Originally from International Arbitration Court Decisions - 3rd Edition

JUDGMENT OF THE SUPREME COURT NEW YORK COUNTY APPELLATE DIVISION RENDERED IN 2003 IN CASE 754 N.Y.S. 2d 264

Subject-Matter:
Punitive damages in arbitral award.

Finding:
USD 25 million was grossly excessive punitive damages and constituted manifest disregard of law, but not public policy.

Parties:
Claimants: 1. Stephen B. Sawtelle (USA)
2. Hackett Associates, Inc. (USA)
Respondents: 1. Waddell & Reed, Inc. (USA)
2. Torchmark Corporation (USA)

Place of Court Proceedings:
New York, USA

Arbitration Proceedings:
Arbitration proceedings before the National Association of Securities Dealers, USA

Applicable Law:
The U.S. Federal Arbitration Act

Summary
Terminated mutual fund broker (Stephen B Sawtelle) and his current employer (Hackett & Associates) filed claim with the National Association of Securities Dealers (NASD) against broker’s former employer (Waddell & Reed, Inc.) and certain of its representatives, alleging tortuous interference with business expectancy and a violation of the Connecticut Unfair Trade Practices Act (CUTPA).

Following arbitration award of approximately $27 million in favour of plaintiffs, plaintiffs commenced proceeding to confirm award. The Supreme Court, New York County, Michael Stallman, J., reduced award and confirmed it as modified, and denied defendants’ motion to vacate award of punitive damages.