Federal Arbitration Act Interstate Commerce California Case Law
In Spellman v. Securities, Annuities & Ins. Services, Inc. (1992), 8 Cal. App. 4th 452, the Second District Court of Appeal (Div. 6) confronted the issue of application of the Federal Arbitration Act to an arbitration agreement contained in a securities exchange application, which was specifically incorporated into the parties' employment contract. (Id. at p. 458.)
The employee in Spellman argued that securities representatives "engage in interstate commerce within the meaning of the Federal Arbitration Act " and thus the employment contract in his case fell within the section 1 exclusion.
The court disagreed, distinguishing the cases relied on by the employee, which involved postal workers. (American Postal Workers Union v. U.S Postal Serv. (11th Cir. 1987) 823 F.2d 466; Bacashihua v. U.S. Postal Service (6th Cir. 1988) 859 F.2d 402, 404-405.) Postal workers, the court observed, belong to a class of workers " 'actually engaged in interstate commerce.' " (Spellman, supra, at p. 459.)
The court in Spellman found pertinent the case of Matter of Management Recruiters Intern. and Nebel (N.D. Ohio 1991) 765 F. Supp. 419, a case in which the court squarely addressed the question "whether an arbitration provision in Nebel's employment contract was subject to the exclusion contained in section 1 of the Federal Arbitration Act." (Spellman, supra, at p. 460.)
The Spellman court noted that the majority of the Circuit Courts of Appeals "have 'limited the exception in 1 to employees involved in the actual movement of goods in interstate commerce. . . .' the Nebel court held, therefore, that the Federal Arbitration Act applies to non-union employment contracts in the securities industry.
The narrow construction accorded section 1 of the Federal Arbitration Act by the federal courts supports the strong national policy favoring arbitration as a means of settling private disputes. (Matter of Management Recruiters Intern. and Nebel, supra, 765 F. Supp. at pp. 421-422.)" (8 Cal. App. 4th at p. 460.)