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Alabama Supreme Court Upholds Exclusion

AllAmerica Financial Life v. Miller, Nos. 198029-30 (Ala., 6/23/00): In a split Opinion, the Alabama Supreme Court reaffirms a broad exclusion of insurance-related cases from NASD arbitration’s purview.

Mr. Miller is a former AllAmerica agent, who now sues for unpaid commissions on an insurance product of which he was a top seller. His direct employer was Nowlin & Associates, but Nowlin, the Court decides, does not have standing to invoke the Form U-4 agreement to arbitrate, as Nowlin is not a NASD member.

All America is a NASD member, but is also an insurance company. Under NASD Rule 10101, “disputes involving the insurance business of any member which is also an insurance company” are excepted from the SRO’s arbitration requirements; this Court, in Ex Parte Hagan, 721 So.2d 167 (1998), held the exception applicable in similar circumstances and denied arbitration. In this decision, although invited by All America’s petition to re-visit Hagan, the Court’s majority stands firm. A three–judge dissent would overrule Hagan. To rule broadly that “an employment dispute with an insurance company necessarily involves the insurance business of that company … [is] contrary to the clear majority of cases….” (SAC Ref. No. 2000-18-002)


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