The Dotted Line
Pennsylvania law is quite clear that, when confronted with a petition to compel arbitration, the court must engage in a two-step inquiry to decide the threshold issue of "substantive arbitrability." The court must first determine whether there is a valid arbitration agreement. If such an agreement exists, the court must next determine whether the dispute before it is encompassed by the agreement. A plaintiff may assert the absence or invalidity of an underlying agreement as a defense against arbitration.
In Carlson v. Janney Montgomery Scott LLC, 80 D.&C. 4th 230 (Phila. County April 5, 2007), the plaintiff was required, as a matter of securities regulation, to agree to arbitration of disputes as a condition of his employment as a securities broker. In support of its motion to compel arbitration, defendant produced an electronically-filed Form U4 registering plaintiff with the NASD as a securities broker. The electronic filing was made on plaintiff's behalf and, in keeping with SEC regulations, contained the mandatory arbitration agreement. The electronically-filed U4 did not, however, bear plaintiff's signature. The court refused to order arbitration:
This motion judge is unable to grant defendant's request [for arbitration] absent proof that plaintiff did in fact agree to arbitrate disputes occurring during his employment or that he signed Form U4, albeit a prerequisite for employment as a financial consultant or registered representative. Without proof of the original or even a copy of a signed Form U4, this motion judge cannot find that a valid arbitration agreement existed between the parties.
This case illustrates that, despite society's ever-increasing reliance on electronic communications, signed original documents remain of paramount importance when it comes to the enforcement of legal obligations between parties. For persons entering into agreements -- especially agreements that, like arbitration agreements, affect otherwise existing legal rights -- the bottom line is that signatures still matter. Get them. Save them. Rest easy.
