The opinion of the court was delivered by: William C. Conner, Senior District Judge.
The following facts are undisputed. In 1990, plaintiff
commenced his employment with defendant CIBC, Inc.*fn1 as a Vice
President and Director. Hart was hired to develop the company's
capabilities in the area of electric power financing and related
advisory services. He was promoted to Managing Director of CIBC,
Inc. in 1992 and then to Co-Head of the Global Power Group in
1995. As Co-Head of the Global Power Group, Hart was responsible
for developing and implementing a plan to turn CIBC Wood Gundy
Securities, Corp. ("Wood Gundy Corp.") into a full-service
provider of investment banking services and products in the
global power industry. To this end, in or about January of 1996,
Hart was asked to serve as Managing Director of Wood Gundy Corp.,
the American investment banking/brokerage subsidiary of the
As Managing Director of Wood Gundy Corp., Hart was required by
the NASD and NYSE Rules to take the Series 7 examination and
register with the NASD and NYSE.*fn3 Plaintiff passed his Series
7 exam on March 7, 1996, and registered with the NASD and NYSE by
signing a Uniform Application for Securities Industry
Registration or Transfer, commonly referred to as a Form U-4.
Under a caption warning that "THE APPLICANT MUST READ THE
FOLLOWING VERY CAREFULLY" paragraph 5 of the Form U-4 provides:
I agree to arbitrate any dispute, claim or
controversy that may arise between me and my firm, or
a customer, or any other person, that is required to
be arbitrated under the rules, constitutions, or
by-laws of the organizations indicated in item 10
[here the NASD and NYSE] as may be amended from time
to time and that any arbitration award rendered
against me may be entered as a judgement in any court
of competent jurisdiction.
On October 29, 1997, plaintiff's employment with Wood Gundy Corp.
was terminated, allegedly for performance reasons.
At the time Hart signed his Form U-4 and when he filed the
instant complaint, the NASD and NYSE rules provided for
compulsory arbitration of employment related disputes, including
statutory discrimination claims. Accordingly, on October 15,
1998, defendants moved to dismiss Count V of the complaint
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure
for failure to state a claim and, simultaneously, for an order
pursuant to Section 3 of the FAA, staying this action and
compelling arbitration of all causes of action not dismissed by
the Court. Since then, the Securities and Exchange Commission
("SEC") has approved changes to NASD and NYSE arbitration rules
creating an exception to mandatory arbitration of employment
disputes. According to the amendments, arbitration of statutory
employment discrimination claims may only be compelled if the
parties agreed to arbitration after the dispute had arisen. The
NASD rule change went into effect January 1, 1999 and applies to
claims filed on or after that date. See SEC Release No.
34-40109, 63 Fed.Reg. 35299, 1998 WL 339422. The NYSE rule change
was approved by the SEC on December 29, 1998 and is silent on the
issue of retroactivity. See SEC Release No. 34-40858, 64 Fed.
Reg. 1051, 1999 WL 3315.
The Second Circuit has enumerated the following factors to be
considered when deciding whether to compel arbitration: (1)
whether the parties agreed to arbitrate; (2) the scope of that
agreement; (3) whether Congress intended the plaintiff's
statutory claims to be nonarbitrable; and (4) if not all claims
are arbitrable, the court must determine whether to stay the
balance of the proceedings pending arbitration. See Bird v.
Shearson Lehman/American Express, Inc., 926 F.2d 116, 118 (2d
Cir. 1991) (citing Genesco, Inc. v. T. Kakiuchi & Co., Ltd.,
815 F.2d 840, 844 (2d Cir. 1987)).
I. Plaintiff's Agreement to Arbitrate
It is well established that a signed Form U-4 constitutes an
express arbitration agreement enforceable under the FAA. See,
e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20,
22-25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991); Haviland v.
Goldman, Sachs & Co., 947 F.2d 601, 604 (2d Cir. 1991).
Plaintiff does not deny that he signed a Form U-4; however, he
claims that the arbitration agreement is unenforceable because it
was signed under duress and was the result of unequal bargaining
power.*fn5 Further, he alleges that the waiver of his federal
forum rights was neither voluntary or knowing as required by
To establish duress or coercion plaintiff must show: "(1) a
threat, (2) which was unlawfully made, and (3) caused involuntary
acceptance of contract terms, (4) because the circumstances
permitted no other alternative." Kamerman v.
Steinberg, 891 F.2d 424, 431 (2d Cir. 1989); see also Schuetz
v. CS First Boston Corp., No. 96 Civ. 5557(DC), 1997 WL 452392,
at *2 (S.D.N.Y. Aug.8, 1997). Here, plaintiff has failed to
allege any threat that induced him to sign the Form U-4. He
claims that he was "required by Defendants to work for . . . CIBC
Gundy Securities Corp.," that he "agreed" to do so (Compl. ¶ 8),
and that "his signing the Form U-4 was a condition of his
continued employment" with Wood Gundy Corp. (Pl.Mem. ¶ 46). It is
clear that plaintiff chose to accept a position with Wood Gundy
Corp. which required him to register with the NASD and NYSE by
signing a Form U-4. Moreover, Hart claims that he "was frequently
approached by executive recruiters during the period 1994 through
1997" and that he "consistently turned down opportunities to
interview for other jobs." (Compl. ¶ 15). He cannot, ...