Painewebber Incorporated v. Michael J. Bybyk and Joyce O. Bybyk

pensions defined in Section in- retirement Disability

cluding the Total Retirement Pen- INCORPORATED, PAINEWEBBER qualification Because the criteria for sion. Petitioner-Appellant, depending on the individual varies retirement sought by applicant, pension the drafters Joyce Bybyk, Michael J. BYBYK and O. reasonably employed the term “other re- Respondents-Appellees. in order to reach all of quirements” requirements different of the various retire- No. Docket 94-9246. sup- pensions. Our view is further United States Court of Appeals, ported by fact that Nowak offers no Second Circuit. interpretation viable alternative phrase. Argued Oct. 1995. Because we find the terms of 1973 Plan April Decided 1996. unambiguous,

to be we need not reach No- arguments urging wak’s us to contra

proferentwm other rules of construction alleged ambiguity against

to resolve the clear, unambigu-

defendants. Based on the Plan, ineligi-

ous terms the 1973 Nowak is disability pension,

ble for the retirement properly granted summary

the district court

judgment in favor of the defendants.

III. Conclusion

To summarize: jurisdictional

1. allega- Because Nowak’s

tions were neither immaterial nor insubstan-

tial, we construe the district court’s dismissal pension

of his claim for benefits under pursuant

ERISA as a dismissal on the merits 12(b)(6).

to Rule

2. The district court acted within its dis-

cretion, 1367(c)(3), pursuant § to 28 U.S.C.

exercising jurisdiction supplemental over No-

wak’s related state law claims. clearly unambig-

3. Because the Plan

uously ineligible rendered Nowak dis-

ability pension, summary judgment was

properly granted in favor of the defendants.

Accordingly, judgment of the district

court is affirmed.

1195 Fried, Frank, Steingart, Harris,

Bonnie Jacobson, (Brad City Shriver & New York S. Maistrow, Maistrow, Meyers & New York City, brief), on the for Petitioner-Appellant Incorporated. PaineWebber Lawlor, City, NY, John E. Garden Respondents-Appellees Bybyk Michael J. Joyce Bybyk. 0. Fenster, Orriek, Lawrence E. Herrington Sutcliffe, City, New York for Securities Industry Association as Amicus Curiae. Goldberg, Lipner, Stuart C. Deutseh & NY, City, Garden for Public Investors Arbi- tration Bar Association as Amicus Curiae. GRAAFEILAND, Before: VAN JACOBS PARKER, Judges. Circuit JACOBS, Judge: Circuit respondents-appellees Joyce and Bybyk opened Michael an investment ac- petitioner-appellant count with PaineWebber Incorporated. par- On March ties executed a client which con- tained an arbitration clause. That clause (which retrospective prospec- had as well as effect) provided tive for the arbitration of “any and all controversies which arise” concerning agree- the account. The client provided that ment further all claims were to be arbitrated accordance with the “rules of organization convening panel.” 24,1993, September Bybyks On filed a statement of claim with the National Associa- (the “NASD”) tion of Securities Dealers al- leging, among things, other PaineWebber’s supervise failure to their account and breach fiduciary duty. PaineWebber then com- menced an action in New York stay permanently Court to arbitration of the particular claims arose out invest- prior September on ments made ground those claims were time- six-year barred limitations Act, sought the Federal Arbitration also PaineWebber NASD Code. panel con- conducted before an arbitration Bybyks proceeding from with enjoin the Exchange, before the NASD the New York Stock pending vened the arbitration punitive attorneys’ fees or or the National Association Securi- seeking and from Dealers, subsequently re- I ties Inc. also select damages. The exchange’s court. national securities arbi- the suit to federal moved upon forum which tration for the District Court The United States legally required to arbitrate the controver- J.) York, (Duffy, District of New Southern me, including, applicable, sies with where to dismiss the granted Bybyks’ motion Making Municipal Rule Securities ground that the arbitration complaint on the governed Board. arbitration shall be Such for arbitration the issue agreement reserved convening organization rules of the appeal, a claim is arbitrable. On of whether panel_ The award of the arbitra- principle that the invokes PaineWebber tors, them, majority оr of the of shall be determine court —not an arbitrator —must final, judgment upon and the award ren- in accordance a claim is arbitrable whether may any be entered in court of dered agree- an with the jurisdiction. competent conclude, however, that the arbi- ment. We agreement parties’ tration evinces the intent Agreement a choice of The also contains the arbi- to submit issues of to provides agree- which that “[t]his any re- trators. The effect that timeliness ment and its enforcement shall be construed quirement Bybyks’ claims must has on the governed by the and laws State by the arbitrator therefore be determined New York.” PaineWebber drafted the Accordingly, we af- rather than court. of the com- firm the district court’s dismissal 16, 1993, July Bybyks filed a uni- On plaint. agreement form submission with the NASD to initiate arbitration with PaineWebber. On

BACKGROUND 24,1993, September Bybyks a filed state- against Giving Appeal. A. To This ment of claim with the NASD Paine- Events Rise alleges, Webber. The statement claim July, Bybyks opened in- an among things, rec- PaineWebber vestment account with PaineWebber. On ommended and executed unsuitable transac- 14, 1990, March that ac- connection with tions, account, supervise failed to count, agree- Bybyks executed a client fiduciary duty Bybyks. breached its to the (the “Agreement”) which recites in rel- part еvant as follows: promptly spe a PaineWebber commenced (cid:127) binding final and on the Arbitration is proceeding cial in New York Court parties. pursuant to N.Y.Civ.Prac. L. & R. 7502 and (McKinney Supp.1996), seeking (cid:127) 1980 & waiving right their to stay permanent respect of arbitration with court, including seek remedies in arising to those claims from investments right jury trial. 24, 1993, years prior September made six Bybyks the date the filed their statement of by carrying agree, I an account for alleged claim. that section 15 agrees, any me PaineWebber those claims Code rendered NASD controversies which arise between me untimely. Section 15 states as follows: account, аny concerning and PaineWebber claim, transaction, construction, dispute, controversy or dispute or the No performance, any eligible for submission to arbitration under or breach of this or oth- (6) agreement, years elapsed prior, er this Code where have whether entered into six hereof, giving rise to subsequent on or from the occurrence or event to the date shall controversy. dispute, or Any arbi- the act or claim determined arbitration. applicable not extend tration under this shall be held This section shall limitation, apply to nor shall it pursuant under and to and be statutes

H97 Furthermore, any case which is directed to arbitration under New York attor- competent jurisdiction. neys’ a court of fees not be awarded in arbitra- tion unless the arbitration ex- Dealers, National Association Securities pressly such affords relief. N.Y.Civ.Prac. Procedure, of Arbitration Code NASD 1980). (McKinney L. & R. 7513 ¶3715 (1994). Manual PaineWebber also enjoin sought any arbitration of claims for Bybyks argue punitive damages attorneys’ or fees. The evinces the “clear and unmistakable” Bybyks proceeding removed this to federal intent to arbitrate arbitrability, issues of district court and filed a motion to dismiss Options Chicago, First Kaplan, Inc. ‍​​​​​‌​‌‌​​‌​​‌‌‌‌‌‌‌​‌​‌​​‌‌‌‌​​​‌‌​‌‌‌​​​‌‌‌‌‌‍v. complaint pursuant to Federal Rule of -, 12(b)(6) ground Procedure on Civil and that the district Agreement expressly ques- reserved all properly court therefore allowed the arbitra including tions of tors decide whether section 15 of the Code issues of timeliness. alleged bars those claims untimely. to be Furthermore, argue that pithy

In a under Endorsement Order dated Octo- Conticommodity Philipp Servs. Inc. v. Judge Duffy ber ruled as follows: Lion, (2d Cir.1980), 613 F.2d Plaintiff seeks to forestall validity of a time-bar defense such as section by contending that the NASD statute of 15 is an issue for arbitration. respect With precludes recovery. limitations This obvi- to argument PaineWebber’s that New York ously question is a for the arbitrators. See recovеry fees, law bars attorneys’ By 2;§ 9 see also U.S.C. Shear son/American byks, relying on Mastrobuono v. Shearson McMahon, 220, Express, Inc. v. 482 U.S. Hutton, Inc., U.S. -, Lehman (1987). 2332, 107 S.Ct. 96 L.Ed.2d 185 1212, 1217, 115 S.Ct. 131 L.Ed.2d 76 granted. motion to dismiss is argue right that their substantive under the Federal Arbitration Act to enforce the arbi B. The Appeal. Parties’ Contentions on tration Agree is unaffected appeal, argues On PaineWebber that the ment’s choice of New York law. Because the court —not the arbitrator —decides whether parties’ intent to refer all issues to arbitra period a claim falls within the of limitations respected, tion must be contend set forth at section 15 of the NASD Code. correctly the district court dismissed starts from the well-estab stay PaineWebber’s action to arbitration. premise lished the courts determine scope agreement— of the arbitration DISCUSSION may may what issues not be arbitrated. PaineWebber,

According to the court in so This Court de novo a reviews dis doing respect must grant choice that trict court’s of a motion to dismiss interpretation issues construction and pursuant to Federal Rule of Civil Procedure 12(b)(6). Citibank, controlled York including New au Corp., N.A v. K-H 968 (and (2d thority 1489, Cir.1992). under New York law consistent F.2d 1494 When an circuits) with the appeal law of several that section comes before this Court on a motion dismiss, 15 of eligi the NASD Code is a substantive accept we as true the factual bility requirement allegations that the court complaint. Square must de D Co. v. Bureau, Inc., termine is directing Niagara satisfied before a claim 476 Frontier Tariff Pierce, 409, 411, 1922, to arbitration. Lynch, 1923-24, See Merrill U.S. 106 S.Ct. 90 Smith, DeChaine, (1986); Fenner & Inc. v. 194 L.Ed.2d 413 Bankers Trust Co. (1st 472, Rhoades, (2d 1096, Dep’t), Cir.1988), A.D.2d 600 N.Y.S.2d 459 859 F.2d 1098 denied, 657, appeal denied, 1007, 1642, 604 cert. 490 109 S.Ct. U.S. 556, (1993); PaineWebber, (1989). 1643, N.E.2d considering 104 L.Ed.2d158 In Hartmann, motions, Inc. v. 921 F.2d 513-14 such complaint must read the we (3rd. Cir.1990) (holding liberally, drawing the NASD inferences favor of eligibility requirement Rhodes, pleader. Code’s is a substan Scheuer v. 416 U.S. arbitrated). 232, 236, 1683, 1686, tive limit on claims 94 S.Ct. 40 L.Ed.2d 90 (1974). Moreover, Technologies, T 475 U.S. at we will reverse a district AT & Sons, 1418; complaint Wiley “unless it cоurt’s dismissal of the see also John & S.Ct. 546-47, certainty plaintiff Livingston, that a can appears to Inc. v. 376 U.S. entitling 909, 913-13, him prove no set of facts to relief.” S.Ct.

Ryder Energy Corp. words, v. Merrill Distribution must the court determine Commodities, Inc., Lynch 748 F.2d given scope whether a issue falls within the (2d Cir.1984). parties’ undertaking accept arbitra- tion. Arbitrability. A. said, That themselves a matter of contract Arbitration “is arbitrator, court, provide that not the required and a cannot be to submit to an shall determine whether issue is arbitra any dispute which he has not analy ble. In such cases the contract-based Technologies, agreed to submit.” AT T so & and AT T sis set forth Prima Paint Amer Inc. v. Communications Workеrs of Technologies applies, ‍​​​​​‌​‌‌​​‌​​‌‌‌‌‌‌‌​‌​‌​​‌‌‌‌​​​‌‌​‌‌‌​​​‌‌‌‌‌‍compels still but ica, 475 U.S. opposite result. theAs Court has (1986) (quoting 89 L.Ed.2d 648 United Steel recently stated: workers America v. Warrior & Navi Gulf as the of the merits of a Just gation 363 U.S. depends upon dispute whether the (I960)). 1352-53, 4 L.Ed.2d 1409 The Feder agreed dispute, to arbitrate that so the “body al Act of federal creates a question primary power “who has arbitrability, applicable substantive law arbitrability” upon decide turns what the agreement within the cover parties agreed about that matter. Did the age of the Act.” Moses H. Cone Memorial parties agree to submit Hosp. Mercury Corp., Constr. question to arbitration? (1983). 927, 24, 941, itself 74 103 S.Ct. Any agreement affecting arbitration inter — at -, Options, First 115 аt U.S. S.Ct. issue, commerce, at state such as the one is (citations added). emphasis 1923 and omitted Id.; subject §§ to the Act. see 9 1 & U.S.C. question posed Options The in First is the (1988). 2 question presented appeal. in this to section 4 Pursuant of the Federal Options answering First assists in Act, Arbitration the court matter, question the it an initial frames. As parties, upon being shall and sat hear the interpreting agreement in an arbitration we making agreement isfied that the apply principles govern the state law comply arbitration or the failure to there ordinary the formation of contracts. Id. at issue, in with is not the court shall make an -, 1924; 115 S.Ct. at see also Mastrobuo dirеcting parties proceed order the to —no, at at 1217. U.S. S.Ct. in arbitration accordance with the terms of agreement ambigu Where the arbitration agreement. the ous, policy the Federal Arbitration Act’s fa (1988). § voring requires “any 9 U.S.C. role of the courts arbitration doubts reviewing subject concerning in scope matters the of arbitrable issues therefore, determining in is limited to two is- should be resolved favor of arbitration.” i) Cone, 24-25, agreement sues: whether a valid or obli- Moses H. 460 U.S. at 103 S.Ct. ii) exists, However, gation to arbitrate and whether one at 941. the where arbitration failed, neglected ambiguity to the has contains an as to who arbitrate, pаrt. eligibility, presumption or refused to or in Act’s whole determines Corp. Mfg. favoring Prima Paint v. so that the Flood & Conklin is reversed Co., 395, 403-04, ordinarily question. court will decide the U.S. 1805-06, Thus, at-, Options, 18 L.Ed.2d 1270 First 115 S.Ct. at Thus, parties clearly Options “[u]nless the and unmistak- 1924. under First and AT & ably otherwise, provide Technologies, given question of T of a parties agreed question whether the is to is a for the court unless there arbitrate issue by court, be decided not the arbitrator.” is “clear and unmistakable” evidence from applies at This agreement, as construed 1219. rule here: draft, in- did not edit or parties Agree- state alter the the relevant ment; they question opportunity shall nor did hаve the tended that specific provision We influence the the arbitrator. Id. the NASD be decided (purportedly incorporated Code into appeal. in this the con- that standard reference) governs tract that now their Parties’ Intent in the Therefore, B. The as Evidenced claim in arbitration. to the extent ambiguous PaineWebber “drafted an they document ... cannot now claim the Agreement specifically benefit of in construing any the doubt” ambi- it is to be construed in accordance states that guities. mind, principles Id. With these York law. New York with New follows language Agreement we look to that, interpreting law rule a “[i]n commоn parties’ order to discern intent. contract, governs,” parties intent Several in the evi- be con “[a] and therefore contract should dence the intent give meaning as to full effect to arbitrate all is- strued so sues, including arbitrability:' provisions.” Express to all of its American Uniroyal, (a) Bank 164 A.D.2d Ltd. “[A]ny controversies ... con- (1st 1990), Dep’t any account, ceming transaction, dis- . denied, appeal 569 N.Y.S.2d construction, pute performance, or the (1991); Tigue N.E.2d 52 also agree- or breach this or Ins. Commercial ... shall be determined arbi- Life 1995) (“[T]he (4th Dep’t court must as tration. ...” intent of the from the certain the (b) waiving right are “[T]he their plain meaning language employed.”). to seek remedies court....” contract, interpreting “[w]ords (c) “[A]ny arbitration agree- under this given meaning. phrases plain their ment shall be held under and pursuant unambiguous agree an Rather than rewrite governed by to and be the Federal ment, mean plain a court should enforce the Act....” agreement.” Express, ing of that American (d) “[Arbitration shall be (cita 164 A.D.2d 562 N.Y.S.2d at organization convening rules of the omitted); Pope, 250 tions see also Heller v. panel....” (1928). 132, 135, 164 Further N.Y. N.E. 881 meaning provisions The of the first of these more, parties can be where “the intent of the plain any is indeed: and all are controversies agreement, from the dеtermined face of the by to be determined arbitration. The word- law,” interpretation is a and a matter of inclusive, ing categorical, is unconditional and turning interpretation on that thus claim “any The words and all” elas- unlimited. by summary judgment by or be determined enough encompass disputes tic to over Express, dismissal. American 164 A.D.2d at timely a claim is a whether whether 277, 614; Tigue, at 631 562 N.Y.S.2d see also within, scope claim is of arbitration. That at 974. N.Y.S.2d provision expressly category includes the of clear, disputes regarding As Mastrobuono makes construction of interpretation Agreement incorporates common-law rule of contract as whether it —such lan ambiguous that “a court should construe the NASD Code. The invite us guage provision that an against the interest of the construe the second listed as applies express in interpreting parties’ right drafted it” waiver to contest — at -, agreements. at in court or to U.S. 115 S.Ct. seek remedies Billet, 1219; untimely being preventing also claim from 64 N.Y.2d an Graff least, arbitration; 733, 734-35, very N.E.2d at the 487 N.Y.S.2d submitted to a purpose provision opportunity is “to that is a missed for of this rule seeking protect party who draftsman to avoid such a waiver. did not choose succeeding provisions to- language from an unintended or unfair re We read the two — Mastrobuonо, at -, gether that specifying sult.” as the rules U.S. by panel nifying parties’ intent to be bound state convening the arbitration organization arbitration). governing the ex- the arbitration itself to rules govern shall are consistent with the those rules tent that on Luckie is self- PaineWebber’s reliance Act. Federal Luckie, defeating. deciding the New grant power to the parties’ broad Appeals York Court of relied on the Seventh unqualified by any language is arbitrators Mastrohuono, decision in which was Circuit’s (with eligibility carving out substantive issues subsequently Supreme overturned timeliness) specific or without reference Luckie, N.Y.2d at Court. See the courts. PaineWebber for resolution 647 N.E.2d 1308. In Mas presumption to overcome the thus unable tirobuono, rejected Supreme Court in the first of the above-listed established argument that here and PaineWebber makes “[a]ny that and all controversies” argument that the New York Court of objective reading arbitrated. An are to be — Appeals advanced Luckie. U.S. at therefore, Agreement, leads us to con- -, agree at 1219. The client arbitrate, clude that the intended to Mastrohuono, like the one at issue arbitrability. way, Put another no issues of here, provision included a choice-of-law that six-year seeking a limitation on draftsman specified that was to the entire scope of would craft this York an arbitra New objective. If language accomplish that provision specified tion contro untimely, Bybyks’ claim is PaineWebber’s versy was to be arbitrated in accordance remedy the arbitration action on is to defend with the rules of the NASD. Id. at- enjoin grounds, not to timeliness - -, brokerage 115 S.Ct. at 1216-17. The altogether. provi house contended that the choice of law argues altogether an dif for parties’ sion evidenced the intent exclude reading It con ferent punitive damages from because the contractual choice of New tends that punitive damages аrbitrators not award signifies York intent to be law under New York law. ‍​​​​​‌​‌‌​​‌​​‌‌‌‌‌‌‌​‌​‌​​‌‌‌‌​​​‌‌​‌‌‌​​​‌‌‌‌‌‍The Court imposed bound substantive limitations disagreed, and held a choice law power York courts on the of an New more, provision, impute without cannot a arbitrator to determine issues of arbitrabili specific puni intent of the to exclude ty. arguing, In so PaineWebber relies on at -, damages. tive Id. 115 S.Ct. at 1219. Barney, Upham Smith Harris & Co. Instead, provision “may a rea choice-of-law Luckie, sonably merely be read as substitute denied, cert. N.E.2d analysis the conflict-of-laws that otherwise -, would what law to to dis determine Appeals which the New York Court of held putes arising out the contractual relаtion York the New choice t ship.” Id. at 115 S.Ct. a 1217. effectively a similar client incor Therefore, provision, a choice-of-law when porated limitations of York substantive New accompanied by provision an arbitration such arbitrability punitive damages. law on the of Agreement, in “encompass[es] as the sub generally Since York reserves is New principles that stantive New York courts sues of timeliness and for the apply, special would but not ... limit rules courts, County Rockland v. Primiano of authority ing the the arbitrators.” Id. at of Co., 1, 6-7, Constr. added). (emphasis 115 S.Ct. at 1219 478, 480-81, (1980), 409 N.E.2d 951 Paine- Mastrohuono, squarely point, supports on argues Webber that the choiсe of that, Bybyks’ the contentions under the Fed New York law that all of means such issues Act, they prevented are not eral by must be settled the court. by provision the New York choice of law See Volt v. Board Trustees Sciences Info. of arbitrating of and at from issues timeliness Univ., Leland Junior 489 U.S. Stanford torneys’ fees. 468, 476-77, 1248, 1254-55, (1989) (Federal PaineWebber next contends that the fo- Arbitration Act preempt provision sig- does not rum-rules choice-of-law —“arbitration by organization any governed may the rules of the that be conducted be- convening panel” incorporates panel, subject fore an NASD to NASD arbi- reference, by including rules, sectiоn NASD Code Agreement tration requires no That is cast the NASD Code. section thing. Agreement, such par- Under the language “eligibility” in the and is thus may ties choose to dispute arbitrate a before Since, arguably (at a “substantive limitation”. NYSE, NASD, Bybyks’ or Act, election) under the Federal Arbitration the court “any other national securities ex- decides whether substantive limitations are change’s upon forum which Paine- directing met before a claim to legally required Webber is to arbitrate.” contends that the court must Agreement presumes that each of these Bybyks’ determine whether claim is organizations has its own set of rules. Some time-barred under section 15. may of those rules be in couched terms of “eligibility” requirements peri- or limitations conclude, however, We Agreement ods. But the cannot be deemed incorporated NASD Code is not into the incorporate these all limitations rules law, paper Under New York “a reference, because there is no basis for as- in referred to a written instrument and suffi suming they casting consistent in ciently part described be made a in eligibility, limitations terms of fixing incorporated body instrument as if into the period, limitations applying or in principles of Co., it.” Jones Cunard S.S. 238 A.D. tolling and accrual. (2d 1933). Dep’t 263 N.Y.S. At uphold common order to “[i]n the validi only reason point PaineWebber can ty incorporated by of terms reference it must “eligibility” language of section 15 of the be clear that the to the NASD Code is that the already NASD has knowledge had of and assented to incor designated been as the arbitral forum. porated Corp., terms.” Lamb v. Emhart 47 Looking Agreement at the ex it ante —as was (2d Cir.1995). F.3d New York fol Bybyks signed when the it —no one could tell lows that “requir[ing] common law rule certainty with which forum desig- would be paper incorporated to be into a nated or govern which set of rules would written instrument reference must be so Indeed, dispute. the event of a there is no referred to and described the instrument why disputes reason two arising under the paper may beyond identified subject could not become the reasonable doubt.” Chiacchia v. National two lodged statements of claim in two differ- USA, Westminster Bank A.D.2d Certainly, ent forums. the NASD Code (2d 1986) Dep’t 889-90 govern dispute actually a once it is in arbitra- added). (emphasis party’s While a failure tion panel. before an NASD arbitration But duly incorporated read a document will not since the part NASD Code is not a obligation excuse the to be bound its Agreement, we will not look to it in deter- terms, Wolz, Export Corp. see Level Aiken mining Agreement’s short, scope. it 305 N.Y. 111 N.E.2d 218 cannot be that these fоrmed the ob- will not be bound to the terms of jective incorporate any body intent to one clearly document unless it is identified rules into the itself. Paine- Chiacchia, agreement. 124 A.D.2d at Webber has thus not shown that the NASD (agreement 507 N.Y.S.2d at 890 with no di (in particular) incorporated Code into the rect reference to second document did not Agreement “beyond all doubt.” reasonable document); incorporate that see also Weiner Chiacchia, See A.D.2d at Mercury Corp., Artists 284 A.D. determine, N.Y.S.2d at 890. We need not- (1st 1954) (one- Dep’t therefore, whether section 15 of the NASD page validly incorporate contract did not ar prоcedural Code is a substantive or limitation provision bitration 207-page buried in book claims; on incorporated by the Code is not let). reference, and thus does not affect our above Agreement

The does not meet this stan- conclusion that the intended to arbi- Agreement contemplates dard. While the arbitrability. trate issues of 1980). (McKinney Al- L. & R. 7513 incorporated Prae. were if the NASD Code Even injunction sought an though PaineWebber conclude Agreement, we would still into the seeking attorneys’ Bybyks from barring the to arbitrate the parties intended arbitration, see no indication fees in we arbitrability, the NASD because issue of attorneys’ fees was otherwise pow- the issue of grants to the arbitrators Code itself court; subject proceedings in the district interpret apply section 15. Section er to certainly no men- Judge Duffy’s order makes provides as follows: NASD Code 35 of the However, court dis- the district tion of it. in- empowered to The arbitrators claims, and that all of PaineWebber’s missed applicability of terpret and determine the § 1291with is final under 28 U.S.C. dismissal take this Code and to provisions under that issue. respect to compliance action to obtain appropriate arbitrator(s). ruling with deduce that the dis We therefore Dealers, Association of Securitiеs National correctly that issue as court ruled on trict Procedure, NASD of Arbitration Code “any provides that Agreement The well. added). ¶ (1994) (emphasis Manual submitted to arbi all controversies” shall be section Nothing in Code removes the NASD tration; express no limitation with there is As the of section 35. 15 from the ambit attorneys’ For reasons al respect to fees. examining recently after Eighth held Circuit stated, provision of law will ready a choice incorporat- expressly agreement that a client re impose substantive not be construed ed the NASD Code: parties’ rights under the on the strictions Act, including right Federal Arbitration adoption оf this

[T]he attorneys’ claims for fees. See to arbitrate a “clear and unmistakable” [section 35] at -, Mastrobuono, of their intent to leave expression Therefore, PaineWebber at 1218-19. arbitrators. question of to the rely York choice-of-law terms, cannot on the New 35 commits In uncertain section no Bybyks prevent the from seek provision to interpretation of all remedy that is not fore ing in arbitration a Reading to the arbitrators. NASD Code whole, closed ... as a we see no the NASD Code arbi- not section 35 to the

reason application regarding the trators’ decision CONCLUSION of section 15. herein, forth the deci- For thе reasons set Freel, Corp. v. F.3d FSC Securities court is affirmed. sion of the district (8th Cir.1994). Thus, Eighth 1312-13 “by adopting concluded Circuit GRAAFEILAND, Judge, Circuit VAN as the Arbitration Procedure NASD Code of dissenting: governing dispute, appellants rules their of the court eight-line decision below agreed give arbitrators discretion via my colleagues gen- simply “pithy,” as is not interpret 15’s time section 35 ... section completely to erously describe it. It fails agree. at 1313. We limitation.” Id. parties’ expressed intent and the discuss the all is- language of the itself commits Code expressed intent on arbitrabili- effect of such sues, arbitrability and including issues of result, has forced ty. As a this Court been timeliness, to the arbitrators. determination, this a task to make performed the district should have been Attorneys C. ’Fees. Unfortunately, de novo undertak- our court. Last, contends that left, accord. ing has not us unanimous their claim not submit Board Trustees Sciences v. Volt attorneys’ Info. fees to because Univ., 489 U.S. Leland Junior it and its enforce Stanford provides that of 468, 103 L.Ed.2d laws of the governed “shall be us as follows: the Court instructed York,” attorneys’ State of New under which is a matter [FAA] fees under the not to an arbitrator be submitted coercion, consent, parties gen- are unless and not expressly N.Y.Civ. provided. See 1203 (see, erally their arbitration of free to structure Statute Limitations issue Conti they they commodity Lion, agreements Philipp as see fit. Just as Servs. v. 613 1222, Cir.1980]) may by F.2d 1224-1225 [2d limit contract the issues which or arbitrate, issuing stays from they they specify so too under our will arbitration (see, act Matter Rederi by [Dow the rules under which that Chem. contract of Co.], Where, 660, 25 N.Y.2d 307 will be conducted. as N.Y.S.2d 774). However, 255 N.E.2d here, parties’ the parties agreed by have the abide govern choice that New York enforcing law would state rules of those ” (em agreement “the and its according ‍​​​​​‌​‌‌​​‌​​‌‌‌‌‌‌‌​‌​‌​​‌‌‌‌​​​‌‌​‌‌‌​​​‌‌‌‌‌‍agree- rules terms enforcement added) phasis indicates their “intention to fully goals ment is consistent with the arbitrate to the extent allowed FAA, [this if even the result is that arbitra- law,” application State’s] even if stayed [FAA] tion is where the would oth- State law—and an ruling adverse on a permit go By per- it to erwise forward. Statute Limitations claim—would re mitting “rigorously courts to enforce” responsibility lieve the of their un terms, agreements according such to their (Armco der the contract to arbitrate Steel give rights we effect to the contractual and Corp., 311, v. F.Supp. Co. CSX parties, expectations doing without [(D.D.C. 1991)]; also, Saturn Distrib. policies violence to the behind [sic] Williams, Corp. v. 905 F.2d 719 Cir. [4th (citations omitted) FAA. [parties incorporate 1990] are entitled to The “CLIENT’S AGREEMENT” at issue State law restrictions intо their arbitration provides heading herein under the “Jurisdic- agreement that would otherwise be tion”: preempted by FAA], cert denied 498 accounts) my All made for transactions 527; U.S. 112 L.Ed.2d governed shall be terms this Flight Sys. v. Paul A Laurence agreement. agreement This and its en- 1989]). F.Supp. Although [D.D.C. governed forcement shall be construed and parties broadly agreed to arbitrate York, the laws of the State of New “any controversy” arising from the custom heirs, executors, binding upon my agreements, er that clause—like all other administrators, successors, assigns. provisions subject in the contract —was ambiguity I provision. find no this It is qualification additional determinative of thе issue as to whether arbi- provides York New State law the basis of provisions quot- tration should be held. The questions concerning only decision for not page majority opinion at ed 1199 of the are agreement, critically, but more its en paragraph contained headed “ARBI- Accordingly, forcement. we conclude They govern any parties agreed under this TRATION.” nature of i.e., questions of passed upon; issues that refer timeliness to the courts contro- by incorporating New York law. versies between the and Paine- words, account, when the chose to transaction, concerning Webber excluding New York “without its etc., arbi disрute, the resolution of which shall be general tration rules” from condition FAA and shall be conducted (Mastrobuono Shearson, Lehman Hut designated panel. before a ton, Cir.1994], [7th 20 F.3d cert. very These similar to the U.S. -, 115 granted 514 [130 S.Ct. 305 ones contained in the issue (1994)]), parties adopted Barney, Upham Smith Harris & Co. binding as New York’s rule that threshold Luckie, questions Statute of Limitations are for denied, - U.S. -, N.E.2d cert. the courts. There, 133 L.Ed.2d 23 Id. at at 805. Appeals York New Court said: Undeniably, in explicit My colleagues’ rejection the absence of an of Luckie as bind- provision, governing unwarranted, ing authority choice law Federal New York precluded upon would have thе courts their reliance Mastrobuono v. Shearson Hutton, appeals addressing before us from the Lehman support the claims 131 L.Ed.2d 76 determine whether timely. rejection misplaced. is The issue seek to enforce arbitration are of this not, here, as whether arbi- was Mastrobuono passage

tration would be barred

time; timely in a it whether arbitrators was punitive could award

conducted arbitration

damages. significant It that Mastrobuono is “any controversy” interpret lan-

did not herein,

guage and the choice-of-law at issue phrase provision did not contain the critical DOE, Plaintiff-Appellee, Jane significant It “and enforcement.” also is its Appeals that the New York Court denied reargument in Luckie that wаs motion for PHILLIPS, II, Defendant, Francis D. part upon based in Court’s Mastrobuono, 85 N.Y.2d decision D’Amelia, Jr., D. Gerald Defendant- (1995). 800, 647 N.E.2d 1308 N.Y.S.2d Appellant. short, under New York the timeliness of No. Docket 95-7659. substantially arbitration is different from the resolution of the issues to be arbitrated. Appeals, United States Court of It also well established under New York Circuit. Second courts, arbitrators, law that the not decide Argued Jan. 1996. sought whether claims to be arbitrated are See, e.g., limitations of barred time. Pav April Decided 1996. High er & v. Catholic School Wildfoerster Ass’n, 382 N.Y.S.2d Rowlett, (1976); Caudill,

345 N.E.2d 565 Educ.,

Scott v. Board 47 A.D.2d (1975)(mem.); Indus., Buck Creek Mfg.

Inc. v. Beattie 96 Misc.2d gain

409 N.Y.S.2d 575 It cannot be bringing proceeding,

said that in the instant seeking compliance

PaineWebber was with provision in the Claim

actions to enforce it “shall be

the laws of New York.” Under the circum

stances, following I excerpt ‍​​​​​‌​‌‌​​‌​​‌‌‌‌‌‌‌​‌​‌​​‌‌‌‌​​​‌‌​‌‌‌​​​‌‌‌‌‌‍find the from Judge Kaye’s

Chief concurring opinion in compelling:

Luckie most

I opinion concur in the Court’s and conclu-

sion that because the form arbitration

agreements plainly at issue provide that governs “agreement

New York law added), and its (emphasis enforcement” fairly can be understood to agreed

have that all of New York arbitra-

tion (including of CPLR

article 75 which allow a to first liti- court)

gate Statute of Limitations issues in apply.

would

85 N.Y.2d at 808.

I believe that the matter should be re-

manded to the district court with instructions

Case Details

Case Name: Painewebber Incorporated v. Michael J. Bybyk and Joyce O. Bybyk

Court Name: Court of Appeals for the Second Circuit

Date Published: Apr 19, 1996

Citation: 81 F.3d 1193

Docket Number: 370, Docket 94-9246

Court Abbreviation: 2d Cir.