was obtained through fraud and misrepresentation.
The second and third cases cited by Defendants, Maye v. Smith Barney, Inc., 897 F. Supp. 100 (S.D.N.Y. 1995), and DeGaetano v. Smith Barney, Inc., 1996 U.S. Dist. LEXIS 1140, No. 95 Civ. 1613 (DLC), 1996 WL 44226 (S.D.N.Y. Feb. 5, 1996), did not involve U-4 Forms. In finding that the parties agreed to arbitrate, the Maye and DeGaetano courts stressed the fact that the arbitration agreements signed by plaintiffs in both cases expressly defined the types of employment disputes subject to arbitration. See Maye, 897 F. Supp. 100, 107 (the one-page document contains a "detailed explanation of the arbitration procedures and . . . at the bottom of the document there is a paragraph that expressly defines the employment disputes that are to be submitted to arbitration"); DeGaetano, 1996 U.S. Dist. LEXIS 1140, 1996 WL 44226, at *7 ("at the bottom of the one-page Agreement, there is a paragraph that expressly defines the employment disputes that are subject to the Agreement's arbitration procedures."). Maye states "the agreements that Maye and Harris signed could not have done more to put them on notice that they were agreeing to submit any and all Title VII claims to arbitration," 897 F. Supp. at 107, and contrasts those agreements with the U-4 Form at issue in a Ninth Circuit case cited by the Maye plaintiffs, Prudential Ins. Co. v. Lai, 42 F.3d 1299 (9th Cir. 1994), noting that a "more stark contrast to the facts in Lai cannot be imagined." Maye, 897 F. Supp. at 107.
Berger alleges, also in contrast to the facts in Maye and DeGaetano, that Cantor's failure to provide him with a copy of the NASD Manual deprived him of notice of the types of disputes covered under the U-4 arbitration clause. See Hoffman v. Kamhi, Inc., 927 F. Supp. 640, 644 (S.D.N.Y. 1996) ("in this District, those judges who have had the opportunity to confront this issue have ordered arbitration where language in the arbitration agreement placed the employee plaintiff on notice that he or she was waiving his or her right to bring employment discrimination claims in the federal courts") (citing Maye, 897 F. Supp. at 107; DeGaetano, 1996 U.S. Dist. LEXIS 1140, 1996 WL 44226, at *5, and contrasting Hall, 1995 U.S. Dist. LEXIS 5812, 1995 WL 258061, at *3-4). Here, there is no such notice contained within the four corners of the arbitration agreement.
The issue of notice is relevant both to the scope of an arbitration agreement, see Hoffman, 927 F. Supp. at 644-45, and to the initial question of whether a voluntary agreement to arbitrate has been made, see Maye, 897 F. Supp. at 106-08. Plaintiff's request at oral argument to conduct discovery into Cantor's policies and practices regarding distribution of the NASD Manual is a reasonable one.
The parties are directed to commence discovery on Plaintiff's claim that he was induced to sign the U-4 Form by misrepresentation, high pressure tactics and unfair dealing on the part of Defendant Cantor. Defendants' motions to compel arbitration and stay these proceedings are denied pending the outcome of discovery. Plaintiff's request for a jury trial on the issue of arbitrability, pursuant to Section 4 of the FAA, 9 U.S.C. § 4, will be considered at the close of discovery. See, e.g., Rush v. Oppenheimer & Co., Inc., 638 F. Supp. 872 (1986) (jury trial ordered on plaintiff's claim that he was fraudulently induced to agree to arbitration).
SHIRA A. SCHEINDLIN
Dated: November 1, 1996
New York, New York