                            In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 06-1254
DELBERT L. DUNMIRE,
                                           Plaintiff-Appellant,
                               v.

LAWRENCE J. SCHNEIDER,
                                           Defendant-Appellee.
                         ____________
       Appeal from the United States District Court for the
         Northern District of Illinois, Eastern Division.
          No. 05 C 3450—John A. Nordberg, Judge.
                         ____________
  ARGUED FEBRUARY 5, 2007—DECIDED MARCH 15, 2007
                   ____________


 Before EASTERBROOK, Chief Judge, and ROVNER and
SYKES, Circuit Judges.
  EASTERBROOK, Chief Judge. Delbert Dunmire traded
silver futures contracts through Morgan Stanley and
its predecessor Dean Witter. Dunmire’s broker, John
Hoffman, retired in 2002 and Morgan Stanley assigned
the account to his son Matt. Lawrence Schneider, a
supervisory broker, assured Dunmire that Matt was up
to the task and promised to keep tabs on his performance.
In April 2004 volatility in the silver market led the New
York Mercantile Exchange, where Dunmire’s contracts
were trading, to increase its maintenance margin require-
ments. Matt Hoffman miscalculated the effects of this
change and told Dunmire that he needed $750,000 in
2                                             No. 06-1254

additional margin, about one-quarter of what actually
was required; Dunmire posted the $750,000 to maintain
his contracts, though he might not have done so had
Hoffman provided accurate numbers.
  On April 19, 2004, Hoffman told Dunmire that $1 million
in additional margin was needed before the market
opened the next day. Again Hoffman’s calculation was off
(the actual requirement was more than $3 million), but
Dunmire decided that even an extra $1 million was too
much to put at risk. He declined to meet this margin call,
expecting that his position would be liquidated immedi-
ately. Yet liquidation did not occur on the 20th—whether
because the market went limit down that morning or
because Hoffman made still another error is unclear. By
the time Dunmire’s positions were closed the afternoon of
April 21, his silver contracts had a negative value. Morgan
Stanley demanded $1.4 million to cover the loss; Dunmire,
however, demanded that Morgan Stanley pay about
$2 million to make good what Dunmire thought to be the
consequences of Hoffman’s blunders. A stalemate was
followed by litigation—and still more litigation.
  Dunmire first launched a reparations proceeding before
the Commodities Futures Trading Commission seeking
$2 million. See 7 U.S.C. §§ 9, 18. Morgan Stanley filed a
counterclaim seeking $1.4 million. While that was pend-
ing, Dunmire sued Morgan Stanley in the Western District
of Missouri on the theory that it had disclosed confiden-
tial information to his estranged wife, in violation of
federal laws regulating financial transactions. Next
Dunmire commenced an arbitration before the National
Futures Association; again Morgan Stanley counter-
claimed for the balance due on the account. Dunmire’s
fourth action, against Matt Hoffman, was filed in the
Southern District of New York. His fifth, against Robert
Lee, one of Hoffman’s co-workers, was filed in the Western
District of Missouri. And his sixth, this suit, was filed
No. 06-1254                                                3

against Schneider in the Northern District of Illinois. This
is the sort of vexatious multiplication that 28 U.S.C.
§1927 is designed to prevent, though Schneider has not
invoked that statute in this suit.
  The main event was (or should have been) the National
Futures Association, whose arbitrators split the difference
by rejecting both Dunmire’s demand for $2 million in
damages and Morgan Stanley’s demand for the $1.4
million shortfall. The suit against Lee was dismissed for
lack of personal jurisdiction. The reparations proceeding
was dismissed on Dunmire’s motion after it had been
pending for more than a year—and the CFTC concluded
that Dunmire’s effort to recover in the administrative
forum without showing scienter on Morgan Stanley’s part
was frivolous, so that Morgan Stanley’s counterclaim
had to be dismissed for lack of jurisdiction. Dunmire v.
Hoffman, 2006 CFTC LEXIS 25 (Mar. 2, 2006). Morgan
Stanley won the wrongful-disclosure suit on the merits.
See Dunmire v. Morgan Stanley DW, Inc., 2007 U.S. App.
LEXIS 2474 (8th Cir. Feb. 5, 2007). Finally, the actions
against Hoffman and Schneider were dismissed as barred
by Dunmire’s promise to arbitrate rather than litigate.
  The “Futures Customer Agreement” between Dunmire
and Morgan Stanley contains this arbitration clause:
    Every dispute between customer and [Morgan
    Stanley] arising out of or relating to the making or
    performance of this Agreement or any transaction
    pursuant to this Agreement, shall be settled by
    arbitration in accordance with the rules, then in
    effect, of the National Futures Association, the
    contract market upon which the transaction giving
    rise to the claim was executed, or the National
    Association of Securities Dealers, as Customer
    may elect. . . . By signing this agreement you (1)
    may be waiving your right to sue in a court of law
4                                               No. 06-1254

    and (2) are agreeing to be bound by arbitration of
    any claims or counterclaims which you or [Morgan
    Stanley] may submit to arbitration under this
    agreement.
Dunmire observes that this clause does not mention
Morgan Stanley’s employees, and he insists that he is
therefore free to sue Schneider in any court where he can
obtain personal jurisdiction. The district court, by contrast,
observed that Dunmire’s dispute with Schneider is one
“arising out of or relating to the making or performance of
this Agreement or any transaction pursuant to this Agree-
ment”; Dunmire’s claims concern how Schneider super-
vised (or didn’t supervise) Hoffman’s handling of
his account, rather than an unrelated topic such as
negligence while driving a car.
   Morgan Stanley’s obligations to Dunmire depend on
what its agents did (or omitted) when dealing with his
account. It would make little sense for a customer to
arbitrate Morgan Stanley’s liability while simultaneously
litigating with the employees—if there were anything to
litigate with the employees about. Schneider, Hoffman,
and Lee dealt with Dunmire on behalf of a disclosed
principal; as long as they acted within the scope of that
agency, they would not be personally liable under the law
of most states whether or not their errors or omissions
caused Morgan Stanley to injure a customer. See Restate-
ment (Third) of Agency §6.01 & Comment d (2006). (This
contrasts with torts, for which an agent may be directly
liable. See id. at §7.01.) Given the rule that liability runs
for or against the principal only, a contract providing
for arbitration between the customer and the principal
covers the waterfront.
  To the extent that there is any doubt about this, courts
regularly treat employees as third-party beneficiaries of
arbitration clauses such as this. See Letizia v. Prudential
No. 06-1254                                              5

Bache Securities, Inc., 802 F.2d 1185 (9th Cir. 1986),
approved (though in dictum) in Asset Allocation & Manage-
ment Co. v. Western Employers Insurance Co., 892 F.2d
566, 574-75 (7th Cir. 1989). See also, e.g., Pritzker v.
Merrill Lynch, Pearce, Fenner & Smith, Inc., 7 F.3d 1110
(3d Cir. 1993); Roby v. Corporation of Lloyd’s, 996 F.2d
1353 (2d Cir. 1993). No appellate decision goes the other
way.
  The benefits of arbitration in making decision fast
and less expensive, and committing resolution to experts,
can be achieved only by consolidating all claims and
theories in a single arbitral forum. Should any of its
employees be held liable in separate litigation, Morgan
Stanley would have to pay; Morgan Stanley also is bearing
the legal expense of defending the suits. (Morgan Stanley’s
internal counsel’s office is representing Schneider.) Cf.
Ross v. American Express Co., 2007 U.S. App. LEXIS
3224 (2d Cir. Feb. 13, 2007) (it would be unjust to allow a
person who has agreed to arbitrate a dispute to weasel out
of that promise by suing related persons or entities, so
equitable estoppel blocks such a course).
  Arbitration is a creature of contract, as Dunmire
stresses, but the party to be bound here is Dunmire
himself: his signature is on the contract. That Schneider
and Morgan Stanley’s other employees did not sign does
not distinguish this from any other situation in which the
signatories to a contract confer benefits on third parties.
Dunmire could acquire services from Morgan Stanley at
lower cost by agreeing to arbitrate all claims in one forum
than he could by threatening suits against all of Morgan
Stanley’s employees, one at a time, and obtaining judg-
ments that Morgan Stanley must pay. Dunmire is trying
to roll the dice repeatedly and take the outcome most
favorable to him; that skews the odds compared with a
single arbitration (or for that matter a single litigation)
6                                            No. 06-1254

and imposes on dealers a cost that investors must bear
in the end.
  Notwithstanding all of this, Dunmire insists, his situa-
tion is distinctive because Morgan Stanley changed the
terms of the arbitration clause. Until 2000 arbitration
agreements between Morgan Stanley and its customers
specifically covered claims against the firm’s employees
as well. That language was dropped in 2000, and the
difference implies that the arbitration clause no longer
covers employees, the argument runs.
  An inference from a change in language is weak. Good
drafters often omit unnecessary language, which compli-
cates agreements and impedes comprehension without
changing the consequences. Given decisions such as Asset
Allocation, Letizia, Pritzker, and Roby, all of which pre-
dated 2000, a reference to employees could well have been
omitted as pointless clutter.
  As it happens, however, there was no change. Dunmire’s
appellate lawyer either does not understand the agree-
ments her client signed or is attempting to mislead the
court. Dunmire signed four agreements with Morgan
Stanley and its predecessor in interest. Two dealt with
securities and two with futures and other derivatives. The
four are, in order of signing: (1) a “Customer Agreement:
Margin Account” (1989); (2) a “Futures Customer Agree-
ment” (1997); (3) a “Client Account Agreement” (1999); and
(4) a “Futures Customer Agreement” (2000). Numbers 1
and 3 deal with securities, numbers 2 and 4 with deriva-
tives. Dunmire’s appellate lawyer compares agreements 3
and 4, observing that the former consents to arbitration
by and against employees while the latter does not men-
tion employees. Yet agreement 4 did not replace agreement
3; it replaced agreement 2. Both agreements 1 and 3
specify that arbitration includes claims by and against
employees; neither agreement 2 nor agreement 4 mentions
No. 06-1254                                                7

employees. So there has been no change on either the
securities side or the derivatives side. The difference
probably can be traced to the fact that the securities clause
is a standard form used by NASD, while the derivatives
clause is common for futures transactions. No matter
why the securities agreement differs from the derivatives
agreement, however, there has been no material change
with respect to either line of business, and no inference
can be drawn from nonexistent change.
                                                 AFFIRMED


A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit




                   USCA-02-C-0072—3-15-07
