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Factor v. Societe Generale North America

May 24, 2006

DAVID E. FACTOR, PLAINTIFF,
v.
SOCIETE GENERALE NORTH AMERICA, INC., DEFENDANT.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge

OPINION & ORDER

Plaintiff seeks a declaratory judgment that a non-compete clause in his employment agreement is void on its face, and thus, unenforceable. Defendants removed the case from state court and filed a motion to stay proceedings and compel arbitration of this dispute pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et. seq. For the reasons below, this motion is GRANTED.

I. BACKGROUND

The following facts are undisputed and taken from plaintiff's Complaint. David Factor ("Plaintiff" or "Factor") was hired as an employee-at-will by Société Générale ("SG" or "Defendant"), an investment banking firm, in March 2001. He was employed as a foreign exchange trader and traded SG's capital on the foreign currency exchange market.

On November 2, 2004, during the course of his employment, Factor signed an agreement that contained a non-compete provision. Plaintiff resigned from SG on May 4, 2006. The non-compete clause prohibited him, without SG's consent, inter alia, from directly or indirectly trading at any financial company in direct or indirect competition with, or engaging in substantially the same business as SG, for a period of six months following his departure. Plaintiff asked the Defendant to waive this provision. Defendant refused. Plaintiff requests that this Court declare the restrictive covenant unenforceable. Plaintiff is currently unemployed awaiting resolution of this issue. David Factor Affidavit ¶ 3 (May 12, 2006).

II. DISCUSSION

The only issue is whether the arbitration clause included in the Plaintiff's employment agreement is applicable to this dispute. If it is, the FAA requires me to stay proceedings in this Court and compel arbitration. Plaintiff argues that the FAA does not apply. I disagree.

The FAA applies to any arbitration agreement that affects interstate or foreign commerce.

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, 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 (2001) (emphasis added). The Supreme Court has held that the phrase "involving commerce" is read broadly -- and usually "signals the broadest permissible exercise of Congress' Commerce Clause power." Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003). The FAA defines commerce as:

Commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nations, or between the District of Columbia and any State or Territory or foreign nation.

Id. at § 1.

Plaintiff was a foreign exchange trader with SG's "New York Foreign Exchange Trading Desk." As described in the Plaintiff's Verified Complaint:

The foreign exchange (currency or "forex") market exists wherever one currency is traded for another. It is the largest market in the world, in terms of cash value traded, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial ...


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