Bank of the Commonwealth v. Hudspeth, 714 S.E.2d 566

Hudspeth was hired by Bank as VP–Investments and CFA sales manager in 2005; employment terminated in 2008.
Hudspeth sued Bank in 2008 for $225,000 in unpaid compensation; Bank demurred arguing contract ran with CFA; circuit court overruled demurrer in 2009.
Bank moved to stay and compel arbitration under FINRA Customer Code claiming Bank was a member firm and Hudspeth an associated person.
Bank contended Bank was a customer via broad definition and that BI Investments had provided investment services to Bank; Hudspeth was FINRA-registered through BI Investments.
Circuit court denied arbitration, finding Bank not a customer under the Customer Code and adopting a holistic, contextual approach to define customer; no express arbitration agreement found.
Bank appealed; Supreme Court held circuit court erred by denying arbitration and reversed, remanding for further proceedings consistent with the opinion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Bank is a 'customer' under the Customer Code	Hudspeth argues Bank is not a customer; no express agreement exists.	Bank argues Bank is a customer because it is not a broker/dealer and had investments services via BI Investments; thus arbitration is mandated.	Yes; Bank falls within ambiguous scope, and doubts favor arbitration.
Whether absence of an express arbitration agreement bars arbitration	Hudspeth contends there is no express arbitration agreement between the parties.	Bank contends the Customer Code itself provides a written agreement to arbitrate.	Arbitration binding under FAA via Customer Code; no express contract required.
Whether the presumption of arbitrability applies and resolves in favor of arbitration	Hudspeth asserts ambiguities should be resolved against arbitration.	Bank relies on broad, inclusive reading to trigger arbitration.	Any ambiguity should be resolved in favor of arbitration; circuit court erred.

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (statutory arbitrability under FAA; governing law for arbitration scope)
Volt Info. Sciences, Inc. v. Bd. of Trs. of Leland Stanford, Jr. Univ., 489 U.S. 468 (U.S. 1989) (federal policy favoring arbitration; interpret arbitration broadly)
AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643 (U.S. 1986) (presumption of arbitrability; doubts resolved in favor of coverage)
Warrior & Gulf Navigation Co. v. United Steelworkers, 363 U.S. 574 (U.S. 1960) (strong presumption of arbitrability; only forceful evidence excludes coverage)
Washington Square Sec., Inc. v. Aune, 385 F.3d 432 (4th Cir. 2004) (nonsignatories can enforce arbitration; scope of arbitration clause under FAA)
Fleet Boston Robertson Stephens, Inc. v. Innovex, Inc., 264 F.3d 770 (8th Cir. 2001) (customer definition under FINRA rules; investors as customers when receiving services)
Multi-Fin. Sec. Corp. v. King, 386 F.3d 1364 (11th Cir. 2004) (customer defined broadly; not a broker/dealer suffices for customer status)
First Montauk Sec. Corp. v. Four Mile Ranch Dev. Co., 65 F. Supp. 2d 1371 (S.D. Fla. 1999) (customer code contains no limitations beyond exclusion of brokers/dealers)
Oppenheimer & Co. v. Neidhardt, 56 F.3d 352 (2d Cir. 1995) (investors harmed by broker can be customers of the firm)