lacquer and paid the royalties called for in the agreement.
In 1954, defendant, through one of its own staff, discovered another lacquer, simpler to produce, but which also met the Army specifications. Thereafter use of plaintiffs' formula gradually diminished until finally it was discontinued and payment of royalties ended.
In 1960, plaintiffs filed a complaint in this court charging that defendant had breached a confidential relationship and had converted their secret formula without properly accounting for the royalties due. The defendant moved for a stay of proceedings pending the arbitration contracted for in the agreement between the parties. The stay was granted by the late Circuit Judge Goodrich, sitting specially as a district court judge. Kirschner v. West Co., 185 F. Supp. 317 (E.D.Pa.1960). Since the order granting the stay was interlocutory, an appeal therefrom was dismissed. Kirschner v. West Co., 300 F.2d 133 (3d Cir. 1962). The parties thereupon selected the Honorable Horace Stern, former Chief Justice of the Pennsylvania Supreme Court, as arbitrator, and proceeded to arbitrate the dispute. Justice Stern made an award in favor of the defendant, West Company, following which the motions now before me were filed.
At the outset plaintiffs assert that Judge Goodrich did not have jurisdiction to order a stay of proceedings pending arbitration.
Defendant's motion for a stay was based upon § 3 of the Arbitration Act. Judge Goodrich noted that that section's "* * * compulsory effect is applicable only to those contracts covered by Section 2 of the Act, i.e., 'any maritime transaction or * * * contract evidencing a transaction involving commerce.' Bernhardt v. Polygraphic Co., 350 U.S. 198, 201-202, 76 S. Ct. 273, 275-276, 100 L. Ed. 199 (1956)." Kirschner, supra, 185 F. Supp. p. 319. Observing that the contract (a copy of which is attached to the pleadings) dealt with coatings to be used in the pharmaceutical industry, Judge Goodrich judicially noticed that that industry covers the whole country, and concluded that the contract involved commerce and that he had jurisdiction to order the stay.
Plaintiffs take issue with Judge Goodrich's taking judicial notice of the scope of the pharmaceutical industry and his finding that this contract involved commerce. There was ample support in the pleadings themselves for Judge Goodrich's finding and conclusion in that regard. See his Opinion in Kirschner, supra, p. 319 n. 5., Cf. Ohio Bell Telephone Co. v. Public Utilities Comm., 301 U.S. 292, 57 S. Ct. 724, 81 L. Ed. 1093 (1937). There is no merit in plaintiffs' jurisdictional objection.
As for plaintiffs' objections to the arbitration award itself, it is well to keep in mind at the outset that arbitration awards cannot be set aside "* * * on grounds of erroneous finding of fact or of misinterpretation of law." Amicizia Societa Navegazione v. Chilean Nitrate & Iodine Sales Corp., 274 F.2d 805, 808 (2d Cir. 1960), cert. denied, 363 U.S. 843, 80 S. Ct. 1612, 4 L. Ed. 2d 1727 (1960); San Martine Compania De Navegacion, S.A. v. Saguenay Terminals, Ltd., 293 F.2d 796 (9th Cir. 1961). The only grounds upon which an arbitration award may be vacated are set forth in § 10 of the Arbitration Act. Plaintiffs rely specifically on two of those provisions:
"§ 10. * * *