Thompson v. GFI Brokers L.L.C.
Filing
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OPINION AND ORDER re: 11 MOTION for Partial Summary Judgment Expedited and Declaratory Relief, filed by William Thompson, 7 MOTION to Compel Arbitration and Dismiss Action filed by GFI Brokers L.L.C. For the foregoing re asons, GFI's motion to compel arbitration is hereby GRANTED. The action is, therefore, dismissed. Thompson's motion for summary judgment is DENIED as moot. The Clerk of the Court is directed to close the motions at docket numbers 7 and 11 and to close the case. SO ORDERED. (Signed by Judge J. Paul Oetken on 10/27/2014) (ja)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
WILLIAM THOMPSON,
:
:
Plaintiff,
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-v:
GFI BROKERS LLC,
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Defendant. :
:
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14-CV-1043 (JPO)
OPINION AND ORDER
J. PAUL OETKEN, District Judge:
Plaintiff William Thompson brings this action against his former employer, Defendant
GFI Brokers LLC (“GFI”), alleging breach of contract and violation of New York Labor Law,
and seeking a declaration that a portion of his employment contract is void. GFI moves to
compel arbitration pursuant to the employment agreement it signed with Thompson and to
dismiss the action under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et. seq. Thompson
moves for summary judgment. For the reasons that follow, GFI’s motion is granted and
Thompson’s motion is denied.
At the commencement of his employment, GFI and Thompson signed an employment
agreement. That agreement was renewed yearly until Thompson left GFI in January of 2014.
According to GFI, the agreement contains the following arbitration clause:
The parties hereby agree that all claims, disputes or controversies (“Claims”)
arising under this Agreement or otherwise concerning in any way Thompson’s
employment, including, without limitation, Claims for wages or salary, severance
or compensation; Claims for breach of any contract or covenant (express or
implied) . . . shall be resolved exclusively through arbitration. Such arbitration
shall be conducted before, and in accordance with the arbitration rules of, the
National Association of Securities Dealers (“NASD”), the New York Stock
Exchange (“NYSE”) or the National Futures Association (“NFA”), if the matter is
eligible for such arbitration and the NASD, NYSE or NFA, as the case may be,
agrees to arbitrate . . . . If the matter is not eligible for arbitration before the
NASD, NYSE or NFA, or other mandatory exclusive forum, the parties agree to
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submit any Claims to the exclusive jurisdiction of the United States District Court
of the Southern District of New York or if such court lacks subject matter
jurisdiction, to the jurisdiction of the Supreme Court of the State of New York,
County of New York with respect to any Claims (whether or not any such party is
otherwise subject to the jurisdiction or venue of such Court).
(Dkt. No. 9, Defendant’s Memorandum of Law in Support of its Motion to Compel Arbitration,
at 2 [hereinafter: “Defendant’s Memo”] (emphases removed).) Thompson does not dispute that
this is an accurate excerpt of the agreement. Nor does he dispute that his claims fall within the
word “[c]laims” in the agreement and are, therefore, subject to arbitration if the arbitration clause
is enforced. He does not dispute that the parties could arbitrate this dispute before the NFA. He
contends only that the clause is invalid due to an ambiguity (or mistake) in the phrase “or other
mandatory exclusive forum” because NFA provides for elective arbitration in its own internal
rules.
Whether the parties agreed to arbitrate is a question of state law, Bell v. Cendant Corp.,
293 F.3d 563, 566 (2d Cir. 2002), and where a party resisting arbitration challenges the existence
or validity of an arbitration clause, ordinary contract law governs. E.g., Abram Landau Real
Estate v. Bevona, 123 F.3d 69, 73 (2d Cir. 1997); Bar-Ayal v. Time Warner Cable Inc., 03-CV9905, 2006 WL 2990032, at *2 (S.D.N.Y. Oct. 16, 2006). Thus, the Court will look to New
York contract law to determine whether the agreement is valid and whether it indicates that the
parties contracted to arbitrate their disputes.
Thompson argues that several contract theories invalidate the arbitration clause, all of
which are premised on the fact that the agreement implies that NFA is an exclusive forum and
that it is not, in fact, an exclusive forum as reflected in its governing rules. Thompson argues
that this tension invalidates the clause via four “legal avenues.” (Dkt. No. 22, Plaintiff’s
Memorandum of Law in Opposition, at 7 [hereinafter: “Plaintiff’s Memo”].) First, Thompson
“relies on governing rules of contract construction, including the doctrine of contra proferentum,
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upon which he asks the Court to construe the equivocal provision, firstly by striving to
harmonize words in tension, and if that is not possible, to resolve the ambiguity against the
drafter.” (Id.) Second, he contends that the agreement is voidable on the grounds of mutual
mistake. (Id.) Third, he “seeks a reformation of the provision so that the parties’ rights and
obligations will not undermine their in-common wrong understanding: that the parties were
agreeing to arbitrate disputes if such arbitration is required.” (Id.) Finally, he contends that GFI,
as drafter of the arbitration provision, “should not in equity be entitled to the remedy of specific
performance as if the provision did not contain the fundamental mistake.” (Id.)
All four avenues rely on the assumption that the quoted language from the arbitration
agreement assumes that NFA’s rules are what make it a “mandatory exclusive” forum. But the
plain meaning of the arbitration agreement itself makes the chosen arbitral forum exclusive. The
agreement reads “all . . . Claims arising under this Agreement or otherwise concerning in any
way Thompson’s employment . . . shall be resolved exclusively through arbitration.”
(Defendant’s Memo, at 2 (emphasis added).) When the agreement refers to “other mandatory
exclusive” fora, it means that if one of the specified fora is unavailable, and another forum is
available, the parties must use it (“mandatory”) and may use only it (“exclusive”).
Thompson seeks to avoid this reading by noting that as a general practice, brokers—GFI
is a broker—often include arbitration clauses in agreements that would be subject to arbitration
anyway because both parties are members of financial self-regulatory organizations that compel
arbitration in all cases. (Plaintiff’s Memo, at 9 n.4.) Thompson reads the words “mandatory
[and] exclusive” to mean that the agreement compels arbitration only if arbitration would be
compelled by the organizations’ rules anyway. Thus, Thompson urges, his preferred reading
does not render the arbitration clause superfluous because plenty of brokers write contracts this
way—the belt to the financial organizations’ suspenders, more or less. Although that may be
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correct, its relevance is unclear. The phrase “all . . . Claims arising under this Agreement or
otherwise concerning in any way Thompson’s employment . . . shall be resolved exclusively
through arbitration” is unambiguous and, therefore, the fact that Thompson’s competing reading
does not render the whole agreement superfluous is insufficient to invalidate the contract as it is
written.
To invalidate the agreement on any of the legal avenues he proposes, Thompson must at
least show that the phrase “other mandatory exclusive forum” represents a misunderstanding of
the rules of the NFA. But given the plain meaning of the agreement, there is no reason to believe
that is so.
GFI’s motion to compel arbitration is hereby GRANTED. The action is, therefore,
dismissed. 1 Thompson’s motion for summary judgment is DENIED as moot.
The Clerk of the Court is directed to close the motions at docket numbers 7 and 11 and to
close the case.
SO ORDERED.
Dated: October 27, 2014
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge
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Neither party here has requested a stay of the proceedings pending arbitration. Therefore, this
Court does not need to address the difficult question of whether or not it is empowered to dismiss
the action in the face of a request that it be stayed pursuant to 9 U.S.C. § 3. See, e.g., Angelina
M. Petti, Note, Judicial Enforcement of Arbitration Agreements: The Stay-Dismissal Dichotomy
of FAA Section 3, 34 HOFSTRA L. REV. 565, 568 (2005).
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