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MAIDMAN v. O'BRIEN

March 16, 1979

Lea MAIDMAN, Plaintiff,
v.
Joseph H. O'BRIEN II and Evans & Co., Incorporated, Defendants



The opinion of the court was delivered by: HAIGHT

Memorandum Opinion and Order

By Memorandum and Order of this Court dated November 16, 1976 (the Opinion), this action was stayed pursuant to section 3 of the Federal Arbitration Act (the Act), 9 U.S.C. § 3, and assigned to this Court's suspense docket, pending the resolution via arbitration of plaintiff's securities law claim against the corporate defendant Evans & Company, Incorporated (Evans). Familiarity with that Opinion is assumed for the purposes of this discussion. That arbitration was conducted on May 23rd and May 27th, 1977, before a panel of five arbitrators under the auspices of the New York Stock Exchange, Incorporated. The panel rendered a decision on June 7, 1977 dismissing Ms. Maidman's claim. *fn1"

 Evans has now renewed its pre-arbitration motions pursuant to Fed.R.Civ.P. 12: 1) to dismiss the securities law claim in count three as to it on the basis of the arbitrators' decision; and 2) to dismiss the libel claim in count two, as a) beyond this Court's jurisdiction, and/or b) barred by the applicable statute of limitations. The individual defendant O'Brien has similarly moved to dismiss count three, as it stands against him, on the basis of the collateral estoppel effect of the arbitration and to dismiss the libel claim in count one due to the lack of jurisdiction over its subject matter. The plaintiff has opposed all these applications, objected to the arbitrators' decision, and moved for leave to amend her complaint to add the New York Stock Exchange as a defendant. For the reasons which follow, the defendants' motions to dismiss are hereby granted, plaintiff's motion is denied and this action ordered discontinued in its entirety.

 I.

 A. Evans' Motion to Dismiss Count Three on the Basis of the Arbitrators' Decision.

 Preliminarily, it should be noted that although Evans has not sought to have the arbitration decision confirmed pursuant to 9 U.S.C. § 9, there is authority for treating such motions to dismiss as implicitly seeking that confirmation *fn2" and when a party objects to an arbitration decision on the merits, the possible untimeliness of the confirmation application has been viewed as waived. *fn3" Consequently, the discussion will proceed with a review of the arbitration under the standards for confirming or vacating such a decision.

 The arbitration hearing on Ms. Maidman's claim against Evans consumed just over six (6) hours on two afternoons and resulted in a transcript of 269 pages. In their decision the arbitrators gave no reasons for dismissing the claim, but they had no obligation to do so, *fn4" and the courts in such situations as this are instructed that "(i)f a ground for the arbitrator's decision can be inferred from the facts of the case, the award should be confirmed." *fn5"

 Moreover, although the failure to rule in accordance with the provisions of the securities laws would be grounds for vacating the decision, that failure must "be made clearly to appear." *fn6" Thus, unless there is "manifest disregard" of the applicable law, *fn7" or the decision evinces an otherwise "grievously flawed character," *fn8" the decision should be upheld even though there might exist an underlying misinterpretation of the law. *fn9"

 Consequently, in reviewing arbitration the courts do not attempt to analyze the reasoning employed therein, but, absent "manifest disregard" of the law, they uphold the award unless the challenging party demonstrates one of the infirmities listed in section 10 of the Act. *fn10" Plaintiff has, in her papers, alleged both a flagrant disregard for the law in dismissing the claim and also many of the grounds contained in section 10 of the Act. *fn11"

 A careful review of the transcript of the arbitration hearing, however, reveals none of these flaws. First, with regard to the alleged error in the decision itself, the crux of plaintiff's claim was O'Brien's "unauthorized" transactions with her securities, but as the arbitrators recognized there was a significant difference of opinion between O'Brien and Maidman as to the circumstances surrounding O'Brien's authority. If O'Brien's testimony was credited, the transactions were authorized within the meaning of the securities laws, rendering both Evans and O'Brien non-liable. No further analysis of the decision need be undertaken.

 Secondly, regarding the grounds for vacating the decision, as listed in section 10, there is not the slightest hint of any such infirmities. *fn12" Accordingly, the defendant Evans would be entitled to confirmation of the decision and is hereby granted its motion to dismiss count three of the complaint, as such count stands as to it.

 B. Evans' Motion to Dismiss Count Two.

 Count two seeks damages from Evans due to the alleged defamation Ms. Maidman suffered as a result of Evans' "publication" *fn13" on February 23, 1973 of an allegedly libelous statement authored by O'Brien. This claim was asserted for the first time against Evans in the amended complaint which was sworn to on June 18, 1976 and served on Evans' counsel's office July 16, 1976. *fn14" Evans submits such a claim is barred by the one-year statute of limitations prescribed in N.Y.C.P.L.R. § 215. *fn15"

 Evans is correct. Under such circumstances the action was not "commenced" against Evans within one year after publication. Kern v. Hettinger, 303 F.2d 333 (2d Cir. 1962). Accordingly the second count is hereby ordered dismissed. ...


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