[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 96-3074
D. C. Docket No. 95-1718-CIV-T-23A
AMERICAN EXPRESS FINANCIAL ADVISORS, INC.
f.k.a. IDS FINANCIAL SERVICES, INC.,
and IDS LIFE INSURANCE COMPANY,
Plaintiffs-Appellants,
versus
DENNIS MAKAREWICZ,
and TRAVIS TUCILLO,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Georgia
(September 9, 1997)
Before TJOFLAT and BARKETT, Circuit Judges, and HOWARD*, Senior
District Judge.
___________________________
*Honorable Alex T. Howard, Jr., Senior U.S. District Judge for
the Southern District of Alabama, sitting by designation.
TJOFLAT, Circuit Judge:
American Express Financial Advisors, Inc. ("American
Express"), and IDS Financial Services, Inc. ("IDS") appeal the
district court's denial of injunctive relief and its
administrative closure of their lawsuit pending industry
arbitration. We hold that we lack jurisdiction over the appeal
from the district court's decision to compel arbitration as to
the damages claims. Regarding the district court's denial of
injunctive relief, however, we find that we have jurisdiction,
and we reverse.
I.
Appellants American Express and IDS provide financial
services and insurance to individual and organizational clients
nationwide. Appellees Dennis Makarewicz and Travis Tuccillo
worked as financial advisors for appellants until September 14,
1995, when they ended their relationships with American Express
and IDS and started their own financial consulting business.
According to the appellants' original complaint, filed October
16, 1995, Makarewicz and Tuccillo took approximately 200 of
appellants' clients with them when they left, departures which
allegedly resulted in the withdrawal of approximately $20 million
in investments managed by the appellants. In luring away these
customers, appellees allegedly violated contractual agreements
that they had signed as an original condition of employment by
2
appellants.1
1
Section IV(1) of the agreements signed by Makarewicz
and Tuccillo stated, in part, the following:
(a) You must not . . . :
(1) Encourage or induce anyone to terminate an
agreement with [American Express or IDS] without
[American Express'] consent;
(2) Encourage or induce any Client to stop
carrying out any action related to a Product or Service
it acquired from or through [American Express] . . . ;
(3) Promote or make unwarranted claims against
[American Express or IDS];
(4) Encourage or induce any Client to sell,
surrender or redeem any Product or Service distributed
or offered by [American Express or IDS] without
[American Express'] consent.
(b) All of the above provisions apply while the
Agreement is in effect and after it ends.
(c) All Records and Materials are the property of
[American Express or IDS]. All rights to Records and
Materials that you prepare or create in connection with
the performance of this Agreement are hereby assigned
to [American Express]. You agree that you will not
reproduce or allow the reproduction of the Records and
Materials in any manner whatsoever, except pursuant to
written policy or consent of [American Express].
(d) . . . . Such Records and Materials are open to
inspection by [American Express] at any time during
your normal business hours. You must return them and
all copies of them to [American Express] at any time on
request. When this agreement ends, all of these items
remain [American Express] property. You must return
all of them, together with any licenses you have or
control, without demand or compensation.
(e) While this agreement is in effect and after it
ends, you agree that you will not reveal the contents
of any [American Express] property or allow them to be
revealed, except in connection with carrying out your
duties under the Agreement. You will not reveal the
names and addresses of [American Express] Clients or
any other information about them, including financial
3
On October 16, 1995, appellants brought this diversity suit
against Makarewicz and Tuccillo in the United States District
Court for the Middle District of Florida. They sued for breach
of contract, misappropriation of trade secrets, breach of
fiduciary duty, conversion, and intentional interference with
prospective business relationships. Appellants sought both
injunctive relief and compensatory and punitive damages. With
regard to damages, however, the complaint admitted that
"[p]ortions of this dispute may be arbitrable pursuant to the
[National Association of Securities Dealers' ("NASD")] Code of
Arbitration Procedure." Nevertheless, appellants sought both
preliminary injunctive relief to preserve the status quo pending
arbitration and permanent injunctive relief for whatever claims
were not arbitrable.
information. You also will not reveal any of this information
about potential Clients, to whom a presentation has been made by
an [American Express] Planner, who might reasonably be expected
to do business with [American Express or IDS]. You will not
allow any of this information about Clients or potential Clients
to be revealed.
(f) You agree that the identity of Clients and
potential Clients is confidential information. For one
year after this Agreement ends, you agree not to use
any such information in connection with any business in
competition with [American Express or IDS].
(g) For one year after this Agreement ends, you agree
that you will not . . . directly or indirectly offer
for sale, sell or seek an application for any Product
or Service issued or provided by any company to or from
a Client you contacted, dealt with or learned about
while you represented [American Express or IDS] or
because of that representation.
(emphasis added).
4
On October 17, appellees initiated NASD arbitration.2 On
October 18, appellants moved for a temporary restraining order
("TRO") pursuant to Fed. R. Civ. P. 65. On October 19, the
appellees moved for a hearing on this motion, and on October 27,
they moved for "an order pursuant to the Federal Arbitration Act
staying this action and compelling arbitration."3 The district
court granted the appellees' motion for a hearing on the issue of
preliminary injunctive relief. At the November 1, 1995 hearing,
the district court listened to the arguments of both sides, but
it did not rule on either the appellant's motion for a
preliminary injunction or the appellees' motion to compel
arbitration.
Months passed. On April 8, 1996, appellants moved for a
declaration that no elements of the dispute were subject to NASD
arbitration; they argued that the appellees had misrepresented
their standing to initiate NASD arbitration. The district court
did not respond. On June 30, 1996, the district court finally
issued a terse order in which it concluded that "all of the
2
Appellees have never answered the appellants'
complaint. Instead, they have adopted the position, in response
to various motions filed by the appellants, that all of the
claims the appellants have asserted -- both legal and equitable -
- are subject to mandatory NASD arbitration.
3
Appellees were apparently referring to the Federal
Arbitration Act, 9 U.S.C. §§ 1-16 (1994) ("FAA"). Both parties
apparently accept that this act applies to the present case, and
we find no reason to disagree. See generally Volt Info.
Sciences, Inc. v. Board of Trustees of Leland Stanford Junior
Univ., 489 U.S. 468, 476, 109 S. Ct. 1248, 1254, 103 L. Ed. 2d
488 (1989) ("It is undisputed that this contract falls within the
coverage of the FAA, since it involves interstate commerce . . .
.").
5
claims raised in this action are encompassed by the standard NASD
arbitration agreements executed by the parties." The court
reached this conclusion "[f]or the reasons discussed by the
defendants (1) in their October 27, 1995, memorandum, (2) at the
November 1, 1995, oral argument, (3) in their May 1, 1996,
memorandum opposing the plaintiffs' motion for a ruling of non-
arbitrability, and (4) in their other filings." The district
court therefore granted appellees' motion to compel arbitration
as to all claims and denied appellants' motion for injunctive
relief. The court administratively closed the case and removed
it from its docket. American Express and IDS took this appeal.
II.
As an initial matter, we must address our jurisdiction over
the present appeal. The FAA currently governs the appealability
of orders disposing of requests to compel arbitration. See 9
U.S.C. § 16 (1994). Section 16(b) of the act provides as
follows: "Except as otherwise provided in section 1292(b) of
title 28, an appeal may not be taken from an interlocutory order
. . . granting a stay of any action under section 3 of this title
. . . ." 9 U.S.C. § 16(b) (1994). The district court in this
case granted a stay under section 3 of the FAA.4 The district
4
Section 3 states the following:
If any suit or proceeding be brought in any
of the courts of the Unites States upon any
issue referable to arbitration under an
agreement in writing for such arbitration,
the court in which such suit is pending, upon
6
court did not certify this decision for interlocutory appeal
pursuant to 28 U.S.C. § 1292(b). Therefore, we have no
jurisdiction over the district court's decision to stay the
present action pending arbitration.5 We cannot, at present,
resolve the merits of the defendants' claims for relief.
We do have jurisdiction, however, to review the district
court's denial of appellants' request for preliminary and
permanent injunctions. The district court explicitly denied
appellants' motions for injunctive relief. As stated in 28
U.S.C. § 1292 (1994), the courts of appeals have jurisdiction
over "[i]nterlocutory orders of the district courts . . .
refusing or dissolving injunctions." § 1292(a)(1). Therefore,
we may review this aspect of the district court's order.
III.
being satisfied that the issue involved in such suit or
proceeding is referable to arbitration under such an agreement,
shall on application of one of the parties stay the trial of the
action until such arbitration has been had in accordance with the
terms of the agreement . . . .
9 U.S.C. § 3 (1994). Although the district court did not cite
any authority for its order to stay the present action, section 3
clearly provided such authority.
5
Section 16(a)(3) provides the courts of appeals with
jurisdiction over "a final decision with respect to an
arbitration that is subject to this title." 9 U.S.C. § 16(a)(3)
(1994). Appellants might argue that the district court's
decision to submit appellants' claims to arbitration was a final
decision. We have held, however, that "orders granting or
denying requests to compel arbitration are not final decisions if
entered in the course of ongoing actions for legal or equitable
relief on the underlying claims." Thomson McKinnon Sec., Inc. v.
Salter, 873 F.2d 1397, 1399 (11th Cir. 1989) (per curiam).
Hence, we have no jurisdiction over this order.
7
The district court apparently denied appellants' motion for
preliminary and permanent injunctions on the ground that the NASD
arbitrator should decide this issue.6 When the district court
submitted appellants' equitable claims to the arbitrator, the
court in effect held that the parties had agreed to arbitrate the
question of injunctive relief. We reverse, however, because the
plain terms of the contracts in this case contradict the district
court's conclusion.
Under the FAA, upon motion of a party, district courts must
compel arbitration of all claims subject to arbitration. See
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 - 19, 105
S. Ct. 1238, 1241 - 42, 84 L. Ed. 2d 158 (1985). On the other
hand, "the FAA does not require parties to arbitrate when they
have not agreed to do so, . . . nor does it prevent parties who
do agree to arbitrate from excluding certain claims from the
scope of their arbitration agreement." Volt Info. Sciences, Inc.
v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S.
468, 478, 109 S. Ct. 1248, 1255, 103 L. Ed. 2d 488 (citations
omitted). Because parties are free to structure their
arbitration agreements as they see fit, "they may limit by
contract the issues which they will arbitrate." Id. at 479, 109
S. Ct. at 1256. "When deciding whether the parties agreed to
6
Because of its brevity, the district court's order is
unclear on this point. One of the arguments made by appellees,
however, was that appellants should seek injunctive relief from
the NASD arbitrator rather than the district court. The court's
order incorporated this argument by reference. We find that the
district court denied appellants' request for injunctive relief
because the court decided that this claim should be arbitrated.
8
arbitrate a certain matter . . . , courts generally . . . should
apply ordinary state-law principles that govern the formation of
contracts." First Options of Chicago, Inc., v. Kaplan, 514 U.S.
938, ---, 115 S. Ct. 1920, 1924, 131 L. Ed. 2d 985 (1995).
Under Florida law, the terms of the contract should control
where the rights and interests of the parties are definitely and
clearly stated. Atlanta & St. A.B. Ry. Co. v. Thomas, 53 So.
510, 513 (Fla. 1910). Section IV(3)(b) of the agreements signed
by Makarewicz and Tuccillo provided as follows:
If a dispute involving this Agreement is submitted for
arbitration under the Code of Arbitration Procedure of
the National Association of Securities Dealers or
otherwise, you agree that [American Express] is
entitled to an injunction from a court of competent
jurisdiction to keep you from violating these
restrictions while the arbitration is pending.
This provision leaves no room for ambiguity: the parties
intended to allow "a court of competent jurisdiction" -- the
United States District Court for the Middle District of Florida -
- to provide injunctive relief. Therefore, we hold that the
district court erred in denying injunctive relief on the ground
that the parties intended the arbitrator to decide whether to
grant such relief.7
7
Appellees might argue that the district court merely
submitted to the NASD arbitrator the issue of who should decide
whether appellants were entitled to an injunction. Given that
their agreement indicates that they intended to arbitrate certain
issues, appellees might argue that the issue of who should grant
injunctive relief should be committed to the arbitrator in the
absence of clear evidence that such issues should be decided by
the district court. The Supreme Court, however, has held
otherwise: "Courts should not assume that the parties agreed to
arbitrate arbitrability unless there is 'clear and
unmistakabl[e]' evidence that they did so." First Options of
9
IV.
On remand, the district court should determine as soon as
possible8 whether to grant appellants' request for preliminary
and permanent injunctions. In conclusion, the appeal from the
district court's order staying appellants' damages claims is
DISMISSED, but the district court's order denying appellants'
requests for temporary and permanent injunctive relief is
REVERSED.
Chicago, 514 U.S. at ---, 115 S. Ct. at 1924 (quoting AT&T
Technologies, Inc. v. Communications Workers, 475 U.S. 643, 649,
106 S. Ct. 1415, 1418 - 19, 89 L. Ed. 2d 648 (1986)). We find,
to the contrary, that the parties in this case deliberately
assigned to the district court the question whether appellants
would be entitled to injunctive relief.
8
Appellants' claims for temporary and permanent
injunctive relief remained pending for 8½ months. The two
provisions which barred appellees from competing with appellants,
sections IV(1)(f) and IV(1)(g), by their terms lasted for only
one year after the date of appellees' separation. By the time
appellants reached oral argument before this court, therefore,
the two provisions central to their claim for injunctive relief
had been mooted -- principally because of the district court's
delay in ruling on their motions. Luckily for appellants, the
one-year time bar did not apply to all of the provisions of their
agreements with appellees. It is these remaining provisions
which the district court must consider on remand.
10