Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 13 (1995)

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Thomas, J., dissenting

law provision with the arbitration provision is to read "the laws of the State of New York" to encompass substantive principles that New York courts would apply, but not to include special rules limiting the authority of arbitrators. Thus, the choice-of-law provision covers the rights and duties of the parties, while the arbitration clause covers arbitration; neither sentence intrudes upon the other. In contrast, respondents' reading sets up the two clauses in conflict with one another: one foreclosing punitive damages, the other allowing them. This interpretation is untenable.

We hold that the Court of Appeals misinterpreted the parties' agreement. The arbitral award should have been enforced as within the scope of the contract. The judgment of the Court of Appeals is, therefore, reversed.

It is so ordered.

Justice Thomas, dissenting.

In Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 478 (1989), we held that the Federal Arbitration Act (FAA) simply requires courts to enforce private contracts to arbitrate as they would normal contracts—according to their terms. This holding led us to enforce a choice-of-law provision that incorporated a state procedural rule concerning arbitration proceedings. Because the choice-of-law provision here cannot reasonably be distinguished from the one in Volt, I dissent.1

1 The Seventh Circuit adopted a de novo standard of review of the arbitrators' decision. Although we have not yet decided what standard of review to apply in cases of this sort, see First Options of Chicago, Inc. v. Kaplan, cert. granted, 513 U. S. 1040 (1994), petitioners waived the argument that a deferential standard was appropriate. Petitioners did not raise the argument in their petition for certiorari or in their opening brief. While the standard of review may be an antecedent question, see United States Nat. Bank of Ore. v. Independent Ins. Agents of America, Inc., 508 U. S. 439 (1993), given petitioners' waiver of the argument it seems more appropriate to resolve the question in First Options than here.

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