The opinion of the court was delivered by: Scheindlin, District Judge.
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.
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:
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
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
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
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 there
was subjective agreement as to each clause in the contract, but
on whether there was an objective agreement with respect to the
entire contract." Id.
With respect to the scope of the arbitration agreement,
arbitration clauses must be construed "as broadly as possible"
and arbitration should be ordered unless it may be said with
positive assurance that the arbitration clause is not susceptible
of an interpretation that covers the asserted dispute. McMahan
Securities Co. v. Forum Capital Markets L.P., 35 F.3d 82, 88 (2d
Cir. 1994) (internal quotations and citation omitted). "[A]ny
doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration." Moses H. Cone Memorial Hosp.
v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74
L.Ed.2d 765 (1983).
The burden of showing that Congress intended to preclude the
arbitration of a claim founded on statutory rights rests on the
party opposing arbitration. Bird, 926 F.2d at 119. In assessing
Congress' intent, the Court must look to the statute's text or
legislative history, or infer an intent to preclude arbitration
inherent conflict between arbitration and the statute's
underlying purposes.'" Id. at 119 (quoting Shearson/American
Express, Inc. v. McMahan, 482 U.S. 220, 227, 107 S.Ct. 2332, 96
L.Ed.2d 185 (1987)). Throughout this inquiry, the Court must keep
in mind that "`questions of arbitrability must be addressed with
a healthy regard for the federal policy favoring arbitration.'"
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111
S.Ct. 1647, 114 L.Ed.2d 26 (1991) (quoting Moses H. Cone
Memorial Hospital, 460 U.S. at 24, 103 S.Ct. 927).
1. Plaintiff's Agreement to Arbitrate
By signing the U-4 Form, Raiola agreed to arbitrate any
disputes arising between herself and Warburg. Under New York law,
a signatory to an agreement is "bound by the terms of the
[a]greement, including the arbitration provision," unless she can
demonstrate "special, mitigating circumstances, such as duress or
coercion." DeGaetano, 1996 WL 44226, at *5; see also, Gilmer,
500 U.S. at 33, 111 S.Ct. 1647. To establish duress or coercion a
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.
DeGaetano, 1996 WL 44226, at *5 (quoting Kamerman v.
Steinberg, 891 F.2d 424, 431 (2d. Cir. 1989)).
Raiola claims that the arbitration agreement is the result of
unequal bargaining power, and thus unenforceable. The Supreme
Court has considered and rejected this argument. See Gilmer,
500 U.S. at 33, 111 S.Ct. 1647 ("Mere inequality in bargaining
power . . . is not a sufficient reason to hold that arbitration
agreements are never enforceable in the employment context").
Unequal bargaining power, standing alone, will not render the U-4
Form unenforceable. See also, Hart v. Canadian Imperial Bank of
Commerce, 43 F. Supp.2d 395, 400-01 (S.D.N.Y. 1999); Desiderio
v. NASD, 2 F. Supp.2d 516, 520 (S.D.N.Y. 1998).
Nor does Raiola allege that she signed the U-4 Form under any
threat, much less an unlawful one. Thus, Raiola fails to
demonstrate any special, mitigating circumstances and it must be
presumed that she assented to the provisions in the U-4 Form.
This presumption is further supported by the fact that the
arbitration clause was directly preceded by the heading "THE
APPLICANT MUST READ THE FOLLOWING VERY CAREFULLY." Finally, as
Plaintiff's counsel represented in telephone conferences on April
6-9, 1999, at the time Raiola signed the U-4 Form, she had taken
and successfully passed the Series 7 test. As part of that test,
taken in November 1993, Raiola was required to become familiar
with the rules of the NASD, including the rules requiring the
arbitration of disputes between employees and their employer.
See Feinberg v. Bear, Stearns & Co., Inc., 90 Civ. 5250, 1991
WL 79309, at *3 (S.D.N.Y. May 3, 1991). Thus, Plaintiff's claim
that she was ignorant of the requirement that she arbitrate any
employment disputes is unpersuasive and does not vitiate her
agreement with Warburg. Id.
Accordingly, I find that Raiola knowingly waived her right to
bring a Title VII claim in court. Given the facts developed in
this case, Plaintiff's signature on the U-4 Form constitutes her
agreement to arbitrate employment claims. A similar conclusion
has been reached by many courts in this Circuit. See Halligan v.
Piper Jaffray, Inc., 148 F.3d 197, 200 n. 2 (2d Cir. 1998);
Thomas James Associates, Inc. v. Jameson, 102 F.3d 60, 65 (2d
Cir. 1996); Hart, 43 F. Supp.2d 395, 404-05; Martens v. Smith
Barney, Inc., 181 F.R.D. 243, 251 (S.D.N.Y. 1998); Desiderio,
2 F. Supp.2d at 520 (citing cases); Schuetz v. CS First Boston
Corp., 96 Civ. 5557, 1997 WL 452392, *2 (S.D.N.Y. Aug.8, 1997).
2. The Scope of the Agreement
By signing the U-4 Form, Raiola agreed to arbitrate "any
dispute, claim or controversy that may arise between [her] and
[Warburg] . . . that is required to be arbitrated under the
rules, constitution, or by-laws of the [NYSE or NASD]." It is
undisputed that the NYSE Rules in effect at the time of Raiola's
agreement provide, in pertinent part, that
[a]ny dispute, claim or controversy between a
customer or non-member and a member, allied member,
member organization and/or associated person arising
in connection with the business of such member,
allied member, member organization and/or associated
person in connection with his activities as an
associated person shall be arbitrated under the
Constitution and Rules of the New York Stock
Exchange, Inc. as provided by any duly executed and
enforceable written agreement or upon the demand of
the customer or non-member.
New York Stock Exchange Guide, ¶ 2600, Rule 600(a) (1995). As
discussed already, the U-4 Form signed by Raiola constitutes a
"duly executed and enforceable written agreement."
In addition, NYSE Rule 347 provides:
Any controversy between a registered representative
and any member or member organization arising out of
the employment or termination of employment of such
registered representative by and with such member or
member organization shall be settled by arbitration,
at the instance of any such party, in accordance with
the arbitration procedure prescribed elsewhere in
Id. at Rule 347. Raiola is therefore required to arbitrate all
of her employment claims.
Similarly, the NASD Code of Arbitration Procedure requires the
any dispute, claim or controversy arising out of or
in connection with the business of any member of the
[NASD], or arising out of the employment or
termination of employment of associated person(s)
with any member, with the exception of disputes
involving the insurance business of any member which
is also an insurance company: (a) between or among
members; (b) between or among members and associated
persons; (c) between or among members or associated
persons and public customers, or others; and (3)
between or among members [and registered clearing
National Association of Securities Dealers, Inc. Manual, § 10101
(April 1998). See also, id. at § 10201 (making arbitration of
the disputes described in § 10101 mandatory in these
In short, under the rules of either organization, Raiola's
assent to the terms of the U-4 Form bound her to arbitrate any
disputes arising with Warburg. Resolving "any doubts concerning
the scope of arbitrable issues . . . in favor of arbitration,"
Moses H. Cone Memorial Hosp., 460 U.S. at 24-25, 103 S.Ct. 927,
I find that Raiola's claims fall within the scope of her
agreement in the U-4 Form to arbitrate her disputes with Warburg.
See Thomas James, 102 F.3d at 65-66 (finding employment claims
to be within scope of U-4 Form agreement signed by plaintiff);
Desiderio, 2 F. Supp.2d at 520 (Title VII and other employment
claims); Schuetz, 1997 WL 452392, at *3 (same) (citing cases).
3. Arbitrability of Title VII Claims
Subsequent to signing her U-4 Form and filing her lawsuit, both
the NYSE*fn3 and the NASD*fn4 modified their rules to
preclude mandatory arbitration of discrimination claims.*fn5
Lingering disputes within the spirited public policy debate about
requiring discrimination claims to be heard in arbitral fora
instead of the courts, and whether this advances or hinders
vindication of basic civil rights, are properly left to the
legislative rather than the judicial branch.*fn6 As Gilmer
makes clear, the only question before this Court is whether
Congress, when it enacted the 1991 CRA, intended to preclude
pre-dispute agreements in Title VII claims.
In Gilmer, the Supreme Court held that the FAA required the
enforcement of the pre-dispute mandatory arbitration clause in a
U-4 Form identical to the one signed by Raiola. Gilmer involved
a claim of age discrimination brought under the ADEA. The Supreme
Court, noting numerous other contexts in which it had held that
statutory claims could be the subject of arbitration agreements,
ruled that pre-dispute arbitration clauses should be enforced
unless the plaintiff could show Congressional intent to preclude
arbitration. See Gilmer, 500 U.S. at 26, 111 S.Ct. 1647. To
determine that intent, courts were directed to look to a
statute's text and legislative history and to ascertain whether
there was a conflict between arbitration and the statute's goals.
Plaintiff's attempts to demonstrate that Congress intended to
preclude compulsory arbitration of Title VII claims run counter
to the overwhelming weight of authority in this circuit finding
arbitration of Title VII claims to be appropriate. See, e.g.,
Hart, 43 F. Supp.2d at 403-05; Desiderio, 2 F. Supp.2d at 520;
Bishop v. Smith Barney, Inc., 1998 WL 50210, *7-8 (S.D.N Y
Feb.6, 1998); Schuetz, 1997 WL 452392, at *4 (citing cases);
DeGaetano, 1996 WL 44226, at *5-7; Smith v. Lehman Bros.,
Inc., 95 Civ. 10326, 1996 WL 383232, *2 (S.D.N.Y. July 8, 1996);
Hall v. Metlife Resources, 1995 WL 258061, *3 (S.D.N.Y. May 3,
1995); Maye v. Smith Barney, Inc., 897 F. Supp. 100, 109
(S.D.N.Y. 1995) (citing cases). Similarly, the New York Court of
Appeals has held that claims arising under the State's Human
Rights Law can be arbitrated. See Fletcher v. Kidder, Peabody &
Co., 81 N.Y.2d 623, 601 N.Y.S.2d 686, 693-94, 619 N.E.2d 998,
Raiola relies heavily on the Martens case, as well as several
cases from other circuits, to argue that Congress intended to
preclude pre-dispute waiver of judicial remedies for violations
of Title VII. See, e.g., Duffield v. Robertson Stephens & Co.,
144 F.3d 1182 (9th Cir. 1998); Rosenberg v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 995 F. Supp. 190 (D.Mass. 1998).
These cases do not overcome the weight of authority in this and
First, the Martens Court did not hold that Title VII claims
are not subject to pre-dispute arbitration agreements, as
suggested by Raiola. Instead, that Court found, in the inapposite
context of determining whether it possessed subject matter
jurisdiction to evaluate a settlement, that the plaintiffs would
not be collaterally
estopped from arguing that these claims were not subject to such
agreements. Martens, 181 F.R.D. at 258. Such a tentative and
unrelated holding cannot rebut a steady stream of holdings in
this Circuit squarely supporting arbitration.
As to Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 170 F.3d 1 (1st Cir. 1999) the First Circuit affirmed the
district court's stay of arbitration on general contract
principles, expressly rejecting the lower court's findings
concerning the arbitrability of Title VII claims. See
Rosenberg, 170 F.3d 1, 6-11 ("We find no conflict between the
language or purposes of Title VII, as amended, and arbitration").
Further, Plaintiff here has not launched an attack based on the
alleged structural or systemic bias of the arbitral
organizations, upon which the Rosenberg district court relied.
See Rosenberg, 170 F.3d 1, 13-17. In the absence of any
evidence in this record to support a finding of arbitral bias,
the holding of the Rosenberg trial court has no application
here. See also, Hart, 43 F. Supp.2d at 405-06.
Similarly, the decision of the Ninth Circuit Court of Appeals
in Duffield is not binding here. In any event, its reasoning
has been rejected by many other courts. See, e.g., Rosenberg v.
Merrill Lynch, Pierce, Fenner & Smith Inc., 170 F.3d 1, 6-11
(1st Cir. 1999); Seus v. John Nuveen & Co., Inc., 146 F.3d 175,
182 (3rd Cir. 1998); Paladino v. Avnet Computer Techs., Inc.,
134 F.3d 1054, 1062 (11th Cir. 1998); Gibson v. Neighborhood
Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997);
Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 837 (8th
Cir. 1997); Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465,
1467-68 (D.C.Cir. 1997); Austin v. Owens-Brockway Glass
Container, Inc., 78 F.3d 875, 882 (4th Cir. 1996); Metz v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 39 F.3d 1482, 1487
(10th Cir. 1994); Willis v. Dean Witter Reynolds, Inc.,
948 F.2d 305, 307-12 (6th Cir. 1991); Alford v. Dean Witter
Reynolds, Inc., 939 F.2d 229, 230 (5th Cir. 1991). These cases
apply the Supreme Court's holding in Gilmer to Title VII as
amended by the 1991 CRA, and hold that there was no Congressional
intent to preclude pre-dispute arbitration agreements in the 1991
CRA. In sum, Raiola provides little basis to counter the weight
of authority that a pre-dispute agreement to arbitrate, embodied
in a U-4 Form and voluntarily entered into by the Plaintiff,
compels arbitration of Title VII and other employment claims.
For the foregoing reasons, Plaintiff's claims must be
arbitrated pursuant to the U-4 Form which she signed prior to her
employment with Warburg. The Defendant's motion to compel
arbitration is granted, and the parties are directed to proceed
to arbitration. All of Plaintiff's claims asserted in this case
are to be arbitrated. The complaint is dismissed without
prejudice to its reinstatement in the event further proceedings
are required following the arbitration. The Clerk of the Court is
directed to close the case.