complaint, withdrawing the class action allegations. Ten days later, Equitable moved to compel arbitration of Scher's claims and to stay the proceedings in this Court.
The Federal Arbitration Act states that agreements to arbitrate contained in written contracts involving commerce are "valid, irrevocable and enforceable." See 9 U.S.C. § 2. The Act also provides that if an issue covered by a valid arbitration agreement is brought in federal court, that action must be stayed pending the outcome of arbitration. See 9 U.S.C. § 3. The agreement signed by Scher is a written contract for the sale of securities, and thus falls squarely within the ambit of the Act.
The arbitrability of the instant matter is not affected by the nature of the plaintiff's claims. Several Courts have held that employees who agree to arbitrate disputes with their employers must arbitrate Title VII claims. See e.g., Scott v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1992 U.S. Dist. LEXIS 13749, 1992 WL 245506 (S.D.N.Y.). Nor is it relevant that Scher's employment with Equitable terminated prior to the 1993 amendment of the NASD Arbitration Code. See Kidd v. Equitable Life Assurance Society, 32 F.3d 516, 520 (11th Cir. 1994) (pre-amendment NASD Code required arbitration of employment disputes). Scher agreed to comply with the NASD rules as they are and may be adopted, changed or amended from time to time." See Exhibit 1 to Affidavit of James H. Houck, at 10, P 2. Significantly, the amendment occurred prior to the filing of this law suit. Scher must comply with the NASD Code as it existed at the time he commenced his action.
Scher's claim that Equitable has waived its right to arbitration by delaying its motion to compel, to his prejudice, is without merit. "Any examination of whether the right to compel arbitration has been waived must be conducted in light of the strong federal policy favoring arbitration for dispute resolution." Rush v. Oppenheimer & Co., 779 F.2d 885, 887 (2d Cir. 1985).
There is no indication that Equitable intentionally delayed its motion in order to gain a tactical advantage through the use of discovery which would be unavailable in arbitration. Rather, Equitable's delay appears to be the direct result of Scher's initial stylization of the complaint as a class action. Once the class allegations were removed from the complaint, Equitable promptly moved this Court to compel arbitration of the dispute. Any motion prior to their removal would have likely been futile in light of the NASD Code. See NASD Manual (CCH) P 3712 (d)(1).
In addition, Scher has not demonstrated any prejudice because of the delay. Unlike Zwitserse Maatschappij Van Levensverzekering en Lijfrente v. ABN International Capital Markets Corp., 996 F.2d 1478, 1480 (2d Cir. 1993) (six witnesses responded to questions and provided sworn testimony before an examining judge prior to service of the Demand for Arbitration) and Com-Tech Associates v. Computer Associates International Inc., 938 F.2d 1574, 1576 (2d Cir. 1991) (two years of extensive pre-trial discovery, including 10 depositions, occurred before defendant moved to compel arbitration), only a day and a half of deposition of the plaintiff was taken prior to the filing of the instant motion.
This does not warrant a finding of actual prejudice sufficient to support a conclusion of waiver by Equitable of their contractual right to arbitrate.
This Court adheres to the widely held view that "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." See Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S. Ct. 927, 941, 74 L. Ed. 2d 765 (1983). For the reasons set forth above, Equitable's motion to compel arbitration and stay the proceeding in this Court is granted. Additionally, Equitable is hereby directed to respond to plaintiff's document request forthwith.
DEBORAH A. BATTS, U.S.D.J.
Dated: October 26, 1994
New York, New York