Armijo v. Prudential Ins. Co. of America, s. 94-2131

CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)
Citation72 F.3d 793
Docket NumberNos. 94-2131,94-2257,94-2132,s. 94-2131
Parties69 Fair Empl.Prac.Cas. (BNA) 1544, 67 Empl. Prac. Dec. P 43,870 Jake ARMIJO, Plaintiff-Appellant, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, Tom Brokaw, Miles Melton, Defendants-Appellees. Erlinda HOURIGAN, Plaintiff-Appellant, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, Tom Brokaw, Judith Crane, Laura Stubblefield, Defendants-Appellees. Pete FUENTES, Plaintiff-Appellee, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, Tom Brokaw, Defendants-Appellants.
Decision Date15 December 1995

Kenwood C. Youmans, of Seyfarth, Shaw, Fairweather & Geraldson, Los Angeles, California (Lorraine H. O'Hara, of Seyfarth, Shaw, Fairweather & Geraldson, Los Angeles, California, with him on the reply brief; and Duane C. Gilkey, Barbara G. Stephenson, Charles W. Weese, of Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, New Mexico, on the opening briefs) for defendants.

Narciso Garcia, Jr., Albuquerque, New Mexico, for all plaintiffs.

Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge and JENKINS, * District Judge.

EBEL, Circuit Judge.

These three cases each involve federal and state discrimination claims by former sales agents, Jake Armijo ("Armijo"), Linda Hourigan ("Hourigan") and Pete Fuentes ("Fuentes"), who were terminated by Prudential Insurance Co. of America ("Prudential"). Prudential moved to compel arbitration and to dismiss Plaintiffs' claims based on a signed agreement to arbitrate under the National Association of Securities Dealers ("NASD") Code of Arbitration Procedure ("Code"). In the actions brought by Armijo and Hourigan, the district court ruled for Prudential, compelling arbitration and dismissing Plaintiffs' claims, and Plaintiffs appealed. In Fuentes's action, a different judge of the same district ruled that Plaintiff was not compelled to arbitrate his claim, and Prudential appealed. 1


Plaintiffs Fuentes, Hourigan, and Armijo were all employees who worked as sales agents for Prudential in Albuquerque. Plaintiffs--who are Hispanic--primarily sold insurance policies, but also sold mutual funds through Pruco Securities Corporation ("Pruco"). Because they were authorized to sell mutual funds, each of the Plaintiffs was required to sign a Uniform Application for Securities Industry Registration or Transfer ("Form U-4").

The Forms U-4 committed the plaintiffs to

. . . . .

arbitrate any dispute, claim or controversy that may arise between me and my firm [The Prudential] ... that is required to be arbitrated under the rules, constitutions, or by-laws of the organizations with which I register, as indicated in Item 10 as may be amended from time to time. 2

Each of the Plaintiffs' Form U-4 listed the NASD as an organization with which he or she was to register. Thus, each Plaintiff agreed to arbitrate disputes covered by the NASD Code. It is the interpretation then of the NASD arbitration provisions that forms the crux of this appeal.

Two provisions of the NASD Code are relevant: Section 1 and Section 8. Section 1 defines generally the matters eligible for arbitration, and it provides for

arbitration of any dispute, claim, or controversy arising out of or in connection with the business of any member of the Association, with the exception of disputes involving the insurance business of any member which is also an insurance company:

(1) between or among members;

(2) between or among members and public customers, or others; and

(3) between or among members, registered clearing agencies with which the Association has entered into an agreement to utilize the Association's arbitration facilities and procedures, and participants, pledges, or other persons using the facilities of a registered Section 8 of the NASD Code addresses which disputes are required to be arbitrated--a subset of the disputes eligible for arbitration under Section 1--and provides that:

clearing agency, as these terms are defined under the rules of such a registered clearing agency.

[a]ny dispute, claim, or controversy eligible for submission under Part I of this Code [Section 1, quoted above, is in Part I] between or among members and/or associated persons, and/or certain others, arising in connection with the business of such member(s) or in connection with the activities of such associated person(s), shall be arbitrated under this Code, at the instance of:

(1) a member against another member;

(2) a member against a person associated with a member or a person associated with a member against a member; and,

(3) a person associated with a member against a person associated with a member.

The version of the Code in effect during the alleged acts of discrimination was the February 1992 version of the Code. On October 1, 1993, the NASD amended the Code. Each of the Plaintiffs was terminated and filed discrimination claims with the EEOC prior to October 1, 1993, claiming that they were terminated because of their race, sex, or national origin. However, each of the Plaintiffs' complaints were not filed in federal court until after October 1, 1993. On November 24, 1993, Prudential filed motions to compel arbitration and to dismiss Plaintiffs' complaints in each of these actions. 3 Initially, the district courts denied all three motions. However, upon a motion for rehearing and submission to the court of the October 1, 1993 Code amendments, the district court granted Prudential's motion in Hourigan and Armijo. In Fuentes, the district court denied Prudential's motion for rehearing based on the amended Code. Each of the losing parties appealed.


Standard of Review

We review a district court's grant or denial of a motion to compel arbitration de novo, applying the same legal standard employed by the district court. MidAmerica Federal Sav. and Loan Ass'n v. Shearson/American Express, Inc., 886 F.2d 1249, 1259 (10th Cir.1989); Kidd v. Equitable Life Assurance, 32 F.3d 516, 518 (11th Cir.1994); Sunkist Soft Drinks, Inc. v. Sunkist Growers, 10 F.3d 753, 756 (11th Cir.1993), cert. denied, --- U.S. ----, 115 S.Ct. 190, 130 L.Ed.2d 123 (1994); Trap Rock Industries, Inc. v. Local 825, Int'l Union of Operating Engineers, 982 F.2d 884, 887 (3d Cir.1992).

A. Jurisdiction Over Armijo and Hourigan Appeals of District Court Decisions to Compel Arbitration

As a preliminary issue, with respect only to Armijo and Hourigan, 4 Prudential argues that we do not have jurisdiction over Plaintiffs' appeals from the district court decisions to compel arbitration. See 9 U.S.C. Sec. 16(b)(2). In Adair Bus Sales, Inc. v. Blue Bird Corp., 25 F.3d 953 (10th Cir.1994), we held that interlocutory appellate review of a district court's grant of a motion to compel arbitration was inappropriate when the district In Adair, the plaintiff brought a breach of contract claim, along with a claim for declaratory judgment that an arbitration clause in the parties' agreement did not compel arbitration of the particular contract dispute at issue. 25 F.3d at 954. Defendant argued that the agreement provided for mandatory arbitration and moved for a stay pending arbitration. Id. The district court found that the contract dispute was within the scope of the arbitration agreement and ordered the parties to proceed to arbitration. Id. However, instead of granting the motion for a stay pending arbitration, the district court dismissed the complaint, and plaintiff appealed. Id. at 955.

                court also should have granted the motion to stay proceedings pending arbitration.  Id. at 955.   Had the motion to stay been properly granted, the order granting arbitration would then not have been a final order.  Id.  Hence, we declined to consider the arbitrability issue on its merits.  Id.  Prudential argues that our holding in Adair precludes our exercise of jurisdiction in this case.  However, the difference is that Adair ultimately dealt with a non-final order compelling arbitration whereas here we have a final order compelling arbitration.  9 U.S.C. Sec. 16(a)(3) expressly provides for the appealability of a final order with respect to arbitration

The Federal Arbitration Act provides that the district court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. Sec. 3 (emphasis added). Because the defendant in Adair had requested a stay, it was error for the district court not to have stayed the action pending arbitration. 25 F.3d at 955. We, therefore, vacated the district court's order of dismissal. Id. When we vacated the district court's dismissal and remanded the case to the district court to enter a stay, the district court's disposition was no longer final, and thus we declined to consider the arbitrability of the claim. See 9 U.S.C. Sec. 16(b)(1) and (2).

However, in the case before us, we are not faced with a district court's erroneous failure to enter a requested stay. Prudential moved the district court to compel arbitration, but, instead of requesting a stay pending such arbitration, Prudential requested only that the district court dismiss Plaintiffs' complaints with prejudice. Hourigan App. at 15; Armijo App. at 8. We find no evidence in the record of any request for a stay. We therefore cannot find error here in failing to grant a stay. Thus, in this case, the district court's order granting Prudential's motion to compel arbitration and to dismiss Plaintiffs' claims was clearly a final order, permitting us to exercise jurisdiction over this case pursuant to 28 U.S.C. Sec. 1291. See Farrand v. Lutheran Brotherhood, 993 F.2d 1253, 1254 (7th Cir.1993) (in a similar action, holding that 9 U.S.C. Sec. 16(b) does not preclude plaintiffs' appeal of an order compelling arbitration and dismissing plaintiffs' claims because such an order conclusively disposes of all issues in the case).

B. Whether the Parties Agreed to Arbitrate These Claims

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