of his employment, albeit damages of a different character.
In Rhoads v. Heberling, 306 Pa. Super. 35, 451 A.2d 1378 (Pa. Super. 1982), Judge Popovich alluded to the distinction between a remedy and a claim when he affirmed a judge's instruction to a jury that it could award punitive damages, even if it did not award compensatory damages. He held that such a situation would be acceptable, but it would be "essential  that facts be established that, apart from punitive damages, are sufficient to maintain a cause of action." Id. at 1383.
The Pennsylvania Supreme Court reiterated this analysis in Kirkbride v. Lisbon Contractors, Inc., 521 Pa. 97, 555 A.2d 800 (Pa. 1989), when it addressed whether punitive damages needed to bear a relationship to compensatory damages. Justice Zappala wrote: "If no cause of action exists, then no independent action exists for a claim of punitive damage since punitive damages is [sic] only an element of damages." Id. at 802.
In this case, Mr. Waltman claims he is bringing an action for punitive damages, but Rhoads and Kirkbride show he is really bringing a second action for defamation (based on the same facts and against the same party) and attempting to collect additional relief. The doctrine of res judicata is therefore a bar.
B. The Arbitration Agreement
Mr. Waltman argues that if he had known New York arbitrators could not award punitive damages, he could have had the issue determined unarbitrable, removed from arbitration, and placed before a judicial body that could have granted the relief he deserved. He claims he is now being prejudiced because Fahnestock waited until after the arbitration to challenge the punitive damages award. This argument also fails.
First, nothing requires a party to challenge arbitrability before the arbitration proceedings unless not doing so would create a waiver or laches situation. In fact, as with any trial strategy, Fahnestock's decision to wait involved its own risks, and its success is not grounds for invalidating the result it achieved. Clearly, Mr. Waltman might have tried to remove from arbitration the punitive damages issue himself, and it is conceivable that a court might have granted such a motion.
Second, it is true that when faced with the question of arbitrability, courts inquire whether there is a valid arbitration agreement and whether the dispute is within the scope of the agreement. See A.T.& T. Tech., Inc. v. Communications Workers, 475 U.S. 643, 106 S. Ct. 1415, 1418-9, 89 L. Ed. 2d 648 (1986). It is therefore conceivable that a court could have severed the punitive damages issue from the arbitration.
The problem here would have been, however, that neither New York nor Pennsylvania law provides for a separate cause of action for punitive damages. See Santos v. Security and Law Enforcement Employees, Council 82, AFSCME, AFL-CIO,, 80 A.D.2d 554435 N.Y.S.2d 357, 358 (2d Dept. 1981) (New York); Kirkbride v. Lisbon Contractors, Inc., 521 Pa. 97, 555 A.2d 800 (Pa. 1989) (Pennsylvania). For this reason, even if Mr. Waltman could have withdrawn the punitive damages issue from arbitration, he could not have litigated it as an independent claim.
In addition, the parties' arbitration agreement would have precluded Mr. Waltman from removing his entire claim from arbitration so he could get punitive damages. The parties proceeded under the constitution and rules of the New York Stock Exchange. These regulations require that "any controversy between . . . a member, allied member or member organization and any other person, arising out of the business of such member . . ., shall at the instance of any such party be submitted for arbitration;" and that arbitration is the proper forum for "any dispute, claim or controversy" or "any controversy . . . arising out of employment or the termination of employment." The terms of this agreement required arbitration for any claim.
By accepting employment under these conditions, Mr. Waltman accepted certain advantages and disadvantages. As it turns out, one of the disadvantages was to surrender the chance to collect punitive damages in arbitration -- and quite possibly to collective punitive damages at all. Of course, this outcome does not make the arbitration agreement unfair or permit me to rewrite it. Both Fahnestock and Mr. Waltman are well acquainted with business practices, and I can only assume they understood and intended the implications of their arrangements whatever those implications proved to be.
For these reasons, Mr. Waltman has failed to state a claim for which I can grant relief, and I will grant Fahnestock's motion to dismiss. An order follows.
EDITOR'S NOTE: The following court-provided text does not appear at this cite in 792 F. Supp. 31.
AND NOW, this day of June, 1992, it is hereby ordered that:
1. Defendant Fahnestock & Co., Inc.'s motion to dismiss is granted.
2. This matter is dismissed.
BY THE COURT
J. William Ditter, J.
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