Collins v. Prudential Ins. Co. of America

752 So. 2d 825, 2000 WL 39140
CourtSupreme Court of Louisiana
DecidedJanuary 19, 2000
Docket99-C-1423
StatusPublished
Cited by56 cases

This text of 752 So. 2d 825 (Collins v. Prudential Ins. Co. of America) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Collins v. Prudential Ins. Co. of America, 752 So. 2d 825, 2000 WL 39140 (La. 2000).

Opinion

752 So.2d 825 (2000)

Frederick COLLINS
v.
The PRUDENTIAL INSURANCE COMPANY OF AMERICA, et al.

No. 99-C-1423.

Supreme Court of Louisiana.

January 19, 2000.

*826 Raymond Joseph Salassi, Jr., Mary Ellen Burggraf Jordan, Laurie Michele Chess, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans; Kenneth J. Pfaehler, Michael A. Schlanger, Sonnenschein, Nath & Rosenthal, Washington, DC; Walter W. Christy, Tracy Kern Hidalgo, Frilot, Partridge, Kohnke & Clements, New Orleans, Counsel for Applicant.

Dwan Singleton Hilferty, New Orleans, Counsel for Respondent.

MARCUS, Justice.[*]

Frederick Collins accepted a job with Prudential Insurance Company in 1989. On Friday May 4, 1995, his supervisor, Leo Beaulieu, terminated his employment. Collins was allowed to return on the following Monday to gather his personal belongings. On that same date, a memo was circulated to the office staff informing them of his termination. In that memo, statements were made regarding the termination which Collins interpreted as defamatory.

Collins filed suit against Prudential and Beaulieu for libel, defamation, and intentional infliction of emotional distress by virtue of the statements in the Monday memo. Relying on provisions in an agreement signed by Collins at the time of his employment, defendants filed a joint motion to compel arbitration. The trial judge granted the defendants' motion and stayed all proceedings pending the outcome of an arbitration to be instituted by the plaintiff.

Plaintiff appealed the order compelling arbitration, contending that his defamation claim did not fall within the scope of the *827 arbitration agreement, which he admitted was otherwise valid and enforceable. Defendants filed a motion to dismiss the appeal on the ground that the arbitration order was interlocutory and non-appealable. Alternatively, defendants argued that the trial judge was correct in ordering arbitration pursuant to the agreement signed by the plaintiff. The court of appeal reversed the judgment of the trial court, holding that the order compelling arbitration was subject to immediate appeal and that the dispute did not fall within the scope of the arbitration agreement.[1] It remanded the case for a trial on the merits. Upon application of defendants, we granted certiorari to consider the correctness of that decision.[2]

The issues before us for review are whether the district court order compelling arbitration was subject to an immediate appeal and, if so, whether the plaintiff's claims fall within the scope of the arbitration agreement.

In order to resolve the initial issue presented for our consideration, we deem it appropriate to first determine whether the arbitration agreement at issue is governed by the Federal Arbitration Act (9 U.S.C. §§ 1-16; hereinafter the "FAA") or by the Louisiana Arbitration Law (La. R.S. 9:4201-4217; hereinafter the "LAL"). The United States Supreme Court has made it clear that the substantive provisions of the Federal Arbitration Act preempt state law and govern all written arbitration agreements in contracts connected to transactions involving interstate commerce.[3] The FAA embodies a liberal federal policy favoring arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Whether a claim is brought in state court or federal court, and whether a claim is based on state or federal law, courts must enforce arbitration agreements in contracts covered by the FAA, notwithstanding any state statutory or jurisprudential rules to the contrary. Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). Moreover, the phrase "involving commerce" has been interpreted as the functional equivalent of "affecting commerce." The Supreme Court has concluded that Congress intended to exercise its commerce powers to the fullest in legislating in favor of arbitration. Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995).

When plaintiff was employed with Prudential in 1989, he executed a "Uniform Application for Securities Industry Registration or Transfer," commonly known in the industry as a "Form U-4." By his execution of that form, plaintiff agreed to:

arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the organization with which I register, as indicated in item 10....

and to

abide by, comply with, and adhere to all the provisions, conditions and covenants of the statutes, constitutions, certificates of incorporation, by-laws and rules and regulations of the ... organizations as they are and may be adopted, changed or amended from time to time....

Collins elected in Item 10 of the Form U-4 to register with the National Association of Securities Dealers (NASD). Section 10101 of the NASD Code, incorporated by reference in the Form U-4 agreement, further requires:

the arbitration of any dispute, claim, or controversy arising out of or in connection with the business of any member of the Association, or arising out of the *828 employment or termination of employment of associated persons(s) with any member.... (Emphasis added.)

The United States Supreme Court has treated arbitration provisions contained in "Uniform Application for Securities Industry Registration or Transfer" (Form U-4) agreements as governed by the FAA because they involve interstate commerce. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991); Perry v. Thomas, 482 U.S. 483, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987). See also Thomas James Assoc., Inc. v. Jameson, 102 F.3d 60 (2nd Cir.1996); Williams v. Cigna Fin. Advisors, 56 F.3d 656 (5th Cir.1996).[4] Thus, we agree with Prudential that pursuant to the substantive directives of the FAA, any dispute covered by the arbitration agreement in the U-4 Form must be enforced. The district court in this case ordered arbitration, concluding that plaintiffs claims are covered by the Form U-4 arbitration agreement because they arose out of his employment or termination of employment. This finding was consistent with the mandate of the FAA to give effect to arbitration agreements.

The fact that the FAA governs the contract at issue as a matter of substantive law, however, does not necessarily mean that the FAA also governs the availability of a direct appeal in a state court proceeding.

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Cite This Page — Counsel Stack

Bluebook (online)
752 So. 2d 825, 2000 WL 39140, Counsel Stack Legal Research, https://law.counselstack.com/opinion/collins-v-prudential-ins-co-of-america-la-2000.