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DEAN WITTER REYNOLDS, INC. V. BYRD, 470 U. S. 213 (1985)

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U.S. Supreme Court

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985)

Dean Witter Reynolds, Inc. v. Byrd

No. 83-1708

Argued December 4, 1984

Decided March 4, 1985

470 U.S. 213

Syllabus

In 1981, respondent invested $160,000 in securities through petitioner broker-dealer. The parties had a written agreement to arbitrate any disputes that might arise out of the account. Thereafter, the value of the account declined by more than $100,000. Respondent then filed an action against petitioner in Federal District Court, alleging violations of the Securities Exchange Act of 1934 and of various state law provisions. Petitioner filed a motion to compel arbitration of the pendent state claims under the parties' agreement and to stay arbitration pending resolution of the federal action. Petitioner argued that the Federal Arbitration Act -- which provides that arbitration agreements

"shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for revocation of any contract"

-- required the District Court to compel arbitration of the state claims. The District Court denied the motion, and the Court of Appeals affirmed.

Held: The District Court erred in refusing to grant petitioner's motion to compel arbitration of the state claims. Pp. 470 U. S. 216-224.

(a) The Arbitration Act requires district courts to compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel, even when the result would be the possibly inefficient maintenance of separate proceedings in different forums. By its terms, the Act leaves no room for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed. The Act's legislative history establishes that its principal purpose was to ensure judicial enforcement of privately made arbitration agreements, and not to promote the expeditious resolution of claims. By compelling arbitration of state law claims, a district court successfully protects the parties' contractual rights and their rights under the Arbitration Act. Pp. 470 U. S. 216-221.

(b) Neither a stay of arbitration proceedings nor joined proceedings is necessary to protect the federal interest in the federal court proceeding. The formulation of collateral estoppel rules affords adequate protection to that interest. Pp. 470 U. S. 221-223.

726 F.2d 552, reversed and remanded.

MARSHALL, J., delivered the opinion for a unanimous Court. WHITE, J., filed a concurring opinion, post, p. 470 U. S. 224. chanroblesvirtualawlibrary

Page 470 U. S. 214





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