NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 07a0556n.06 F iled: August 8, 2007 Case No. 06- 3304 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT DOMINIC A. V ISCONSI, S R., et al., P lai nt iffs- App e lle e s,
v. LEHMAN BROTHE RS, INC., et al., De fend ant s- App e lla nt s.

_______________________________________ ) ) ) ) ) ) ) ) ) ) ) ON AP P EA L F RO M THE UNITED STAT ES DIS TRICT COURT F OR THE NORT HERN DI STRIC T OF OHI O

BEF ORE: G UY , BA TC HELD ER , G ILM AN , C ir c uitJudg e s. ALICE M. BATCHEL DER, Circ uit Jud ge. Defendants -A pp e lla nts L e hma

n B ro the rs , I nc. and L ehman B rothers H oldings, Inc. (c ollectively ref err ed to a s “L ehman” ) appea l the district
cou rt ’s den ia l of

the ir mot ion to v a c a te an a

rb itr a tio n a

wa rd g ra nti ngmor e tha

n $ 10 .4 mil lio n to Plaintiffs-Appellee s Dominic A. Vis consi, Sr., Dominic A. Visconsi, J r., Anthoni Visconsi I I , J ames V. Stanton, and Peg g y

Stanton ( collectively ref

err ed to a s “Plaintiffs”). On appe al, L ehman a rgues that we should vacate the arbitration a war d beca

use it wa s issued in ma

nifest disreg ard of

the law. Findingno merit in this arg ument, we AF F IRM the district court’s de cision. I. The a rbitration awa

rd at issue in this ca s e ar ose in the af termath of a

massive fra

udulent i n v es t m en ts ch em e o rc h es t ra t edb y C l ev el an d -b as eds t o ck

b ro k er , Fr an k

D. Gru t t ad au ri a. Du ri n g a fiftee n-y ear

period, Gr

utta d auria misappropriated ove r $115 million from his clients and2

misrepre sented their a ccount va lues by more than $280 million. He hid th i s ex tensive fr aud by sending false a ccount statem en t s t o his clients, which purporte d to summarize their respe ctive inv e stm e nt p or

tf oli os , w hil e div e rt ing the ir tr ue a c c ount state me nts to a po st- of fi c e bo x in th e name of a fi c tit iou s o rg anizatio n. Whe n a c lie nt w ou ld r e qu e st a ll or a po rt ion of he r i nv e stm e nt f

un ds , Gruttada uria would tra

nsfer money from one client to a nother — known as a

third-par ty transfe r — thu s k e e pin g his sc he me a fl oat. Gr utt a da ur ia be g an th is s c he me in the 19 80 s a nd c on tin ue d it thr ou g ho ut t

he 19 90 s, wh ile
wo rk ing for Cowe n & Com pa ny , w hic h late r b e c ame SG C ow e n Se c ur iti e s Co rp or a tio n ( “ SG Cowen”) . I n October

2000, L ehman pur chase d SG Cowen’s hig h-net-w ort h p ersona l investment bu sin e ss a

nd , a s p art

of the de a l, G rutta da

ur ia a g re e d to wor k as a br ok e r a nd br anc h ma

na g e r i n L ehman’ s Cleveland off

ice. Gr uttadauria continued his fr au d u lent scheme while workingfor L ehman, until J anuar

y 2002, when he exposed his wrong doing in a confe ssion letter to the Fe dera l B ur e a u o f I nv e sti g a tio n (“ F B I ” ). He late r ple a de d g uil ty to s e c ur iti e s f

ra ud , ma il f ra ud , id e nti ty

the ft , and makin g fa lse state me nts to f e de ra lly ins ur e d f ina nc ia l in sti tut ion s. I n the af termath of this widespr ead f raud, both the Sec urities and Exchang e Commissi on (“SEC”) a

nd the New

Yo rk S tock Exchang e (“NYSE”) inve stigated L ehman’ s oversig ht of Gruttada uri a, and both determined that L ehman ha d violated their re spective r ules by failing
rea sonably

to supervise Gr

utt ad au ria’s a ctivities. The SEC’s and the NYSE’s inve stigations
uncover ed many

problems with L ehman’ s oversig ht: (1) Gr uttadauria ’s dual role as bra nch mana g er
and re ta il b ro ke r e sse nti a lly

e na ble d h im t o su

pe rv ise him se lf

; (2 ) G rutta da

ur ia ’s un fe tte re d a c c e ss to the fax machine a

nd postag e meter

allowed him to by

pass L ehman’ s proce dures f or re viewing outgoingand incomingcorr espondenc e; and ( 3) L ehman lac ked ade quate pr ocedur es for monitoring3

Gr utt a da ur ia ’s c omp ute r a c tiv ity , h is i mpr op e r us e of po st- of fi c e bo x mai lin g a dd

re sse s, and

his
un lawf ul u se of thi rd -p art

y tr ans fe rs . Plaintiffs invested approximately $21 milli on wi t h Gr u t tadaur ia duringthe time he wa s employ ed by

SG Cowen, an d ra t h er t han investing these funds a s directe d, Gruttada uria used Pla int if fs ’ m on ey

fo r h is o wn

purp os e s. Thro ug ho ut t his pe ri od , Pl a int if

fs ma de pe ri od ic withdrawa ls from their acc ounts a mounting to $25.8 milli on, which Gr uttadauria paid using funds from other

clients. In spite of these substantial withdra wals, the last fic titious s t at em ents issued while Gruttada

uria wor ked for SG Cowen indicated that Plaintiffs — collectively — had a total of $44.1 milli on i n t h ei r ac counts. In rea lity , howeve r, Plaintiffs’ ac counts containe d only $24,000. After Gruttada u ri a beg an wor

king f or L ehman, Plaintiffs withdrew an additional $5.5 million, deposited only

$300,000, and watched their portfolio balanc es drop f rom $44.1 milli o n t o $37.9 mil lio n. I n th e e nd , d e sp ite the fa c t th a t th e ir a c c ount state me nts sh ow e d milli on s of d oll ars in t he ir inv e stm e nt a c c ounts , Pl a int if fs we re a c tua lly

le ft wi th o nly a fe w tho us and

do lla rs in t ho se a c c ounts
. I n Marc h 2002, Plaintiffs filed suit ag ainst L ehman, S G C o wen, a nd SG Cowen’s prede cessor , Societe Ge nera le SA, a lleg ing brea ch of fiduciar y duty , brea ch of c ontrac t, promissory estoppel, fr aud, conve rsion, civil conspirac y , aiding and abetting , neg lige nt supervision, neg lige nt misrepre sentation, and statutory secur ities violations. I n May 2002, L ehman f

iled a motion to stay the proc eeding s and compe l arbitration, which the district court denied. In Aug ust 2003, we re verse d the district court’s de cision, see Fazio v

. Lehman Bros., Inc. , 340 F.3d 386, 398 ( 6th Cir. 2003), and
on rema nd, the district court g rante d L ehman’ s motion t o compel ar bitration. Plaintiffs then filed a state men t o f cl ai m with a three -ar bitrator pane l provided by the Natio na l Asso c iatio n of Sec ur iti e s De a le rs (“NA SD” ), re a sse rt ing the le g a l cla ims pr e se nte d in the ir4

fede ral c ourt complaint, and reque sting $37.5 milli on in c ompensatory damag es and $300 million in punitive damag es. The arbitration a g ree ment stated that this dispute would be g overne d by New Yo rk state law. Pr ior

to t he he ari ng , Pl a int if

fs se ttl e d th e ir

c la ims a g a ins t SG Cow e n — the te rm s of which a

re c onfidential — and voluntar ily withdrew the ir claims ag ainst Societe Ge nera le SA. The a rbitration panel hear d extensive evidenc e reg arding Plaintiffs’ claims ag ainst L ehman. Prior to issuing i ts decision, t he panel reque sted and rece ived briefing on Plaintiffs’ a rgument that the ar bitrators should hold L ehman liable for all the losses ca used by Gruttada uria’s f raud, inc luding th ose incurr ed duringhis employ ment with SG Cowen. Plainti ffs a rgued that four

leg al theorie s supported their position: (1) L ehman c ould be held jointly and seve rally

liable w i t h S G Cowen and/or Gr uttadau ri a bec ause L ehman e ng ag ed in conc erte d action with both of them; (2) L ehman
c ou ld be hel d jo int ly

and se ve ra lly lia ble wi th S G C ow e n a

nd /or Gr utt a da ur ia be c a us e Pla int if

fs ’ injuries wer e indivisible and could not be a pportioned amongthe tortfea sors; (3) L ehman wa s contra ctually

liable for the entire amounts lis ted on Plaintiffs’ fra udulent acc ount statements; and (4) L ehman a ssumed responsibility for Gr uttadaur i a’ s fra

ud beca use of its rec klessness in hiring and sup e r v is in g h im
. I n r e s p o n s e to Pl a inti f f s ’ b r ie f , L e h ma n c o un te r e d th a t ( 1 ) Pl a inti f fs had not
e sta bli sh e d th e re qu isi te a g re e me nt need e d to state a c la im f or c ivi l c on sp ir a c y

and (2 ) P la int if

fs ’ injuries wer e in fa ct d i v isible. I n September 2005, the panel issued its dec ision without opinion, summari ly

awa rding Plaintiffs more than $10.4 million in compensatory damag es; one a

rbitrator dissented without expl anation. Unha pp y wi th the pa

ne l’ s awa rd — is su e d in

the ve ry fo rum it ha d f ou g ht s o h ard

to g e t in to — L ehman f

iled in the district court a motion to vacate the arbitration awa rd, ar g uing that the awa

rd was issued in manife st disreg ard of the law. In Fe bruar

y 2006, the district court de nied this moti on,5

acknow ledg ing that there w as “suf ficient support in the rec ord and c ase la w to support a conc lusion that L ehman [was] joint ly and seve rally

liable,” a nd stating that, in any

event, “ the ar

bitrators’ a

war d [could] be justified without relianc e on joint a nd sever al liability .” L ehman f iled a timely

notice of
a pp e a l. II. “When re viewinga district cour t’s decision to vac ate or

confirm a

n arbit ra t i o n aw ard, w e revie w finding s of fa ct for c lear err or and que stions of law de novo.” Glennon v. Dean W itter Rey nolds, Inc. , 83 F.3d 132, 135 ( 6th Cir. 1996). Courts pla y a ver y limit ed role in review ing the decision of a

n arbitrator. See id. a t 13 6; Mich

. F a mi l y Re s., Inc. v . Serv. Em

ployee s Int’l Union Local 517M

, 475 F.3d 746, 753 (6th Cir. 2007) (en banc) (empha siz ing the narr ow scope of judicial revie w over labor-a

rbitration decisions). When a party is challeng ing the merits of an a rbitrator’ s decision, ra t h er t h an the ar bitral proce dure, see9 U.S.C. § 10(a), we will vacate only wher e the arbitrator “manife stly

disr e g a r d e d the law,” Dawahare v. Spe ncer , 210 F.3d 666, 669 ( 6th Cir. 2000). “Our revie w for ma

nifest disreg ard of

the law does not open the door to ext ensive re view of a

rbitral
awa rds.” Id. “A mer e er

ror in interpr etation or a

ppl i cation of the law is insufficient. Rathe r the decision must fly

in the fac e of clea

rly established leg al prec edent.” Merrill Lynch, Pierc e, Fe nner & Smith, Inc. v . Jaros , 70 F.3d 418, 421 ( 6th Cir. 1995) (citation omitted). We wi ll fi nd a manif

e st dis re g ard of the law on ly wh e re “ (1 ) t he a pp lic a ble le g a l pr inc ipl e is clear ly define d and not subject to re asonable debate ; and (2) the arbitrators ref used t o heed that leg al principle.” Nationw ide Mut. Ins. Co. v. Hom e Ins. Co. , 330 F.3d 843, 847 (6 t h C i r. 2 003) (q u o t i n g Da wah ar e , 2 1 0 F
. 3 d a t6 6 9 )
. A s p arto f

th i s tw o - p r o n g s h o w i n g , th e c h a l l e n g i n g p arty g en e r a ll y mu s t d e mo n s tr a te th a t h e o r h is o p p o n e n t p r e s e n te d th e a ll e g e d ly d is r e g ar d e d leg al6

principle to the a

rbitrator. Se e Da wah ar e , 210 F.3d at 670 (reje cting a cha lleng e to an a rbitra tion
awa rd wh e re the c ha lle ng e r “ po int [ed ] to n ot hi ng in the re c or d th a t sh ow [ed ] the arb itr a tor s’
awa re ne ss o f t

he c omm on law that he a lle g e [d] to be a pp lic a ble ” ); Du fe rc o I nt’ l Ste e l Tra ding v . T. Kla v e ne ss S hip ping A /S , 333 F.3d 383, 390 ( 2d Cir. 2003) (“I n order to intentionally

disreg ard the law, the arb itrator must have known of its exi stence , and its applicability to the problem bef

ore him.”).

“ Ar

bit rator s ar e no t re qu ir e d to expla in the ir de c isi on s. I f the y c ho os e no t to do so , it

is all bu t im po ssi ble to deter

mine whether they acte d with manifest disreg ard [of] the law.” Da wah ar e , 21 0 F. 3d a t 669 ( e mph a sis a dd e d) ; se e als o Jaros , 70 F.3d at 421 (“Where , as her e, the a rbitrators decline to explain their resolution of cer tain questions of law, a party seekingto have the a war d set aside fa ces a

tremendous obstac le.”) . In such situations, the alleg ed er ror of law ofte n “ca

nnot be shown with the requisite [degr ee of] c erta inty ” bec ause it is g ener ally impossibl e, without eng ag ing in unr estraine d speculation, to “dete rmin[e] what cause d an arbitrator to r ule as he did.” El e c . D ata S ys . Co r p . v. Done lson , 4 7 3 F
. 3 d 6 8 4 , 6 9 1

- 9 2 ( 6 th Ci r . 2 0 0 7 )
. “ I f a c o urt c an f in d an y line of argument that is leg ally

plausible and supports the awa rd[,] then it must be confirme d. Only wher e
no jud g e or

g ro up of jud g e s c ou ld c on c e iva

bly c ome to t he same de te rm inatio n a s th e arb itr a tor mus t the awa rd be se t aside.” Jaros , 70 F.3d at 421. The three -ar

bitrator panel in the prese nt case did not issue an opinion supporting its awa rd of $10.4 million. P laintiffs asser ted numerous ba ses upon which the a rbitrators could have g rante d
re lie f, inc lud ingbr e a c h o f f idu c iary duty , b re a c h o f c on tra c t, p ro mis so ry e sto pp e l, f

ra ud , c ivi l conspirac y , aiding and abe tting, neg l i gent supervision, neg lige nt misreprese ntation, and statutory
se c ur iti e s v iol a tio ns . B e c a us e we are no t pr ivy

to th e arbi tr ato rs ’ t

ho ug ht p ro c e ss, we are le ft toW e p ause t o note t hat arbi t rat i ng pa rt i es ar e no t unwi t t i ngl y at t he m ercy of an unscr up ul o us arbit rat o r who 1 a ttem p ts to insu la te his d e c isio n b y re fus ing to issu e a n o p inio n . W e m u st re m e m b e r th a t t h e a rb itra to r’s ro le is cr ea t ed by c on t r ac t , a n d t h e v er y c on t r ac t t h at e mpowe r s t h e ar bi t r at or t o r u l e i s t h e s ame c on t r ac t t h at ma y de man d a wr i t t en opi n i on j u s t i f

y i n g h i s a wa r d. W h i l e Pl ai n t i f f s a l l eg e t h at N ASD r u l es pr oh i bi t ed t h es e ar bi t r at or s f r om i ss ui ng a wri t t en o p i ni o n, other arbi t rat i ng pa rt i es ar e f ree t o co nt ract f

o r an ar b i t rat o r’ s o p i ni o n. 7 g uess at the pr ecise leg al basis up o n wh i ch they awa rded r elief. F acingthis sea of spec ulation, L ehman does not a

ttempt to challeng e eac h basis of liability , focusinginstead on the broa der issue of dama g e s. L e hma n’ s argume nts on

the iss ue of

dama g e s a

re be st d ivi de d into t

wo g ro up s: the fi rs t
asser ts that the arb i t ra t o rs issued their a war d in manifest disreg ard of the law of

joint and severa l liability ; and the sec ond contends that the a rbitrators c ould not have based their awa rd on any theory of individual liabilit y

(as oppose d to joint and severa l li ab i l i t y ). At the outset, we reiter ate that L ehman f ace s a nea rly impossibl e burde n, cre ated by the arbitrators’ issuance of an aw ard w ithout an opinion. Se e Da wah ar e , 210 F.3d at 669. I f we deter mine that the ar

bitrators could have base d 1 their aw ard on pr in ci ples of joint and seve ral liability , then the aw ard must be uphe ld. See J aros , 70 F.3d at 421. Furthe rmore, if we f ind that the arbitrators could h ave ba sed their a war d on any theory of individual liabilit y , then the aw ard must be uphe ld for this alternative rea son. See id. We b e g in w ithL e hma

n’ s argume nts re g ard ingjoi nt an d sev e ra l liab ili ty . L e hma n p ri mari ly
c on te nd s that it c a

nn ot be he ld joi ntl y and se ve ra lly lia ble fo r t he ha rm c a us e d b y Gr utt a da ur ia or SG Cowen bec ause L ehman itself did not ca use anyinj ur

y to P la int if

fs . L e hma

n d id n ot p resent thi s argument to the arbitrators, and w e gen er al l y will not find a manifest disreg ard of the law on the basis of a le g al theory

not presente d at ar

bitration. Se e Da wah ar e , 2 10 F .3 d at 67 0; Duferco I nt’l Steel , 3 33 F .3 d at 39 0. Mo re ov e r, L e hma n canno t demons tr a te a

le g a l e rr or

wi th t he “ re qu isi te
cer tainty ” nee ded to establish a manifest disreg ard of the law. See D onelson , 473 F.3d at 691-92.8

L eh m an ’s ar gu m en ti s p re m i s edo ni t s v eh em en t l y ar gu edb el i ef

th at i td i d n o ti n

j ure o r d am age Plaintiffs in any

way , and this belief, in t u rn , is based on L ehman’ s out-of-poc ket theory of calc ulating da

mag es. Be cause the arbitrators did not issue an opinion, we ca nnot determine whether they adopted L ehman’ s theory of damag es. Thus, any

leg al er ror pr emised on L ehman’ s belief that it did n o t d am age Plainti ffs “ cannot be shown with the requisite c erta inty ” nee ded to establish a manifest disreg ard of

the law. Se e id . at 692. I n any event, we find that the out -of- pocket theory of damag es, which underlies L ehman’ s
asser tion that it di d not harm Plaintiffs, is an improper me ans of d et er m ining damag es under the circ umstances, a

nd thus L ehman’ s argument is wholly wit h o u t m erit. The out-of-poc ket theory focuse s on the direc t c ash flow to a nd from Plaintiffs; it is a relianc e measure of dama ges , whi ch seeks to return Plainti ffs to the pos ition they held bef ore inve sting their mone y with Gruttadaur ia, SG Cowen, and L ehman. Plaintiffs invested $21 million while Gruttadaur ia worke d for SG Cowen, wh ic h w a s o ff

se t by the ir wi thd ra wal of mor e tha

n $ 21 mil lio n d

ur ingthat ti me . In c on tr a st, Plaintiffs invested only

$300,000 while Gruttada uria worked for

L ehman, yet they

withdrew more t h an$ 5
. 5 m i l l i o nd

u r i n g t h a tt i m e . T h u s , L e h m a n c o n t e n d s th a tP l a i n t i f f s a c tu a l l y profited

from G r u t t a d a u r i a ’ s f r a u d d u r i n g h i s e mp l o ym e n tw i thL e h m anb e c a u s e , a c c o r d i n g t o L e h m an ’ s th e o r y, Plaintiffs ga ined more tha n $5.2 milli on duringthat period. I n contra st to L ehman’ s out-o f-poc ket theory , Plaintiffs urg ed the a rbitrators to adopt the benef it-of-the- barg ain measur e of da mag es. T h e b en ef

i t -o f- th e- b ar gai nth eo ry

fo cu s es o nth e a m o u nt of money Plaintiffs would have re ceive dhad Gr uttadauria , SG Cowen, and L ehman investe d Plaintiffs’ funds as dire cted; it is an expectanc y measure of dama g es, which se eks t o put Plainti ffs in t he po sit ion

the y wo uld have he ld ha d Gr

utt a da ur ia , SG Cowe n, and

L e hma n n ot b re a c he d th e ir9

“bar g ain” to invest Plaintiffs’ money . Plaintiffs’ acc ounts a lleg edly contained $37.9 milli on at the time Gruttadaur ia exposed his fraud to the F BI . These f ictitious figures purported to a ccount f or the
mor e tha n $ 31 .3 mil lio n Pla int if

fs wi thd re w fr om t

he ir a c c ounts ov e r t

he y e ars ($ 25 .8 mil lio n w hil e Gruttada uria wor ked for SG Cowen and $5.5 million while he wor ked for L ehman) . Plaintiffs thus be lie ve that, r e g ard le ss o f the amou nts of the ir pr ior de po sit s a

nd wi thd ra wa ls, the y

are e nti tle d to the e nti re $3 7. 9 mi lli on

tha t th e sp ur iou s a c c ount s tate me nts re pr e se nte d as b e ingc on ta ine d in the ir
a c c ounts
. L e hma n’ s o ut- of -p oc ke t th e or

y mis a pp re he nd s the ha

rm su ff e re d by Pla int if

fs and the fa c ts of this case
. Plaintiffs g ave $21 milli on to G ruttadaur ia, not to hide under a rock or lock in a saf

e, but for the express purpose of investment, with a hope — indeed a rea sonable e x pectation — that it would gr ow. Thus, the out-of- pocket theor y , which see ks to rest ore to Plaintiffs only the $21 milli on they

orig inally invested less their subsequent withdrawa ls, is a wholly inadequate measur e of dama g e s. Ha d G rutta da

ur ia inv e ste d Pl a int if

fs ’ mon e y a s re qu e ste d, the ir fu nd s w ou ld h ave lik e ly g rown immensely , espec ially considering t h at Plaintiffs invested primarily throug hout the mid19 90 s, wh ic h, ha d th e y

hir e d a n h on e st b ro ke r o r a watc hf ul c omp any that re a so na

bly su pe rv ise d it s
e mpl oy e e s , w o u l d

h av e p l a c e d

t h e i r m o n e y i nt h e s t o c k

m ar k e td ur i n g o n e o f

t h e s tr o n g e s tb u ll marke ts in rec ent memory . I n fac t, the fictitious statements issued by L ehman, whic h wer e desig ned to t ra c k Pl a int if

fs ’ f un ds a s if the y ha d b e e n p ro pe rl y

inv e ste d, ind ic a te that Pla int if fs ’ a c c ounts would have grown to more t h an $ 3 7
. 9 milli on (eve n acc ounting f or the withdra

wal of more than $3 1. 3 mi lli on ). Pla int if

fs thu s c ou ld h ave re a so na bly be lie ve d th a t th e y

we re e nti tle d to the fu ll $3 7. 9 mi lli on

ba lanc e sh ow n, re g ard le ss of the amou nts of the ir pr e vio us de po sit s a

nd wi thd ra wa ls. We t he re fo re re

je c t L e hma

n’ s argume nt b e c a

us e it i s f

ound e d o n a

n im pr op e r — and

wh oll yW e sim ilar ly reje c t L e h m a n ’s ar g u m e n t t h a t P la intiff s a c tua lly prof

i t ed dur i ng t he peri od Leh man mana ged 2 t he i r f un d s. T he o nly rea so n L eh m an ca n p ursu e this arg um en t i s b ec au se G rutt ad au ria d i ssi p ated m o st o f P l ainti f f s’ fun d s p rio r to lea v ing S G C o w e n a n d jo inin g L e h m a n , an d thu s n e e d e d to ste a l f ro m o the r c lien ts d u rin g this tim e . B u t t h e ev i den ce pr es en t ed t o t h e ar bi t r at i on pa n el w as s u f f i ci en t t o de mon s t r at e t h at Le h man w as a wa r e of sig n ifi c a n t i rr e g u la rities in G ru ttad a u ria ’s p ra c tice s a t t h e ti m e o f L e h m a n ’s p u rc h a se o f t h is p a rt o f S G C o w e n ’s bus i nes s , an d purc has ed i t des pi t e t hi s kn owl edge. 10 ina de qu a te — me a sure of dama g e s. 2 L e hma n p re se nts a

ba rr a g e of oth e r c on te nti on s to de mon str a t e h o w t h e a r bit rator s ma nif e stl y disreg arde d the law of

joint and severa l liabilit y , arguing that L ehman did not enga g e in conc erte d
a c tio n wi th e ith e r Gr

utt a da ur ia or SG Cow e n, that L e hma n d id n ot p ro vid e su

bs tanti a l a ssi sta

nc e to Gruttada uria orSG Cowen, and that Plaintiffs’ injuries we re e asily apportioned a

mong the tortfea sors. We need not a ddress e ach of L ehman’ s individual arguments so long as we identify one leg ally plausible basis for the arbitrators’ aw ard. See J aros , 70 F.3d at 421. Under N ew Yor k law, a def endant may

be held jointly

and seve rally

liable in at least thr ee i n s t ances: (1) whe re the de fe nd ant a c ts i n c on c e rt wi th a no the r t o p ro du ce a sin g le inj ur y ; ( 2) wh e re the de fe nd ant a c ts
c on c ur re ntl y wi th a no the r t o p ro du c e a

sin g le inj ur

y ; or (3 ) wh e re the pla int if f’ s injury is “ inc a pa ble
o f an y r e a s o n a

b le o r p r a c ti c a

b le d iv is io n o r a ll o c a ti o n amo n g mu lt ip le to rt- f e a s o r s.” R a vo v. Rogatnick, 514 N.E.2d 1104, 1106-07 (N.Y. 1987). Duringthe ar

bitration, Plainti ffs a

rgued that their injuries could not be appor tioned among Gr utt a da ur ia , SGCow e n, and

L e hma n, and ur g e d th e arb itr a tor s to imp os e joi nt a nd se ve ra l li a

bil ity on that basis. I n response , both be fore the arbitrators and on appe al, L ehman a cknowledg ed that an indivisi ble injury

cause d by

joint tortfeasors is a leg ally sufficie nt basis for im p o s i n g joint and
sever al liability

under N ew Yor

k law, see id. at 1107, but asser ted that P l ai ntiffs’ losses could beLehman’ s ar gu ment f ai l s t o app r eci at e t hat G r ut t adaur i a i s al s o a j oi nt t ort f eas or a nd t hat we mus t cons i der 3 t he harm ca used b y hi s act i o ns as wel l t hat caused b y SG C o wen and Lehm an.

B ec au s e t h e ar bi t r at or s ’ a wa r d g r an t ed Pl ai n t i f f s $10. 4 mi l l i on , w h i ch i s j u s t a f r ac t i on of

t h e $37. 5 mi l l i on 4 r eques t ed by P l ai nt i f

f s , i t i s poss i bl e t hat t he ar bi t r at ors f ound Leh man i ndi vi dual l y l i abl e f or t he po r t i on of

damages i t ca us ed, r at her t han j oi nt l y an d s eve r al l y l i abl e f or Pl ai nt i f

f s ’ en t i r e damages
. Perh aps t he ar bi t r at ors ca l cul at ed Pl ai n t i f f s ’ t ot al da mag es t o be $10. 4 mi l l i on a n d h el d Le h man j oi n t l y a n d s ev er al l y l i abl e f or t h e en t i r e amou n t ; or p e rh a p s the a rb itra to rs c a lc u la te d P la intiff s’ to ta l d a m a g e s to b e $ 3 7 .5 m ill io n a n d he ld L e h m a n ind ivid u a lly liab le

11 easily apportioned be tween SG Cowe n and L ehman. We conclude th at , contra ry to L ehman’ s 3

c on te nti on s, the arb itr a tor s c ou ld h ave fo un d Pl a int if fs ’ i nju ri e s to be ind ivi sib le and

the re fo re c ou ld have imposed joint and seve ral liability on that basis. The a

rbitrators migh t rea sonably have conclude d that Plaintiffs’ monetary losses — which der ived from a tang led web of

fra udulent transfe rs spanningmore than a five-year period and involving two separ ate investment c ompanies
— w e re inc a

pa ble of div isi on amon g Gr

utt a da ur ia , SG Cowe n, and L e hma n. Th is is par

tic ula rl y so in light of the e vidence of Gruttada uria’s imprope r ac tiviti es that L ehman be came awa re of during its du e dil ig e nc e pr ior

to i ts p ur c ha se of

thi s p art of SG C ow e n’ s busi ne ss. Ev e n if we we re to dis a g re e wi th such a leg a l c on c lus ion on the div isi bil ity

of Pla int if fs ’ i nju ri e s, a “ me re e rr or

in interpre tation or application of the law is insufficie nt” to establish a manife st disreg ard of the law. See J aros , 70 F.3d at 421. Be cause there is a plausible leg al basis for the arbitrators’ aw ar d , we reje ct L ehma n ’s arg

ument that the ar

bitrators manife stly

disreg arde d the law of

joint and severa l l i a b i l i t y. Havingconclude d that the ar bitrators could have base d their awa rd on principles of

joint and
sever al liability , we ne ed not re ach L ehman ’s arguments on individual li ability
. See id. We
never theless ac knowledg e — as a n alternative basis for the a rbitration awa

rd — that the a

rbitrators might have held L ehman individually l i ab l e wi t h out resortingto principles of joint and seve ral liabili t y . The a

rbitrators, f

or example, might have imposed individual liabilit y under a theory of 4onl y f or t he po r t i on of

damages ca us ed by Leh man. W e s i mp l y do not kn ow. 12 n e g li g e n t s u

p e r v is io n, s ee P et erT. v. Children’s Vill., Inc. , 819 N.Y.S.2d 44, 47 (N.Y. A pp. Div. 2006) — a theory of liability which Plaintiffs prese nted to the ar bitrators and which was suppor ted by the SEC’s a

nd NYSE’s finding s that L ehman failed rea sonably to supe rvise Gruttadauria. L ehman c ontends that the ar bitrators could not have ba sed their a war d on anytheory

of individual liability beca use L ehman did not damag e Plaintiffs in any way . We have a lread y co n s i d er ed and
re je c te d, in t

he c on te xt of

joi nt a nd se ve ra l li a

bil ity , L e hma

n’ s e rr on e ou s b e lie f —

pr e mis e d o n it s out-of-poc ket theory

of dama g es — that it did not injure Plaintiffs. And for the same re asons that
w e r e je c te d th a t ar g u me n t in th e c o n te xt of jo int an d s e v e r a l li a b il it y , w e a ls o r e

je c t i t i nth e c o n te xt
o f i n d i v i d u a l l i a b i l i t y. I n sum, we conc lude that L ehman ha s not met its “all-but-impossib l e” b u rd en of de mon str a tin g that the arb itr a tor s’ awa rd , un a c c omp anie d by a

le g a l op ini on , w a s is su e d in manif e st disreg ard of

the law. Se e Da wah ar e , 210 F.3d at 669. III . For the fore g oing r easons, we AF F IRM the di strict court’s or der de nying L ehman’ s motion to vacate the ar

bitrators’ a

war d.