Spector v. Torenberg

David Spector, an Israeli, was president of Specurity Industrial, Ltd. (collectively, Specurity) (plaintiffs). Spector entered a shareholders’ agreement with Dov Torenberg, an Israeli with American citizenship, Ximena Florez, Nicolas Fucci, and TRS Computers, Ltd. (defendants). A corporation called Microguard, Inc. (plaintiff) was formed by some of the shareholders to market a product made by Specurity. Microguard and Specurity entered into an exclusive distribution agreement for the product. The shareholder agreement and the distribution agreement each contained an arbitration clause and a clause specifying that the law of New York would apply. After a dispute arose, Specurity filed a demand for arbitration. Arbitration was conducted in New York, and a final award was issued that favored Microguard, Torenberg, and Florez. After the arbitral award was rendered, Specurity filed a petition in federal district court to set aside the award. Specurity argued that the award had resulted from evident partiality and misconduct on the part of one of the arbitrators, Lawrence Weiss. Specurity noted that, early in arbitration, Weiss had discussed the possibility of imposing sanctions for frivolous litigation. Specurity also alleged that Weiss had coached witnesses for the opposing side. Specurity further claimed that Weiss had shown an anti-Israeli bias because of a comment made about economic policies between the United States and Israel. Finally, Specurity alleged that Weiss had engaged in misconduct by holding an improper ex parte conversation with Torenberg in which Weiss asked a question when Specurity was not present about a computer problem he had once experienced.