## Facts

- Vitarroz Corporation distributed ethnic food products and pursued a merger or acquisition transaction with Willi USA Holdings, Inc., an entity associated with G. Willi Food International Ltd.
- The parties signed an agreement for the proposed transaction that included a confidentiality provision requiring confidentiality of (1) the agreement’s existence and (2) information exchanged during due diligence.
- The confidentiality obligation survived even if the transaction did not close.
- The acquisition did not occur.
- After the deal fell through, the Willi side proposed a joint press release stating it had conducted a “detailed review of the financial condition of Vitarroz” and that the transaction did not proceed due to “issues that arose during the due diligence process.”
- Vitarroz rejected that language, asserting it violated the confidentiality provision because it implied negative conclusions about Vitarroz’s finances based on due-diligence information.
- Willi issued the press release unilaterally using similar language.
- Vitarroz sued Willi and related parties, asserting claims tied to breach of the confidentiality provision and resulting business harm.
- The dispute was submitted to arbitration; Vitarroz’s principals, Steve and Artie (Arthur) Weinreb, joined as parties in the arbitration.
- The arbitration involved substantial discovery and a five-day evidentiary hearing before a three-arbitrator panel; Vitarroz presented nine witnesses and Willi presented six.
- During the hearing, an arbitrator faced an unexpected personal issue, and the panel imposed time limits of about 30 minutes per side for direct and cross-examination of Steve Weinreb.
- Multiple third-party suppliers testified that they understood the press release to suggest something was wrong with Vitarroz’s finances and described negative effects on Vitarroz’s business relationships.
- The panel found for Vitarroz, concluding the press release breached the confidentiality provision by conveying objectionable information or implications about Vitarroz’s financial condition connected to due diligence, and it awarded relief.
- In federal court, Willi moved to vacate the award and Vitarroz cross-moved to confirm under the Federal Arbitration Act (FAA).

## Issues

1. Whether the arbitration panel’s time limits on direct and cross-examination of Steve Weinreb amounted to “misconduct” under FAA § 10(a)(3) by depriving Willi of a fair hearing.
2. Whether Willi showed any other statutory basis under the FAA for vacating the arbitration award rather than confirming it.

## Decision

- The court denied Willi’s motion to vacate and granted Vitarroz’s motion to confirm the arbitration award.
- The court held that the time limits imposed on the examination of Steve Weinreb, viewed in the context of a multi-day hearing with many witnesses and extensive discovery, did not deny Willi a fair opportunity to present its case.
- The court concluded Willi did not show that the panel refused to hear material evidence or that the time limits caused prejudice sufficient to justify vacatur.
- The court declined to revisit the panel’s findings on breach and harm, including the panel’s reliance on supplier testimony interpreting the press release and describing its commercial effects.

## Legal Principles

- Review of arbitration awards under the FAA is highly deferential; a court may vacate an award only on the limited grounds stated in FAA § 10.
- Under FAA § 10(a)(3), an award may be vacated for arbitrator “misconduct” only when a procedural ruling so affects a party’s rights that it results in an unfair hearing (for example, by blocking the presentation of material evidence).
- Arbitrators have broad authority to manage hearings, including setting reasonable time limits, especially where the record shows both sides had meaningful opportunities to present witnesses and arguments.
- A party seeking vacatur based on limits on examination must show more than dissatisfaction with case management; it must show actual prejudice and that the limitation prevented the presentation of material proof.
- Courts do not re-try the case, reweigh testimony, or second-guess credibility determinations when confirming an award, so long as the arbitrators acted within the scope of the parties’ submission.

## Conclusion

The District of New Jersey confirmed the arbitration award because Willi failed to meet the FAA’s narrow vacatur standards: the brief time limits on examining Steve Weinreb, imposed during a five-day hearing with extensive testimony and discovery, did not render the arbitration unfair or justify setting aside the panel’s breach and damages determinations.


Vitarroz Corp. v. G. Willi Food International Ltd., 637 F. Supp. 2d 238 (2009)