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STECK v. SMITH BARNEY

June 4, 1987

Robert Steck, Plaintiff,
v.
Smith Barney, Harris Upham & Co., Incorporated, Defendant



The opinion of the court was delivered by: SAROKIN

 Defendant moves before this court pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq., seeking to compel arbitration of plaintiff's ADEA and related state claims. For the reasons set forth below, the court denies the defendant's motion to require arbitration of the federal ADEA claim. As to the state law claims, the court is compelled to grant defendant's motion.

 BACKGROUND

 Plaintiff, Robert Steck, was hired by the defendant, Smith, Barney, Harris Upham & Co., in November 1973 as an account executive. As a condition of employment, plaintiff executed an application and agreement for approval as a registered representative pursuant to the rules of the New York Stock Exchange ("NYSE"). See Application for Securities Industry Registration, Exhibit A attached to Clark Affidavit. The standardized agreement provides as follows:

 
"I agree that any controversy between me and any member or member organization or affiliate or subsidiary thereof arising out of my employment or the termination of my employment shall be settled by arbitration at the instance of any such party in accordance with the arbitration procedure prescribed in the Constitution and rules then obtaining of the New York Stock Exchange, Inc.".

 In addition, Rule 347 of the New York Stock Exchange mandates that any controversy between a registered representative and any member "arising out of employment or termination of employment of such registered representative by and with such member" shall be settled by arbitration at the instance of any such party. Defendant contends that in registering with the NYSE, plaintiff agreed to and became bound by its rules.

 On or about September 29, 1984, plaintiff was terminated by the defendant. Alleging that the termination constituted unlawful discrimination on the basis of age, plaintiff instituted the underlying suit. The complaint alleges violations of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the New Jersey Law Against Discrimination, N.J.S.A. § 10:5 et seq., as well as the public policy of the State of New Jersey.

 Defendant now moves before the court pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq. to require arbitration of plaintiff's ADEA and related state claims. Section 2 of the Arbitration Act, 9 U.S.C. § 2, provides:

 
A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

 Defendant asserts that neither the text nor legislative history of the ADEA reflect any Congressional intent to exempt ADEA claims from the Arbitration Act's requirements. In addition, relying on the Supreme Court's holding in Dean Witter Reynolds, Inc v. Byrd, 470 U.S. 213, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985), defendant contends that Smith Barney's federally protected right to arbitration overrides any contrary right by the plaintiff to bring his pendent state claims in this forum.

 DISCUSSION

 I. Plaintiff's ADEA Claim

 In determining the arbitrability of plaintiff's ADEA claims the court relies on the analytic framework set forth in Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, 473 U.S. 614, 105 S. Ct. 3346, 87 L. Ed. 2d 444 (1985). The Mitsubishi Court required a two step inquiry: (1) "Whether the parties' agreement to arbitrate reached the statutory issues" and (2) "whether legal constraints external to the parties' agreement foreclosed the arbitration of those claims." Id. at 3355.

 The Mitsubishi Court refused to read a presumption against arbitration of statutory claims into the Federal Arbitration Act. Id. at 3353. Emphasizing the significant federal interest favoring rigorous enforcement of arbitration agreements, Moses H Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983) ("questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration"), the Court held that a party who has agreed to arbitrate must do so "unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." Mitsubishi, 105 S. Ct. at 3355. Adopting Mitsubishi's reasoning, the Third Circuit has held that determining arbitrability of federal statutory claims is a "matter of statutory interpretation" and may not be determined "on the basis of some judically recognized public policy". Jacobson v. Merrill Lynch, Pierce, Fenner & Smith, 797 F.2d 1197, 1202 (3d Cir 1986). ...


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