Opinion ID: 571266
Heading Depth: 2
Heading Rank: 1

Heading: Compensatory Award

Text: 12 Bendelac contends that the FAA does not apply in this case. He acknowledges that there is a basis of federal jurisdiction, namely diversity of citizenship, but maintains that the Erie doctrine mandates that the New York arbitration statute be invoked when federal jurisdiction is predicated on diversity. This is a strange contention because diversity jurisdiction serves as a basis for invoking the provisions of the FAA, not as a ground for invoking the application of a state arbitration statute. See Smiga v. Dean Witter Reynolds, Inc., 766 F.2d 698, 703 (2d Cir.1985), cert. denied, 475 U.S. 1067, 106 S.Ct. 1381, 89 L.Ed.2d 607 (1986); Ballantine Books, Inc. v. Capital Distributing Co., 302 F.2d 17, 19 (2d Cir.1962); Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 408-09 (2d Cir.1959). The FAA applies when there is federal subject matter jurisdiction, i.e., diversity jurisdiction, see Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n. 32, 103 S.Ct. 927, 942 n. 32, 74 L.Ed.2d 765 (1983), and when the contract calling for arbitration evidenc[es] a transaction involving interstate commerce. 9 U.S.C. § 2. That the first requirement is met here is not called into question. Nor could Bendelac dispute the interstate nature of the transactions at issue: [They] involved Venezuelan investors, a New York financial institution and the purchase and sale of securities on a national exchange. 752 F.Supp. at 155; see also Willis v. Shearson/American Express, Inc., 569 F.Supp. 821, 823 (M.D.N.C.1983); Corey v. New York Stock Exchange, 493 F.Supp. 51, 54 (W.D.Mich.1980), aff'd, 691 F.2d 1205 (6th Cir.1982). Therefore, the Barbiers properly invoked the provisions of the FAA to confirm the arbitral award. 13 Bendelac asserts that the arbitral award should be vacated in its entirety by reason of the Panel's supposed failure to render an award on all of the issues presented to it. He also accuses the Panel of basing its award on the assault claim, which was withdrawn by the Barbiers during the hearings. We assume that these contentions are based on the enumeration of claims appearing in the upper portion of the arbitral award form entitled Case Summary. In the Case Summary, the Panel listed three claims: unauthorized trades, conversion, [and] assault. While conversion and assault were set forth as specific claims in the Barbiers' Statement of Claim, unauthorized trading was not listed as a claim. 14 It is well-settled that judicial review of an arbitration award is narrowly limited. The award may be vacated only if at least one of the grounds specified in 9 U.S.C. § 10 is found to exist. Carte Blanche (Singapore) Pte., Ltd. v. Carte Blanche Int'l, Ltd., 888 F.2d 260, 264-65 (2d Cir.1989); Diapulse Corp. v. Carba, Ltd., 626 F.2d 1108, 1110 (2d Cir.1980). As the district court correctly noted, [a]rbitrators need not explain their rationale for an award. 752 F.Supp. at 163; see also Koch Oil, S.A. v. Transocean Gulf Oil Co., 751 F.2d 551, 554 (2d Cir.1985). Moreover, courts generally will not look beyond the lump sum award in an attempt to analyze the reasoning processes of the arbitrators. Kurt Orban Co. v. Angeles Metal Sys., 573 F.2d 739, 740 (2d Cir.1978). Rather, if a ground for the arbitrator's decision can be inferred from the facts of the case, the award should be confirmed. Sobel v. Hertz, Warner & Co., 469 F.2d 1211, 1216 (2d Cir.1972). 15 The district court found, after a complete review of the parties' submissions, that the Panel considered all of the claims prior to rendering [its] award. 752 F.Supp. at 163. On the basis of the record, we hold that this finding is not clearly erroneous. See A/S Siljestad v. Hideca Trading, Inc., 678 F.2d 391, 392 (2d Cir.1982) (per curiam); Ballantine Books, 302 F.2d at 21-22. As the district court noted, [e]vidence adduced during the course of the arbitration proceedings demonstrated that [the Barbiers'] names were forged on various account documents, thus facilitating the unauthorized dissipation and conversion of [the Barbiers'] funds without their knowledge. 752 F.Supp. at 163 n. 20. We think it is quite clear that the claims of breach of contract, breach of fiduciary duty and negligence and recklessness are encompassed by the terms, unauthorized trading. The common denominator of those claims is unauthorized trading, and arbitrators properly may describe the claims in one all-encompassing term in place of a listing of all claims. With respect to the claim of assault, the fact that it appeared in the Case Summary is not an indication that the Panel based its award on that claim. Bendelac presents no persuasive evidence that the Panel acted on the claim of assault, and it was clear to the parties that this claim was withdrawn early in the proceedings. 16 Nor is the arbitral award ambiguous or indefinite, as Bendelac asserts. The award specifically provides that it is rendered in full and final settlement of all claims between the parties. Moreover, the award was clear enough to indicate what each party [was] required to do, Dighello v. Busconi, 673 F.Supp. 85, 90 (D.Conn.1987), aff'd mem., 849 F.2d 1467 (2d Cir.1988), and no further litigation is necessary to finalize the obligations of the parties under the award, id.