Amicus Curiae Brief — Shearson Lehman/American Express Inc. v. Bird

Supreme Court brief1989

Ask Donna

What actually matters in this document.

Text

No. 89-231

ate) Supreme Court, U.S.

IN THE | os oe

Supreme Court of the United States

JOSEPH F. SFANIOL, JR.

CLERK

OCTOBER TERM, 1989

————

SHEARSON LEHMAN/AMERICAN EXPRESS INC.

and RAYMOND R. CLEMENTS, op

Petitioners,

—_—V.—

FRANK L. BIRD, Trustee of the FRANK L. BIRD

PROFIT SHARING TRUST, FRANK L. BIRD, Individually,

J ;

scat Sak ae Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

MOTION FOR LEAVE TO FILE BRIEF AMICI CURIAE

AND BRIEF OF AMICT CURIAE IN SUPPORT OF THE

PETITION FOR A WRIT OF CERTIORARI

JAMES K. MANNING

Counsel of record; and

PAUL WINDELS III

ELIZABETH STORCH

BROWN & WOOD

One World Trade Center

New York, New York 10048

(212) 839-5300

Attorneys for Securities Industry

Association, The Advest Group, Inc.,

J.C. Bradford & Co., Dain Bosworth

Incorporated, D.A. Davidson & Co., Inc.,

Dean Witter Reynolds Inc., A.G. Edwards

& Sons, Inc., Goldman, Sachs & Co.,

J.J.B. Hilliard, W.L. Lyons, Inc.,

Merrill Lynch, Pierce, Fenner & Smith

Incorporated, Piper, Jaffray & Hopwood

Incorporated, Prescott, Ball & Turben,

Inc., Prudential-Bache Securities Inc.,

and Wheat, First Securities, Inc.,

as Amici Curiae

= “oS

“7

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-231

SHEARSON LEHMAN/AMERICAN EXPRESS INC. and

RAYMOND R. CLEMENTS,

Petitioners,

—_—vV.—

FRANK L. BIRD, Trustee of the FRANK L. BIRD

PROFIT SHARING TRUST, FRANK L. BIRD, Individually,

and JOAN SHEA,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

MOTION OF THE SECURITIES INDUSTRY

ASSOCIATION, THE ADVEST GROUP, INC.,

J.C. BRADFORD & CO., DAIN BOSWORTH

INCORPORATED, D.A. DAVIDSON & CO., INC.,

DEAN WITTER REYNOLDS INC., A.G. EDWARDS

& SONS, INC., GOLDMAN, SACHS & CO., J.J.B.

HILLIARD, W.L. LYONS, INC., MERRILL LYNCH,

PIERCE, FENNER & SMITH INCORPORATED,

PIPER, JAFFRAY & HOPWOOD INCORPORATED,

PRESCOTT, BALL & TURBEN, INC.,

PRUDENTIAL-BACHE SECURITIES INC., AND

WHEAT, FIRST SECURITIES, INC., FOR LEAVE

TO FILE BRIEF AMICI CURIAE

The Securities Industry Association (‘‘SIA’’), The Advest

Group, Inc. (‘‘Advest’’), J.C. Bradford & Co. (‘‘Bradford’’),

Dain Bosworth Incorporated (‘‘Dain Bosworth’’), D.A. David-

son & Co., Inc. (‘‘Davidson’’), Dean Witter Reynolds Inc.

(‘Dean Witter’’), A.G. Edwards & Sons, Inc. (‘‘A.G.

Edwards’’), Goldman, Sachs & Co. (‘‘Goldman Sachs’’),

J.J.B. Hilliard, W.L. Lyons, Inc. (‘‘Hilliard Lyons’’), Merrill

Lynch, Pierce, Fenner & Smith Incorporated (‘‘Merrill

Lynch’’), Piper, Jaffray & Hopwood Incorporated (‘‘Piper Jaf-

fray’’), Prescott, Ball & Turben, Inc. (‘‘Prescott’’), Prudential-

Bache Securities Inc. (‘‘Prudential’’), and Wheat, First

Securities Inc. (‘‘Wheat First’’), hereby respectfully move, pur-

suant to Rule 42 of this Court, for leave to file the annexed

brief, as amici curiae in support of the Petitioners, urging this

Court to issue a writ of certiorari to the United States Court of

Appeals for the Second Circuit with respect to its decision and

judgment below in Bird v. Shearson Lehman/American

Express, Inc., 871 F.2d 292 (2d Cir. 1989). The consent of

Shearson Lehman/American Express Inc. and Raymond R.

Clements, the Petitioners, has been obtained. Consent of the

Respondents has been requested but was not granted.

INTEREST OF AMICI CURIAE

SIA is the principal trade association of the securities indus-

try, having as members more than six hundred securities firms

in the United States and Canada. As such, it has a substantial

interest in the extent to which agreements to arbitrate claims

between securities firms and their customers may be enforced.

Because arbitration is an efficient, fair, and economical manner

of resolving disputes, most of SIA’s members have agreed with

many of their customers to arbitrate any controversies arising

between them. Among these members are amici Advest, Brad-

ford, Dain Bosworth, Davidson, Dean Witter, A.G. Edwards,

Goldman Sachs, Hilliard Lyons, Merrill Lynch, Piper Jaffray,

Prescott, Prudential, and Wheat First.

Amici curiae have a substantial interest in having this Court

resolve whether agreements to arbitrate claims arising under the

Employee Retirement Income Security Act of 1974, 29 U.S.C.

§ 1001 et seg. (‘‘ERISA’’), are enforceable as valid contracts

under Section 2 of the United States Arbitration Act, 9 U.S.C.

§ 2, as this Court has found with respect to claims arising under

the antitrust laws, the racketeering laws, and the securities laws.

See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,

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

Mahon, 482 U.S. 220 (1987); and Rodriguez De Quijas v.

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

1917 (1989). Amici seek to clarify and make uniform the law on

this issue so that the enforceability of arbitration provisions in

agreements with their customers can be predicted and ielied

upon.

This concern is not abstract: a significant portion of amici’s

accounts, such as Individual Retirement Accounts, are subject

to ERISA. The decision below has the anomalous result of ren-

dering the same agreement enforceable as to some accounts and

unenforceable as to others. As a practical matter, it would carve

a major exception to the rule this Court set down in Rodriguez

and McMahon: that arbitration clauses in brokerage agree-

ments are enforceable under the Arbitration Act.

SIA has also filed amicus briefs with this Court on the

enforceability of agreements to arbitrate in Dean Witter Rey-

nolds Inc. v. Byrd, 470 U.S. 213 (1985), Shearson/American

Express, Inc. v. McMahon, 482 U.S. 220 (1987), Dain

Bosworth Incorporated v. Johnson, No. 88-284, and Rodriguez

De Quijas v. Shearson/American Express, Inc., _.._ U.S.

___, 109 S.Ct. 1917 (1989).

Amici curiae firmly believe that the Court of Appeals erred

below. The Court of Appeals, notwithstanding the congressio-

nal policy favoring arbitration contained in the United States

Arbitration Act, 9 U.S.C. § 1 et seq. voided an agreement to

arbitrate future claims brought under ERISA as a waiver of

substantive rights under that statute. It did so even though this

Court has often held that such an agreement does not affect

substantive rights under the antitrust laws, Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985),

the securities laws, Rodriguez De Quijas v. Shearson/American

Express, Inc., U.S. , 109 S.Ct. 1917 (1989) and

Shearson/American Express, Inc. v. McMahon, 482 U.S. 220

(1987) and the federal racketeering statute, McMahon.

Amici move for leave to file this brief in order to put facts

relating to arbitration practice in the securities industry before

the Court. See proposed brief, infra, at 7-12. These facts, amici

respectfully submit, will assist the Court in deciding whether to

grant a writ of certiorari. They bear out this Court’s approval

of securities industry arbitration—and thus its conclusion that

an agreement to arbitrate claims does not waive substantive

rights. By the same token, they refute the Court of Appeals’

negative assumptions about arbitration and thus undercut the

basis of its decision.

WHEREFORE, the Securities Industry Association, The Advest

Group, Inc., J.C. Bradford & Co., Dain Bosworth Incorpo-

rated, D.A. Davidson & Co., Inc., Dean Witter Reynolds Inc.,

A.G. Edwards & Sons, Inc., Goldman, Sachs & Co., J.J.B. Hil-

liard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith

incorporated, Piper, Jaffray & Hopwood Incorporated, Pres-

cott, Ball & Turben, Inc., Prudential-Bache Securities Inc., and

Wheat, First Securities, Inc., respectfully move this Court that

leave be granted them to file the brief as amici curiae in support

of the petition for a writ of certiorari.

Dated: September 6, 1989

Respectfully submitted,

/s/ James K. Manning

JAMES K. MANNING

Counsel of Record; and

PAUL WINDELS II]

ELIZABETH STORCH

BROWN & WOOD

One World Trade Center

New York, New York 10048

(212) 839-5300

Attorneys for Amici Curiae

TABLE OF CONTENTS

ee Ge SO dn odd 268 dnc ccdadend neti

ey ae er , o.ua 00.038 6s desk dendabindanes

ge BRE ey re ee

anes Oe Cs ic 66 6626 écesaxawneeewar

Reasons for Granting a Writ of Certiorari........

SES OF FE oan ccc ovdevaseatnaecdars

ARGUMENT

II.

Ill.

The United States Arbitration Act Mandates

that Arbitration be Recognized as an Efficient

and Widely Accepted Means of Resolving

Broker-Customer Disputes in the Securities

DE oc cece beamapadeasedcrrecaokr nines

The Court Below Misapplied the Standard for

Finding an Implied Repeal of the United States

PO FE a co ca vundunscésssswnecssesas

The Circuits Stand in Conflict as to the Arbitra-

ee OG SE GD ocean dc ncnecnsuadvenes

CRAG od ake cc nndnnt sbskensseehetssabauaan

APPENDIX

Sixth Report of the Securities Industry Confer-

ence on Arbitration Statistical Report (August

RO) CIE occ ccdcuaeasakcceaxseeses

SUPPLEMENTAL LODGING OF AMICI CURIAE

New York Stock Exchange, Inc., Arbitration

ROG ccecckhevveswnueeuueeses eee sceeeses

PAGE

TABLE OF AUTHORITIES

Cases: PAGE

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974) .14, 15

Allen v. McCurry, 449 U.S. 90 (1980)................ 13

Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc., 847

eee See ee Gals. PENS 05 0 kc och eucececheastas 4, 14, 16

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

iy FEE CRED nV idesancectaheusecasuduceesuelen 14, 15

Bird v. Shearson Lehman/American Express, Inc., 871

ames Gee GO Gals ROUEP ccccectausavens’ 2, 4, 6, 7, 11, 14n

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) 3

Kaiser Steel Corp. v. Mullins, 455 U.S. 72 (1982)...... 13

Kulukundis Shipping Co. v. Amtorg Trading Corp., 126

FP 3, g fe SB, SRR R er cee eee 5

McDonald v. City of West Branch, 466 U.S. 284

Wiku:o-6¥505 bSSd G00 604s eRe kL ERR R EUR ooEt 14, 15

McMahon v. Shearson/American Express, 788 F.2d 94

(2d Cir. 1986), rev’d, 482 U.S. 220 (1987) .........

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Pg Se tae GO CRORE kc bcnescucaceccauvencces passim

Morton v. Mancari, 417 U.S. 535 (1974). ............. 13

Moses H. Cone Memorial Hospital v. Mercury Constr.

Gas Sew Gate: S CRDRON ccc ccakctcceasdtucucwaaus 4,5

Rodriguez De Quijas v. Shearson/American Express,

Inc., U.S. ___, 109 S. Ct. 1917 (1989) ...... 2, 3, 4,

5, 6, 15, 16

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) .... 6

iil

PAGE

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

U.S. 220 (1987) .......cecceccceeceeces 2, 3, 4, 5, 6, 7, 16

Southland Corp. v. Keating, 465 U.S. 1 (1984) «2.2000. 4,6

Taggert Corp. v. Efros, 475 F. Supp. 124 (S.D. Tex.

DID). oop ccccccccccccrccccccassnccsssessssvesess 6

Statutes:

Employee Retirement Income Security Act of 1974

Section 1001 ef seq., 29 U.S Lv. § 1001 ef seq....----. 2

Section 1144(d), 29 U.S.C. § 1144(d)...---- eee ee: 13n

Labor-Management Relations Act of 1947

Section 301, 29 U.S.C. § 185.......-eee eee ee renee 14

Racketeering Influenced and Corrupt Organization Act

Sections 18 U.S.C. §§ 1961-68. .....---- eee ee creer 7

Securities Exchange Act of 1934

Section 78 ef seq., 15 U.S.C. § 78 ef Seg. ..--++++++> 14

Section 19, 15 U.S.C. § 788....-..--- sere cere eeeee s

Section 27, 15 U.S.C. § 78aa......--- eee cree seen 14

United States Arbitration Act

Section 1 ef seq., 29 U.S.C. § 1 ef Seg... -----+++05> 3

Section 2, 9 U.S.C. § 2.....-- cece eeeeeeceeeeeees 2

Rules:

American Stock Exchange, Inc., Arbitration Rules, 2

Am. Stock Ex. Guide (CCH) 44 9540-95513... 2000 7n, 8n

10n, lin

Code of Arbitration Procedure of the National Associa-

tion of Securities Dealers, Inc., N.A.S.D. Manual

(CCH) 44 3701-3746 .... 02+ ee eee ee eeeee 7n, 8n, 10n, lin

PAGE

Constitution of the New York Stock Exchange, Inc., Art.

XI, 2 N.Y.S.E. Guide (CCH) 44 1501-1503 ......... 8n

New York Stock Exchange, Inc., Arbitration Rules 600-

Gee sdndesnvenbstalusdcnansussvessds 7n, 8n, 9n, 10n, lln

Uniform Code of Arbitration §§ 1-31, reprinted in Sixth

Report of the Securities Industry Conference on Arbi-

IS Me osc odukecc cus ducee% 7n, 10n, lin

Articles:

C. Katsoris, The Arbitration of a Public Securities Dis-

pute, 53 Fordham L. Rev. 279 (1984) ............. 11, lin

Miscellaneous:

American Stock Exchange, Inc., Panel of Arbitrators

1988-89, 1 Am. Stock Ex. Guide (CCH) 158-60 ..... 9

Annual Report of the Director of the Administrative

Office of tiie United States Courts 1988 ............ 12n

Brief of the SEC as amicus curiae in Shearson/American

Express, Inc. v. McMahon, No. 86-44.............. ®

Brief of the SIA as amicus curiae in Dain Bosworth

Incorporated v. Johnson, No. 88-284 .............. 3

H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 327,

reprinted in 1974 U.S. Code Cong. & Admin. News.

PUL sitakighoeadedesetnnadeudonsuce eben dsl. 14

New York Stock Exchange Response to the SEC Request

for Review of Predispute Arbitration Agreements,

October 14, 1988, reprinted in P. Hoblin, Jr., Securi-

ties Arbitration Procedures Strategies Cases (2d Supp.

BRIER Bee By Agron Ra Se Bh A ne a 12n

SEC Exchange Act Release No. 16390 (Nov. 30, 1979),

DD Malis BPMN ROOD CHOTED occ ccdccccscecnccuace ®

Sixth Report of the Securities Industry Conference on

Arbitration Statistical Report (August 1989) ........ lin

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-231

SHEARSON LEHMAN/AMERICAN EXPRESS INC.

and RAYMOND R. CLEMENTS,

Petitioners,

FRANK L. BIRD, Trustee of the FRANK L. BIRD

PROFIT SHARING TRUST, FRANK L. BiRD, Individually,

and JOAN SHEA,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

—|\_—---

BRIEF OF AMICI CURIAE IN SUPPORT OF THE

PETITION FOR A WRIT OF CERTIORARI

PRELIMINARY STATEMENT

The Securities Industry Association (‘‘SIA’’), The Advest

Group, Inc. (‘‘Advest’’), J.C. Bradford & Co. (‘‘Bradford’’),

Dain Bosworth Incorporated (‘‘Dain Bosworth’), D.A. David-

son & Co., Inc. (‘‘Davidson’’), Dean Witter Reynolds Inc.

(‘Dean Witter’), A.G. Edwards & Sons, Inc. (“‘A.G.

Edwards’’), Goldman, Sachs & Co. (‘‘Goldman Sachs’’),

J.J.B. Hilliard, W.L. Lyons, Inc. (‘‘Hilliard Lyons’’), Merrill

Lynch, Pierce, Fenner & Smith Incorporated (‘‘Merrill

Lynch’’), Piper, Jaffray & Hopwood Incorporated (‘‘Piper Jaf-

fray’’), Prescott, Ball & Turben, Inc. (‘‘Prescott’’), Prudential-

Bache Securities Inc. (‘‘Prudential’’), and Wheat, First

Securities, Inc. (‘‘Wheat First’’) submit this brief as amici

curiae in support of the Petitioners, and urge this Court to issue

a writ of certiorari to the United States Court of Appeals for the

Second Circuit with respect to its decision and judgment below

in Bird v. Shearson Lehman/American Express, Inc., 871 F.2d

292 (2d Cir. 1989).

INTEREST OF AMICI CURIAE

SIA is the principal trade association of the securities indus-

try, having as members more than six hundred securities firms

in the United States and Canada. As such, it has a substantial

interest in the extent to which agreements to arbitrate claims

between securities firms and their customers may be enforced.

Because arbitration is an efficient, fair, and economical manner

of resoiving disputes, most of SIA’s members have agreed with

many of their customers to arbitrate any controversies arising

between them. Among these members are amici Advest, Brad-

ford, Dain Bosworth, Davidson, Dean Witter, A.G. Edwards,

Goldman Sachs, Hilliard Lyons, Merrill Lynch, Piper Jaffray,

Prescott, Prudential, and Wheat First.

Amici curiae therefore have a substantial interest in having

this Court resolve whether agreements to arbitrate claims aris-

ing under the Employee Retirement Income Security Act of

1974, 29 U.S.C. § 1001 et seq., (“‘ERISA’’) are enforceable as

valid contracts under Section 2 of the United States Arbitration

Act, 9 U.S.C. § 2, as this Court has found with respect to

claims arising under the antitrust laws, the racketeering laws,

and the securities laws. See Mitsubishi Motors Corp. v. Soler

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

American Express v. McMahon, 482 U.S. 220 (1987); and

Rodriguez De Quijas v. Shearson/American Express, Inc.,

pe YF , 109 S.Ct. 1917 (1989). Amici seek to clarify

and make uniform the law on this issue so that the enforceabil-

os natant vacemeiumasaaa inimitable

ity of arbitration provisions in agreements with their customers

can be predicted and relied upon.

This concern is not abstract: a significant portion of amici’s

accounts, such as Individual Retirement Accounts, are subject

to ERISA. The decision below has the anomalous result of ren-

dering the same agreement enforceable as to some accounts and

unenforceable as to others. As a practical matter, it would carve

a major exception to the rule this Court set down in Rodriguez

and McMahon: that arbitration clauses in brokerage agree-

ments are enforceable under the Arbitration Act.

SIA has also filed amicus briefs with this Court on the

enforceability of agreements to arbitrate in Dean Witter Rey-

nolds Inc. v. Byrd, 470 U.S. 213 (1985), Shearson/American

Express, Inc. v. McMahon, 482 U.S. 220 (1987), Dain

Bosworth Incorporated v. Johnson, No. 88-284, and Rodriguez

De Quijas v. Shearson/American Express, Inc., ____ U.S.

___, 109 S.Ct. 1917 (1989).

REASONS FOR GRANTING A WRIT OF CERTIORARI

At issue here is whether the lower courts have license to infer

congressional intent to overrule the United States Arbitration

Act, 9 U.S.C. § 1 et seg. (the ‘‘Arbitration Act’’), without any

direct evidence that Congress intended to do so. Although this

Court has repeatedly held in no uncertain terms that predispute

agreements to arbitrate claims arising under federal statutes are

enforceable under the Arbitration Act absent a showing of spe-

cific congressional intent to repeal the effect of the Arbitration

Act with respect to such claims, see Mitsubishi Motors Corp. v.

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

American Express v. McMahon, 482 U.S. 220 (1987), Rodri-

guez De Quijas v. Shearson/American Express, Inc., U.S.

, 109 S.Ct. 1917 (1989), the Court of Appeals below

refused to enforce a predispute agreement to arbitrate claims

arising under ERISA, without even purporting to find any

direct expression of congressional intent to overrule the Arbi-

tration Act.

SUMMARY OF ARGUMENT

The opinion of the United States Court of Appeals for the

Second Circuit below, Bird v. Shearson Lehman/American

Express, Inc., 871 F.2d 292 (2d Cir. 1989), held that predispute

agreements to arbitrate ERISA claims are unenforceable, in

spite of the Arbitration Act’s mandate that an agreement to

arbitrate is as enforceable as any other valid contract. The deci-

sion below rested upon two erroneous premises: (1) a conclu-

sion, indefensible in light of this Court’s recent Arbitration Act

decisions, that arbitration of ERISA claims is inconsistent with

that statute’s ‘‘remedial’’ purposes, and (2) a misapplication of

the test for determining whether Congress repealed the Arbitra-

tion Act by implication with respect to ERISA claims. See Mit-

subishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

U.S. 614 (1985); Southland Corp. v. Keating, 465 U.S. 1 (1984);

Moses H. Cone Memorial Hospital v. Mercury Constr. Corp.,

460 U.S. 1 (1983). As to the former premise, it assumes that the

enforcement of agreements to arbitrate ERISA claims dilutes

the substantive provisions of that Act, a view consistently

rejected by this Court in analogous contexts. As to the latter

premise, the Court of Appeals, being unable to find statutory

language conflicting with the Arbitration Act or legislative his-

tory demonstrating congressional intent to repeal the Arbitra-

tion Act, in effect overruled the substantive, congressional

policies embodied in the Arbitration Act solely on the basis of

its own conception of public policy.

A writ of certiorari is also appropriate here because a split in

the Circuits exists. In contrast to the result here, the Court of

Appeals for the Eighth Circuit has analyzed the issue in the

manner set forth by this Court in Mitsubishi, McMahon, and

Rodriguez and has held that predispute agreements to arbitrate

are enforceable with respect to ERISA claims. Arnulfo P. Sulit,

Inc. v. Dean Witter Reynolds, Inc., 847 F.2d 475 (8th Cir.

1988).

Such results as the Court of Appeals for the Second Circuit

reached below can only lead lower courts to stray from the rule

laid down by this Court: that the Arbitration Act is valid except

~ ——

where Congress has expressed its intention, either in statutory

language or legislative history, to repeal it. Amici respectfully

submit that the petition for certiorari should be granted in order

to prevent inconsistent treatment among the lower courts that

are trying to define the scope and validity of the Arbitration

Act.

POINT I

THE UNITED STATES ARBITRATION ACT MANDATES

THAT ARBITRATION BE RECOGNIZED AS AN

EFFICIENT AND WIDELY ACCEPTED MEANS OF

RESOLVING BROKER-CUSTOMER DISPUTES IN THE

SECURITIES INDUSTRY

The United States Arbitration Act provides that an agree-

ment to arbitrate in a contract involving interstate commerce is

valid to the same extent as any other contract. When Congress

passed the Arbitration Act in 1925, it established a clear federal

policy favoring the use of arbitration to resolve disputes. That

policy marked a decisive shift from the hostility to arbitration

then prevalent in the courts.

In its recent decisions, this Court has found occasion to rec-

ognize the policy behind the Arbitration Act. In Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., the Court

observed:

[W]e are well past the time when judicial suspicion of the

desirability of arbitration and the competence of arbitral

tribunals inhibited the development of arbitration as an

alternative means of dispute resolution.

473 U.S. at 626-27. Accord Rodriguez De Quijas v. Shearson/

American Express, Inc., 109 S.Ct. at 1920 (‘‘ ‘the old judicial

hostility to arbitrations’. . . has been steadily eroded over the

years’’) (quoting Kulukundis Shipping Co. v. Amtorg Trading

Corp., 126 F.2d 978, 985 (2d Cir. 1942) (Frank, J.)); Moses H.

Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. at

24 (the Arbitration Act ‘‘is a congressional declaration of a lib-

eral federal policy favoring arbitration . . . [and] questions of

arbitrability must be addressed with a healthy regard for the

federal policy favoring arbitration’’); Southland Corp. v. Keat-

ing, 465 U.S. at 10 (in enacting the Arbitration Act, ‘‘Congress

declared a national] policy favoring arbitration. . . [that] man-

dated the enforcement of arbitration agreements’’); Scherk v.

Alberto-Culver Co., 417 U.S. 506, 510-11 (1974).

The Court of Appeals’ refusal to enforce predispute agree-

ments to arbitrate ERISA claims rested in large part on its con-

ception of ERISA as a remedial statute. In the words of the

Court of Appeals:

The federal courts have consistently interpreted ERISA as

a remedial statute designed to ‘‘curb the funding and dis-

closure abuses of employee pension and welfare benefit

plans by establishing minimum federal standards.”’

871 F.2d at 296-97 (quoting Taggert Corp. v. Efros, 475 F.

Supp. 124 (S.D. Tex. 1979). Yet ERISA’s remedial purpose can

have no bearing as to whether agreements to arbitrate ERISA

claims are enforceable under the Arbitration Act, unless it is

assumed that arbitration of ERISA claims semehow dilutes the

substantive rights conferred by that statute.

This Court has rejected the predicate of the decision below,

the notion that an agreement to arbitrate controversies under a

federal statute affects the substantive provisions of that statute:

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, informal-

ity, and expedition of arbitration.

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

473 U.S. at 628; accord, Rodriguez De Quijas v. Shearson/

American Express, Inc., U.S. , 109 S.Ct. at 1920-21;

Shearson/American Express, Inc. v. McMahon, 482 U.S. at

232. In these cases, the Court enforced agreements to arbitrate

claims arising under three of the most fundamentally remedial

bodies of federal statutory law: the antitrust laws (Mitsubishi),

the securities laws (McMahon and Rodriguez), and the Racke-

teering Influenced and Corrupt Organization Act, 18 U.S.C.

§§ 1961-68 (McMahon). Indeed, the Court of Appeals’ conten-

tion that the enforcement of agreements to arbitrate ERISA

claims is inconsistent with ERISA’s remedial purpose not only

flies in the face of the decision of this Court, it echoes the Court

of Appeals’ since reversed conclusion in McMahon v.

Shearson/American Express, 788 F.2d 94, 98 (2d Cir. 1986),

rev’d, 482 U.S. 220 (1987), as to ‘‘the inappropriateness of the

United States Arbitration Act when strong public policy consid-

erations are involved.’’’

The established structure of arbitration in the securities

industry, which this Court has recognized in McMahon and

Rodriguez, refutes the Court of Appeals’ assumption that the

enforcement of contracts to arbitrate ERISA disputes will

dilute the protection of ERISA beneficiaries. Securities

exchanges and the National Association of Securities Dealers,

Inc. (the ‘‘N.A.S.D.’’), under the supervision of the Securities

and Exchange Commission (the ‘‘Commission’’), provide arbi-

tration facilities for disputes between member firms and their

public customers.” The current procedures have evolved since

1872, when the New York Stock Exchange, Inc., first adopted

arbitration procedures for customer disputes. The N.A.S.D.

has maintained arbitration facilities for more than forty years.

1 As Judge Cardamone stated in dissent below:

Simply labeling ERISA as ‘‘remedial’’ is insufficient, it seems to

me, to rebut the heavy presumption in favor of freedom of contract

to arbitrate, particularly as the High Court has sustained the valid-

ity of compulsory arbitration agreements under other ‘‘remedial’’

statutes.

871 F.2d at 299-300.

2 See, e.g., 2 Am. Stock Ex. Guide (CCH) {9542 (Rule 602);

N.A.S.D. Manual (CCH) 4 3701; N.Y.S.E. Rule 600 (a copy of the

New York Stock Exchange, Inc. Arbitration Rules is contained in the

Supplemental Lodging of Amici Curiae); Uniform Code of Arbitration

§ 1, reprinted in Sixth Report of the Securities Industry Conference on

Arbitration (August 1989).

The exchanges and the N.A.S.D. also have permanent arbitra-

tion staffs. Their rules and constitutions contain detailed codes

of arbitration procedures.’

Moreover, the Commission has approved the implementation

and operation of this arbitral system, see Exchange Act Release

No. 16390, (Nov. 30, 1979), 18 S.E.C. Docket 1197 (1979), and

retains jurisdiction to monitor the fairness of arbitration pro-

ceedings. See Section 19 of the Securities Exchange Act of 1934,

15 U.S.C. § 78s. As the Commission itself argued to this Court

in McMahon, ina brief signed by its General Counsel and Solic-

itor:

[T]he Commission has had the power to ensure that arbi-

tration procedures prescribed by the [Self-Regulatory

Organizations] are adequate to enforce the rights of cus-

tomers against brokerage firms that are members of SROs.

In these circumstances, the suspicion of arbitration on

which Wilko rested is inappropriate, and an agreement to

arbitrate accordingly should not be deemed a waiver of

rights under the Exchange Act.

Shearson/American Express, Inc. v. McMahon, No. 86-44,

Brief of the Securities and Exchange Commission as amicus

curiae at 13.

That the Securities Industry Conference on Arbitration

(‘‘SICA’’) and the Commission worked together to add further

improvements to SRO arbitration codes in the year following

the McMahon decision proves that the Commission can and

will exercise its oversight authority and that SROs will respond

in a constructive manner. During the Summer of 1988, the

Commission invited SICA and the stock exchanges to review

and possibly revise their arbitration rules in certain respects.

SICA and the stock exchanges considered the matter and

3 See, e.g., Constitution of the New York Stock Exchange, Inc., Art.

XI, 2 N.Y.S.E. Guide (CCH) 4§ 1501-1503; Rules 600-638 of the New

York Stock Exchange, Inc.; Code of Arbitration Procedure of the

National Association of Securities Dealers, Inc., N.A.S.D. Manual

(CCH) 44 3701-3746; Arbitration Rules of the American Stock

Exchange, Inc., 2 Am. Stock Ex. Guide (CCH) 4§ 9540-9551J.

drafted amendments to their arbitration rules, which were

adopted on May 10, 1989.

As changed, the rules require that any arbitration clause in a

broker-customer agreement be highlighted and in plain lan-

guage. In addition, the arbitration clause must disclose to the

customer that he is thereby foregoing a jury trial in any lawsuit

against his broker and agreeing to limits on discovery and

appellate review.* The contract must also disclose the presence

of the arbitration clause immediately before the customer’s sig-

nature line.° The amendments further require that discovery

requests be responded to within 30 days and provide for a pre-

hearing conference before an arbitration panel to resolve dis-

covery disputes.° Retired securities industry personnel (as well

as professionals who do substantial business with securities

firms) cannot serve as public arbitrators, and all who serve as

arbitrators must provide their employment history for the prior

ten years to the parties.’ A record, either stenographic or taped,

must be kept of all arbitration proceedings, and, lastly, arbitra-

tion awards must be made public and state the issue involved,

the amount claimed, and the amount actually awarded.®

The long established competence of securities industry arbi-

trators to adjudicate disputes should dispel any suspicion of the

arbitral process in that industry. The stock exchanges and the

N.A.S.D. keep permanent lists of arbitrators. These lists com-

prise senior securities industry personnel, as well as attorneys

and other professionals from outside the industry, who are well

versed in the field. See, e.g., Panel of Arbitrators 1988-89, 1

Am. Stock Ex. Guide (CCH) 158-60; N.A.S.D. Manual (CCH)

4 3702. Most have previously served as arbitrators and are

therefore well acquainted with arbitration procedures and cus-

toms. This, this Court’s observation in Mitsubishi that ‘‘adapt-

See N.Y.S.E. Rule 637(1).

See N.Y.S.E. Rule 637(2).

See N.Y.S.E. Rule 619(a)(2), (d).

See N.Y.S.E. Rules 608 and 610.

See N.Y.S.E. Rules 623 and 627.

on TK A DS

ability and access to expertise are hallmarks of arbitration,’’

473 U.S. at 633, hits the mark with respect to the securities

industry.

The arbitration rules of the N.A.S.D. and the various stock

exchanges further ensure that arbitration practice in the securi-

ties industry will be efficient and impartial. For example, these

rules require a majority of ‘‘public’’ arbitrators (i.e., unaffili-

ated with member firms) in disputes between public customers

and member firms unless the customer requests otherwise.’

Arbitrators are required to disclose any business affiliation with

any parties before them, and may be disqualified for cause for

even the appearance of a conflict of interest. '° Each party in an

arbitration has at least one peremptory challenge, as well as

unlimited challenges for cause.’

The arbitration itself provides for a full and fair hearing. The

parties have the right to be present at the hearing, to be repre-

sented by counsel, to cross-examine witnesses, and to have a

transcript of the hearing taken. They may subpoena witnesses

and documents just as in a court proceeding, and may also com-

pel the presence of any employee of a member of the sponsoring

institution at a hearing, regardless of whether that employee

would be within the subpoena power of the courts for the state

where the hearing is held.'* Moreover, arbitrators serve, and

witnesses testify, under oath.’? The fairness of these rules and

9 See, e.g., 2 Am. Stock Ex. Guide (CCH) 4 9542 (Rule 602);

N.A.S.D. Manual (CCH) § 3719; N.Y.S.E. Rule 607; Uniform Code

of Arbitration § 8.

10 =See, e.g., 2 Am. Stock Ex. Guide (CCH) 4 9542(f)-9542A (Rules

602(f) and 603); N.A.S.D. Manual (CCH) § 3723; N.Y.S.E. Rule 610;

Uniform Code of Arbitration § 11.

11 See, e.g., 2 Am. Stock Ex. Guide (CCH) 4 9542(f} (Rule 602(f));

N.A.S.D. Manual (CCH) 4 3722; N.Y.S.E. Rule 609; Uniform Code

of Arbitration § 10.

12 See, e.g., 2 Am. Stock Ex. Guide (CCH) § 9545A, 9548-49, 9551A

(Rules 607, 610-11, 614); N.Y.S.E. Rules 614-15, 619, 623; Uniform

Code of Arbitration 4§ 15-16, 20.

13. See, e.g., 2 Am. Stock Ex. Guide (CCH) ¢ 9551B (Rule 615);

N.Y.S.E. Rule 624; Uniform Code of Arbitration § 25.

procedures is borne out by the results of arbitrations conducted

under them. For the years 1980-1988, 51% of public customer

cases that went to arbitration before one of the stock exchanges

or the N.A.S.D. and were decided—rather than being settled—

awarded damages to the customer.“

Moreover, the arbitration process significantly reduces dis-

covery expenses and minimizes delay in reaching a hearing. See

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

U.S. at 628; C. Katsoris, The Arbitration of a Public Securities

Dispute, 53 Fordham L. Rev. 279, 286-87 (1984). For example,

state laws generally provide subpoena power to arbitrators and

counsel, and parties are encouraged to produce documents ‘‘to

the fullest extent possible without resort to the issuance of the

subpoena process.’’ '° Arbitrators may also direct the appear-

ance of persons associated with member organizations or the

production of records of these organizations without using the

subpoena process.'© That most stock exchanges and the

N.A.S.D. offer a streamlined arbitration procedure for smaller

claims also enables customers to resolve small disputes without

incurring great expense.’’ Arbitration also offers an expeditious

result. According to a survey conducted by the accounting firm

of Deloitte Haskins & Sells (‘‘DH&S’’) at the request of the

New York Stock Exchange, Inc., the average arbitration pro-

ceeding took almost six maaths less, from filing of the com-

14. See Sixth Report of the Securities Industry Conference on Arbitra-

tion Statistical Report (August 1989) excerpts of which are reproduced

in the Appendix to this Brief.

15 See, e.g., 2 Am. Stock Ex. Guide (CCH) $9548 (Rule 619);

N.A.S.D. Manual (CCH) 4 3732; N.Y.S.E. Rule 619(f); Uniform

Code of Arbitration § 20; C. Katsoris, supra, at 286.

16 See, e.g., 2 Am. Stock Ex. Guide (CCH) $9549 (Rule 611);

N.A.S.D. Manual (CCH) § 3733; N.Y.S.E. Rule 619(g); Uniform

Code of Arbitration § 20.

17 See, e.g., 2 Am. Stock Ex. Guide (CCH) § 9551H (Rule 621);

N.A.S.D. Manual (CCH) § 3710; N.Y.S.E. Rule 601; Uniform Code

of Arbitration § 2.

plaint to the ultimate judgment, than the average litigation.’* In

addition, according to statistics complied by the Securities

Industry Conference on Arbitration, nearly 6,101 securities

industry arbitrations were filed with stock exchanges and the

N.A.S.D. in 1988, and 3,740 arbitrations in the securities indus-

try were resolved during that year.'? The 1988 figures represent

more than four times the number of arbitrations filed in 1982.”

Finally, the excessive caseload in the federal district courts

makes it all the more important that arbitrable claims between

securities firms and their customers proceed to arbitration. Fil-

ings of ERISA claims increased by 625 to 6,704 filings in 1988.”

Since the average caseload per United States District Judge in

1988 was 493 cases,” permitting agreements to arbitrate all

ERISA claims would effectively create up to 13 new federal dis-

trict judgeships, which could help to relieve the federal courts

of their overloaded dockets.

POINT Il

THE COURT BELOW MISAPPLIED THE STANDARD

FOR FINDING AN IMPLIED REPEAL OF THE UNITED

STATES ARBITRATION ACT

In reaching its decision below, the Court of Appeals con-

cluded that Congress intended to repeal the Arbitration Act

with respect to ERISA claims. Yet because it divined congres-

18 New York Stock Exchange Response to the Securities and Exchange

Commission Request for Review of Predispute Arbitration Agree-

ments, October 14, 1988, reprinted in P. Hoblin, Jr., Securities Arbi-

tration Procedures Strategies Cases (2d Supp. 1989). DH&S used a

sample of 243 cases (66 litigations, 142 arbitrations, and 35 litigations

transferred to arbitration) over a three month time frame.

19 See Appendix.

20 The number of filings rose from 1,340 in 1982 to 6,101 in 1987. See

Appendix.

21 Annual Report of the Director of the Administrative Office of the

United States Courts 1988 at 10 (1988).

22 Annual Report of the Director of the Administrative Office of the

United States Courts at 7, 14 (1988).

sional intent without adequate legislative evidence, the court

below reached an incorrect result by misapplication of the stan-

dard set by this Court.

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

requires that any finding of an implied repeal of the Arbitration

Act be supported by ‘‘congressional intention expressed in

some other statute. . . .”’ 473 U.S. at 627. This is simply a reit-

eration of the traditional standard for finding that a federal

Statute has been repealed by implication by a subsequently

enacted federal statute. Kaiser Steel Corp. v. Mullins, 455 U.S.

72, 88 (1982) (‘* ‘repeals by implication jof a prior statute by a

subsequently enacted one] are disfavored’ ’’) (quoting Allen v.

McCurry, 449 U.S. 90, 99 (1980)); Morton v. Mancari, 417

U.S. 535, 550 (1974) (‘‘In the absence of some affirmative

showing of an intention [by Congress] to repeal, the only per-

missible justification for a repeal by implication is when the ear-

lier and later statutes are irreconcilable’’).

In Mitsubishi, this Court stated:

We must assume that if Congress intended the substantive

protection afforded by a given statute to include protec-

tion against waiver of the right to a judicial forum, that

intention will be deducible from text or legislative history.

473 U.S. at 628.

Under this test, there can be no question that predispute

agreements to arbitrate ERISA claims are enforceable under the

Arbitration Act. ERISA contains no statutory language that

restricts a party’s ability to choose an arbitral forum with

respect to claims brought thereunder.” Nor is there any evi-

dence in the legislative history of ERISA that Congress

intended to repeal the Arbitration Act with respect to ERISA

23 Quite to the contrary, Section 1144(d) of the ERISA provides:

Nothing in this subchapter shall be construed to alter, amend, mod-

ify, invalidate, impair, or supersede any law of the United States

(except as provided in Sections 1031 and 1137(b) of this title) or any

rule or regulation issued under any such law.

29 U.S.C. § 1144(d). Sections 1031 and 1137(b) do not refer to the

Arbitration Act in any way.

claims. In the words of the Court of Appeals for the Eighth Cir-

cuit in Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc. , 847

F.2d 475, 478 (8th Cir. 1988), ‘‘our examination reveals no con-

gressional intent to single out ERISA claims for exemption

from the general federal policy favoring rigorous enforcement

of agreements to arbitrate... .”’

None of the legislative matter cited by the court below can

qualify as evidence of a congressional intent to repeal the Arbi-

tration Act. That Congress bestowed exclusive jurisdiction on

the federal courts to hear ERISA claims does not demonstrate

an intent to repeal the Arbitration Act. To the contrary, this

Court in McMahon held that agreements to arbitrate claims

arising under the Securities Exchange Act of 1934, 15 U.S.C.

§ 78 et seq. (the ‘‘Exchange Act’’), to be enforceable under the

Arbitration Act even though Section 27 of the Exchenge Act, 15

U.S.C. § 78aa, provides for exclusive federal jurisdiction over

Exchange Act claims. If an exclusive federal jurisdiction provi-

sion does not show congressional intent to repeal the Arbitra-

tion Act with respect to Exchange Act claims, it cannot do so

with respect to ERISA claims.

As to the reference in the ERISA conference report to Section

301 of the Labor-Management Relations Act of 1947, 29

U.S.C. § 185, that reference applies only to ‘‘actions to enforce

or clarify benefit rights provided under title I [of ERISA],”’

H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 327, reprinted

in 1974 U.S. Code Cong. & Admin. News at 5034, 5107, and

not to actions for breach of fiduciary duty, like the case at

bar.

Last, the three cases decided by this Court that the Court of

Appeals cited in support of its opinion, Alexander v. Gardner-

Denver Co., 415 U.S. 36 (1974), Barrentine v. Arkansas-Best

Freight System, Inc., 450 U.S. 728 (1981), McDonald v. City of

West Branch, 466 U.S. 284 (1984), have no bearing on this case.

All those cases concerned the enforceability and binding effect

24 The Court of Appeals acknowledged that Section 301 deals with

‘the applicable law for the breach of a collective bargaining agree-

ment.’” 871 F.2d at 298.

of agreements to arbitrate contained in collective bargaining

agreements purporting to bind individuals subject to those

agreements, as opposed to a direct agreement among individual

parties to arbitrate controversies. Their holdings depended

upon factors unique to the context of arbitration clauses in col-

lective bargaining agreements. In each case, the litigation of the

employee’s claim was controlled by the union involved, with the

result that the employee lacked control over the proceeding,

unlike the plaintiff here. Alexander v. Gardner-Denver Co.,

415 U.S. at 58 n.19. Indeed, in each case, the Court specifically

noted that the union prosecuting the claim might have a differ-

ent interest than the employee whose claim it was. Alexander v.

Gardner-Denver Co., 415 U.S. at 58 n.19; Barrentine v.

Arkansas-Best Freight System, Inc., 450 U.S. at 742;

McDonald v. City of West Branch, 466 U.S. at 291. Here, by

contrast, where the plaintiff has full control over the prosecu-

tion of his claim, there is no possibility of such a conflict of

interest. Likewise, the fact that arbitrators under collective bar-

gaining agreements often have limited jurisdiction to enforce

the terms of the collective bargaining agreement, and their

expertise tends towards ‘‘the law of the shop, not the law of the

land,’’ see Alexander v. Gardner-Denver Co., 415 U.S. at 57;

McDonald v. City of West Branch, 466 U.S. at 290-91, distin-

guishes them from the situation at bar. Here the arbitrators of

the various stock exchanges have plenary power to resolve any

claims brought before them. In short, there can be no applica-

tion of the rules of Alexander, Barrentine, and McDonald

beyond the issue of the effect of arbitration agreements in col-

lective bargaining cases, and those cases in no way impair the

governance of Rodriguez, McMahon, and Mitsubishi to this

case.

POINT Ill

THE CIRCUITS STAND IN CONFLICT AS TO THE

ARBITRABILITY OF ERISA CLAIMS

A direct conflict now exists among the Courts of Appeal with

respect to whether a predispute agreement to arbitrate claims

arising under the Securities Act is enforceable. The decision

below directly conflicts with the decision of the Cour of

Appeals for the Eighth Circuit in Arnulfo P. Sulit, Inc. v. Dean

Witter Reynolds, Inc., 847 F.2d 475 (1988). There, the Court of

Appeals followed the analysis employed by this Court in Mitsu-

bishi, McMahon, and Rodriguez and held that agreements to

arbitrate ERISA claims are enforceable under the Arbitration

Act.

CONCLUSION

For the reasons set forth above, amici curiae the Securities

Industry Association, The Advest Group, Inc., J.C. Bradford

& Co., Dain Bosworth Incorporated, D.A. Davidson & Co.,

Inc., Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc.,

Goldman, Sachs & Co., J.J.B. Hilliard, W.L. Lyons, Inc.,

Merrill Lynch, Pierce, Fenner & Smith Incorporated, Piper,

Jaffray & Hopwood Incorporated, Prescott, Ball & Turben,

Inc., Prudential-Bache Securities Inc., and Wheat, First Securi-

ties, Inc., respectfully request that the petition for a writ of cer-

tiorari be granted.

Dated: Septernber 6, 1989

Respectfully submitted,

JAMES K. MANNING

Counsel of record; and

PAUL WINDELS III

ELIZABETH STORCH

BROWN & WOOD

One World Trade Center

New York, New York 10048

(212) 839-5300

Attorneys for Amici Curiae

Of Counsel:

William J. Fitzpatrick, Esq.

Gerard J. Quinn, Esq.

Lee E. Kuckro, Esq.

R. Patrick Shepherd, Esq.

Louis L. Bulba, Esq.

Bruce A. MacKenzie, Esq.

Paul J. Dubow, Esq.

Brian C. Underwood, Esq.

Robert J. Katz

James C. Stone III, Esq.

Philip M. Mandel, Esq.

David E. Rosedahl, Esq.

Robert Shiffra, Esq.

Loren Schechter, Esq.

John Harris, Esq.

SECURITIES INDUSTRY

ASSOCIATION

THE ADVEST GROUP, INC.

J.C. BRADFORD & CO.

DAIN BOSWORTH

INCORPORATED

D.A. DAVIDSON & Co., INC.

DEAN WITTER REYNOLDS

INC.

A.G. EDWARDS & SONS, INC.

GOLDMAN, SACHS & Co.

J.J.B. HILLIARD,

W.L. LYONS, INC.

MERRILL LYNCH, PIERCE,

FENNER & SMITH

INCORPORATED

PIPER, JAFFRAY & HOPWOOD

INCORPORATED

PRESCOTT, BALL & TURBEN,

INC.

PRUDENTIAL-BACHE

SECURITIES INC.

WHEAT, FIRST SECURITIES,

INC.

a =

: © =

ah Sore ‘owl ait oo a

» Ahn Wise, an,

——

APPENDIX

Ri?

yds

1980

1981

1982

1983

1984

1985

1986

1987

1988

Sixth Report of the Securities Industry

Conference on Arbitration Statistical Report

(August 1989)

COMPOSITE ARBITRATION FIGURES

Total

Cases Public

Total Concluded Small Small Customer

Cases Including Claims Claims Cases

Received Settlement Received Concluded Decided

830 686 332 269 410

1,042 980 306 357 532

1,340 1,044 322 292 558

1,731 1,259 416 320 622

2,449 1,762 561 489 736

2,796 2,190 664 520 961

2,838 2,460 657 610 1,017

4,358 2,958 827 641 1,153

6,101 3,740 1,473 930 1,561

Awards

in Favor

of Public

205

264

293

331

366

530

506

636

743

AMERICAN STOCK EXCHANGE, INC.

Total

Cases Public

Total Concluded Small Small Customer Awards

Cases Including Claims Claims Cases in Favor

_ Received Settlement Received Concluded Decided of Public

1980 45 41 18 1] 35 16

1981 39 40 7 11 42 22

198237 31 9 4 16 10

1983 41 42 14 8 10 6

1984 69 53 16 14 45 26

1985 64 58 21 14 41 24

1986 63 60 20 28 31 14

1987 92 74 34 24 41 24

1988 100 63 21 29 27 12

Cases carried over into 1989: 87

BOSTON STOCK EXCHANGE, INC.

Total

Cases Public

Total Concluded Small Small Customer Awards

Cases Including Claims Claims Cases in Favor

Received Settlement Received Concluded Decided of Public

1980 2 2 2 2 2 0

1981 2 2 2 2 0 0

1982 1 1 1 ] 1 ]

1983 2 2 2 2 1

1984 0 0 0 0 0 0

1985 0 0 0 0 0 0

1986 2 2 2 2 2 0

1987 0 0 0 0 0 0

1988 0 0 0 0 0 0

Cases carried over into 1989: 0

CHICAGO BOARD OPTIONS EXCHANGE, INC.

Total

Cases Public

Tota! Concluded Small Small Customer Awards

Cases Including Claims Claims Cases in Favor

.Received Settlement Received Concluded Decided of Public

1980 44 31 11 1] 18 6

1981 4} 32 10 8 12 3

1982 50 38 6 6 14 3

1983 75 45 5 4 13 6

1984 91 56 24 16 4 3

1985 64 38 10 5 0 0

1986 72 44 1 9 12 9

1987 130 93 29 33 22 9

1988 149 89 22 27 48 12

Cases carried over into 1989: 151

MIDWEST STOCK EXCHANGE, INC.

Total

Cases Public

Total Concluded Small Small Customer Awards

Cases Including Claims Claims Cases in Favor

Received Settlement Received Concluded Decided of Public

1980 2 2 1 0 l ]

1981 2 2 0 0 0 0

1982 ] 0 0 0 0 0

1983 2 2 0 0 0 0

1984 l 0 0 0 0 0

1985 ] 0 0 0 0 0

1986 4 0 1 0 0 0

1987 5 3 1 ] ] 1

1988 1 7 0 0 0 0

Cases carried over into 1989: 2

MUNICIPAL SECURITIES RULEMAKING BOARD

Total

Cases Public

Total Concluded Small Small Customer Awards

Cases Including Claims Claims Cases in Favor

Received Settlement Received Concluded Decided of Public

1980 21 21 7 7 3 2

1981 25 25 5 5 7 4

1982 33 16 7 7 13 6

1983 78 40 17 9 14 5

1984) =s-1113 80 20 17 34 21

1985 91 118 31 35 54 31

1986 82 89 30 21 30 15

1987 8106 90 38 34 42 24

1988 115 126 49 52 63 37

Cases carried over into 1989: 59

1980

1981

1982

1983

1984

1985

1986

1987

1988

Cases carried over into 1989: 4,005

Total Concluded Small Small

Cases Including Claims Claims Cases

Received Settlement Received Concluded Decided

318 234 134 113 122

422 422 142 177 242

606 435 157 139 276

768 549 216 147 272

1,108 747 298 244 381

1,490 962 377 250 434

1,587 1,199 390 327 476

2,866 1,625 458 325 642

3,990 2,169 1,084 539 934

NATIONAL ASSOCIATION OF

SECURITIES DEALERS, INC.

Total

Cases

Public

Customer Awards

in Favor

of Public

118

140

161

196

232

248

364

432

1980

1981

1982

1983

1984

1985

1986

1987

1988

Cases carried over into 1989: 1,269

NEW YORK STOCK EXCHANGE, INC.

Total

Cases

Total Concluded Small

Cases Including Claims

Received Settlement Received Concluded Decided

367 327

477 433

558 473

713 532

1,008 796

1,095 962

965 1,004

1,050 1,000

1,623 1,196

13]

117

109

136

176

198

18]

225

263

Public

Customer Awards

Small

Claims Cases

11¢ 221

134 214

113 214

122 276

183 259

190 424

205 432

204 378

235 440

in Favor

of Public

119

11]

118

137

113

221

210

200

228

1980

1981

1982

1983

1984

1985

1986

1987

1988

PACIFIC STOCK EXCHANGE, INC.

Total

Cases Public

Total Concluded Small Small Customer

Cases Including Claims Claims Cases

Received Settlement Received Concluded Decided

24 28 12 11 4

24 20 17 17 9

31 21 15 1] 10

35 29 17 17 23

45 26 21 11 10

50 40 12 18 20

4] 37 9 13 18

64 58 27 1] 23

99 77 30 40 45

Cases carried over into 1989: 86

Awards

in Favor

of Public

Al0

PHILADELPHIA STOCK EXCHANGE, INC.

Total

Cases Public

Total Concluded Small Small Customer Awards

Cases Including Claims Claims Cases in Favor

Received Settlement Received Concluded Decided of Public

1980 7 0 16 4 4 2

1981 10 6 6 3 6 ]

1982 23 iS 18 11 14 8

1983 17 19 9 11 12 5

1984 14 7 6 _ 4 3 0

1985 31 18 15 8 8 2

1986 22 15 10 6 7 2

1987 25 15 15 9 4 1

1988 24 13 4 8 4 2

Cases carried over into 1986: 42

lee >.

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.