By Christina Powell, originally published in Law360 on 3/21/16.
Outsourcer Can Pursue Software Co.’s Asset Info, Judge Says
Law360, New York (March 21, 2016, 5:31 PM ET) A New York federal judge on Monday allowed a business process outsourcer to go after the assets of a human resources software company that an arbitration panel found hadn’t paid for call center services, reconsidering a previous decision in light of the Second Circuit’s recent ruling that upheld the panel’s award.
U.S. District Judge Michael A. Telesca granted Sutherland Global Service Inc.’s motion for reconsideration of its bid to demand asset information from Adam Technologies International SA de CV so it can seek a judgment of more than $1 million backing up the arbitration panel’s ruling.
Judge Telesca initially denied the request in December, saying the court lacked jurisdiction because Adam Technologies had appealed the October 2014 confirmation of the arbitral award to the Second Circuit. But in February, the appellate court affirmed, saying there was no basis to vacate the award.
“The court grants plaintiff’s motion for reconsideration of its order denying plaintiff’s motion to compel and reconsiders this motion in light of the Second Circuit’s affirmance and because defendant has raised no objections,” Judge Telesca said Monday.
A threemember independent arbitration panel in August 2012 granted New Yorkbased Sutherland Global an $870,000 award, as well as monthly interest and arbitration fees and expenses, finding that Adam Technologies had breached a contract by not paying for call center services it received for its software business in Latin America in 2009, according to court documents.
Adam Technologies urged the district court to vacate the award, saying the arbitration panel was improperly constituted, improperly interpret the damages clause in the original service agreement and improperly applied the law to resolve the dispute.
But Judge Telesca ruled against Adam Technologies, finding there was no evidence that the panel manifestly disregarded the law or the terms of the contract. Adam Technologies quickly appealed to the Second Circuit. The total amount due on the court’s judgment is more than $1.1 million, according to Sutherland.
In November, Sutherland told the district court that Adam had refused to respond to its postjudgment requests for information on the whereabouts of certain assets and asked the judge to compel the company to submit to its discovery requests.
Judge Telesca denied the motion in December, citing jurisdictional complications raised by the pending appeal, and Sutherland Global asked for reconsideration in January and argued the judge did not follow precedent.
A Second Circuit panel then upheld the lower court’s confirmation of the award in February, saying “we discern no colorable basis in Adam’s arguments, which essentially disagree with the arbitration panel’s factual findings and interpretation of the [master service agreement], for departing from that general principle and vacating the arbitral award.”
On Monday, following the appellate court’s ruling, Judge Telesca granted reconsideration.
In doing so, he rejected Adam Technologies’ argument that it did not have to comply with the requests because they were served on the wrong attorney, a lawyer at Thompson Hine LLP who it said hadn’t actually done work on the case other than appearing to notice its appeal.
“Because Mr. [Joseph B.] Koczko was the attorney of record for defendant at the time the postjudgment discovery demand was served on him, such service was proper and effective,” the order said.
Sean C. McPhee of Phillips Lytle LLP, an attorney for Sutherland, said Monday the ruling would get things rolling again.
“Now that the discovery has been ordered, we expect Adam Technologies to fully comply with its discovery obligations so that Sutherland can enforce its judgment without further delay,” McPhee said.
Representatives for Adam Technologies did not respond to requests for comment.
Sutherland is represented by Sean C. McPhee and Daniel R. Maguire of Phillips Lytle LLP.
Adam Technologies is represented by Richard A. De Palma and Joseph B. Koczko of Thompson Hine LLP.
The case is Sutherland Global Services Inc. v. Adam Technologies International SA de CV, case number 6:12cv06439, in the U.S. District Court for the Western District of New York.
–Additional reporting by Vidya Kauri, Hannah Sheehan and Jack Newsham. Editing by Brian Baresch.