

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT
                                           

No. 95-1590

                PRUDENTIAL-BACHE SECURITIES, INC.,

                      Plaintiff - Appellant,

                                v.

                    ROBERT D. TANNER, ET AL.,

                     Defendants - Appellees.

                                           

No. 95-1591

                    JOSE F. RODRIGUEZ, ET AL.,

                     Plaintiffs - Appellees,

                                v.

                PRUDENTIAL-BACHE SECURITIES, INC.,

                      Defendant - Appellant.

                                           

No. 95-1592

                PRUDENTIAL-BACHE SECURITIES, INC.,

                      Plaintiff - Appellee,

                                v.

                    ROBERT D. TANNER, ET AL.,

                     Defendants - Appellants.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                 FOR THE DISTRICT OF PUERTO RICO

         [Hon. Salvador E. Casellas, U.S. District Judge]                                                                  

                                           

                              Before

                     Torruella, Chief Judge,                                                     

                 Campbell, Senior Circuit Judge,                                                         

                       and Watson,* Judge.                                                   

                                           

     Thomas  F. Curnin, with whom Roy L. Regozin, Cahill Gordon &amp;                                                                           
Reindel, Guillermo J.  Bobonis, Carlos Bobonis-Gonz lez, Bobonis,                                                                           
Bobonis &amp; Rodr guez-Poventud, Louis  J. Scerra, Jr. and Goldstein                                                                           
&amp;  Manello,   P.C.  were  on  brief   for  Prudential  Securities                            
Incorporated.
     Jos  Angel  Rey, with  whom Jos  Luis  Gonz lez-Casta er and                                                                       
Harold D. Vicente  were on brief for Robert D. Tanner, et al.                           

                                           

                        December 29, 1995
                                           

                                                  

*   Of the United States Court of International Trade, sitting by
designation.

                               -2-

          TORRUELLA,   Chief   Judge.      Appellant   Prudential                    TORRUELLA,   Chief   Judge.                                              

Securities  Incorporated,  formerly Prudential-Bache  Securities,

Inc. ("Prudential"), seeks the reversal of a judgment, entered in

two consolidated actions,  confirming arbitration awards  entered

by a  panel of New  York Stock  Exchange arbitrators in  favor of

Jos   F.  Rodr guez   ("Rodr guez"),  Robert  Tanner  ("Tanner"),

Garland Hedges  ("Hedges"), Wolfram  Pietri ("Pietri"), and  Jos 

Cimadevilla  ("Cimadevilla"),  former  employees of  Prudential's

subsidiary  in  Puerto  Rico,  Prudential-Bache  Capital  Funding

Puerto  Rico, Inc.  ("PBPR").  Prudential  argues that  the award

should be vacated  on either  of two  grounds:   first, that  the

arbitration award  was in manifest  disregard of Puerto  Rico Law

80;  and  second,   that  it  went  against  a  well-defined  and

established   public  policy  requiring   that  securities  firms

maintain  accurate and  current books  and records.   However, we

find that Prudential neither meets the  standard for the vacation

of an  award on the  grounds of  manifest disregard,  set out  in

Advest,  Inc.  v.  McCarthy, 914  F.2d  6  (1st  Cir. 1990),  nor                                     

demonstrates  that the  arbitration  panel found  that  appellees

acted  against  public  policy.   Since  its  argument  that  the

district  court  erred  in  refusing  to  vacate  the  awards  of

attorney's fees and costs  also fails, we affirm the  judgment of

the court below on all points.

                            BACKGROUND                                      BACKGROUND

          The  arbitration  underlying  this  case  arose out  of

Prudential's decision  to close  its Puerto Rican  subsidiary and

                               -3-

terminate the employment of  several executives assigned to PBPR.

On  December  29,  1990,  Rodr guez, former  President  of  PBPR,

together with his wife and their conjugal partnership, filed suit

against   Prudential,  seeking  compensation  for  his  allegedly

wrongful  discharge.    Appellant  Prudential  moved  to   compel

arbitration, and the lower court stayed all discovery and ordered

the  parties  to  proceed  with  the arbitration  of  all  claims

pertaining  to Rodr guez.    The claims  of  his wife  and  their

conjugal  partnership  were   stayed  pending  the  arbitration's

outcome.   Meanwhile,  the claims of  Tanner, Hedges,  Pietri and

Cimadevilla,  all  also  former  PBPR  executives,  were  brought

directly through arbitration.

          An arbitration  panel appointed  by the New  York Stock

Exchange  heard the  parties'  claims between  February 1992  and

December 1993.  On  January 7, 1994, the panel  issued its award,

under which  Prudential was  to pay Tanner  $1,028,000, Rodr guez

$1,014,250, Hedges  $312,750,  Pietri $310,750,  and  Cimadevilla

$216,025.  Various amounts in costs and attorney's fees were also

awarded.   When Rodr guez moved  the district court  for entry of

judgment  on the award, Prudential filed a petition to vacate the

arbitration award  as against all  claimants on the  grounds that

(1) the award  was against public  policy; (2)  the award was  in

conflict with Puerto  Rico Law  80; (3) the  award of  attorney's

fees was contrary to  law; (4) the arbitrators improperly  denied

Prudential   the  opportunity  to   conduct  discovery  into  the

claimants' financial position and current earnings; (5) the award

                               -4-

failed to properly  record the decision  of the arbitrators  that

Prudential  was not  responsible for  promissory notes  issued by

Tanner  and Rodr guez to their employees at Prudential in lieu of

cash bonuses;  and  (6)  the award  incorrectly  noted  that  the

arbitrators ordered that appropriate shares of the  bonus were to

be paid to claimants.  They

contest the district court's findings on the first three of these

issues on appeal.

                          DISCUSSION                                        DISCUSSION

                      A.  Standard of Review                                A.  Standard of Review                                                      

          As  the  Supreme  Court  recently  stated,  "courts  of

appeals  should  apply  ordinary,  not  special,  standards  when

reviewing district court decisions upholding arbitration awards."

First Options of Chicago, Inc. v. Kaplan,      U.S.    ,    , 115                                                  

S.  Ct.  1920, 1926,  131 L.Ed.2d  985  (1995).   Accordingly, we

accept findings of fact that are not clearly erroneous and decide

questions of law de novo.  Id., 115 S. Ct. at 1926.                                          

          However, our  discussion does  not end there.  "We must

consider,   of  course,   the   district  court's   standard   of

review . . . ."   Kelley v.  Michaels, 59  F.3d 1050,  1053 (10th                                               

Cir.  1995).    When  a  district  court  faces  an  arbitrator's

decision,  "the court will set  that decision aside  only in very

unusual circumstances."  First Options, 115 S. Ct. at 1923.   The                                                

first set  of "unusual  circumstances" are  laid  out in  Section

                               -5-

10(a)  of the Federal Arbitration  Act ("FAA"), 9  U.S.C.   10(a)

(1994).1  See Gateway  Technologies v. MCI Telecommunications, 64                                                                       

F.3d 993, 996 (5th Cir.  1995) (laying out the scope of  judicial

review  of arbitration awards in  the light of  First Options and                                                                       

the FAA).  

          Prudential relies on a second, narrower, set of grounds

for review, established  by case law  for "manifest disregard  of

the  law."   See  Wilko  v. Swan,  346  U.S.  427, 436-37  (1953)                                          

(creating the exception), overruled on other grounds by Rodr guez                                                                           

de Quijas v. Shearson/American Express, Inc., 490 U.S. 477,  484-                                                      

85   (1989);  Advest,  914  F.2d  at  9  n.5  (noting  that  this                              

judicially-created method  of review is  based on dicta  in Wilko                                                                           
                                                  

1   Section 10(a) provides that a court may vacate an award:

               (1)  Where the  award was  procured by
            corruption, fraud, or undue means.
               (2)      Where   there   was   evident
            partiality    or   corruption    in   the
            arbitrators . . . .
               (3)  Where the arbitrators were guilty
            of misconduct in refusing to postpone the
            hearing, upon sufficient cause  shown, or
            in  refusing  to hear  evidence pertinent
            and  material to  the controversy;  or of
            any other misbehavior by which the rights
            of any party have been prejudiced.
               (4)    Where the  arbitrators exceeded
            their powers, or so  imperfectly executed
            them  that a mutual,  final, and definite
            award upon the  subject matter  submitted
            was not made.
               (5)  Where an award is vacated and the
            time within which the  agreement required
            the award to be  made has not expired the
            court  may, in  its discretion,  direct a
            rehearing by the arbitrators.

9 U.S.C.    10(a) (1994); see Advest, 914 F.2d at 8 (stating that                                              
  10 "carefully limits judicial intervention").

                               -6-

and  not  found  in    10).    The test  for  a  challenge  to an

arbitration award for manifest disregard of the law is set out in

Advest, Inc. v. McCarthy:                                  

            a successful challenge . . . depends upon
            the challenger's ability to show that the
            award is  "(1)  unfounded in  reason  and
            fact;  (2) based on reasoning so palpably
            faulty that no judge, or group of judges,
            ever  could conceivably have  made such a
            ruling;  or (3)  mistakenly  based  on  a
            crucial assumption that  is concededly  a
            non-fact."

Advest,  914 F.2d  at 8-9  (quoting Local  1445, United  Food and                                                                           

Commercial Workers v. Stop &amp; Shop Cos., 776 F.2d 19, 21 (1st Cir.                                                

1985)). 

        B.  Timeliness of Prudential's Petition to Vacate                  B.  Timeliness of Prudential's Petition to Vacate                                                                   

          Before  addressing Prudential's arguments, we examine a

threshold issue appellees raise:   whether Prudential's  petition

to vacate was timely.  Appellees argue that Prudential's petition

is governed by  Rule 627(g) of  the Rules of  the New York  Stock

Exchange  ("NYSE"),  which  they  maintain establishes  a  30-day

period for filing petitions  to vacate.2  Since the  petition was
                                                  

2  The Rule states:

            All  monetary awards shall be paid within
            thirty  (30)  days  of receipt  unless  a
            motion  to vacate has  been filed  with a
            court  of  competent  jurisdiction.    An
            award shall  bear interest from  the date
            of  the award:   (i)  if not  paid within
            thirty  (30) days of receipt, (ii) if the
            award  is  the  subject  of a  motion  to
            vacate  which  is  denied,  or  (iii)  as
            specified  by  the  arbitrator(s) in  the
            award.  Interest shall be assessed at the
            legal  rate, if  any, then  prevailing in
            the state where  the award was  rendered,

                               -7-

filed  on March 9,  1994,  sixty-one  days  after the  award  was

issued,  under appellees'  reading of  Rule 627(g),  Prudential's

petition  would be time-barred.  In  turn, Prudential claims that

its petition is governed by the 90-day period  set out in   12 of

the FAA,  9 U.S.C.    12 (1994),3 and  so is  timely.  The  court

below found that Section 12 of the FAA applies,  and the petition

is not time-barred.  We affirm.

          Appellees make  their argument  in two stages.   First,

they maintain  that, since parties  may agree to  arbitrate under

non-FAA rules,4  and the  parties submitted a  Uniform Submission

Agreement to  the NYSE  providing that  the arbitration  would be

conducted in  accordance with the  rules of the  exchange,5 those
                                                  

            or at a rate set by the arbitrator(s).

2 New York Stock Exchange Guide, Rule 627(g) (1989).

3  The Rule states, in pertinent part:

            Notice of a  motion to vacate,  modify or
            correct an award must be  served upon the
            adverse  party  or  his  attorney  within
            three months after the award is  filed or
            delivered.

9 U.S.C.   12 (1994).

4   See Mastrobuono v. Shearson Lehman Hutton,     U.S.    ,    ,                                                       
115 S. Ct.  1212, 1216, 131 L.Ed.2d  76 (1995) (noting  that "the
FAA's pro-arbitration  policy does not operate  without regard to
the  wishes of  the contracting  parties"); Volt  Info. Sciences,                                                                           
Inc. v. Board of Trustees, 489 U.S. 468, 479 (1989) ("Arbitration                                   
under the Act  is a matter of consent,  not coercion, and parties
are generally  free to structure their  arbitration agreements as
they see fit").

5  Each appellee  signed an Employment Agreement  with Prudential
that  contained an arbitration clause.   The clause provided for,
inter alia,  settlement of all claims  arising between Prudential                    
and  its  employees  through  arbitration  under  the  prevailing

                               -8-

rules  trump the FAA.   Second, they  argue that Rule  626(g), by

requiring payment of the award within 30 days of its receipt if a

motion  to vacate has not been filed, compels the conclusion that

any  challenge to an arbitration  award must be  filed within the

same period. 

          We are not convinced, however.  We do not question that

the  NYSE Rules  apply.  Where  parties agree  to a  set of rules

different than those of the FAA, "enforcing those rules according

to the terms of the agreement is fully consistent with  the goals

of  the FAA,  even if  the result  is that arbitration  is stayed

where the Act  would otherwise permit it  to go forward."   Volt,                                                                          

489 U.S. at  479.  While we agree  with appellees' first premise,

however, we do not subscribe to their second one.

          Appellees seek to find a time limit in Rule 627(g) that

it does  not include.   To  support  their reading  of the  rule,

appellees  argue  that it  is  meant  to  operate  as a  stay  of

execution for the period during which the party may challenge the

award.  In that context,  they maintain it would be  senseless to

allow such  a stay  for only  30 days  if  the period  to file  a

petition to  vacate is to be governed by the 90-day period of the

FAA, as the award would be  subject to enforcement during the  60

days following the  expiration of  the stay.   While their  logic

holds some merit, they  cannot escape the  fact that the text  of
                                                  

Constitution  and  Rules  of  the NYSE.    Also,  the  Submission
Agreement which the parties  filed with the NYSE shows  that they
submitted their  dispute to  arbitration in accordance  with that
body's Rules, Constitution, By-laws, Regulations, and/or Code  of
Arbitration.

                               -9-

the Rule  is clear.  As  stated by the court  below, "[t]he plain

language of Rule 627(g) . . . does  not even address the question

of  a  time  limitation  on  motions  for  vacatur,   but  rather

establishes  when awards are to be paid and the precise moment at

which interest begins to  accrue on unpaid amounts of  an award."

Rodr guez v. Prudential-Bache Sec., Inc., 882 F. Supp. 1202, 1206                                                  

(D.P.R. 1995).   We are unwilling  to read a time  limit into its

language. 

          In  contrast, the  text of  Section 12  is unambiguous,

clearly setting out a 90-day time limit.  Since the  Rules of the

NYSE provide no time limit, we find that the FAA 90-day provision

applies,  and appellant's  petition  is timely.   See  Escobar v.                                                                        

Shearson Lehman Hutton, Inc., 762 F. Supp. 461, 463 (D.P.R. 1991)                                      

("A  party who seeks judicial review of an arbitration award must

comply with the notice requirements of  section 12 . . . ."); cf.                                                                           

Franco  v. Prudential  Bache  Sec., Inc.,  719  F. Supp.  63,  64                                                  

(D.P.R. 1989)  (finding motion  to overturn an  arbitration award

untimely for  failure to petition within 90-day period of   12). 

                C.  Manifest Disregard of the Law                          C.  Manifest Disregard of the Law                                                           

          As stated  above, judicial review of arbitration awards

is available  where arbitrators have acted  in manifest disregard

of the law.  See Wilko, 346 U.S. at 436-37.  As this court stated                                

in Advest,  Inc. v. McCarthy,  arbitration awards are  subject to                                      

review "where it  is clear  from the record  that the  arbitrator

                               -10-

recognized the  applicable law--and then ignored it."6   914 F.2d

at 9.

          Prudential argues that this is such a case.  It asserts

that  appellees   were   terminated  for   "just   cause"   under

Commonwealth Law  80,  which sets  out the  remedy for  employees

under   contracts  without  fixed  duration  who  are  wrongfully

discharged.   29  L.P.R.A.   185a  (Supp. 1991).   Law 80 details

what  constitutes just  cause for  discharge, including  "[f]ull,

temporary   or  partial   closing  of   the  operations   of  the

establishment."  29 L.P.R.A.   185b(d) (Supp. 1991).  It provides

an  exclusive remedy.7   See  Alvarado-Morales v.  Digital Equip.                                                                           
                                                  

6  We emphasize  that this is a narrow basis for  review:  a mere
mistake of law  by an  arbitrator cannot serve  as the basis  for
judicial review.  We  have long recognized the general  rule that
"courts  are  not to  review the  merits  of an  arbitral award."
Challenger Caribbean Corp. v.  Uni n General de Trabajadores, 903                                                                      
F.2d 857, 861 (1st  Cir. 1990).  They "do not sit  to hear claims
of factual or  legal error by an arbitrator as an appellate court
does in reviewing decisions of lower courts."  Misco, 484 U.S. at                                                              
38.   Thus  our  review is  circumscribed  by the  provisions  of
Section 10(a)  and the specifications of  the "manifest disregard
of the law" test laid out by this court in Advest.                                                           

7  While "[t]here is no question that Act No. 80 is the exclusive
remedy for  wrongful discharge  in  Puerto Rico,"   Weatherly  v.                                                                       
International  Paper Co.,  648 F.  Supp. 872, 875  (D.P.R. 1986),                                  
three  exceptions exist to the  rule that Law  80 precludes other
civil actions  against an  employer who wrongfully  terminates an
employee.  They  arise (1)  when a plaintiff  has an  independent
cause  of action  for  a  tort committed  in  the  course of  the
discharge,  Vargas v. Royal Bank  of Canada, F.  Supp. 1036, 1039                                                     
(D.P.R.  1985); (2) when a plaintiff is protected by other social
legislation, Weatherly,  648  F. Supp.  at 877  n.8 (listing  the                                
twelve  statutes that provide remedies for employment termination
alongside  Law  80); and  (3)  when  the plaintiff's  termination
violates  his or  her constitutional  rights, In  re El  San Juan                                                                           
Hotel Corp., 149 B.R.  263, 273 (D.P.R. 1992); Santini  Rivera v.                                                                        
Serv. Air, Inc., 94 JTS 121 (Hern ndez Denton, J., concurring).                         

   This is not to say, however, that the parties to an employment

                               -11-

Corp.,  843 F.2d  613,  615  n.1  (1st  Cir.  1988)  (noting  the               

exclusiveness of the remedy for wrongful constructive discharge);

Rodr guez v. Eastern  Air Lines,  Inc., 816 F.2d  24, 27-28  (1st                                                

Cir. 1987) (finding that  the remedy's exclusive nature precludes

reinstatement claim).  

          Prudential contends that, given that the five appellees

were discharged  from employment in Puerto  Rico under employment

agreements without a fixed  duration, Law 80 applies.   Since the

law provides an exclusive remedy, and the appellees' claims arise

out of  their termination, it argues, the  only penalty appellees

could claim for wrongful  discharge would be that set by  Law 80.

Prudential carries its argument  a step further, maintaining that

under  Section 185b(d) of Law 80 there was no wrongful discharge,

as the employees were terminated in conjunction  with the closing

of PBPR.8  Since  "employees who are dismissed for  cause are not

entitled  to the  relief afforded  by Act  80," Marti  v. Chevron                                                                           

U.S.A., Inc.,  772 F.  Supp. 700, 705  (D.P.R. 1991),  Prudential                      

concludes, the arbitrators' award  is irreconcilable with Law 80,
                                                  

contract cannot  make an  agreement regarding  indemnification in
the case of  wrongful termination.   See Santini  Roig v.  Iberia                                                                           
L neas  A reas de  Espa a, 688  F. Supp.  810, 817  (D.P.R. 1988)                                   
(allowing recovery under Law 80 when parties had been indemnified
according to a collective  bargaining agreement, stating that Law
80  "is an independent statute that provides for a separate cause
of  action for  monetary relief  regardless of  the terms  of the
collective bargaining agreement.").

8    Prudential  makes  the additional  arguments  that  appellee
Tanner's alleged  failure to  record a transaction  in accordance
with  federal   and  company   rules  provided  just   cause  for
termination, and that appellee  Rodr guez' decision to resign was
not constructive  discharge under  Law 80.   These arguments  are
also defeated under the analysis presented below.

                               -12-

and so was made in manifest disregard of it.

          In  order  to  demonstrate  that  the  arbitrator  both

recognized and ignored the applicable law, Advest, 914 F.2d at 9,                                                           

"'there must be some showing in the record, other than the result

obtained,  that  the  arbitrators  knew  the  law  and  expressly

disregarded  it,'"   id.  at  10  (quoting  O.R.  Sec.,  Inc.  v.                                                                       

Professional Planning Assocs., Inc., 857 F.2d 742, 747 (11th Cir.                                             

1988)).  The demand for  a showing in the  record sets up a  high

hurdle  for   Prudential  to  clear,  because   where,  as  here,

arbitrators do  not explain the reasons  justifying their award,9

"appellant is hard  pressed to satisfy the  exacting criteria for

invocation of the doctrine."  Id.  "In fact, when the arbitrators                                           

do not give their  reasons, it is nearly impossible for the court

to determine whether they acted  in disregard of the law."   O.R.                                                                           

Sec.,  857  F.2d  at  747.    But see  Advest,  914  F.2d  at  10                                                       

(suggesting that a court  could find arbitrators in  disregard of

the law  despite the lack  of a record  where "the  governing law

[has]   such  widespread   familiarity,  pristine   clarity,  and

irrefutable  applicability   that  a  court   could  assume   the

arbitrators knew  the rule  and, notwithstanding, swept  it under

the rug.").  

          In the  present case Prudential's argument  is thwarted

                                                  

9  It is  well established that arbitrators  are not required  to
either  make formal  findings of  fact or  state reasons  for the
awards they issue.   Labor  Relations Div. of  Constr. Indus.  of                                                                           
Mass.,  Inc. v. International Bhd. of Teamsters, 29 F.3d 742, 747                                                         
(1st Cir. 1994);  Raytheon Co. v. Automated Business  Sys., Inc.,                                                                          
882 F.2d 6, 8 (1st Cir. 1989).

                               -13-

by  the fact  that the  arbitrators did  not explain  the reasons

behind  their award.   It is undisputed  that Law 80  was not the

only cause  of action  asserted by Prudential's  former employees

before  the arbitrators.  What is more, it is equally uncontested

that appellees presented evidence  regarding damages under Law 80

in contradiction of Prudential's  position.  Given the fact  that

the panel members heard conflicting arguments, it is difficult to

maintain  that they both  recognized the applicable  law and then

ignored it, id. at 9, without the benefit of a statement of their                         

reasons.    The broad  leeway  arbitrators  enjoy in  determining

remedies,  see id. at 11; Challenger Caribbean Corp., 903 F.2d at                                                              

869,  further  stymies  Prudential's  attempt  to  demonstrate  a

manifest disregard of  the law  on the part  of the panel,  given

that their  remedial  options are  not limited  to those  offered

during the hearing.  Advest, 914 F.2d at 11.                                     

          Accordingly, we are not  convinced that the court below

abused  its discretion in  finding that, judging  from the award,

the  arbitrators considered  and  rejected Prudential's  argument

that it  had just  cause  to terminate  appellees.10   Therefore,

like  the  district court  before  us,  we "decline  Prudential's

                                                  

10    The   parties  briefly  debate  two  grounds  for  recovery
concurrent   to  Law 80:  (1) whether  the appellees'  claims for
emotional  and mental  suffering  are based  on tortious  conduct
separate and independent from the termination of their employment
for the purposes of Law 80; and (2) whether a partnership between
Tanner, Cabrer, Rodr guez and  Prudential was formed under Puerto
Rico law.
We find that the arbitrators may have rejected  Prudential's just
cause argument and therefore uphold their award.  Accordingly, we
need not address the details of these disputes.

                               -14-

invitation to  revisit the merits of  their factual contentions",

Rodr guez, 882 F. Supp.  at 1209, and affirm their decision.  Cf.                                                                           

O.R.   Sec.,  857 F.2d  at 748  ("The record  of the  arbitration                     

proceedings in  this  case  shows that  the  issue  of  successor

liability  was  clearly  presented  to the  arbitrators  and  the

arbitrators  declined  to state  reasons  for their  conclusions.

This ends the inquiry.").

                        D.  Public Policy                                  D.  Public Policy                                                   

          Prudential argues that the awards in favor of appellees

Tanner and Rodr guez should be vacated because they are  contrary

to  a  well-defined and  dominant  public  policy requiring  that

securities   firms   maintain    correct   books   and   records.

Specifically, Prudential asserts that Tanner and Rodr guez failed

to  record  three  puts11  to Schering  Plough,  PaineWebber  and

Squibb, as well  as a  one million dollar  rebate (together,  the

"transactions").   The  failure  to record  the transactions,  it

asserts,  violates  a dominant  public policy  demanding accurate

books and records.  

          A  court  may vacate  an  arbitration  award where  the

arbitration agreement as interpreted would violate public policy.

See  United Paperworks Int'l Union  v. Misco, Inc.,  484 U.S. 29,                                                            

42-43 (1987); W.R. Grace &amp; Co. v.  Local Union 759, United Rubber                                                                           

Workers,  461 U.S. 757, 766 (1983).  However, this authority does                 
                                                  

11  A put is "[a]n option permitting its holder to sell a certain
stock  or commodity at  a fixed price  for a  stated quantity and
within a stated period.  Such a right is purchased for a fee paid
the  one who  agrees to  accept the  stock or  goods if  they are
offered."  Black's Law Dictionary 1237 (6th ed. 1990).

                               -15-

not include  "a broad  judicial  power to  set aside  arbitration

awards  as  against  public policy."    Misco,  484  U.S. at  43.                                                       

Rather, the  court's power is  limited "to  situations where  the

contract  as  interpreted  would  violate  'some explicit  public

policy'  that is  'well  defined  and  dominant,  and  is  to  be

ascertained 'by  reference to the  laws and legal  precedents and

not from  general considerations of supposed public interests.''"

Id. (quoting W.R. Grace, 461 U.S. at 766).                                   

          In United  Paperworks Int'l  Union v. Misco,  Inc., the                                                                      

Supreme   Court   set  out   two  requirements   for  overturning

arbitration awards on the  grounds of public policy.   First, the

"alleged public policy must be properly framed under the approach

set  out  in W.R.  Grace."   Id.   This  demands  "examination of                                          

whether the award created any explicit conflict  with other 'laws

and  legal  precedents' rather  than  an  assessment of  'general

considerations  of supposed  public interests.'"   Id.   (quoting                                                                

W.R. Grace,  461 U.S. at 766);  see W.R. Grace, 461  U.S. at 766,                                                        

770  (finding that  obedience  of judicial  orders and  voluntary

compliance with Title VII of the Civil Rights Act of 1964 are two

such public policies).   Second, "the violation of such  a policy

must be clearly shown if an award is not to be enforced."  Misco,                                                                          

484 U.S. at 43. 

          To  meet  the  demands  of the  first  requirement  and

demonstrate that  the policy is "ascertained 'by reference to the

laws and legal precedents,'" id. (quoting W.R. Grace, 461 U.S. at                                                              

766), Prudential points to the reporting requirements set out for

                               -16-

registered  broker-dealers in  Section  17(a)  of the  Securities

Exchange Act of 1934,  15 U.S.C.   78q(a)  (1994), and the  rules

promulgated under that Act, SEC Rule 17a-3, 17 C.F.R.   240.17a-3

(1994), as  well as  the rules of  self-regulatory organizations.

See, e.g., 2 New York Stock Exchange Guide, Rule 440 (1989).  All                   

of these  statutes and rules mandate  recording transactions like

those  of Tanner  and Rodr guez in  the books and  records of the

registered  broker-dealer.    It   is  not  disputed  that  these

regulations applied to the transactions.  

          We need not  address, however, whether these  reporting

requirements establish  an explicit  public policy such  that the

"award create[s] any explicit conflict with other 'laws and legal

precedents.'"  Misco,  484 U.S.  at 43 (quoting  W.R. Grace,  461                                                                     

U.S. at 766).  Since the second requirement of the Misco analysis                                                                  

demands that the violation of the policy "be clearly shown," id.,                                                                          

and Prudential cannot show that the  arbitration panel found that

Tanner and Rodr guez violated public policy, its argument fails.

          In reviewing an arbitration award challenged  on public

policy grounds, we "tak[e] the facts as found by the arbitrator."

Board of County Comm'rs v. L. Robert Kimball and Assocs, 860 F.2d                                                                 

683, 686 (6th Cir. 1988), cert. denied, 494 U.S. 1030 (1990); see                                                                           

Misco, 484 U.S. at 45 ("The parties did not bargain for the facts               

to  be  found  by  a  court,  but  by  an  arbitrator  chosen  by

them . . . .").   Although  the  parties are  in dispute  whether

Tanner and Rodr guez'  failure to record  the transactions is  an

admitted  fact, Prudential's  argument is  again undercut  by the

                               -17-

arbitrators'  decision   not  to   explain  their  award.     The

arbitration  panel heard  Prudential's claims,  and its  award of

more than one million  dollars each to both Tanner  and Rodr guez

"suggests    that   they   were   unpersuaded   by   Prudential's

allegations."12   Rodr guez, 882 F. Supp.  at 1208.  In  the face                                     

of  the panel's silence and  its awards, we  cannot conclude that

the  arbitrators, in  their  fact-finding  capacity,  necessarily

found that there  was a recording violation, and we  refuse to do

so in  their stead.  See  Misco, 484 U.S. at  44-45 (holding that                                         

for the Court  of Appeals to draw inferences from known facts was

an "inappropriate" exercise in factfinding).  

                  E.  Attorney's Fees and Costs                            E.  Attorney's Fees and Costs                                                         

          Prudential's  final contention is that the arbitrators'

awards of attorney's fees  and costs to the appellants  should be

vacated.  First, it  claims that the award of  attorney's fees is

not  contemplated  by  Rule 629(c)  of  the  NYSE.13   Prudential
                                                  

12  Prudential  asserts that the district court improperly relied
on an  issue Prudential did not raise before it, namely, that the
transactions  were  done  without  authorization.    Indeed,  the
district   court   characterizes  the   authorization   issue  as
"Prudential's main contention."  Rodr guez, 882 F. Supp. at 1209.                                                    
However, its discussion of Prudential's  argument to the panel as
well as the arbitrators' decision, quoted  above, refers not only
to the authorization issue,  but also to Prudential's "assumption
that  the actions .  . .  were in fact  unlawful."   Id. at 1208.                                                                  
Therefore, we can rely on these findings of the district court in
our discussion of whether  there was a clear violation  of public
policy, without being guilty of factfinding.

13  That rule provides, in pertinent part:

               In   addition   to  forum   fees,  the
            arbitrator(s) may determine in  the award
            the amount of costs incurred  pursuant to
            Rules   617,  619  and  623  and,  unless

                               -18-

argues  that  because  the   rule  does  not  explicitly  mention

attorney's fees,  to assume  it provides an  implicit independent

basis  for awarding them is contrary to the general American rule

that  parties typically bear their  own legal fees.   See Alyeska                                                                           

Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975),                                                

superseded by statute as stated in Stanford Daily v. Zurcher, 550                                                                      

F.2d  464, 465-66 (9th Cir. 1977).  Second, Prudential points out

that under Puerto Rico law attorney's fees may be awarded only if

provided  for by  statute, or  against a  party which  raises and

obstinately  pursues  meritless claims  or  otherwise vexatiously

engages in unnecessary litigation.   See P rez Marrero v. Colegio                                                                           

de Cirujanos  Dentistas,  92  J.T.S.  124 (1992);  Elba  A.B.  v.                                                                       

Universidad  de Puerto  Rico, 90  J.T.S. 13  (1990).   Prudential                                      

argues  that  no  judge  could  reasonably  find that  it  raised

frivolous claims  or pursued them improperly, given its claims of

violations of  the record-keeping  requirements by  Rodr guez and

Tanner.    

          We disagree.  Since Prudential does not state its basis

for  overturning the award, we  presume it is  relying on Section

10(a)(4) of the  FAA, which  provides that courts  may set  aside

awards when  the  arbitrators  exceed  their powers.    9  U.S.C.

  10(a)(4).    This  award   was,  however,  within  the  panel's

                                                  

            applicable  law directs  otherwise, other
            costs and expenses of  the parties.   The
            arbitrator(s)  shall  determine  by  whom
            such costs shall be borne.

2 New York Stock Exchange Guide, Rule 629(c) (1989).

                               -19-

authority.  First,  we do not think that  the district court read

an implicit basis for awarding  attorney's fees into Rule 629(c).

The  rule states that it provides for "costs and expenses, unless

applicable  law directs  otherwise."   We read  this  language to

include  attorney's fees, and  have found no  case law suggesting

otherwise.14

          Second,  although not  noted  by the  court below,  the

record reveals  that both parties requested  attorney's fees from

the  panel (Joint  Appendix,  pp. 811,  923-24), suggesting  that

awarding  fees was contemplated by  the parties to  be within the

scope of the agreement to arbitrate.   The case law suggests that

this is an important  factor.  See  Bacard  Corp. v. Congreso  de                                                                           

Uniones Industriales, 692  F.2d 210, 214 (1st Cir. 1982) (finding                              

arbitrator exceeded  his authority awarding attorney's fees where

grieving  union did not claim them, and their award "did not draw

its essence  from the collective bargaining  agreement"); Wing v.                                                                        

J.C. Bradford  &amp; Co., 678  F. Supp.  622, 626  (N.D. Miss.  1987)                              
                                                  

14   In  fact, we  have  found little  case  law on  this  issue,
although there is certainly precedent for the award of attorney's
fees.   See, e.g., Phoenix Central v. Dean Witter Reynolds, Inc.,                                                                          
768 F. Supp. 702, 703 (D. Ariz. 1991) (granting order  to confirm
NYSE panel arbitration award including  attorney's fees); Barbier                                                                           
v.  Shearson Lehman Hutton, 752 F. Supp. 151, 154 (S.D.N.Y. 1990)                                    
(confirming NYSE  arbitrators'  award of  attorney  fees  without
comment), aff'd in  part, rev'd in  part, 948  F.2d 117 (2d  Cir.                                                  
1991).  What  cases we have found  addressing whether arbitrators
should have awarded attorney's fees analyze the issue under state
law,  not the Rules of the NYSE.   See, e.g., Zate v. A.T. Brod &amp;                                                                           
Co.,  839 F.  Supp. 27,  29 (M.D.  Fla. 1993)  (analyzing whether             
arbitrator  should  have  awarded attorney's  fees  under Florida
law);  Emrick v. Deutsche Bank  Capital Corp., No.  91 Civ. 0592,                                                       
1991  WL 61091, at *2-4  (S.D.N.Y. Apr. 15,  1991) (weighing NYSE
panel's failure  to award  attorney's fees under  New York  labor
law).

                               -20-

(confirming NYSE arbitration panel award of attorney's fees where

parties submitted the award of fees to panel).   

          Third,  Prudential  is correct  in stating  that Puerto

Rico law demands a finding that a "party or its  lawyer has acted

obstinately  or frivolously."  P.R. R. Civ. P. 44.1(d).  However,

appellees offered  examples of  Prudential's  conduct to  support

such  a conclusion.  It is reasonable  to find that the fact that

the panel awarded attorney's  costs indicates it found Prudential

obstinate and/or temarious  in litigating some of  the claims, or

in its conduct.  Thus, given that the panel had evidence in front

of it as  to obstinate  or frivolous conduct,  that both  parties

requested attorney's  fees, and that  the NYSE Rules  provide for

the award  of  fees,  we cannot  conclude  that  the  arbitrators

exceeded the scope of their authority under Section 10(a)(4).

          Finally,  Prudential argues  that the  former employees

failed to leap  a procedural hurdle, since they did  not submit a

verified statement to the panel itemizing all expenses sought, as

mandated by  Puerto Rico  civil  procedure.     P.R. R.  Civ.  P.

44.1(a),  (b).  In so  arguing, Prudential ignores  the fact that

the parties agreed to arbitrate under the rules of the  NYSE, and

Rule 629(c)  imposes no  itemization requirement.   Nevertheless,

the appellees itemized  their costs in their closing brief, filed

five  days before the parties  made their final  arguments to the

panel.   While  Prudential had  the opportunity to  challenge the

accuracy or reasonableness of the  costs, it chose not to do  so.

Therefore,  because we  do not  find  that the  arbitration panel

                               -21-

clearly exceeded the scope of its powers, and giving its decision

the  deference  due to  arbitrators, we  find  that the  award of

attorney's fees should not be vacated.  Cf. Advest, 914 F.2d at 8                                                            

(stating  that even where arbitrators'  factual or legal error is

"painfully clear," courts may not reconsider an award's merits).

                            CONCLUSION                                      CONCLUSION

          For the foregoing reasons, the judgment of the district

court is affirmed.                   affirmed.                           

                               -22-
