MICHAEL L. BAZZONE, JR., t/d/b/a BAZZONE INSURANCE AGENCY v. Nationwide Mutual

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 03-4659
____________
MICHAEL L. BAZZONE, JR.,
t/d/b/a BAZZONE INSURANCE AGENCY,
Appellant
v.
NATIONWIDE MUTUAL;
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY;
NATIONWIDE GENERAL INSURANCE COMPANY;
NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY;
NATIONWIDE VARIABLE LIFE INSURANCE COMPANY, n/k/a
NATIONWIDE LIFE AND ANNUITY COMPANY
____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 97-cv-00725)
District Judge: Honorable William L. Standish
____________
Argued September 15, 2004
Before: ALITO, AMBRO and FISHER, Circuit Judges.
(Filed February 15, 2005)

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1We may only vacate an arbitration award in limited circumstances, such as when
an award was procured by corruption or fraud. See 9 U.S.C. § 10. Although Bazzone
appeals the District Court’s confirmation of the arbitration award, he offers no statutorily
sufficient basis on which we might overturn that award. We therefore focus on the
arbitrability issues.
2
Avrum Levicoff
Dianne S. Wainwright (Argued)
Levicoff, Silko & Deemer
650 Smithfield Street
Centre City Tower, Suite 1900
Pittsburgh, PA 15222
Attorneys for Appellant
David J. Armstrong
Dickie, McCamey & Chilcote
Two PPG Place, Suite 400
Pittsburgh, PA 15222-5402
Christopher Landau
Edwin J. U (Argued)
Kirkland & Ellis
655 15th Street, N.W., Suite 1200
Washington, DC 20005
Attorneys for Appellees
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OPINION OF THE COURT
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FISHER, Circuit Judge.
Appellant Michael L. Bazzone appeals from the final orders of the District Court
granting Appellee Nationwide Mutual Insurance Company’s motions to compel
arbitration and confirming the arbitrators’ award in Nationwide’s favor.1 We will affirm
the District Court’s orders.

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2“Redlining” is defined as the refusal to issue insurance policies to certain persons
or groups because they live or are located in an area predominantly inhabited by persons
of a particular ethnicity, income level, and/or marital status.
3
Bazzone, a Nationwide agent, submitted a Uniform Application for Securities
Industry Registration or Transfer, known as a “Form U-4,” to Nationwide, which
Nationwide in turn filed with the National Association of Securities Dealers (“NASD”).
In the Form U-4, Bazzone “agree[d] to arbitrate any dispute, claim or controversy that
may arise between me and my firm, or a customer, or any other person, that is required to
be arbitrated under the rules, constitutions, or by-laws of the organizations with which I
register, as indicated in Question 8.” The Form U-4 identified the NASD as the
organization with which he was registering. In pertinent part, the NASD’s Code of
Arbitration Procedure prescribes arbitration for “any dispute, claim, or controversy arising
out of or in connection with the business of any member of the Association, or arising out
of the employment or termination of employment of associated person(s) with any
member, with the exception of disputes involving the insurance business of any member
which is also an insurance company.” NASD Rule 10101 (1997).
Bazzone filed the complaint at issue here advancing several claims against
Nationwide based on Nationwide’s alleged “redlining” practices,2 which Bazzone claims
caused injury to his business.

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3We have federal question jurisdiction because Bazzone advances a claim for
violations of the Fair Housing Act, 42 U.S.C. § 3604.
4
The District Court had subject matter jurisdiction over Bazzone’s complaint under
28 U.S.C. §§ 13313 and 1367, and had jurisdiction over Nationwide’s motions to compel
arbitration under the Federal Arbitration Act, 9 U.S.C. § 4. We have appellate
jurisdiction pursuant to 9 U.S.C. § 16 and 28 U.S.C. § 1291. We review de novo a district
court’s resolution of “legal questions concerning the applicability and scope of an
arbitration agreement.” Medtronic AVE, Inc. v. Advanced Cardiovascular Sys., Inc., 247
F.3d 44, 53 (3d Cir. 2001) (citation omitted).
The framework in this Circuit for analyzing whether a claim is arbitrable is well
settled. “[D]istrict courts need only ‘engage in a limited review to ensure that the dispute
is arbitrable--i.e., that a valid agreement to arbitrate exists between the parties and that the
specific dispute falls within the substantive scope of that agreement.’” John Hancock
Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1998) (citation omitted). “In
conducting this limited review, the courts must apply ordinary contract principles, with a
healthy regard for the strong federal policy in favor of arbitration.” Id. (citations
omitted); see also Brayman Const. Corp. v. Home Ins. Co., 319 F.3d 622, 625 (3d Cir.
2003) (Federal Arbitration Act “mandates that ‘any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration.’”) (citations omitted).
Cardinal among the “ordinary contract principles” we should apply is the tenet that “[i]f
the language used by the parties is plain, complete, and unambiguous, the intention of the

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5
parties must be gathered from that language, and from that language alone, regardless of
what the actual or secret intentions of the parties may have been.” 11 Richard A. Lord,
Williston on Contracts § 31.4 (4th ed. 1999).
Bazzone argues that (1) the applicable arbitration provisions do not cover his
“redlining” claims; (2) that even if the arbitration provisions cover his “redlining” claims,
the exception in those provisions for claims relating to “insurance business” exempts his
claims from compulsory arbitration; and (3) that the arbitration provisions do not extend
to his claims that Nationwide breached any settlement agreement.
We reject these contentions. We agree with Nationwide that the Form U-4 signed
by Bazzone, together with NASD Rule 10101, clearly and unambiguously require
arbitration of Bazzone’s “redlining” claims. Particularly in light of the strong
presumption in favor of arbitrability that binds us, we must follow the unambiguous
language of the arbitration provisions compelling arbitration of Bazzone’s “redlining”
claims.
We foreclosed Bazzone’s argument that his “redlining” claims fall within the
Code’s “insurance business” exception in In re Prudential, 133 F.3d 225 (3d Cir. 1998).
There, construing the same arbitration language in a Form U-4 and the Code as obtains
here, we held, in effect, that the “insurance business” exception cannot be given any
definitive construction in the arbitration context because the term “insurance business” is

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6
ambiguous. This ambiguity led us to apply the presumption in favor of arbitrability in In
re Prudential, and we are bound to do the same here.
Finally, Bazzone’s claims based on Nationwide’s alleged breach of a purported
settlement of Bazzone’s “redlining” claims are also arbitrable. Rule 10101 of the Code,
applying broadly to “any dispute, claim, or controversy,” encompasses claims arising out
of a purported settlement of claims themselves covered by the Rule. Indeed, we have
held explicitly that “[s]ettlement agreements [ ] between parties to a collective bargaining
agreement containing a broad arbitration clause are arbitrable when the underlying
disputes are arbitrable, except when the parties expressly exclude the settlement
agreements from arbitration.” United Steelworkers of America, AFL-CIO-CLC v. Lukens
Steel Co., Div. of Lukens, Inc., 969 F.2d 1468, 1475 (3d Cir. 1992) (citation omitted).
Accordingly, Bazzone’s claims regarding Nationwide’s alleged breach of a settlement
agreement are arbitrable as well.
For these reasons, we will affirm the District Court’s orders granting Nationwide’s
motions to compel and affirming the arbitrators’ award in Nationwide’s favor.

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7
AM BRO, Circuit Judge, Dissenting.
I do not agree that the National Association of Securities Dealers (“NASD”) Form
U-4 applies to Bazzone’s allegations in this case. I therefore respectfully dissent.
Form U-4, and the NASD Code provision it incorporates, require the arbitration of
any dispute, claim, or controversy arising out of or in connection with
the business of any member of the Association, or arising out of the
employment or termination of employment of associated person(s)
with any member, with the exception of disputes involving the
insurance business of any member which is also an insurance
company . . . between or among members and associated persons.
NASD Code § 10101. My colleagues in the majority conclude “that the Form U-4 signed
by Bazzone, together with NASD Rule 10101, clearly and unambiguously require
arbitration of Bazzone’s ‘redlining’ claims.” This conclusion ignores a threshold
question. Do the arbitration provisions in Form U-4 and NASD Rule 10101 apply to
claims, such as those alleged here, that do not relate to securities and that Bazzone claims
he therefore did not intend to arbitrate?
In order to answer this question, we must look at what Bazzone intended at the
time he signed Form U-4, for it is well settled that, despite our recognition of a
presumption of arbitrability, “[a]rbitration is a matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not agreed to submit.” AT&T
Techs. v. Communications Workers of Am., 475 U.S. 643, 648 (1986); see also
Medtronic Ave Inc. v. Advanced Cardiovascular Sys. Inc., 247 F.3d 44, 55 (3d Cir. 2001)

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8
(parties not required to arbitrate dispute that falls outside the scope of the arbitration
agreement).
Bazzone signed Form U-4 so that he could sell variable annuity life insurance,
which is considered a security and thus subject to securities regulations. Any dispute
Bazzone had with Nationwide arising out of the sale of these life insurance products
would clearly fall within the scope of the arbitration provision in Form U-4. But
Bazzone’s redlining allegations here relate not to the sale of variable annuity life
insurance, but to the sale of homeowners’ and automobile insurance— products that are
not considered securities.
There is no indication that, by signing Form U-4, Bazzone intended to agree to
submit all disputes arising between himself and Nationwide to arbitration. First, Bazzone
sold homeowners’ and automobile insurance products before he signed Form U-4.
Second, the sale of life insurance is apparently a very small percentage of Bazzone’s
business. In this context, if a person sells X and Y without an agreement to arbitrate, and
then signs an agreement to arbitrate claims as to Z because he wishes to sell Z products
and to do so he is required to arbitrate related claims, logic leads away from arbitrating
claims regarding X and Y absent an agreement explicitly extending arbitration to X and
Y. Put another way, common sense (laymen’s logic) cannot conclude that Bazzone
intended, by signing Form U-4, to agree to arbitrate disputes arising out of the sale of
homeowners’ and automobile insurance—sales that he was engaged in prior to entering

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4Our decision in In re Prudential Ins. Co. of Am. Sales Practice Litig., 133 F.3d
225 (3d Cir. 1998), does not, in concluding that arbitration of the Prudential sales agents’
insurance sales fraud allegations was required under Form U-4 and the NASD Code,
mention what kind of insurance the alleged fraud scheme involved. However, we noted
in that case that one former employee’s “entire theory of recovery [was] premised on the
fact that he was a Prudential employee with authority to trade in securities.” Id. at 229
n.7. Presumably, if there were a threshold issue in that case whether Form U-4 governed
the dispute, it would have been raised by the former Prudential employees who resisted
arbitration.
9
any agreement implicating the NASD rules and that constituted the main portion of his
business.
Although our precedents considering whether disputes are arbitrable under Form
U-4 do not explicitly consider whether the substantive dispute must involve securities for
Form U-4 to apply, these cases arose in contexts where securities were directly at issue or
where the parties had expressly agreed that Form U-4 would apply. See, e.g., John
Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 140 (3d Cir. 1998) (parties agreed
that the substantive dispute fell within the scope of the arbitration clause in Form U-4);
First Liberty Inv. Group v. Nicholsberg, 145 F.3d 647, 653 (3d Cir. 1998) (arbitration of
breach of employment agreement was required when the employment agreement itself
incorporated the NASD Code); Seus v. John Nuveen & Co., Inc., 146 F.3d 175, 177 (3d
Cir. 1998) (no question as to the threshold applicability of Form U-4 because the
employee was one who was employed to “deal directly with the public in purchase and
sale of over-the-counter securities”).4

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5Because I conclude that Form U-4 does not require arbitration in this case, I need
not reach the issue whether Bazzone’s claims fall into the “insurance business exception”
in NASD Rule 10101. If I reached that question, my analysis would be somewhat
different from that of my colleagues in the majority. I am not convinced that In re
Prudential forecloses Bazzone’s argument that the insurance business exception applies
here. In that case, we broadly stated that the insurance business exception requires
arbitration of claims that are “intrinsically insurance” and that we could not define that
phrase with any certainty in relation to the requirement that employment disputes be
arbitrated. In re Prudential, 133 F.3d at 234. We therefore applied the presumption in
favor of arbitrability to hold that employment disputes do not fall within the exception.
Id. Concluding, as the majority does, that the insurance business exception also does not
apply to Bazzone’s claims, which do not arise from his employment with Nationwide but
rather from Nationwide’s business practices, renders the exception surplusage because it
is inapplicable to either category of disputes for which NASD Rule 10101 requires
10
Here, unlike our other cases in this area, the substantive dispute does not involve
securities, and Bazzone does not appear to have agreed to the application of Form U-4
and the NASD Code to the non-securities part of his business. Concluding, as the
majority does, that Form U-4 and NASD Rule 10101 require arbitration in this case is, in
my view, an unwarranted expansion of the scope of the arbitration agreement between
Bazzone and Nationwide. An arbitration provision designed for the securities industry
does not, absent clear agreement, transfer to a situation where securities are not involved
at all. Cf. IDS Life Ins. Co. v. Royal Alliance Assocs., 266 F.3d 645, 652 (7th Cir. 2001)
(Posner, J.) (noting, in holding that a dispute did not fall within the insurance business
exception to arbitration under the NASD rules, that “this is not a case of an arbitration
program designed for the securities industry being yanked into a class of disputes that do
not involve securities.”). I perceive no choice but to dissent from my colleagues’
conclusion that “clear[] and unambiguous[]” language calls for arbitration.5

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arbitration (employment disputes and disputes arising out of, or in connection with, an
NASD member’s business).
In IDS Life Ins., however, Judge Posner wrote that the purpose of the insurance
business exception is to “keep arbitrators away from issues that are peculiar to insurance
such as reserves, reinsurance, actuarial calculations, rates, coverage, and mandatory
terms.” 266 F.3d at 652. Bazzone’s redlining allegations implicate Nationwide’s sales
practices, not any issues that are “peculiar to insurance.” Under the reasoning of IDS Life
Ins., I would therefore hold that if Form U-4 applied to Bazzone’s claims, the insurance
business exception would not exempt them from arbitration.
11

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