1:18-cv-11112
S.D.N.Y.Oct 18, 2019Background
- Eaton Partners (placement agent) and Azimuth Capital (fund manager) executed a written Placement Agreement (May 22, 2014) with an arbitration clause in New York; Eaton alleges Azimuth stopped payments in Jan. 2017.
- Eaton commenced arbitration (Nov. 27, 2017); Azimuth counterclaimed, asserting Eaton was precluded from promoting a competing fund under exclusivity/best-efforts clauses.
- Procedural orders required witness lists by Aug. 24, 2018 and limited rebuttal witnesses; Azimuth listed three fact witnesses, including Jason Montemurro.
- Montemurro became unavailable shortly before the Sept. 6, 2018 hearing (family death); parties discussed adjournment, video testimony, and Azimuth ultimately withdrew him.
- On Sept. 12, 2018 Azimuth sought to add David Pearce as a rebuttal witness (not on the witness list); the arbitrator excluded Pearce as cumulative and untimely.
- Arbitrator issued an Award for Eaton (Oct. 29, 2018); Eaton petitioned to confirm and Azimuth moved to vacate, alleging arbitrator misconduct and manifest disregard; the district court denied vacatur, confirmed the Award, and awarded Eaton attorneys’ fees.
Issues
| Issue | Plaintiff's Argument (Eaton) | Defendant's Argument (Azimuth) | Held |
|---|---|---|---|
| Whether arbitrator committed misconduct by refusing to postpone the hearing after Montemurro became unavailable | No misconduct: Azimuth voluntarily withdrew Montemurro; parties discussed video and adjournment; no valid timely request to adjourn | Arbitrator should have postponed hearing and allow live testimony; refusal was misconduct prejudicing Azimuth | Denied. Withdrawal by Azimuth mooted adjournment claim; suggestion of video was raised by Azimuth; no deprivation of fundamentally fair hearing |
| Whether exclusion of rebuttal witness Pearce was misconduct | Excluding Pearce was improper and prejudicial | Pearce was cumulative, not a true rebuttal, and was untimely under procedural order | Denied. Arbitrator properly excluded Pearce as cumulative and procedurally untimely |
| Whether arbitrator manifestly disregarded law in interpreting exclusivity and best-efforts clauses | Arbitrator misinterpreted contract and favored Eaton | Arbitrator provided colorable justifications; contractual interpretation is for arbitrator | Denied. Arbitrator’s interpretation met the "barely colorable" standard; courts cannot reweigh merits |
| Whether court should vacate award and enter judgment for Azimuth | — (Eaton sought confirmation) | Azimuth asked court to vacate and enter judgment in its favor | Denied. Court cannot re-decide merits of arbitration; vacatur not warranted; award confirmed; Eaton awarded fees |
Key Cases Cited
- Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504 (2001) (courts cannot review arbitrator's merits decisions)
- United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29 (1987) (limits on judicial review of arbitration merits)
- Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16 (2d Cir. 1997) (exclusion of a key witness whose testimony is essential can warrant vacatur)
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (courts must confirm arbitration awards unless statutory vacatur grounds apply)
- Schwartz v. Merrill Lynch & Co., 665 F.3d 444 (2d Cir. 2011) (manifest-disregard standard and limits on review of arbitrator's legal conclusions)
- Westerbeke Corp. v. Daihatsu Motor Co., 304 F.3d 200 (2d Cir. 2002) (arbitrator's contract interpretation upheld if "barely colorable")