Appeal from Order of the Court of Common Pleas, Civil Division, of York County, No. 86-SU-02235-07
Gregory S. Rubin, Paoli, for appellant.
Thomas M. Campbell, Harrisburg, for appellees.
Wieand, Beck and Cercone, JJ.
[ 365 Pa. Super. Page 41]
James R. Moose, Robert L. Beard, and James R. Rohrbaugh became employees of Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) in late 1983 and early 1984.*fn1
[ 365 Pa. Super. Page 42]
At the time of commencing employment, each employee executed a written employment agreement which contained, inter alia, a restrictive covenant by which the employee agreed that for a period of one year after termination of his employment he would not solicit any of Merrill Lynch's customers whom he had serviced or whose name he had learned during his employment by Merrill Lynch. These agreements also provided that all records of Merrill Lynch, including the names and addresses of its customers, were to remain the employer's property and could not be copied or duplicated without its permission. Moose, Beard, and Rohrbaugh were trained by Merrill Lynch as commodities brokers, and they worked in the Merrill Lynch Commodities Department for central Pennsylvania until May 30, 1986, when they resigned and joined E.F. Hutton, a competitor.
In June, 1986, Merrill Lynch filed a complaint in equity against its former employees and requested, inter alia, a temporary restraining order prohibiting them from competing with it in central Pennsylvania. The trial court, on June 9, 1986, entered an ex parte order restraining Merrill Lynch's former employees from soliciting or accepting any customers of the Merrill Lynch Commodities Department who had been serviced by the former employees or whose name had become known to them while in the employ of Merrill Lynch. On June 11, 1986, the court amended its prior order, again acting ex parte, to permit the former employees to "accept" business from Merrill Lynch's customers but enjoining them from "soliciting" business from such persons. The former employees responded to the complaint against them by filing a petition to compel Merrill Lynch to arbitrate the dispute in accordance with the bylaws of the New York Stock Exchange, to which Merrill Lynch had subscribed, and to stay further court proceedings until the arbitration proceedings were completed. This petition was consolidated with Merrill Lynch's motion for preliminary injunction, and both were heard by the trial court on June 19, 1986. At the conclusion thereof, the trial court entered an order directing arbitration and continuing
[ 365 Pa. Super. Page 43]
the preliminary injunction, as modified, until the arbitration proceedings had been concluded. Merrill Lynch appealed.*fn2
Merrill Lynch contends that the trial court erred when it ordered Merrill Lynch to submit to arbitration before the New York Stock Exchange (NYSE). It argues that (1) no express agreement to arbitrate existed in the employment contract between Merrill Lynch and its former employees, and (2) the dispute did not arise out of Merrill Lynch's business and therefore was not subject to the arbitration provisions of the New York Stock Exchange. We will examine these contentions carefully, for they present issues of first impression in the appellate courts of Pennsylvania.
"It is well settled . . . that voluntary arbitration is a matter of contract, and absent an agreement between the parties to arbitrate their disputes, they cannot be compelled to arbitrate." Gaslin, Inc. v. L.G.C. Exports, Inc., 334 Pa. Super. 132, 139, 482 A.2d 1117, 1121 (1984), citing Hoffman v. Gekoski, 250 Pa. Super. 49, 53, 378 A.2d 447, 448 (1977). In the instant case, the agreement to arbitrate appears in Merrill Lynch's agreement with the New York ...