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RAIOLA v. UNION BANK OF SWITZERLAND

April 30, 1999

SUZANNE RAIOLA, PLAINTIFF,
v.
UNION BANK OF SWITZERLAND, LLC (FORMERLY UBS SECURITIES, LLC AND SWISS BANK), DEFENDANT.



The opinion of the court was delivered by: Scheindlin, District Judge.

OPINION AND ORDER

Plaintiff Suzanne Raiola ("Raiola") alleges discrimination on the basis of her sex under Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000e et seq. Defendant Warburg Dillon Read LLC ("Warburg") moves to compel arbitration of Raiola's claims pursuant to Sections 2-4 of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 2-4, and to dismiss or stay this action if the case is submitted to arbitration. For the reasons stated below, Defendant's motion to compel arbitration is granted and this action shall be dismissed without prejudice to reinstatement in the event further proceedings are required following the arbitration.

I. Background

In February, 1996, UBS Securities LLC ("UBS") hired Raiola as an Assistant Trader at the firm's Over-the-Counter Equities Desk, where she worked for a little over two years. See Plaintiff's Complaint ("Pl's Cmplt.") at ¶¶ 4, 11; Defendant's Answer ("Def's Ans.") at ¶¶ (B)4, (B)11. During this period, Raiola worked with approximately 12 others, at times the only female, among whom she was neither the most junior nor the most senior. See Pl's Cmplt. at ¶ 12; Def's Ans. at ¶¶ (A)4, (A) 11, (B)12.

In June, 1998, UBS, along with the other subsidiaries of its parent, Union Bank of Switzerland, merged with the Swiss Bank Corp. and its subsidiaries.*fn1 See Pl's Cmplt. at ¶ 5; Def's Ans. at ¶ (A)5. During the resulting consolidation of the two firms, Raiola alleges that employment interviews were extended to each member of Raiola's department, with the exception of Raiola and one other employee. See Pl's Cmplt. at ¶¶ 13, 14; Def's Ans. at ¶¶ (A)8, (A)9, (B)15. Although this other employee, a male, was not interviewed, he was subsequently offered a position. See Pl's Cmplt. at ¶ 16. Consequently, Raiola alleges that all the male employees in Raiola's department were either interviewed or offered employment positions. See Pl's Cmplt. at ¶¶ 13-16. Warburg denies that all the males and only males were interviewed for post-merger positions. See Def's Ans. at ¶¶ (A)7, (A)8, (B)15. Raiola, however, was terminated even though she was senior to many of the individuals who received offers and had previously received outstanding evaluations and bonuses. See Pl's Cmplt. at ¶¶ 11, 16; Def's Ans. at ¶ (A)6.

After filing a complaint with the EEOC, Raiola commenced an action under Title VII of the Civil Rights Act alleging sex discrimination. Raiola is now suing Warburg pursuant to Title VII of the Civil Rights Act.

When UBS hired Raiola in 1996, as a condition of her employment Raiola executed a form commonly known as a Uniform Application for Securities Industry Registration or Transfer (a "U-4 Form"). See Pl's Cmplt. at ¶¶ 32, 33; Def's Ans. at ¶¶ (B)32, (B)33. Paragraph Five of the U-4 Form states:

  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, constitution, or
  by-laws of the organizations indicated in Item 10 as
  may be amended from time to time and that any
  arbitration award rendered against me be entered as a
  judgment in any court of competent jurisdiction.

This provision lies directly below a capitalized admonition to the applicant that reads: "THE APPLICANT MUST READ THE FOLLOWING VERY CAREFULLY." Raiola's signature dated February 12, 1996 appears directly below this section of the form on the same page. See Declaration of Alan Rabinowitz, Defendant's Attorney, at Ex. A, U-4 Form executed by Raiola. The organizations listed in Item 10 and referenced in the paragraph concerning arbitration include the New York Stock Exchange ("NYSE") and the National Association of Securities Dealers ("NASD").

Raiola urges this Court to interpret the intent of the 1991 Civil Rights Act ("1991 CRA") as excluding civil rights claims under such pre-dispute arbitration agreements. Warburg argues that Raiola's claims unquestionably fall within her agreement to arbitrate.

II. Standards of Review

To determine whether to compel arbitration, a court must decide (1) whether the parties agreed to arbitrate; (2) the scope of the agreement; and (3) whether Congress intended Title VII claims to be arbitrated. Bird v. Shearson Lehman/American Express, Inc., 926 F.2d 116, 118 (2d Cir. 1991) (citing Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 844 (2d Cir. 1987)); DeGaetano v. Smith Barney, Inc., 95 Civ. 1613, 1996 WL 44226, at *3 (S.D.N Y Feb.5, 1996).*fn2

The Federal Arbitration Act "reflects a legislative recognition of the `desirability of arbitration as an alternative to the complications of litigation.'" Genesco, 815 F.2d at 844 (quoting Wilko v. Swan, 346 U.S. 427, 431, 74 S.Ct. 182, 98 L.Ed. 168 (1953)). Section 2 of the FAA provides that "an agreement in writing to submit to arbitration an existing controversy . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This section is a "`congressional declaration of a liberal federal policy favoring arbitration agreements.'" Bird, 926 F.2d at 119 (citation omitted). If the Court finds an arbitration agreement to be covered by the FAA, it must refer the matter to arbitration. DeGaetano, 1996 WL 44226, at *3.

In determining whether the parties agreed to arbitrate, the Court must apply the "`federal substantive law of arbitrability,'" Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (citation omitted), "which comprises generally accepted principles of contract law." Genesco, 815 F.2d at 845. "Under general contract principles a party is bound by the provisions of a contract that [s]he signs, unless [s]he can show special circumstances that would relieve [her] of such obligation." Id. This Court must focus "not on whether ...


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