
USCA1 Opinion

	




                            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 &               _________________            ______________  _______________          Reindel, Guillermo J.  Bobonis, Carlos Bobonis-Gonz lez, Bobonis,          _______  _____________________  _______________________  ________          Bobonis & Rodr guez-Poventud, Louis  J. Scerra, Jr. and Goldstein          ____________________________  _____________________     _________          &  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 & 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 & 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  & 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 &                                             ___  ____  ____    ___________          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-
