Document: 514 U.S. 52115 S.Ct. 1212131 L.Ed.2d 76 Antonio MASTROBUONO and Diana G. Mastrobuono, Petitioners,v.SHEARSON LEHMAN HUTTON, INC., et al. No. 94-18. Supreme Court of the United States Argued Jan. 10, 1994. Decided March 6, 1995. Syllabus * Petitioners filed this action in Federal District Court, alleging that their securities trading account had been mishandled by respondent brokers. An arbitration panel, convened under provision parties' standard-form contract Arbitration Act (FAA), awarded petitioners punitive damages other relief. The Appeals disallowed award because contract's choice-of-law specifies "the laws State New York" should govern, but York law allows only courts, not arbitrators, to damages. Held: arbitral have enforced as within scope between parties. Pp. __. (a) This case is governed what has say about arbitrability petitioners' claim. FAA's central purpose ensure "that private agreements arbitrate are according terms." Volt Information Sciences, Inc. v. Board Trustees Leland Stanford Junior Univ., 489 468, 479, 109 1248, 1256, 103 488. Court's decisions make clear if contracting parties agree include claims issues be arbitrated, FAA ensures agreement will its terms even a rule state would otherwise exclude such from arbitration. See, e.g., Allied-Bruce Terminix Cos. Dobson, 513 ----, 115 834, 130 753. (b) misinterpreted reading conflicting. Although contains no express reference claims, fact it intended demonstrated considering separately impact each two provisions, then inquiring into meaning taken together. process reveals not, itself, an unequivocal exclusion strongly implies appropriate, best way harmonize read encompass substantive principles courts apply, special rules limiting authority arbitrators. Thus, covers rights duties parties, while clause arbitration; neither intrudes upon other. 20 F.3d 713 (CA7 1994), reversed. STEVENS, J., delivered opinion which REHNQUIST, C.J., O'CONNOR, SCALIA, KENNEDY, SOUTER, GINSBURG, BREYER, JJ., joined. THOMAS, dissenting opinion. William J. Harte, Chicago, IL, for petitioners. Malcolm L. Stewart, Washington, DC, U.S., amicus curiae leave Court. Joseph Polizzotto, City, respondents. Justice STEVENS 1 In dispute arising out expressly provides "shall York," panel arbitrators award. question presented whether arbitrators' consistent with 488 (1989). 2 1985 petitioners, assistant professor medieval literature, his wife artist, opened Shearson Lehman Hutton, (Shearson), executing Shearson's Client's Agreement. Respondent Nick DiMinico, vice president Shearson, managed Mastrobuonos' until they closed 1987. 1989, Northern Illinois, respondents claiming on variety federal theories. 3 Paragraph 13 provision. Relying §§ 4 9 U.S.C. 3, 4, motion stay court proceedings compel pursuant National Association Securities Dealers. granted motion, three was convened. After conducting hearings ruled favor proceedings, argued Nevertheless, panel's included $400,000, addition compensatory $159,327. Respondents paid portion vacate 812 F.Supp. 845 (ND Ill.1993), Seventh Circuit affirmed. (1994). Both relied agreement, shall law. Because decided power limited judicial tribunals may exercised Garrity Lyle Stuart, Inc., 40 N.Y.2d 354, 386 N.Y.S.2d 831, 353 N.E.2d 793 (1976), held case. 5 We certiorari, 305, 218 (1994), Courts expressed differing views contractual preclude proper. Compare Barbier Hutton 948 F.2d 117 (CA2 1991), Pierson Dean, Witter, Reynolds, 742 334 1984), Bonar Dean Witter 835 1378, 1386-1388 (CA11 1988), Raytheon Co. Automated Business Systems, 882 6 (CA1 1989), Lee Chica, 983 883 (CA8 1993). now reverse.1 II Earlier Term, we upheld enforceability predispute Alabama law, though statute unenforceable. 753 (1995). Writing Breyer observed Congress passed "to overcome courts' refusals enforce arbitrate." Id., at 838. See also 474, 1253; Reynolds Byrd, 470 213, 220, 105 1238, 1242, 84 158 (1985). determining applied readily concluded pre-empted Alabama's statutory prohibition. Allied-Bruce, 839, 843. 7 seek similar disposition before us today. Here, interpreted incorporate including ask hold pre-empts York's prohibition against awards vestige " ' "ancient" hostility 838, quoting Bernhardt Polygraphic America, 350 198, 211, n. 5, 273, 281, 100 L.Ed. 199 (1956) (Frankfurter, concurring). rely Southland Corp. Keating, 465 1, 104 852, 79 (1984), Perry Thomas, 482 483, 107 2520, 96 426 (1987), California statutes purported require resolution certain disputes. Southland, explained "declared national policy favoring arbitration," actually "withdrew states forum agreed resolve arbitration." 858. 8 answer evidences any contract. claim, distinguishable Perry, presumably desired unlimited stood way. Regardless decision contracts incorporating argue themselves bound Garrity, just forgo altogether. words, says "no damages," end matter, interpret accordance intentions parties—even effect those limit previously pro-arbitration does operate without regard wishes S.Ct., (1989), Appeal construed mean arbitration, rather than rules, govern dispute. 472, 1252. Noting were "manifestly designed encourage resort process," id., 476, 1254, "generally foster[ed] 1254 interpretation entirely enforceability, terms, 1254. referring holdings struck down agreed-upon arbitrability, added: 10 "But follow prevents enforcement different set forth itself. Indeed, result quite inimical primary ensuring terms. matter consent, coercion, generally free structure see fit. Just arbitrate, Mitsubishi [v. Soler Chrysler-Plymouth, 473 614, 628, 3346, 3354-55, 87 444 (1985) ], so too specify conducted." Volt, 1256. 11 our reasoning thus lawfully arbitrated waiving claim On hand, think comes III 12 "Client Agreement," executed, 18 paragraphs. relevant provisions found 13.2 first sentence paragraph provides, part, entire York." App. Pet. Cert. 44. second "any controversy" transactions settled arbitration" Dealers (NASD), or Boards Directors Stock Exchange and/or American Exchange. Ibid. To ascertain expresses intent address considered separately. move more important inquiry: Restatement (Second) Contracts § 202(2) (1979) ("A writing whole"). provision, when viewed isolation, reasonably merely substitute conflict-of-laws analysis determine apply disputes relationship. contract, signed performed York, did state. event, there nothing could possibly constitute evidence claims. Accordingly, allowed because, absence contrary, pre-empt rule. supra, 14 Even ordinary and, urge, includes caveat, "detached otherwise-applicable law," might enter awards. N.Y.2d, 358, N.E.2d, 796. obligations, State's allocation alternative tribunals.3 Respondents' argument persuasive "New law" means decisional notwithstanding law." But, demonstrated, need broadly. It claims.4 15 (the 13) improve respondents' argument. appropriate. explicitly authorizes NASD rules;5 proceeded rules.6 NASD's Code Procedure indicates "damages relief." ¶ 3741(e) (1993). While authorization damages, appears broad enough least contemplate remedy. Moreover, noted, manual provided provision: 16 "B. Punitive Damages 17 "The issue arise great frequency arbitrations. Parties informed can consider remedy." F.3d, 717. text itself surely support—indeed, contradicts —the conclusion foreclose damages.7 19 nor clause, considered, fair leads conclusion. theory, ambiguous, "arbitration rules" permissible, juxtaposition clauses suggests incorporates relating disagree. At most, introduces ambiguity allow As pointed interprets covered FAA, "due must given ambiguities resolved Moses H. Cone Memorial Hospital Mercury Constr. Corp., 460 24-25, 927, 941-42, 74 765 (1983).8 cannot common-law construe ambiguous language interest party drafted it. Fire Ins. Schnackenberg, 88 Ill.2d 57 Ill.Dec. 840, 842, 429 1203, 1205 (1981); Graff Billet, 64 899, 902, 487 733, 734-735, 477 212, 213-214 (1984);9 206 (1979); Seckinger, 397 203, 210, 90 880, 884-85, 25 224 (1970). document, benefit doubt. reason protect who choose unintended unfair result.10 That rationale well-suited facts practical seems unlikely aware bifurcated approach idea signing giving up right. face doubt, unwilling impute 21 Finally violates another cardinal principle construction: document give all render them re Halas, 83, 92, 83 540, 546, 960, 964 (1984); Crimmins Contracting City 166, 172-173, 544 580, 583-84, 542 1097, 1100 (1989); Trump-Equitable Fifth Avenue H.R.H. 106 App.Div.2d 242, 244, 485 65, 67 (1985); 203(a) Comment b id. 202(5). contrast, sets conflict one another: foreclosing allowing them. untenable. 22 agreement. judgment is, therefore, 23 ordered. 24 dissenting. University, 478, 1255, (FAA) simply requires normal contracts—according holding led incorporated procedural concerning proceedings. here distinguished I dissent.1 26 A. 27 University entered construction install electrical systems campus. contained A "[t]he Contract place where Project located," happened California. When arose regarding compensation, invoked court, however, moved civil procedure. Cal.Civ.Proc.Code Ann. 1281.2(c) (West 1982). Opposing stay, authorizing seq. 28 preempted statute. Rejecting Volt's position imposes precluded permitting "simply privately negotiated like contracts, 1255. result, applicable governing conduct specific hampers delays rejected dismissed hinder 29 force involving interstate commerce. Instead, proceed manner [the parties'] agreement." 4. Construction (1983), remain mindful "as control," Motors 626, 3354, intend procedure understanding. "There rules; B 30 case, mandatory clause. functionally equivalent: whereas California]," today states, Agreement, "[t]his . forbids awarding permits "anti-arbitration," hence FAA. concluding majority essentially accepts precisely same irrelevant, identifies supports result. 31 incorporation "need broadly" both choice "is claims." Ante, But these arguments sort "state rule[ ] enforce. "Just parties] 1256 (citation omitted). sure, correct "alternative tribunals," ante, __, although describe law.2 Nonetheless, makes distinction serve distribute (which finds unenforceable) types enforceable). allocates pending related litigation. 471, 1251-52. 32 relies assertions defend departure Volt. First, contends "[a]t told "would awards," 13's statement conducted "in effect, Dealers, Inc." unclear "rules" mean, am willing phrase refers Procedure. offered speak availability states: 33 contain names name counsel, any, summary issues, type(s) security product, controversy, relief requested, awarded, resolved, dates rendered, number hearing sessions, location hearings, signatures concurring award." 41(e) 34 define powers arbitrators; describes form announce decision. 41 confirm point. 41(a) ("All ."); 41(c) ("Director endeavor copy award" parties); 41(d) (arbitrators days); 41(f) (awards "publicly available"). find specifically addresses speaks allow. Such exist. certainly empowered damages; leaves remedial powers. 35 purports expression "a arbitrators." Client Agreement nowhere mentions manual; [NASD]." fit either part description: "of [NASD]," "rules." 36 apparently official document. promulgated adopted NASD. compiled members Industry Conference (SICA) supplement Uniform Arbitration, clearly adopt 13. present Nor do assert used gave rise More importantly, indication 37 Second, provide sense contemplated 13; instead, general information advice arbitrator, "Hints Chair." SICA, Arbitrator's Manual (1992). "how to" guide arbitrator. One bit advice, example, "Care exercised, particularly questioning witness, arbitrator indicate disbelief. Grimaces, frowns, hand signals avoided. 'poker' goal." 19.3 38 manual, context, SICA explain are, establish them: 39 Generally, consist compensation excess actual punishment wrongdoer. If relied." 26. glance neighboring passages, "compensatory/actual "injunctive relief," "interest," "attorneys' fees," "forum 26-29, confirms attempt standardized rules. made stretch passage relate arbitrator's authority, limits own applicability situation According manual's Ethics Arbitrators, "[w]hen derived exceed less required exercise completely." 38. Regarding "[w]here procedures followed followed, obligation comply rules." 38-39. contemplates authorities directed back rest whose York.4 My examination Procedure, demonstrates clear, divined majority. precludes "conflict," puts it, directly issue, silent. Giving every honor intent, indicated 42 Thankfully, import majority's narrow. amounts applying Illinois Illinois. Much sitting diversity, represents understanding single requirements imposed such, reaches erroneous narrow question, respectfully dissent. NOTE: syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber Co., 200 321, 327, 282, 287, 50 499. de novo deferential standard, decide proper standard court's review recently certiorari involves some issues. First Options Kaplan, 94-560, "Paragraph provides: "This inure your [Shearson's] successors assigns[,] binding undersigned, my [petitioners'] heirs, executors, administrators assigns, York. Unless unenforceable due controversy [my] accounts, you, officers, directors, agents employees me breach thereof, Exchange, elect. election registered mail addressed you main office days after demand election, election. Judgment rendered having jurisdiction thereof. future extent determined compelled point, meaningful "substance" "remedy," entitlement prevail Brief 25-27. here, pass persuasiveness. dissent much similarity took novo. deferred state's 1253 ("the ordinarily sit review"). accords decision-maker arguably entitled deference—the 1. (at election) instead Neither discretion doubt ability Exchanges' claimants Solicitor General reminds us, namely Rule 21(f)(4) Rules Fair Practice, reads: 'No [between member customer] condition file award.' 6. applies executed September 7, 1989. Notwithstanding date, 1985. "Were confine plain little trouble 'settle' 'all disputes' through 'just equitable' 'remedy relief' sufficiently Inasmuch 'generously construed,' [473 3353-54, seem sensible 'any remedy phrases indicate, minimum, intention chosen resolvers varieties forms Since respect Raytheon-Automated equally empowered." 1989). establishes that, doubts arbitrable problem allegation waiver, delay, defense arbitrability." Cone, 941. cite precedent designated suggest controversy. drafters Second justified follows: "Where chooses he likely carefully protection interests party. He know uncertainties meaning. deliberately obscure, intending later date assert. cases long factors decisive, substantial preferring party." 206, (1979). yet sort, 94-560 (cert. Dec. petitioner's waived raise petition opening brief. antecedent Nat'l Bank Oregon Independent Insurance Agents --- ---- [113 2173, 124 402] (1993), waiver appropriate here. rested exemplary social remedies punish, compensate. punish hands State, wield impose 833-835, 796-797. Other include: Chair maintain decorum times. Shouting, profanity, gratuitous remarks stopped." "Some attorneys often made, truer becomes. Chair, discourage needless repetition." "Immediately close hearing, usually room begin deliberations deliberation. Unlike jurors, restricted discussing among themselves." 25. telling reply brief reserve consistently "waiver" "right" obtain

Category: 7