Kenneth Thomas brought suit against his former employer, Kidder, Peabody & Company, and two of its employees, Barclay Perry and James Johnston, in a dispute over commissions on sales of securities. When he applied to work at Kidder, Peabody, Thomas had filled out a form, which contained an arbitration agreement clause.
Thomas had also registered with the New York Stock Exchange (NYSE). Rule 347 of the NYSE provides that any controversy between a registered representative and a member company shall be settled by arbitration. Kidder, Peabody is a member of the NYSE. Thomas refused to arbitrate, relying on Section 229 of the California Labor Code, which provides that actions for the collection of wages may be maintained ‘‘without regard to the existence of any private agreement to arbitrate.''
Perry and Johnston filed a petition in a California state court to compel arbitration under Section 2 of the Federal Arbitration Act, which was enacted pursuant to the Commerce Clause of the U.S. Constitution. Should the petition of Perry and Johnson be granted?