Court Opinion

ID: 9648883
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:37:20.884963+00
Date Added: 2024-06-11T09:08:15.355646
License: Public Domain

Ray Thornton, Justice, dissenting. I respectfully dissent from the majority’s conclusion that arbitration is not required. In my view, the agreement entered into by Mr. Lewis and the Llama Company, the U-4, clearly subjects this case to arbitration. The NASD Code of Arbitration Procedure 10201(a) applies to any dispute between or among members and/ or associated person(s) arising out of the employment of a person associated with such member. The code further provides that such dispute shaE be arbitrated under this code, at the instance of “a person associated with a member against a person associated with a member.”1  The Llama Company, a member of the NASD, was originaEy joined as a defendant in this case. The Llama Company was the employer of Mr. Lewis, and was the only party to the litigation who was providing employment compensation to Mr. Lewis for providing services to, or at the direction of, the Llama Company throughout the time of this dispute. Mr. Lewis, as an employee of the Llama Company, was an associated person with the NASD member, the Llama Company, and executed an agreement with his employer (the U-4 agreement) to arbitrate any dispute between himself and his firm “or any other person” as described in 10201(a). The U-4 agreement is an agreement to arbitrate.2 Alice Walton, the President of the Llama Company, was also a person associated with a member, the Llama Company, and had also executed a U-4 agreement to arbitrate any disputes arising between Ms. Walton and the Llama Company or a person associated with the Llama Company. This dispute relates to the employment of Mr. Lewis, and the appropriate compensation for services provided by him at the direction of his employer, for the benefit of a joint venture, which was closely associated with his employer, the Llama Company. The majority holds that the dispute does not arise out of Mr. Lewis’s employment with a member. This conclusion is not supported by the pleadings, stipulations of fact, or affidavits presented in this case. Mr. Lewis was at all times relevant to this suit an employee of the Llama Company. The Llama Company is an NASD member. The Llama Company and all of its sister companies are controlled by Alice Walton. Alice Walton urged Mr. Lewis to perform services for the joint venture. While providing services to this joint venture, Mr. Lewis continued to work for Alice Walton’s Llama Company. All work on the joint venture performed by Mr. Lewis was completed from his Fayetteville Llama Company office. Moreover, the claim asserted by Mr. Lewis was that Alice Walton, and two other defendants, Llama Capital, and/or Llama Mortgage, converted the money in dispute by depositing it with the Llama Company, the NASD member, and Mr. Lewis’s employer. The heart of this dispute involves activities that took place during Mr. Lewis’s tenure at the Llama Company. Specifically, it involves events that were the direct result of a work assignment given to Mr. Lewis by Alice Walton. Accordingly, all conditions set forth in the unambiguous agreement to arbitrate signed by Mr. Lewis with Alice- Walton’s Llama Company should be enforced. Alice Walton, as a person associated with the NASD member, has the right to demand arbitration. Mr. Lewis sought to avoid this result by dismissing the Llama Company from the litigation on the day before the hearing, but that does not bar Alice Walton’s rights. See American Ins. Co. v. Cazort, 316 Ark. 31, 871 S.W.2d 575 (1994) (holding that one should not be allowed to circumvent arbitration by nonsuiting a party that would subject the matter to arbitration). In my view, Llama Capital and Llama Mortgage have a status interwoven with that of Atice Walton, and arbitration addressing the merits of the compensation issue will resolve any remaining issues between Mr. Lewis and these two corporations. If not joined in arbitration of the underlying dispute, any separate action against them should be stayed pending resolution of the arbitration dispute. The disposition of this case by submitting it to arbitration is required by the plain and unambiguous language of the U-4 agreements and the Code of Arbitration Procedure. It must also be noted that the position taken by the majority opinion today is contrary to the overwhelming public policy favoring arbitration. The United States Supreme Court in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985), articulated its position on the use of arbitration in cases such as the present case subject to the Federal Arbitration Act. The Court held that: the Arbitration Act provides that written agreements to arbitrate controversies arising out of an existing contract “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. By its terms, the Act leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed. §§ 3, 4. Id. The Court also noted that “the Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985); See also Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983); Morgan v. Smith Barney, Harris Upham & Co., 729 F.2d 1163 (8th Cir. 1984). The language used by the Court seems clear that in a case that is governed by the Federal Arbitration Act there is strong public policy in favor of arbitration. Arkansas has followed the federal courts’ lead and also expressed a preference for resolving matters through arbitration. In Anthony v. Kaplan, 324 Ark. 52, 918 S.W.2d 174 (1996), we explained the advantages to arbitration, noting that as a matter of public policy, arbitration is strongly favored, and is looked upon with approval by courts as a less expensive and more expeditious means of settling litigation and relieving docket congestion. Lancaster v. West, 319 Ark. 293, 891 S.W.2d 357 (1995); Estate of Sandefur v. Greenway, 898 S.W.2d 667 (Mo. App. W.D. 1995); Anthony v. Kaplan, 324 Ark. 52, 918 S.W.2d 174 (1996). We have also foEowed the federal courts view that any doubts and ambiguities of what matters are subject to arbitration should be resolved in favor of arbitration. See Wessell Bros. v. Crossett Sch. Dist. No. 52, 287 Ark. 415, 701 S.W.2d 99 (1985). Thus, I am dismayed that the majority has faded to acknowledge that the U-4 signed by Mr. Lewis clearly subjects him to arbitration at the demand of Ms. Walton, who has also signed a U-4 agreement. I am also concerned that the majority has ignored the strong public policy favoring arbitration as consistently announced by this court and federal courts. For those reasons, I respectfuEy must dissent. I am authorized to state that Corbin and Smith, JJ., join in this dissent.   Any dispute, claim, or controversy eligible for submission under the Rule 10100 Series between or among members and/or associated persons, and/or certain others, arising in connection with the business of such member(s) or in connection with the activities of such associated person(s), or arising out of the employment or termination of employment of such associated person(s) with such member, shall be arbitrated under this code, at the instance of: (1) a member against another member; (2) a member against a person associated with a member or a person associated with a member against a member; and (3) a person associated with a member against a person associated with a member.    I agree to arbitrate any dispute, claim or controversy that may arise between me, and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the organization indicated in Item 10 [the NASD bylaws including the Code of Arbitration Procedure].