## Facts

- Verve Communications Pvt. Ltd., an Indian company, contracted to provide services to Software International, Inc., a New Jersey company, under a 2009 client-vendor agreement.
- The agreement required binding arbitration under AAA Commercial Arbitration Rules and specified an “on the papers” process with no live witnesses or appearances.
- After a dispute over unpaid services, Verve initiated AAA arbitration in April 2010; both sides asserted contract and fraud-related claims and counterclaims.
- The arbitrator set a discovery period and repeatedly instructed that any discovery dispute affecting the schedule be raised immediately; one discovery extension was granted through November 4, 2010.
- After initial submissions were filed, SII requested an additional 60 days of discovery to obtain evidence from a third-party server (“Devix”), asserting it was needed to show Verve’s services were deficient.
- The arbitrator denied the request as untimely and insufficiently supported, citing lack of detail on alleged defects and lack of specificity about the information sought.
- In January 2011, the arbitrator awarded Verve more than $300,000 and denied SII’s counterclaims.
- Verve sought confirmation in New Jersey state court; SII removed to federal court and cross-moved to vacate under the FAA; the district court decided the motions on written submissions.

## Issues

1. Whether the award should be vacated under 9 U.S.C. § 10(a)(4) because the arbitrator “exceeded [his] powers” by denying SII’s late discovery request.
2. Whether the award should be vacated under 9 U.S.C. § 10(a)(3) for “misconduct” based on refusal to postpone proceedings or to hear pertinent and material evidence, allegedly denying SII a fundamentally fair hearing.
3. If vacatur was unwarranted, whether the FAA required confirmation of the award.

## Decision

- The court denied SII’s motion to vacate and granted Verve’s motion to confirm the arbitration award.
- The arbitrator did not exceed his powers; managing discovery and enforcing deadlines fell within the authority conferred by the arbitration clause and AAA rules.
- The arbitrator did not commit misconduct under § 10(a)(3); denying a late, speculative discovery request did not render the proceeding fundamentally unfair.
- Judgment was entered for Verve for $336,736 plus 8% annual interest and $6,615 in reimbursed arbitral fees and expenses.

## Legal Principles

- Judicial review of arbitration awards under the FAA is extremely limited; vacatur is available only on the narrow statutory grounds in 9 U.S.C. § 10.
- Under § 10(a)(4), an arbitrator exceeds his powers only in exceptional circumstances, such as deciding matters not submitted or issuing an award untethered from the parties’ agreement; routine procedural rulings generally do not qualify.
- Under § 10(a)(3), the key inquiry is whether the arbitrator’s evidentiary or scheduling ruling denied the party a fundamentally fair hearing; denial of additional discovery, without a showing of diligence and materiality, is typically insufficient.
- Where the parties agreed to an efficient, paper-only arbitration process, courts will generally defer to an arbitrator’s reasonable efforts to enforce that procedure and associated deadlines.
- If no statutory ground for vacatur or modification is shown, the FAA directs courts to confirm the award.

## Conclusion

The court confirmed the arbitration award because the arbitrator’s refusal to reopen discovery was a permissible case-management decision within the parties’ agreement and AAA rules and did not deprive SII of a fundamentally fair hearing under the FAA.


Verve Commc’ns Pvt. Ltd. v. Software Int’l, Inc., No. 11-1280 (FLW), 2011 WL 5508636 (D.N.J. Nov. 9, 2011)