've heard from other witnesses.

The panel subsequently rendered an award in favor of Tempo Shain and Neptune, and denied Bertek's counterclaims. Appellees petitioned the United States District Court for the Southern District of New York pursuant to sections 9 and 10 of the Federal Arbitration Act ("FAA" or "Act"), 9 U.S.C. §§ 9-10 (West 1970 & Supp. 1997), to confirm the arbitration award. Bertek cross-moved to vacate the award, arguing that the arbitrators were guilty of misconduct pursuant to FAA section 10(a)(3), 9 U.S.C. § 10(a)(3). Appellees filed an opposition to Bertek's motion to vacate. In response, Bertek filed surreply papers, which included an affidavit from Pollock stating what he would have testified to, if permitted. The district court (Loretta A. Preska, Judge) granted the petition to confirm the arbitration award and denied the motion to vacate. Tempo Shain Corp. v. Bertek, Inc., No. 96 Civ. 3354 (S.D.N.Y. Oct. 24, 1996). In granting a later request by Bertek to add Pollock's affidavit to the record on [**4]  appeal, the court noted that it had considered Pollock's affidavit when it made its decision. The court's endorsement order was based on its conclusion that the arbitration panel correctly understood that it was required to decide whether Pollock's testimony would add to the panel's knowledge about the case or simply be repetitive, and that the panel made its decision accordingly. Tempo Shain, No. 96 Civ. 3354, at 2. Bertek appealed.

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120 F.3d 16 *; 1997 U.S. App. LEXIS 18048 **

In the Matter of the Arbitration Between TEMPO SHAIN CORPORATION; NEPTUNE PLUS CORPORATION, Petitioners-Appellees, v. BERTEK, INC., Respondent-Appellant.

Prior History:  [**1]  Appeal from judgment of the United States District Court for the Southern District of New York (Loretta A. Preska, Judge) confirming an arbitration award in favor of appellees and granting post-award prejudgment interest.

Disposition: Vacated and remanded.


Repel, arbitration, laminated, letters, vacate, fraudulent inducement, arbitration award, arbitration panel, negotiations, misconduct, parties, counterclaim

Civil Procedure, Alternative Dispute Resolution, Arbitration, General Overview, Labor & Employment Law, Collective Bargaining & Labor Relations, Federal Preemption, Primacy of Labor Policy, Federal Arbitration Act, Business & Corporate Compliance, Pretrial Matters, Judicial Review, Appeals, Standards of Review, International Trade Law, Dispute Resolution, International Commercial Arbitration, Arbitration, Validity of ADR Methods