Gold v. Deutsche Aktiengesellschaft

• Decision Date: 21 April 2004
• Docket Number: Docket No. 03-7283.
• Citation: 365 F.3d 144
• Parties: Jonathan GOLD, Plaintiff-Appellant, v. DEUTSCHE AKTIENGESELLSCHAFT, Deutsche Morgan Grenfell/C.J. Lawrence, Inc., Peter Nason, and Gregory Williams, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

365 F.3d 144

Jonathan GOLD, Plaintiff-Appellant, v. DEUTSCHE AKTIENGESELLSCHAFT, Deutsche Morgan Grenfell/C.J. Lawrence, Inc., Peter Nason, and Gregory Williams, Defendants-Appellees.

Docket No. 03-7283.

United States Court of Appeals, Second Circuit.

Argued: October 31, 2003.

Decided: April 21, 2004.

Joseph O. Giaimo, Giaimo & Vreeburg, LLP, Kew Gardens, NY, for Plaintiff-Appellant.

Peter L. Altieri, Epstein Becker & Green, P.C., New York, NY, for Defendants-Appellees Deutsche Aktiengesellschaft, Deutsche Morgan Grenfell/C.J. Lawrence, Inc., and Peter Nason.

Lawrence R. Sandak, Proskauer Rose LLP, Newark, NJ, for Defendant-Appellee Gregory Williams.

Before: FEINBERG, KEARSE, and RAGGI, Circuit Judges.

FEINBERG, Circuit Judge.

Plaintiff-appellant Jonathan Gold was hired by defendant-appellee Deutsche Aktiengesellschaft ("Deutsche Bank" or the "Bank") in 1995. Before beginning his employment, Gold signed various documents, including one that contained an arbitration clause requiring all employment disputes with the firm to be arbitrated. After his termination from the company approximately a year later, Gold brought the instant suit under Title VII, 42 U.S.C. §§ 2000e to e-17, and state law, claiming sexual harassment based on sexual orientation. The United States District Court for the Southern District of New York (Kimba M. Wood, J.), on defendants' motion, ordered arbitration of the dispute and then, following the arbitration proceedings, dismissed Gold's suit. Gold appeals, arguing that (1) Title VII claims cannot be subject to mandatory arbitration; and (2) the "special circumstances" of his case require reversal of the district court's order. For the reasons set forth below, we reject Gold's arguments and affirm the order of the district court.

I. Background

A. Gold's Employment at Deutsche Bank

While Gold was in his final year of an MBA program at New York University, he accepted a position with Deutsche Bank for employment after graduation. According to Gold, he took the job with Deutsche Bank despite offers from several other employers because Deutsche Bank assured him that he would work in a few different areas at the Bank and be groomed for positions of continually increasing authority. Gold alleges that after he began his employment in August 1995, Deutsche Bank failed to fulfill its promises. Gold, who is homosexual, alleges that once his sexual orientation was known, he was assigned to menial tasks such as purchasing chewing tobacco, fetching coffee and lunch for co-workers, and making photocopies. In April 1996, Gold was transferred to Deutsche Morgan Grenfell/C.J. Lawrence, Inc. ("Deutsche Morgan"), a subsidiary of Deutsche Bank. Gold claims that his immediate superior at Deutsche Morgan, defendant-appellant Peter Nason, created a hostile work environment, berating Gold and making fun of him on the basis of his sexual orientation. Gold also alleges that defendant-appellant Gregory Williams, a senior employee at the Bank, subjected him to quid pro quo sexual harassment, promising Gold that he would help him with his problems at the Bank if Gold entered into a sexual relationship with him. In June 1996, Deutsche Morgan terminated Gold's employment.

B. Gold's Title VII Claim and Arbitration

In February 1997, Gold filed his complaint in the Southern District, alleging that he had been subjected to hostile work environment and quid pro quo sexual harassment on the basis of sexual orientation in violation of Title VII.¹ Gold alleged in his complaint that at a training session prior to beginning his employment, he was required to sign numerous forms, including Form U-4, which the National Association of Securities Dealers, Inc. ("NASD") requires all "registered representatives" to sign. Form U-4, under a heading stating, "THE APPLICANT MUST READ THE FOLLOWING VERY CAREFULLY," provided in relevant part:

I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm ... that is required to be arbitrated under the rules, constitutions, 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 may be entered as a judgment in any court of competent jurisdiction.

Item 10 of Form U-4 indicated that Gold would be registered with the NASD. The NASD Code of Arbitration Procedure, Part II, § 8(a), provides for arbitration of "[a]ny dispute, claim or controversy ... arising out of the employment or termination of employment of ... associated person(s) with [a] member...." At the time Gold signed Form U-4, he did not challenge or question the arbitration clause. However, in his complaint, Gold claimed "lack of notice that by signing such agreement he would be waiving his right to a judicial resolution of a human rights claim."

After Gold filed his complaint, defendants-appellees moved to compel arbitration. In a written opinion filed in March 1998, Judge Wood compelled arbitration and stayed Gold's lawsuit. The judge held that an employee who had agreed to Form U-4's broad arbitration clause could be required to submit employment discrimination claims to arbitration. Judge Wood also found that Gold had not alleged sufficient special circumstances to justify holding the arbitration clause unenforceable.

In July 1998, Gold moved under Federal Rule of Civil Procedure 60(b) for reconsideration.² The motion asked the district court to consider recent decisions of the Ninth Circuit and the District of Massachusetts holding that Title VII claims were not subject to mandatory arbitration pursuant to the arbitration clause in Form U-4. See Duffield v. Robertson Stephens & Co., 144 F.3d 1182, 1199-1200 (9th Cir.1998); Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 995 F.Supp. 190, 204, 211 (D.Mass.1998), aff'd on other grounds, 170 F.3d 1 (1st Cir.1999). An affidavit submitted by Gold with the Rule 60 motion further alleged for the first time that when Gold signed Form U-4, he was brought into an office along with more than 20 other management trainees, was instructed to sign more than a dozen forms without any explanation of their content, was not given any opportunity to ask questions or review the forms and was given no more than 10 to 15 minutes to review and sign the forms.

In January 1999, the district court denied the Rule 60 motion on the ground that the two decisions relied upon by Gold went against the weight of authority in the Second Circuit that arbitration of Title VII claims was appropriate. The court also found that Gold had not alleged outright misrepresentation or other special circumstances sufficient to justify holding the arbitration clause unenforceable.

Gold proceeded to arbitration before an NASD panel. After 30 hearings, the arbitration panel concluded that Gold did not meet his burden of proving his discrimination claims against Deutsche Bank, Deutsche Morgan, Nason or Williams. In January 2003, the panel dismissed all of Gold's claims and assessed fees to each party. Gold then asked the district court to lift the judicial stay, arguing again that his Title VII claims were not subject to the mandatory arbitration provisions of Form U-4. Citing our opinion in Desiderio v. National Association of Securities Dealers, Inc., 191 F.3d 198 (2d Cir.1999), which had been decided after Gold's Rule 60 motion was denied, the district court in March 2003 denied Gold's request and closed the case. Gold now appeals from that order.

II. Discussion

On appeal, Gold renews his arguments that (1) Title VII claims are not subject to mandatory arbitration; and (2) in the alternative, the special circumstances of his case render the arbitration clause invalid. We review a district court's determination of arbitrability de novo. Chelsea Square Textiles, Inc. v. Bombay Dyeing and Mfg. Co., 189 F.3d 289, 295 (2d Cir.1999).

A. Arbitrability of Title VII Claims

In addressing Gold's claims, we note first the strong federal policy — manifested in the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. — favoring arbitration. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24-25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991); Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). As we have acknowledged before, the Supreme Court, this court and other courts have all indicated that "the ancient judicial hostility to arbitration is a thing of the past." Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 200 (2d Cir.1998). Indeed, the strong presumption in favor of arbitration has survived even the "greater scrutiny," id. at 201, given to the use of mandatory pre-dispute arbitration agreements, like the one Gold signed, to resolve statutory claims of employment discrimination. Courts have consistently found that such claims can be subject to mandatory arbitration. See, e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 123, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) ("The Court has been quite specific in holding that arbitration agreements can be enforced under the FAA without contravening the policies of congressional enactments giving employees specific protection against discrimination prohibited by federal law[.]"); Gilmer, 500 U.S. at 35, 111 S.Ct. 1647 (ADEA); Desiderio, 191 F.3d at 203, 206 (Title VII).

Nevertheless, again relying on the Ninth Circuit's decision in Duffield v. Robertson Stephens & Co., 144 F.3d at 1199-1200, Gold urges us to reverse the district court. In Duffield, the Ninth Circuit held that the arbitration clause in Form U-4 was unenforceable as applied to Title VII claims. Id. But in Desiderio, 191 F.3d at 205, we explicitly rejected the Duffield reasoning in concluding, along with the majority of other circuits, that Title VII claims could be subject to compulsory arbitration, id. at 206. Gold claims, however, that the factual circumstances in Duffield — an employee who was "unaware" of the arbitration clause...