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November 23, 1992

LYNDON GUARANTY BANK OF NEW YORK, a Division of ITT Consumer Financial Corp.; ITT CONSUMER FINANCIAL CORP.; and GREGORY L. FERGUSON, Individually and as President of Lyndon Guaranty Bank of New York, Defendants.

The opinion of the court was delivered by: DAVID G. LARIMER



 Plaintiff was formerly employed by ITT Consumer Financial Corporation ("ITT") as the Operations Manager at its subsidiary, Lyndon Guaranty Bank of New York. On July 7, 1989, plaintiff and ITT entered into a written employment contract, Paragraph 5 of which provides:

 ITT CFC and EMPLOYEE agree that any dispute between them or claim by either of them against the other or any agent or affiliate of the other shall be resolved by binding arbitration under the Code of Procedure of the National Arbitration Forum, 2124 Dupont Avenue South, Minneapolis, MN, and that judgment upon the award may be entered in any court of competent jurisdiction.

 Goodman Aff. Ex. A.

 Plaintiff, who resigned from her employment on October 30, 1991, timely filed a complaint with the New York State Division of Human Rights, alleging that her immediate supervisor subjected her to gender discrimination, sexual harassment and a hostile work environment. After she was issued a right-to-sue letter by the Equal Employment Opportunity Commission ("EEOC"), plaintiff commenced this action in March 1992, alleging causes of action under Title VII of the Civil Rights Act, 42 U.S.C. § 2000e, and the New York State Human Rights Law, N.Y. Exec. L. § 296.

 Defendants have moved to stay these proceedings and to compel arbitration under the Federal Arbitration Act ("FAA" or "the Act"), 9 U.S.C. § 1 et seq. Plaintiff has cross-moved for attorney's fees and costs pursuant to Rule 11 of the Federal Rules of Civil Procedure.

 With one narrow exception, which will be explained below in the discussion of punitive damages, I will grant defendants' motion to compel arbitration. Since plaintiff's cross-motion is based largely on her contention that defendants' motion is meritless, I will deny her motion for attorney's fees and costs.


 1. Applicable Standard Under the FAA

 A court deciding a motion to compel arbitration and to stay proceedings should consider four factors: whether there has been an agreement to arbitrate; the scope of that agreement; whether the federal statutory claims, if any, were intended by Congress to be non-arbitrable; and, if only some of the claims are subject to arbitration, whether to stay the remainder of the proceedings pending arbitration. Creative Securities Corp. v. Bear Stearns & Co., 671 F. Supp. 961, 965 (S.D.N.Y. 1987), aff'd, 847 F.2d 834 (2d Cir. 1988).

 The arbitrability of the parties' dispute is for the court, not the arbitrator, to decide at the outset. AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 649, 89 L. Ed. 2d 648, 106 S. Ct. 1415 (1986). In determining arbitrability, the court must take into account the strong federal policy favoring enforcement of agreements to arbitrate. Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226, 96 L. Ed. 2d 185, 107 S. Ct. 2332 (1987); Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983). This policy is intended to prevent "contracts to arbitrate [from being] avoided by allowing one party to ignore the contract and resort to the courts." Southland Corp. v. Keating, 465 U.S. 1, 79 L. Ed. 2d 1, 104 S. Ct. 852 (1984).

 So strong is the policy favoring arbitration that enforcement of the agreement "should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." AT & T, 475 U.S. at 650 (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960)). Accordingly, any doubts as to arbitrability should be resolved in favor of arbitration. Id.; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 626, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985).

 The court is not to consider the merits of the underlying controversy in deciding whether it should be submitted to arbitration. AT & T, 475 U.S. at 649. The only issues at this stage are whether the parties' agreement to arbitrate encompasses the dispute, and if so, whether the law permits arbitration of the dispute. Mitsubishi, 473 U.S. at 628. If both these questions are answered in the affirmative, the court has no discretion, and must direct the parties to proceed ...

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