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Respondent-appellant Roger Bendelac appeals from a judgment entered in the United States District Court for the Southern District of New York (Ward, J.) confirming a New York Stock Exchange arbitration award of compensatory and punitive damages in the total amount of $155,645.00 in favor of petitioners-appellees Marco Barbier, Silvana Barbier and Stefania Barbier (collectively, the "Barbiers"). In their complaint, the Barbiers alleged claims of conversion, breach of fiduciary duty, breach of contract, negligence and/or recklessness and assault against Bendelac and his former employer, Shearson Lehman Hutton, Inc. ("Shearson").

On appeal, Bendelac contends that the district court erred by denying his motion to vacate the arbitral award in its entirety. As grounds for vacatur, Bendelac maintains that the arbitration award is based partly on issues that were withdrawn from arbitral consideration and that the arbitration panel (the "Panel") failed to consider all the issues presented to it. He also argues that the court incorrectly applied the Federal Arbitration Act ("FAA"), see 9 U.S.C. §§ 1-16 (1988), rather than New York's arbitration statute, see N.Y.Civ. Prac.L. & R. §§ 7501-7511 (McKinney 1980 & Supp. 1991). Bendelac asserts that the FAA does not apply in this case because jurisdiction was predicated on the diversity of the parties and, on that basis, the Erie doctrine requires the court to apply New York's arbitration statute. He further argues that, under the Erie doctrine, the court was required to apply settled New York law, which prohibits arbitrators from awarding punitive damages, see Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 353 N.E.2d 793, 386 N.Y.S.2d 831 (1976), and therefore it was error to confirm the Panel's award of punitive damages. For the reasons that follow, we affirm the portion of the judgment confirming the compensatory damages award. We reverse the portion of the judgment confirming the arbitral award of punitive damages, although for reasons other than those asserted by Bendelac.


948 F.2d 117 (1991)

In the Matter of New York Stock Exchange Arbitration between Marco BARBIER; Silvana Barbier and Stefania Barbier, Petitioners-Appellees,


SHEARSON LEHMAN HUTTON INC., Successor-in-interest to Shearson Lehman Brothers, Inc.; and Roger E. Bendelac, Respondents, Roger E. Bendelac, Respondent-Appellant.

No. 1420, Docket 91-7070.

United States Court of Appeals, Second Circuit.

Argued May 10, 1991.

Decided October 31, 1991.

New York Law School location: File #1232, Box #128