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Tapimmune, Inc. v. Gardner

United States District Court, S.D. New York

July 8, 2015

TAPIMMUNE, INC., Petitioner,


GREGORY H. WOODS, District Judge.


Before the Court are TapImmune, Inc.'s petition to confirm an arbitration award and respondent Michael Gardner's motion to vacate the award. Mr. Gardner asserts a number of grounds for vacatur, but for the reasons outlined below, the Court rejects them all. Thus, TapImmune's petition to confirm the arbitration award is GRANTED, and Mr. Gardner's motion to vacate the award is DENIED.


TapImmune is a biotechnology company and a citizen of Washington state. It specializes in the development of vaccines for cancers and other serious diseases. In 2012, TapImmune needed to raise money for upcoming clinical trials, as well as to satisfy outstanding debts. Dr. Wilson, the chairman and CEO of TapImmune, hired the respondent, Michael Gardner, a citizen of New York, to assist TapImmune in finding investors to raise money.

On May 15, 2012, Dr. Wilson and Mr. Gardner entered into an agreement for Mr. Gardner to servie as TapImmune's "exclusive financial advisor" for 18 months, "to perform business and financial consulting services" for them. Consulting Agreement, Dkt. No. 6, Ex A, at 1. In the agreement, Mr. Gardner agreed to provide advice and guidance to TapImmune in a number of specific areas, including long-term financial planning. Id. at 1-2. Mr. Gardner also agreed to consult with TapImmune regarding investor and public relations and SEC filings. Id. at 2. In exchange, TapImmune paid Mr. Gardner in stock, specifically 9.9% of its "fully diluted capitalization in newly issued common stock" at the time the agreement was signed. Id. at 2.

The agreement also contained an arbitration provision, which reads:

Any controversy, dispute or claim arising out of or relating to this agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in New York, N.Y. (unless the parties agree in writing to a different location) before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. In any such arbitration proceeding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

Id. at 3.

Not long after the agreement was signed, Dr. Wilson wrote to Mr. Gardner expressing concerns about his performance under the contract and ability to raise money. It appears the relationship between Mr. Gardner and TapImmune soon soured, because on January 22, 2013, TapImmune filed a claim against Mr. Gardner with the AAA International Centre for Dispute Resolution, claiming that Mr. Gardner had fraudulently induced TapImmune to enter into the consulting agreement by making false representations. Pet. at ¶ 5.

On December 21, 2012, before commencing arbitration, TapImmune sought a preliminary injunction in aid of arbitration by order to show cause in New York Supreme Court. TapImmune asked the court to enjoin Mr. Gardner from transferring or selling his TapImmune stock. It argued that otherwise it would be impossible for them to recover that stock if they prevailed in their planned arbitration. See State Court Decision, Dkt. No. 11, Ex 1, at 5. The court granted a temporary restraining order. See Dkt. No. 11, Ex 4.

On April 8, 2013, the New York Supreme Court denied TapImmune's motion for a preliminary injunction and vacated the temporary restraining order, allowing Mr. Gardner's sale of TapImmune stock to go forward. The court reasoned that N.Y.C.P.L.R. 7502(c), the New York state law governing preliminary injunctions in aid of arbitration, required assessing the traditional equitable criteria-(1) irreparable harm; (2) likelihood of success; and (3) whether the balance of equities favors the moving party-as well as whether "the award to which the applicant may be entitled may be rendered ineffectual without such provisional relief." See State Court Decision, at 3-6 (quoting N.Y.C.P.L.R. 7502(c)). After assessing both the traditional equitable and arbitrationspecific criteria, the court found that TapImmune had not demonstrated a likelihood of success on the merits of its claims, and thus denied the motion for a preliminary injunction. Id. at 6-11.

Mr. Gardner responded to the arbitration claim later that day, and filed counterclaims with the arbitrator alleging breach of contract. Pet. at ¶ 6. The parties exchanged discovery, filed briefs, and in May 2014, had a 3-day hearing in front of a single arbitrator in New York. Id. at ¶ 7. After the hearing, both sides filed post-hearing briefs. Id. at ¶ 8. On July 18, 2014, the arbitrator issued a decision in favor of TapImmune for $196, 204 plus statutory interest. Id. at ¶ 9.

TapImmune filed a petition to confirm the arbitration award in this Court, and Mr. Gardner responded by filing papers styled as both an opposition to the petition to confirm and a motion to vacate the award. Mr. Gardner argues that: (1) TapImmune's previous motion for a preliminary injunction in state court requires this Court to decline jurisdiction; (2) if this Court confirmed the arbitration award it would be reversing the state court's preliminary injunction decision; (3) the arbitrator's reasoned award went beyond the parties' agreement for a standard award; (4) the arbitrator showed evident partiality; and (5) the award itself was rendered in manifest disregard of the law.

In its reply, TapImmune argues that filing this petition to confirm in federal court does not conflict with state court actions or prior rulings, and that Mr. Gardner has not provided any evidence that the arbitrator exceeded her powers, showed evident partiality, or acted in manifest disregard of the law.


"It is well-settled that judicial review of an arbitration award is narrowly limited." Barbier v. Shearson Lehman Hutton Inc., 948 F.2d 117, 120 (2d Cir. 1991). "Normally, confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court...." D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006) (internal quotation marks omitted).

A reviewing court is required to grant a petition to confirm an arbitration award "unless the award is vacated modified, or corrected as prescribed in [9 U.S.C. §§ 10 and 11]." 9 U.S.C. § 9. Under 9 U.S.C. § 10, an award may only be vacated in one of four circumstances:

(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, ...

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