Fed. Sec. L. Rep. P 95,610 Joe Goldberg v. Bear, Stearns & Co., Inc., and Michael S. Gorinsky , 912 F.2d 1418 ( 1990 )

MORGAN, Senior Circuit Judge,

dissenting:

I respectfully disagree with the majority’s conclusion that the customer agreement at issue in this case permits appellee to forego arbitration of his federal securities law claims. As the majority notes, there is a split in authority among the district courts that have considered the language involved in paragraph 13 of the customer agreement at bar. I find those cases which hold that this agreement provides for arbitration of all claims, whether state or federal, to be better reasoned. See e.g., Scher v. Bear Stearns & Co., Inc., 723 F.Supp. 211 (S.D.N.Y.1989); Reed v. Bear Stearns & Co., Inc., 698 F.Supp. 835 (D.Kan.1988); Ryan v. Liss, Tenner & Goldberg Securities Corp., 683 F.Supp. 480 (D.N.J.1988).

The paragraph at issue is set forth in the majority opinion, supra, at page 1419. The central question to be resolved concerns the scope of the clause “[y]ou understand that this Agreement to arbitrate does not constitute a waiver of your right to a judicial forum where such a waiver would be void under the securities laws and specifically does not prohibit you from pursuing any claim or claims arising under the federal securities laws in any court of competent jurisdiction.” That question reduces itself to whether the quoted language is part of a mere notice provision, or whether it gives a substantive contractual right to litigate federal securities claims regardless of the arbitrability of other related claims.

A court asked to compel arbitration must first determine whether the parties to the contract agreed to arbitrate their dispute. Federal policy is not absent from this determination. “[A]s with any other contract, the parties’ intentions control, but those intentions are generously construed as to issues of arbitrability.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 3353, 87 L.Ed.2d 444 (1985). Any ambiguities in the arbitration agreement should be resolved in favor of arbitration. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983).

When choosing between possible interpretations of an ambiguous term, the entire contract should be considered and the interpretation selected which best accords with the remainder of the contract and which, if possible, will make every part of the contract effective. Broad v. Rockwell International Corp., 642 F.2d 929, 947 (5th Cir.1981) (en banc). Construing the arbitration clause as a whole, I agree with those courts that have found that the last sentence beginning with the language “[y]ou understand ...” is a mere notice provision and not a substantive right to litigate federal securities claims in court. See e.g., Scher, 723 F.Supp. at 216.

If, as the majority suggests, the proper interpretation of the last sentence of the arbitration clause is that arbitration of ap-pellee’s federal securities law claims is optional, the first part of the clause, which provides for the arbitration of all claims, would be meaningless. Accord, Scher, 723 F.Supp. at 216; Reed, 698 F.Supp. at 841; Ryan, 683 F.Supp. at 483. Because I conclude that the parties to the contract did not intend to give appellee a substantive right to avoid the arbitration of his federal securities law claims, I would reverse the judgement of the district court.