author: LYNNE, Senior District Judge.

text:
    WILLOUGHBY ROOFING & SUPPLY COMPANY, INC., Plaintiff, v. KAJIMA INTERNATIONAL, INC., Defendant.
    Civ. A. No. CV82-L-5556-NE.
    United States District Court, N.D. Alabama, Northeastern Division.
    Dec. 6, 1984.

      Ralph W. Hornsby, David H. Meginniss, Hornsby, Blankenship, Robinson & Meginniss, Huntsville, Ala., for plaintiff.
    Robert 0. Fleming, Jr., Smith & Fleming, Atlanta, Ga., Philip A. Geddes, Decatur, Ala., for defendant.
   MEMORANDUM OPINION

LYNNE, Senior District Judge.

This matter comes before the Court on the plaintiff’s application for judgment. The plaintiff’s fraud, breach of contract, and related claims have been submitted to an arbitration panel at the insistence of the defendant. The arbitrators, having considered those claims and having found them meritorious, have awarded the plaintiffs $41,091.25 in compensatory damages. In addition, because they found the defendant guilty of willful misrepresentations of material fact concerning the transaction at issue, the arbitrators have awarded the plaintiffs the further sum of $108,908.75 in punitive damages. However, the defendant, once the champion of the need for arbitration in this case, now expresses dissatisfaction with the results achieved by that process. Having once argued strenuously that the arbitration clause contained in the parties’ contract required arbitration of all of the plaintiff’s claims, the defendant now seeks to qualify its previous position. Now, for the first time, the defendant argues that the arbitration panel lacked authority to consider the plaintiff’s claims for punitive damages. On this basis, the defendant has filed a motion to vacate the award of punitive damages. Because the Court is satisfied that the arbitrators’ award was within the broad scope of their authority under the contract and under law, the defendant’s motion will be overruled and judgment entered in accordance with the arbitral award.

BACKGROUND

This action began when the plaintiff, Willoughby Roofing & Supply Company (“Willoughby Roofing”), filed suit in the Circuit Court of Madison County, Alabama. The complaint sought compensatory and punitive damages for breach of contract, fraud, misrepresentation, and breach of the duty of good faith and fair dealing by the defendant, Kajima International, Inc. (“Kajima”). These claims emanated from a contract between the parties whereby plaintiff, as subcontractor, was to construct and install a roof on a building for Kajima, the general contractor on a certain construction project in Huntsville, Alabama. Willoughby Roofing had allegedly prepared its bid on the roofing job in reliance on certain representations by Kajima as to the plans and specifications that would have to be followed in constructing the roof. Following acceptance of Willoughby Roofing’s bid, however, those plans and specifications were materially altered by Kajima, so much so that the cost to the plaintiff of completing the contract would have been substantially higher than anticipated. Therefore, Willoughby sought to renegotiate the contract price or to submit a new bid. Despite the fact that Willoughby had gone to considerable expense in preparing to fulfill the contract under the original specifications, Kajima chose instead to cancel the contract and engage another subcontractor to do the work.

It was at this point that the state court action was filed. Shortly thereafter, the case was removed to this Court by the defendant. Following removal, the defendant filed a motion for a stay of the proceedings pending arbitration. This motion was based upon the arbitration clause of the contract between the parties:

Section 6.07. Arbitration.
All claims, disputes, and other matters in question arising out of, or relating to, this Agreement or a Work Assignment or the breach thereof, except with respect to matters for which the Architect’s decision shall be final and binding as provided in this Agreement, shall be resolved by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association unless the parties mutually agree otherwise. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

This arbitration clause is, of course, quite broad, and it evinces an intent of the parties to vest the arbitrators with authority to decide virtually any claim that could arise in relation to the contract and its performance. Indeed, as the defendant itself aptly argued in support of its motion for a stay pending arbitration,

... the arbitration procedure applies to all disputes arising in connection with the subcontract. It would have been difficult, if not impossible, for the parties to have drafted a broader arbitration provision. This broad language, coupled with the national policy favoring a liberal construction of arbitration agreements, makes it clear that the disputes involved in this case are well within the scope of the arbitration agreement.

Convinced that the arbitration clause did indeed cover all of the plaintiffs claims, including the claims for compensatory and punitive damages for fraud, see generally Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), the Court granted the stay. An arbitration panel was selected, and the plaintiff's claims were presented to that panel. Finding those claims to be meritorious, the panel awarded the plaintiff $150,000 in unspecified damages.

At this point, the defendant first objected that the arbitrators had awarded punitive damages and that to do so was beyond their authority. In order to clarify the issue, the Court on April 26, 1984, ordered that the award be resubmitted to the same arbitration panel for an explicit breakdown of the claims for which damages were provided. Subsequently, on August 21, 1984, the panel issued the following award:

... [W]e the undersigned Arbitrators find the following facts:
1. That KAJIMA INTERNATIONAL, INC., did in fact breach its contract to WILLOUGHBY ROOFING & SUPPLY CO., INC., and that the compensatory damages suffered by WILLOUGHBY ROOFING & SUPPLY CO., INC., were $41,091.25.
2. We further find that KAJIMA INTERNATIONAL, INC., did make misrepresentations of material facts, that these facts were willfully made to deceive WILLOUGHBY ROOFING & SUPPLY CO., INC., that these misrepresentations were made by KAJIMA INTERNATIONAL, INC., to be relied upon by WILLOUGHBY ROOFING & SUPPLY CO., INC., and that in fact WILLOUGHBY ROOFING & SUPPLY CO., INC., did rely on these misrepresentations and that WILLOUGHBY ROOFING & SUPPLY CO., INC., suffered damages as a result of this reliance.
For these wrongful acts of KAJIMA INTERNATIONAL, INC., we find that KAJIMA INTERNATIONAL, INC., should pay punitive damages of $108,-908.15.

Therefore, Arbitrators, AWARD as follows:

A. Award compensatory damages in the amount of $41,091.25 to be paid by KAJIMA INTERNATIONAL, INC.
B. Award punitive damages in the amount of $108,908.75 to be paid by KAJIMA INTERNATIONAL, INC.

Now unhappy with the bed it has made for itself, Kajima no longer wishes to lie in it. Consequently, Kajima now seeks an order vacating this award on two separate grounds: (1) the contract between the parties does not authorize the arbitrators to award punitive damages; and (2) even if the contract does authorize the arbitrators to make such an award, public policy prohibits them from doing so. As discussed below, however, neither of these arguments is sufficiently persuasive to displace the plenary deference traditionally owing to the decisions of arbitrators as a matter of federal policy.

DISCUSSION

I.

The contention that the arbitration clause involved in this case is not broad enough to empower the arbitration panel to award punitive damages is one that must fail. As the defendant has candidly admitted, “it would have been difficult, if not impossible, for the parties to have drafted a broader arbitration provision.” Moreover, the arbitration clause incorporates by reference the Construction Industry Arbitration Rules. Rule 43 of those rules provides that

The arbitrator may grant any remedy or relief which is just and equitable and within the terms of the agreement of the parties (emphasis supplied).

When the extremely broad arbitration clause is read in light of the equally broad grant of remedial power in Rule 43, it is clear that the parties by their contract have authorized the arbitrators to award punitive damages. Cf. Willis v. Shearson/American Express, Inc., 569 F.Supp. 821 (M.D.N.C.1983). The contract purports to place no limits on the remedial authority of the arbitrators, nor should one be implied to exclude the authority to award punitive damages. The parties certainly had the power to limit the arbitrator’s ability to fashion appropriate remedies, but they chose not to do so. As defendants have conceded, strong federal policy requires a liberal construction of arbitration agreements, not a strict one. See, e.g., United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 585, 80 S.Ct. 1347, 1354, 4 L.Ed.2d 1409 (1960). In resolving questions pertaining to the arbitrator’s authority, courts must broadly construe the agreement and resolve all doubts in favor of the arbitrator’s authority. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983); Lackawanna Leather Co. v. United Food & Commercial Workers, 706 F.2d 228 (8th Cir.1983); Daniel Construction Co. v. International Union of Operating Engineers, Local 513, 570 F.Supp. 299 (E.D.Mo.1983), aff'd 738 F.2d 296 (8th Cir.1984). This is particularly true with respect to the remedial authority of arbitrators, for it is essential that arbitrators have a great deal of flexibility in fashioning remedies if the national policy favoring the settlement of disputes by arbitration is to have any real substance. United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960). See also Mogge v. District 8, International Association of Machinists, 454 F.2d 510, 514 (7th Cir.1971); Local 369, Bakery and Confectionery Workers I.U. v. Cotton Baking Co., Inc., 514 F.2d 1235, 1237 (5th Cir.1975), cert. denied 423 U.S. 1055, 96 S.Ct. 786, 46 L.Ed.2d 644 (1976). Accordingly, federal policy places a heavy burden upon those claiming that arbitrators’ awards exceed their authority. Joint Board of Cloak, Skirt and Dressmakers Union v. Senco, Inc., 289 F.Supp. 513 (D.Mass.1968). Accord, International Association of Machinists v. Texas Steel Co., 538 F.2d 1116, 1121 (5th Cir.1976), cert. denied 429 U.S. 1095, 97 S.Ct. 1110, 51 L.Ed.2d 542 (1977).

[The] mandate clearly is that in interpreting [an] agreement and fashioning a remedy in accordance with that agreement, an arbitrator is given broad latitude and discretion. His remedy need not be specifically authorized by the agreement. And, so long as his remedy represents a fair solution to the dispute, the remedy awarded should be affirmed. Reviewing courts should be extremely reluctant to substitute their interpretation of the agreement for that of the arbitrator____ [H]is awards should be upheld so long as he does not disregard or modify plain and unambiguous provisions of [the] agreement.

General Telephone Co. of Ohio v. Communications Workers of America, 648 F.2d 452, 457 (6th Cir.1981) (emphasis supplied). Accord, Lodge No. 12, District No. 37, International Association of Machinists v. Cameron Iron Works, 292 F.2d 112, 119 (5th Cir.1961), cert. denied 368 U.S. 926, 82 S.Ct. 361, 7 L.Ed.2d 190 (1961) (arbitrator’s remedy to be upheld in the absence of “clearly restrictive language” in the arbitration agreement); Minute Maid Co. v. Citrus, Cannery, Food Processing and Allied Workers, etc., 331 F.2d 280, 281 (5th Cir.1964) (arbitrator’s remedy upheld where the “contract did not exclude from arbitration either the subject matter or the remedy adopted by the arbiter”). See also Sverdrup/ARO, Inc. v. International Association of Machinists, 532 F.Supp. 143, 146 (E.D.Tenn.1980).

In the present case, the award of punitive damages is neither explicitly nor implicitly prohibited by the agreement. Indeed, it was all but expressly authorized. Although the defendant has cited certain labor cases which lend some support to the theory that an arbitrator has no power to award punitive damages absent express authority, see, e.g., International Union of Operating Engineers, Local No. 450 v. Mid-Valley, Inc., 347 F.Supp. 1104 (S.D.Tex.1972), and Baltimore Regional Joint Board v. Webster Clothes, Inc., 596 F.2d 95 (4th Cir.1979), this Court is convinced that such a restrictive presumption is contrary to the overriding principle under the Federal Arbitration Act that “any doubts concerning the scope of arbitrable, issues,” as well as any doubts concerning the scope of the arbitrators’ remedial authority, are to be resolved in favor of the arbitrators’ authority as a matter of federal law and policy. See Moses H. Cone Memorial Hospital v. Mercury Construction Co., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983); Lodge No. 12 v. Cameron Iron Works, 292 F.2d at 119; Minute Maid, 331 F.2d at 281; General Telephone, 648 F.2d at 457. See also United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. at 597, 80 S.Ct. at 1361. Only in the presence of “clear and express exclusions” could it be said that the arbitrators lacked authority under the contract to consider the plaintiff’s claims for punitive damages. Willis v. Shearson/American Express, Inc., 569 F.Supp. 821, 823-24 (M.D.N.C.1983); Cameron Iron Works, 292 F.2d at 119. No such exclusions are present, and in their absence the contract is clearly broad enough to authorize the arbitrators to consider the plaintiff’s claim for punitive damages and to grant such relief where it is just and equitable to do so. Cf. Willis, 569 F.Supp. at 824. Therefore, the contention that the contract itself denies the arbitrators the power to award punitive damages is a contention that must fail.

II.

This brings us to the defendant’s second contention. Does public policy prohibit the parties to a contract from vesting an arbitration panel with authority to consider their claims for punitive damages for fraud in the inducement or performance of the contract? The Court thinks not.

It is true, as Kajima points out, that certain state courts have held that under the law of those states arbitrators cannot award punitive damages even if the parties authorize them to do so. See, e.g., Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 353 N.E.2d 793, 386 N.Y.S.2d 831 (1976); School City of East Chicago, Indiana v. East Chicago Federation of Teachers, 422 N.E.2d 656 (Ind.App.1981). Decisions such as those, however, deal only with the powers of arbitrators under state law and state public policy. Federal law and federal policy under the Federal Arbitration Act apply to the arbitration provision in the case sub judice, since that provision is part of a written contract evidencing a transaction in interstate commerce. 9 U.S.C. §2 et seq. Even if Alabama law and policy were deemed consistent with that of New York and Indiana, it would not control the issue presented here, despite the stipulation contained in the contract that Alabama law would generally be deemed to govern the agreement. “Although the parties to a contract can agree that a certain state’s law will govern the resolution of issues submitted to arbitration (i.e., plaintiff’s entitlement to punitive damages, assuming [a certain state’s substantive] law applies), federal law governs the categories of claims subject to arbitration” and the “resolution of issues concerning the arbitration provision’s interpretation, construction, validity, revocability, and enforceability.” Willis v. Shearson/American Express, Inc., 569 F.Supp. 821, 823-24 (M.D.N.C.1983) (emphasis supplied). See also Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983); Tullis v. Kohlmeyer & Co., 551 F.2d 632 (5th Cir.1977); Ultracashmere House, Ltd. v. Meyer, 664 F.2d 1176, 1179-80 (11th Cir.1981). The Supreme Court recently made this clear in Southland Corp. v. Keating, — U.S. —, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). There, the high court of California had interpreted a state statute so as to require judicial consideration of claims brought under the statute and accordingly refused to enforce the parties’ contract to arbitrate such claims. On appeal, the Supreme Court flatly held that “[s]o interpreted, the [state law] directly conflicts with § 2 of the Federal Arbitration Act and violates the Supremacy Clause.” — U.S. at —-—, 104 S.Ct. at 858, 79 L.Ed.2d at 11-12. Said the Court,

In enacting § 2 of the federal Act, Congress declared a national policy favoring arbitration and withdrew the power of states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration____ We discern only two ■limitations on the enforceability of arbitration provisions governed by the Federal Arbitration Act: they must be part of a written contract evidencing a transaction in interstate commerce, and such clauses may be revoked upon ‘grounds as exist at law or equity for the revocation of any contract.’ We see nothing in the Act indicating that the broad principle of enforceability is subject to any additional limitations under state law.

— U.S. at —, 104 S.Ct. at 858, 79 L.Ed.2d at 12.

Southland Corp. v. Keating firmly establishes that it is the “federal substantive law” of arbitrability that governs questions such as the one presented here. Id. — U.S. at —, 104 S.Ct. at 859, 79 L.Ed.2d at 13. Therefore, if federal policy allows enforcement of an arbitration provision vesting the arbitrators with the authority to award punitive damages, then such a provision remains enforceable despite contrary state law or policy.

It is clear that federal policy does not prohibit the award of punitive damages by arbitrators if the parties’ agreement is found to confer upon them the authority to make such an award. Willis v. Shearson/American Express, 569 F.Supp. at 824. Even the cases cited by Kajima in support of its contention that as a matter of contract construction, arbitrators do not have the authority to award punitive damages unless that authority is expressly conferred in the contract, are cases that clearly stand for the proposition that such an award is entirely consistent with federal policy whenever the agreement of the parties encompasses it. See, e.g., United Electrical, Radio & Machine Workers v. Litton, 704 F.2d 393 (8th Cir.1983), on rehearing 728 F.2d 970 (8th Cir.1984); Norfolk & Western Railway Co. v. Brotherhood of Railway, Airline & Steamship Clerks, etc., 657 F.2d 596 (4th Cir.1981); Baltimore Regional Joint Board v. Webster Clothes, 596 F.2d 95 (4th Cir.1979).

Other cases stand for the same proposition. Thus, in Sweeney v. Morganroth, 451 F.Supp. 367 (S.D.N.Y.1978), the court rejected a claim that an arbitrator’s award could not be enforced because it was punitive in nature. Said the Court:

Even assuming that the award is a penalty — no small assumption under either state or federal law — where, as here the contract expressly provides the arbitrator with the power to grant the award, and recognizing the substantial leeway which must be granted an arbitrator in fashioning remedies ..., the award seems wholly consistent with the prevailing law, both state and federal; it certainly does not evidence manifest disregard therefor.

451 F.Supp. at 370-71 (footnotes omitted). The Garrity case was noted but not followed. Id. at n. 7.

Similarly, in Cadillac Auto Co. v. Metro Auto Salesmen, 588 F.2d 315, 316 (1st Cir.1978), the First Circuit upheld an arbitral award despite its conclusion that the award was clearly punitive rather than compensatory. In Ging v. Parker-Hunter, Inc., 544 F.Supp. 49 (W.D.Pa.1982), the court expressly referred claims for punitive damages to arbitration, implicitly holding that arbitrators have the authority to consider such claims and to grant the requested relief if their findings warrant it. In Local 416, Sheetmetal Workers International Association v. Helgesteel Corp., 335 F.Supp. 812 (W.D.Wisc.1971), the court explicitly held that “[a]n award by an arbitrator of punitive damages ... is not, as defendant claims, illegal per se.” 335 F.Supp. at 815. In Texas Gas Transmission Corp. v. International Chemical Workers, 200 F.Supp. 521 (W.D.Louisiana 1962), the Court, on rehearing, clearly upheld the power of an arbitrator to award punitive damages where he determines that the wrongful conduct of the defendant warrants such a sanction. The court relied heavily upon Lodge No. 12, District No. 37, International Association of Machinists v. Cameron Iron Works, 292 F.2d 112, 119 (5th Cir.1961), as mandating a broad construction of the remedial authority of arbitrators.

The old Fifth Circuit also sanctioned the award of punitive damages by arbitrators in appropriate cases, reasoning that the judiciary owes “considerable deference” to the decisions of arbitrators and that arbitrators “must ... be free to decide more than which party is right or which party is wrong.” Local 369, Bakery & Confectionery Workers Int. Union v. Cotton Baking Co., Inc., 514 F.2d 1235, 1237 (5th Cir.1975). The Court emphasized that the arbitration provision was quite broad (as is the one in the case sub judice), purporting to cover “any dispute” arising out of the transaction involved. 514 F.2d at 1238. This decision is, of course, the law of the Eleventh Circuit. See Bonner v. Prichard, 661 F.2d 1206 (11th Cir. 1981).

Other cases lend varying degrees of support to the authority of arbitrators to make punitive awards. Perhaps the most direct treatment of the federal policy on this issue, however, is found in Willis v. Shearson/American Express, 569 F.Supp. 821, 824 (M.D.N.C.1983). There, on facts remarkably similar to those in the case sub judice, the court flatly rejected the Garrity line of cases in the context of arbitration agreements governed by the Federal Arbitration Act, pointing out that federal and not state policy controlled the power of arbitrators to award punitive damages. In a well-reasoned opinion, the court concluded that there was “no public policy reason persuasive enough to justify prohibiting arbitrators from resolving issues of punitive damages submitted by the parties.” 569 F.Supp. at 824.

This Court agrees that there is no public policy bar which prevents arbitrators from considering claims for punitive damages. The Supreme Court has emphasized that the arbitration process can be a viable method of dispute resolution only if “it serves as a vehicle for handling any and all disputes that arise under the agreement,” United Steelworkers v. American Mfg. Co., 363 U.S. 564, 567, 80 S.Ct. 1343, 1346, 4 L.Ed.2d 1403 (1960), and only if the arbitrators are given a great deal of flexibility in the fashioning of appropriate remedies. United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (1960). The remedy of punitive damages is one to which a plaintiff is traditionally entitled under Alabama law “when the fraud is malicious, oppressive or gross and the misrepresentation is made with knowledge of its falsity and with the purpose of injuring him.” Boulevard Chrysler-Plymouth v. Richardson, 374 So.2d 857 (Ala.1979). That is precisely what the arbitrators found in this case. Where the arbitrators are concededly vested with the authority to hear and resolve the plaintiffs claim of fraud, it would be anomalous indeed to deny them remedial power commensurate with that authority. Compare Teamsters Union, Local No. 115 v. DeSoto, Inc., 725 F.2d 931, 937 (3rd Cir.1984) (arbitrator’s remedial power is as broad if not broader than the jurisdiction conferred upon him); American Safety Equipment Corp. v. J.P. MaGuire & Co., 391 F.2d 821, 825 (2d Cir.1968) (“the remedy a statute provides for the violation of the statutory right it creates may be sought not only in ‘any court of competent jurisdiction’ but also in any other competent tribunal, such as arbitration, unless the right itself is of a character inappropriate for enforcement by arbitration”) (emphasis supplied). To deny arbitrators the full range of remedial tools generally available under the law would be to hamstring arbitrators and to lessen the value and efficiency of arbitration as an alternative method of dispute resolution. See Note, Arbitration: The Award of Punitive Damages as a Public Policy Question, 43 Brooklyn L.Rev. 546, 551 (1976). Compare United Steelworkers v. American Mfg. Co., 363 U.S. at 567, 80 S.Ct. at 1346. This would not sit well with the strong federal policy favoring arbitration.

The defendant insists, however, that because an award of punitive damages serves not only to punish the present wrongdoer for willful or wanton misconduct, but also to deter others in society at large, the power to award them should not be wielded by anyone other than a judge or jury. The defendant raises the spectre of overly partial arbiters manipulated by the party in a superior bargaining position, who may award punitive damages out of bias and prejudice. That spectre has more bark than bite, however, for the Arbitration Act expressly provides for the vacation of an arbitral award where the award was “procured by corruption, fraud or undue means,” 9 U.S.C. § 10(a), or where there was “evident partiality or corruption in the arbitrators.” 9 U.S.C. § 10(b). The mere possibility of bias or corruption no more justifies a wholesale withdrawal of the authority of arbitrators to make an award of punitive damages than it would a wholesale withdrawal of their authority to resolve disputes at all. If corruption or evident partiality in fact surfaces, naturally an award of punitive damages emanating from such circumstances should be set aside. Clearly, however, the possibility of an occasional abuse of power is no grounds for an absolute bar on the award of punitive damages by arbitrators.

Kajima also complains that to allow arbitrators to hear and decide claims for punitive damages is to displace the court and jury as an engine for imposing a social sanction designed more to punish and deter than to compensate. Of course, the argument that it is unfair to allow an arbitrator to displace a court and jury is one that has been sounded before. Not only litigants but state courts as well have questioned the ability of arbitrators to properly dispense justice. Many state courts have therefore declared contractual agreements to submit all disputes to arbitration to be totally unenforceable as a matter of public policy because they “defeat the jurisdiction of the courts.” See, e.g., Wells v. Mobile County Board of Realtors, 387 So.2d 140 (Ala.1980). But Congress has enunciated a broad and pervasive federal policy that overrides all such arguments. That policy, embodied in the Arbitration Act, mandates that whenever a written contract evidencing a transaction in interstate commerce contains an arbitration provision, that provision must be given effect by state and federal courts alike, and that “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983). Accord, Southland Corp. v. Keating, — U.S. —, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). Indeed, the very purpose of the Act was to overrule longstanding judicial precedents which declared agreements to submit justiciable controversies to arbitration to be contrary to public policy as displacing the functions of the courts. Southland v. Keating, — U.S. at —, —, 104 S.Ct. at 859, 860, 79 L.Ed.2d at 13, 14. See also American Airlines, Inc. v. Louisville & Jefferson County Air Board, 269 F.2d 811 (6th Cir.1959); National Railroad Passenger Corp. v. Missouri Pacific Railway Co., 501 F.2d 423 (8th Cir.1974); Ultracashmere House, Ltd. v. Meyer, 664 F.2d 1176, 1180 (11th Cir.1981). There is no reason to believe that the Act’s mandate of enforceability did not extend to agreements to arbitrate issues of punitive damages. Nor is there reason to believe that the purposes of punitive awards — punishment of the present wrongdoer and deterrence of others who might otherwise engage in similar conduct — will not be furthered by arbitral awards every bit as much as by formal judicial awards. Indeed, an arbitrator steeped in the practice of a given trade is often better equipped than a judge not only to decide what behavior so transgresses the limits of acceptable commercial practice in that trade as to warrant a punitive award, but also to determine the amount of punitive damages needed to (1) adequately deter others in the trade from engaging in similar misconduct, and (2) punish the particular defendant in accordance with the magnitude of his misdeed. See generally Note, Punitive Damages in Arbitration: The Search for a Workable Rule, 63 Cornell L.Rev. 272 (1978).

The wisdom of allowing arbitrators to consider and resolve issues of punitive damages becomes all the more plain when we consider the practical effect of a contrary result. Defendant urges that merely by agreeing to arbitration, a plaintiff has automatically forfeited his right to punitive damages because arbitrators are prohibited by public policy from awarding such damages. Thus, by entering an arbitration agreement the plaintiff has contractually waived his right to punitive damages. Cf. Baselski v. Paine, Webber, Jackson & Curtis, 514 F.Supp. 535, 543 (N.D.Ill.1981). But compare Davis v. Chevy Chase Financial, Ltd., 667 F.2d 160, 165 (D.C.Cir.1981) (“A party who consents to the inclusion in a contract of a limited arbitration clause does not thereby waive his right to a judicial hearing on the merits of a dispute not encompassed within the ambit of the clause”). Yet, not only would such a mandatory result seriously undermine the value and sufficiency of the arbitral process as a method of dispute resolution, it would also constitute a total frustration of the public policies and purposes served by punitive damage awards. Merely by agreeing to arbitrate a defendant could escape the monetary sanction of punitive damages that the law would otherwise impose upon him for gross and malicious conduct. Both the policies of deterrence and of punishment would be completely thwarted in a broad range of commercial transactions involving agreements to arbitrate. Moreover, granting such automatic immunity could well encourage grossly unjustified conduct in certain cases by making it more economically feasible. Surely that would be a much more serious distortion of public policy than vesting the authority to award such damages in an impartial and experienced arbiter.

Even if the plaintiff who has agreed to arbitration is not deemed to have automatically waived his right to be heard on the issue of punitive damages, the practical effect of a bar on the arbitrability of such issues would be unsatisfactory. In essence, where tort and contract claims are mixed and punitive damages are sought, to follow the Garrity rule in these circumstances would require two trials — one before the arbitrator and then “a separate judicial trial on essentially the same facts— obviously a wasteful exercise.” Note, Punitive Damages in Arbitration: The Search for a Workable Rule, 63 Cornell L.Rev. at 299. This would undermine the chief advantages and purposes of arbitration — to relieve congestion in the courts and to achieve a quick, inexpensive and binding resolution of all disputes that arise between the parties to an agreement. See Ultracashmere House, Ltd. v. Meyer, 664 F.2d 1176, 1179 (11th Cir.1981).

Where parties have selected arbitration as a means of dispute resolution, they have presumably done so in recognition of the speed and inexpensiveness of the arbitral process; federal courts ill serve these aims and that of the facilitation of commercial intercourse____ It is particularly necessary to accord the ‘narrowest of readings’ to the excess-of-authority provision of Section 10(d). That provision does not, it must be stressed, confer on courts a general equitable power to substitute a judicial resolution of a dispute for an arbitral one____

Davis v. Chevy Chase Financial, Ltd., 667 F.2d at 164-165. Of course, where the parties expressly exclude certain claims or issues from their agreement to arbitrate, a certain amount of repetitiveness and the attendant failure to promote judicial economy may have to be tolerated. Id. But otherwise, the principles of arbitral flexibility, judicial deference to an arbitrator’s superior knowledge of a given business, and extreme skepticism of- judicial intrusion into the disputes parties have agreed to arbitrate all militate in favor of the simpler, more efficient and less costly option of allowing the arbitrator to handle “any and all disputes that arise under the agreement,” including claims for punitive damages. See United Steelworkers v. American Mfg. Co., 363 U.S. at 567, 80 S.Ct. at 1346; Moses H. Cone Memorial Hospital v. Mercury Constr. Co., 460 U.S. at 24-25, 103 S.Ct. at 941-942. See generally Southland Corp. v. Keating, — U.S. —, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967).

CONCLUSION

It may be, as the defendant belatedly claims, that the informalities and lack of judicial review attendant to arbitration render that method of dispute resolution less desirable than a full judicial trial when it comes to the airing of claims for punitive damages. But having chosen arbitration as the method of resolution of “all claims, disputes and other matters ... arising out of or relating to” its agreement with Willoughby Roofing, and having vested the arbitrators with authority to grant “any remedy or relief which is just and equitable,” it may fairly be said that Kajima got what it bargained for. The words of Judge Learned Hand are most pertinent in this regard:

Arbitration may or may not be a desirable substitute for trials in courts; as to that the parties must decide in each instance. But when they have adopted it, they must be content with its informalities; they may not hedge it about with those procedural limitations which it is precisely its purpose to avoid. They must content themselves with looser approximations to the enforcement of their rights than those that the law accords them, when they resort to its machinery.

American Almond Products Co. v. Consolidated Pecan Sales Co., Inc., 144 F.2d 448, 450 (2d Cir.1944).

If parties to an arbitration agreement desire to exclude the issue of punitive damages from the consideration of an arbitrator and reserve it for judicial hearing, they are free to specify that in their contract. Otherwise, the strong federal policies favoring arbitrability of issues and remedial flexibility of arbitrators will govern. Those principles are dispositive of this case.

Accordingly, the motion to vacate or modify the arbitrator’s award will be DENIED, and the Court will enter a judgment in accordance with the arbitral award.

       The Court acknowledges the exceptional contribution of Michael R. Pennington, Law Clerk, to the preparation of this opinion.

      . See Defendant's Memorandum in Support of Motion to Stay Judicial Proceedings Pending Arbitration, at p. 8.

      . The defendant also moved to vacate or modify the award of compensatory damages, alleging a lack of evidence to support certain aspects of the award. These contentions have been overruled by a separate order.

      . Defendant's Memorandum in Support of Motion to Stay Judicial Proceedings Pending Arbitration, at p. 8. (Emphasis in original).

      . This more explicit award, like its predecessor, was signed by only two of the three arbitrators on the panel.

      . Since the arbitration provision in this case is contained in a contract evidencing a transaction involving interstate commerce, the policies and provisions of the Federal Arbitration Act, 9 U.S.C. § 1 et seq., govern all questions of the validity, interpretation, construction and enforceability of the arbitration agreement. See Moses H. Cone Memorial Hospital v. Mercury

        Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983). Therefore, the questions presented here will be analyzed in terms of "the body of federal substantive law of arbitrability, applicable to any agreement within the coverage of the Act.” Id.

      . See note 3, supra, and accompanying text.

      . Arbitration clauses expressly withholding from arbitrators the authority to decide claims for punitive damages are certainly not uncommon. See, e.g., Automotive, Petroleum and Allied Industries Employees Union, Local 618 v. Sears, Roebuck & Co., 581 F.Supp. 672 (E.D.Missouri 1984); Humble Oil & Refining Co. v. Local Union 866, 211 F.Supp. 281 (S.D.N.Y.1967).

      . See note 3, supra, and accompanying text.

        . In truth, none of these cases actually involved factual findings or allegations sufficient to support the award of punitive damages under applicable substantive law. The case sub judice is decidedly different in this respect.

      . Even if other circuits may subscribe to the proposition that arbitrators have no authority to award punitive damages absent an express conferral of such authority, that is not the governing principle in this Circuit. Under the rule of Bonner v. Prichard, 661 F.2d 1206 (11th Cir.1981), this Court is bound by the more liberal rules of construction enunciated by the Fifth Circuit in Minute Maid and Cameron Iron Works. Indeed, the old Fifth Circuit reversed at least one district court for following the restrictive approach of the Mid-Valley case. See Local 369, Bakery and Confectionery Workers I.U. v. Cotton Baking Co., Inc., 514 F.2d at 1237 (5th Cir.1975), reversing 377 F.Supp. 1172 (W.D.La.1974).

      . The arbitration provision in the present case is even broader than that found to authorize the award of punitive damages in Willis, by virtue of the incorporation by reference of Rule 43 of the Construction Industry Arbitration Rules, which expressly authorizes the arbitrators to grant “any remedy or relief which is just and equitable____” Compare Willis, 569 F.Supp. at 822-23.

      . Even if the original arbitration clause were not broad enough in and of itself to authorize the award of punitive damages, by voluntarily submitting the plaintiff’s fraud claims to arbitration without reservation of the claim made for punitive damages and without objecting to the authority of the arbitrators to award the claimed relief, Kajima in effect extended the authority of the arbitrators to include these matters. This is the rule of Piggly Wiggly Operators’ Warehouse, Inc. v. Piggly Wiggly Operators' Warehouse Independent Truck Drivers Union, 611 F.2d 580 (5th Cir.1980). See also Graphic Arts International Union v. Haddon Craftsmen, Inc., 489 F.Supp. 1088 (M.D.Pa.1979) (a party may not await an adverse arbitration award before asserting objections on grounds of which he had knowledge prior to the award); Gibbons v. United Transportation Union, 462 F.Supp. 838 (N.D.Ill.1978) (accord). Cf. Kamakazi Music Corp. v. Robbins Music Corp., 684 F.2d 228, 231 (2d Cir.1982) (where alleged copyright infringer forced copyright holder to submit its claim for infringement to arbitration and urged arbitrator to consider all of the issues between the parties, copyright infringer by its conduct clearly agreed to submit all claims under Copyright Act to arbitrator, including copyright holder’s claim for an award of attorneys’ fees).

      . While these cases are labor cases, the Court finds unconvincing the argument that labor cases are sui generis in this respect. The Arbitration Act provides no basis for such a distinction.

      . On appeal, Helgesteel was reversed on other grounds. 507 F.2d 1053 (7th Cir.1974).

      . While the Cotton court was not entirely convinced that the award in that case was punitive, the Court held, in the alternative at least, that if the award was in fact punitive, it was nevertheless supported by the contract and hence enforceable. 514 F.2d at 1238 (discussion of International Union of Operating Engineers v. Mid-Valley, Inc., 347 F.Supp. 1104 (S.D.Tex.1972)).

      . See, e.g., Joint Board of Cloak, Skirt & Dressmakers Union v. Senco, Inc., 289 F.Supp. 513 (D.Mass.1968) (enforcing arbitral award which was allegedly punitive based partially upon the recognition of legal authority of arbitrators to make such an award).

      . It is disturbing to the Court that although Willis is the one federal case which most squarely addresses the issues presented here and flatly rejects the Garrity rule, neither side called the Court’s attention to the existence of this close and direct precedent. Unfortunately, the same is true of many of the cases cited in this opinion.

      . In fact, it has been said that an arbitration panel’s remedial discretion is so broad that it may sometimes grant equitable relief that even a court could not. Sperry International Trade, Inc. v. Government of Israel, 532 F.Supp. 901 (S.D.N.Y.1982).

      . The general right of recovery for fraud in Alabama is established by § 6-5-101 Ala.Code (1975).

      . Compare Note, Arbitration: the Award of Punitive Damages as a Public Policy Question, 43 Brooklyn L.Rev. 546, 551 (1976): "The result [of application of the Garrity rule prohibiting arbitrators from awarding punitive damages] may be that incomplete recompense is made to an innocent party, while a guileful defendant is free to act with impunity without any fear of punitive sanction. Clearly, the imposition of punitive sanctions might lead to an unfair result where, as in arbitration proceedings, a party could use his superior bargaining position to improper ends. Nevertheless, the policy favoring the complete and fair resolution of private disputes through arbitration will be likely to suffer as a result of the restriction the Garrity court has placed upon an arbitrator’s power to award a full range of damages.”

      . Compare Janmort Leasing, Inc. v. Econo-Car International, Inc., 475 F.Supp. 1282, 1291 (E.D.N.Y.1979) (where claims for punitive damages were "concededly inarbitrable” under contract, separate judicial trial would be had on the issue following arbitration of plaintiff s other claims). See also Davis v. Chevy Chase Financial, Ltd., 667 F.2d 160, 165 (D.C.Cir.1981).


source: Caselaw Access Project

author: MacMAHON, District Judge.

license: Public Domain

text:
    William G. CLARK, Plaintiff, v. INDUSTRY AND LOCAL 338 PENSION AND WELFARE FUND, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Defendant.
    No. 83 Civ. 9298 (LFM).
    United States District Court, S.D. New York.
    Dec. 6, 1984.

      Cohen, Weiss & Simon by Stanley M. Berman and Jani K. Rachelson, New York City, for defendant.
    Jordan & Walster, Montgomery Hollow by K. Randlett Walster, Roxbury, N.Y., for plaintiff.
   OPINION

MacMAHON, District Judge.

Defendant moves for summary judgment, pursuant to Rule 56, Fed.R.Civ.P. There are no material facts in issue. Defendant contends that plaintiff’s claim is barred as a matter of law under the doctrine of res judicata. Alternatively, defendant contends that under the doctrine of collateral estoppel, plaintiff may not relitigate certain issues previously determined, and, accordingly, defendant is entitled to judgment as a matter of law.

This action arises from plaintiff’s claim that he is owed past service credit under defendant’s pension plan. The trustees of defendant Industry and Local 338 Pension Fund determined that plaintiff is entitled to seven years of past service credit for his nineteen years of employment at Matthew Brothers Inc.

On February 9, 1977, the New York State Insurance Department commenced an administrative proceeding against the trustees, alleging that they had violated New York Insurance Law Article III-A by failing to accord plaintiff past service credit for the full amount of his employment. The Insurance Department conducted a four-day evidentiary hearing, and on December 17, 1980 the Superintendent of Insurance decided against the trustees.

The trustees then brought a special Article 78 proceeding which was transferred to the Appellate Division, Second Department. On May 10, 1980, the Appellate Division reversed, holding that the Superintendent had exceeded his jurisdiction because the trustees had carried out their duties in accordance with the requirements of the pension plan and there was no showing that those requirements were arbitrary or capricious. Heithaus v. Lewis, 86 A.D.2d 323, 450 N.Y.S.2d 32 (2d Dept. 1982).

The doctrine of res judicata bars litigation of the same claim in a subsequent proceeding between the same parties or their privies with respect to issues actually decided as well as those which might have been decided. Winters v. Lavine, 574 F.2d 46, 55-56 (2d Cir.1978). Defendant argues that the instant complaint alleges the same claim as that determined by the Appellate Division in Heithaus v. Lewis, supra, namely, plaintiff's entitlement to past service pension credit, and, therefore, that plaintiff is bound by that earlier judgment. Plaintiff counters that his complaint is not precluded by the previous decision because (1) he was not a party or a “privy” to the earlier proceeding, and (2) the claims in the two proceedings are not the same.

PRIVITY

“It is a violation of due process for a judgment to be binding on a litigant who was not a party or a privy and therefore has never had an opportunity to be heard.” Staten Island Rapid Transit Operating Authority v. I.C.C., 718 F.2d 533, 542 (2d Cir.1983), citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 & n. 7, 99 S.Ct. 645, 649 & n. 7, 58 L.Ed.2d 552 (1979). “Privity,” for purposes of judicial finality, generally means:

“concurrent relationship to the same right of property; successive relationship to the same right of property; or representation of the interests of the same person.”

Staten Island Rapid Transit Operating Authority v. I.C.C., supra, 718 F.2d at 543, citing 1B J. Moore & T. Currier, Moore’s Federal Practice ¶ 0.411[1] at 1255 (2d ed. 1965). Plaintiff is therefore bound by the prior judgment if his interests were adequately represented by the Department of Insurance, and the Department was vested with the authority of representation. See, e.g., Ellentuck v. Klein, 570 F.2d 414, 425 (2d Cir.1978).

New York CPLR § 7802(c) (McKinney 1981) provides that:

“Where the [Article 78] proceeding is brought to restrain a body or officer from proceeding without or in excess of its jurisdiction in favor of another, the latter shall be joined as a party.”

The effect of this provision is to require joinder of a party in an Article 78 proceeding where that party’s interest is at stake. Since plaintiff was not joined in the Article 78 proceeding, his interest was not adequately represented. Moreover, although the Department of Insurance has broad statutory powers of investigation and accounting, we find no indication that the Department is authorized to litigate on behalf of citizens. See N.Y. Insurance Law § 37 (McKinney 1983).

Furthermore, plaintiff never authorized the Department to represent him. The Department brought the proceeding on its own volition, and plaintiff neither exercised nor possessed any control over the action at any level. He attended only one of the four days of hearings, and then only because the Department called him to testify. He was never given an opportunity to present evidence, to make legal arguments, or to call witnesses. Plaintiff thus was not accorded a full and fair opportunity to litigate his claim.

; Since plaintiff was neither a party nor a privy to the prior proceeding, due process prohibits precluding him from bringing the instant claim even if the same claim was resolved in the prior proceeding. Parklane Hosiery Co. v. Shore, supra. It is therefore unnecessary to discuss the issue of whether the claims in the two proceedings are the same. For the foregoing reasons, we hold that plaintiff is not barred from bringing the instant claim under the doctrine of res judicata.

Defendant next argues that plaintiff is collaterally estopped from challenging the Appellate Division’s finding that the trustees “properly made [the] determinations as to the eligibility of [plaintiff] ... for pension credits, in accordance with the duly adopted provisions of the Plan.” Heithaus v. Lewis, supra, 86 A.D.2d at 328, 450 N.Y.S.2d 32. Collateral estoppel precludes the relitigation of identical issues decided in a prior claim and decisive of a later claim unless a fair and full opportunity to contest that decision was not afforded. Schwartz v. Public Administrator, 24 N.Y.2d 65, 298 N.Y.S.2d 955, 246 N.E.2d 725 (N.Y.1969).

We decline to hold that plaintiff is collaterally estopped because he had no control of the defense of the prior proceeding, of the decision whether to appeal, or of the prosecution of the administrative hearing. See, e.g., United States v. Depilatron Epilator etc., 473 F.Supp. 913 (S.D.N.Y.1979).

Accordingly, defendant’s motion is denied in all respects.

So ordered.

      . The failure to join plaintiff could have been raised by the parties in the Article 78 proceeding. However, their failure to raise the issue there does not result in preclusion to plaintiff, for an absent party whose joinder was mandatory is not bound by the judgment. Provident Tradesmen’s Bank & Trust Co. v. Patterson, 390 U.S. 102, 110, 88 S.Ct. 733, 738, 19 L.Ed.2d 936 (1968).

      . Article III-A of the New York Insurance Law authorizes the Department to supervise employee trust funds for the protection of employee beneficiaries and their families. The statute provides for the registration of funds (§ 37-b), maintenance of fund records and periodic examination of fund affairs (§ 37-c), and annual statements and reports to the Superintendent, employers and employees (§§ 37-g, 37-h, 37 — i). However, it does not provide for litigation on behalf of employees. N.Y. Insurance Law § 37 (McKinney 1983).

      . Cf. Newsday, Inc. v. Ross, 80 A.D.2d 1, 437 N.Y.S.2d 376 (2d Dept. 1981) (Industrial Commissioner and an employee were in privity in a prior proceeding based on a statute which authorized Commissioner to take assignments of employees’ claims for wages and to sue on such claims).

      . Cf. Roode v. Michaelian, 373 F.Supp. 53 (S.D.N.Y.1974) (privity found where plaintiff had prosecuted administrative proceeding seeking reinstatement and had opportunity to present evidence and legal argument to agency and to court).

      . It should be noted, however, that, although these two claims involve overlapping issues and similar questions of law and evidence, it is not clear that "a different judgment in the second would destroy or impair rights or interests established in the first." Schuykill Fuel Corp. v. Nieberg Realty Corp., 250 N.Y. 304, 165 N.E. 456 (N.Y.1929). In the Article 78 proceeding, the trustees obtained a determination that the Superintendent of the Insurance Department had exceeded his jurisdiction in directing the trustees to afford pension credits in a fashion contrary to the pension plan. Plaintiffs claim, however, is for enforcement of the terms of the plan.


author: THOMAS F. HOGAN, District Judge.

text:
    Aaron HOLSEY, Plaintiff, v. James P. CHANDLER, et al., Defendants.
    Civ. A. No. 84-2309.
    United States District Court, District of Columbia.
    Dec. 6, 1984.

      Aaron Holsey, pro se.
    Rebecca L. Ross, Asst. U.S. Atty., Washington, D.C., for defendants.
   MEMORANDUM OPINION AND ORDER

THOMAS F. HOGAN, District Judge.

Plaintiff, proceeding pro se, filed the instant action under 42 U.S.C. § 1983 in this Court on July 27, 1984. In his complaint, plaintiff alleges that James P. Chandler, a Washington attorney, William K. Slate, the Clerk of the Court of Appeals for the Fourth Circuit, and Dulcey B. Fowler, Senior Staff Counsel of the Fourth Circuit Court of Appeals, “subject[ed] plaintiff to denial of due process.” Complaint, 4.

The facts, briefly stated, are as follows:

Defendant Chandler was appointed to represent plaintiff before the United States Court of Appeals for the Fourth Circuit in a civil case entitled Holsey v. Bass. Defendant Fowler, as Senior Staff Counsel for the Fourth Circuit, appointed Chandler, and defendant Slate, as the former Clerk of the Fourth Circuit, corresponded with plaintiff regarding the appointment and the progress of the case.

Plaintiff claims that defendants failed to keep him sufficiently informed of the progress of his appeal, failed to notify him of oral argument, and failed to send him copies of briefs in a timely fashion.

Plaintiff further suggests that these alleged shortcomings in the appellate process “denyed (sic) Holsey unhindered access to the Courts, as well as to Due Process of law....”

The federal defendants (Fowler, Slate, and Gleacon) have moved to dismiss and defendant Chandler has moved for dismissal, or, in the alternative, for summary judgment. Plaintiff has filed a cross-motion for summary judgment.

The Court has carefully considered the motions of the parties and the record herein and concludes that judgment must be entered for the defendants.

At the outset, it appears that the action against the federal defendants in their official capacities must be dismissed because of the absence of a waiver of sovereign immunity. Because plaintiff is seeking a money judgment against the United States, the failure to proceed in accordance with the limited waiver of immunity provided in the Federal Tort Claims Act is fatal to this portion of the claim. See Lehman v. Nakshian, 453 U.S. 156, 101 S.Ct. 2698, 69 L.Ed.2d 548 (1981). Further, plaintiffs constitutionally-based due process claim against defendant Chandler — a private citizen — must also be dismissed. Chandler's actions in this case were those of private counsel performing a traditional function. The fact that Chandler was appointed to represent the plaintiff does not mean that his acts were “under color of law.” See Polk County v. Dodson, 454 U.S. 312, 102 S.Ct. 445, 70 L.Ed.2d 509 (1981). Because plaintiffs complaint against defendant Chandler is a claim of deprivation of constitutional rights, it must be dismissed.

Finally, the claims against the federal defendants in their individual capacities must also be dismissed. These defendants are entitled to at least a qualified immunity from damages for acts taken within the scope of their authority. There is absolutely no suggestion that these defendants “violate[d] clearly established constitutional rights of which a reasonable person would have known.” Fitzgerald v. Harlowe, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). In fact, the affidavits submitted, as well as the complaint itself, demonstrate conclusively that defendants acted conscientiously and in good faith to aid the plaintiff.

This Court also holds that, the complaint fails to state a claim upon which relief may be granted, even under the most liberal construction of the pleadings. Accepting the allegations of the complaint as true, there is not any indication of wrongdoing on the part of any federal or state actors. See Haines v. Kemer, 404 U.S. 519 (1972) (per curiam). In fact, plaintiff’s claim meets — or comes perilously close to meeting — the “frivolous or malicious” standard for dismissal under 28 U.S.C. § 1915(d). See Gale v. Federal Bureau of Prisons, 628 F.2d 224 (D.C.Cir.1980).

Plaintiff Holsey’s record of abusive and wasteful federal court litigation is well documented and need not be repeated here. See e.g., Holsey v. Bass, 519 F.Supp. 395 (D.Md.1981). Judge Watkins’ comment on the unlikely prospect of plaintiff Holsey filing a meritorious claim at this point in his career is noted for the record. See id. at 415. Nevertheless, the Court has carefully reviewed the factual allegations of the complaint in light of the potential constitutional, statutory, and common law duties of the defendants. The Court finds no violation of any legal duty or responsibility owed to plaintiff. Suffice it to say that appointed appellate counsel’s failure to correspond regularly or to invite plaintiff to oral argument does not by any stretch of the imagination rise to the level of a constitutional violation.

Accordingly, it is this 6th day of December, 1984 hereby

ORDERED that:

1) Defendant Chandler’s Motion to Dismiss is Granted;

2) Defendants Fowler, Slate, and Gleacon’s Motion to Dismiss is Granted;

3) Judgment shall be, and is, entered for the defendants.

      . The current clerk, Mr. John Gleacon, has been substituted in his official capacity pursuant to Rule 25(d) of the Federal Rules of Civil Procedure.

      . Plaintiff's Amended Complaint at 3.


author: ALLEN SHARP, Chief Judge.

text:
    Ross CALDWELL, Plaintiff, v. NATIONAL ASSOCIATION OF HOME BUILDERS, Defendant.
    No. D 83-74.
    United States District Court, N.D. Indiana, South Bend Division.
    Dec. 7, 1984.

      Charles Asher, South Bend, Ind., for plaintiff.
    Gregory L. Kelly, South Bend, Ind., Dudley C. Rochelle, Peter R. Spanos, Atlanta, Ga., for defendant.
   MEMORANDUM AND ORDER

ALLEN SHARP, Chief Judge.

This case involves an alleged violation of the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq. (the Act). The defendant, National Association of Home Builders (NAHB) filed a motion for summary judgment on the ground that plaintiff, Ross Caldwell (Caldwell), failed to file a timely charge with the EEOC. Both parties have briefed the issues and oral argument was held on December 3, 1984. For the reasons that follow, defendant’s motion for summary judgment will be granted.

Summary judgment must be granted when the pleadings, depositions, answers to interrogatories, admissions on file and any affidavits demonstrate that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In reviewing the pleadings and supporting documents, they must be viewed in the light most favorable to the non-moving party. Trulson v. Trane Co., 738 F.2d 770, 771 (7th Cir.1984); Korf v. Ball State University, 726 F.2d 1222, 1226 (7th Cir.1984); Egger v. Phillips, 710 F.2d 292, 296 (7th Cir.1983).

Plaintiff was employed by the NAHB beginning on June 1, 1972 as an Assistant Director of the Association Services Department at the initial annual salary of $14,000.00. In that position, he was to function as the NAHB resident field representative in Division “F”. Throughout his employment with NAHB, the plaintiff served as Regional Representative. NAHB abolished the Regional Representative Program, in which Caldwell was employed in the Fall of 1981, to be effective October 31, 1981. Caldwell was informed of that decision by letter dated September 25, 1981 which also contained information with respect to severance pay that Caldwell would receive.

At the time the Regional Representatives Program was abolished, the Board of Directors of NAHB created the Association Management Services Division (AMSD) which provided some of the services previously provided by the Regional Representative Program. The AMSD consisted of four employees as opposed to twelve positions authorized under the Regional Representatives Program.

After the announcement of the abolition of the Regional Representative Program at the 1981 Fall Board Meeting, several NAHB members and staff persons of local affiliates wrote to David Stahl requesting that plaintiff be retained as an employee of NAHB, either in the position of Regional Representative or in a new position. Plaintiff was temporarily reemployed by NAHB to continue performing his duties as Regional Representative during the time AMSD was being staffed and organized. This temporary employment was effective January 4, 1982, and was originally supposed to last until March 21st. The March 21st date was later extended until July 2, 1982, which allowed plaintiff to obtain additional vested rights in the NAHB Pension Plan. Plaintiff was not informed by NAHB that his continuing performance on a temporary basis of the duties of a Regional Representative was any indication that his position as Regional Representative had not been abolished or that it had been reinstated. Plaintiff believed himself to be a victim of age discrimination by reason of the abolition of the Regional Representative Program in the Fall of 1981.

Staffing of the AMSD was done by James Chiswell, Staff Vice President for the AMSD after he was hired by Executive Vice President David E. Stahl. In addition to the position of Staff Vice President, three positions were open in the newly created AMSD for Assistant Directors. Applicants for these positions were invited from state and local officers of local chapters affiliated with NAHB. Applicants were sought who had a minimum of five years experience as an association manager, preferably in the home building industry, who could excel in all aspects of association management, who were interested in advising and providing educational programs for local and state leadership, and who could be creative innovators with high energy levels, flexible approaches to problem solving, good analytical skills, and capable of helping others do their jobs effectively. The qualifications expected of applicants for AMSD were disseminated at the 1981 Fall Board Meeting, and in a memorandum of Executive Vice President Stahl which Caldwell had seen in October 1981.

Plaintiff applied for all available positions within the AMSD, including not only the positions of Assistant Director but also that of Membership Director after the termination of Kip Orr from that position. His original application letter was written in late September or early October. He met with NAHB Executive Vice President Stahl sometime in the middle of October, and Caldwell was informed he would be considered. When the job of Membership Director in AMSD became open, Caldwell submitted a letter of application to Jim Chiswell for that position. Sometime in March or April, plaintiff met with Jim Chis-well and was told he was being considered for Membership Director and for positions remaining open within the AMSD.

Plaintiff was not hired into any of these positions within AMSD. Two of those hired as Assistant Directors were Bill Carr and Bob McPeck, both within the protected age group, and both having more years of experience as Regional Representatives with NAHB, and also having direct experience either in association management or in education. The only Assistant Director hired who was outside the protected age group, Cindi Warner, had twelve years experience in association management. James Chiswell, hired as Staff Vice President for AMSD, had several years experience in association management, including being an Executive Office of an NAHB affiliate state organization. James DeLizia, hired as Membership Director, had over ten years experience in association related work, as well as educational background and communication skills superior to Caldwell’s. James DeLizia is also outside the protected age group.

Plaintiff was informed by telephone on May 20,1982, that he had not been selected for the last available position within AMSD. Plaintiff filed a grievance with NAHB on May 24, 1982. Jim Chiswell called plaintiff in response to his grievance and explained that those hired were more qualified than plaintiff. This conversation was followed up with a letter responding to plaintiff’s grievance on June 9, 1982. NAHB did not misrepresent or fraudulently conceal from Caldwell the facts necessary to support his charge or induce him to delay filing his charge with the EEOC. Caldwell filed his charge of discrimination with the EEOC on August 9, 1982 and an amended charge on August 20, 1982 alleging that he was discriminated against on the basis of age. Caldwell’s charge filed with the EEOC reads as follows:

I worked for the National Association of Home Builders for approximately ten years. I understand it to be a non-profit Illinois corporation headquartered in Washington, D.C. It is an educational and lobbying organization for home builders.
My job was as a regional representative. There were approximately 12 regional representatives in the employ of NAHB for the last several years. By the fall of 1981, almost all of the regional representatives were within the protected age classification of the Age Discrimination in Employment Act. I am 59V2 years old. Apparently plans were developed in late 1981 and were implemented in 1982 to do away with the regional representatives and to open a new division entitled Association Management Services Division to carry on the same function as was carried on by the regional representatives. I and the vast majority of the regional representatives were terminated and the persons hired into the Association Management Services Division were, at least for the most part, in their 20’s and 30's. All of my evaluations by the NAHB were excellent and I was always told that I was an extremely beneficial asset of the Association. I believe that I have been discriminated against on the basis of my age. I was terminated finally on July 2, 1982.
I applied for the position of director of membership services as well as all positions within the Association Management Services Division. I was not hired in the position of director of membership services or in any position in the Association Management Services Division. I believe that three of the five persons holding the positions for which I applied are under the protected age range of the Age Discrimination in Employment Act. Those three persons under the protected age range of the Age Discrimination in Employment Act were also not previously employees of the National Association of Home Builders.
I believe that I have also been discriminated against in terms and conditions of employment because the pay and benefits extended to me during my employment by the National Association of Home Builders was substantially less advantageous than those extended to persons now acting as director of the membership services and acting as members of the Association Management Services Division.

Section 7(d)(1) of the Act, 29 U.S.C. § 626(d)(1), requires that an individual file a charge alleging unlawful discrimination within 180 days after the claimed unlawful practice occurred. The 180 days period is controlling here since Indiana is not a deferral State for purpose of the ADEA. Keitz v. Lever Bros. Co., 563 F.Supp. 230, 234 (N.D.Ind.1983). Although the 180 day limit is not jurisdictional in nature and may be tolled for equitable reasons, failure to file a timely charge bars an action unless the plaintiff satisfies the court that the filing deadline was tolled on equitable grounds. See Kephart v. Institute of Gas Technology, 581 F.2d 1287 (7th Cir.1978).

The first step in determining the timeliness of a discrimination complaint is to identify precisely the “unlawful employment practice” alleged by the employee. Delaware State College v. Ricks, 449 U.S. 250, 258, 101 S.Ct. 498, 504, 66 L.Ed.2d 431 (1980). In his charge filed with the EEOC and in his deposition, plaintiff maintained that he believed he was a victim of age discrimination at the time he was terminat-. ed by the NAHB due to the elimination of the Regional Representatives Program. The Supreme Court in Delaware State College v. Ricks, 449 U.S. 250, 257-58, 101 S.Ct. 498, 503-04, 66 L.Ed.2d 431 (1980), established that a plaintiff complaining of unlawful discrimination in his discharge from employment must file a charge of discrimination within 180 days of the date on which the decision to terminate is made by the employer and communicated to the employee. Construing language in Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(e), which is identical to the language of Section 7 of the Age Discrimination in Employment Act, requiring that a complaint be filed within 180 days “after the alleged unlawful employment practice occurred,” the Court concluded that the relevant date for commencing the 180 day period was the date upon which the decision was made and communicated to Ricks that his tenure was denied, not the date of termination following the one year contract offered him upon denial of tenure. Following Ricks, the Supreme Court has also held that the statute of limitations under Title VII begins to run from the date when notice of termination is given, not the date on which the employee is actually terminated. Chardon v. Fernandez, 454 U.S. 6, 102 S.Ct. 28, 70 L.Ed.2d 6 (1981). The rule of Ricks and Chardon, that notice rather than actual discharge constitutes the act of discrimination, applies to age discrimination claims. Heiar v. Crawford County, 746 F.2d 1190 (7th Cir.1984).

The decision to terminate plaintiff, along with the other Regional Representatives, was made at the 1981 Fall Board Meeting of NAHB during September, communicated to the plaintiff at that meeting, and restated in a letter from the Executive Vice President of the NAHB to Caldwell on September 25, 1981. Therefore, the time for plaintiff to file his charge of discrimination began to run no later than the latter part of September, at least by the time he received the termination letter dated September 25. However, even if the court would consider the date that plaintiff was terminated and received his severance pay, October 31, 1981, as the latest date upon which the time period for filing began to run, Caldwell’s charge, which was filed August 6, 1982 was still untimely.

Plaintiff argues in his reply to defendant’s motion for summary judgment that his claim accrued on May 20, 1982 when he was informed that he had not been selected for the last remaining position with the AMSD because the NAHB had not followed its terms of employment in repositioning or rehiring plaintiff. Plaintiff did not however state in his charge, or even imply, that he was basing an independent claim of age discrimination on any alleged promises in the NAHB Employee Handbook. It is a well established principle of employment discrimination litigation that claims which are not addressed in the charge of discrimination may not be raised in subsequent litigation, because of the statutory policy expressed in both Title VII and the ADEA that potential defendants must become aware of the charges against them so that good faith negotiation and an appropriate opportunity by the EEOC to conciliate the charge is obtained. See, e.g., Wippel v. Prudential Insurance Company, 33 FEP Cases 412, 413 (D.M.D.1982). The courts, including the Seventh Circuit, have held that, in order to be a basis for subsequent litigation, the plaintiff’s charge of discrimination must encompass the claims asserted. Limongelli v. Postmaster General, 707 F.2d 368, 373 (9th Cir. 1983); Carrillo v. Illinois Bell Telephone Company, 538 F.Supp. 793, 798 (N.D.Ill. 1982) (Title VII demotion and discharge complaint may not include allegations of discrimination on the basis of pregnancy or race, because these alleged practices were not included within the scope of the EEOC charge, citing Jenkins v. Blue Cross Mutual Hospital Insurance, Inc., 538 F.2d 164, 168 (7th Cir.1976)); Jackson v. Ohio Bell Telephone Company, 555 F.Supp. 80, 83 (S.D.Ohio 1982) (discriminatory discharge complaint does not include claim concerning maintenance of discriminatory seniority system); Miller v. Walker Division of Butler Manufacturing Company, Inc., 577 F.Supp. 948, 950-51 (S.D.W.Va.1984) (EEOC charge alleging discriminatory discharge does not include claim for alleged discrimination in salary, promotions, and treatment during employment). Caldwell’s claim of age discrimination is based upon his discharge and alleged replacement with younger employees whose pay and benefits exceeded his. It does not exclude a charge of failure to hire as a separate claim of age discrimination so plaintiff’s argument that the commencing date should be May 20, 1982 is not supported by law.

Further, the plaintiff has not satisfied the court that the filing deadline should be tolled for equitable reasons. In Wallace J. Vaught v. R.R. Donnelley & Sons Co., 745 F.2d 407 (7th Cir.1984), the Seventh Circuit held that the EEOC filing deadline begins to run when facts that would support a charge of discrimination were apparent or should have been apparent to a person with a reasonably prudent regard for his rights similarly situated. At 410. It is apparent that Caldwell knew facts that would support a discrimination charge in September 1981 and failed to go to the EEOC until the following August. The hope by an employee that he might be rehired or his fear that the filing of a charge of discrimination might diminish his chances of being rehired will not operate to toll the time limitations under the Act. Mayor v. Western Electric Co., Inc., 487 F.Supp. 84 (W.D.Mo.1980). Nor is an aggrieved employee’s fear of retaliation by his employer for asserting an age discrimination claim an excuse for failure to comply with the time requirements of the statute. Platt v. Burroughs Corp., 424 F.Supp. 1329 (E.D.Pa.1976). The pendency of a grievance or pursuit of some other remedy for discrimination also does not toll the time limitations under the statute. Ricks, 449 U.S. at 261, 101 S.Ct. at 505. As stated in Jackson v. Alcan Sheep & Plate, 462 F.Supp. at 87: “Waiting due to faith in the adequacy of one of two independent remedies is no excuse to justify tolling the statute of limitations of the other.” Further, the failure to rehire or a denial of a reapplication for employment as subsequent failure to remedy the act or mitigate its affect are not the unlawful act triggering the administrative limitation period, the termination is and the continuity of employment is insufficient to convert an unlawful act into a continuing violation. See, e.g., Ricks, 449 U.S. at 258, 101 S.Ct. at 504; Jackson v. Alcan Sheep & Plate, 462 F.Supp. 82 (N.D.N.Y.1978); Clark v. Emerson Elec. Mfg. Co., 430 F.Supp. 216 (N.D. Miss.1977). Finally, consideration of an employee for another job with the employer does not toll the time limitations absent misrepresentations or fraudulent concealment of facts by the employer. Vaught v. R.R. Donnelly & Sons Co., supra, at 412.

The facts of this case do not warrant a tolling of the 180 day time limitation imposed on plaintiff to file with the EEOC. The limitation period began running in September 1981 and plaintiff’s August 1982 filing was untimely. Accordingly, defendant’s motion for summary judgment is hereby GRANTED. SO ORDERED.

        . In his brief and argument, plaintiff argued that his case should be analyzed under Hishon v. King & Spalding, — U.S. —, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). In Hishon, the plaintiff alleged that being considered for partner was a term, condition or privilege of employment and as such could not be applied discriminatorily. 104 S.Ct. at 2234. Thus, the unlawful act that would trigger the running of the limitation period was the failure to consider her for partnership. If Caldwell's claim were one for denial of a promotion, absent any prior termination, then his case would in most respects parallel Hishon. However, whereas in Hishon the employee’s termination was a consequence of the decision not to consider her for partnership because she was a woman (and presumably under the rule of Ricks and Chardon not a subsequent act of discrimination giving Hishon the benefit of a later administrative time limitation for filing), in the present case, as has been consistently alleged by Caldwell beginning with his charge of discrimination through his complaint the unlawful employment practice began with the termination of the Regional Representative program. In short, Hishon’s case is a type of alleged failure to “promote”, prior to the termination which was a consequence. In that respect, Hishon is exactly parallel to Ricks. Ricks concerned the denial of tenure to a college teacher, a circumstance in many ways analogous to the denial of partnership at a law firm. Ricks continued in employment subsequent to his notification that he would be denied tenure, and could have argued, as Caldwell does here, that the failure to reappoint him to a subsequent contract of a temporary nature would constitute an independent violation. However, as the Supreme Court expressly held in Ricks, and reaffirmed in Chardon, the act which triggers the running of the administrative limitations period is the act which notifies plaintiff that he may be a victim of alleged discrimination. In Hishon’s case, this was her denial of partnership; in Ricks' case, it was his denial of tenure; in Caldwell’s case, it was the cancellation of the Regional Representative program. Consistent application of the rule of Ricks and Chardon shows, therefore, that Hishon’s charge was presumably timely because filed within the appropriate period after she was notified of her rejection for partnership, but Caldwell’s charge was filed in an untimely manner after he received written and verbal notification of the alleged discriminatory act by which he lost his employment.


author: GONZALEZ, District Judge.

text:
    PEOPLES BANK AND TRUST COMPANY, Executor of the Estate of Norman L. Marxen, Deceased, Plaintiff, v. PIPER AIRCRAFT CORPORATION, Defendant.
    No. 84-8331-CIV.
    United States District Court, S.D. Florida, N.D.
    Dec. 7, 1984.

      John Davidson, Chicago, 111., for plaintiff.
    Joseph Womack, Miami, Fla., for defendant.
   ORDER

GONZALEZ, District Judge.

The issue raised in this case is whether, under the “significant relationships test”, the law of Ohio — where the plaintiff decedent lived, and purchased and hangared his airplane — or the law of Florida — where the defendant airplane company now resides— should be applied in resolving the legal issues arising out of decedent’s fatal airplane crash in Ohio. Defendant Piper Aircraft Corporation (“Piper Aircraft” or “Piper”) has moved to apply Ohio law, while plaintiff argues that the law of Florida should control. The court has considered the arguments raised by the parties, as well as the relevant case law, and has concluded that the law of Ohio shall be applied in these proceedings.

A federal district court sitting in a diversity case must apply the choice-of-law rules of the forum in which it sits. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Acme Circus Operating Co. v. Kuperstock, 711 F.2d 1538, 1541 (11th Cir.1983). Thus, this court must rely on Florida law in resolving the conflicts questions presented in this case.

Florida, like many states, originally used the rule of lex loci delicti, or law of the place of wrong, to resolve choice-of-law questions. When this rule proved to rigid and harsh, the Supreme Court of Florida replaced it with the “significant relationships test” in Bishop v. Florida Specialty Paint Co., 389 So.2d 999 (Fla.1980).

Under the “significant relationships test”, a reviewing court must take into account the contacts and policies of the subject forums as set forth in sections 6, 145 and 146 of the Restatement (Second) of Conflict of Laws.

The “Choice of Law Principles” delineated in section 6 include:

(1) A court, subject to constitutional restriction, will follow a statutory directive of its own state on choice of law.
(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectation,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.

Restatement (Second) of Conflict of Laws § 6 (1971).

Section 145 reads:

(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered. These contacts are to be evaluated according to their relative importance with respect to the particular issue.

Id. § 145.

Finally, section 146 counsels that
n an action for a personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.

Id. § 146.

The presumption borne of the “significant relationships test” is that the law of the forum where the injury occurred determines the substantive issues unless another state has a more compelling interest in the parties or the events. Bishop, 389 So.2d at 1001. Courts typically pay lip service to the other factors listed in sections 6 and 145 of the Restatement (Second), but it is the conduct of the parties and the interests of the states from which flows these other factors. In other words, once the relevant state policies and contacts are identified, it is relatively easy to conclude that the application of the law of one forum or another is predictable, certain and uniform.

Defendant in the instant case seeks to have this court apply the law of the State of Ohio, while plaintiff counters that the law of Florida should control. Resolution of this issue has significant implications, for plaintiff submits that it is unclear whether punitive damages are available under Ohio law, while such relief is permitted under Florida law.

As the following recitation of the facts in this ease demonstrate, Ohio has substantially more contacts with the events and parties than does Florida.

The genesis of this case was the crash of a Piper Aerostar airplane in Ohio. The airplane involved was manufactured in California, purchased in Ohio by an Ohio corporation, hangared in Ohio, and the fatal trip was scheduled to begin and end in Ohio. Less clear is the place where the conduct causing the crash occurred. Plaintiff alleges that defendant negligently designed the Piper Aerostar, Complaint ¶ 3 (filed June 28, 1983), which by their own admission occurred in California. Id. If 2. Plaintiff also contends that defendant negligently developed and sold parts for and promulgated and maintained rules governing the use of the Aerostar aircraft first in California, and later in Florida (where defendant relocated). Plaintiff also avers that defendant negligently and intentionally delayed safety improvements to the Aerostar airplane after learning of its dangerous defects and tendencies. This latter act or omission is alleged to have occurred before plaintiff crashed and while defendant resided in Florida.

Turning next to the citizenship of the parties, the deceased was a citizen of Ohio at the time of his death. Defendant is'a Florida resident with its principal place of business in that state.

The shift from the rule of lex loci delicti to the “significant relationships test” was in part necessary because, under the former rule, a court would have to apply the law of a forum whose contacts with the events and the parties were purely fortuitous. All that has changed in Florida since the Florida Supreme Court rendered its decision in Bishop. In that case, the supreme court applied Florida law in a case involving the crash in North Carolina of an airplane carrying Florida citizens who were headed from Florida to South Carolina. Similarly, Florida law was applied in Harris v. Berkowitz, 433 So.2d 613 (Fla. 3rd DCA 1983), a case in which Florida residents who were driving a Florida-registered vehicle and insured by a Florida carrier were killed in a car crash in Maine. The district court of appeal also applied Florida law in Proprietors Insurance Co. v. Valsecchi, 435 So.2d 290 (Fla.3d DCA 1983), which involved the crash in North Carolina of an airplane rented in Florida and carrying Florida residents. In each of these cases, the court held that the contacts of the non-Florida forum with the event and the parties was happenstance; the car or planes could have crashed in any state along the way.

In this case, however, the crash of Mr. Marxen’s airplane in Ohio was not fortuitous, but could reasonably be expected (to the extent that it unfortunately had to happen at all) because the deceased lived in the state, kept his plane there, and was flying from one point to another in Ohio when he met disaster. Under Bishop, these facts militate strongly in favor of applying Ohio layr. Another Florida decision, State Farm Mutual Automobile Insurance Co. v. Olsen, 406 So.2d 1109 (Fla.1981), supports this view. In State Farm, the supreme court applied Illinois law to a personal injury action arising out of a car accident in Illinois between an Illinois resident and a Florida resident who was insured by a Florida carrier. After noting that Florida law provided for comparative negligence while in Illinois contributory negligence applied, the court found that “Illinois has an interest in the rights of its citizens who are subject to subrogation by the insurer on any uninsured motorist coverage it pays, which interest ... is paramount to the relevant policies of Florida as a forum.” Id. at 1111.

The State Farm decision makes clear that a choice-of-law analysis does not stop with an examination of the subject forums’ contacts with the events and parties. Rather, a court must proceed to consider whether a forum other than the one where the injury occurred has policies which are legally more significant to the underlying occurrences and parties than the interests of the forum where the injury took place.

The two state interests which are of principal concern in this case are the availability and nature of compensatory and punitive damages.

The state in which Mr. Marxen resided before his death has a substantial interest in the nature and extent of his compensatory relief. By living and working in Ohio, Mr. Marxen availed himself of the rights and duties of being an Ohio citizen. One such right is the ability of the deceased and his beneficiaries to be compensated for their injuries. Compared to Ohio, Florida has a low interest in seeing that Mr. Marx-en’s beneficiaries receive their proper distribution of his compensatory award. Plaintiff Peoples Bank and Trust Company opened an ancillary estate in Florida following Mr. Marxen’s death, and some of defendant’s wrongdoings occurred in Florida, but the relationship between Mr. Marxen and Piper Aircraft is centered in Ohio. Recall that Mr. Marxen was an Ohio citizen; his plane was purchased and hangared in Ohio; and his plane crashed while flying from one location to another in Ohio. For the most part, then, the acts or omissions for which plaintiffs now seek compensatory relief arose out of defendant’s breach of duties imposed by Ohio law, and thus Ohio law should be applied to determine the nature and extent of plaintiff’s compensatory award.

Far more problematic is whether Ohio or Florida law should be applied with respect to punitive damages. The decision to permit recovery of punitive damages reflects a legislative judgment to punish wrongdoers and deter future misconduct. See In re Air Crash Disaster Near Chicago, 644 F.2d 594, 610, 614 (7th Cir.1981). Florida courts permit punitive damages. See Martin v. United Security Services, Inc., 314 So.2d 765 (Fla.1975). Conversely, those states which prohibit punitive damages have chosen to protect resident defendants from excessive financial liability thereby encouraging corporate migration. Air Crash, 644 F.2d at 610, 614. Although the Supreme Court of Ohio has not yet decided whether the state’s new wrongful death statute permits the recovery of punitive damages, the court did rule that the statute’s predecessor did not authorize such an award. See Rubeck v. Huffman, 54 Ohio St.2d 20, 374 N.E.2d 411 (1978).

Admittedly, Florida has a strong interest in applying punitive damages. Piper Aircraft resides and does business in Florida, and the state has an interest in promoting airplane safety. The threat of punitive damages undoubtedly affects Piper’s corporate behavior and provides another layer of protection for the public. A state’s policy regarding punitive damages is meant to either police or promote corporate activity, and thus a state in which a corporation resides and does business has a stronger interest in applying its punitive damages policy than does a state in which the corporation does business but does not reside. On that basis, Ohio has a weaker interest than Florida in applying its law on punitive damages.

But Ohio, like Florida, not only has a substantial interest in promoting airplane safety, but it also has a strong interest in not suffering airplane crashes which kill its own citizens. Certainly, the Ohio legislature could have foreseen such a scenario, and thus whatever decision the Supreme Court of Ohio makes on the availability of punitive damages should be given considerable weight. Given the plethora of contacts that Piper has with Ohio, it is reasonable to give equal importance to that state’s policy regarding punitive damages. Overall, then, “under the ‘most significant relationship’ test, when there is a true conflict between laws of states having equal interests in the issue of punitive damages, and when the place of injury has a strong interest in air safety and in protection of air transportation corporations, the law of the place of injury will apply.” Air Crash, 644 F.2d at 616. In Air Crash, a California-bound American Airlines (Delaware corporation with principal place of business in New York and misconduct in Oklahoma) DC-10 designed and manufactured by McDonnell Douglas Corporation (Maryland corporation with principal place of business in Missouri and misconduct in California) crashed shortly after takeoff from an airport in Chicago, Illinois. Significantly, Illinois — the forum whose law was largely applied in the case — prohibited the recovery of punitive damages. In the instant case, Ohio courts may ultimately decide not to permit punitive damages, but its law should still apply.

If defendants such as Piper Aircraft can escape punitive damages even when so significantly connected to a forum where it does not reside or conduct most of its business, then certainly many corporations would set up their principal place of business in those states which prohibit the recovery of punitive damages. This would undermine the policies of those states who seek to police corporate activity which harms their own citizens. Furthermore, deciding the choice-of-law issue with regard to punitive damages solely on the basis of which state enables a plaintiff to recover more money has no principled basis in law, for it disregards the most important aspect of the “significant relationship” test: the contact of the states with the events and the parties. As explained by one Florida court,

[t]he law of conflicts cannot rest upon the proposition ... that lex loci applies when it is more generous than the state of the survivors’ residence.

Proprietors, 435 So.2d at 297 & n. 6.

The instant case presents a more difficult choice-of-law problem than most cases because defendant does have a legally significant contact with Florida. The question is further complicated because Florida permits punitive damages whereas Ohio has not answered the question as it relates to its new wrongful death statute. In resolving the issue, however, the court is continually drawn back to the contacts of the respective forums with the occurrences and the parties. Without question, Ohio has the more important relationship to this case. Undoubtedly, one can formulate a legal construct that produces a different result, but this court is convinced that a rigorous reading of the applicable law requires the application of Ohio law. This result passes constitutional .muster, because Ohio has significant contacts or a significant aggregation of contacts which create state interests with both the parties and the occurrence such that choice of its law is neither arbitrary nor fundamentally unfair. Allstate Insurance Co. v. Hague, 449 U.S. 302, 313, 101 S.Ct. 633, 640, 66 L.Ed.2d 521 (1981).

Accordingly, it is hereby ORDERED AND ADJUDGED that defendant’s motion to apply Ohio law be and the same is hereby GRANTED.

       The Restatement (Second)’s discussion of choice-of-law analysis as regards wrongful death actions also is relevant. Section 175 provides:
      Right of Action for Death. In an action for wrongful death the local law of the state where the injury occurred determines the rights and liabilities of the parties unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.
      Restatement (Second) of Conflict-of-Laws § 175 (1971). Section 178 reads:
      Damages. The law selected by application of the rule of § 175 determines the measure of damages in an action for wrongful death.

      . If "greatest recovery” were the sole criterion, any state with any arguable tangential interest in the litigation could be arbitrarily selected by any plaintiff. It is also improbable that the supreme court intended to confer the greatest liability upon the airline in every case.