Opinion ID: 3038348
Heading Depth: 2
Heading Rank: 2

Heading: Was the Choice of the NASD Integral?

Text: [4] When a court asks whether a choice of forum is integral, it asks whether the whole arbitration agreement becomes unenforceable if the chosen arbitrator cannot or will not act. As one court of appeals put it: Only if the choice of forum is an integral part of the agreement to arbitrate, rather than an “ancillary logistical concern” will the failure of the chosen forum preclude arbitration. Here there is no evidence that the choice of the NAF as the arbitration forum was an integral part of the agreement to arbitrate. Brown’s argument that the arbitration agreement is void because the NAF was unavailable must fail. Brown, 211 F.3d at 1222 (citations omitted). We see no evidence that the choice was integral here—in fact, there was not even an express statement that the NASD would be the arbitrator. The district court, however, relied upon In re Salomon, 68 F.3d at 555-56. That case did, indeed, declare that the implicit choice was also implicitly integral and exclusive. It presented little reasoning to support that determination but, rather, pointed to other cases which had held that arbitration must go forward in one of the chosen fora. Id. at 558-59. It then concluded that where a forum selection clause “is as important a consideration as the agreement to arbitrate itself, a court will not sever the failed term from the rest of the agreement and the entire arbitration provision will fail.” Id. at 561 (internal quotation marks omitted). However, its holding is not persuasive. Essentially, the cases upon which it relied were inappoREDDAM v. SIDLEY AUSTIN BROWN AND WOOD 9255 site. In Roney, 875 F.2d at 1223, the Sixth Circuit Court of Appeals decided that when the parties had agreed to a particular arbitrator, which was still available, one of them could not choose a different arbitrator. In PaineWebber, 903 F.2d at 107-08, the Second Circuit Court of Appeals reached the same conclusion in the same context. Finally, in Luckie, 999 F.2d at 510-11, 513-14, the Eleventh Circuit Court of Appeals was presented with the same situation and reached the same result. Again, none of those cases dealt with a failure or refusal of the named arbitrator to arbitrate. Thus, they cast little light on that situation. Other cases relied upon by Reddam are no more to the purpose. In Smith Barney, 212 F.3d at 862, the Fourth Circuit Court of Appeals prevented a party from seeking another arbitrator when the fora mentioned in the agreement were available. Even further afield is a case where the agreement expressly provided that arbitration could be “only before” certain fora and at least one of them was still available. Merrill Lynch, Pierce, Fenner & Smith Inc. v. Georgiadis, 903 F.2d 109, 111-13 (2d Cir. 1990). [5] Thus, we cannot agree that the customer agreement involved here became unenforceable between the parties when the NASD bowed out. There is no evidence that naming of the NASD was so central to the arbitration agreement that the unavailability of that arbitrator brought the agreement to an end. See Brown, 211 F.3d at 1222; McGuire, Cornwell & Blakey v. Grider, 771 F. Supp. 319, 320 (D. Colo. 1991); Astra Footwear Indus. v. Harwyn Int’l, Inc., 442 F. Supp. 907, 910-11 (S.D.N.Y. 1978). Something more direct is required before we, in effect, annihilate an arbitration agreement. [6] Our decision is analogous to our approach to forum selection clauses which choose a particular court as the litigation arena. There we have not treated the selection of a specific forum as exclusive of all other fora, unless the parties 9256 REDDAM v. SIDLEY AUSTIN BROWN AND WOOD have expressly stated that it was. Compare Pelleport Investors, 741 F.2d at 275, 280 (holding remand required where contract provided that “disputes . . . shall be litigated only in the Superior Court for Los Angeles, California (and in no other)”), with N. Cal. Dist. Council of Laborers v. PittsburgDes Moines Steel Co., 69 F.3d 1034, 1036-37 (9th Cir. 1995) (holding remand not proper where contract provided that decisions “shall be enforceable by a petition . . . filed in the Superior Court of the City and County of San Francisco” because that language “is permissive.”), and Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 76-78 (9th Cir. 1987) (holding remand not proper where contract provided that “[t]he courts of California, County of Orange, shall have jurisdiction over the parties”). In referring to those cases, we do not suggest that other arbitral fora can be utilized when the one selected by the parties is itself available. But here, of course, the selected forum was not available. [7] Therefore, on this record we are constrained to hold that the refusal of the NASD to conduct an arbitration neither rendered the district court powerless to require arbitration to proceed11 nor deprived it of jurisdiction. In determining otherwise, the district court erred.12