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January 29, 1997


The opinion of the court was delivered by: LARIMER

 Plaintiff Richard Oldroyd ("Oldroyd") brings this action against the Elmira Savings Bank ("ESB" or "the Bank") asserting that he was wrongfully terminated from his employment in violation of 12 U.S.C. § 1831j (the "Depository institution employee protection remedy"), as well as in breach of the employment contract between them. Presently before me is ESB's motion for partial summary judgment and a stay pending arbitration. For the reasons set forth below ESB's motion is granted in part and denied in part.


 Oldroyd was employed by ESB from 1985 until his termination in October 1995, at which time his title was Vice President in charge of the Bank's Management Information Systems. Oldroyd claims that in January 1994 he told senior bank officials that the head of the Consumer Loan Department was making improper or illegal loans to himself and his family members. Oldroyd claims that he was told to "leave this information alone."

 In April 1994 Oldroyd allegedly gave this information to the United States Department of the Treasury's Office of Thrift Supervision ("OTS"). He subsequently told ESB's President that he had done so.

 The OTS commenced an investigation of ESB which eventually resulted in the prosecution and conviction of the head of the Consumer Loan Department for bank fraud. Oldroyd cooperated with the OTS throughout that investigation.

 Thereafter, Oldroyd claims that he was subjected to a course of discriminatory conduct by senior bank officials, including what amounted to a demotion as well as unreasonable job demands. The Bank's actions allegedly caused Oldroyd to become ill and unable to work.

 On October 20, 1995, the Bank discharged Oldroyd allegedly because it had not received requested information from him concerning his medical condition.

 Oldroyd brought this action in May 1996. His first claim is for retaliatory discharge pursuant to 12 U.S.C. § 1831j, which makes it unlawful for a depository institution to discharge or discriminate against an employee because the employee "provided information to any Federal banking agency ... regarding ... a possible violation of any law or regulation ... or ... an abuse of authority ... by the depository institution or any director, officer, or employee [thereof]." 12 U.S.C. § 1831j(a). On this claim Oldroyd seeks reinstatement and damages, including punitive damages.

 Oldroyd's second cause of action is for breach of his employment contract. On this claim Oldroyd seeks damages, including punitive damages, based upon the Bank's wanton and malicious conduct.

 ESB moves for partial summary judgment dismissing those parts of Oldroyd's claims which seek punitive damages, on the grounds that neither 12 U.S.C. § 1831j, nor New York law governing breach of contract, provides for punitive damages as a matter of law. ESB also seeks a stay of the remaining parts of Oldroyd's claims pending arbitration, based upon the arbitration provision contained in Oldroyd's employment contract with ESB. Oldroyd opposes ESB's motion in its entirety.


 A) Arbitrability of Oldroyd's Claims

 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. DiCrisci v. Lyndon Guar. Bank of New York, 807 F. Supp. 947, 950 (W.D.N.Y. 1992) (citing 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 of Am., 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 Technologies, Inc., 475 U.S. at 650 (quoting United 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, Inc., 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 Technologies, Inc., 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 to arbitration. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217-18, 84 L. Ed. 2d 158, 105 S. Ct. 1238 (1985).

 In this case, there is no dispute that the employment contract between the parties contains an arbitration provision. In order to "assure [the] Bank" of Oldroyd's "continued dedication, ... and to induce [Oldroyd] to remain and continue in the employ of Bank" ESB and Oldroyd renewed their pre-existing employment contract in February 1994 by entering into a new, five-year employment agreement. That agreement (the "ESB/Oldroyd Agreement") contains the following provision:

ARBITRATION: Any dispute, controversy or claim arising under or in connection with this Agreement shall be settled exclusively by arbitration, ... in accordance with the rules of the American Arbitration Association ....

 Thus, the issues I must decide are whether Oldroyd's claims are arbitrable and, if so, whether they are within the scope of the arbitration provision contained in the ESB/Oldroyd Agreement.

 1) Oldroyd's Breach of Contract Claim Is Arbitrable

 I disagree. As I have held previously on two different occasions, the Section 1 exclusion does not appear to have been intended to embrace all employment contracts. See Townsend v. Smith Barney Shearson, Inc., 906 F. Supp. 153, 158 (W.D.N.Y. 1995); and DiCrisci, 807 F. Supp. at 952-53. The Court of Appeals for the Second Circuit repeatedly has held that the Section 1 exclusion applies only to employees actually working in the transportation industry. See Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972); Signal-Stat Corp. v. Local 475, United Elec., Radio & Mach. Workers of Am., 235 F.2d 298 (2d Cir. 1956), cert. denied, 354 U.S. 911 (1957). Thus, because banking is not the transportation industry, I find that Oldroyd's employment contract is not exempt from the provisions of the Federal Arbitration Act based upon the exclusionary language set forth in 9 U.S.C. § 1. See also Powers v. Fox Television Stations, Inc., 923 F. Supp. 21, 24 (S.D.N.Y. 1996) (finding that "the § 1 language was not intended to exclude all employment ...

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