Sacks v. Richardson Greenshield Securities, Inc.

• Decision Date: 26 December 1991
• Docket Number: No. CV-F-85-269 OWW.,CV-F-85-269 OWW.
• Parties: Pauline SACKS, Plaintiff, v. RICHARDSON GREENSHIELD SECURITIES, INC., Defendant.
• Court: U.S. District Court — Eastern District of California

781 F. Supp. 1475

Pauline SACKS, Plaintiff, v. RICHARDSON GREENSHIELD SECURITIES, INC., Defendant.

No. CV-F-85-269 OWW.

United States District Court, E.D. California.

December 26, 1991.

Mary Louise Frampton, Scott W. Williams, Frampton, Hoppe, Williams & Boehm, Fresno, Cal., for plaintiff.

Michael L. Wolfram, Morgan, Lewis & Bockius, Los Angeles, Cal., for defendant.

MEMORANDUM OPINION

WANGER, District Judge.

Cross-motions to vacate or confirm arbitration award and to dismiss this action were heard December 12, 1991.

BACKGROUND

This case was filed in the California State Court for the County of Tulare on February 13, 1985. It was removed to this Court on May 7, 1985, on defendant's invocation of diversity jurisdiction. Plaintiff's amended complaint filed September 20, 1985, asserts claims for her alleged wrongful discharge as a New York Stock Exchange (NYSE) Registered Representative with defendant, a NYSE member firm, in breach of an employment contract; tortious breach of contract for wrongful termination of employment for "whistle blowing" concerning alleged illegal churning practices; violation of California Labor Code § 1054 by alleged misrepresentations about plaintiff to plaintiff's prospective employers and clients; and gender discrimination in violation of the California Fair Employment & Housing Act, Government Code § 12960 (FEHA claim).

By written stipulation filed October 28, 1985, the parties by and through their attorneys agreed as follows:

IT IS HEREBY STIPULATED between Richardson and Sacks, by and through their respective counsel of record, that they will submit the dispute set forth in the Amended Complaint to arbitration pursuant to the Constitution and Rules of the New York Stock Exchange and the Court may and should order a stay of all proceedings in this action until a decision and award is rendered in that arbitration. (Emphasis added)

The case was arbitrated for three full days on July 1, October 19 and 20, 1987. Fourteen witnesses were called. Over fifty exhibits were received. A hearing transcript of 630 pages was generated by the proceedings. (Arbitration Record "AR") No claim is made that the arbitrators were unfair nor is the efficacy of the arbitration proceedings challenged as to the composition of the panel of arbitrators or the panel's procedural or substantive fitness to adjudicate.

The arbitrators rendered a decision for defendant on all claims in February of 1988. The decision was provided to counsel for the parties in April of 1988. It referred to a dismissal of the "claim." A letter of April 25, 1988, from plaintiff's counsel to U.S. District Judge Edward Dean Price advised that the arbitration had been concluded, that the stipulated stay might be lifted, and that the plaintiff was ready to discuss discovery and the setting of a trial date.¹ Plaintiff does not contend that the FEHA claim was expressly reserved or excluded from arbitration by any agreement between the parties.

On May 2, 1988, defendant filed a Notice of Arbitration Decision and Request to Dismiss. On August 5, 1988, defendant filed its Motion to Confirm the Arbitration Award. Plaintiff filed opposition authorities to the Motion to Confirm the Arbitration Award September 2, 1988. Defendant filed reply authorities on September 12, 1988. The motion was heard and submitted on September 19, 1988. On November 2, 1988, the Court's order on the motion to confirm arbitration award remanded the matter to the panel of arbitrators "so that they might inform the Court as to their intention in the choice of the use of the words selected by them."

On December 9, 1988, arbitration counsel for the New York Stock Exchange wrote to the defendants' counsel advising that the decision of the arbitration panel was based "on the merits of the case." Plaintiff, on February 3, 1989, filed her Motion to Vacate the Arbitration Award. On March 27, 1989, defendants filed a counter-motion to Confirm Arbitration Award and dismiss the action and filed opposition to plaintiff's motion to vacate the arbitration award. Plaintiff filed opposition authorities on April 3, 1989. The motions were heard and submitted on April 10, 1989. On May 19, 1989, Judge Price's Memorandum Decision again remanded the matter to the arbitrators and directed them to publish findings of fact and conclusions of law signed by all arbitrators. The Court deferred its decision as to plaintiff's motion until the arbitration panel responded to the Court's order of May 19, 1989.

On October 6, 1989, counsel for defendant prepared written findings of fact and conclusions of law for execution by the panel members. Two of the arbitrators signed those findings and conclusions. It was not until November 7, 1991, that the third arbitrator signed the findings of fact and conclusions of law which were then submitted to the Court.² On November 27, 1991, defendants' counsel filed a copy of findings of fact and conclusions of law signed by arbitrators W. Reece Bader and Robin R. Henry.

The Motions

Two issues were eliminated at the hearing on the cross-motions by concessions of counsel. Defendant acknowledged that in view of this Court's finding that no final administrative decision had been rendered in the matter until November 7, 1991, that its argument that plaintiff had failed to timely challenge the "arbitration award" under the Federal Arbitration Act, ("FAA") 9 U.S.C. § 12 is not a viable contention.

Plaintiff acknowledged that the only claim susceptible to the judicial reservation theory is her statutory claim for gender discrimination.³ The Stipulation and New York Stock Exchange Submission Agreement were knowingly and voluntarily executed. The agreements expressly authorize the arbitration of the "dispute set forth in the amended complaint." Plaintiff has not suggested that the claims for contract, tortious breach of contract, and the Labor Code claim are not arbitrable. The final decision of the arbitrators, once confirmed, bars relitigation of those claims, absent grounds to refuse confirmation of the decision. Plaintiff asserts she is entitled to a trial de novo on the FEHA claim.

Plaintiff's Motion to Vacate the Arbitration Award is premised on the following grounds:

1. The arbitration panel has not complied with this Court's Orders to formalize their decision. This argument has been rendered moot by the receipt of findings of fact and conclusions of law signed by all three arbitrators.

2. Plaintiff's gender discrimination claim is justiciable even if the arbitration award is confirmed. This contention turns on the interpretation and application of the recent Supreme Court decision in Gilmer v. Interstate/Johnson Lane Corp., ___ U.S. ___, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). Plaintiff argues in essence that statutory gender discrimination is not similar to the Age Discrimination In Employment Act and the Gilmer decision does not bar subsequent judicial determination of a previously arbitrated gender discrimination claim. Plaintiff relies primarily on Swenson v. International Management Recruiters, 858 F.2d 1304 (8th Cir.1988).

3. The arbitrators manifestly disregarded the law by their alleged failure to give collateral estoppel effect to a State Court finding in an unemployment compensation appeal, that plaintiff "was not discharged for misconduct or insubordination since her conduct constituted neither of these," made by a Tulare County Superior Court Judge in an administrative mandamus case brought by defendant alleging denial of a fair hearing on appeal because of the malfunction of a recording device. A variation of this ground is that the arbitrators' decision violates public policy and it is unfair to deny plaintiff a trial de novo on the statutory claim.

Defendant raises the following points in support of its Motion to Confirm:

1. The arbitration agreement in this case is not contained in an employment contract. All claims are subject to the FAA. Plaintiff expressly submitted the entire amended complaint to arbitration, unconditionally and without reservation.

2. The finding of the Administrative Law Judge, upheld by the Superior Court Judge's decision bears only on the issue of whether plaintiff willfully breached her duty to her employer and is not the same as a finding of "misconduct," the standard necessary to sustain denial of unemployment compensation benefits to plaintiff in the administrative proceedings.

3. The FAA requires that the arbitration award be confirmed and a judgment for defendant entered.

4. Gilmer mandates that this Court confirm the arbitration award, including the state statutory discrimination claim.

Arbitration Of Statutory Claim

The parties do not dispute that the claims in this case are covered by the FAA, except the statutory discrimination claim. Plaintiff's agreement to arbitrate "the dispute set forth in the Amended Complaint," was entered into in October 1985, when some uncertainty existed as to whether arbitral claims arising under statute were reserved for ultimate judicial resolution. "It is by now clear that statutory claims may be the subject of an arbitration agreement, enforceable pursuant to the FAA." Gilmer, supra, 111 S.Ct. at 1652. Plaintiff did not specifically reserve for judicial determination the statutory discrimination claim by including express language in the stipulation to exclude the statutory claim from arbitration.

Effect Of Gilmer

The parties disagree on the application of Gilmer v. Interstate/Johnson Lane Corp., supra, 111 S.Ct. 1647. In Gilmer, the United States Supreme Court held that an age discrimination claim under the Age Discrimination in Employment Act of 1967 (ADEA) 29 U.S.C. §§ 621-634, was subject to compulsory arbitration under the FAA and the same securities registration form⁴ and rule of the New York Stock Exchange (NYSE Rule 347), which provides for "arbitration of any controversy arising out of a registered representative's employment or termination of...