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A federal court in Tennessee declined to issue a preliminary injunction of an arbitration taking place in Tennessee, despite the fact that the parties' agreement contained a Massachusetts forum selection clause because the Court did not have jurisdiction.
In Linsco/Private Ledger Corp. v. Maurice, No. 3:07-0183, 2007 WL 869720 (M.D. Tenn. Mar. 21, 2007), Linsco/Private Ledger ("LPL"), an independent brokerage firm with headquarters in Boston, Massachusetts, became embroiled in a dispute with Maurice, an LPL representative. Maurice's "Representative Agreement" with LPL included an arbitration agreement, which expressly named Boston as the arbitral forum.
When the National Association of Securities Dealers arbitrator set the site of the initial arbitration hearing in Maurice's home state of Tennessee, LPL filed suit in Tennessee for a preliminary injunction to stop the hearing.
The Tennessee Court held that under the Federal Arbitration Act it lacked jurisdiction to compel arbitration in Boston. Only a Massachusetts federal court could issue such an order.
Additionally, the Court did not find that LPL would suffer the requisite harm as a result of the Court's refusal to grant the injunction. Specifically, the Court noted that LPL could seek a change in forum from the arbitration panel itself or seek an order compelling arbitration in Boston from a court of proper jurisdiction.
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