The opinion of the court was delivered by: Lee, District Judge.
Presently before this Court is a Motion by defendant, Shearson Lehman
Hutton, Inc., (Shearson), to Compel Arbitration*fn1 of the claims of
plaintiff, William G. Kaliden, Jr., (Kaliden).
This case arises out of Kaliden's claim that Shearson terminated his
employment because of his age and non-job-related hearing impairment in
violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621
et seq. (ADEA), and the Pennsylvania Human Relations Act, 43 P.S. §
951 et seq., (PHRA).
On November 15, 1984, Kaliden was hired by Shearson as Vice President
and Regional Sales Director for its mid-Atlantic Region. At the time of
his hire, Kaliden completed an application for employment in which he
that any controversy arising out of or in connection
with my compensation, employment or termination of
employment shall be submitted to arbitration before
the National Association of Securities Dealers, Inc.,
the New York Stock Exchange, Inc., or the American
Stock Exchange, Inc., and be resolved in accordance
with the rules in effect of such entities.
On January 16, 1985, in order to retain his existing securities
registration while employed by Shearson, Kaliden executed a Uniform
Application for Securities Industry Registration or Transfer, commonly
known as Form U-4. On January 16, 1987, Kaliden became a registered
general securities representative of the New York Stock Exchange (NYSE),
after having successfully obtained his Series 7 licensure, and,
completing an additional Form U-4. Under the terms of each application,
to arbitrate any dispute, claim or controversy that
may arise between me and my firm . . . that is
required to be arbitrated under the rules,
constitution or by-laws of the organizations with
which I register . . .
any controversy between a registered representative
and any member or member organization arising out of
the employment or termination of employment of such
registered representative by and with such member or
member organization shall be settled by arbitration,
at the instance of any such party, in accordance with
the arbitration procedure described elsewhere in these
Shearson terminated Kaliden's employment on November 10, 1987, claiming
that such termination was part of a corporate-wide staff and cost
reduction efforts. On September 15, 1989, Kaliden commenced the present
action, claiming that his termination was based upon his age and
non-job-related hearing impairment.
Shearson moved for leave to amend its answer on June 19, 1990, to add
the affirmative defense that Kaliden's claims were barred because of his
agreement to submit claims arising out of his employment with Shearson to
arbitration. This Court granted Shearson's motion and the additional
defense was incorporated. Despite demands made by Shearson that Kaliden
submit all of his claims in the lawsuit to arbitration, Kaliden refused
to place his claims before an arbitration tribunal.
Shearson now moves this Court to Compel arbitration of the aforesaid
claims. Because of the strong federal policy favoring arbitration, and
the holding in Gilmer v. interstate/Johnson Lane Corporation, 500 US.
___, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), such motion shall be
The Federal Arbitration Act (Act), 9 U.S.C. § 1 et seq., was
intended to "revers[e] centuries of judicial hostility to arbitrate
agreements" by "plac[ing] arbitration agreements upon the same footing as
other contracts." Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-511, 94
S.Ct. 2449, 2453, 41 L.Ed.2d 270 (1974). The Act provides that
arbitration agreements "shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or equity for the revocation of
any contract." 9 U.S.C. § 2. The express mandate of the Act also
provides that a court must stay its proceedings if it is satisfied that an
issue before it is subject to valid written arbitration agreement,
9 U.S.C. § 3; and it authorizes a federal district court to direct
the parties to proceed to arbitration in those instances where it is
clear that an agreement to arbitrate has been made and there has been a
"failure, neglect or refusal" to comply with the agreement.
9 U.S.C. § 4.
The United States Supreme Court has made clear that the Act establishes
a federal policy favoring arbitration and requiring that such provisions
be rigorously enforced. See Shearson/American Express, Inc. v. McMahon,
482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987) (quoting
Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1,
29, 103 S.Ct. 927, 943, 74 L.Ed.2d 765 (1983) and Dean Witter Reynolds,
Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 1242, 84 L.Ed.2d 158
(1985)). In Shearson/American Express, the Supreme Court held further
that the duty to enforce arbitration agreements is not diminished when a
party bound by the agreement raises a claim founded on statutory rights.
This expanded the Act to require that certain claims brought under
Section 10(b) of the Securities Exchange Act and under RICO be subject
to arbitration. The Supreme Court has also held enforceable ...