Court Opinion

ID: 9488460
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:46:16.086602+00
Date Added: 2024-06-11T17:52:54.537054
License: Public Domain

ROVNER, Circuit Judge,
dissenting.
I agree with the majority that if Pipkin consented to arbitration, his consent was not obtained through a denial of due process. And I agree with the majority that if Pipkin consented to arbitration, the members of the arbitration panel were properly selected. But Pipkin never consented to arbitration. The agreement that Pipkin signed did not constitute a clear and unambiguous consent to arbitrate, and it did not incorporate by reference any other document containing an arbitration clause. All of the parties agree that courts will not find an agreement to arbitrate in the absence of a clear and unambiguous consent to arbitration. See Brief of Amicus Curiae at 5 (“NFA does not dispute the general principle that courts will not find a contract to arbitrate in the absence of a clear and unambiguous consent to arbitration”). See also Flood v. Country Mutual Ins. Co., 41 Ill.2d 91, 94, 242 N.E.2d 149, 151 (1968) (“parties are only bound to arbitrate those issues which by clear language they have agreed to arbitrate”). All of the parties also agree that the Form 8-R signed by Pipkin contained no arbitration clause. But the majority decides today that the phrase “if registered as.'an Associate, I shall become and remain bound by all NFA requirements as then and thereafter in effect” incorporates by reference an arbitration clause in another document.
Yet the Form 8-R does not mention any other such document, much less incorporate it by reference. The majority, however, *264reaches its conclusion by referring to NFA’s Articles of Incorporation and NFA’s Compliance Rules, neither of which are mentioned anywhere on the Form 8-R. From these documents, the majority extracts a definition of the word “Requirements,” and applies that definition to the word “requirements” on the Form 8-R, as if it were a defined term. The Articles of Incorporation and the Compliance Rules define “Requirements” as “any duty, restriction, procedure, or standard imposed by a charter, bylaw, rule, regulation, resolution, or similar provision.” This definition, the majority then states, encompasses the NFA’s Member Arbitration Rules. And these, in turn, require Associates and Associated Persons like Pipkin to submit to arbitration. Three documents which are not even mentioned in the Form 8-R can hardly be incorporated by reference.
The majority’s conclusion is especially astonishing in light of the fact that the NFA conceded at oral argument that nothing on the Form 8-R indicates that “requirements” is a defined term, that “requirements” is not defined on the Form 8-R itself, and that the Form 8-R does not mention any of the documents the NFA claims are incorporated. Instead, the NFA argued that when a person wants to do business in a highly regulated industry, that person “understands” that there are other documents he needs to read when he registers. A general understanding that other documents may exist is no substitute for the clear and unambiguous consent to arbitrate required by the ease law. The majority’s reasoning constitutes a substantial departure from the established rule.
Furthermore, in every case on which the majority relies, the incorporation by reference is just that — the document signed contains an explicit reference to another document that contains the arbitration clause. There is no explicit reference here. There is not even an implicit reference. Nothing in the Form 8-R even clues in the signatory to the defined meaning of the word “requirements.” As noted above, the NFA concedes that the definition is contained in a document that is not even mentioned in the Form 8-R.
The majority also relies on Geldermcmn, Inc. v. Commodity Futures Trading Com’n, 836 F.2d 310 (7th Cir.1987), a case where membership in a voluntary association confers the obligation to arbitrate disputes. However, Pipkin is not a member of the NFA, and this case does not apply to him. He is merely associated with the NFA, and as such, the NFA admits he is not subject to the same requirements as members. He need not pay dues, for example. NFA implicitly admits, therefore, that the word “requirements” is subject to more than one meaning. Thus, the word “requirements” as it appears in the Form 8-R is at best ambiguous. Ambiguities in a contract are to be construed against the drafter, in this ease the NFA. See Epstein v. Yoder, 12 Ill.App.3d 966, 29 Ill.Dec. 169, 175, 391 N.E.2d 432, 438 (Ill.App. 1st Dist.1979). In short, Pipkin never clearly and unambiguously consented to arbitration. I respectfully dissent.