(CCH) P 3701 (1993). On March 7, 1995, Wojcik filed suit against defendants Aetna, Bacher and Sommer. On June 13, 1995, Aetna moved to dismiss the suit and compel arbitration.
In order to determine whether a claim is arbitrable, the Court must determine: (1) whether there is an agreement to arbitrate; (2) whether the claims fall within the scope of that agreement; and (3) whether there has been a waiver of the right to arbitrate. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24-34, 114 L. Ed. 2d 26, 111 S. Ct. 1647 (1991). In this action the parties do not dispute that an agreement to arbitrate was signed by Wojcik, nor do they contend that waiver of the right to arbitrate is an issue. These criteria, therefore, need not be addressed by the Court.
The question before the Court is whether the claims asserted by Wojcik are within the scope of arbitrable matters contemplated by the arbitration agreement. Wojcik contends that his claims are not eligible for arbitration and opposes Aetna's motion to compel on several grounds. Wojcik argues that: (1) the 1993 amendments to the Code, expressly providing for arbitration of employment-related disputes, can only be applied retroactively in direct contravention of Seventh Circuit authority; (2) the compliance clause in paragraph 2 of Wojcik's Form U-4, in which he promises to "abide by, comply with and adhere to all provisions . . . constitutions . . . and rules of [NASD] as they are and may be . . . amended from time to time," does not extend to NASD's Code of Arbitration Procedure; and alternatively (3) should the amendments be held to apply, the dispute can not be arbitrable since: (a) it involves the insurance business of Aetna and therefore triggers a Code exception to arbitration; and (b) there are named defendants who are not eligible parties for arbitration whose presence precludes arbitration of Wojcik's claims against Aetna. We find Wojcik's arguments unpersuasive.
Standards Governing Arbitrability
The arbitration agreement in this case is not just the Form U-4, but the U-4 plus an extrinsic document, the NASD Code of Arbitration Procedure, incorporated by reference in the Form U-4. The agreement to arbitrate encompassed in the Form U-4 is governed by the Federal Arbitration Act ("FAA") which provides that an arbitration clause "shall be valid, irrevocable, and enforceable save upon such grounds as exist in law or equity for the revocation of any contract." 9 U.S.C. § 1 et seq. (1982). See Gilmer, 500 U.S. 20, 114 L. Ed. 2d 26, 111 S. Ct. 1647 (1991); O'Donnell v. First Investors Corp., 872 F. Supp. 1274, 1276 (S.D.N.Y. 1995).
Recently, the Supreme Court in First Options of Chicago, Inc. v. Kaplan, held that "when deciding whether the parties agreed to arbitrate a certain matter . . . courts generally . . . should apply ordinary state law principles that govern the formation of contracts." 115 S. Ct. 1920, 1924, 131 L. Ed. 2d 985 (1995). Furthermore, the Supreme Court has recently reiterated in Mastrobuono v. Shearson Lehman Hutton, Inc., that when a court interprets provisions in an agreement covered by the FAA, "due regard must be given to federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration." 115 S. Ct. 1212, 1218, 131 L. Ed. 2d 76 (1995) (citing Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 476, 109 S. Ct. 1248, 1254, 103 L. Ed. 2d 488 (1989)). Therefore, the Arbitration Act mandates arbitration of this matter if the NASD Code of Arbitration Procedure can reasonably be interpreted under Illinois contract law as applying to Wojcik's claims.
The 1993 Amendments to the Code are Applicable to Wojcik's Claims
The Seventh Circuit had previously held that, prior to the October 1, 1993 amendments the NASD Code did not require arbitration of employment disputes.
See Farrand v. Lutheran Bhd., 993 F.2d 1253, 1254-55 (7th Cir.1993); Kresock v. Bankers Trust Co., 21 F.3d 176, 178 (7th Cir. 1994). Thus, the issue before this Court is whether the October 1, 1993 amendments to the Code, which expressly provide for arbitration of employment-related disputes, are applicable to Wojcik's case. Wojcik contends that they may not be applied for two reasons; because such application would be "retroactive" and in contravention of established Seventh Circuit authority, and because Wojcik's promise to comply with amendments to the Code does not extend to matters concerning arbitration.
The Seventh Circuit addressed a similar, but factually distinguishable situation in Kresock, a case heavily relied upon by Wojcik to support his argument that the amended Code may not be applied in his case. Id. Wojcik contends that application of the amendments in his case would contravene the holding in Kresock. We disagree.
In Kresock, the plaintiff ("Kresock") was terminated by Banker's Trust and filed suit against Banker's Trust for Title VII violations, before the effective date of the Code amendments compelling arbitration of employment disputes. 21 F.3d at 179. In connection with her employment by Banker's Trust, Kresock signed a Form U-4 application. Id. at 177. Banker's Trust moved to compel arbitration pursuant to the arbitration agreement in Kresock's Form U-4 and argued that the court should apply the amendments retroactively. The court held that although Kresock's Form U-4 contained a compliance clause in which she "certainly . . . agreed to be bound by amendments to the NASD Code," she nevertheless, "never agreed to the retroactive application of such amendments." Id. The court then held that the October 1, 1993, amendments to NASD Code did not apply retroactively where the "relevant conduct" took place long before the effective date of the amendments:
...the SEC's order indicates that [the amendments] are not to be effective until October 1, 1993, four years after Kresock signed the Form U-4, more than two years after Banker's Trust fired her, and nearly a year after Kresock filed this lawsuit. Thus, the relevant conduct took place long before these amendments to the NASD Code of Procedure became effective.