statute, nor does this Court find the award to be ambiguous.
Accordingly, plaintiffs' second and fourth causes of action
fail to state claims upon which relief can be granted.
Plaintiffs fifth and sixth causes of action are brought under
CPLR 7511(c)(1) and (3) and seek modification of the award,
pursuant to the court's "equity powers," for mathematical
miscalculation, patent ambiguity, and imperfection in form.
Complaint ¶¶ 42-62.*fn5 Plaintiffs ask this Court to exercise
its "equity powers in the safeguarding and protection of the
public against unfair, abusive, fraudulent, antitrust-violating
and/or calussed [sic] act(s) and treatment of the lay-public by
brokerage houses . . . involving federally-created antitrust
law with treble damages . . . and the FRCP 60(b) fraud."
Plaintiffs' Memo at 30. Plaintiffs assert that the record
reveals violations of federal antitrust law, violations of the
NASD Rules, violations of the Fair Trade Commission Act, and
fraud. They argue that Fed.R.Civ.P. 60(a) and (b) provide bases
for relief and that modification is appropriate "based on the
face of the record and evidence thereof, not changing the
merits and not requiring further hearing." Plaintiffs Memo at
23-25, 29-31, Complaint ¶ 62.
The alleged miscalculation, imperfection and/or ambiguity
identified by plaintiffs is that the arbitrators found that
plaintiffs incurred actual damages of $17,500, while plaintiffs
contend that they incurred actual damages of $49,970 exclusive
of costs, expenses, and interest — a claim rejected by the
panel. Complaint ¶ 59. The modification sought pursuant to CPLR
7511 would affect the substantive rights of the parties and
reflects an attempt to revisit the merits of the arbitrators'
award. CPLR 7511(c) does not permit a modification of an
arbitration award that affects the substance of an award,
rather than merely correcting an error in form. See Seafarer,
112 A.D.2d 412, 492 N.Y.S.2d 72.
Plaintiffs' Complaint refers to modification available under
Fed.R.Civ.P. 60(b) for "mistake(s), inadvertence, surprise or
excusable neglect, fraud, void judgment, and the like."
Complaint ¶ 10(b). Defendant asserts that the text of Rule 60
does not authorize a party to obtain judicial relief from an
award of an arbitration panel. Defendant's Reply Memo at 8.
Neither Rule 60 per se nor, for that matter, any other of the
Federal Rules of Civil Procedure was ever designed to apply to
proceedings in other than the United States District Courts.
Fed.R.Civ.P. 1; Washington-Baltimore Newspaper Guild, Loc. 35
v. Washington Post Co., 442 F.2d 1234, 1239 (D.C. Cir. 1971).
In Washington-Baltimore Newspaper Guild, the Court of Appeals
for the District of Columbia Circuit stated, "[W]e think that
neither Rule 60(b) nor any judicially constructed parallel
thereto was meant to be applied to final arbitration awards."
442 F.2d at 1239. In an appeal from an order under Rule 60(b)
setting aside an arbitration award, the Court of Appeals for
the Seventh Circuit reversed the judgment of the lower court,
finding that the defendant-appellee had failed to show that the
neutral arbitrator had violated the ethical and legal standards
for arbitrators and that such violation created a substantial
danger of an unjust result. Merit Ins. Co. v. Leatherby Ins.
Co., 714 F.2d 673 (7th Cir. 1983). While not squarely
addressing the availability of Rule 60 to set aside a final
arbitration award, the decision implies that in certain
circumstances an arbitration award may be set aside pursuant to
In Cook Chocolate Co. v. Salomon Inc., 748 F. Supp. 122, 125
(S.D.N.Y. 1990), ruling on a motion to overturn an arbitration
award under Rule 60(b), this Court, per Sweet, D.J., stated:
Under Rule 81(a)(3), the rules are extended to
cover arbitration proceedings "only to the extent
that matters of procedure are not provided for in"
the Federal Arbitration Act, 9 U.S.C. Because a
motion to vacate an award falls within the scope
of "matters of procedure," and because 9 U.S.C. § 9
explicitly provides for this relief, Rule 60(b)
is unavailable . . . in contesting the arbitrators'
Article 75 of the CPLR is substantially similar to the Federal
Arbitration Act, 9 U.S.C. § 1-14. By analogy, we find that
because plaintiffs' prayer to set aside the award pursuant to
Rule 60 falls within the scope of "matters of procedure" and
because such relief is explicitly provided for in CPLR § 7511,
Rule 60 is likewise unavailable to contest the arbitrators'
Even if Rule 60 were available to provide relief from an
arbitration award, modification under Rule 60(a) would be
inappropriate, it not appearing that the award rendered by the
arbitrators was a clerical, mathematical, or other clearly
demonstrable mistake, oversight or omission subject to
correction under Rule 60(a). Rule 60(a) is not a vehicle for
relitigating matters that have already been litigated and
decided. See Ferraro v. Arthur M. Rosenberg, Co., 156 F.2d 212
(2d Cir. 1946). Rule 60(b) is likewise inapplicable in the
present context. Plaintiffs fail to set forth any facts
pointing out in any way that there was any mistake,
inadvertence, surprise, or excusable neglect justifying relief
from the arbitrators' judgment. Plaintiffs do not allege
inequities in the arbitration proceedings but merely attempt to
relitigate the merits of the case. It does not appear that the
fraud charged "really prevented the complaining party from
making a full and fair defense." Biotronik Messund
Therapiegeraete GmbH & Co. v. Medford Medical Instrument Co.,
415 F. Supp. 133, 138-39 n. 15 (D.N.J. 1976) (citing Toledo
Scale Co. v. Computing Scale Co., 261 U.S. 399, 421, 43 S.Ct.
458, 463, 67 L.Ed. 719 (1923). Nor is the judgment void, it not
appearing that the arbitrators lacked jurisdiction to hear the
dispute or that they acted in a manner inconsistent with due
process of law. This Court is not persuaded that the grounds
enunciated by plaintiffs or the interests of justice require us
to set aside the arbitration award under Rule 60. Hence,
plaintiffs' fifth and sixth causes of action fail to state
claims upon which relief can be granted.
In their complaint before this Court, plaintiffs allege
violations of the Lanham Act, 15 U.S.C. § 1051 et seq., as
providing a basis for federal court jurisdiction over their
claim. Complaint ¶ 3. The alleged Lanham Act violations were
not included in the plaintiffs' Statement of Claim before the
arbitration panel and thus could not have been considered by
it. Plaintiffs' complaint neither alleges any facts
establishing a cause of action for violation of the Lanham Act,
nor makes a prayer for relief under it. Accordingly, in their
allegation of Lanham Act violations plaintiffs fail to state a
claim upon which relief may be granted.
Plaintiffs' pro se complaint incorporates by reference all of
the exhibits attached thereto.*fn6 In accordance with the rule
that pro se pleadings be liberally construed, Haines v. Kerner,
404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972), this Court
finds that plaintiffs, by incorporating the exhibits by
reference, intended that the claims made in such exhibits be
realleged. In Exhibit B to the Complaint, Plaintiffs' Statement
of Claim before the MSRB, and in Exhibit D to the Complaint,
Supplemental Pleadings to the Statement of Claim, plaintiffs
allege violations of the Sherman Act, 15 U.S.C. § 1-7, the
Clayton Act, 15 U.S.C. § 12-27, and the Federal Trade
Commission Act, 15 U.S.C. § 45-58. Plaintiffs' Statement of
Claim and the Amended Statement of Claim show that
issues of antitrust, unfair competition, fraud, and violations
of the Federal Trade Commission Act were fully presented to the
arbitrators and submitted to them for their final decision. The
arbitrators' decision was rendered on December 11, 1989, and
reveals that the arbitrators declined to state reasons for
Plaintiffs point out that the MSRB decision and award
document nowhere distinguish nor recognize explicitly
plaintiffs' allegations of fraud, unfair practices and
violations of the Federal Trade Commission Act.*fn8
Plaintiffs' Memo at 39. Plaintiffs would have this Court
conclude that the arbitrators' silence with regard to these
claims compels a finding that the panel ignored the issues.
"[T]he absence of express reasoning by the arbitrators [does
not] support the conclusion that they disregarded the law."
Stroh Container Co. v. Delphi Industries, Inc., 783 F.2d 743,
750 (8th Cir.) cert. denied, 476 U.S. 1141, 106 S.Ct. 2249, 90
L.Ed.2d 695 (1986). It is well settled that arbitrators are not
required to disclose or explain the reasons underlying the
award. United Steelworkers of America v. Enterprise Wheel & Car
Corp., 363 U.S. 593, 598, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424
(1960). "[T]o allow a court to conclude that it may substitute
its own judgment for the arbitrator's whenever the arbitrator
chooses not to explain the award would improperly subvert the
proper functioning of the arbitral process . . ." Stroh, 783
F.2d at 750 (citing Sobel v. Hertz, Warner & Co.,
469 F.2d 1211, 1215 (2d Cir. 1972)). As a matter of public policy, the
merits of an arbitration award are beyond judicial review.
Integrated Sales, Inc. v. Maxell Corp. of America, 94 A.D.2d 221,
463 N.Y.S.2d 809 (1st Dep't 1983). This Court will not
second-guess the arbitrators' decision absent a showing of
facts supporting modification or vacation of the arbitration
Under the doctrine of res judicata, a valid judgment on the
merits bars a second suit based on the same cause of action
Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct.
645, 649 n. 5, 58 L.Ed.2d 552 (1979), and "precludes the
parties or their privies from relitigating issues that were or
could have been raised." Federated Department Stores, Inc. v.
Moitie, 452 U.S. 394, 398, 101 S.Ct. 2424, 2428, 69 L.Ed.2d 103
(1981). Although some arbitration proceedings have been given
preclusive effect, the Supreme Court has been unwilling to hold
that arbitration proceedings are always entitled to res
judicata or collateral estoppel effect. Cullen v. Paine Webber
Group Inc., 689 F. Supp. 269, 276 (S.D.N.Y. 1988). In McDonald
v. City of West Branch, 466 U.S. 284, 104 S.Ct. 1799, 80
L.Ed.2d 302 (1984), and Dean Witter Reynolds Inc. v. Byrd,
470 U.S. 213, 105
S.Ct. 1238, 84 L.Ed.2d 158 (1985), the Court cautioned that, in
fashioning preclusion rules for arbitration proceedings, the
nature of the federal rights involved and the protection
afforded them in an arbitration must be considered. This Court
concludes that awarding preclusive effect to an arbitration
award which, "in full and final resolution of the issue
submitted for determination," rejected unfair competition and
antitrust claims does not undermine the purposes of the Federal
Trade Commission Act or the Sherman or Clayton Acts,
particularly in view of recent Supreme Court decisions which
reflect increased recognition of the federal policy favoring
arbitration and a retreat from the American Safety doctrine.
See Cullen v. Paine Webber Group, 689 F. Supp. at 277 (decision
of arbitration panel addressing the predicate acts underlying
RICO claims may be given preclusive effect, providing the
elements necessary for preclusion are satisfied); see also
Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 855 (2d Cir.
1987) (holding that unfair competition claims are arbitrable);
Gemco Latinoamerica, Inc. v. Seiko Time Corp., 671 F. Supp. 972
(S.D.N.Y. 1987) (concluding that domestic antitrust claims are
subject to arbitration). Plaintiffs cannot here relitigate the
merits of rejected antitrust, fraud, and unfair trade practices
claims because the arbitrators' rejection of these claims has a
preclusive effect on further litigation.
Plaintiffs' seventh cause of action seeks vacation of the
award as provided in CPLR 7511(b). Complaint ¶¶ 64-65. An
arbitration award may be vacated only upon the grounds
enumerated in the statute. Materia v. Josephthal & Co.,
133 A.D.2d 146, 518 N.Y.S.2d 814 (2d Dep't 1987); Sweeney v. Herman
Management, Inc., 85 A.D.2d 34, 447 N.Y.S.2d 164 (1st Dep't
1982). See also Dundas Shipping & Trading Co. v. Stravelakis
Bros., Ltd., 508 F. Supp. 1000, 1003-04 (S.D.N.Y. 1981). Hence,
the exclusive grounds for vacating an arbitration award are
limited to fraud or misconduct in procuring the award,
arbitrator partiality, arbitrator's abuse of power, or denial
of procedural due process. Integrated Sales, Inc. v. Maxell
Corp. of America, 94 A.D.2d 221, 463 N.Y.S.2d 809.
Plaintiff alleges none of these grounds in support of his
request to vacate the award. Instead, plaintiff alleges, that:
[T]his Court must vacate the award-judgment and
remand/remit the proceedings back to the MSRB for
rehearing before a different arbitration panel, on
the grounds that the award being patently
imperfectly executed and irrational and devoid of
reasoning or explanation in the award document, in
light of prior arbitrators having refused to
modify in response to Claimants (Plaintiffs) prior
Petition to modify and correct, and in the light
of the arbitrators having denied the Claimants's
[sic] petition (motion).
Complaint ¶ 64. Plaintiffs also ask this Court to vacate the
award on the grounds that: