11. On April 14, 1995, PaineWebber filed a parallel arbitration against Johnson with the NASD.
12. Also on April 14, 1995, PaineWebber asked the NYSE to stay its arbitration pending resolution of the NASD proceeding and to adjourn the NYSE proceeding pending resolution of its jurisdictional objections. These requests were denied on April 18, 1995.
13. On May 18, 1995, PaineWebber filed this action in this Court, stating claims under the Federal Arbitration Act, 9 U.S.C. §§ 1-14 (1970), and breach of contract.
14. On May 24, 1995, PaineWebber filed this Motion for Injunctive Relief, which was opposed by Johnson. Accordingly, a hearing was held on June 2, 1995. No evidence was introduced at this hearing; rather the parties relied on the attachments to the various pleadings in this action as well as several stipulations.
15. There are no material facts in controversy, accordingly, this Motion is ripe for final decision. Both parties agree that these disputes must be arbitrated; the only question is where.
The Federal Arbitration Act (FAA) gives federal courts the power to enforce arbitration agreements, including the power to consolidate ongoing actions. 9 U.S.C. § 4; Hartmann, 921 F.2d at 510; Gavlik Constr. Co. v. H.F. Campbell Co., 526 F.2d 777, 787-89 (3d Cir. 1975). Agreements to arbitrate particular issues in a particular forum are enforced as a matter of contract law. First Options of Chicago v. Kaplan, No. 94-560, 131 L. Ed. 2d 985, 115 S. Ct. 1920, 1995 U.S. LEXIS 3463 at *12 (May 22, 1995); PaineWebber, Inc. v. Fowler, 791 F. Supp. 821, 826 (D. Kan. 1992). If a district court finds that an issue falls within the scope of an arbitration agreement, the court must send the issue to arbitration without regard for the merits of the claim. Hartmann, 921 F.2d at 511. In Pennsylvania, the parties' intent to arbitrate a particular issue must be objectively revealed in the agreement before arbitration will be compelled. First Options, 131 L. Ed. 2d 985, 115 S. Ct. 1920, 1995 U.S. LEXIS 3463 at *12 (applying Pennsylvania law).
Here, we find that the two provisions in the Promissory Note clearly and unmistakably make the issues in this lawsuit, as well as the two underlying arbitrations, arbitrable in the NASD only. First, Johnson's claims all rely on the determination of whether he was terminated for cause. This is equally so for the defamation and business opportunities claims as the Promissory Note claim, because the first two claims are based on assertions that he was not susceptible for termination for cause. According to the Promissory Note, whether a termination was for cause can only be determined by an arbitration in the NASD.
Second, the Promissory Note's arbitration clause states that any action instituted as a result of a controversy arising out of the Promissory Note is subject to the exclusive jurisdiction of the NASD. This language includes all the issues in this action in that the language makes not only the Promissory Note issues arbitrable only in the NASD, but also all claims brought in the same action as the Promissory Note action.
Johnson argues that PaineWebber has waived its right to demand arbitration before the NASD because it has participated in the NYSE arbitration. It cites Executone Information Systems, Inc. v. Davis, 26 F.3d 1314 (5th Cir. 1994) in support of this argument. The Fifth Circuit held that a party can expand the original arbitration agreement by submitting extra issues to arbitration, and that that expansion will be binding. Id. at 1323. We find that PaineWebber's participation in the NYSE arbitration did not waive their right to demand the NASD arbitration because in most NYSE pleadings and all discovery, PaineWebber reserved its jurisdiction objections. Moreover, its Submission specifically incorporated its jurisdictional objections in its Answer and Counterclaim. Kaplan, 1995 U.S. LEXIS 3463 at *21 (arbitration agreement upheld and first arbitration award vacated, because first arbitration in non-contractual forum, even when parties went through entire arbitration).
Injunctive relief is appropriate when there is no remedy at law for the injury. Fowler, 791 F. Supp. at 826. The Third Circuit has held that a party suffers per se irreparable injury when it is forced to arbitrate claims it has not agreed to arbitrate. Hartmann, 921 F.2d at 515; Kaplan, 1995 U.S. LEXIS at *14-*15. Although Hartmann addressed the issue of whether a claim could be arbitrated at all, we find that this principle applies equally to the issue of whether an agreement for an exclusive forum for arbitration can be enforced.
For these reasons, we find that an order enjoining the NYSE arbitration is appropriate. We will, therefore, enjoin the NYSE arbitration, Order Johnson to withdraw his claims in the NYSE and refile them in the NASD.
An appropriate Order follows.
AND NOW, this day 5th of June, 1995, upon consideration of Plaintiff's Motion for Order Compelling Arbitration or in the alternative, For Consolidation of Injunctive Relief, responses thereto and a hearing on the matter, the Motion is hereby GRANTED in PART. Defendant is hereby Ordered to withdraw his claims against Plaintiff and its employees in the New York Stock Exchange and refile them in the National Association of Securities Dealers, as discussed in the attached Memorandum. The Motion is otherwise DENIED.
BY THE COURT:
J. CURTIS JOYNER, J.