The opinion of the court was delivered by: Denise Cote, District Judge
Plaintiff Jeffrey S. Vaughn moves to lift the stay entered in this action on August 12, 2005, and to vacate an arbitration award entered May 10, 2007 by the National Association of Securities Dealers ("NASD"). In that award, the arbitrators determined that a settlement agreement Vaughn executed in 1998 precluded him from bringing a class action in court. Defendants Prudential Securities, Inc. and Prudential Financial (collectively "Prudential"), and Leeds Morelli & Brown, P.C., Inc. and Jeffrey K. Brown (the "Leeds Defendants")*fn1 , interpose no objection to lifting the stay. They oppose plaintiff's motion to vacate the arbitration award, and cross-move to confirm the award. The stay is lifted, and the arbitration award is confirmed.
The facts giving rise to this lawsuit were discussed at some length in an August 12, 2005 Opinion and Order (the "August 2005 Opinion") granting defendants' motion to compel arbitration and staying the instant federal action. See Vaughn v. Leeds, Morelli & Brown, P.C., 04 Civ. 8391 (DLC), 2005 WL 1949468 (S.D.N.Y. Aug. 12, 2005). Familiarity with that Opinion is assumed. Briefly, in 1998, Vaughn retained the law firm of Leeds, Morelli & Brown to represent him in an employment discrimination lawsuit against Prudential, his former employer. That dispute was settled through mediation, and Vaughn granted Prudential a general release of claims in exchange for $200,000. The agreement memorializing this settlement included an arbitration clause providing that "[a]ny claim or controversy arising out of or related to this Agreement or the interpretation thereof will be settled by arbitration" before the NASD.
Vaughn initiated the instant action on October 25, 2004 by filing a complaint alleging that the Leeds Defendants and Prudential had entered into a secret agreement through which Prudential would pay the Leeds Defendants' attorneys' fees in exchange for the Leeds Defendants' agreement to cap any damages awarded to Vaughn and other former Prudential employees who had submitted employment discrimination claims to dispute resolution. Vaughn styled this suit as a class action, putatively brought on behalf of himself and hundreds of other Prudential employees whose discrimination claims against the company were adversely affected by collusion between it and the Leeds Defendants.
Prudential moved to compel arbitration before the NASD. Vaughn opposed the motion and argued that because NASD rules do not permit class actions, he was not bound to prosecute this putative class action through arbitration. The August 2005 Opinion granted Prudential's motion, concluding that the settlement agreement between Vaughn and Prudential included "sweeping language concerning the scope of the questions committed to arbitration," id. at *3 (quoting Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 453 (2003)), and that the arbitration clause was enforceable. The Opinion opined that, even if Vaughn were correct that the arbitration rules of the NYSE and NASD preclude class action arbitrations, "it would be plausible to interpret the arbitration clause to require all claims to be arbitrated and to disallow class actions with no further qualifications or caveats." Id. Quoting Bazzle, the Opinion observed that the question presented in this case is "not whether the parties wanted a judge or an arbitrator to decide whether they agreed to arbitrate a matter," but rather "what kind of arbitration proceeding the parties agreed to."
Bazzle, 539 U.S. at 452. The Opinion also compelled arbitration of Vaughn's claims against the Leeds Defendants, finding they were inextricably intertwined with the settlement agreement. Finally, the Opinion stayed the action "until the resolution of the arbitration proceedings." Vaughn, 2005 WL 1949468, at *5.
The following facts, which concern the procedural history of this case following the August 2005 Opinion, are undisputed. By letter dated December 7, 2005, Vaughn moved to lift the stay entered by the August 2005 Opinion and to continue the instant action in federal court, because the New York Stock Exchange had rejected his arbitration claim on the ground that it lacked jurisdiction over the Leeds Defendants. A volley of letters from Prudential and the Leeds Defendants followed, essentially arguing that Vaughn was seeking to evade his obligation to arbitrate by asking to reinstate his federal action rather than proceeding before the NASD and representing that the NASD was willing to arbitrate the claims against Prudential and the Leeds Defendants in a single proceeding. An Order dated December 27 ruled that the case would "remain stayed and on the Court's suspense docket pursuant to the Opinion and Order dated August 12, 2005."
Vaughn filed a Statement of Claim with the NASD in February 2006, requesting that the arbitrators issue an order and decision declaring that Vaughn may pursue his class action claims against defendants in court and directing defendants to withdraw their objections and stipulate that the agreement to arbitrate does not preclude Claimants' right to proceed with a class action in court and, therefore, is not enforceable.
Vaughn did not seek arbitration of the merits of his claims. On August 31, 2006, defendants moved this Court for an order enforcing its August 12 and December 27, 2005 orders. At a conference held on September 5, this Court stated that Vaughn's presentation of legal issues to the NASD was "inaccurate and misleading," and reiterated that "[t]he plaintiff clearly agreed to the arbitration of his claims and I ruled that the arbitration agreement was valid and enforceable." Observing that "it is for the arbitrator to interpret the agreement and decide what the parties' intentions were," this Court laid out a non-exclusive list of three possible outcomes of the arbitration:
[T]he arbitrator could decide that the parties had intended to disallow class actions. The arbitrator could decide that the parties had agreed to arbitrate individual claims but had reserved unto themselves the right to litigate class claims. The arbitrator could decide that the part[ies] had agreed to arbitrate all claims, individual or class claims.
This Court made clear that it had "not rule[d] that everything had to be subject to arbitration," and rejected defendants' argument "that the arbitrators' hands are bound in some way such that they couldn't rule in interpreting the parties' intent that the plaintiff has the right to come to court and proceed on a class action."
The NASD appointed a three-member arbitration panel on November 9. In his pre-hearing motion to the panel, Vaughn argued that he had never "waived" his right to pursue a class action in federal court, and that the action should therefore be dismissed and referred back to this Court. Prudential cross-moved for judgment on the pleadings, arguing that the settlement agreement between the parties evidenced an unambiguous intent to arbitrate all claims. The panel rejected both parties' pre-hearing motions, and a hearing was held on April 23, 2007. The panel received into evidence the settlement agreement and the documents supporting both parties' pre-hearing motions, and heard oral argument from both parties as well as testimony from Vaughn.
On May 10, the arbitrators issued a unanimous award. "After considering the pleadings, the testimony and evidence presented at the hearing," the panel concluded that the settlement agreement "precludes Claimant from bringing a Class Action in court" and dismissed Vaughn's claims in their entirety. Vaughn now moves to lift the stay entered on August 12, 2005, and to vacate the panel's decision. ...