SW Legal studies in Business

Use of Deposition Does Not Violate Right to Arbitrate Dispute
Description An Appeals court held that in a dispute that was required to go to arbitration, the complaining party did not lose the right to arbitrate by engaging in formal discovery, including taking depositions, which would be normal in litigation but not in arbitration. The discovery was not improper, so arbitration could proceed.
Topic Alternate Dispute Resolution
Key Words Arbitration; Depositions; Securities
C A S E   S U M M A R Y
Facts Numerous investors sued Merrill Lynch, a brokerage firm, for various securities law violations. By the terms of the investors' contracts with Merrill Lynch they were required to take their complaints to arbitration. The investors engaged in various discovery procedures, including the taking of depositions of witnesses. Merrill Lynch contended that the taking of depositions violated the right of the investors to arbitrate and requested the court to dismiss the complaints. The trial court ordered the arbitration to proceed; Merrill Lynch appealed.
Decision Affirmed. The investors did not waive their right to arbitration of their claims of securities law violations by taking depositions in their action against the brokerage firm. While it is not typical arbitration procedure since it is a part of litigation procedure, it is not improper activity since under arbitration there are discovery methods somewhat like those available in litigation.
Citation Merrill Lynch v. Adams, 2001 WL 331976 (Ct. App., Fla., 2001)

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