Respondents Brief — Gilmer v. Interstate/Johnson Lane Corp.

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___ INTERSTATE/JOHNSON LANE CORPORATION,

- On Writ

United States Court Of

‘Fourth Circu

—+

BRIEF ON THE MERITS FOR RESPONDENT

: +

*James B. Spears, JR.

Rosert S. Puirer

HAYNswortH, BALDWIN, JOHNSON

& Greaves, P.A.

901 West Trade Street

Suite 1050

Charlotte, NC 28202

(704) 342-2588

Attorneys for Respondent

“Counsel Oy Reed

QUESTION PRESENTED

May a court in accordance with the Federal Arbitra-

tion Act, 9 U.S.C. §§ 1-15, compel arbitration of an indi-

vidual claim of age discrimination brought under the Age

Discrimination in Employment Act, 29 U.S.C.

§§ 621-633a?

PARTIES AND LIST OF

AFFILIATED CORPORATIONS

See page ii of Respondent's Brief in Opposition to the

Petition.

ill

TABLE OF CONTENTS

Page

EEE EE - i

Parties and Lists of Affiliated Corporations ........ ii

cece cede eecescceccecesesccess Vv

Statutory and Other Provisions Involved........... 1

te aes accdcccecesececcees I

etek sel ececcteecsecescecsess 3

EGR va cecccceccvcercessesscccses 7

I. THE FAA REQUIRES ENFORCEMENT OF PETI-

TIONER’S AGREEMENT TO ARBITRATE

BECAUSE CONGRESS HAS NOT EXCEPTED

ADEA CLAIMS FROM THE MANDATE OF THE

FAA AND SUCH CLAIMS ARE NOT INHER-

ENTLY UNSUITABLE FOR ARBITRATION..... 7

A. Petitioner's Arguments That Arbitration

Cannot Adequately Resolve His ADEA

Claim Are Neither Legally Nor Factually

Sufficient To Avoid Arbitration............ 13

1. Petitioner's Policy Arguments About

The Adequacy Of Arbitration To Resolve

A Statutory Claim Are Not Legally Suffi-

cient To Avoid Enforcement Of His

eee b ee casuccesccecsceces 13

The Arbitral Procedures Applicable To

Petitioner's ADEA Claim Provide A

Sound And Fair Method For Resolving

His Claim On Its Merits............... 17

TABLE OF CONTENTS - Continued

Page

B. Petitioner's Concerns About The Relative

Bargaining Powers Of The Parties Are Not A

Proper Basis For Denying Arbitration...... 26

C. The Fourth Circuit Correctly Ruled That

Arbitration Would Not Conflict With The

Statutory Enforcement Scheme Established

ee We reas ekntaacdsevenudeuaunedaeos 29

D. Alexander, Barrentine, McDonald And Buell

Do Not Preclude Arbitration Of ADEA

Si ectakGdaonkchuthrdscvetbecueedvasds 35

E. Summary of Argument .................... 40

ll. THE ARBITRATION AGREEMENT APPLICA-

BLE TO PETITIONER’S CLAIMS IS ENFORCE-

ABLE UNDER THE FEDERAL ARBITRATION

TABLE OF AUTHORITIES

Page

Cases

A. G. Edwards & Son, Inc. v. Smith, 11 Empl. Ben.

Coord. (BNA) 2430 (D. Ariz. 1989)................ 45

Alberto-Culver Co. v. Scherk, 484 F.2d 611 (7th Cir.

1973), rew’d, 417 U.S. 506 (1974)................... 17

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974) passim

Alford v. Dean Witter Reynolds, Inc., 905 F.2d 104

al a Wcanduesuuwie dGiaudekeawundenes boas. 40

American Postal Workers Union v. United States

Postal Serv., 823 F.2d 466 (11th Cir. 1987).......... 46

Andros Compania Maritima v. Marc Rich & Co., AG.,

ee ee OE csc eacciduannscdede sans 19

Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc.,

ee FS fe | | rere 41

Aspero v. Shearson American Express, Inc., 768 F.2d

ee ee OE a al ce dcunda cn cinchetenseebnes 44

Atchison, Topeka and Santa Fe Ry. Co. v. Buell, 480

& J eee eee 35, 36, 37, 38, 39, 41

Barrentine v. Arkansas-Best Freight System, Inc., 450

ee Se Gea acddadacanecaaae a 35, 37, 38, 39, 41

Bernhardt v. Polygraphic Co. of Amer., Inc., 218 F.2d

948 (2d Cir. 1955), rev'd, 350 US. 198 (1956) ...... 49

Brown v. Gilligan, Will & Co., 287 F. Supp. 766

(S.D.N.Y. 1968)

Brown v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

666 F. Supp. 969 (5D. Pa. 1967) .............2005. 44

Coenen v. R. W. Pressprich & Co., 453 F.2d 1209 (2d

Cir.), cert. denied, 406 U.S. 949 (1972).............. 43

TABLE OF AUTHORITIES - Continued

Page

587 F.

Cullen v. Paine, Webber, Jackson & Curtis, Inc.,

Supp. 1520 (N.D. Ga. GIDE . ac cccnccsecescceess 28, 44

Dean Witter Reynolds, Inc. v. Byrd, 470 US. — a

COND cc ccneancccsuasecsses sesessnsestses , 36,

Dickstein v. duPont, 443 F.2d 783 (ist Cir. 1971)....-. 49

Erving v. Virginia Squires Basketball Club, 468 F.2d ~—

1064 (2d “Cir OUTED .. cucccccccccccecccsceoscess ,

Gilmer v. Interstate/Johnson Lane, 895 F.2d 195 (4th in

a RR ee, pa

Jeske v. Brooks, 875 F.2d 71 (4th Cir. 1989) ....----+>> 15

Lege, Mason & Co. v. Mackall & Coe, Inc., 351

| 1367 (D.D.C. 1972) .....----eeee errr 44, 45

Malison v. Prudential-Bache Secs., 654 F- Supp. 101 co

CTRDEL, GOEPD ..~ 22 occ cccccescnnccccscncsscesses

. Cit West Branch, 466 U.S. 284

“ene... a ¥« Le PS PRE Py 35, 37, 38, 39, 41

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hovey, -

726 F.2d 1286 (8th Cir. 1984).....-------eerrr tren 4

- h,

Mitsubishi Motors Corp. v. Soler Chrysler Plymout |

Inc., 473 US. 614 (1985) ....--- eee errr passim

Morgan v. Smith Barney, Harris Upham & Co., 729 ”

F.2d 1163 (8th Cir. 1984)....-.------eer errr

Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., —

460 US. 1 (1983) ....----- cere ee reece 8, 11, -

New York Gaslight Club, Inc. v. Carey, 477 US. 54 ”

Mh <.U lac auueedsevehnetnecexnnees een entye<**

vii

TABLE OF AUTHORITIES - Continued

Page

Nicholson v. CPC Internat’l, Inc., 877 F.2d 221 (3d

Se POE cdancuncunasccnupaceckanscatuensweacs 22, 40

O’Neel v. National Ass'n of Sec. Dirs., Inc., 667 F.2d

ie Ct ca vccutsdeaenncenueseesana ens 45

Perry v. Thomas, 482 U.S. 483 (1987).............. 49, 50

Pierce v. Shearson Lehman Hutton, Inc., 52 Fair

Empl. Prac. Cas. (BNA) 1882 (N.D. Ill. 1990)...... 41

Prima Paint Corp. v. Flood & Conklin Mis. Co., 388

err ee TTT ETL 27, 45

Rodriguez de Quijas v. Shearson/American Express,

Inc., 490 U.S. 477, 109 S.Ct. 1917 (1989)....... passim

Roe v. Kidder, Peabody & Co., 52 Fair Empl. Prac.

Cas. GEA) BGG GDI. BOOED... ccc cccsscecess 4T

Rogers v. Frito-Lay, Inc., 611 F.2d 1074 (Sth Cir.

1980), cert. denied, 449 U.S. 889 (1980)............. 33

Scharnhorst v. Independent School Dist. #710, 686

F2d 637 (8th Cir. 1982), cert. denied, 462 US.

Re a NA ie orn re ey ere ae 30

Shearson/American Express, Inc. v. McMahon, 482

Ss ee SD So ke cuser ces tirseseneesseiseens passim

Shearson Lehman/American Express, Inc. v. Bird, 110

S.Ct. 225 (1989), vacating and remanding 871 F.2d

ee Ce Gh BOE os vn 60h ose canwaensendneséess eae 41

Signal-Stat Corp. v. Local 475, United Elec. R. & M.

Workers, 235 F.2d 298 (2d Cir. 1956), cert. denied,

354 US. 911 (1957)

viii

TABLE OF AUTHORITIES - Continued

Page

Stokes v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

523 F.2d 433 (6th Cir. 1975)........... cee eeeeeeee 48

Swenson v. Management Recruiters Internat'l., Inc.,

858 F.2d 1304 (8th Cir. 1988), cert. denied, 110

BED, BED GITTIRe oc cw ccccceveccccecsesecscsccessess 40

Tenney Eng. v. United Elec., R. & M. Workers, 207

F.2d 450 (3d Cir. 1953)........... penchasteuedseeex 48

Tonetti v. Shirley, 173 Cal. App. 3d 1144, 219 Cal.

Rptr. 616 (1985) .... 2.66. cece e cece cece eee eee ees 49

Tullis v. Kohlmeyer & Co., 551 F.2d 632 (Sth Cir.

TR cc cckbicwscaWhessk cede us sbenbeckeense 0s ek

United Air Lines, Inc. v. McMann, 434 US. 192

NN gn 6d Caldas ace ee eteuesdenndsnaceseecasenss. 33

United Elec. R. M. Workers v. Miller Metal Products,

215 F.2d 221 (4th Cir. 1954). .......... cece eee eee 47

United Paperworkers Internat’l Union v. Misco, Inc.,

Gt @ 2, errr 48

United States v. Oregon, 366 U.S. 643 (1961).........-. 33

Utley v. Goldman Sachs & Co., 883 F.2d 184 (1st Cir.

1989), cert. denied, 110 S.Ct. 842 (1990)........---. 40

Washington v. New York City Board of Estimate, 709

F.2d 792 (2d Cir.), cert. denied, 464 U.S. 1013

CREE. voc cv ecccceevcncssetsaterdstpnenectscesss' 30

Wilko v. Swan, 346 U.S. 427 (1953)...... 9, 12, 16, 17, 25

Willis v. Shearson/American Express, Inc., 569 F.

iG TY a ere

TABLE OF AUTHORITIES - Continued

Page

STATUTES

Age Discrimination in Employment Act, as amended,

Se es Se Ds v cludosanecncendenatecences i, 3

er as SOA a cecncsecivaNiscsurnschucces aa, , Hi~

Fair Labor Standards Act, as amended;

29 U.S.C. §§ 201-219

et ee ORGS Cae Cle4 osu estates viawadeegetaes 29

a> Uae. © 206. ...5. gibt ela ets ag See ta 22, 31

Federal Arbitration Act, 9 U.S.C. §§ 1-15 ‘

he 6, 37, 38, 42, 45, 46, 48, 49

PE ctiaiecwicdadsaek Sina kelik es 4,7, 9, 26, 44

Pe NN Ga Pei eis ban caW acer oe sab henackedeey 2, 8

EE ane ith is sencucwebead avweanewultas 8, 26, 27

EE ink oss ecu Gie sok Cine a eeeanis Coan Eheee 21

ET eck escherees keene aes eK sees 19, 23, 24

CE ME ba Ceud ences 6b Goa Kos KEE Rab an 23

DUB. 8 UD... cccrscccscvcceesvcccesesevevencees 14

National Labor Relations Act,

29 U.S.C. §§ 151-168

i Pn re bh eke h eeu COR SAMAR E NUS RKP RES 32

Older Workers Benefit Protection Act, Pub. L.

EY OE Ds cca cecctvedaeuseucseusvedns 34

Public Law Amending the Federal Arbitration

Act, Pub. L. 91-368, 84 Stat. 693 (1970).........34, 35

TABLE OF AUTHORITIES - Continued

Public Law Amending the Federal Arbitration

Act, Pub. L. 100-702, 102 Stat. 4671 (1988) ........ 34

LEGISLATIVE MATERIALS

Civil Rights Act of 1990, Section 18, reprinted in

Conf. Rep. on Civil Rights Act of 1990, H.R. Doc.

No. 101-856, 101 Cong., 2d Sess. (1990) ........ 32, 34

Joint Explanatory Statement of the Committee of Con-

ference, reprinted in Conf. Rep. on Civil Rights Act

of 1990, H.R. Doc. No. 101-856, 101 Cong., 2d

By IN hd nec nk cdndunscdncenkedst ees dasntiscas 33

Hearing before a Subcommittee of the Senate Commit-

tee on the Judiciary on S.4213 and S.4214, 67th

me a ee ee 47

ARTICLES

Note, Agreements to Arbitrate Claims Under the Age

Discrimination in Employment Act, 104 Harv. L.

BOW. TED CEONED occ ccccvcccncces 11, 22, 26, 29, 34, 39

Note, Classwide Arbitration and 10b-5 Claims In the

Wake of Shearson/American Express, Inc. v.

McMahon, 74 Cornell L. Rev. 380 (1989)........... 22

Note, To Arbitrate Or Not To Arbitrate? The Protec-

tion of Rights Under The Age Discrimination In

Employment Act, 1988 Journal of Dispute Reso-

ED GU eck csv badcueederedecsenredsibedewsecesse 16

Shell, ERISA and Other Federal Employment Stat-

utes: When Is Commercial Arbitration an “Ade-

quate Substitute” for the Courts?, 68 Tex. L. Rev.,

Ee iskbpunedisssebescesacenagasexees eoas 39

TABLE OF AUTHORITIES - Continued

Page

Siconolfi, Blow to Brokers: Stock Investors Win More

Punitive Awards in Arbitration Cases, Wall St. J.,

NN RM Se 23

Waks & Ginsberg, Arbitrating Executive and Other

Employment Disputes: Let’s Put a Pin In Gardner-

Denver!, reprinted in Proceedings of New York

University’s 43rd National Conference on

Labor, 62 (Little Brown, to be published Decem-

Pee Ma vewadscwsss casediwisiaees ccateccto ow eees 28

OtTHER MarterIALs

EEOC Notice No. N-915-060 (August 29, 1990)...... 41

New York Stock Exchange Rule 347.................. 1

New York Stock Exchange Arbitration Rules

ag EE EA Ee OS Oe ee ee ee 18

NE ss coc evebacus5yss4eaneunvesencuaececsexedei 18

REET. + SeRGS euaych We lucususekusetnceexudicnabs cies 18

INN 0% Sv 5 C55 554 ins dd bdendesSaddnss ances aks 21, 22

IE 04k 64a e sae os senceuen Denn cdkessnececcaste 19

ME 0456446545 460865 d6sn ens 0558405 400k 6 scar 20, 21

ck PE POET OPEL LD ny ES Te ae 21

DET Se Ge ee chen edsastdedee ka bhi tea tineneeoe 23

SR or eg Se rea rr a eee Pee 22, 24, 25

xii

TABLE OF AUTHORITIES - Continued

Proceedings of the Twenty-Sixth Annual Convention

of the International Seamen's Union of America,

BE GOED oko no cccecceciens cocncenccedesses

SEC Order Approving Proposed Rule Changes By New

York Stock Exchange, Inc., Nat'l Ass'n of Sec.

Dealers, Inc., and the American Stock Exchange,

Inc., Relating to the Arbitration Process and the Use

of Predispute Arbitration Clauses, 54 Fed. Reg.

EY co kkanoeencé6s0sesKunueseseoeesaeeenadss

SEC Order Approving Proposed Rule Change

Relating To Amendments To Arbitration Pro-

cedures And Fees, 55 Fed. Reg. 38181 ........

Page

STATUTORY AND OTHER PROVISIONS INVOLVED

In addition to those statutory provisions designated

by Petitioner, Respondent directs the Court’s attention to

Rule 347 of the Rules of the Board of Directors of the New

York Stock Exchange, Inc., and the Arbitration Rules of

the New York Stock Exchange, Inc., all of which are set

out verbatim in the Appendix to this brief.

STATEMENT OF THE CASE

Petitioner became employed by Respondent in 1981

as a Manager of Financial Services. As required to per-

form the duties of his position, he registered as a securi-

ties broker with the New York Stock Exchange (“NYSE”

or “the Exchange”). Petitioner was not a member of a

union and, therefore, his employment was not subject to

the terms of a collective bargaining agreement. Paragraph

V of the registration agreement (Form U-4) submitted by

Petitioner to the NYSE provides as follows: “I agree to

arbitrate any dispute, claim or controversy that may arise

between me and my firm... that is required to be

arbitrated under the rules, constitutions or bylaws of the

organizations with which I| register... .” (J.A. at 18.)!

NYSE Rule 347 provides for the arbitration of “[a]ny

controversy .. . arising out of the employment or termi-

nation of employment” of a registered securities repre-

sentative. (App. *.)

Petitioner’s employment with Respondent termi-

nated in 1987. He filed a charge of discrimination with

the Equal Employment Opportunity Commission

(“EEOC”) and subsequently filed his Complaint in the

United States District Court for the Western District of

' Citations to “J.A.” are to tht Joint Appendix. Citations to

“App.” are to the Appendix to this brief.

]

North Carolina before the EEOC finished its investigation

or attempted conciliation of his claim. Petitioner’s Com-

plaint presented only a single claim that his employer

discharged him in violation of the ADEA. (J.A. at 4.) No

other federal or state law claim (statutory or otherwise) is

presented in this case; Petitioner also has not sought to

initiate other legal proceedings regarding his employ-

ment with Respondent. The Complaint challenged no

employment policy or practice of the Respondent that

affects any other employee or applicant. The remedies

Petitioner seeks are those traditionally sought in a single

discharge claim; i.e., individual reinstatement, backpay,

and liquidated damages. Also, Petitioner seeks attorneys

fees and court costs as authorized by federal law for a

“prevailing party.”

Interstate responded to Petitioner’s federal court

Complaint by filing a motion to compel arbitration of

Petitioner’s claim. (J.A. at 10.) The motion sought

enforcement of the Petitioner’s arbitration agreement as

authorized by section 3 of the Federal Arbitration Act

(FAA), 9 U.S.C. § 3. Although he opposed the motion,

Petitioner presented no evidence before the district court

that the agreement did not cover his dispute with

Respondent. He also did not dispute the validity of his

arbitration agreement. Indeed, Petitioner’s counsel

informed the district court that “I’m not alleging any

fraud or anything.” (J.A. at 42.) Petitioner also did not

dispute evidence presented by his employer that the reg-

istration agreement containing the arbitration agreement

was entered into by him as a requirement of performing

the duties of his position. (J.A. at 74.) Instead, Petitioner’s

principal argument for avoiding arbitration has been sim-

ply that his statutory claim of age discrimination is not

subject to the FAA’s provisions.

The district court denied Respondent’s motion and

accepted Petitioner’s argument that Alexander v. Gardner-

Denver Co., 415 U.S. 36 (1974), precluded enforcement of

the arbitration agreement. (J.A. at 85.) Respondent

appealed the district court’s refusal to enforce the arbitra-

tion agreement to the United States Court of Appeals for

the Fourth Circuit. (J.A. at 78.)

The court of appeals reversed the district court's

order in an opinion dated February 6, 1990. The appeals

court held that the rationale underlying this Court’s deci-

sions in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614 (1985), Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220 (1987), and Rodriguez de Quijas v.

Shearson/American Express, Inc., 490 U.S. 477, 109 S.Ct.

1917 (1989), mandated enforcement of Petitioner’s writ-

ten arbitration agreement and that nothing in the ADEA’s

text, history or purpose precluded arbitration of ADEA

claims. Gilmer v. Interstate/Johnson Lane, 895 F.2d 195 (4th

Cir. 1990). The court of appeals denied Petitioner’s

motion for rehearing and suggestion for rehearing en banc

on March 28, 1990. Petitioner filed a Petition for Cer-

tiorari in this Court on June 26, 1990. The Petitioner

presented two questions for review: (1) “Are claims

brought pursuant to the Age Discrimination in Employ-

ment Act, 29 U.S.C. § 621, et seq. (“ADEA”), subject to

compulsory arbitration?” and (2) “Is an arbitration clause

executed six years before any claim arises under the

ADEA an invalid prospective waiver?” On October i,

1990, the Court granted certiorari as to the single issue of

whether ADEA claims are subject to compulsory arbitra-

tion.

SUMMARY OF ARGUMENT

This case presents the single issue of whether, under

the FAA, Petitioner can be compelled to arbitrate his

ADEA claim. The Fourth Circuit in reversing the district

court’s denial of arbitration held that Plaintiff could be

compelled to arbitrate his ADEA claim. Respondent sub-

mits that the circuit court’s ruling should be affirmed.

The court of appeals determined the arbitrability of

Petitioner's ADEA claim by following the analytical

framework of this Court’s recent decisions in Mitsubishi v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985), Shearson/

American Express, Inc. v. McMahon, 482 U.S. 614 (1985),

and Rodriguez de Quijas v. Shearson/American Express, Inc.,

490 U.S. 477 (1989). Those decisions resoundingly rejected

the premise that statutory claims are inherently unsuited

for arbitration. Instead, those cases recognized a rebut-

table presumption favoring arbitrability in light of the

congressional policy stated in the FAA. The FAA

expressly mandates enforcement of private arbitration

agreements “save upon such grounds as exist at law or in

equity for the revocation of any contract.” 9 U.S.C. § 2. In

applying this presumption to statutory claims, the Court

made clear in McMahon that arbitration should be com-

pelled, unless the party opposing arbitration can affirma-

tively demonstrate that, in enacting the statute giving rise

to the claim, Congress intended to preclude a waiver of a

judicial forum.

Petitioner has not met his burden of affirmatively

showing that Congress intended to except ADEA claims

from compulsory arbitration. He concedes that neither

the text nor legislative history of the ADEA contains any

reference to arbitration. Moreover, his arguments that

arbitration conflicts with the inherent purpose of the

ADEA fall far short of rebutting the presumption favor-

ing arbitrability.

The Mitsubisht - McMahon — Rodriguez de Quijas tril-

ogy establishes that the Court narrowly construes the

type of evidence that will suffice to show a conflict

between statutory rights and arbitration. In large mea-

sure, Petitioner simply argues archaic perceptions that

arbitration will not provide him with an adequate forum

to pursue his statutory claim. These arguments give little

regard to the well-established procedures of the NYSE

that will provide the forum for his claim and simply

anticipate problems that may in fact never occur. The

Mitsubishi trilogy rejected such arguments as nothing

more than the very hostility towards arbitration that the

FAA was intended to overcome. Petitioner’s concerns

that arbitration will conflict with the statutory framework

of the FAA also are unfounded. Arbitration will not

diminish the EEOC’s enforcement role. It also does not

conflict with the jury trial option or role of the courts

under the ADEA. The jury trial option in ADEA cases is

one that can be waived, just as in other statutory cases

where arbitration agreements have been enforced. Sim-

ilarly, there is no requirement in the ADEA that courts

decide all cases. Private parties are free under the statute

to settle cases or to choose state courts over federal

courts, all without judicial supervision. No reason exists

why they should not similarly be free to agree on arbitra-

tion as the means for resolving their disputes, partic-

ularly where, as here, arbitration involves no waiver of

substantive rights and will be subject to judicial review to

ensure that the Petitioner's ADEA claim is given due

regard in the arbitral proceeding.

Finally, Petitioner’s argument, premised on Alexander

v. Gardner-Denver Co., 415 U.S. 36 (1974) and related cases,

that ADEA claims are in a special category of rights

inherently unsuited for arbitration misconstrues those

authorities. None of those cases dealt with the enfor-

ceability of an individual arbitration agreement. None

applied the FAA's presumption favoring arbitration to the

claim at issue. Instead, those cases dealt either with the

preclusive effect that should be accorded collective bar-

gaining arbitration (a much more limited form of arbitra-

tion than available here) or with whether a statutory

collective bargaining procedure provided the exclusive

remedy for the wrong alleged. The issues decided were

thus materially different than that presented here, and

the Court’s decisions in those cases are not controlling.

Amici curiae in support of Petitioner argue that the

FAA does not apply to this case. They rely on language in

section 1 of the Act that excludes “contracts of employ-

ment of seamen, railroad employees, or any other class of

workers engaged in foreign or interstate commerce” from

coverage by the FAA. 9 U.S.C. §1. Petitioner never raised

this argument below, nor did he petition for certiorari on

this issue. The issue is thus not properly before this

Court.

In any event, the amici overlook that Petitioner’s

arbitration agreement is enforceable under the FAA over

and above any connection it has with his employment

with Respondent. The arbitration agreement is enforce-

able as a material part of Petitioner’s registration agree-

ment with the NYSE. He is thus bound by that agreement

the same as Respondent and all others who contract to do

business with the Exchange are bound by the Exchange's

rules, bylaws and constitution. On this basis, courts uni-

versally have held such arbitration agreements enforce-

able under the FAA.

The amici also construe section 1’s exclusionary lan-

guage far too broadly in applying it to Petitioner’s arbi-

tration agreement. Petitioner, as a professional broker and

senior-level executive, does not fit within the categories

of “workers” to which Congress intended the exclusion to

apply.

ARGUMENT

In this case, the Court must decide whether Congress

foreclosed arbitration of Petitioner’s statutory claim of

age discrimination in employment or whether, instead,

the strong federal policies favoring arbitration require

enforcement of Petitioner’s agreement to arbitrate his

employment dispute. The appeals court held that Peti-

tioner’s ADEA claim is subject to compulsory arbitration

and that, under the FAA, the district court should have

ordered Petitioner to arbitrate that claim. The appeals

court’s decision dealt principally with the question of

enforceability, finding in this Court’s recent decisions

applying the FAA a strong presumption favoring enforce-

ment of arbitration agreements. Although recognizing

that in some statutory cases the FAA’s presumption of

enforceability may be overcome by clear evidence of a

congressional intent to preclude arbitration of the statu-

tory claim, the appeals court found no such intent in the

ADEA. Notwithstanding Petitioner’s arguments here, the

appeals court was correct.

I. THE FAA REQUIRES ENFORCEMENT OF PETI-

TIONER’S AGREEMENT TO ARBITRATE

BECAUSE CONGRESS HAS NOT EXCEPTED

ADEA CLAIMS FROM THE MANDATE OF THE

FAA AND SUCH CLAIMS ARE NOT INHERENTLY

UNSUITABLE FOR ARBITRATION.

A determination of whether Petitioner’s agreement

to arbitrate is enforceable as to his statutory age claim

must begin with an analysis of the FAA. McMahon, 482

U.S. at 225. Under section 2 of the Act, Congress long ago

provided that arbitration agreements “shall be valid, irre-

vocable, and enforceable, save upon such grounds as

exist at law or in equity for the revocation of any con-

tract.” 9 USC. § 2. The Act requires a court to stay its

proceedings and direct the parties to resolve their dispute

through arbitration whenever any suit is brought on a

matter within the scope of an agreement to arbitrate. 9

U.S.C. § 3. Similarly, the Act directs a court, upon petition

by an aggrieved party, to order arbitration whenever a

party hag failed. neglected or refused to comply with an

arbitration agreement. 9 U.S.C. § 4.

This Court has recognized that “[t]he legislative his-

tory of the [FAA] establishes that the purpose behind its

passage was to ensure judicial enforcement of privately

made agreements to arbitrate.” Dean Witter Reynolds, Inc.

v. Byrd, 470 U.S 213, 219 (1985). The Act thus represents

“a congressional declaration of a liberal federal policy

favoring arbitration agreements. ...” Moses H. Cone Mem.

Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). The

statute's terms are mandatory; it “leaves no place for the

exercise of discretion by a district court, but instead man-

dates that district courts shall direct the parties to proceed

to arbitration on issues as to which an arbitration agree-

ment has been signed.” Byrd, 470 U.S. at 218 (emphasis in

original). Where questions of arbitrability arise under a

particular agreement, such “questions . . . must be

addressed with a healthy regard for the federal policy

favoring arbitration. . . . The Arbitration Act establishes

that, as a matter of federal law, any doubts concerning the

scope of arbitrable issues should be resolved in favor of

arbitration. ...” Moses H. Cone Mem. Hosp., 460 US. at

24-25.

In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614 (1985), this Court held that the congres-

sional policy favoring enforcement of arbitration agree-

ments applies with equal force to statutory claims. The

Court rejected any notion that statutory claims should be

subject to a per se rule of exclusion from the operation of

the FAA:

[W]e find no warrant in the Arbitration Act for

implying in every contract within its ken a pre-

sumption against arbitration of statutory claims.

Id. at 625. The Court then described the framework for

determining the arbitrability of statutory claims:

[T]he first task of a court asked to compel arbi-

tration of a dispute is to determine whether the

parties’ agreed to arbitrate that dispute. . . . [A]s

with any other contract, the parties’ intentions

control, but those intentions are generously con-

strued as to issues of arbitrability.

There is no reason to depart from these

guidelines where a party bound by an arbitra-

tion agreement raises claims founded on statu-

tory rights. Some time ago this Court expressed

“hope for [the Act’s] usefulness both in contro-

versies based on statutes or on standards other-

wise created,”[?] . . . and we are well past the

time when judicial suspicion of the desirability

of arbitration and of the competence of arbitral

tribunals inhibited the development of arbitra-

tion as an alternative means of dispute resolu-

tion. . . . Of course, courts should remain

attuned to well-supported claims that the agree-

ment to arbitrate resulted from the sort of-fraud

or overwhelming economic power that would

provide grounds “for revocation of any con-

tract.”[3] . . . But, absent such compelling con-

siderations, the Act itself provides no basis for

disfavoring agreements to arbitrate statutory

claims by skewing the otherwise hospitable

inquiry into arbitrability.

Id. at 626-27 (citations omitted). Where the parties’ agree-

ment encompasses the statutory Tlaim at issue, a second

inquiry arises, which is the issue presently before the

2 Quoting Wilko v. Swan, 346 U.S 427, 432 (1953) (footnote

omitted).

3 Quoting 9 U.S.C. § 2.

Court. A court must discern if “legal constraints external

to the parties’ agreement foreclosed the arbitration of

those claims.” Id. at 628. In making this determination,

the Court explained that

it is the congressional intention expressed in

some other statute on which the courts must

rely to identify any category of claims as to

which agreements to arbitrate will be held unen-

forceable. . .. We must assume that if Congress

intended the substantive protection afforded by

a given statute to include protecticn against

waiver of the right to a judicial forum, that

intention will be deducible from text or legisla-

tive history. . . . Having made the bargain to

arbitrate, the party should be held to it unless

Congress itself has evinced an intention to pre-

clude a waiver of judicial remedies for the statu-

tory rights at issue.

Id. at 627-28 (citations omitted).

Significantly, the Court rejected as unfounded any

fears that the substantive rights advanced in a particular

statutory claim would be lost or diminished if resolved in

an arbitral, rather than a judicial, forum:

By agreeing to arbitrate a statutory claim, a

party does not forgo the substantive rights

afforded by the statute; it only submits to their

resolution in an arbitral, rather than a judicial,

forum. It trades the procedures and opportunity

for review of the courtroom for the simplicity,

informality, and expedition of arbitration.

Id. at 628.

Following Mitsubishi, this Court consistently has

underscored the strong policies favoring enforcement of

arbitration agreements, even as to claims involving statu-

tory rights. See Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220 (1987); Rodriguez de Quijas v. Shear-

son/Ame~ican Express, Inc., 490 U.S. 477, 109 S.Ct. 1917

(1989). McMahon has particular significance. It expands

upon the Mitsubishi framework for determining the arbi-

trability of a particular statutory claim, and emphasizes

that the party opposing arbitration must carry the burden

on that question. In McMahon, the Court stated:

Like any statutory directive, the Arbitration

Act’s mandate may be overridden by a contrary

congressional command. The burden is on the

party opposing arbitration, however, to show

that Congress intended to preclude a waiver of

judicial remedies for the statutory rights at issue

.... If Congress did intend to limit or prohibit

waiver of a judicial forum for a particular claim,

such an intent “will be deducible from [the stat-

ute’s] text or legislative history,” ... or from an

inherent conflict between arbitration and the

statute’s underlying purposes.

482 U.S. at 226-27, quoting Mitsubishi, 473 “_.S. at 62°

After McMahon, it is clear that, absent an affirmative

showing that Congress specifically intended that particu-

lar statutory claims be resolved only in a judicial forum,‘

* Mitsubishi and McMahon clearly hold that a congres-

sional intent to exclude statutory claims from compulsory arbi-

tration cannot be presumed. Rather, such an intent must be

clearly demonstrated in the text or legislative history or by an

inherent conflict between arbitration and the underlying pur-

poses of the statute.

Reading Mitsubishi, McMahon and Rodriguez de Quijas

together demonstrates that the Court narrowly construes the

type of evidence that can show a congressional intent to pre-

clude compulsory arbitration of particular statutory claims. See

Note, Agreements to Arbitrate Claims Under the Age Discrimina-

tion in Employment Act, 104 Harv. L. Rev. 568, 573 (1990) (here-

inafter cited as “Harv. Note”). This conclusion is evident in the

Court’s repeated affirmation of the “liberal federal policy

favoring arbitration,” Moses H. Cone Mem. Hosp., 460 U.S. at 24,

quoted in Mitsubishi, 473 U.S. at 625; and McMahon, 482 U.S. at

226; and its unwillingness to find that a statutory framework

(Continued on following page)

courts should hold a party to his agreement to arbitrate

such claims.

The Fourth Circuit correctly applied the McMahon

analysis in this case. In determining under the FAA that

Petitioner should arbitrate his age claim in accordance

with his agreement, the appeals court correctly followed

the dictates of Mitsubishi, McMahon, and Rodriguez, find-

ing that:

nothing in the text, legislative history, or under-

lying purposes of the ADEA indicate[s] a con-

gressional intent to preclude enforcement of

arbitration agreements. Arbitration is nowhere

mentioned in the text of the statute, and “[t]his

silence in the text is matched by silence in the

statute’s legislative history.” McMahon, 107 S.Ct.

at 2344. Nor is there any statement on the part

of Congress to indicate that a federal judicial

forum is the only appropriate forum for vindica-

tion of the rights created by the ADEA. More-

over, we see no conflict between arbitration and

the underlying purposes of the ADEA which

would preclude arbitration of ADEA claims.

895 F.2d at 197. Significantly, at no time in the court

below, nor in this Court, has Petitioner disputed the

appeals court’s determination that neither the ADEA’s

text nor its legislative history expressly forecloses com-

pulsory arbitration. Petitioner instead has focused on

(Continued from previous page)

relying on judicial procedures and remedies in and of itself

indicates a congressional intent to preclude arbitration, see, e.g.,

Mitsubishi, 473 U.S. at 632-37; McMahon, 482 U.S. at 230-31

(rejecting argument that arbitration would weaken a plaintiff's

ability to recover); Rodriguez de Quijas, 109 S.Ct. at 1920-21

(rejecting Wilko v. Swan determination that procedural rights

afforded plaintiffs under the 1933 Securities Act showed a

congressional intent to preclude compulsory arbitration of

claims under that Act).

what he perceives to be the inadequacy of arbitrs tion to

resolve a statutory discrimination claim and or inherent

conflicts that he claims exist between the ADE.\’s statu-

tory framework and/or its underlying purpose and any

arbitration. These arguments do not withstand scrutiny

under the principles recently enunciated by this Court’s

opinions on the arbitrability of statutory claims.

A. Petitioner’s Arguments That Arbitration Can-

not Adequately Resolve His ADEA Claim Are

Neither Legally Nor Factually Sufficient To

Avoid Arbitration.

Petitioner argues at great length that arbitral procedures

simply are inadequate to resolve an ADEA claim. He con-

tends that compulsory arbitration might diminish his ability

to vindicate his ADEA claim due to a variety of factors,

including (i) the suspected potential bias of industry arbitra-

tors; (ii) the suspected inexperience of arbitrators in dealing

with statutory discrimination claims; (iii) the alleged

unavailability of discovery; (iv) the alleged limited remedies

that would be available in an arbitral proceeding; (v) the

likelihood that arbitrators will not issue written opinions,

thereby impairing judicial review and eliminating a source of

doctrinal development under the Act; (vi) the limited

grounds for vacating an award; and (vii) the purported

narrow transactional focus of arbitral proceedings. Peti-

tioner’s argument falls far short of what the McMahon anal-

ysis requires under the FAA to deny enforcement of a valid

agreement to arbitrate.

1. Petitiorer’s Policy Arguments About The

Adequacy Of Arbitration To Resolve A Stat-

utory Claim Are Not Legally Sufficient To

Avoid Enforcement Of His Agreement.

Viewed candidly, Petitioner’s arguments evidence

only policy judgments that are premised on suspicions

and fears about arbitration as a mechanism for dispute

resolution. This Court’s recent decisions make clear that

it no longer accepts such generalized objections as ade-

quate bases upon which to deny arbitration of disputes,

statutory or otherwise. Mitsubishi, 473 US. at 627. In fact,

the Court has gone further to endorse the prompt enforce-

ment of valid arbitration agreements, noting that objec-

tions such as those raised by Petitioner here may be

better resolved at the award-enforcement stage.®

In Mitsubishi, for example, an amicus argued that the

matter should not be sent to arbitration because the arbi-

tral panel might misapply the law. It thereby presented a

question about the “competency” of the panel to decide

statutory issues. In rejecting this argument, the Court

stated:

We .. . have no occasion to speculate on this

matter at this stage in the proceedings, when Mit-

subishi seeks to enforce the agreement to arbi-

trate, not to enforce an award.

473 U.S. at 637 n.19 (emphasis added). The Court’s obser-

vation is significant in that it underscores the obvious:

there is no present need to resolve what may — but has

not yet — become an objection to one or even several

part(s) of a future arbitration.

The Court similarly emphasized in Mitsubishi that

adequate safeguards were present after the arbitration to

> In November 1988 Congress amended the FAA to clarify

when lower courts’ orders involving enforcement of arbitration

agreements are appealable. See 9 U.S.C. § 15. While an order

denying enforcement of an arbitration agreement is imme-

diately appealable under this section, an order enforcing such

an agreement is appealable only after arbitration has been

completed. Compare § 15(a) with § 15(b). This amendment

underscores the priority Congress places on prompt enforce-

ment of such agreements. See Jeske v. Brooks, 875 F.2d 71 (4th

Cir. 1989) for a proper application of this recent amendment.

ensure that the procedure adequately addressed the stat-

utory claims:

Having permitted the arbitration to go for-

ward, the national courts of the United States

will have the opportunity at the award-enforce-

ment stage to ensure that the legitimate interest

in the enforcement of the antitrust laws has been

addressed.

Id. at 638 (emphasis added). Implicit in the Court’s obser-

vation is that speculation about potential problems does

not aid resolution of the present inquiry on enforceability.

Other language in Mitsubishi further demonstrates

that the Court is not inclined to prejudge the adequacy of

a particular arbitral procedure in deciding whether to

enforce an arbitration agreement. For example, the Court

rejected concerns that antitrust claims had never before

been resolved in an international arbitral tribunal,

observing that

the potential of these [arbitral] tribunals for effi-

cient disposition of legal disagreements arising

from commercial relations has not yet been tested.

If they are to take a central place in the interna-

tional legal order, national courts will need to

“shake off the old judicial hostility to arbitra-

a es

Id. at 638 (citation omitted; emphasis added). The Court

also addressed an objection that arbitrators familiar with

national law may not be available on the international

arbitral tribunal that would hear the dispute. The Court

rejected that objection, again articulating its clear prefer-

ence that the arbitral proceeding be given a chance to

deal with the issue:

[A]daptability and access to expertise are hall-

marks of arbitration. The anticipated subject

matter of the dispute may be taken into account

when the arbitrators are appointed. . . .

ld. at 633 (emphasis added).

In sum, the Court’s approach in these cases has been

to effectuate Congress’ intention that arbitration agree-

ments be liberally enforced under the FAA. In so doing, it

consistently has discouraged just the type of policy judg-

ments about arbitration that Petitioner advances here. See

Note, To Arbitrate Or Not To Arbitrate? The Protection of

Rights Under The Age Discrimination In Employment Act,

1988 Journal of Dispute Resolution 199, 217 (“The clear

mandate in Mitsubishi is that it is the intent found in the

text of the statute [giving rise to the claim], not the logical

conclusions of the courts regarding the adequacy of arbi-

tration, that is determinative.”). Thus, the Court has dem-

onstrated its preference that the courts enforce valid

arbitration agreements. Particular objections to specific

procedures or arbitrators are better resolved at the

award-enforcement stage, after an adequate record has

been compiled on which objections, if any, can be evalu-

ated.

This approach simply applies common sense. A court

too often is faced with an inadequate or nonexistent

record to decide these questions at the threshold when it

is deciding whether the arbitration agreement should be

enforced at all. Justice Frankfurter’s dissent in Wilko v.

Swan, 346 U.S. 427, 439 (1953), in which the Court denied

enforcement of an arbitration agreement as to 1933 Secu-

rities Act claims, supports this point. Justice Frankfurter

noted that the majority decision did not rest on any

evidence, cither, “in the record .. . [or] in the facts of

which [the Court could] take judicial notice” in conclud-

ing “that the arbitral system ... would not afford the

plaintiff the rights to which he is entitled.”®

* Recent decisions of this Court have cited Justice Frank-

furter’s comments approvingly. See McMahon, 482 U.S. at 231,

and Rodriguez de Quijas, 109 S.Ct. at 1921.

These same weaknesses exist in Petitioner’s argu-

ments here. As the discussion which follows shows, there

is no record, nor any facts of which a court could take

judicial notice, showing that the NYSE arbitration pro-

cedures available to Petitioner will prove inadequate to

resolve his ADEA claim. Petitioner therefore cannot rebut

the presumption favoring arbitration. He therefore

should be required “to honor [his] bargain,” Mitsubishi,

473 U.S. at 640, citing Alberto-Culver Co. v. Scherk, 484 F.2d

611, 620 (7th Cir. 1973) (Stevens, J., dissenting), rev’d., 417

U.S. 506 (1974), by exhausting arbitration first and then -

if needed - seeking judicia! -elief based on any inade-

quacies that he believes <rfects the outcome.

2. The Arbitral Procedures Applicable To Peti-

tioner’s ADEA Claim Provide A Sound And

Fair Method For Resolving His Claim On

Its Merits.

Petitioner’s “suspicions” about the adequacy of arbi-

tration represent nothing more than the same old hostility

to arbitration that the FAA was intended to overcome,

and that this Court has consistently rejected as a basis for

refusing to enforce arbitration agreements. See Mitsubishi,

473 US. at 625-27 & 632-38; McMahon, 482 U.S. at 229-32.

In McMahon, this Court observed that such suspicions,

which had formed the underpinning for the Court’s deci-

sion in Wilko, had largely been abandoned by the Court’s

more recent decisions:

[M]ost of the reasons given in Wilko have been

rejected subsequently by the Court as a basis for

holding claims nonarbitrable. In Mitsubishi, for

example, we recognized that arbitral tribunals

are readily capable of handling the factual and

legal complexities of antitrust claims, notwith-

standing the absence of judicial instruction and

supervision. . . . Likewise, we have concluded

that the streamlined procedures of arbitration

do not entail any consequential restriction on

substantive rights. . . . Finally, we have indi-

cated that there is no reason to assume at the

outset that arbitrators will not follow the law;

although judicial scrutiny of arbitration awards

necessarily is limited, such review is sufficient

to ensure that arbitrators comply with the

requirements of the statute.

482 U.S. at 232 (citations omitted).

That Petitioner’s suspicions have no foundation in

fact or law in the present case is clear. For instance, no

basis exists for assuming that arbitration panels selected

under the NYSE Arbitration Rules to hear employee-

member disputes will be biased in favor of industry

employers.”? In any event, this Court has rejected this

assumption as a legitimate basis for denying arbitration

of statutory claims. See Mitsubishi, 473 U.S. at 634. In

Mitsubishi the Court observed that the parties and the

arbitral body administering the proceeding will have

input in the selection of the arbitrator and should be able

to ensure bias does not creep into the process. Id. Accord-

ingly, the Court stated, “We decline to indulge the pre-

sumption that the parties and arbitral body conducting a

proceeding will be unable or unwilling to retain compe-

tent, conscientious, and impartial arbitrators.” Id.

Ample checks and balances certainly exist in the

NYSE procedures to ferret out potentially biased arbitra-

tors. See Rules 608, 609, and 610 of the NYSE Arbitration

? Although Plaintiff argues that the NYSE Arbitration

Rules provide that a panel for an intrafirm dispute will be

composed of industry arbitrators, the rules do not contain such

a requirement. In fact, employee-member disputes typically are

heard by panels consisting of a majority selected from public

or non-industry arbitraters. See Brief of Amicus Curiae Securi-

ties Industry Association at text accompanying note 8.

Rules (App. 9-11). These rules include very detailed dis-

closure requirements that arbitrators must follow and

that will provide facts from which the possible bias of

any arbitrator can be assessed.* The FAA also provides

that bias of an arbitrator is a basis upon which any party

may ask a district judge to overturn an arbitrator's

award. 9 U.S.C. § 10(b).*%

Similarly, Petitioner's argument that arbitrators

selected under NYSE rules will prove unable to resolve

ADEA claims and unable to apply applicable law is

unsubstantiated. Here again, the parties and the arbitral

authorities will be able to ensure that qualified arbitra-

tors'® are found to decide the case. See Mitsubishi, 473

U.S. at 633-34. Moreover, because the Petitioner can be

represented by counsel, Rule 614 (App. 16), counsel can

* The failure of an arbitrator to make an adequate dis-

closure of facts relevant to assessing his or her impartiality

may be grounds to set aside any award rendered by that

arbitrator. Andros Compania Maritima v. Marc Rich & Co., A.G.,

579 F.2d 691 (2d Cir. 1978).

* Authority also exists that the district court, in enforcing

an arbitration agreement under the FAA, may compel the

appointment of a neutral arbitrator whenever any legitimate

question exists as to the impartiality of the arbitrator(s) pro-

vided by the parties’ agreement. See Erving v. Virginia Squires

Basketball Club, 468 F.2d 1064, 1067-68 (2d Cir. 1972).

enced lawyers. Such a choice would ensure that the arbitrators

are capable of understanding the basic legal concepts that

apply in an ADEA case. See Judge Wilkinson’s comments

below, 895 F.2d at 201 (courts should not be deluded “into

thinking that the ultimate question in ADEA cases is of a type

which only federal judges are capable of resolving”); cf.

McMahon, 482 U.S. 239-40 (no reason to suppose RICO claims

too complex for arbitral resolution); Mitsubishi, 473 U.S. at 633

(potential complexity of statutory antitrust claims not enough

to preclude arbitration).

ensure that the legal principles applicable to a particular

claim will be adequately presented to the arbitrators. In

any event, arbitrators’ actions on a particular case are

always subject to review. As noted above in McMahon,

there simply is “no reason to assume . . . that arbitrators

will not follow the law. .. . ” 482 U.S. at 232 (emphasis

added). In any event, an arbitrator's imperfect execution

of his duties or manifest disregard of applicable law

remains a valid reason for a district court, upon review-

ing the arbitrator’s award, to vacate the arbitrator's deci-

sion. See discussion infra at 24-25. .

Arbitration under NYSE rules also provides Peti-

tioner with ample opportunity to develop and present his

claim. The NYSE’s recently amended rules provide for

expanded discovery and are more than sufficient for Peti-

tioner to develop his claim. See Rule 619 (App. 17-21). See

also SEC Order Approving Proposed Rule Changes By New

York Stock Exchange, Inc., Nat'l Ass'n of Sec. Dealers, Inc.,

and the American Stock Exchange, Inc., Relating to the Arbi-

tration Process and the Use of Predispute Arbitration Clauses,

34 Fed. Reg. 21144, 21149-51 [hereinafter cited as “SEC

Order”|. While Petitioner complains that taking a deposi-

tion depends on obtaining an arbitrator’s approval, such

approval should not be difficult to obtain,'' particularly

where, as in most employment cases, a claimant will

likely be able to demonstrate that the evidence sought is

'! In approving recent revisions to NYSE’s discovery rules,

the SEC noted that “[t}he SRO’s . . . have explicitly recognized

the appropriateness of depositions in particular circumstances.

Under the proposed rule changes, arbitrators may order depo-

sitions when appropriate.” SEC Order, 54 Fed. Reg. at 21149. It

then stated, “The Commission's approval of this portion of the

discovery rule is based on our clear understanding that deposi-

tions will be available as a matter of routine to parties in appro-

priate cases.” Id. at 21150 (emphasis added).

pertinent to his claim. In any event, this argument focuses

on only one aspect of the arbitration procedure. A proper

analysis must focus on the entire procedure and its fair-

ness to the parties, not just upon an isolated discovery

procedure.

By the time the arbitration hearing begins, Petitioner

also will have received a detailed, written answer from

Respondent, who is obligated by the NYSE rules to set

forth all relevant facts on which it will rely in defending

the claim. Rule 612 (App. 12). Respondent will also have

produced, at least ten (10) days before the hearing, all

documents it intends to use at the hearing, thereby

affording Petitioner ample opportunity to become famil-

iar with those documents and to prepare any needed

response. Rule 619(c) (App. 19).

For the hearing, an arbitrator or any counsel may

subpoena witnesses to the extent provided by law. Rule

619(f) (App. 20). See also 9 U.S.C. § 7 (“The arbitrators

selected, . . . or a majority of them may summon in

writing any person to attend before them or any of them

as a witness and in a proper case to bring with him or

them any book, record, document or paper which may be

deemed material as evidence in the case.”). The arbitra-

tors also may compel attendance by any member

employee and/or the production of any records in the

possession or control of any member company or its

employees. Rule 619(g) (App. 20-21). Because formal evi-

dence rules do not apply, the Petitioner will have consid-

erably more latitude in presenting his claim than might

be the case in court. Rule 620 (App. 21).

Although the AARP complains that arbitration will

preclude the prosecution of class actions, Brief Amicus

Curiae of AARP, at 18, that argument has no bearing on

this case. Petitioner's claim has never been anything but

an individual one;'? thus, the availability or unavail-

ability of a class action has no bearing on whether arbi-

tration is sufficient to resolve his claim.

Petitioner’s claim that arbitration will unduly restrict

the relief a discrimination claimant can recover also has

no merit. The rules impose no limitation on the relief a

panel may award Petitioner. Unlike the collective bar-

gaining context found controlling in Alexander, in which

the arbitrator may be limited to providing only relief

allowed by a union contract, the NYSE rules do not

restrict arbitrators from fully remedying any violation of

law they may find. Cf. Rule 627(e) (App. 24).'%

'2 In any event, nothing in the NYSE arbitration rules

would preclude a claimant from pursuing even a class action,

seeking class-wide relief. At least one commentator has

observed that, with some amount of judicial supervision, class

arbitrations are feasible. See Note, Classwide Arbitration and

10b-5 Claims In the Wake of Shearson/American Express, Inc. v.

McMahon, 74 Cornell L. Rev. 380, 395-406 (1989). See also

Nicholson v. CPC Internat’l, Inc., 877 F.2d 221, 240-41 (3d Cir.

1989) (Becker, J., dissenting) (“arbitrations may in fact go for-

ward as class actions”); Harv. Note at 575. NYSE Rules were

recently again amended to liberalize procedures for a collective

proceeding. See 55 Fed. Reg. 38181 (Sept. 17, 1990). In such

cases, Rule 612(d) now permits a collective proceeding similar

to that available under the ADEA. Cf. 29 U.S.C. §§ 626(b) &

216(b).

'3 If that means ordering the elimination of a pattern or

practice of discriminatory behavior that adversely affected the

Plaintiff, or a class of similarly situated co-claimants, the arbi-

trators are able to do so under the statute (the ADEA) they will

be charged with applying and under the broad equitable

powers historically found to reside in arbitrators. See Nicholson,

877 F.2d at 240 (Becker, J., dissenting).

(Continued on following page)

Although Petitioner and various amici complain that

the record in an arbitration is too cursory to permit an

adequate review of the proceeding or of the reasons

behind a particular award, their objections do not apply

here. Appropriate procedures exist under NYSE Arbitra-

tion Rules to ensure a court can adequately review the

results of the proceeding. Thus, the rules, as recently

amended, require that a verbatim record be maintained.

Rule 623 (App. 22).'4 The new rules also require that

(Continued from previous page)

Both Mitsubishi and McMahon also indicate that arbitral

forums can provide statutory damages. In each case, the Court

held that statutory treble damages could be pursued adequately

through arbitration. McMahon, 482 US. at 242; Mitsubishi, 473 US.

at 635. Petitioner here should likewise be able to pursue his

statutory liquidated damages claim in the arbitral forum to the

extent he can sustain a claim for a willful violation. Arbitrators

certainly have not hesitated to award such punitive amounts in

other contexts. See Willis v. Shearson/American Express, Inc., 569 F.

Supp. 821, 824 (M.D.N.C. 1983); Siconolfi, Blow to Brokers: Stock

Investors Win More Punitive Awards in Arbitration Cases, Wall St. J.,

June 11, 1990, at 1, col. 1. There is no reason for any different rule

in the employment context. -

Furthermore, a prevailing ADEA claimant could recover

his or her costs and attorney’s fees following a favorable

arbitral award, whether or not granted by the arbitrators. As a

prevailing party, the claimant probably could request and

receive such an award from the district court at the award-

enforcement stage. Cf. New York Gaslight Club, Inc. v. Carey, 477

U.S. 54 (1980) (prevailing party in state administrative pro-

ceeding entitled to fee award under Title VII).

The FAA, of course, also provides that the district court

may vacate [§10(d)] or modify [§11(c)] any incomplete or

imperfect award. Those provisions grant the district courts the

authority to ensure that a complete remedy is provided.

'* The SEC Order approving the new rule notes that “the

SRO proposals would assure the preservation of a record of

(Continued on following page)

arbitrators issue their award in writing, stating, inter alia,

the issues resolved and the relief awarded. Rule 627(e)

(App. 24). The ability of a district court to review such an

award is commensurate with its ability to review a jury

verdict. Just as with a jury trial in federal court, NYSE

rules do not require preparation of findings of fact and

conclusions of law.

Once the matter is brought before a court at the

award-enforcement stage, the court can ensure that the

Petitioner’s statutory rights were given due consider-

ation. The FAA clearly authorizes a district court to ascer-

tain whether the arbitrators ignored applicable law,

deprived the parties of a fair hearing, or rendered a

decision tainted by bias. 9 U.S.C. § 10. If a court finds

such improprieties, the court may vacate the award. This

availability of judicial review certainly suffices to ensure

that the Petitioner’s ADEA rights will not be lost, or even

limited, by the arbitral process to which he agreed. The

Court recognized as much in Mitsubishi. In rejecting con-

cerns that statutory antitrust claims may be lost if con-

fined to an international arbitral forum, the Court

observed that

{hlaving permitted the arbitration to go for-

ward, the national courts of the United States

will have the opportunity at the award-enforce-

ment stage to ensure that the legitimate interest

in the enforcement of the antitrust law: has been

addressed. .. . While the efficacy of the arbitral

process requires that substantive review at the

award-enforcement stage remain minimal, it

would not require intrusive inquiry to ascertain

that the tribunal took cognizance of the antitrust

claims and actually decided them.

(Continued from previous page)

each arbitration proceeding and therefore facilitate an appro-

priate court review.” SEC Order, 54 Fed. Reg. at 21151.

473 U.S. at 638. See also id. at 637 n.19 (noting that Court

“would have little hesitation” condemning a refusa! to

apply applicable law as against public policy).

Finally, Petitioner’s concerns that arbitration of age

claims may retard doctrinal development and impede the

role of an ADEA plaintiff as a “private attorney general”

also have no merit. Initially, Petitioner ignores the con-

tinuing authority of the EEOC to pursue any cases it

believes to be in the public interest and to promulgate

regulations. Secondly, Petitioner overlooks that by pursu-

ing an ADEA claim, whether in an arbitral or judicial

forum, Petitioner and other claimants advance the reme-

dial and deterrent functions of the ADEA. In Mitsubishi,

the Court rejected similar concerns, noting that “so long

as the prospective litigant effectively may vindicate its

statutory cause of action in the arbitral forum, the statute

will continue to serve both its remedial! and deterrent

function.” Id. at 637 (emphasis added). The recently

amended NYSE rules also assure that awards will be

publicized, thus furthering both the deterrent impact a

favorable employee award will have on future actions of

the particular defendant and other employers and the

development of precedent which may guide future deci-

sions. See Rule 627(f) (App. 24).

In short, Petitioner’s concerns about the adequacy of

arbitration as a means of resolving his ADEA claim are

nothing more than erroneous speculation. They cannot

warrant an across-the-board refusal to enforce arbitration

agreements that encompass ADEA or other statutory

claims. This Court has repeatedly rejected such assump-

tions as sufficient to deny enforcement of arbitration

agreements as to other statutory rights. Thus, in

McMahon, the Court, in rejecting Wilko’s restrictive

approach to arbitrations, observed:

[T]he reasons given in Wilko reflect a general

suspicion of the desirability of arbitration and

the competence of the arbitral tribunals - most

apply with no greater force to the arbitration of

securities disputes than to the arbitration of

legal disputes generally.

482 U.S. at 231. The approach should be no different here.

The concerns enumerated by Petitioner are best dealt

with on a case-by-case basis by judicial review of the

particular arbitration in which they truly arise. The mere

possibility that such problems may arise, though, is not a

proper basis for refusing to give the arbitral process a

chance to work, particularly in light of Congress’ strong

mandate that the courts liberally enforce arbitration

agreements.

B. Petitioner’s Concerns About The Relative Bar-

gaining Powers Of The Parties Are Not A

Proper Basis For Denying Arbitration.

Petitioner argues that enforcement of his arbitration

agreement will result in widespread impositicn of such

agreements on sinilar claimants, many of whom

allegedly may have little or no bargaining power to resist

such terms. This argument suffers from the same fault

that undermines Petitioner’s other arguments: it argues

for a per se rule of exclusion when there is no evidence in

this record that would justify such a ruling.

As one commentator has observed, “[t]raditional

contract doctrines rather than a per se rule of unenfor-

ceability are the appropriate means of addressing the

problem of adhesion contracts.” Harv. Note at 576. The

FAA expressly provides the means for deciding this issue,

where it truly arises, on a case-by-case basis. Section 2 of

the FAA provides that arbitration agreements are enforce-

able “save upon such grounds as exist at law or in equity

for the revocation of any contract.” 9 U.S.C. § 2. Section 4

further provides for a summary jury trial if, in a proceed-

ing to enforce the agreement, it appears that the making

of the agreement is at issue. Id. § 4.'° These provisions

thus indicate that a party opposing arbitration on this

ground must come forward with evidence as to his or her

agreement warranting a denial of enforcement under tra-

ditional contract law principles. They are inconsistent

with applying per se rules of exclusion.

Mitsubishi and McMahon confirm this approach. In

Mitsubishi, the Court refused to foreclose arbitration on

the assumption that contracts generating antitrust dis-

putes are typically contracts of adhesion. The clear thrust

of the Court’s reasoning was that the party claiming that

the arbitration clause is tainted must prove that point.

The Court thus stated that “absent such a showing - and

none was attempted here - there is no basis for assuming

the forum inadequate or its selection unfair.” 473 U.S. at

633. Similarly, in McMahon, the Court approved the arbi-

tration of 1934 Exchange Act claims, rejecting the allega-

tion that predispute agreements applicable to such claims

should be void because “they tend to result from broker

overreaching.” 482 U.S. at 230, 231. The Court held that

such argument, instead, should be raised as a ground for

revoking a particular agreement, using “ordinary princi-

ples of contract law”; it was not, however, deemed a

ground for holding all such contracts void. Id. Both deci-

sions thus demonstrate that arguments for invalidating

arbitration clauses must be addressed to the facts of each

particular case and should not be premised on assump-

tions about the “type” of claim or “type” of arbitration

agreement involved.

15 Under this Court’s opinion in Prima Paint Corp. v. Flood

& Conklin Mfg. Co., 388 U.S. 395 (1967), this procedure comes

into play only when the validity of the arbitration clause itself

is at issue. If the validity of the whole agreement containing

the arbitration provision is challenged, that issue must be

decided by the arbitrator. /d.

When analyzed under this approach, the record in

this case reveals no evidence warranting a refusal to

enforce the arbitration agreement. In the first place, the

arbitration provision was not “forced” on Petitioner by

Respondent; rather, Petitioner agreed to arbitration in

conjunction with his registration with the NYSE. In that

context “the arbitration rule is a reasonable exercise of

the self-regulatory power vested in the Exchange, 15

U.S.C. § 78a, et seq., and is not void as adhesive.” Cullen v.

Paine, Webber, Jackson & Curtis, Inc., 587 F. Supp. 1520,

1523 (N.D. Ga. 1984).

Secondly, the Court should note that Petitioner is an

experienced businessman,'® who long has worked under

registration agreements like that containing the arbitra-

tion agreement at issue here. (J.A. at 22.) There is no

evidence that he was misled into agreeing to arbitrate his

employment disputes with Respondent. In fact, his coun-

sel notified the district court that Petitioner was “not

alleging any fraud or anything.” (J.A. at 42.) Accordingly,

the court of appeals correctly noted that Petitioner “has

never asserted that his waiver [of the judicial forum] was

anything other than knowing and voluntary... . ” 895

F.2d at 200. When this Court denied certiorari on this

question, that ended the issue in this case.

'© These facts thus present a peculiarly strong basis for

enforcing the agreement. See Waks & Ginsberg, Arbitrating

Executive and Other Employment Disputes: Let's Put a Pin in

Gardner-Denver!, reprinted in Proceedings of New York Univer-

sity’s 43rd National Conference on Labor, 62 (Little Brown, to

be published December 1990) (“Especially where executive

employees are involved, sophistication should be presumed

C. The Fourth Circuit Correctly Ruled That Arbi-

tration Would Not Conflict With The Statutory

Enforcement Scheme Established By The

ADEA.

Petitioner argues that the ADEA’s enforcement

framework itself evinces a congressional intent at odds

with requiring an age claimant to pursue his claim

through arbitration. As the Fourth Circuit correctly held,

this argument has no merit. Petitioner points to aspects of

the statute such as the role of the EEOC, the role of the

courts in deciding ADEA cases, and the availability of a

jury trial as indicating that Congress intended these cases

to be resolved exclusively through a judicial forum. The

court of appeals’ thorough analysis of these arguments

cogently explains why none of these attributes of the

statute show a congressional intent to preclude arbitra-

tion of age claims.

The appeals court found no reason to suspect that the

EEOC’s role would be diminished. Whatever happens

here, the EEOC retains its plenary authority to investigate

and prosecute appropriate age claims. See 29 U.S.C.

§§ 626(a) & 211(a). The EEOC is not foreclosed from its

statutory role by any determination made in a private

arbitration. Thus, submission of Petitioner’s ADEA claim

to arbitration does not preclude the EEOC from investi-

gating his claim and, similarly, will have no limiting

effect on the EEOC’s investigation or prosecution of other

ADEA claims. Moreover, because the EEOC remains

available to act on behalf of an aggrieved employee, an

individual age claimant bound by a private arbitration

agreement remains free to file charges or complaints with

the EEOC, thereby supplementing the Commission’s stat-

utory investigative, conciliation and litigation roles. See

generally Harv. Note at 573-74. Rather than conflicting with

arbitration as a means of resolving ADEA claims, the

continuing statutory role of the EEOC under the ADEA

provides an additional safety net that may not have been

available in other cases where this Court upheld com-

pulsory arbitration of statutory claims.

The jury trial option under the ADEA and the judici-

ary’s role in the Act’s enforcement scheme also were

properly rejected by the appeals court as evidence of a

congressional intent to foreclose compulsory arbitration

of Petitioner’s age claim. As the appeals court recog-

nized, the option of a jury trial is one that can be freely

waived; in no sense is it the exclusive manner of proceed-

ing for resolving an age claim. 895 F2d at 199, citing

Washington v. New York City Board of Estimate, 709 F.2d

792, 797-99 (2d Cir. 1983), cert. denied, 464 U.S. 1013

(1983); Scharnhorst v. Independent School Dist. #710, 686

F.2d 637, 641 (8th Cir. 1982), cert. denied, 462 U.S. 1109

(1983). Similarly, the court of appeals recognized that

while the ADEA provides for a trial de novo in federal

court, that provision

says nothing about Congress’ attitude toward

arbitration [of age cases]. Unlike either courts or

agencies, arbitration is a forum selected by

mutual agreement of the parties. Congress’

choice of an enforcement scheme in which

ADEA suits are brought in a judicial forum sim-

ply does not manifest an intention to prevent

parties from reaching a private contractual

agreement to submit their disputes to arbitra-

tion.

895 F.2d at 199.

In this respect, the ADEA’s enforcement scheme is no

different than those provided for the statutory claims

considered in Mitsubishi, McMahon and Rodriguez de

Quijas. Each case involved a claim that, by statute, was

triable in a federal jury proceeding. Yet, this Court

rejected this fact as a reason for denying arbitration of

those statutory claims.

Rodriguez de Quijas is particularly compelling in this

regard. The 1933 Securities Act, like the ADEA, provides

for concurrent jurisdiction in state and federal court. The

court found that this jurisdictional flexibility

would suggest that arbitration agreements

which are, “in effect, a specialized kind of

forum-selection clause,” Scherk v. Alberto-Culver

Co., 417 U.S. 506, 519, 94 S.Ct. 2449, 2457, 41

L.Ed.2d 270 (1974), should not be prohibited

. . Since they, like the provision for concurrent

jurisdiction, serve to advance the objective of

allowing buyers of securities a broader right to

select the forum for resolving disputes, whether

it be judicial or otherwise.

109 S.Ct. at 1921.

The same rationale applies to a claim under the

ADEA. Not only does the ADEA allow the same flex-

ibility of concurrent jurisdiction in state and federal

courts, see 29 U.S.C. §§ 626(b) & (c)(1), 216(b), it goes

further to express a strong preference for conciliation as a

means of resolving disputes under the Act, id. § 626(b) &

(d). An employee, therefore, clearly has the freedom to

choose forums other than federal courts for resolving an

age claim by a private agreement. As the appeals court

recognized, “Congress clearly did ot intend that all

ADEA disputes be resolved in federal court; rather, it

contemplated a more flexible scheme for the resolution of

individual ADEA claims.” 895 F.2d at 200.'7 Compare

'7 Indeed, the ADEA does not state that only a jury can

resolve such claims. The fact that a private ADEA plaintiff

remains free to settle his claim at any time demonstrates that

fact. Compare the Court’s analysis in Mitsubishi:

And, of course, the antitrust cause of action remains

at all times under the control of the individual liti-

gant: no citizen is under an obligation to brimg an

(Continued on following page)

section 10(a) of the National Labor Relations Act, 29

U.S.C. § 160(a), where Congress explicitly stated that

arbitration agreements cannot preclude the NLRB from

deciding unfair labor practice cases.

Apparently realizing that nothing in the existing lan-

guage of the ADEA precludes arbitration, Petitioner

points to a recent legislative proposal, which he contends

implicitly establishes that Congress disfavors binding

arbitration of such claims. The proposed, but not enacted,

Civil Rights Act of 1990 contained a provision encourag-

ing arbitration and other means of alternative dispute

resolution “[w]here appropriate and to the extent autho-

rized by law... .” Section 18 of the (proposed) Civil

Rights Act of 1990, reprinted in Conf. Rep. On Civil Rights

Act of 1990, H.R. Doc. No. 101-856, 101 Cong., 2d Sess.

(1990). If this unenacted legislation is to be given any

consideration here, its clear language supports Respon-

dent’s position and the appeals court’s analysis and rul-

ing in this matter: i.e., under existing law, such claims are

arbitrable. Nonetheless, Petitioner argues that a Confer-

ence Committee’s explanatory statement supports an

opposite meaning. That explanation states:

The Conferees emphasize . . . that the use of

alternative dispute resolution mechanisms is

intended to supplement, not supplant, the

remedies provided by Title VII. Thus, for example,

the Conferees believe that any agreement to

submit disputed issues to arbitration, whether

in the context of a collective bargaining agree-

ment or in an employment contract, does not

preclude the affected person from seeking relief

(Continued from previous page)

antitrust suit, ... and the private antitrust plaintiff

needs no executive or judicial approval before set-

tling one.

473 U.S. at 636.

under the enforcement provisions of Title VII. This

view is consistent with the Supreme Court's

interpretation of Title VII in Alexander v. Gard-

ner-Denver Co., 415 US. 36 (1974).

Joint Explanatory Statement of the Committee of Conference,

reprinted in Conf. Rep. On Civil Rights Act of 1990, H.R.

Doc. No. 101-856, 101 Cong., 2d Sess. (1990), at 20

(emphasis added.)

Petitioner’s reliance on the Committee’s explanatory

statement hardly supports his argument against enforce-

ment of his arbitration agreement in this case. In the first

place, after-the-fact pronouncements by Congress cannot

provide legislative history relevant to divining Congress’

intent at the time it passed the ADEA. See Rogers v. Frito-

Lay, Inc., 611 F.2d 1074, 1080 (5th Cir. 1980), cert. denied,

449 U.S. 889 (1980). Secondly, the explanatory statement

conflicts with the plain language of the proposed amend-

ment, which encouraged the use of arbitrations under the

civil rights laws without restriction. Legislative history

that conflicts with unambiguous language in a statutory

enactment should not be permitted to change the mean.

ing of the language actually used in the proposed legisla-

tion. See United Air Lines, Inc. v. McMann, 434 US. 192,

199 (1977); United States v. Oregon, 366 U.S. 643, 648

(1961). Thirdly, the fact remains that the Civil Rights Act

of 1990 never passed. The bill and its accompanying

legislative materials thus represent little more than filler-

material for the Congressional Record at this point.

Perhaps most significantly, though, Petitioner over-

looks that the explanatory statement voices an opinion

solely about the arbitration of Title VII claims. It in no way

endeavors to provide an interpretation that would have

precluded, or even limited, the arbitration of ADEA

claims, even though section 18 of the Conference bill

plainly addresses the use of arbitrations, and other means

of alternative dispute resolution, in resolving “disputes

arising under the Acts amended by this Act.” Section 18,

Civil Rights Act of 1990 (Conference Committee bill)

(emphasis added). The ADEA was one of “the Acts” that

would have been amended by the Civil Rights Act of

1990. Thus, if anything, the explanatory statement, by its

own limitation to Title VIL, suggests that arbitration of an

ADEA claim is acceptable to the Conference Committee.

Other recent legislation may supply some guidance

on Congress’ attitude on this subject. Title II of the

recently enacted Older Workers Benefits Protection Act

(“OWBPA”), Pub. L. 101-433, establishes standards that

must be satisfied in order to effectuate a waiver of sub-

Stantive rights under the ADEA. Although Congress

passed this Act at about the same time it considered the

proposed Civil Rights Act of 1990, and specifically dealt

with the issue of waivers under the ADEA, Congress

voiced no concern about the use of binding arbitration to

resolve ADEA claims. Notably, although the Fourth Cir-

cuit’s Gilmer decision was published at that point, Con-

gress made no effort to note its disagreement with Gilmer

anywhere in the text or Committee Reports on the

OWBPA. Nowhere in the Act, or the legislative history of

that Act, does Congress even address the topic of arbitra-

tions or mandate a judicial forum for such cases. It easily

could have done so. Thus, while the OWBPA clearly has

only prospective application and no impact on this case,

it indicates Congress has no real concern with the Fourth

Circuit's decision in this case. See Harv. Note at 577 n.71.

That Congress never has endeavored to preclude or

limit application of the FAA according to the type of

claim involved also is significant. Although the FAA has

been amended on several occasions, see Pub. L. 91-368, 84

Stat. 693 (1970); Pub. L. 100-702, 102 Stat. 4671 (1988), no

subject matter exceptions have been written into the Act.

Congress clearly has the power to except certain types of

claims from the FAA. Where it has not done so, reading

such exceptions into the Act based on “policy” consider-

ations would run contrary to Congress’ clear intention in

the FAA that arbitration agreements be liberally enforced.

Compare the Court's analysis in Mitsubishi, 473 U.S. at 639

n.21, where Congress’ amendment to the FAA in Pub. L.

91-368, 84 Stat. 692 (9 U.S.C. §§ 201-08), led the Court to

observe “Congress did not specify any matters it

intended to exclude from its [FAA’s] scope.” Clearly Con-

gress has not so limited the FAA; thus Congress appar-

ently has been satisfied with the Court’s implementation

of its “liberal federal policy favoring arbitration agree-

ments.” Moses H. Cone Mem. Hosp., 460 U.S. at 24.

D. Alexander, Barrentine, McDonald and Buell Do

Not Preclude Arbitration of ADEA Claims.

Lastly, Petitioner argues that the Fourth Circuit's

decision conflicts with this Court’s earlier decisions in

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974); Barren-

tine v. Arkansas-Best Freight System, Inc., 450 U.S. 728

(1981); McDonald v. City of West Branch, 466 US. 284

(1984); and Atchison, Topeka and Santa Fe Ry. Co. v. Buell,

480 U.S. 557 (1987). Petitioner misreads these cases as

supporting his argument that his individual ADEA claim

cannot be arbitrated.

Alexander, Barrentine, McDonald and Buell are obvi-

ously distinguishable from the present case in that none

of these cases involved the enforcement of a written indi-

vidual agreement to arbitrate that would have encom-

passed the statutory claims at issue in those cases.

Alexander, Barrentine and McDonald all focused on

whether a prior arbitral award was preclusive of particular

statutory claims. Each decision probably needed to go no

further than its recognition that the statutory claims were

not decided in the collective bargaining arbitration that

preceded the court action. In fact, the Court recognized in

each case that the statutory claim could not have been

decided by the labor arbitrators, since each arbitrator's

authority was clearly limited to interpreting and applying

the terms of the various collective bargaining agreements.

The issue of preclusion is not presented at all in this case.

This case involves only the threshold question of whether

the court should enforce an individual arbitration agree-

ment. The issue of preclusion should await completion of

the arbitration. The district court then can determine

what preclusive effect the award may have vis-a-vis any

federal statutory claim. See Dean Witter Reynolds, Inc. v.

Byrd, 470 US. at 224 (“there is no reason to require that

district courts decline to compel arbitration . . . simply to

avoid an infringement of federal interests”).'*

Buell similarly dealt with a different issue than the

enforcement of an individual agreement to arbitrate that

would have covered the statutory claim. That case

resolved whether the Railway Labor Act (“RLA”) pro-

vided the exclusive remedy for the plaintiff's FELA claim.

The Court held that the RLA procedures were not the

plaintiff's exclusive remedy. The Court noted that FELA

provided the plaintiff with a damages claim for “negli-

gent conduct that is independent of the employer's obli-

gations under its collective bargaining agreements. .

480 US. at 565. The “minor dispute” provisions of the

RLA, on the other hand, did not address the damages

issue presented by the plaintiff's FELA claim. Since the

'* Byrd predates the Mitsubishi - McMahon - Rodriguez

trilogy and thus does not fully recognize the arbitrability of

federal statutory claims as do those subsequent decisions.

Nonetheless, it supports the proposition that determinations of

preclusive effect ordinarily should await completion of the

arbitral proceeding.

RLA did not provide the means to resolve the plaintiff's

FELA claim, the Court found no conflict between the RLA

and FELA warranting a ruling that the RLA repealed any

part of FELA. Id. at 566-67. Thus, the Court's hoiding in

Buell is limited by the same fact that was sufficient to

resolve Alexander, Barrentine and McDonald: i.e., because

the statutory claim could not be fully resolved by the

collective bargaining agreement procedures available to

the plaintiff, he was not precluded from pursuing his

statutory claim in court.

In this case, Petitioner clearly can present his statu-

tory claim in the arbitral forum and that forum is

equipped to resolve the claim. Thus Alexander, McDonald,

Barrentine, and Buell, should not preclude enforcement of

the agreement to arbitrate at issue here.

Equally significant in the Alexander line of cases is the

total absence in those cases of any discussion or consider-

ation of the FAA or the strong public policy favoring

enforcement of individual arbitration agreements under

the FAA.'* Petitioner focuses, however, on the fact that

Buell was decided after Mitsubishi, yet still excepted the

statutory employment claim at issue in that case from the

“minor dispute” provisions of the Railway Labor Act.

There is no indication in Buell, though, that the FAA‘s

applicability or the congressional policy favoring enforce-

ment of individual arbitration agreements was ever con-

sidered. In fact, the Court would not have applied the

FAA to the fact situation in Buell. Since Buell was a

railroad employee, the FAA, and its attendant presump-

tion favoring arbitration, had no applicability. See 9

'’ Given that all these cases arose under collective bar-

gaining agreements, and Buell and Barrentine involved a rail-

road worker and a transportation worker, the exclusionary

provision in section | of the FAA likely precluded application

of the Act to those cases. See discussion in Argument II infra

U.S.C. § 1. In any event, the Court in Buell grappled with

the issue of whether the RLA implicitly repealed the

FELA insofar as employees covered under RLA collective

bargaining agreements were concerned. It did not deal

with whether a private agreement to arbitrate could be

enforced under the FAA, where doing so would in no

way preclude pursuit of the statutory claim at issue.

Thus, the issue presented in Buell provided no basis for

the Court to apply or reject the presumption favoring

enforcement of arbitration agreements recognized in Mit-

subishi.

Petitioner’s reliance on Alexander, Barrentine,

McDonald and Buell also fails to recognize the collective

bargaining context in which those cases arose. Yet, that

context obviously played a substantial role in the Court’s

refusal to find the prior arbitrations preclusive in Alex-

ander, Barrentine and McDonald, and its refusal to find that

the statutory arbitration procedure available in Buell was

the plaintiff's exclusive remedy.

In Alexander, for example, the Court observed that

“Title VII's purpose and procedures strongly suggest that

an individual does not forfeit his private cause of action if

he first pursues his grievance to final arbitration under the

nondiscrimination clause of a collective-bargaining agree-

ment.” 415 U.S. at 49 (emphasis added). The Court then

noted what it perceived as limitations in collective bargain-

ing arbitration that precluded such arbitration from pro-

viding an effective forum for the vindication of Title VII

rights. These limitations included the arbitrator's limited

role “|ajs the proctor of the bargain, . . . to effectuate the

intent of the parties,” id. at 53, which provided the arbi-

trator with “no general authority to invoke public laws

that conflict with the bargain between the parties .. . ,” id.

The Court also observed that the expertise of such arbi-

trators is limited “to the law of the shop, not the law of

the land.” Id. at 57. And finally, the Court stated that

[a] further concern is the union’s exclusive con-

trol over the manner and extent to which an

individual grievance is presented. . . . In arbitra-

tion, as in the collective-bargaining process, the

interests of the individual employees may be subordi-

nated to the collective interests of all employees in

the bargaining unit. . . . Moreover, harmony of

interest between the union and the individual

employee cannot always be presumed, espe-

cially where a claim of racial discrimination is

made.

Id. at 58 n.19 (citations omitted; emphasis added). See also

Barrentine, 450 U.S. at 735. Such concerns were similarly

echoed throughout Barrentine, McDonald, and Buell.

The present case obviously does not fit within the

context of Alexander or its progeny. Unlike those cases,

the present case does not arise under a collective bargain-

ing agreement. Thus, the Court's concerns in Alexander

bout collective bargaining arbitration do not apply here.

Significant distinctions exist between the arbitral pro-

cedures to be utilized in Petitioner's arbitration and col-

lective bargaining arbitration. Compare NYSE procedures

applicable to Petitioner's claim discussed at Argument II.

A.2 supra. Commentators have observed that the differ-

ences between the two models, in large measure, explain

why the results in Alexander, Barrentine, and McDonald

differ from those in Mitsubishi, McMahon and Rodriquez.

See Sheli, ERISA and Other Federal Employment Statutes:

When Is Commercial Arbitration an “Adequate Substitute” for

the Courts?, 68 Tex. L. Rev. 509, 512-14 (1990); Harv. Note

at 577-80.

Finally, the Alexander line of cases also must be ques-

tioned in light of the obvious hostility expressed by those

cases towards arbitration as a procedure for resolving

statutory claims. If that hostility is simply a recognition

of the limitations inherent in collective bargaining arbi-

trations, it may have some justification, but it is not

germane to this case. On the other hand, to the extent that

hostility manifests a broader concern applicable to all

forms of arbitration, it likely has been eviscerated by this

Court’s subsequent decisions in the Mitsubishi - McMahon

~- Rodriguez de Quijas line of cases.

E. Summary of Argument

The foregoing discussion establishes that the Fourth

Circuit’s decision in this case was correct.2° As the court

20 For these same reasons, Respondent takes issue with

those cases relied upon by Petitioner as contrary to the Fourth

Circuit’s opinion in this case. E.g., Alford v. Dean Witter

Reynolds, Inc., 905 F.2d 104 (5th Cir. 1990); Utley v. Goldman

Sachs & Co., 883 F.2d 184 (1st Cir. 1989), cert. denied, 110 S.Ct.

842 (1990); Nicholson v. CPC Internat'l, Inc., 877 F.2d 221 (3d Cir.

1989); Swenson v. Management Recruiters Internat’l, Inc., 858 F.2d

1304 (8th Cir. 1988), cert. denied, 110 S.Ct. 143 (1989). Respon-

dent proffers Judge Becker’s dissenting opinion in Nicholson

and the Fourth Circuit’s opinion below as more in line with the

approach to arbitrability enunciated by this Court in Mitsubishi

and McMahon. Those opinions give due regard to the congres-

sional purposes underlying the ADEA, while at the same time

applying the strong presumptions favoring arbitrability recog-

nized in Mitsubishi and McMahon. Because each opinion con-

cludes that arbitration will not affect the substantive rights at

issue, each reads enforcement of the FAA policy favoring arbi-

tration as consistent, not in conflict, with the enforcement of an

individual claimant’s ADEA rights. This is the better — rea-

soned approach ~ giving effect to the purposes underlying

both statutes, rather than exalting one to the exclusion of the

other. Each opinion also properly recognizes the factual dis-

tinctions that make Alexander, et al., inapplicable to cases

involving the enforcement of an individual arbitration agree-

ment. A number of other recent cases have been willing to take

(Continued on following page)

below held, Petitioner has demonstrated nothing in the

text or legislative history of the ADEA showing a con-

gressional intent to foreclose arbitration of ADEA claims.

The appeals court also correctly determined that the arbi-

tration of Petitioner’s claims would not pose an inherent

conflict with Congress’ objectives in passing the ADEA.

Petitioner has raised no arguments here that show any

error in that conclusion. Lastly, this Court’s decisions in

Alexander, Barrentine, McDonald and Buell do not support

Petitioner’s arguments for reversal. In any event, those

cases hinge, at least in part, on an outdated hostility

towards arbitration of statutory claims and may warrant

clarification, at least to the extent that they may be inter-

preted as precluding arbitration of all statutory employ-

ment claims under individual arbitration agreements.?!

(Continued from previous page)

this approach, as well. See, e.g, Pierce v. Shearson Lehman Hutton,

Inc., 52 Fair Empl. Prac. Cas. (BNA) 1882 (N.D. Ill. 1990)

(Conlon, J.) (ADEA claim); Roe v. Kidder, Peabody & Co., 52 Fair

Empl. Prac. Cas. (BNA) 1865 (S.D.N.Y. 1990) (Haight, J.) (Title

VII and section 1981 claims). See also Arnulfo P. Sulit, Inc. v.

Dean Witter Reynolds, Inc., 847 F.2d 475 (8th Cir. 1988) (ERISA

claim).

Respondent also disagrees, on the same grounds, with the

EEOC’s recent policy guidance memorandum addressing the

issue in this case. See EEOC Notice No. N-915-060 (August 29,

1990). Respondent also questions whether any weight should

be accorded the EEOC’s interpretation. It obviously was stated

long after enactment of the ADEA and seems to have been

issued for the Court’s consideration in this case.

2! See generally this Court’s order of remand in Shearson

Lehman/American Express, Inc. v. Bird, 110 S.Ct. 225 (1989),

vacating and remanding, 871 F.2d 292 (2d Cir. 1989). The Second

Circuit had held that an ERISA claim was not subject to com-

pulsory arbitration, in large measure because of the importance

(Continued on following page)

Il. THE ARBITRATION AGREEMENT APPLICABLF

TO PETITIONER’S CLAIMS IS ENFORCEABLE

UNDER THE FEDERAL ARBITRATION ACT.

In briefs submitted amicus curiae, the AFL-CIO, AARP

and Lawyers Committee for Civil Rights argue that section 1

of the FAA excludes Petitioner’s arbitration agreement from

the Act’s coverage. Section 1 of the FAA states, in pertinent

part, that “contracts of employment of seaman, railroad

employees, or any other class of workers engaged in foreign

or interstate commerce” are not covered by the statute. 9

U.S.C. § 1. According to the aforementioned amici, this

provision excludes all employment contracts from the cover-

age of the FAA and thus precludes Respondent from enforc-

ing the arbitration agreement as to Petitioner’s claims. This

argument is incorrect.

An obvious point overlooked by the amici is the context

in which Petitioner’s arbitration agreement arose. The arbi-

tration agreement actually arises in Petitioner’s regictration

agreement with the NYSE. In that agreement, he agreed to

the constitution, rules and bylaws of the Exchange and

agreed to arbitrate any dispute between him and his firm in

accordance with the rules, constitution and bylaws of the

Exchange. See Petitioner’s Application for Securities Industry

Registration (J.A. at 15-19). Petitioner also executed this pro-

vision as a condition of his employment with Respondent,

since his registration with the Exchange was necessary to

fulfill his duties. The provision thus also became part of his

employment contract with Respondent. Affidavit of Franklin

C. Golden 4 1 (J.A. at 74).

(Continued from previous page) —

of the remedial objectives underlying ERISA. This Court

remanded Bird for reconsideration in light of Rodriguez de

Quijas.

Petitioner’s arbitration agreement is enforceable over

and beyond his employment contract with Respondent.

The arbitration agreement also is enforceable by Respon-

dent as a contract between Plaintiff, as a registered repre-

sentative working in the Exchange, the Exchange, and its

member companies, that inures to the benefit of Respon-

dent as a member company, just as it would to customers,

other Exchange members, and the Exchange. The enfor-

ceability of Petitioner’s agreement to arbitrate in this

regard is no different than the enforceability of any mem-

ber company’s, allied member’s, or registered representa-

tive’s obligations under the Exchange’s constitution, rules

and bylaws.

It has been stated that “the constitution and rules of a

stock exchange constitute a contract between all members

of the exchange with each other and with the exchange

itself.” Legg, Mason & Co. v. Mackall & Coe, Inc., 351

F.Supp. 1367, 1370 (D.D.C. 1972) (citations omitted). This

“contract” consists of the very rules and regulations by

which the Exchange, as a Self-Regulatory Organization

(SRO), governs itself, its members and the employees of

the Exchange and its member companies, subject to SEC

oversight. The arbitration provision to which Petitioner

agreed upon his registration with the Exchange is an

important part of this contract of interwoven obligations.

It, like the other provisions of the Exchange’s constitu-

tion, rules and bylaws, “reflects the self-regulation of the

securities industry, as well as the effort to provide an

integrated method of resolving disputes involving the

affairs of the NYSE.” Merrill Lynch, Pierce, Fenner & Smith,

Inc. v. Hovey, 726 F.2d 1286, 1289 (8th Cir. 1984). In this

respect, the arbitration provision generally is deemed

binding on both the employee and his member-employer

and enforceable by each. In Coenen v. R. W. Pressprich &

Co., 453 F.2d 1209 (2d Cir.), cert. denied, 406 U.S. 949

(1972), for example, the court observed:

Since the rules of the Exchange “constitute a

contract between the members, the arbitration

provisions which they embody have contractual

validity.” ... The Exchange provisions requiring

arbitration constitute an agreement to arbitrate

which is binding upon both [parties].

453 F.2d at 1211, quoting Brown v. Gilligan, Will & Co., 287

F.Supp. 766, 769-70 (S.D.N.Y. 1968); accord, e.g., Tullis v.

Kohlmeyer & Co., 551 F.2d 632, 638 n.8 (Sth Cir. 1977);

Cullen v. Paine, Webber, Jackson & Curtis, Inc., 587 F.Supp.

at 1523 (N.D. Ga. 1984). See generally Aspero v. Shearsen

American Express, Inc., 768 F.2d 106 (6th Cir. 1985); Morgan

v. Smith Barney, Harris Upham & Co., 729 F.2d 1163, 1165 &

n.2 - 1166 & n.5 (8th Cir. 1984) (in particular see cases

cited at n.4); Brown v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 664 F. Supp. 969 (E.D. Pa. 1987); Malison v. Prudential-

Bache Secs., Inc., 654 F. Supp. 101 (W.D.N.C. 1987), all of

which hold such arbitration provisions binding and

enforceable in individual disputes between brokerages

and their employees or former employees.

To focus on the arbitration agreement at issue here as

simply part of Plaintiff's employment contract with

Respondent would ignore the larger context in which the

agreement truly arises and in which it is enforceable.

When viewed instead as part of Plaintiff's commitment to

the same contract that governs all members and mem-

bers’ representatives who participate in the SRO’s activ-

ities, the arbitration provision indisputably fits within the

FAA and is enforceable by Respondent under section 2 of

that Act. As one court has observed, “[t]here is no doubt

that the contract between the parties to arbitrate contro-

versies under the Constitution and Rules of the New York

Stock Exchange evidences a ‘transaction involving com-

merce’ within the meaning of section 2 of the Act.” Legg,

Mason & Co., 351 F.Supp. at 1370. Thus, another court has

stated, “[t]he principle that an arbitration provision,

incorporated by reference into an application to become

an allied member of a stock exchange, is enforceable

where there has been no fraud in the inducement, is so

clearly established that no further discussion is neces-

sary.” O’Neel v. National Ass'n of Sec. Dirs., Inc., 667 F.2d

804, 806 (9th Cir. 1982); accord, A.G. Edwards & Son, Inc. v.

Smith, 11 Empl. Ben. Coord. (BNA) 2430, 2432 (D. Ariz.

1989) (applying the same principle to registered represen-

tative). Respondent therefore submits that the case law

emphatically establishes that the section 1 proviso would

not preclude arbitration of the present dispute, even if it

excluded all employment contracts from the FAA’s cover-

age as the amici contend.

In any event, the amici’s argument that section 1

excludes all employment contracts overlooks the plain

language of the statute. Congress sought only to exclude

a particular category of “workers’ ” agreements from the

FAA's coverage — 1e., only “contracts of employment of

seamen, railroad employees, or any other class of workers

engaged in foreign or interstate commerce.” See 9 U.S.C.

§ 1. It did not purport to exclude “all” employment

contracts.2? Had Congress intended to write all employ-

ment contracts out of the FAA, it could very easily have

done so; simply stating that “nothing herein contained

shall apply to any contracts of employment” would have

sufficed.

°2 The Court previously has observed that Congress

“amended ... the statute to exclude certain kinds of employ-

ment contracts.” Prima Paint Corp., 388 U.S. at 401 n.7

(emphasis added). This description differs significantly from

saying that Congress excluded all employment contracts.

A review of the legislative history and judicial inter-

pretation of section 1’s exclusionary language?3 demon-

strates that Congress sought only to exclude those

contracts in which organized labor, principally the Sea-

men’s Union, had significant interests in maintaining its

influence. Organized labor wanted to ensure it and its

members remained free of any efforts by management to

force arbitration agreements upon weak unions or indi-

vidual seamen, and free of judicial directives to honor

agreements to arbitrate that might have limited labor

from using other forms of economic pressure that might

prove more persuasive in a given situation. See American

Postal Workers Union v. United States Postal Serv., 823 F.2d

466, 470 (11th Cir. 1987) (“Organized labor, which was

already aggrieved by actions of the federal judiciary, did

not want federal courts to have the power to order it to

arbitrate disputes with management. Accordingly, at the

behest of the Seamen’s Union, Congress included [the

present exclusionary language found in section 1].”) The

objections of organized labor to the original language of

the FAA that are referenced in the AFL-CIO’s and

AARP’s briefs are limited precisely to these concerns. See,

e.g., Proceedings of the Twenty-Sixth Annual Convention of

the International Seamen’s Union of America, 203-04 (1923)

(comments of Andrew Furuseth that compulsory arbitra-

tion would and seamen’s traditional “right to quit work

in harbor” and restore slavery); Brief of AFL-CIO, 17-19.

Similarly, in responding to labor’s concerns, the prin-

cipal proponents of the FAA sought to clarify that they

had no intention “to make an industrial arbitration” or to

23 Of course, resort to such legislative history and judicial

interpretation is hardly necessary to determine that the exclu-

sion does not cover all employment contracts as the amici

contend; the plain language of the statute shows that fact.

compel arbitration of “labor disputes.” Hearing before a

Subcommittee of the Senate Committee on the Judiciar, on

$.4213 and $.4214, 67th Cong., 4th Sess. 9 (1923) (state-

ment of Mr. Piatt). From the context of these statements,

one can clearly discern that the proponents of the Act

were acknowledging only that they had no intention of

compelling arbitration of labor-management disputes.

They accordingly deferred to organized labor's objec-

tions, principally those expressed by the Seamen's Union,

to exclude those categories of contracts within organized

labor's area of interest.

In light of the context in which the exclusionary

provision was added to the statute, and the choice of

words used to describe the subject of the exclusion, it has

since become well settled that the exclusionary provision

is more limited in scope than the amici have recognized.

In United Elec., R. & M. Workers v. Miller Metal Products,

215 F.2d 221 (4th C . 1954), the Fourth Circuit observed:

It appears that the exclusion clause of the Arbitra-

tion Act wes introduced into the statute to meet an

objection of the Seafarers International Union; and

certainly such objection was directed at including

collective bargaining agreements rather than indi-

vidual contracts of employment under the provisions

of the statute. The terms of the collective bargain-

ing agreement become terms of the individual

contracts of hiring made subject to its provisions

and the controversies as to which arbitration

would be appropriate arise in almost all

instances, not with respect to the individual con-

tracts of hiring, but with respect to the terms

engrafted on them by the collective bargaining

agreement. It is with respect to the latter that

&bjection arises to the compulsory submission to

arbitration which the Arbitration Act envisages.

No one would have serious objection to submitting to

arbitration the matters covered by the individual

contracts of hiring divorced from the provisions

grafted on them by the collective bargaining agree-

ments.

Id. at 224 (emphasis added). The Fourth Circuit thus

recognized that the proviso to section 1 of the FAA had

only a limited purpose — to exclude collective bargaining

agreements from the coverage of the Act in light of orga-

nized labor's objections.** It saw nothing, however, to

indicate that individual arbitration agreements were

excluded from the Act by section 1.

Other courts also have drawn meaning from Con-

gress’ explicit reference to “workers’” contracts and to

particular categories of “workers” in the exclusionary

provision of the FAA. Thus, in Tenney Eng. v. United Elec.,

R. & M. Workers, 207 F.2d 450 Grd Cir. 1953), the Third

Circuit, in perhaps the seminal case interpreting the

exclusionary provision, construed the provision to except

only contracts of workers in the enumerated categories or

in a similar class of workers moving goods through inter-

state commerce, and contracts of workers engaged in the

transportation industry. Since Tenney numerous other

courts have found that various categories of employees

not fitting the description of “workers engaged in . . . int-

erstate commerce” are not subject to the exclusionary

provision. See, e.g., Stokes v. Merrill Lynch, Pierce, Fenner &

*4 For this same reason, the amici’s reference to United

Paperworkers Internat'l Union v. Misco, Inc., 484 U.S. 29 (1987) is

meaningless. That case arose in the context of collective bar-

gaining agreement arbitration. At most, the Court's observa-

tion that the FAA “does not apply to ‘contracts of employment

of .. . workers engaged in foreign or interstate commerce’ “

but may provide “guidance in labor arbitration .. . “ id. at 372

n.9 indicates that the FAA does not control arbitration under

collective bargaining agreements. It does not support the argu-

ment that all emplo»ment contracts are excluded from the

FAA, and it clearly has no application to the context in which

this case arises.

Smith, Inc., 523 F.2d 433, 436 (6th Cir. 1975) (stock broker-

age account executives “do not seriously contend . . . they

fall within the exception from coverage in § 1 of the

Arbitration Act. . . . ”); Erving v. Virginia Squires Basketball

Club, 468 F.2d 1064 (2d Cir. 1972) (professional athlete);

Dickstein v. duPont, 443 F.2d 783 (Ist Cir. 1971) (stock-

broker); Signal-Stat Corp. v. Local 475, United Elec., R. & M.

Workers, 235 F.2d 298 (2d Cir. 1956), cert. denied, 354 US.

911 (1957) (production workers under collective bargain-

ing agreement who were not moving goods through com-

merce or working in an interstate transportation

function); Tonetti v. Shirley, 173 Cal. App. 3d 1144, 219

Cal. Rptr. 616, 618 (1985) (stockbroker). See also Bernhardt

v. Polygraphic Co. of Amer., Inc., 218 F2d 948, 951-52 (2d

Cir. 1955), rev'd on other grounds, 350 U.S. 198 (1956)

(“Plaintiff was not hired as a ‘worker’ but as a plant

superintendent at a salary of $15,000 a year, with manag-

erial duties fundamentally different from those of

‘workers.” “).

On at least one occasion this Court has implicitly

recognized that an individual registration agreement like

Petitioner executed here is covered by the FAA, section

I's proviso notwithstanding. In Perry v. Thomas, 482 US.

483 (1987), the Court held that the FAA preempted a state

wage payment law that exempted claims under the stat-

ute from arbitration. The Court’s holding compelled the

claimant, who, like Petitioner here, individually had

agreed to arbitrate any dispute with his employer as part

of his registration application with the NYSE, to arbitrate

a wage payment claim. Although the Court did not

expressly consider whether employment contracts were

excluded from coverage under the FAA by section I's

proviso, it nonetheless read the FAA as preempting a

state statutory provision applicable to the plaintiff's

claim. In so doing the Court observed that the FAA's

“general applicability reflects that ‘[t}he preeminent con-

cern of Congress in passing the Act was to enforce private

agreements into which parties had entered.’ ...” Id. at 490,

quoting Byrd, 470 U.S. at 221 (emphasis added). It seems

doubtful the Court would have accorded the FAA such an

expansive preemptive effect on the facts of that case if it

had not recognized that the FAA applied to individual

arbitration agreements like that to which the plaintiff in

Perry and the Petitioner here were parties.

CONCLUSION

The decision of the Fourth Circuit Court of Appeals

should be affirmed. The court properly determined that

nothing in the text, legislative history or underlying pur-

poses of the ADEA preclude arbitration as a forum for

effectively resolving those claims. Because the arbitration

agreement to which Petitioner was a party covered his

ADEA claims and was valid and enforceable under the

FAA, the court was correct in directing the district court

to order Petitioner to arbitration.

Dated this the 19th day of December, 1990.

Respectfully submitted,

*James B. Srears, Jr.

Rosert S. Prurer

HaynsworTH, BALowIn,

JouNsON AND Greaves, P.A.

901 West Trade Street, Suite 1050

Charlotte, NC 28202

(704) 342-2588

_ Attorneys for Respondent

Interstate/Johnson Lane

Corporation

"Counsel of Record

App. 1

APPENDIX

Controversies As to Employment or

Termination of Employment

(From Rules of Board of Directors of

New York Stock Exchange, Inc.)

Rule 347. Any controversy between a registered

representative and any member or member organization

arising out of the employment or termination of employ-

ment of such registered representative by and with such

member or member organization shall be settled by arbi-

tration, at the instance of any such party, in accordance

with the arbitration procedure prescribed elsewhere in

these rules.

Amendments.

April 17, 1958.

April 3, 1975; effective May 1, 1975

Revised NYSE

Arbitration Rules’

Arbitration

Rule 600. (a) Any dispute, claim or controversy

between a customer or non-member and a member, allied

member, member organization and/or associated person

arising in connection with the business of such member,

allied member, member organization and/or associated

person in connection with his activities as an associated

person shall be arbitrated under the Constitution and

Rules of the New York Stock Exchange, Inc. as provided

by any duly executed and enforceable written agreement

or upon the demand of the customer or non-member.

' See Note at end of Appendix.

App. 2

(b) Under this Code, the New York Stock Exchange,

Inc. shall have the right to decline the use of its arbitra-

tion facilities in any dispute, claim or controversy, where

~ having due regard for the purposes of the New York

Stock Exchange; Inc. and the intent of this Code — such

dispute, claim or controversy is not a proper subject

matter for arbitration.

Simplified Arbitration

Rule 601. (a) Any dispute, claim or controversy,

arising between a public customer(s) and an associated

person or a member subject to arbitration under this code

involving a dollar amount not exceeding $5,000, exclusive

of attendant costs and interest, shall upon demand of the

customer(s) or by written consent of the parties, be arbi-

trated as herein after provided.

(b) The Claimant shall file with the Director of Arbi-

tration an executed Submission Agreement and a copy of

the Statement of Claim of the controversy in dispute and

the required deposit, together with documents in support

of the Claim. Sufficient copies of the Submission Agree-

ment and the Statement of Claim and supporting docu-

ments shall be provided to the Director of Arbitration for

each party and the arbitrator. The Statement of Claim

shall specify the relevant facts, the remedies sought and

whether or not a hearing is demanded.

amount in controversy is $1,000 or less, $25.00 if the

amount is more than $1,000 but $2,500 or less, or $100 if

the amount in controversy is more than $2,500, but does

App. 3

not exceed $5,000 upon filing of the Submission Agree-

ment. The final disposition of this sum shall be

determined by the arbitrator.

(d) The Director of Arbitration shall endeavor to

serve promptly, by mail or otherwise, on the Respon-

dent(s) one (1) copy of the Submission Agreement and

one (1) copy of the Statement of Claim. Within twenty

(20) calendar days from receipt of the Statement of Claim,

Respondent(s) shall serve each party with an executed

Submission Agreement and a copy of Respondent's

Answer. Respondent's executed Submission Agreement

and Answer shall also be filed with the Director of Arbi-

tration with sufficient additional copies for the arbitra-

tor(s) along with any deposit required under the schedule

of fees for customer disputes. The Answer shall designate

all available defenses to the Claim and may set forth any

related Counterclaim and/or related Third Party Claim

the Respondent(s) may have against the Claimant or any

other person. If the Respondent(s) has interposed a Third

Party Claim, the Respondent(s) shall serve the Third

Party Respondent with an executed Submission Agree-

ment, a copy of Respondent’s Answer containing the

Third Party Claim and a copy of the original Claim filed

by the Claimant. The Third Party Respondent shall

respond in the manner herein provided for response to

the Claim. If the Respondent(s) files a related Counter-

claim exceeding $5,000, the arbitrator may refer the claim,

counterclaim and/or Third Party Claim, if any, to a panel

of three (3) or five (5) arbitrators in accordance with Rule

607 of this Code or, he may dismiss the Counterclaim

and/or Third Party Claim without prejudice to the Coun-

terclaimant(s) and/or Third Party Claimant(s) pursuing

App. 4

the counterclaim and/or Third Party Claim in a separate

proceeding. The costs to the Claimant under either pro-

ceeding shall in no event exceed $200.

(e) All parties shall serve promptly by mail or oth-

erwise on all other parties and the Director of Arbitra-

tion, with sufficient additional copies for the arbitrators,

a copy of the Answer, Counterclaim, Third Party Claim,

amended claim or other responsive pleading, if any. The

claimant, if a Counterclaim is asserted against him, shall

within ten (10) calendar days either:

(i) Serve on each party and on the Director

of Arbitration with sufficient additional copies

for the arbitrator(s) a reply to any counterclaim,

(ii) if the amount of the Counterclaim

exceeds the Claim, have the right to file a state-

ment withdrawing the Claim. If the Claimant

withdraws the Claim, the proceedings will be

discontinued without prejudice to the rights of

the parties.

(f) The dispute, claim or controversy shall be sub-

mitted to a single arbitrator knowledgeable in the securi-

ties industry selected by the Director of Arbitration.

Unless the public customer demands or consents to a

hearing, or the arbitrator(s) calls a hearing, the arbitrator

shall decide the dispute, claim or controversy solely upon

the pleadings and evidence filed by the parties. If a

hearing is necessary, such hearing shall be held as soon as

practicable at a locale selected by the Director of Arbitra-

tion.

App. 5

(g) The Director of Arbitration may grant exten-

sions of time to file any pleading upon a showing of good

cause.

(h) The arbitrator shall be authorized to require the

submission of further documentary evidence as he, in his

sole discretion, deems advisable.

(i) Upon the request of the arbitrator, the Director of

Arbitration shall appoint two (2) additional arbitrators to

the panel which shall decide the matter in controversy.

(j) In any case where there is more than one (1)

arbitrator, the majority will be public arbitrators.

(k) In his discretion, the arbitrator may, at the

request of any party, permit such party to submit addi-

tional documentation relating to the pleadings.

(1) Except as otherwise provided herein, the general

arbitration rules of the New York Stock Exchange, Inc.

shall be applicable to proceedings instituted under this

Code.

Amendment.

December 6, 1984.

Mav 10, 1989.

Hearing Requirements - Waiver of Hearing

Rule 602. (a) Any dispute, claim or controversy,

except as provided in Section 2 (Simplified Arbitration),

shall require a hearing unless all parties waive such hear-

ing in writing and request that the matter be resolved

solely upon the pleadings and documentary evidence.

App. 6

(b) Notwithstanding a written waiver of a hearing

by the parties, a majority of the arbitrators may call for

and conduct a hearing. In addition, any arbitrator may

request the submission of further evidence.

Time Limitation Upon Submission

Rule 603. No dispute, claim or controversy shall be

eligible for submission to arbitration under this Code

where six (6) years shall have elapsed from the occur-

rence or event giving rise to the act or the dispute, claim

or controversy. This section shall not extend applicable

statutes of limitations, nor shall it apply to any case

which is directed to arbitration by a court of competent

jurisdiction.

Amendment.

December 6, 1984.

Dismissal of Proceedings

Rule 604. At any time during the course of an arbi-

tration, the arbitrators may either upon their own

initiative or at the request of a party, dismiss the proceed-

ing and refer the parties to the remedies provided by law.

The arbitrators shall upon the joint recuest of the parties

dismiss the proceedings.

Settlements —

Rule 605. All settlements upon any matter submit-

ted shall be at the election of the parties.

App. 7

Tolling of time Limitation(s) for the Institution of Legal

Proceedings and Extension of Time Limitati

Submission to Arbitration an er

_ Rule 606. (a) Where permitted by law i

limitation(s) which would siheonten run sa mses icy Howe

institution of legal proceedings, shall be tolled when a

duly executed Submission Agreement is filed by the

claimant(s). The tolling shall continue for such period as

the New York Stock Exchange, Inc. shall retain jurisdic-

tion upon the matter submitted.

(b) The six (6)-year time limitation upon submission

to arbitration shall not apply when the parties have sub-

mitted the dispute, claim or controversy to a court of

competent jurisdiction. The six (6)-year time limitation

shall not run for such period as the court shall retain

jurisdiction upon the matter submitted.

Amendment.

December 6, 1984.

Designation of Number of Arbitrators

Rule 607. (a) Public Controversies

(1) In all arbitration matters involving

public customers and other non-members where

the amount in controversy is $500,000 or more

the Director of Arbitration shall appoint an arbi-

tration panel which shall consist of five (5) arbi-

trators unless the parties agree in writing to a

panel of three (3) arbitrators, at least a majority

of whom shall not be from the securities indus-

try, unless the public customer or non-member

requests a panel consisting of at least a majority

from the securities industry.

(2) An arbitrator will be deemed as being

from the securities industry if he or she:

App. 8

1. is a person associated with a mem-

ber, broker/dealer, government securities

dealer, municipal securities dealer, or regis-

tered investment adviser, or

2. has been associated with any of the

above within the past five (5) years or

3. is retired from or spent a substantial

part of his or her business career in any of

the above, or

4. is an attorney, accountant or other

professional who devoted twenty (20) per-

cent or more of his or her professional work

effort to securities industry clients within

the last two (2) Years.

(3) An arbitrator who is not from the secu-

rities industry shall be deemed a public arbitra-

tor. A person will not be classified as a public

arbitrator if he or she has a spouse or other

member of the household who is a person asso-

ciated with a registered broker, dealer, munici-

pal securities dealer, government securities

broker, government securities dealer or invest-

ment adviser.

(b) Composition of Panels

The individuals who shall serve on a particular arbi-

tration panel shall be determined by the Director of

Arbitration. The Director of Arbitration may name the

chairman of each panel.

Amended.

June 18, 1986.

May 10, 1989.

App. 9

Notice of Selection of Arbitrators

Rule 608. The Director of Arbitration shall inform

the parties of the names and employment histories of the

arbitrators for the past ten (10) years, as well as informa-

tion disclosed pursuant to Rule 610, at least eight (8)

business days prior to the date fixed for the initial hear-

ing session. A party may make further inquiry of the

Director of Arbitration concerning an arbitrator’s back-

ground. In the event that any arbitrator, after appoint-

ment and prior to the first hearing session, should resign,

die, withdraw, be disqualified or otherwise be unable to

perform as an arbitrator, the Director of Arbitration shall

appoint a new member to the panel to fill any vacancy.

The Director of Arbitration shall inform the parties of the

name and employment history of the replacement arbitra-

tor for the past ten years, as well as information disclosed

pursuant to Rule 610, as soon as possible. A party may

make further inquiry of the Director of Arbitration con-

cerning the background of the replacement arbitrator and

within the time remaining prior to the first hearing ses-

sion or the five (5) day period provided under Rule 609,

whichever is shorter, may exercise its right to challenge

the replacement arbitrator as provided in Rule 609.

Amended.

May 10, 1989.

Peremptory Challenge

Rule 609. In any arbitration proceeding, each party

shall have the right to one peremptory challenge. In

App. 10

arbitrations where there are multiple claimants, respon-

dents and/or third party respondents, the claimants shall

have one peremptory challenge, the respondents shall

have one peremptory challenge and the third party

respondents shall have one peremptory challenge, unless

the Director of Arbitration determines that the interests

of justice would best be served by awarding additional

peremptory challenges. Unless extended by the Director

of Arbitration, a party wishing to exercise a peremptory

challenge must do so by notifying the Director of Arbitra-

tion in writing within five (5) business days of notifica-

tion of the identity of the persons named to the panel.

There shall be unlimited challenges for cause.

Amendments.

December 6, 1984.

Disclosures Required of Arbitrators

Rule 610. (a) Each arbitrator shall be required to

disclose to the Director of Arbitration any circumstances

which might preclude such arbitrator from rendering an

objective and impartial determination. Each arbitrator

shall disclose:

(1) Any direct or indirect financial or per-

sonal interest in the outcome of the arbitration;

(2) Any existing or past financial business,

professional, family or social relationships that

are likely to affect impartiality or might reason-

ably create an appearance of partiality of bias.

Persons requested to serve as arbitrators should

disclose any such relationships which they per-

sonally have with any party or its counsel, or

with any individual whom they have been told

App. 11

will be a witness. They should also disclose any

such relationship involving members of their

families or their current employers, partners or

business associates.

(b) Persons who are requested to accept appoint-

ment as arbitrator should make a reasonable effort to

inform themselves of any interests or relationships

described in Paragraph (a) above.

ships, or circumstances that might preclude an arbitrator

from rendering an objective and impartial determination

described in subsection (a) hereof is a continuing duty

that requires a person who accepts appointment as an

arbitrator to disclose, at any stage of the arbitration, any

such interests, relationships, or circumstances that arise,

or are recalled or discovered.

(d) Prior to the commencement of the first hearing

session, the Director of Arbitration may remove an arbi-

trator based on information disclosed pursuant to this

section. The Director of Arbitration shall also inform the

parties of any information disclosed pursuant to this

section, if the arbitrator who disclosed the information is

not removed.

“Amended.

May 10, 1989.

Disqualification or Other Disability of Arbitrators

Rule 611. In the event that any arbitrator, after the

commencement of the first hearing session and prior to

the rendition of the award, should resign, die, withdraw.

App. 12

be disqualified or otherwise be unable to perform as an

arbitrator, the remaining arbitrator(s) may continue with

the hearing and determination of the controversy, unless

such continuation is objected to by any party within five

(5) days of notification of the vacancy on the panel. Upon

rejection, the Director of Arbitration shall appoint a new

member to the panel to fill any vacancy. The Director of

Arbitration shall inform the parties as soon as possible of

the name and employment history for the past ten (10)

years of the replacement arbitrator, as well as information

disclosed pursuant to Rule 610. A party may make fur-

ther inquiry of the Director of Arbitration concerning the

replacement arbitrator's background and within the time

remaining prior to the next scheduled hearing session or

the five (5) day period provided under Rule 609, which-

ever is shorter, may exercise its right to challenge the

replacement arbitrator as provided in Rule 609.

Amended.

May 10, 1989.

Initiation of Proceedings

Rule 612. Except as otherwise provided herein, an arbi-

tration proceeding under this Code shall be instituted as

follows:

(a) Statement of Claim

The Claimant shall file with the Director of

Arbitration three (3) executed copies of the Sub-

mission Agreement and an executed Submission

Agreement, a Statement of Claim together with

documents in —— of the claim and the

required deposit. Sufficient additional copies of

the Submission Agreement and the Statement of

App. 13

Claim and supporting documents shall be pro-

vided to the Director of Arbitration for each

party and each arbitrator. The Statement of

Claim should specify the relevant facts and the

remedies sought. The Director of Arbitration

shall endeavor to serve promptly by mail or

otherwise on the Respondent(s) one (1) copy of

the Submission Agreement and one (1) copy of

the Statement of Claim.

(b) Service and Filing with the Director of

Arbitration

For purposes of the Code of Arbitration

Procedure, service may be effected by mail or

other means of delivery. Service and filing are

accomplished on the date of mailing either by

first-class postage prepaid or by means of over-

night mail service or, in the case of other means

of service, on the date of delivery. Filing with

the Director of Arbitration shall be made on the

same date as service.

Cross-Claims

(1) Within twenty (20) business days from

receipt of the Statement of Claim, the Respon-

dent(s) shall serve each party with an executed

Submission Agreement and a copy of Respon-

dent(s) Answer. An executed Submission Agree-

ment and Answer of the Respondent(s) shall

also be filed with the Director of Arbitration

with sufficient additional copies for the arbitra-

tor(s), along with any deposit required under

the schedule of fees. The Answer shall specify

all available defenses and the relevant facts that

will be relied upon at hearing and may set forth

any related Counterclaim the Respondent(s)

may have against the Claimant, any Cross-Claim

the Respondent(s) may have against any other

named Respondent(s) and any Third Party

Claim against any other party or person based

App. 14

upon any existing dispute, claim or controversy

subject to arbitration under this Code.

(2i) A Respondent, Responding Claimant,

Cross-Claimant, Cross-Respondent or Third

Party Respondent who pleads only a general

denial as an answer may, upon objection by a

party, in the discretion of the arbitrators, be

barred from presenting any facts or defenses at

the time of the hearing.

(ii) A Respondent, Responding Claimant,

Cross-Claimant, Cross-Respondent or Third

Party Respondent who fails to specify all avail-

able defenses and relevant facts in such party’s

answer, may, upon objection by a party, in the

discretion of the arbitrators, be barred from pre-

senting such facts or defenses not included in

such party's answer at the hearing.

(iii) A Respondent, Responding Claimant,

Cross-Claimant, Cross-Respondent or Third

Party Respondent who fails to file an answer

within twenty (20) business days from receipt of

service, or unless the time to answer has been

extended pursuant to paragraph (5), may, in the

discretion of the arbitrators, be barred from pre-

senting any matter, arguments or defenses at the

hearing.

(3) Respondent(s) shall serve each party

with a copy of any Third Party Claim. The Third

Party Claim shall also be filed with the Director

of Arbitration with sufficient additional copies

for the arbitrator(s), along with any deposit

required under the schedule of fees. Third Party

Respondent(s) shall ge ge in the manner pro-

vided for response to the claim, as provided in

(1) and (2) above.

(4) The Claimant shall serve each party with

a reply to a counterclaim within ten (10) busi-

ness days of receipt of an Answer containing a

App. 15

Counterclaim. The reply shall also be filed with

the Director of Arbitration with sufficient addi-

tional copies for the arbitrator(s).

(S) The Director of Arbitration may extend

any time period in this section whether such be

denominated as a Claim, Answer, Counterclaim,

Cross-Claim, Reply or Third Party pleading.

Joining and Consolidation - Multiple Par-

ies

(1) With respect to any dispute, claim or

controversy submitted to arbitration, any party

or person eligible to submit a claim under this

Code shall have the right to proceed in the same

arbitration against any other party or person

upon any claim directly related to such dispute.

(2) For purposes of this subsection, the

Director of Arbitration shall be authorized to

determine preliminarily whether a claim is

directly related to the matter in dispute and to

join any other party to the dispute and to con-

solidate the matter for hearing and award pur-

poses. In arbitrations where there are multiple

claimants, respondents and/or third party

respondents, the Director of Arbitration shall be

authorized to determine preliminarily whether

such parties should proceed in the same or sepa-

rate arbitrations.

aid (3) All final determinations with respect to

joining, consolidation and multiple parties

under this subsection shall be made by the arbi-

tration panel.

Amendments.

“ecember 6, 1984. .

June 18, 1986.

May 10, 1989. -

App. 16

Designation of Time and Place of Hearings

Rule 613. Unless the law directs otherwise, the time

and place for the initial hearing shall be determined by

the Director of Arbitration and each hearing thereafter by

the arbitrators. Notice of the time and place for the initial!

hearing shall be given at least eight (8) business days

prior to the date fixed for the hearing by personal service,

registered or certified mail to each of the parties unless

the parties shall, by their mutual consent, waive the

notice provisions under this section. Notice for each hear-

ing, thereafter, shall be given as the arbitrators may deter-

mine. Attendance at a hearing waives notice thereof.

Representation by Counsel

Rule 614. All parties shall have the right to represen-

tation by counsel at any stage of the proceedings.

Attendance at Hearings

Rule 615. The attendance or presence of all persons

at hearings including witnesses shall be determined by

the arbitrators. However, all parties to the arbitration and

their counsel shall be entitled to attend all hearings.

Failure to Appear

Rule 616. If any of the parties, after due notice, fails

to appear at a hearing or any adjourned hearing session,

the arbitrators may, in their discretion, proceed with the

arbitration of the controversy. In such cases, all awards

shall be rendered as if each party had entered an appear

ance in the matter submitted.

App. 17

Adjournments

Rule 617. (a) The arbitrators may, in their discretion,

adjourn any hearing(s) either upon their own initiative or

upon the request of any party to the arbitration.

(b) A party requesting an adjournment after arbitra-

tors have been appointed, if said adjournment is granted,

shall pay a fee equal to the deposit of costs but not more

than $100. The arbitrators may waive this fee or in their

awards may direct the return of this adjournment fee.

This provision shall not apply to cases filed pursuant to

Rule 601.

Amendment.

June 18, 1986.

Acknowledgement of Pleadings

Rule 618. The arbitrators shall acknowledge to all

parties present that they have read the pleadings filed by

the parties.

General Provisions Governing Pre-Hearing Proceeding

Rule 619. (a) Requests for Documents and Informa-

tion

The parties shall cooperate to the fullest extent prac-

ticable in the voluntary exchange of documents and infor-

mation to expedite the arbitration. Any request for

documents or other information should be specific, relate

to the matter in controversy, and afford the party to

whom the request is made a reasonable period of time to

App. 18 App. 19

respond without interfering with the time set for the (c) Pre-Hearing Exchange

hearing.

At least ten (10) calendar days prior to the first

> Decument Peedaction ead fatacmiatios scheduled hearing date, all parties shall serve on each

Exchange other copies of documents in their possession that they

(1) Any party may serve a written request

for information or documents (“information

request”) upon another party twenty (20) busi-

ness days or more after services of the Statement

of Claim by the Director of Arbitration or upon

filing of the Answer, whichever is earlier. The

requesting party shall serve the information

request on all parties and file a copy with the

Director of Arbitration. The parties shall

endeavor to resolve disputes regarding an infor-

mation request prior to serving any objection to

the request. Such efforts shall set forth in the

objection.

(2) Unless a gieater time is allowed by the

requesting party, information requests shall be

satisfied or objected to within thirty (30) calen-

dar days from the date of service. Any objection

to an information request shall be served by the

objecting party on all parties and filed with the

Director of Arbitration.

(3) Any response to objections to an infor-

mation request shall be served on all parties and

filed with the Director of Arbitration within ten

(10) calendar days of receipt of the objection.

(4) Upon written request of a party whose

information request is unsatisfied, the matter

will be referrec py the Director of Arbitration to

either a pre-hearing conference under para-

graph (d) of this section or to a selected arbitrag

tor under paragraph (e) of this section.

intend to present at the hearing and identify witnesses

they intend to present at the hearing. The arbitrator(s)

may exclude from the arbitration, any document not

exchanged or witnesses not identified at that time. This

paragraph does not require service of copies of docu-

ments or identification of witnesses which parties may

use for cross-examination or rebuttal.

(d) Pre-Hearing Conference

(i) Upon the written request of a party, an

arbitration, or at the discretion of the Director of

Arbitration, a pre-hearing conference shall be

scheduled. The Director of Arbitration shall set

the time and place of a pre-hearing conference

and appoint a person to preside. The pre-hear-

ing conference may be held by telephone confer-

ence call. The presiding person shall seek to

achieve agreement among the parties on any

issues that relate to the pre-hearing process or to

the hearing, including but not limited to, the

exchange of information, exchange or produc-

tion of documents, identification of witnesses,

identification and exchange of hearing docu-

ments, stipulations of fact, identification and

briefing of contested issues, and any other mat-

ter which will expedite the arbitration proceed-

ings.

(2) Any issues raised at the pre-hearing con-

ference that are not resolved may be referred by

the Director of Arbitration to a single member of

the Arbitration Panel for decision.

App. 20

(e) Decisions by Selected Arbitrator

The Director of Arbitration may appoint a single

member of the Arbitration Panel to decide all unresolved

issues referred to under this section. Such arbitrator shall

be authorized to act on behalf of the panel to issue

subpoenas, direct appearances of witnesses and produc-

tion of documents, set deadlines and issue any other

ruling which will expedite the Arbitration proceeding or

is necessary to permit any party to develop fully its case.

Decisions under this paragraph shall be made upon the

papers submitted by the parties, unless the arbitrator

calls a hearing. The Arbitrator may elect to refer any issue

under this paragraph.

(f) Subpoenas

The arbitrator(s) and any counsel of record to the

proceedings shall have the power of the subpoena pro-

cess as provided by law. All parties shall be given a copy

of the subpoena upon its issuance. The parties shall pro-

duce witnesses and present proofs to the fuliest extent

possible without resort to the subpoena process.

(g) Power to Direct Appearance and Production of

Documents

The arbitrator(s) shall be empowered without resort

to the subpoena process to direct the appearance of any

person employed or associated with any member or

member organization of the New York Stock Exchange,

Inc. and/or the production of any records in the posses-

sion or control of such persons or members. Unless the

arbitrator(s) direct otherwise, the party requesting the

appearance of a person or the production of documents

App. 21

under this section shall bear all reasonable costs of such

appearance and/or production.

Amended.

May 10, 1989.

Evidence

Rule 620. The arbitrators shall determine the mate-

riality and relevance of any evidence proffered and shall

not be bound by rules governing the admissibility of

evidence.

Renumbered.

May 10, 1989.

Interpretation of Code

Rule 621. The arbitrators shall be empowered to

interpret and determine the applicability of all provisions

under this Code which interpretation shall be final -and

binding upon the parties.

Renumbered.

May 10, 1989.

Determinations of Arbitrators

Rule 622. All rulings and determinations of the panel

shall be by a majority of the arbitrators.

Renumbered.

May 10, 1989

App. 22

Record of Proceedings

Rule 623. A verbatim record by stenographic reporter or

tape recording of all arbitration hearings shall be kept. If

a party or parties to a dispute elect to have the record

transcribed, the cost of such transcription shall be borne

by the party or parties making the request unless the

arbitrators direct otherwise. The arbitrators may also

direct that the record be transcribed. If the record is

transcribed at the request of any party, a copy shall be

provided to the arbitrators.

Amended.

May 10, 1989.

Oaths of the Arbitrators and Witnesses

Rule 624. Prior to the commencement of the first session,

an oath or affirmation shall be administered to the arbi-

trators. All testimony shall be under oath or affirmation.

Renumbered.

May 10, 1989.

Amendments

Rule 625. (a) After the filing of any pleadings, if a

party desires tc file a new or different pleading, such

change must be made in writing and filed with the Direc-

tor of Arbitration. The Director of Arbitration shall

endeavor to serve promptly by mail or otherwise upon all

other parties a copy of said change. The other parties

may, within ten (10) business days from the receipt of

service, file a response with the Director of Arbitration.

App. 23

(b) After a panel has been appointed, no new or

different pleading may be filed except for a responsive

pleading as provided for in (a) above or with the panel’s

consent.

Amendment.

December 6, 1984.

Renumbered.

May 10, 1989.

Reopening of Hearings

Rule 626. Where permitted by law, the hearings may

be reopened by the arbitrators on their own motion or in

the discretion of the arbitrators upon application of a

party at any time be‘ore the award is rendered.

Renumbered.

May 10, 1989.

Awards

Rule 627. (a) All awards shall be in writing and

signed by a majority of the arbitrators or in such manner

as is required by law. Such awards may be entered as a

judgment in any court of competent jurisdiction.

(b) Unless the law directs otherwise, all awards ren-

dered pursuant to this Code shall be deemed final and

not subject to review or appeal.

serve a copy of the award: (i) by registered or certified

App. 24

mail upon all parties, or their counsel, at the address of

record; or, (ii) by personally serving the award upon the

parties; or, (iii) by filing or delivering the award in such

manner as may be authorized by law.

(d) The arbitrator(s) shall endeavor to render an

award within thirty (30) days from the date the record is

closed.

(e) The award shall contain the names of the par-

ties, a summary of the issues in controversy, the damages

and/or other relief requested, the damage and/or other

relief award, a statement of any other issues resolved, the

names of the arbitrators, the dates the claim was filed and

the award rendered, the number and dates of hearing

sessions, the location of the hearing, and the signatures of

the arbitrators concurring in the award.

(f) The awards shall be made publicly available,

provided however, that the name of the customer party to

the arbitration will not be publicly available if he or she

SO requests in writing.

Amended.

May 10, 1989.

Miscellaneous

Rule 628. This Code shall be deemed a part of and

incorporated by reference in every duly-executed Sub-

mission Agreement which shall be binding on all parties.

Renumbered.

May 10, 1989.

App. 25

Schedule of Fees

Rule 629. (a) At the time of filing a Claim, Counter-

claim, Third-Party Claim or Cross-Claim, a Claimant shall

deposit with the New York Stock Exchange, Inc. the

amount indicated below unless such deposit is specifi-

cally waived by the Director of Arbitration.

Amount in Dispute Deposit

(Exclusive of interest and expenses)

Nea a aans cnc cuasaccccceccccccs..... $ 15

Above $1,000-but not exceeding $2,500 .............. 25

Above $2,500-but not exceeding $5,000 ............. 100

Above $5,000-but not exceeding $10,000............ 200

Above $10,000-but not exceeding $50,000... ..___ 400

Above $50,000-but not exceeding $100,000.......... 500

Above $100,000-but not exceeding $500,000......... 750

areas ics cacccccccccccecee... $1,000

Where the amount in dispute is $10,000 or less, no

additional deposits shall be required despite the number

of hearing sessions. Where the amount in dispute is

above $10,000 and multiple hearing sessions are required,

the arbitrators may require any of the parties to make

additional deposit for each additional hearing session. In

no event shall the aggregate amount Geposited per hear-

ing session exceed the amount of the initia] deposit as set

forth in the above schedule.

(b) A hearing session is any meeting between the

parties and the arbitrator(s), including » pre-hearing con-

ference, which lasts four (4) hours or less.

the amount chargeable to the parties as forum fees (fees)

and shall determine by whom such fees shall be borne

Where the amount in dispute is $10,000 or less, total fees

App. 26

to the parties shall not exceed the amount of the total

initial deposit deposited by the parties, regardless of the

number of hearing sessions conducted. Where the

amount in dispute is above $10,000, total fees chargeable

to the parties per hearing session may equal but shall not

exceed the amount of the total initial deposit(s) deposited

by the parties. Amounts deposited by a party shall be

applied against fees, if any. If the fees are not assessed

against a party who has made a deposit, the deposit will

be refunded. In addition to forum fees, the arbitrator(s)

may determine in their awards the amount of costs

incurred pursuant to Rules 617, 619 and 624, and unless

applicable law directs otherwise, other costs and

expenses of the parties and arbitrator(s) that are within

the scope of the agreement of the parties or are otherwise

permitted by law. The arbitrator(s) shall determine by

whom such costs shall be borne.

(d) If the dispute, claim or controversy does not

involve or disclose a money claim, the amount to be

deposited by the Claimant shall be $100, or such amount

as the director of arbitration or the panel of arbitrators

may require but shall not exceed $1,000.

(e) Any matter submitted and thereafter settled or

withdrawn prior to the commencement of the first ses-

sion shall entitle the parties to a refund of all but $25 of

the amount deposited with the New York Stock

Exchange, Inc.

(f) Any matter submitted and thereafter settled or

withdrawn subsequent to the commencement of the first

session may be subject to such refund of assessed

App. 27

deposits, if any, as the New York Stock Exchange, Inc.

may determine.

| (g) The arbitrators may assess forum fees and costs

incurred pursuant to Rules 617, 619 and 623 in any matter

settled or withdrawn subsequent to the commencement

of the first session.

(h) The fees for a pre-hearing conference with an

arbitrator shall be seventy-five (75%) per cent of the fees

contained in subsection (a).

Amendment.

December 6, 1984.

May 20, 1987.

May 10, 1989.

Uniform Arbitration Code

Rule 636. The provisions of the Uniform Arbitration

Code contained in Rules 600 through 630 shall also apply

to controversies between members, allied members,

member firms, member organizations and/or nonmem.

bers who are not public customers, except insofar as such

Provisions specifically apply to matters involving public

customers.

Amendment.

June 18, 1986.

Renumbered.

May 10, 1989.

App. 28

Schedule for Member Controversies

Rule 631. At *he time of filing a Submission Agree-

ment, a Claimant suall deposit with the New York Stock

Exchange, Inc. the amount indicated below:

Deposit

Per Hearing

EE Se eh ae eR Le $200°*

$5000 or more but less than $100,000.............. $750

REIT er pacer ree eS $1,000

Where the controversy does not involve a money

claim, the costs and the amount to be deposited shall be

such amount as may be fixed in advance by the

Exchange, except that such amount shall not exceed

$1,000 per hearing.

When the controversy is resolved in any way other

than by arbitration award, the Exchange shall retain $25.

Amendment.

May 20, 1987.

Renumbered.

May 10, 1989.

Member Controversies

Rule 632. Any controversy between parties who are

members, allied members, member firms or member cor-

porations shall be submitted for arbitration to members

of the Board of Arbitration, unless non-members are also

* This shall also be the fee for non-member claimants who

are not public customers.

App. 29

parties to the controversy. If the amount (exclusive of

interest and costs) involved in the controversy is less than

$10,000 the controversy shall be heard by one arbitrator.

If such amount is $10,000 or more the controversy shall

be heard by at least three but not more than five arbitra-

tors. If nonmembers are also parties to such controver-

sies, the arbitrators shall be appointed in accordance with

Rule 607 unless the non-member(s) consent to arbitration

before members of the Board of Arbitration.

Adopted.

November 30, 1983.

Amendment.

June 18, 1986.

Renumbered.

May 10, 1989.

Filing Fee for Member Non-Member

Controversies

Rule 633. A member organization shall, when filing a

claim against a nonmember, pay a non-refundable filing

fee of $500. This fee shall be an addition to all other fees,

deposits or costs which may be required.

Adopted.

December 6, 1984.

Renumbered.

May 10, 1989.

App. 30

Board of Arbitration

Rule 634. Promptly after the annual election of the

Exchange, the Chairman of the Board of Directors shall

appoint, subject to the approval of the Board of Directors,

a Board of Arbitration to be composed of such number of

present or former members, allied members and officers

of member corporations of the Exchange who are not

members of the Board of Directors as the Chairman of the

Board of Directors shall deem necessary to serve at the

pleasure of the Board of Directors or until the next annuai

election of the Exchange and their successors are appoin-

ted and take office.

Adopted.

May 20, 1987.

Renumbered

May 10, 1989.

Panel of Arbitrators

Rule 635. The Chairman of the ard of Directors

shall from time to time appoint two panels of arbitrators,

composed of persons who are residents of or have their

places of business in the Metropolitan area of the City of

New York. The first of such panels shall be composed of

persons engaged in or retired from the securities business

and the second of such panels shall be composed of

persons not engaged in the securities business. The

Chairman of the Board of Directors may likewise appoint

panels similar to the panels above described to serve

outside the City of New York.

App. 31

Adopted.

May 20, 1987.

Renumbered.

May 10, 1989.

Direction of Arbitration

Rule 636. The Chairman of the Board, shall designate

one of the officers or other employees of the Exchange as

Director of Arbitration. The Director of Arbitration shall

be charged with the duty of performing all ministerial

duties in connection with matters submitted for arbitra-

tion pursuant to these Rules.

Adopted.

May 20, 1987.

Amended.

May 10, 1989.

Requirements When Using Pre-Dispute

Arbitration Agreements With Customers

Rule 637. (1) Any pre-dispute arbitration clause shall

be highlighted and shail be immediately preceded by the

following disclosure language (printed in outline form as

set forth herein) which shall also be highlighted:

(a) Arbitration is final ard binding on the

parties.

(b) The parties are waiving their right to

seek remedies in court, including the right to

jury trial

App. 32

more limited than and different from court pro-

ceedings.

(d) The arbitrators’ award is not required

to include factual findings or legal reasoning

and any party’s right to appeal or to seek mod-

ification of rulings by the arbitrators is strictly

limited.

(e) The panel of arbitrators will typically

include a minority of arbitrators who were or

are affiliated with securities industry.

(2) Immediately preceding the signature line, there

shall be a statement which shall be highlighted that the

agreement contains a pre-dispute arbitration clause. The

statement shall also indicate at what page and paragraph

the arbitration clause is located.

(3) A copy of the agreement containing any such

clause shall be given to the customer who shall acknow!-

edge receipt thereof on the agreement or on a separate

document.

(4) No agreement shall include any condition which

limits or contradicts the rules of any self-regulatory or-

ganization or limits the ability of a party to file any claim

in arbitration or limits the ability of the arbitrators to

make any award.

(5) The requirements of this section shall apply only

to new agreements signed by an existing or new customer

of a member or member organization after September 7,

1989.

Adopted.

May 10, 1989.

App. 33

NOTE: Additional amendments were made to the NYSE

Arbitration Rules effective September 10, 1990. See 55 Fed.

Reg. 38181. These amendments were not available in final

published form in time for inclusion-in this appendix.

Principally, the amendments liberalize the availability of

collective proceedings, Rule 612, allow the awarding of

interest on awards, Rule 627, and modify the fee provi-

sions, Rules 629, 631 and 633.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.