## Facts

- Joan Chason Alford worked as a stockbroker for Dean Witter Reynolds, Inc., under supervisor Don L. Harris.
- As a condition of employment, Alford executed securities-industry registration agreements associated with the NYSE and NASD that included arbitration clauses.
- Alford sued Dean Witter and Harris in federal court alleging employment discrimination under Title VII.
- Defendants moved to compel arbitration based on the registration-agreement arbitration provisions.
- After intervening Supreme Court authority on arbitrability in the securities-registration context, the district court compelled arbitration and dismissed Alford’s Title VII action with prejudice.
- Alford appealed, challenging the dismissal posture and raising additional challenges to arbitration.

## Issues

1. Whether the district court erred by dismissing the Title VII action with prejudice while compelling arbitration, rather than staying the case pending arbitration.
2. Whether Alford could raise for the first time on appeal arguments that (a) she was fraudulently induced to work for Dean Witter, (b) the arbitration provisions were adhesive, and (c) Dean Witter waived arbitration by asserting a counterclaim during arbitration.

## Decision

- The Fifth Circuit affirmed the order compelling arbitration and the dismissal with prejudice.
- The court held that where all claims are referable to arbitration, dismissal rather than a stay is within the district court’s discretion.
- The court declined to consider Alford’s fraud, adhesion, and waiver theories because they were not presented to the district court and did not fall within a narrow exception for purely legal issues.
- The court denied defendants’ request for appellate sanctions.

## Legal Principles

- Title VII employment-discrimination claims may be compelled to arbitration under arbitration clauses in securities-industry registration agreements, consistent with federal arbitration law.
- When all claims in a federal action are subject to arbitration, a district court may dismiss the action (including with prejudice) instead of staying proceedings, because no merits issues remain for judicial resolution.
- Challenges to the validity or enforceability of an arbitration agreement (including fraud, adhesion, and waiver) generally must be raised in the district court; absent a clearly applicable exception, they are forfeited if first asserted on appeal.

## Conclusion

The Fifth Circuit upheld compelled arbitration of a broker’s Title VII claims under securities registration agreements and ruled that dismissal with prejudice was permissible because arbitration encompassed all claims; it also enforced issue-preservation rules to reject new anti-arbitration arguments raised only on appeal.


Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161 (5th Cir. 1992)