UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 97-30895
ANDRE MOUTON,
Plaintiff-Appellee,
versus
METROPOLITAN LIFE INSURANCE COMPANY; RODNEY SCHMIDT,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Louisiana
July 31, 1998
Before WISDOM, KING, and DAVIS, Circuit Judges:
WISDOM, Circuit Judge:
I. Introduction
This case presents a matter of first impression in this Court.
It requires us to decide whether a securities dealer who agreed to
arbitrate “any dispute, claim or controversy that may arise between
[himself] and [his] firm” is compelled to arbitrate his Title VII
discrimination claim against his employer.
Andre Mouton (“Mouton”) worked as a sales agent for
Metropolitan Life Insurance Co. (“Metropolitan”), a member firm of
the National Association of Securities Dealers (“NASD”). As a
seller of mutual funds, he was required to be licensed by the NASD.
In 1989, he submitted a Uniform Application of Securities Industry
Regulation, also known as a U-4 Registration, to the NASD for the
purpose of procuring a license. Under the terms of the
application, Mouton agreed to:
arbitrate any dispute, claim or controversy that may arise
between me and my firm, or a customer, or any other person,
that is required to be arbitrated under the rules,
constitutions or by-laws of the [NASD] as may be amended
from time to time.
At the time Mouton submitted his application, § 1 of the NASD Code
provided, in pertinent part, that arbitration was required for:
any dispute, claim or controversy arising out of or in
connection with the business of any member of the
Association, with the exception of disputes involving the
insurance business of any member which is also an insurance
company:
(2) between or among members and public customers, or
others.
Section 8 of the Code further provided, in pertinent part, that:
any dispute, claim or controversy ... between or among
members and/or associated persons, and/or certain others,
2
arising in connection with the business of such member(s) or
in connection with the activities of such associated
person(s), shall be arbitrated under this Code, at the
instance of:
(2) a member against a person associated with a member of a
person associated with a member against a member.
“Section 1 [of the NASD Code] defines the general universe of
issues that may be arbitrated, and § 8 describes a subset of that
universe that must be arbitrated under the [NASD] Code.”1
In 1993, the Securities and Exchange Commission amended § 1 of
its NASD rules to provide for:
the arbitration of any dispute, claim or controversy arising
out of or in connection with the business of any member of
the [NASD] or arising out of the employment or termination
of employment of associated person(s) with any member, with
the exception of disputes involving the insurance business
of any member which is also an insurance company.
Mouton did not file a second U-4 Registration after the 1993
amendments to the NASD Code took effect.
In July 1995, Mouton testified against Metropolitan in a Title
VII sexual harassment action brought by one of his co-workers. At
1
Armijo v. Prudential Insurance Co. of America, 72 F.3d 793,
798 (10th Cir. 1995).
3
the time of his testimony, Mouton was on disability leave stemming
from a work-related accident that occurred in 1994. Mouton alleges
that when he attempted to return to work in 1995, Metropolitan
embarked on a course of unlawful employment action against him in
retaliation for the unfavorable testimony he gave earlier in the
year. This retaliation, says Mouton, culminated in the termination
of his employment in February 1996. Mouton received a right to sue
letter from the EEOC, and filed his own Title VII complaint against
Metropolitan on December 18, 1996.
Metropolitan sought summary judgment under the Federal
Arbitration Act2 on the basis that Mouton had entered into a
binding agreement with the NASD to arbitrate all claims arising
from his employment with Metropolitan. The district court denied
the motion on the ground that a genuine issue of material fact
existed regarding whether the 1989 NASD Code, which, unlike the
2
9 U.S.C. § 1 et seq. The Federal Arbitration Act provides
the authority for the enforcement of arbitration clauses as a
matter of federal law. In re Prudential Insurance Co. of America
Sales Practice Litigation, 133 F.3d 225, 230 (3d Cir. 1998).
4
1993 amended version, did not specifically require arbitration of
employment-related disputes, required him to arbitrate his Title
VII claim. The district court did, however, grant Metropolitan’s
subsequent motion to stay further proceedings pending its appeal of
the denial of its motion for summary judgment. We hold that Mouton
is required to submit his Title VII action to arbitration.
Metropolitan is therefore entitled to a summary judgment in its
favor.
II. Discussion
We review the denial of summary judgment de novo, applying
the same standard the district court applied.3
A. Scope of the pre-1993 NASD Arbitration Provisions
Our first task is to decide whether the pre-1993 NASD Code
required arbitration of employment disputes such as that brought
by Mouton. If we conclude that it did, we need not decide what
3
Blackwell v. Barton, 34 F.3d 298, 301 (5th Cir. 1994).
5
effect, if any, the 1993 amendments to the Code had on Mouton’s
licensing agreement. The majority of circuits which have
considered this precise issue have concluded that the pre-1993
NASD Code mandated arbitration of employment-related disputes.4
For the following reasons, we side with the plain weight of
authority.
First, the NASD, itself, has made it abundantly clear that
the pre-1993 Code’s arbitration provisions encompassed
employment-related controversies. In 1987, it stated that
employment disputes between its members and their registered
representatives, such as securities dealers, were subject to
4
See Seus v. John Nuveen & Co., Inc., 1998 WL 294020 (3d Cir.
(Pa.)); Thomas James Associates, Inc. v. Jameson, 102 F.3d 60 (2d
Cir. 1996); Armijo v. Prudential Insurance Co. of America, 72 F.3d
793 (10th Cir. 1995); Kidd v. Equitable Life Assurance Society of
the United States, 32 F.3d 516 (11th Cir. 1994). See also
Association of Investment Brokers v. Securities and Exchange
Commission, 676 F.2d 857, 861 (D.C. Cir. 1982) (NASD rules mandate
arbitration of employer-employee disputes, and did so, to the same
extent, as they do now, before the development of [U-4
forms])(dicta). But see Duffield v. Robertson Stephens & Co., 1998
WL 227469 (9th Cir. (Ca.)); Farrand v. Lutheran Brotherhood, 993
F.2d 1253 (7th Cir. 1993).
6
compulsory arbitration.5 Furthermore, at the time the Code was
amended in 1993, it explained that the inclusion of new language
in § 1 was not intended to broaden the category of matters
subject to compulsory arbitration, but rather to clarify that
employer-employee disputes indeed fell within the ambit of the
Code’s arbitration provisions.6
Second, “questions of arbitrability 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.”7 We have no doubt that the
pre-1993 Code contemplated that employment-related claims were
subject to mandatory arbitration. Even if, however, we were to
5
52 Fed.Reg. 9232 (1987).
6
58 Fed.Reg. 39071 (1993).
7
Moses H. Cone Hospital v. Mercury Construction Corp., 460
U.S. 1, 24-25 (1983). See also Rojas v. TK Communications, Inc.,
87 F.3d 745, 747 (5th Cir. 1996) (whenever the scope of an
arbitration clause is in question, the court should construe the
clause in favor of arbitration).
7
acknowledge an that the arbitration provisions at issue were
ambiguous, we would nevertheless be compelled to conclude that
they covered employment-related disputes. Indeed, “to
acknowledge the ambiguity is to resolve the issue, because all
ambiguities must be resolved in favor of arbitrability.”8
Third, we have already stated that an arbitration clause
need not speak directly to employment-related disputes for it to
mandate arbitration of Title VII claims.9 In Rojas v. TK
Communications, Inc.,10 we considered whether a radio station
employee was compelled to submit her sexual harassment claim to
arbitration under the terms of her employment contract. When the
plaintiff executed her contract, she agreed that “any action
contesting the validity of [the contract], the enforcement of its
financial terms, or other disputes [would] be submitted to
8
Armijo v. Prudential Insurance Co. of America at 798.
9
Rojas v. TK Communications, Inc., 87 F.3d 745 (5th Cir.
1996).
10
Id.
8
arbitration. We held that the “other disputes” language in the
arbitration clause was sufficiently broad to encompass Title VII
claims.11 Even though we did not decide Rojas in the context of
the NASD’s arbitration provisions, its reasoning should apply to
the case at bar. Mouton agreed to arbitrate “any dispute, claim
or controversy that may arise between [himself] and
[Metropolitan].” This language, like that at issue in Rojas, is
broad, and, we conclude, is sufficiently broad to encompass Title
VII claims.
B. Remaining Issues
Mouton argues that his claim is not subject to compulsory
arbitration because it falls within § 1's exception for “disputes
involving the insurance business of any member which is also an
insurance company.” Two circuits have already rejected this
11
Id. at 749.
9
argument.12 We reject it, too. In In re Prudential Insurance
Co. of America Sales Practice Litigation, the Third Circuit held
that the NASD Code reflected “one clear expression of intent --
that employment disputes are subject to arbitration while
intrinsically insurance claims are not.”13 Accordingly, it
concluded that a plaintiff’s retaliation claim, which was wholly
unrelated to Prudential’s insurance business, was subject to
compulsory arbitration.14 Likewise, in Armijo v. Prudential
Insurance Co. of America, the Tenth Circuit dismissed the
plaintiff’s assertion that employment-related controversies
involving insurance companies were ineligible for submission to
arbitration.15 It reasoned:
Although Prudential is an insurance company, there is
12
In re Prudential Insurance Co. of America Sales Practice
Litigation, 133 F.3d 225 (3d Cir. 1998); Armijo v. Prudential
Insurance Co. of America, 72 F.3d 793 (10th Cir. 1995).
13
In re Prudential Insurance Co. at 234.
14
Id.
15
Armijo at 800.
10
nothing unique about these discrimination claims by
plaintiffs that involve the insurance business of
Prudential.... Illegal employment discrimination, if it
exists, involves an employer’s statutory obligations as an
employer rather than an insurer.16
We find this line of reasoning particularly persuasive. Mouton’s
Title VII claims involve Metropolitan’s obligations as an
employer rather than an insurer. As such, § 1's insurance
business exception is inapposite here. Furthermore, were we to
conclude otherwise, we would render virtually meaningless any
arbitration agreements between companies involved in the
insurance business and their NASD-licensed employees. That is,
an expansive reading of the insurance business exception would
deprive a company such as Metropolitan of the benefits of the
arbitration system as embodied within the NASD Code.
Finally, Mouton argues that he cannot be compelled to
arbitrate his Title VII claim because he did not knowingly and
voluntarily waive his access to a judicial forum. We implicitly
16
Id.
11
rejected this argument in Rojas, as has every court that has
concluded that the pre-1993 NASD Code mandated arbitration of
employment-related disputes. Mouton agreed to arbitrate “any
dispute, claim or controversy that may arise between [himself]
and [Metropolitan]” (emphasis added). We hold him to that
agreement.
III. Conclusion
For the reasons stated, Mouton is compelled to submit his
Title VII claim to arbitration should he choose to go forward.
The district court’s denial of Metropolitan’s motion for summary
judgment is REVERSED. We REMAND for further proceedings
consistent with this opinion.
12