Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 5 (1995)

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Opinion of the Court

U. S. 213, 220 (1985). After determining that the FAA applied to the parties' arbitration agreement, we readily concluded that the federal statute pre-empted Alabama's statutory prohibition. Allied-Bruce, 513 U. S., at 272-273, 281-282.

Petitioners seek a similar disposition of the case before us today. Here, the Seventh Circuit interpreted the contract to incorporate New York law, including the Garrity rule that arbitrators may not award punitive damages. Petitioners ask us to hold that the FAA pre-empts New York's prohibition against arbitral awards of punitive damages because this state law is a vestige of the " ' "ancient" ' " judicial hostility to arbitration. See Allied-Bruce, 513 U. S., at 270, quoting Bernhardt v. Polygraphic Co. of America, Inc., 350 U. S. 198, 211, n. 5 (1956) (Frankfurter, J., concurring). Petitioners rely on Southland Corp. v. Keating, 465 U. S. 1 (1984), and Perry v. Thomas, 482 U. S. 483 (1987), in which we held that the FAA pre-empted two California statutes that purported to require judicial resolution of certain disputes. In Southland, we explained that the FAA not only "declared a national policy favoring arbitration," but actually "withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration." 465 U. S., at 10.

Respondents answer that the choice-of-law provision in their contract evidences the parties' express agreement that punitive damages should not be awarded in the arbitration of any dispute arising under their contract. Thus, they claim, this case is distinguishable from Southland and Perry, in which the parties presumably desired unlimited arbitration but state law stood in their way. Regardless of whether the FAA pre-empts the Garrity decision in contracts not expressly incorporating New York law, respondents argue that the parties may themselves agree to be bound by Garrity, just as they may agree to forgo arbitration altogether. In other words, if the contract says "no punitive damages," that

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