Bear, Stearns & Co., Inc. v. Bennett
| Decision Date | 08 July 1991 |
| Docket Number | No. 1501,D,1501 |
| Citation | 938 F.2d 31 |
| Parties | Fed. Sec. L. Rep. P 96,129 BEAR, STEARNS & CO., INC., Petitioner-Appellant, v. Robert C. BENNETT, Jr., Respondent-Appellee. ocket 91-7233. |
| Court | U.S. Court of Appeals — Second Circuit |
A. Robert Pietrzak, New York City (Charna L. Gerstenhaber, Donna Carrier-Tal, Brown & Wood, New York City, of counsel), for petitioner-appellant.
Thomas R. Grady, Naples, Fla., for respondent-appellee.
Before VAN GRAAFEILAND, MESKILL and McLAUGHLIN, Circuit Judges.
Bear, Stearns & Co. appeals from a judgment of the United States District Court for the Southern District of New York (Patterson, J.) dismissing its petition to compel Robert C. Bennett, Jr. to arbitrate his claim against Bear Stearns before the American Arbitration Association (AAA) in New York City. We hold that the petition should have been granted.
In 1983 Bennett, a Florida resident, signed a Customer Agreement with Bear Stearns, a securities broker-dealer, which agreement provided in part that
[a]ny controversy arising out of or relating to your account in connection with transactions between us or pursuant to this Agreement or the breach thereof shall be settled by arbitration in accordance with the rules, then in effect, of the National Association of Securities Dealers, Inc., the Board of Governors of the New York Stock Exchange, Inc. or the Board of Governors of the American Stock Exchange, Inc. [AMEX] as you may elect.
Article VIII, section 2(c) of the AMEX Constitution (the AMEX Window) provides that
if any of the parties to a controversy is a customer, the customer may elect to arbitrate before the American Arbitration Association in the City of New York, unless the customer has expressly agreed, in writing, to submit only to the arbitration procedure of the Exchange.
In July 1990 Bennett filed a Demand for Arbitration with the AAA alleging that Bear Stearns had mismanaged his account. Although Bennett made his demand pursuant to his Customer Agreement, and perforce the AMEX rules, he filed the demand in Florida and sought arbitration in the City of Naples. Relying upon the above-quoted provisions of the Agreement and Constitution, Bear Stearns filed a petition in the Southern District of New York to compel arbitration in New York City. Although Bennett's counsel conceded in the court below that Bear Stearns had not waived its claim that the proper venue is New York City, he disputed Bear Stearns's claim on the merits and moved to dismiss the petition. The district court granted the motion, holding in substance that the hearing venue was a procedural matter to be determined by the AAA, not the court. We believe that the clear and explicit contractual terms at issue herein cannot be disregarded so readily.
In the almost two decades that have elapsed since the Supreme Court decided The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), the prima facie validity of forum-selection clauses has been recognized consistently by both the Supreme Court and this court. See, e.g., Carnival Cruise Lines, Inc. v. Eulala Shute, --- U.S. ----, 111 S.Ct. 1522, 1526-29, 113 L.Ed.2d 622 (1991); Karl Koch Erecting Co. v. New York Convention Center Dev. Corp., 838 F.2d 656, 659-60 (2d Cir.1988); Bense v. Interstate Battery Sys. of Am., Inc., 683 F.2d 718, 720-22 (2d Cir.1982). Of particular significance in the instant case is the fact that the Bremen holding has been applied to forum-selection provisions in arbitration agreements. See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974), where the Court, citing Bremen, held enforceable a provision in a sales contract between an American manufacturer and a European businessman calling for arbitration of disputes before the International Chamber of Commerce in...
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