Tempo Shain Corp. v. Bertek, Inc.

Neptune Plus Corporation (Neptune) (plaintiff) was an affiliated company of Tempo Shain Corporation (Tempo). Neptune contracted with Bertek, Inc. (defendant) to obtain a license from Gelman Sciences, Inc. (Gelman) to use a patented repellant treatment for materials. Neptune initiated arbitration against Bertek, alleging breach of contract and fraudulent inducement of contract. Bertek responded, counterclaiming with the same claims as Neptune. During the hearing, Bertek sought to call its former president, Wayne Pollock, as a witness to provide testimony regarding contract negotiations. Pollock became unavailable due to his wife’s cancer diagnosis. Over objection by Bertek, the arbitration panel proceeded with the hearing, issuing an award in Neptune’s favor on both claims. The panel commented that Pollock’s testimony would have been merely cumulative of other evidence, including reports Pollock received and correspondence between Pollock and Neptune’s president, Robin Delaney. The reports involved accounting records that were the topic of the correspondence between Pollock and Delaney. The correspondence described problems between the companies that they were trying to resolve with plans of action in order to continue the relationship. The letters did not include evidence going to the fraudulent-inducement claim by either party, which only Pollock could testify to because he was the only individual negotiating on Bertek’s behalf. Neptune alleged that Bertek made misrepresentations that were undocumented, with the only evidence to refute Neptune’s claims being Pollock’s testimony. No other witness could testify in place of Pollock, which Neptune conceded. Neptune filed a petition in district court to confirm the arbitration award. Bertek responded, seeking to vacate the award on the basis of arbitrator misconduct under the Federal Arbitration Act (FAA), 9 U.S.C. § 10(a)(3). The district court upheld the award. Bertek appealed.