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May 20, 1998

DANIEL M. PORUSH, Plaintiff, against CLAIRE LEMIRE, as executrix of the Estate of RAYMOND C. LEMIRE, and MANAGEMENT REALTY CORPORATION, Defendants.

The opinion of the court was delivered by: WEXLER


 WEXLER, District Judge

 Plaintiff Daniel M. Porush moves for an order pursuant to the Federal Arbitration Act, 9 U.S.C. § 10, vacating an arbitral award against him. Plaintiff contends that the award is unsupported by any record evidence and that the arbitrators acted in excess of their powers and in manifest disregard of the law. Because these contentions are meritless, we deny plaintiff's motion and grant defendants' cross-motion to confirm the award. The Court's jurisdiction is based on diversity between the New York plaintiff and the New Hampshire defendants.


 At all relevant times, Daniel M. Porush was president of Stratton Oakmont, Inc., ("Stratton Oakmont"), a New York-based brokerage firm and member of the National Association of Securities Dealers ("NASD"). *fn1" On or about July 27, 1994, the individual defendant's decedent, Raymond C. Lemire, opened a securities account with Stratton Oakmont and executed a Customer Agreement (the "Agreement") with Stratton Oakmont's clearing broker, Adler, Coleman Clearing Corporation.

 Two clauses of the Agreement are pertinent here. Through a choice-of-law clause, the parties agreed that all controversies arising under the Agreement "shall be governed by and construed, and the substantive rights and liabilities of the parties determined, in accordance with the laws of the State of New York." (Unger Aff. P 13.) Through an arbitration clause, the parties further agreed that all controversies under the Agreement would be determined by arbitration to be held in accordance with the rules of either the New York Stock Exchange or the NASD. On or about August 16, 1994, Management Realty Corporation ("MRC"), of which Lemire was sole owner, opened an account at Stratton Oakmont. Lemire, in his capacity as MRC's president, signed a Customer Agreement identical to the one he signed upon opening his individual account. Lemire and MRC ("Lemire/MRC") stopped trading with Stratton Oakmont in September 1994.

 On or about August 3, 1995, Lemire and MRC initiated an arbitration against Stratton Oakmont and three individual respondents, one of whom was Porush, by filing a Statement of Claim and a Uniform Submission Agreement with the NASD. *fn2" Lemire/MRC claimed that the arbitral respondents failed to disclose Stratton Oakmont's extensive disciplinary problems with the SEC and NASD, recklessly or intentionally misrepresented the stocks in which Lemire/MRC traded and in which Stratton Oakmont was a marketmaker, conducted unauthorized trading in the Lemire/MRC accounts, and illegally froze the Lemire/MRC accounts. The claimants sought $ 602,500 in compensatory damages, and $ 1,397,500 in punitive damages, treble damages, costs, interests, and attorneys' fees.

 On August 10, 1995, Porush consented to submit the dispute to arbitration. On October 3, 1995, the law firm of Tenzer, Greenblatt, representing Porush and the other arbitral respondents, filed an answer and motions to dismiss the arbitral claim. The answer denied the material allegations in the Statement of Claim and asserted as affirmative defenses that punitive damages and attorneys' fees could not be awarded in the arbitration pursuant to New York law. The motion sought to dismiss all claims against Porush on the ground that the Statement of Claim failed to allege any wrongdoing by him, and to dismiss the punitive damages and attorneys' fees claims against all respondents on the ground that New York law does not permit such awards to be made in arbitration. The arbitration panel denied the motions to dismiss.

 On or about February 5, 1996, nearly a year before the arbitration hearing took place, Porush was on notice that punitive damages might be awarded against him -- a federal district court, presented with facts virtually identical to those here and relying on the Supreme Court's decision in Mastrobuono v. Shearson Lehman Hutton, 514 U.S. 52, 131 L. Ed. 2d 76, 115 S. Ct. 1212 (1995), confirmed an arbitration award of punitive damages against Porush made by an NASD panel. See Greening v. Stratton Oakmont, Inc., 1996 U.S. Dist. LEXIS 1483, No. 95-4288, 1996 WL 61095 (N.D. Cal. Feb 5, 1996), aff'd, 1997 U.S. App. LEXIS 9671 115 F.3d 1241 (9th Cir. 1997). The court specifically rejected Porush's argument, virtually identical to the one he raises here, that New York law bars the arbitral award of punitive damages. Id. at *4.

 The arbitration hearing took place on January 13, 1997. Although Tenzer, Greenblatt had withdrawn as Porush's counsel approximately one month earlier, Porush did not seek an adjournment or, as far as may be discerned from the record, attempt to communicate with either Lemire, Lemire's attorneys, or the NASD panel to advise them of this development. Porush did not attend the January 13 hearing, nor did any representative appear on his behalf. Porush did not submit any evidence to the panel after the hearing, nor does it appear that he communicated with the panel between the date of the hearing and March 12, 1997, the date the arbitration decision was rendered. On April 17, 1997, Porush, once again represented by Tenzer, Greenblatt, filed this motion to vacate.


 The Federal Arbitration Act embodies a strong presumption in favor of enforcing arbitration awards. Wall Street Assocs., L.P. v. Becker Paribas Inc., 27 F.3d 845, 849 (2d Cir. 1994) (citing Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983)); see 9 U.S.C. § 9 (court "must grant . . . an order [confirming an arbitration award] unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title"). Consequently, "'arbitration awards are subject to very limited review in order to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation.'" DiRussa v. Dean Witter Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997) (quoting Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997)), cert. denied, 118 S. Ct. 695 (1998); see also Koch Oil, S.A. v. Transocean Gulf Oil Co., 751 F.2d 551, 554 (2d Cir. 1985) ("limited review necessary for arbitration to serve as quick, inexpensive, informal means of private dispute resolution).

 An arbitration award subject to review under the Federal Arbitration Act may be vacated where the arbitrators were guilty of misconduct or any other misbehavior by which the rights of any party have been prejudiced, or where the arbitrators exceeded their powers. 9 U.S.C. § 10(a)(3), (4). Additionally, courts have provided that an award may be vacated if rendered in manifest disregard of the law. See, e.g., DiRussa, 121 F.3d at 821; Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933 (2d Cir. 1986). However, judicial inquiry under the "manifest disregard" standard is extremely limited:

The error must have been obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator. Moreover, the term "disregard" implies that the arbitrator appreciates the existence of a clearly governing principle but decides to ignore it or pay no attention to it.

 Bobker, 808 F.2d at 933-34.

 The party seeking to vacate an arbitration award bears the burden of establishing one of the grounds for relief and the showing required to avoid summary confirmation of the award is high. Standard Microsystems, 103 F.3d at 12. An award will not be vacated if there is even a "barely colorable justification" for the outcome reached, Landy Michaels Realty Corp. v. Local 32 B-32J, 954 F.2d 794, 797 (2d Cir. 1992), even if the award is based on an error of fact. Standard Microsystems Corp., 103 F.3d at 13; Conntech Dev. Co. v. University of Conn. Educ. ...

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