David Fiala, Ltd. v. Harrison
860 N.W.2d 391
Neb.2015Background
- In 2006 William Gross (South Dakota resident) signed an employment/associated person agreement with David Fiala, Ltd. (FuturesOne), which contained section 6.B., an arbitration clause covering: “any dispute, claim, or controversy that may arise between themselves or a customer or any other person that is subject to arbitration under the rules, constitution or by‑laws of the CFTC or NFA or any other self‑regulatory organization with which [Gross] registers, from time to time.”
- In 2012 FuturesOne sued Gross in Nebraska state court asserting breach of contract claims (money owed and violating a noncompete), seeking damages (Gross allegedly owed $7,000).
- Gross moved to compel arbitration under the agreement; the district court denied the motion after interpreting the clause to require arbitration only for disputes that are the sort subject to arbitration under CFTC/NFA (and concluding these claims were not such disputes).
- The district court relied in part on CFTC and NFA website materials to determine the scope of disputes subject to arbitration under those organizations.
- Gross appealed, arguing the arbitration clause was broader (or at least ambiguous) and that the court erred by not treating the clause as ambiguous and by consulting matters outside the record.
- The Nebraska Supreme Court held the clause is ambiguous as to what the modifying phrase (“that is subject to arbitration…”) refers to and reversed and remanded for the district court to consider extrinsic evidence and determine arbitrability; it also held the Federal Arbitration Act (FAA) governs the agreement (preempting Nebraska’s notice requirement under the UAA).
Issues
| Issue | Plaintiff's Argument (Gross) | Defendant's Argument (FuturesOne) | Held |
|---|---|---|---|
| Whether arbitration clause is ambiguous and requires extrinsic evidence | Clause should be read to make disputes between the parties arbitrable; phrase modifies "any other person" so disputes between parties are covered | Phrase modifies "any dispute, claim, or controversy," so only disputes that are of the type subject to CFTC/NFA arbitration are covered | Clause is ambiguous; reasonable competing readings exist; remand for extrinsic evidence and factual resolution |
| Whether FAA or Nebraska UAA governs (impact of state notice requirement) | FAA governs because the contract involves interstate commerce; Nebraska notice requirement does not void the clause | Argued district court could have denied enforcement under Nebraska UAA notice requirement | FAA governs (agreement involves interstate commerce); UAA notice requirement preempted; defect under UAA does not void clause |
| Whether district court erred by consulting external (web) materials / matters outside record | Court should have recognized ambiguity and considered appropriate extrinsic evidence; reliance on web material did not resolve ambiguity | Court used CFTC/NFA materials to determine types of disputes those bodies arbitrate and thus whether the instant claims fit | Court erred in failing to recognize ambiguity; use of web materials did not resolve the core ambiguity; remand required to consider proper extrinsic evidence |
Key Cases Cited
- Kremer v. Rural Community Ins. Co., 280 Neb. 591 (Neb. 2010) (arbitrability presents a question of law)
- Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 279 Neb. 615 (Neb. 2010) (determination of contract ambiguity; extrinsic evidence when ambiguous)
- Aramark Uniform & Career Apparel v. Hunan, Inc., 276 Neb. 700 (Neb. 2008) (FAA preemption of state notice requirement)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitration agreements enforceable according to their terms under 9 U.S.C. § 2)
- Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (U.S. 1996) (FAA applies where contract involves interstate commerce)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (distinction when parties delegate gateway arbitrability issues to arbitrator)