Opinion ID: 1533142
Heading Depth: 2
Heading Rank: 1

Heading: Arising Out of Employment of the Member

Text: In their briefs, the appellants assert that the first reason this dispute must be arbitrated is that the dispute arose out of the Lewis' employment with Llama Company. This is the second subject matter listed above. Article I(q) of the NASD by-laws defines person associated with a member or associated person of a member as: every sole proprietor, partner, officer, director, or branch manager of any member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by such member, whether or not any such person is registered or exempt from registration with the Corporation pursuant to these By-Laws. Furthermore, Article I(m) and (g) of the NASD by-laws define member as any broker or dealer admitted to membership in the Corporation [NASD]. The parties agree that Mr. Lewis is the associated person and that Llama Company is the member. Moreover, there is nothing in the record that suggests that either Llama Capital, Llama Mortgage, Ms. Walton, or the joint venture are members of NASD. Although the appellants cite many cases in their brief that define what type of dispute arises out of employment, we think that the salient issue in this case is whether the dispute over the proceeds of the bonus plan arose out of Mr. Lewis's employment with Llama Company. [3] After a careful analysis of the relevant relationships in this case, we must answer this question in the negative. The parties admit that Llama Company is the only NASD member in this case. As an employee of an NASD member, Mr. Lewis signed an arbitration agreement embodied in the U-4 form. The underlying dispute in this case is whether Mr. Lewis is entitled to payment under the terms of the joint venture's Capital Markets Bonus Plan, and not whether Mr. Lewis is entitled to payment under any agreement with Llama Company. Importantly, the Capital Markets Bonus Plan does not indicate that Mr. Lewis served on the Capital Markets Committee as a representative of any Llama company. We are also persuaded by the fact that neither the joint venture nor any of its individual members (Llama Capital, Llama Mortgage, or Boston Capital Corporation) are members of NASD. Hence, the appellants claim that the NASD arbitration agreement applies in this case because two of the members of the joint venture, Llama Capital and Llama Mortgage, were one of the fifteen or so business entities loosely associated with Llama Company, the only NASD member. In fact, the only thing that Llama Company has in common with Llama Capital and Llama Mortgage is that all three entities are owned by Alice Walton, who was sued in her individual capacity and not as a director or officer of any of the relevant Llama entities. We agree with the trial court that this connection is much too tenuous to say that the underlying dispute in this case arose out of Mr. Lewis's employment with Llama Company, the sole NASD member.