Case Information
*3 Bеfore WILKINSON, Chief Judge, MOTZ, Circuit Judge, and James R. SPENCER, United States District Judge for the Eastern District of Virginia, sitting by designation. _________________________________________________________________ Reversed and remanded by published opinion. Chief Judge Wilkinson wrote the opinion, in which Judge Motz and Judge Spencer joined. _________________________________________________________________ COUNSEL
ARGUED: David G. Russell, PARKER, HUDSON, RAINER & DOBBS, Atlanta, Georgia, for Aрpellants. Teri Louise DiGiulian, BEDZOW, KORN, BROWN, MILLER & ZEMEL, P.A., Aventura, Florida, for Appellees. ON BRIEF: Nancy H. Baughan, PARKER, HUDSON, RAINER & DOBBS, Atlanta, Georgia; Eugene Boyce, Philip R. Isley, BOYCE & ISLEY, P.A., Raleigh, North Carolina, for Appellants. Robert B. Miller, BEDZOW, KORN, BROWN, MILLER & ZEMEL, P.A., Aventura, Florida; Peter J. Sarda, WALLACE, CREECH & SARDA, L.L.P., Raleigh, North Carolina, for Appellees.
OPINION
WILKINSON, Chief Judge:
Critical Health initiated arbitration proceedings against Smith Bar- ney before the American Arbitration Association (AAA). Smith Bar- ney seeks to enjoin the AAA proceedings because a customer agreement between the parties provides that controversies shall be "settled by arbitration, in accordanсe with the rules then in effect of the [NASD, NYSE, or AMEX]." Because the parties have nowhere mentioned the AAA in their agreement, we hold that arbitration may proceed only before one of the specified fora. We therefore reverse and remand.
I.
This case concerns the interpretation of a choice of forum clause in an agreement between Critical Health and Shearson Lehman Hut- *4 ton (Smith Barney is the successor to these accounts). In the early 1980s, Critical Health signed a client agreement that provided:
This agreement shall be governed by the laws of the State of New York without giving effect to the choice of law or conflict of laws provision thereof. Any controversy arising out of or relating to any of my accounts . . . shall be settled by arbitration, in accordance with the rules then in effect of the NASD, or the Boards of Directors of the NYSE or the American Stock Exchange, Inc., as I may eleсt.
The agreement mentions arbitration in accordance with the rules of three self-regulatory organizations (SROs), the National Association of Securities Dealers (NASD), the New York Stock Exchange (NYSE), and the American Stock Exchangе (AMEX). The American Arbitration Association (AAA) is not mentioned in the arbitration agreement.
In April 1998, Critical Health instituted an arbitration proceeding against Smith Barney before the AAA alleging, inter alia , violations of industry rules, fraud, breach of fiduciary duty, negligence, and fail- ure to supervise. These claims were based on transactions as far back as the early 1980s. The AAA assumed jurisdiction under the "AMEX Window." The AMEX Window is created by a provision in the AMEX Constitution that states "the customer may elect to arbitrate before the American Arbitration Association in the City of New York, unless the customer has expressly agreed, in writing, to submit only to the arbitration procedure of the [AMEX]." AMEX Const. art. VIII, § 2(c) (1995). The AAA refused to stay the arbitration procеeding without a court order. Smith Barney then sued for injunctive and declaratory relief in the United States District Court for the Eastern District of North Carolina. Smith Barney alleges that it may be irreparably injured if the dispute proceeds before the AAA, because the AAA rules contain no limita- tions period for Critical Health's claims. By contrast, the NASD, NYSE, and AMEX arbitration rules all provide that claims based upon transactions that occurred more than six years before the arbitra- tiоn was filed are not eligible for arbitration. Critical Health's claims arise from transactions and occurrences from the early 1980s and *5 likely would not be eligible for arbitration under the rules of the three SROs. The district court nonetheless deniеd Smith Barney's motion for a preliminary injunction, finding that the "AMEX Window" allows arbitration before the AAA in North Carolina. Smith Barney now appeals. II.
We review de novo the district court's conclusions regarding the
arbitrability of the dispute between Smith Barney and Critical Health.
See American Recovery Corp. v. Computerized Thermal Imaging,
Inc.,
Federal law governs the construction of contract language concern-
ing arbitrability. See 9 U.S.C. § 2 (1994) (Federal Arbitration Act
(FAA) regulates contracts "evidencing a transaction involving com-
merce to settle by arbitration a controversy thereafter arising out of
such contract."); Porter Hayden Co. v. Century Indem. Co., 136 F.3d
380, 382 (4th Cir. 1998); American Recovery,
and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Critical Health maintains that the agreement does not specify the exclusive fora for arbitratiоn but only requires that the "rules" of the NASD, NYSE, or AMEX be followed in any arbitration. Critical Health's argument centers on the AMEX Window, which allows cus- tomers of the AMEX to arbitrate before the AAA, unless they have agreed in writing to submit only to the arbitration procedures of the AMEX. See AMEX Const. art. VIII, § 2(c). Critical Health maintains that because the AMEX Window is a provision in the AMEX Consti- tution, it is a "rule" of the AMEX and should be followed here. The AMEX Window would allow Critical Health to arbitrate before the AAA because the рarties have not agreed to submit disputes only to the AMEX. Critical Health argues that the AMEX Window is incor- porated into its agreement and therefore that arbitration should be allowed to proceed before the AAA.
This argument, however, contravenes the plain language of the
contract. The agreement provides that "[a]ny controversy arising out
of or relating to any of my accounts . . . shall be settled by arbitration,
in accordance with the rules then in effect of the NASD, or the Boards
of Directors of the NYSE or the American Stock Exchange, Inc." The
agreement specifies that arbitration may take place according to the
rules of three SROs. It does not mention any other organization and
does not specifically provide for arbitration before the AAA. Under
the principle of expressio unius est exclusio alterius, arbitration is
limited to the three prescribed fora.
Critical Health's argument has alsо been rejected by all circuit
courts that have considered the issue.
2
Courts have interpreted similar
2
Most district courts have likewise found the AMEX Window closed.
See, e.g., Conroy v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 899 F.
Supp. 1471, 1474 (W.D.N.C. 1995); Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. King,
Similarly, in considering an agreement with language virtually
identical to the language in the instant case, the Eleventh Circuit
found that the parties had "closed the AMEX Window by agreement."
Luckie,
Wе join the Second and Eleventh Circuits in holding that the AMEX Window can be superseded by a more specific agreement.
Here the agreement provides that arbitration will proceed in accor-
dance with the rules of the threе SROs. Notably, the agreement makes
no mention whatsoever of the AAA. Where the parties have agreed
explicitly to settle their disputes before particular arbitration fora, that
agreement must control. See Georgiаdis,
Critical Health cannot arbitratе its claims before the AAA where it has already agreed to submit disputes to arbitration before the NYSE, NASD, or AMEX. We thus reverse the judgment of the dis- trict court and remand with directions that the district court enforce the choice of forum clause in the arbitration agreement.
REVERSED AND REMANDED