Court Opinion

ID: 157576
Source: CourtListenerOpinion
Date Created: 2010-08-14 05:02:50+00
Date Added: 2024-06-11T15:02:30.690235
License: Public Domain

F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                           FEB 19 1999
                            FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                               Clerk

    OLDE DISCOUNT CORPORATION,

                Plaintiff-Appellant,

    v.                                                   No. 98-3179
                                                  (D.C. No. 98-MC-205-EEO)
    JULIAN HUBBARD,                                        (D. Kan.)

                Defendant-Appellee.

                            ORDER AND JUDGMENT            *

Before BRORBY , EBEL , and LUCERO , Circuit Judges.

         After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore

ordered submitted without oral argument.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
       OLDE Discount Corporation (OLDE) appeals from the district court’s

denial of its petition to compel arbitration and its entry of summary judgment

in favor of Julian Hubbard (Hubbard). Our jurisdiction arises under 28 U.S.C.

§ 1291, and we affirm.

                              I. Relevant undisputed facts

       Upon accepting employment with OLDE in January 1996, Hubbard signed

an employment agreement and a Uniform Application for Securities Industry

Registration or Transfer, Form U-4. Both agreements contained clauses wherein

Hubbard agreed to arbitrate any disputes or claims against OLDE, including those

controversies arising out of his employment or termination that were required to

be arbitrated under the rules of the New York Stock Exchange (NYSE) and the

National Association of Securities Dealers (NASD). OLDE terminated Hubbard’s

employment in July 1996, and Hubbard filed a discrimination charge against

OLDE with the Equal Employment Opportunity Commission. In February 1998

Hubbard offered to settle his claims against OLDE, stating that if no settlement

was reached, he would file a class action suit for racial discrimination in federal

district court in Kansas City, Kansas.   See Appellee’s App. at 2. On March 3,

1998, OLDE filed a petition in the Kansas City, Kansas federal district court

requesting an order to compel Hubbard to arbitrate his dispute with OLDE

pursuant to the employment and U-4 agreements.      See Appellant’s App. at 1. On

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March 12, 1998, Hubbard filed a class action suit in the federal district court for

the Western District of Missouri in Kansas City, Missouri.       See Appellee’s App.

at 5. As a defense to arbitration, Hubbard argued in a motion to dismiss OLDE’s

petition that his claims were not within the scope of the arbitration agreement

because they were filed as a class action and therefore fit within an express

exclusion to arbitration under both the NYSE and NASD rules.        1
                                                                        Finding that

NASD Code of Arbitration Procedure Rule 10301(d)(2) (and the correlative

NYSE rule) applied to exclude Hubbard’s claims from the scope of the arbitration

agreement, the district court denied OLDE’s petition for an order to compel

arbitration, treated Hubbard’s motion to dismiss as one for summary judgment,

and granted summary judgment in favor of Hubbard.            See Order, Appellant’s App.

at 46, 48.

                                    II. Issues raised

      Although OLDE’s brief initially states that the issue raised on appeal is

that “the district court erroneously failed to compel [defendant Julian] Hubbard

to abide by his agreement with OLDE to arbitrate any claims related to his

employment,” Appellant’s Br. at 2, it later emphasizes that the point of the appeal

1
  Because the rules are substantively identical, and the parties have focused on
the NASD rule, we will quote and apply only the NASD rules in this order and
judgment.

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is not “that the District Court should have interpreted the procedures to apply only

to a pending class action . . . [but] that the District Court should not have decided

the class-action dispute at all” under the second paragraph of Rule 10301(d)(2).

See id. at 10. By its emphasis, OLDE has all but waived its argument that the

court misinterpreted and misapplied Rule 10301(d). We will, however, rule on

that issue as well as addressing OLDE’s jurisdictional argument.

                                  III. Standard of review

       We review the denial of a motion to compel arbitration          de novo , applying

the same legal standards the district court employed.          See Armijo v. Prudential

Ins. Co. , 72 F.3d 793, 796 (10th Cir. 1995). Because the material facts are

undisputed, we also review the grant of summary judgment            de novo , determining

if the district court correctly applied the substantive law.       See Kaul v. Stephan ,

83 F.3d 1208, 1212 (10th Cir. 1996).

                                       IV. Discussion

       Rule 10301(d)(1) states:

       A claim submitted as a class action shall not be eligible for arbitration . . .

       Rule 10301(d)(2) states:

       Any claim filed by a member . . . of a putative or certified class
       action is also ineligible for arbitration . . . if the claim is
       encompassed by a putative or certified class action filed in federal or
       state court.

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       ....

       Disputes concerning whether a particular claim is encompassed by a
       putative or certified class action shall be referred by the Director of
       Arbitration to a panel of arbitrators in accordance with Rule 10302 or
       Rule 10308, as applicable. Either party    may elect instead to petition
       the court with jurisdiction over the putative or certified class action
       to resolve such disputes.

NASD Manual - Code of Arbitration Procedure Rule 10301(d) (emphasis added).

       In order to avoid application of Rule 10301(d)(1) to Hubbard’s claims,

OLDE argued in district court that it was “‘not seeking to compel arbitration of

a class action, but merely to force Hubbard to submit[] his claims, as agreed, to

arbitration.’”   See Order, Appellant’s App. at 46. Implicit in this argument is the

assumption that Hubbard’s claims did not qualify as “a claim submitted as a class

action.” Rule 10301(d)(1). The court could have properly concluded that

OLDE’s distinction was a false one (because, by filing suit, Hubbard “submitted”

his claims as a class action) and held that Hubbard’s claims were not eligible for

arbitration under Rule 10301(d)(1). Instead, the court accepted OLDE’s

characterization of Hubbard’s claims as individual claims and found that those

individual claims were encompassed within Hubbard’s newly filed class action.

The court then properly concluded that under Rule 10301(d)(2), Hubbard’s

individual claims were    also precluded.

       On appeal, OLDE focuses on the language in the second paragraph of

Rule 10301(d)(2), arguing that the court erred by answering a Rule 10301(d)(2)

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question that, in its view, could be answered only by the court with actual

jurisdiction over the class action or by an arbitration panel. OLDE cites no

authority for this proposition, relying solely on the express language of the rule.

       Hubbard objects that OLDE didn’t raise that issue in the trial court and has

thus waived its claim of error.    See Appellee’s Br. at 4. OLDE responds that it

had no opportunity to do so because the court recognized the issues that created

a dispute under Rule 10301(d)(2) and ruled on them at the same time.         See

Appellant’s Reply Br. at 5. OLDE ignores, however, that the court recognized the

issue precisely because OLDE characterized Hubbard’s claims as individual

claims instead of class claims--thus, OLDE implicitly invited the court to rule

on its argument. On this basis alone, we could refuse to review OLDE’s

jurisdictional complaints.    See Brown v. Presbyterian Healthcare Servs.     , 101 F.3d

1324, 1332 (10th Cir. 1996) (“[A]n appellant may not generally complain on

appeal of errors he has himself induced or invited.”). There are additional

reasons why we reject its arguments.

       The language that OLDE claims precluded the district court from making

a factual finding on whether Hubbard’s individual claims are encompassed

within his class claims is permissive; it also addresses the procedures the parties

may elect to follow and not the jurisdiction of a particular court.    See

Rule 10301(d)(2). At least one other court has found that this rule is procedural

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and not substantive, and can therefore be waived by the parties.     Cf. D.E. Frey &

Co., Inc. v. Wherry , 27 F. Supp. 2d 950, 951 (S.D. Tex. 1998). We hold that the

district court did not exceed its jurisdiction by making a ruling under

Rule 10301(d)(2) after being invited to do so by appellant. We also find, for the

reasons stated in the district court’s May 13, 1998 Memorandum and Order, that

the court properly denied OLDE’s petition to compel arbitration.

       The judgment of the United States District Court for the District of Kansas

is AFFIRMED.

                                                        Entered for the Court

                                                        Wade Brorby
                                                        Circuit Judge

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