John J. Glennon, Jr. v. Dean Witter Reynolds, Inc.

132 (N.D.Cal.1992) 1261, 1989, F.Supp. judice. sub the matters of the outcome ems Id., at -, pain and recovery for decedent’s (permitting - U.S. 116 S.Ct. at 636. In theory the Warsaw that suffering the on Zicherman, held that Supreme the Court action for of provides a cause Convention exclusive it is the applies,

where DOHSA doubt that is no serious damages), there wrong such in the recoverable damages of source for such provide not does DOHSA itself Id. claims. ful death damages. Zicherman, form of - U.S. at permits Finding that DOHSA Despite -, at 636-637. 116 S.Ct. that held damages, Zicherman pecuniary was not Zicherman Court fact that being “pecuni damages, society not of loss allowing a of propriety to address asked under DOHSA. recovered ary,” not be could 4, award, at n. see id. suffering pain and at -, In accordance S.Ct. Id. 4, principle n. we think at 636 116 S.Ct. the district holding, we reverse that with insuperable ob constitutes of Zicherman damages. of such court’s suffering pain and of to an award stacle grief recoverability survivor’s of As to the damages&emdash;clearlynon-pecuniary damages- DOHSA, Thus, we note same reasons damages under for the cases. in these directly damages, address this we Supreme grief did Court the survivor’s reversed however, any cannot, perceive suffering pain of and issue. We the award reverse now Court Zicherman distinction of damages. permit us to that would approved have

would of non- recovery of one sort conclude that III. society, damages, such as loss pecuniary reasons, we REVERSE forgoing For the DOHSA, sorts of other whereas precluded REMAND court and of the district the order damages, as survivor’s such non-pecuniary with this consistent entry judgment for therefore, We, hold that it not. grief, are opinion. court to the district error for was reversible grief. See damages for survivor’s permit

id. society and hold that loss

Because we available, we grief awards are not survivor’s argu- KAL’s alternative need not consider financially-de- only spouses and ment that Jr., GLENNON, J. John awards. may recover such pendent relatives Plaintiff-Appellee, C. INC., REYNOLDS, DEAN WITTER court’s award district also reverse the We Defendant-Appellant. suffering of pain and for have been Although such awards

decedents. No. 95-5257. under DOH- recovery awards engrafted onto Appeals, States Court of United theories, see different pursuant to several SA Circuit. Sixth 777, Warren, F.2d e.g., Solomon (5th recoveiy Cir.1976) for dece (permitting 28, 1996. Argued March theory suffering pain on dent’s 6,May Decided action such provides a cause of state law dismissed, 434 U.S. damages), cert. Rehearing Suggestion for Rehearing and (1977); Favaloro v. 54 L.Ed.2d 15, 1996. July En Banc Denied Gate, F.Supp. Golden S/S (N.D.Cal.1987) recovery for dece (permitting theory that suffering on the pain dent’s a cause of provides law

general maritime re Air Crash damages); In action for such Honolulu, Haw., Feb. Disaster Near Brecher, Liddle, Lid- A. Ethan

Jeffrey L. Robinson, New O’Connor, dle, Finkelstein & Glennon, Jr. City, for John J. York DC, Brooks, Na- Washington, Betty G. Dealers, Inc., Securities Association tional curiae. amicus Baker, Donelson, Barrow, Clisby Hall Nashville, TN, Caldwell, Vincent & Bearman Bowen, Jay LaGreca, City, S. York New J. Jacobson, Nash- Bowen, Riley, Warnoek Reynolds, Inc. ville, TN, Witter for Dean WELLFORD, KENNEDY, Before: MOORE, Judges. Circuit KENNEDY, J., opinion of delivered J., MOORE, joined. court, in which WELLFORD, 139), (p. delivered J. concurring opinion. separate KENNEDY, Judge. Circuit Inc., Reynolds, Defendant, Witter Dean denying its order District Court appeals a adju- arbitration decision to vacate an motion plaintiff, with John Glen- dicating disputes its claims non, employee. former Defendant in manifest panel the arbitration acted policy public law and disregard of Tennessee dam- plaintiff defamation it awarded when judicial limited federal ages, and that arbitrators’ review process clause of the due damages violates reasons set For Amendment. the Fifth below, we AFFIRM. forth

Facts I. dealer,

Defendant, employed a securities manager of Nashville its plaintiff as branch of a him as result terminated office and position as a In his dispute. compensation broker, producing plaintiff was entitled to grounds and Glennon filed a cross-motion $2,500 expense stipend. annual Defendant to deny Dean Witter’s motion to vacate and inadvertently deposited that amount into to confirm the Despite award. defendant’s plaintiffs account monthly Septem- between objections, the District Court confirmed the ber May Although of 1991. plaintiff acknowledged that those amounts appeal, (1) On Dean argues Witter $2,500 overpayments excess of were to which panel acted manifest disregard entitled, he was not he refused to return the of the law when it failed afford the defam- money, claiming them against as a set-off atory statements on the Form U-5 an abso- monies allegedly owed him for a (2) privilege; lute acted finder’s fee and a recruitment bonus. As- in manifest disregard of the public law and serting entitlement to the finder’s fee and policy when it plaintiff awarded defamation bonus, 1991, recruitment of August plain- (3) and, damages; the District Court’s limit- tiff commenced an proceeding ed review of the arbitrators punitive against by filing of Statement damages violates process due clause of Claim with the National Association of Secu- the Fifth brief, Amendment. In his (“NASD”), rities Dealers the self-regulatory asks this Court to award him attorney fees (“SRO”) organization of which defendant was and costs for what alleges he is a “frivolous a member. appeal.” discharged plaintiff Defendant in October 1991, of and in November of completed 1991 II. Discussion U-5, and filed a Form Uniform Termination A. Notice for Standard of Industry Registration, Securities Review with accordance NASD rules. The form reviewing When a district court’s de inquired whether the terminated individual cision to vacate or confirm an arbitration was “under internal review or fraud award, we findings review of fact for clear wrongful taking property, of or violating in- questions error and law de novo. Merrill statutes, vestment-related regulations, rules Pierce, Lynch, Smith, & Fenner Inc. v. Ja industry or standards of conduct.” In re- ms, 418, (6th Cir.1995) 420 (citing sponse question, to this defendant answered — Options First Chicago, Kaplan, Inc. v. “yes.” -, -, U.S. 1920, 1926, 115 131 Subsequently, plaintiff (1995)). amended his arbi- L.Ed.2d demand, tration alleging that defendant de- A may federal court set aside an famed him maliciously making the false arbitration award under Federal Arbitra “yes” answer on the Form U-5. Plaintiff (“FAA”), tion 10, § Act 9 U.S.C. when sought compensatory and certain statutory judicially or created as well as directing an order defendant to grounds presented. are Lynch, Merrill amend the Form U-5. Pierce, Smith, Fenner & at F.3d An NASD arbitration ruled that provides The FAA statutory several bases plaintiff was entitled to the finder’s fee and upon may which a court vacate an arbitration recruitment bonus. It further found that the states, It part: relevant statements explaining Glennon’s termination (a) any In following cases the in the Form U-5 defamatory were and States United court and for the district $728,250 awarded him in compensatory dam- wherein the award was may made make an $750,000 ages, in punitive damages, and vacating upon order applica- award $213,000 in attorney fees. It also ordered any party tion of to the arbitration— Dean Witter to amend the Form U-5 so toas (1) Where procured by the award was remove the explanation of Glen- corruption, fraud, or undue means. non’s termination replace it with an ex- n planation he (2) had been terminated aas Where partiality there was evident result of a compensation dispute. Dean corruption arbitrators, Wit- or in the or ei- ter moved to vacate the award a number of them. ther investigatory or preliminary even to (3) guilty attaches were the arbitrators Where proceeding, the stages of an administrative refusing postpone misconduct in absolutely privileged. Id. Form U-5 shown, hearing, upon cause sufficient is not New York at 685. Because N.Y.S.2d pertinent refusing to hear evidence or in case, find of law in this proper choice controversy; or of material to the Inc., Stem, persuasive is not Herzfeld misbehavior other authority. preju- any party have been rights of

diced. cases, question a District federal (4) entertaining pendent exceeded state claims the arbitrators Court Where of law rules of imperfectly executed follow the choice powers, or so should Orioles, final, Inc. v. Ma mutual, Baltimore and definite forum state. them that Ass’n, Players F.2d League Baseball jor subject matter submit- upon the denied, (7th Cir.1986), 480 U.S. cert. made. ted was not (1987); L.Ed.2d 782 107 S.Ct. (5) is vacated and an award Where Co., Mfg. Elec. Klaxon Co. v. Stentor see agreement which the time within 1021-22, 487, 496, 61 S.Ct. U.S. has not award to be made required the (1941) that, diversity (holding in L.Ed. 1477 discretion, may, in its expired the court cases, applied the conflict of law rules the rehearing by the arbitrators. direct of the must conform to those federal court indi- § 10. circumstances Absent 9 U.S.C. sits); v. also Baravati in which it see state process was cating that Inc., Ross, Josephthal, Lyon 28 F.3d & fraud, corruption, or arbitrator tainted Cir.1994) (7th (finding appropriate it misconduct, may also vacate court a federal law, not a federal apply state defamation “in manifest disre- awards made defamation, in cases that are common law of Pierce, Lynch, law.” Merrill gard of the under the and then reviewed arbitrated Smith, (quoting at 421 Fenner & FAA). is the forum Because Tennessee Swan, 427, 74 U.S. Wilko state, properly held the District Court (1953)). manifest disre- The 98 L.Ed. 168 princi analysis of Tennessee choice-of-law an narrow; very gard the law standard is ples required to determine what state’s law is applica- interpretation in or error “[a] mere applied plaintiffs defamation should be Rather, the is insufficient. tion of the law claim. clearly fly es- must in the face decision choice of law rules dic Tennessee Lynch, legal precedent.” Merrill tablished apply courts the law of tate that Tennessee Smith, Pierce, F.3d at 421 & Fenner significant with the most relation the state omitted). (citation panel An arbitration parties. Hat ship occurrence and the to the law if the disregard of the acts in manifest (Tenn. McKinley, away v. 830 S.W.2d and well- applicable legal principle is clear 1992). state has the To determine which legal to follow that settled and it refuses significant relationship to the occur most principle. Id. parties, courts con and the Tennessee rence in those factors listed sider Restatement Privilege Form U-5 B. Afforded the (1971): § (Second) of Laws of Conflict ar first contends that the Defendant occurred, (a) injury place where the disregard of in manifest bitration acted (b) causing place the conduct where it failed to afford its statements the law when occurred, injury privilege. De Form U-5 an absolute (c) residence, domicil, nationality, argues federal law re fendant that because place of incorporation and busi- place of U-5, it file the Form quired Dean Witter to parties, and ness of the absolutely privileged communication. was an (d) relationship, if place where the argument, of its Dean Witter parties centered. any, between the Beck, Stem, relies on Inc. Herzfeld Id.; Hataway, see 830 S.W.2d (1991). In that A.D.2d 572 N.Y.S.2d law, case, examining all the facts of this the court interpreting New York After Court, ease, conclude, the District privilege we as did concluded that an absolute because action, applies that Tennessee law to this for the Form U-5 is entitled to an absolute significant most privilege Tennessee has the relation- turns on part whether it is of a ship underlying judicial to the facts the defamation or proceeding. administrative parties’ claim and to the in involvement assigns Securities law quasi- the NASD forming events the basis of the claim. The judicial responsibilities of self-regulating plaintiff employed by in was its exchanges stock and dealer associations in Thus, relationship Nashville office. was the over-the-counter markets. See 15 U.S.C. Moreover, plaintiff centered Tennessee. § 78o-3. U-5, The submission of a Form domiciled Tennessee at the time of however, part is not quasi- of the NASD’s occurrences form the basis of his defa- judicial regulatory process. Baravati, See mation claim and he continues to live in Although F.3d at 708. the Form U-5 can Furthermore, per- Tennessee. the evidence trigger investigation an of a member or bro defamatory mitted the conclusion that may ker and be used as evidence a disci Tennessee; published statements were plinary proceeding, part judicial it is not of a publication statements proceeding. Id. Because the Form U-5 is it difficult made to obtain em- merely preliminary investigatory or formal ployment Finally, in Tennessee. the infor- ity, part quasi-judicial of the NASD’s mation recorded on the Form U-5 was ob- regulatory process, we conclude that under plaintiffs supervisor tained from who was Tennessee law the statements contained located in Nashville. Since Tennessee was therein are privi not entitled to an absolute law, proper proceed choice of to con- lege. (stating See id. that “[t]o insulate the sider whether Tennessee law affords state- liability members from for the contents of privi- ments on the Form U-5 absolute their U-5s would be tantamount allowing lege. member of the NASD to blackball a former employee employment from throughout recognizes Tennessee law that large industry sector of the that the member pertinent statements relevant and to issues ship of the association constitutes” and con- in, pending of, judi and made in the course cluding that under Illinois law the Form U-5 proceedings cial and administrative cannot is not entitled to an privilege); absolute Fah suit; form the basis of a defamation those Co., Wattman, nestock & Inc. v. absolutely privileged. statements are Lamb (2d Cir.) 512, (assuming that under New Serv., din Griffith, Funeral Inc. v. York law the Form U-5 is entitled to a 791, (Tenn.1978). S.W.2d This absolute qualified denied, privilege), cert. 502 U.S. however, privilege, pre not does extend to 942, 380, (1991). 112 S.Ct. 116 L.Ed.2d 331 liminary investigatory stages or of adminis Therefore, panel’s failure to proceedings; trative afford the statements on the Form U-5 an [t]o hold the privi- doctrine [absolute] privilege absolute was not in manifest disre lege applicable investigatory to situations gard of Tennessee law. especially very preliminary [those] so ...— give nature —would be to to license Damages C. Defamation those with ill will and malice toward others Next, argues that the ar to unmercifully simply by harass them ad- presumed bitration award actual dressing vituperative to comments punitive damages disregard and in manifest governmental law enforcement or other in- law, of the First Amendment and Tennessee vestigatory authorities. and in public policy. violation of Tennessee (Tenn. Bailey, Moore v. 628 S.W.2d Defendant claims that the arbitration record Ct.App.1981); Spain Connolly, see does not reputation establish that Glennon’s (Tenn.Ct.App.1980) S.W.2d (holding damaged any pecuni or that he suffered judicial that privilege or administrative does ary special damages or as a result of the protect preliminary investigatory not alleged defamation. alleging police statements misconduct made authority to someone discipline law, without or Under Tennessee the defama Thus, discipline imposed). review whether tion prove damages; must actual by punitive damages afforded award of them. Emerson presume may not court (Tenn.Ct.App. right to Garner, FAA its Fifth Amendment violates 732 S.W.2d 1987). found that Court District Court re- process The District due of law. The draw a was “entitled to process claim on the jected appellant’s arbitration due compensatory dam voluntary inference appellant reasonable was a bases that testimony Mr. that Glennon ages from proceedings participant to the arbitration job on to obtain another able he has been panel was not and that the NASD arbitration previ had he been at which the same level further actor. The District Court a state that the District find ously employed.” We do not share stated that because arbitrators in its conclusion that not err did Court defendants, juries’ against big business bias finding supported a that record arbitration pu- meaningful judicial review of arbitrators’ on the Form U-5 statement unnecessary. damage We nitive awards is damages. precipitated Glennon’s conclude that this case defendant too pan- of the arbitration proceedings, plain- not entitled to review During the arbitration beyond pro- punitive damage industries’ use of the securities el’s tiff described FAA, hiring He testi- by decisions. but do so for reasons the Form U-5 vided experience, which included the District fied that his than those offered other manager, employers experience as a branch Court. employees regularly potential investigating it position In of its is entitled fact, system. data consult the Form U-5 pan meaningful review of the is the means the Form U-5 award, damage punitive el’s defendant relies employment clearing- “administers NASD — Co., Oberg, on Honda Ltd. v. Motor By revealing the reason for the ter- house. U.S. -, L.Ed.2d 336 114 S.Ct. mination, gives members of the form other (1994). ease, argued petitioner In that potentially valuable informa- the association Oregon jury punitive dam that an availability suitability concerning the tion process ages violated the due clause of the Baravati, 28 F.3d potential employees.” jury’s because the Fourteenth Amendment Therefore, repre- when terminated damage award was excessive and of a member NASD seeks sentative Oregon prohibited statute because state member, mat- another as a employment with correcting courts from excessive verdicts. potential employ- industry practice, ter of challenged permitted Oregon The statute Form U-5 database. er consults the a new trial in the absence of courts to order Furthermore, plain- reflected the record damage any supporting punitive evidence job comparable to inability to obtain tiffs However, prohibited it the courts award. The arbi- held at Dean Witter.

that that he litigant if chal providing from relief reasonably inferred that could have trators lenged punitive damage of the the amount publica- difficulty attributable to the at -, award. Id. S.Ct. Rea- Form U-5. tion of the judges soning that under the common law proceedings pre- the arbitration Because traditionally punitive size of reviewed the publication of of sented evidence arbitrary deprivations damage awards for of statements, damages, and a nexus between property, Oregon’s concluded that the Court defamatory statement publication of the statutory abrogation that common law plaintiff, damages and the suffered process. protection violated due Id. at panel’s compensato- award of the arbitration -, at 2337-39. damages in ry punitive was not manifest and, thus, disregard the law the District case, argue that this defendant does of those awards was not confirmation Court’s any support if to the com- there is evidence in error. pensatory damage award or if there is malice, support finding of evidence to that Damages and Punitive D. Due Process damage punitive award is excessive. Rather, argues that because the Finally, argues that defendant record contains no evidence judicial review of an arbitrator’s limited compensatory appeal separate and no evi- a frivolous file a motion re- “intentional, fraudulent, malicious, questing dence of that award. Because has conduct,” there is no basis for an motion, or reckless failed to request file such a his damages.1 award of See Dean Wit- denied. Reynolds, Inc.’s Memorandum of Law in

ter Support of Motion to Vacate Arbitration III. Conclusion Award Whole or Part 36-39. stated, For the reasons we AFFIRM the purposes For of this discussion we assume decision of the District Court. deciding process protections without that due case, therefore, proceed attach in this WELLFORD, Judge, Circuit concurring. meaning- consider whether the FAA affords ful review to claim defendant’s that no evi- Witter, This case is unusual because Dean supports panel’s puni- dence the arbitration principal NASD, one of the members of damage tive award. conclude that We requires which mandatory arbitration of em- disregard per- manifest of the law standard ployment disputes aegis under the punitive damage mits vacatur of those Commission, Exchange Securities and con- supported by awards that no are evidence. tends that he is entitled to have this court Since that standard of review would allow $750,000 punitive review the damage award awards, necessarily vacatur of those it is process únder a due standard. Dean Witter meaningful review of claims that no evidence also compensatory asserts that the supports panel’s punitive an arbitration dam- $728,500to Glennon for defamation constitut- age award. ed disregard a manifest of the law

Because we conclude that the FAA does required was not meaningful fact afford review of the defen- legal set out a factual or basis for its various dant’s claims here that supports no evidence determinations. It is experience our normal panel’s punitive damage the arbitration party that the non-NASD is the one chal- award, defendant is not in need of review of lenging the actions of a NASD arbitration punitive damage the arbitrators’ award be- panel.1 Therefore, yond provided by the FAA.2 thoughtful analy- The district court amade affirm the District Court’s confirmation of sis of the dispute. number issues panel’s punitive damage judge The district confirmed the award and it, right concluding Glennon’s to enforce applied Tennessee law should be under the Attorneys

E. Fees and Costs agree majority circumstances. I with the that this was not an erroneous determination. Finally, plaintiff argues appeal that this is agree I making filing also that the out and requests attorney frivolous and fees and Fed.RApp.P. form, the U-5 which was the basis of the costs under 38. Rule 38 re- claim, subject quires party defamation was not to the seeking that a fees and for costs and, attach, process protections 1. The District Court did review the issue of mal- if due whether disregard provides meaningful judicial ice under the manifest the law stan- the FAA review of appear punitive damage dard. It does not that defendant chal- the amount of a stead, In- lenges appeal finding questions the District Court’s we leave those for a case in necessary disposi- evidence of malice. resolution is for tion. light 2. FAA our conclusion that the does in pointed by “[h]aving fact afford defendant's claim that no evidence 1. As out the district court: supports panel’s punitive damage enthusiastically welcomed the enforcement of review, arbitrate, meaningful unnecessary agreements industry it is the securities might expected encourage us to decide whether NASD rules mandated de- be not to retrial of a claims, plaintiff's Corp. fendant's arbitration of wheth- case in federal & Rostad court" Rostad v. Research, panel governmen- Management er the NASD arbitration was a Investment 923 F.2d (9th Cir.1991). trigger process protections, tal actor so as to due privilege claim of absolute asserted Dean Dean is entitled to claim

Witter. Witter In re: CENTURY OFFSHORE qualified privilege in its statements in the MANAGEMENT CORPO- RATION, Debtor. Form U-5.2 separately I think it is a I write because PRODUCTION; Logistics Air GRASSO question as to whether Glennon ade close Incorporated, Appellants, necessary quately proved, as is under Ten law, damages his for defamation. No nessee INCORPORATED; BMO FINANCIAL longer damages presumed are defamation Montreal, Appellees. Bank of Garner, under Tennessee law. Emerson (Tenn.Ct.App.1987). Plaintiff 732 S.W.2d 613 No. 95-5492. injury required plead prove actual Appeals, United States Court of Memphis Publishing and causation Co. v. Sixth Circuit. (Tenn.1978).

Nichols, 569 Since S.W.2d effectively we cannot review the amount of April Submitted 1996. compensatory damages the award of award 7,May Decided arbitration, injury ed if actual has proven, precluded anything I been am from expression panel

but an of dictum that the damages exceeding awards of and fees were ly generous for circum Glennon under the

stances of this case.

Although I find the issue not to doubt, say be free of I cannot that there was no evidence to the awards this case. We are constrained to a narrow review standard, disregard” under the “manifest patently the arbitrators’ decision was not “so contrary legal precedent” to established Pierce, Lynch, set it Merrill aside. Fenner Jaros, (6th 418, 422 & Smith v. Cir.1995).

Accordingly, I concur in the decision. employer being deliberately intentionally maligning This is a case where Glen- wrong held liable because it was or mistaken in non the U-5. giving discharge; reasons for a it was held liable

Case Details

Case Name: John J. Glennon, Jr. v. Dean Witter Reynolds, Inc.

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Jul 15, 1996

Citation: 83 F.3d 132

Docket Number: 95-5257

Court Abbreviation: 6th Cir.