Verificient Technologies, Inc. v. Dutta

Background

Verificient Technologies, Inc. sought confirmation under Section 9 of the Federal Arbitration Act of an arbitration award against Apratim Dutta. In 2013, the parties entered an employment agreement requiring Dutta to protect Verificient’s confidential information, avoid competing business activities, and avoid employment conflicts. The agreement required arbitration of disputes arising from Dutta’s employment and stated that the arbitrator could award remedies available under applicable law.

Verificient began arbitration in 2018, asserting claims including breach of fiduciary duty, breach of contract, and misappropriation of funds. Verificient claimed that Dutta, while serving as its President and CEO, created a competing business entity in India that recruited Verificient employees and interfered with Verificient’s operations. Dutta filed counterclaims, including claims involving unpaid wages, fraud, and defamation.

After about five years of arbitration, Verificient moved for summary judgment and dismissal of Dutta’s claims. The arbitrator found that Dutta did not adequately respond to the motion and granted Verificient summary judgment by default on June 8, 2023. On December 16, 2023, the arbitrator issued an award totaling $483,681.98. The award included arbitration fees, partial attorneys’ fees, and compensation paid to Dutta during the period of disloyalty. It also allowed Verificient to seek payment of the judgment by levying on shares of Verificient owned by Dutta.

Verificient filed its federal petition on December 12, 2024. After difficulty serving Dutta, the court authorized service by newspaper publication and email. Dutta later informed the court that he had learned of the petition and requested more time to respond. The court extended his deadline, but Dutta did not timely file opposition papers. He did file a submission with nearly 150 pages of exhibits, which the court found addressed matters unrelated to the petition’s merits.

Confirmation of the Arbitration Award

The court stated that review of an arbitration award is very limited. A court generally must confirm an award unless it has been vacated, modified, or corrected under Sections 10 or 11 of the Federal Arbitration Act. Those provisions include grounds such as fraud, corruption, arbitrator misconduct, or an arbitrator exceeding his or her authority.

The court found no reason to conclude that Verificient obtained the award through fraud or dishonesty, or that the arbitrator disregarded the employment agreement or acted outside the arbitrator’s authority. The court also noted that the arbitrator limited the award to damages within the scope of the summary-judgment order and based the award on the agreement and undisputed evidence that Dutta usurped Verificient’s corporate opportunities in violation of the agreement. The court therefore confirmed the award.

Prejudgment Interest

The court exercised its discretion to award prejudgment interest. It relied on the agreement’s statement that arbitration was the sole, exclusive, and final remedy for disputes between the parties, Dutta’s failure to comply with the award, and his failure to timely oppose confirmation.

Because the agreement adopted New York substantive and procedural law, the court applied New York’s default prejudgment-interest rate of nine percent per year. Verificient was awarded prejudgment interest on each element of the award from December 16, 2023, through June 20, 2025.

Post-Judgment Interest

The court awarded post-judgment interest at the rate provided by 28 U.S.C. § 1961(a). It found that the agreement did not establish a different post-judgment interest rate. Under that statute, interest is calculated from the date judgment is entered using the statutory formula tied to the one-year Treasury yield.

Attorneys’ Fees and Costs

Separate from the attorneys’ fees already included in the arbitration award, Verificient sought fees and costs incurred in the federal confirmation action. The court found that Section 13(B) of the employment agreement clearly required Dutta to indemnify Verificient for costs, fees, and expenses, including attorneys’ fees, incurred in successfully enforcing the agreement.

The court therefore granted Verificient reasonable attorneys’ fees and costs for the confirmation action and its enforcement. It directed Verificient to file an application by July 3, 2025, supported by counsel’s affidavit and contemporaneous time records showing the date, hours, and work performed for each attorney.

Disposition

The court granted Verificient’s petition to confirm the arbitration award. It directed the Clerk of Court to enter judgment for Verificient in the amount of $483,681.98, with nine-percent yearly prejudgment interest from December 16, 2023, through June 20, 2025, and post-judgment interest under 28 U.S.C. § 1961(a). The court certified that any appeal would not be taken in good faith and denied payment-free status for purposes of an appeal. It also directed that a copy of the order be mailed to Dutta by first-class and certified mail.