Opinion ID: 3038348
Heading Depth: 2
Heading Rank: 1

Heading: Was There a Choice of Forum Clause?

Text: As we have already pointed out, the arbitration clause used in the customer agreement does state that “[a]ny arbitration under this agreement shall be determined pursuant to the rules then in effect of the National Association of Securities Dealers, Inc., as the undersigned you may elect.” But what does that mean? In deciding, we must, no doubt, apply the usual principles of contract interpretation. See Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1210 (9th Cir. 1998). We have noted that state law generally applies to the construction of arbitration agreements. See id. If so, the agreement in question chooses the law of the State of New York. But we need not resolve the question of whether state law, or federal law,9 should apply to a construction of the forum 8 Beyond that, we have jurisdiction under 9 U.S.C. § 16(a)(1)(A) & (B) to review the district court’s conclusion that it could no longer enforce the arbitration agreement. 9 Other courts of appeals have applied federal law on the basis that arguments about whom the arbitrator can be present issues of federal law. See, e.g., Smith Barney, Inc. v. Critical Health Sys. of N.C., Inc., 212 F.3d 858, 860 (4th Cir. 2000); Weiner v. Gutfreund (In re Salomon Inc. S’holders’ Derivative Litig.), 68 F.3d 554, 559 (2d Cir. 1995). REDDAM v. SIDLEY AUSTIN BROWN AND WOOD 9253 selection provision before us. Whichever body of law is applied, it is our task to determine and effectuate the intent of the parties10 and on this record that means we must do so by reference to the terms of the agreement itself. See In re Salomon, 68 F.3d at 557-58; Cowen & Co. v. Anderson, 558 N.E.2d 27, 28-29 (N.Y. 1990). The provision in the DBSI customer agreement does select the rules of the NASD, but does not state that the arbitration is to take place before the NASD itself. Had the latter been intended, the parties could easily have said so. In fact, a more recent version of DBSI’s customer agreement reads: “I agree to arbitrate with you any controversies . . . only before the New York Stock Exchange or the National Association of Securities Dealers Regulation, Inc. at my election.” The absence of similar language militates in favor of a decision that the provision in question here does not select a forum at all. On the other hand, a commonsensical reading of the provision would suggest that the parties at least considered the NASD to be a proper forum for their arbitration, and probably expected that the NASD would be the forum. It is unlikely that they wanted to use NASD rules, but did not intend to select the NASD itself as the arbitrator, if it would agree to arbitrate. A number of other courts of appeals have decided that a clause which adopts the rules of an organization like the NASD implicitly chooses that organization as the, or a, forum. See Smith Barney, 212 F.3d at 860-61; Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222 (11th Cir. 2000); In re Salomon, 68 F.3d at 557-58; Luckie v. Smith Barney, Harris Upham & Co., Inc., 999 F.2d 509, 510-11, 513-14 (11th Cir. 1993) (per curiam); PaineWebber, Inc. v. Rutherford, 903 F.2d 106, 108 (2d Cir. 1990); Roney & Co. v. Goren, 875 F.2d 1218, 1219-20, 1223 (6th Cir. 1989). 10 See Wolsey, 144 F.3d at 1210. 9254 REDDAM v. SIDLEY AUSTIN BROWN AND WOOD Ultimately, we need not decide whether the provision at issue was a choice of forum clause because, as explained below, the provision was not integral to the arbitration agreement in any event.