source: Caselaw Access Project

author: J. THOMAS GREENE, District Judge.

license: Public Domain

text:
    CONTINENTAL GRAPHICS, DIVISION OF REPUBLIC CORPORATION, a Delaware corporation, Plaintiff, v. HILLER INDUSTRIES, INC., a Utah corporation, Defendant and Third Party Plaintiff, Instituto Mexicano Del Seguro Social, an Agency of the Republic of Mexico, Third Party Defendant.
    Civ. No. C83-602G.
    United States District Court, C.D. Utah, C.D.
    Aug. 5, 1985.

      Kevin Anderson, Fabian & Clendenin, Salt Lake City, Utah, for plaintiff.
    Stephen Stoker, Salt Lake City, Utah, for defendant and third party plaintiff.
    Barbara Strickland, Salt Lake City, Utah, for third party defendant.
   MEMORANDUM DECISION AND ORDER

J. THOMAS GREENE, District Judge.

The matter came on for hearing before the Court on Third Party Defendant’s Motion to Dismiss on June 28, 1985. Kevin Anderson appeared as counsel for plaintiff, Stephen Stoker as counsel for Defendant and Third Party Plaintiff Hiller Industries, Inc. (hereinafter “Hiller”), and Barbara Strickland as counsel for Third Party Defendant Instituto Mexicano del Seguro Social (hereinafter “IMSS”). Extensive memorandums of law had been submitted to the Court and certain additional filings were received at the beginning of the hearing. Extensive oral argument was presented by counsel for Hiller and IMSS, after which the matter was submitted to the Court for ruling, subject to receipt of a Reply Memorandum which the Court granted counsel for Hiller the right to file, and which in fact was filed on July 15, 1985. Now after due consideration, and being fully advised, the Court denies IMSS’s Motion to Dismiss. For the reasons set forth below, we hold that the Mexican agency waived its immunity to suit and find subject matter and personal jurisdiction to exist in this case. We likewise hold that objections as to improper venue and forum non conveniens do not require dismissal of the action.

The Motion to Dismiss requires analysis of the applicability of the Foreign Sovereign Immunities Act (hereinafter “FSIA”) as applied to an agency of the Mexican government under the facts of this case. The operative facts are that in 1982, a representative of Continental Graphics met with representatives of IMSS, an agency or instrumentality of the government of the United Mexican States, in Mexico and negotiated an agreement to print, collate and bind 3100 sets of a two-volume treatise called “El Torrito Mexicano.” The contract was executed in Mexico and called for related sets of maps and map cases in addition to the books. Continental, a California corporation, then subcontracted with Hiller, a Utah corporation, to collate and bind the books and to provide map cases called for under the IMSS-Continental contract. Continental retained responsibility to print the books, and after it had finished doing so, several representatives of IMSS went to California to proof read and inspect the printed materials. At that time the materials had not yet been bound or collated as called for in the Hiller-Continental subcontract. The IMSS personnel all spent one week in California inspecting the materials, and met with representatives of Hiller as well as representatives of Continental while there. These meetings included at least two sessions to negotiate or dismiss the terms of the Hiller book-binding subcontract. Thereafter, Hiller completed the binding, collation and map case production in Utah, and the sets were shipped by Hiller to IMSS in Mexico. IMSS received the books and materials, but refused to pay for them because of claimed defects including the fact that some of the sets contained a photograph that was printed upside-down. As a result, a representative of Continental went to Mexico and arranged a price-reduction under the contract to reflect the printing error. The original price was $1,957,968.80. IMSS had made down payments of about $600,000.00 before the new price was negotiated, leaving a balance due of $1,365,956.80. The newly negotiated price was $1,000,000.00, thus effectively reducing the contract price by $365,956.80, allegedly to reflect printing and collation errors. IMSS still owes approximately $700,000.00 of this amount, which it concedes is due, but resists action by Hiller against it in United States courts. Continental has sued Hiller, alleging that Hiller was responsible for the defects in the books and that therefore Hiller is liable to Continental for any payments IMSS has not made, and for the price adjustment allegedly necessitated by the defective books.

Hiller was granted permission by the court to join IMSS, and by Third Party Complaint has alleged that IMSS is ultimately responsible for claims asserted by Continental against Hiller. IMSS has moved to dismiss Hiller’s Third Party Complaint on three principal grounds: (1) service was improperly made under FSIA; (2) this Court lacks subject-matter jurisdiction; and (3) there is no personal jurisdiction over IMSS. IMSS also raises in its legal memoranda the issues of improper venue and forum non conveniens. Under the facts above set forth, which are undisputed, we consider that IMSS is properly before the court and that the case should progress to the merits. The legal considerations which dictate this conclusion will now be discussed.

1. Service of Process

Section 1608(b) of the Foreign Sovereign Immunities Act of 1976 (“FSIA”), 28 U.S.C. § 1602-1608 governs service of process upon agencies and instrumentalities of foreign governments. One method of serving process thereunder is by way of letters rogatory under § 1608(b)(3)(A), which provides that service can be effected “as directed by an authority of the foreign state or political subdivision in response to a letter rogatory.” In the instant action, Hiller obtained letters rogatory from this Court, submitted such to appropriate persons in Mexico, arranged for translation of the materials into Spanish, and submitted them to officials of the Mexican Federal Court. IMSS was then served in accordance with the directions of the Mexican Federal Court. Documents to establish the aforesaid were filed with this Court, and counsel for IMSS appeared to concede the validity of the service. In any event, the Court finds that service was adequate under the FSIA.

2. Subject Matter Jurisdiction

Section 1330(a) of the FSIA provides that the district courts shall have original jurisdiction of non-jury civil actions against foreign states involving claims for relief in personam where the foreign state “is not entitled to immunity either under § 1605-1607 of this title or under any applicable international agreement” [28 U.S.C. § 1330(a)]. Section 1605 of the Act contains the so-called “commercial activity” exception under which it is acknowledged that an otherwise immune foreign sovereignty may become amenable to suit. Under that Section, the commercial activity waiver becomes effective in any of the following situations:

1) the commercial activity is carried out in the United States;
2) it performs an act in the United States in connection with a commercial activity of the foreign state elsewhere;
3) it performs an act outside the United States that in connection with a commercial activity of the foreign state elsewhere causes a direct effect in the United States.
[28 U.S.C. § 1605(a)(2).]

The definition of “commercial activity” is set forth in subsection 1603(d) which provides:

(d) A “commercial activity” means either a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.

The activities of IMSS in contracting were commercial rather than governmental activities within the meaning of FSIA, but IMSS denies that these admittedly commercial activities were carried out in the United States, or that it performed any act in the United States in connection with a commercial activity carried on elsewhere, or that it performed an act abroad in connection with its commercial activities that had a direct effect in the United States. IMSS argues that any commercial activity it pursued must have been in Mexico because the contract in question was negotiated and executed in Mexico and was “merely” to be performed in the USA. However, “mere” performance of the contract in question necessarily involved substantial commercial activities requiring large usage of labor and materials in the United States. IMSS knew this from the beginning. In connection with such commercial activities, IMSS sent at least four representatives to this country to inspect the printing work done by Continental in California. At least two of the representatives remained in the United States for over one month. These representatives met with Hiller to review the performance expected and to discuss details concerning materials to be used in the binding process and other specifics. The negotiations and inspections by IMSS in California were clearly connected with the commercial activities of IMSS in Mexico in producing the books and maps. Accordingly, even if it could be said that IMSS did not directly “carry out” commercial business in the United States, it certainly performed acts in the United States in connection with its commercial activities carried out in Mexico. Also, when IMSS modified its original contract there was additional direct effect and impact in the United States, including the controversy and cause of action which underlies the present litigation. We hold that IMSS waived its immunity to be sued in the United States District Courts of this country and that subject matter jurisdiction exists.

3. Personal Jurisdiction

Section 1330(b) of the FSIA provides that personal jurisdiction over a foreign state exists where subject matter jurisdiction is found to exist under Section 1330(a) and there has been service of process. That mechanical statutory formula could not create personal jurisdiction, however, if the Constitution forbids it. Accordingly, the question becomes whether IMSS has sufficient contacts with the United States so as to satisfy traditional due process considerations. It is important in each case that maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In making this determination, four factors must be considered: (1) the extent to which the defendant availed itself of the privileges of U.S. law, (2) the extent to which litigation in the United States would have been foreseeable to the defendant, (3) the inconvenience to the defendant of litigating in the United States, and (4) the countervailing interest of the United States in hearing the suit. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); Kulko v. California Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978); Hanson v. Denckla, infra; McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957). The activities of IMSS, and the impact thereof in the United States, should be measured by these standards.

On the facts at hand, the first factor is clearly met. IMSS purposefully availed itself of the services of a U.S. company to perform services in the United States for it. Further, it sent representatives here to review the work and to make inspection of the goods. Had IMSS wanted to, most certainly it could have sued either Continental or Hiller in U.S. Courts. The contract was completely performed in the United States by U.S. workers governed by U.S. law. While IMSS correctly points out that mere contracting with a resident of a foreign corporation is insufficient to provide jurisdiction with nothing more, Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958), the fact remains that it availed itself of the protections of U.S. laws by contracting for production of goods here. The issue is not one of abstract theory, but of economic reality. Thomas P. Gonzales Corp. v. Consejo Nacional de Produccion de Costa Rica, 614 F.2d 1247 (9th Cir.1980).

Turning to the foreseeability factor, when IMSS elected to contract for production of the books in the United States, it was readily foreseeable that litigation might arise from the physical aspects of production. The most obvious foreseeable possibility was what actually happened, that there might be a dispute concerning nonconforming goods. That there would be subcontracts in order to accomplish and carry out the project was also readily foreseeable. Likewise, problems arising under such subcontracts in interpretation, quality of performance, meeting time constraints and like problems was predictable. By the time IMSS and Continental modified their agreement such problems were apparent, not merely foreseeable. The second factor is met.

As to the third factor, the Court recognizes that litigating this matter may be inconvenient to IMSS. IMSS responded to this action initially by entering an appearance through the Mexican Consul in Salt Lake City. Since then, extensive legal memoranda and appearances through able counsel has demonstrated the clearcut ability of IMSS to have its interests well represented in this forum. The alternative of piecemeal litigation in the U.S. and in Mexico, or transfer of the entire matter to Mexico City, most certainly would be more inconvenient to all other parties and burdensome in terms of judicial economy than resolution of the matter here. Moving to the fourth factor, the interest of the United States government in having this dispute resolved in its courts is significant and substantial. The very purpose for which the FSIA was passed was to enable citizens of this country to resolve disputes in United States Courts where labor and capital of this country are utilized in the furtherance of commercial activities or similar matters. Prior to passage of the FSIA, the U.S. had almost uniformly granted sovereign immunity across the board to foreign sovereigns. See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486, 103 S.Ct. 1962, 1967, 76 L.Ed.2d 81, 85 (1983). The FSIA was intended to alter that policy and provide access to the courts in appropriate cases involving foreign sovereigns and their agencies, H.Rep. No. 94-1487, 94th Congress, 2d Sess. 13, 14 (1976), reprinted in 1976 U.S.Code Cong. & Admin.News at 6604, 6611, 6612. We find the third and fourth factors to be present under the facts of this case.

IMSS next argues that even if it is subject to suit in federal district courts as a general proposition, it is not subject to jurisdiction in this court because it had no contacts with Utah. But the activities of IMSS in California and contacts there is enough to constitute waiver of sovereign immunity and to satisfy subject matter jurisdiction. In addition, activities of IMSS did in fact touch and impact Utah, in that before the binding and collating of the books in Utah, and before the map case production occurred in Utah, IMSS met with representatives of Hiller and concurred that such commercial activity should occur here. We need not pursue the jurisdictional implications of such impact upon Utah, however, since we are persuaded by decisions of the vast majority of courts which have held that the relevant forum for determining whether personal jurisdiction exists is the entire United States, not the particular district. Texas Trading & Milling Corp. v. Federal Republic of Nigeria, et al., 647 F.2d 300 (2d Cir.1981). See also Banker’s Trust Co. v. Worldwide Transportation Services, 537 F.Supp. 1101 (E.D.Ark.1982) and cases cited therein at pp. 1108, 1109. Cf. Meadows v. Dominican Republic, 542 F.Supp. 33 (N.D.Ca.1982), Waukesha Engine Division, Dresser Americas, Inc. v. Banco Nacional de Fomento Cooperativo, 485 F.Supp. 490 (E.D.Wis.1980). Having found that requiring IMSS to appear in this court would not violate due process considerations, we hold that this court has personal jurisdiction as to IMSS in this dispute.

4. Venue and Forum Non Conveniens

IMSS argues in its brief that in all events venue is laid improperly in the District of Utah, and/or that the doctrine of Forum Non Conveniens applies. We reject both arguments.

Independent venue need not be met where, as here, third parties are brought into litigation ancillary to the pending suit. U.S. v. Acord, 209 F.2d 709, 712 (10th Cir.1954), cert. denied. Acord v. U.S., 347 U.S. 975, 74 S.Ct. 786, 98 L.Ed. 1115 (1954).

We find no merit in IMSS’ argument that the doctrine of forum non conveniens should apply to dismiss Hiller’s third party complaint under 28 U.S.C. § 1404(a). IMSS has failed to demonstrate that the matter could be resolved more conveniently in any other forum, and that the parties would obtain justice there. IMSS apparently assumes that the matter could be tried in the courts of Mexico, but has failed to demonstrate that IMSS would appear in those courts and that the plaintiffs would not be compromised by dismissal of this action. Swift & Co. Packers v. Compania Colombiana Del Caribe, 339 U.S. 684, 70 S.Ct. 861, 94 L.Ed. 1206 (1950). Also, IMSS has made no showing that the ends of justice and convenience of the parties will best be served by dismissing the case. The standard is a very stringent one which requires balancing the plaintiff’s interest in its choice of forum against the relative burden of inconvenience imposed on the defendant by choice of the forum. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). The court noted in Norwood v. Kirkpatrick, 349 U.S. 29, 75 S.Ct. 544, 99 L.Ed. 789 (1955), that the forum non conveniens doctrine has been applied to justify dismissal of a case where the forum chosen by the plaintiff is “so completely inappropriate and inconvenient that it is better to stop the litigation in the place where brought and let it start all over again somewhere else.” But the court continued:

It is quite naturally subject to careful limitation for it not only denies the plaintiff the generally accorde'd privilege of bringing an action where he chooses, but makes it possible for him to lose out completely, through the running of the statute of limitations in the forum finally deemed appropriate. (349 U.S. at 31, 75 S.Ct. at 546.)

Here, IMSS was joined as a third party defendant in a case already in progress. To dismiss the complaint against IMSS and require Hiller to pursue its remedy separately in Mexico would require piecemeal re-litigation of many issues presented here, and certainly would not bring about judicial economy. Most of the documents, witnesses and other evidence relevant to this dispute are in the United States. While we recognize that IMSS will be burdened to some extent in defending itself here, the alternative of trial in Mexico is even more burdensome overall.

For the foregoing reasons, Third Party Defendant IMSS’s Motion to Dismiss is hereby denied.


author: OWENS, Chief Judge:

text:
    Velva WISE, Plaintiff, v. The MEAD CORPORATION, Defendant.
    Civ. A. No. 83-166-1-MAC.
    United States District Court, M.D. Georgia, Macon Division.
    Aug. 6, 1985.

      J.A. Powell, Jr., Macon, Ga., for plaintiff.
    W. Warren Plowden, Jr., Macon, Ga., for defendant.
   OWENS, Chief Judge:

Velva Wise brought this Title VII suit against the Mead Corporation, alleging that she was fired because of her sex. A trial on the liability issue was held on May 31, 1985. This order comprises the court’s findings of fact and conclusions of law.

Findings of Fact

1. The Mead Corporation (Mead) is located in Macon, Georgia. Plaintiff, a female, began working at Mead in 1974. Until the incident in question occurred, she had an average work record.

2. On April 21, 1982, plaintiff and Tommy Pruitt, another Mead employee, were involved in a fight. Plaintiff was standing near the time clock talking to Petrona Roberts and Donnie Hatten when Pruitt approached plaintiff and made an obnoxious remark.

3. At trial Roberts testified: “Well, Tommy Pruitt walked out of the lunchroom and said something to Velva____ I don’t remember what he said but I do remember that she told him, ‘That’ll be Ms. Wise to you.’ ” (Trial transcript at 25).

4. Hatten testified that:

Me and Velva Wise and Petrona Roberts, like I say, were talking and we had a conversation going between us and Pruitt come up and kind of interrupted the conversation and got into the conversation with Velva Wise____ I don’t really remember exactly what all we was talking about but there was — Mr. Pruitt referred to Velva as Belba or some, it wasn’t her name, and she said, “That’s Mrs. Wise to you____”

(Trial transcript at 28).

5. Plaintiff testified that “It was lunchtime and I had my back to the lunchroom speaking with Petrona Roberts and Donnie Hatten and Tommy Pruitt approached me from behind and started in being real belligerant.” (Trial transcript at 60). She further testified that, “He [Pruitt] was being real belligerant and rude and I had asked him to leave me alone and I do remember he called me, ‘Velma’ and I said, ‘My name is Velva but to you, it’s Mrs. Wise.’ ” (Trial transcript at 61).

6. The testimony of Roberts, Hatten, and plaintiff shows that on this occasion Pruitt provoked the confrontation.

7. Plaintiff and Pruitt continued to argue and exchange words. Although the witnesses to the fight disagree on some details, there is no question that plaintiff scratched Pruitt on the arm and kicked him. At some point during this exchange, Pruitt held plaintiff by the wrist. Pruitt did not require medical treatment.

8. At the time in question, plaintiff was five feet and four and three-fourth inches tall and weighed one hundred five pounds. (Trial transcript at 62). By comparison, Pruitt was six feet tall and weighed two hundred five pounds. (Trial transcript at 91).

9. Following the fight, plaintiff told supervisor Eddie Berry that she had had a disagreement with Pruitt. Berry told her not to worry and that Mead would “forget it.” She approached him three times and each time he told her not to worry. (Trial transcript at 63-64).

10. On the day after the fight the personnel administrator, Rebecca Lee, and supervisor Berry began an investigation of the incident. Lee and Berry interviewed plaintiff, Pruitt, and the witnesses to the fight.

11. As a result of the investigation, Mead decided that the plaintiff had attacked Pruitt and that Pruitt did not retaliate but instead tried to walk away. (Trial transcript at 7).

12. Mead also decided that plaintiff had used “abusive and uncivil” language. (Trial transcript at 9).

13. Plaintiff was terminated on April 23, 1982.

14. There have been at least four other fights between employees at Mead. These fights were between: (1) Paul Singleton and David Wynne, (2) Paul Singleton and Steve Clements, (3) Delois Spencer and Horace Butts, and (4) Thomas Boyd and James Thomas.

15. The only person fired for fighting besides the plaintiff was Singleton, who is male. However, Singleton was not fired until after his second fight.

16. Singleton’s first fighting incident occurred in September, 1977. According to Mead’s personnel records, Singleton pushed Wynne in the face because of a disagreement over banding steel. Both men were given disciplinary lay offs without pay for twelve days. (Plaintiff’s exhibit 2).

17. Singleton’s second fight was more serious than his first. The second fight occurred in November, 1978, a little over a year after the first one. Singleton and Steve Clements began arguing over Singleton’s lunch. Singleton then hit Clements in the nose. Clements had to be taken to the emergency room. He suffered a broken nose and required stitches. (Trial transcript at 16-17; plaintiff’s exhibit 1).

18. Mead fired Singleton on December 4, 1978. Clements received a written reprimand, a two-week disciplinary lay off without pay, and a ninety-day probationary period. (Plaintiff’s exhibit 1).

19. A later fight at Mead involved employees Delois Spencer (female) and Horace Butts (male). That incident occurred on March 26, 1979. Mead’s personnel file shows that during an argument over a broom Butts grabbed Spencer by the arm and cursed her. There is no evidence that either Spencer or Butts was disciplined. (,See plaintiff's exhibit 3 and trial transcript at 13).

20. The most recent incident of fighting at Mead — other than the fight at issue in this case — occurred on December 2, 1980, between James Thomas (male) and Thomas Boyd (male). Mead’s memorandum on the incident states in part: “I [foreman Frank Woodham] saw T. Boyd ... drop a hammer in the direction of J. Thomas’ feet____ J. Thomas then kneed T. Boyd in the groin area. T. Boyd then grabbed J. Thomas and pushed him to the floor.” (Plaintiff’s exhibit 5). Thomas and Boyd each received a written reprimand and a three-day disciplinary lay off because of their behavior. (Id.)

21. The conduct of plaintiff and male employees Boyd, Thomas, and Butts were of equal seriousness, but plaintiff and the men were treated differently: plaintiff was the only one fired for first-time involvement in a fight. Plaintiff’s conduct was nearly identical to these three male employees' conduct notwithstanding the language she used. Mead’s personnel records expressly state that Butts (male) also used cursing language. (Plaintiff’s exhibit 3).

22. Circumstantial evidence shows that Mead treated plaintiff and the men differently because of their sexes. Mead intentionally discriminated against plaintiff because she is a woman.

Conclusions of Law

The ultimate question in a disparate treatment case is whether the defendant intentionally discriminated against the plaintiff. United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 715, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983). Intentional discrimination is an issue of fact. Pullman-Standard v. Swint, 456 U.S. 273, 287-88, 102 S.Ct. 1781, 1789-90, 72 L.Ed.2d 66 (1982). It is difficult — if not impossible — for a plaintiff to produce direct evidence of discriminatory intent. Therefore, plaintiffs may rely upon circumstantial evidence to prove discrimination.

Circumstantial evidence should be analyzed under the three-step procedure of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). First, the plaintiff must establish a prima facie case of sex discrimination. Id. at 802, 93 S.Ct. at 1824. By establishing a prima facie case, the plaintiff creates a presumption of discrimination. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 254, 101 S.Ct. 1089, 1094, 67 L.Ed.2d 207 (1981). A plaintiff fired for misconduct makes out a prima facie case of discriminatory discharge if she shows (1) that she is a member of a protected class, (2) that she was qualified for the job from which she was fired, and (3) that the misconduct for which she was discharged was nearly identical to that engaged in by an employee outside the protected class whom the employer retained. Nix v. WLCY Radio/Rahall Communications, 738 F.2d 1181, 1185 (11th Cir.1984). The prima facie case of discrimination is established even if the plaintiff’s replacement is also a member of the protected class. Id. Of course, women are protected by Title VII. 42 U.S.C.A. § 2000e-2(a)(l) (West 1981). In addition, Mead does not dispute that plaintiff was qualified for her job. Therefore, in the present case, plaintiff can establish a prima facie case by establishing that she was fired but men were retained for nearly identical conduct. Nix, 738 F.2d at 1186; Davin v. Delta Air Lines, Inc., 678 F.2d 567, 570 (5th Cir.1982) (Unit B). Plaintiff has clearly established that the conduct of plaintiff and three male employees (Boyd, Thomas, and Butts) were nearly identical, and therefore has clearly met her burden of establishing a prima facie case.

Next, the defendant must “articulate some legitimate, nondiscriminatory reason for the employee’s [discharge].” McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. at 1824. The defendant can satisfy its intermediate burden if it introduces admissible evidence that clearly sets forth the reasons for the plaintiff’s termination. Burdine, 450 U.S. at 254-55, 101 S.Ct. at 1094. The burden of persuasion never shifts to the defendant. Id. at 253, 101 S.Ct. at 1093. “The defendant need not persuade the court that it was actually motivated by the proffered reasons.” Id. at 254, 101 S.Ct. at 1094. The defendant’s burden is merely one of production, not one of proof. Perryman v. Johnson Products Co., 698 F.2d 1138, 1142 (11th Cir.1983). The Eleventh Circuit has described the defendant’s burden as “exceedingly light.” Id. For a recent discussion of the defendant’s intermediate burden of production, see Fowler, v. Blue Bell, Inc., 737 F.2d 1007, 1010-12 (11th Cir.1984). In the present case, Mead has articulated two reasons for firing plaintiff: (1) she scratched and kicked Pruitt and (2) she used “abusive and uncivil” language. These reasons are sufficiently specific; therefore, Mead has met its burden of production.

The plaintiff may still prevail if she proves that the stated reasons were in fact a pretext for discrimination. McDonnell Douglas, 411 U.S. at 804, 93 S.Ct. at 1825. The Eleventh Circuit has observed that most disparate treatment cases turn on the plaintiff’s ability to prove pretext. Miles v. M.N.C. Corp., 750 F.2d 867, 870 (11th Cir.1985). The plaintiff may prove pretext “either directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer’s proffered explanation is unworthy of credence.” Burdine, 450 U.S. at 256, 101 S.Ct. at 1095. Stated another way, the plaintiff can prove that the defendant’s reasons were “not the sole causes of the discharge but rather that discrimination made a difference in the decision.” Conner v. Fort Gordon Bus Co., 761 F.2d 1495, 1500 (11th Cir.1985). The plaintiff can prove pretext by using comparative evidence. Miles, 750 F.2d at 870. In this case, a review of the facts proves beyond doubt that it is more likely that Mead was motivated by discrimination. Therefore, plaintiff has proved that Mead’s proffered reasons for firing plaintiff are in fact pretext for discrimination.

Accordingly, plaintiff is entitled to immediate job reinstatement. The trial on all other damages issues will be scheduled in the near future.

      . For examples of cases in which direct evidence was presented, see Miles v. M.N.C. Corp., 750 F.2d 867 (11th Cir.1985); Bell v. Birmingham Linen Service, 715 F.2d 1552 (11th Cir.1983); Lee v. Russell County Board of Education, 684 F.2d 769 (11th Cir.1982).


author: SPRIZZO, District Judge.

text:
    Miguel LOPEZ, Petitioner, v. Charles SCULLY, Superintendent, Greenhaven Correctional Facility, Respondent.
    No. 83 Civ. 1964 (JES).
    United States District Court, S.D. New York.
    Aug. 6, 1985.

      Robert Koppelman, New York City, for petitioner.
    Mario Merola, Dist. Atty., Bronx County, New York City, for respondent; Steven R. Kartagener, Billie Manning, Robert L. Shepherd, Asst. Dist. Attys., New York City, of counsel.
   OPINION AND ORDER

SPRIZZO, District Judge.

Petitioner Miguel Lopez was convicted in New York state court on three counts of murder in the second degree, of robbery in the first degree, and of burglary in the second degree. The Appellate Division, First Department affirmed the convictions without opinion, see People v. Lopez, 78 A.D.2d 780, 432 N.Y.S.2d 975 (1st Dept.1980), and leave to appeal to the Court of Appeals was denied. See People v. Lopez, 52 N.Y.2d 1078, 438 N.Y.S.2d 1036, 420 N.E.2d 408 (1981). ■

Lopez filed this petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2254, alleging that under the criteria of Bruton v. United States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968), he was denied his Sixth Amendment right of confrontation at trial because of the trial court’s failure to give proper limiting instructions to the jury regarding the admission into evidence of an extrajudicial statement made by his non-testifying co-defendant, which allegedly implicated Lopez in the crimes.

The Court referred the instant petition to Magistrate Joel J. Tyler for his report and recommendation pursuant to 28 U.S.C. § 636(b). Magistrate Tyler found that petitioner had exhausted his state court remedies with respect to this claim as required by 28 U.S.C. § 2254(b), but recommended that the petition be dismissed on the merits because the co-defendant’s statement was neither clearly inculpatory of Lopez, standing alone, nor vitally important to the prosecution’s case.

Both parties have filed objections to the Magistrate’s Report and Recommendation. Petitioner objects to the finding that his co-defendant’s statement was not clearly inculpatory or vitally important, and also argues that it was erroneous to apply the clearly ineulpatory/vitally important test given the facts of this case. He contends that the Magistrate failed to address the actual issue raised by the petition, which is the absence of proper limiting instructions. Respondent argues that petitioner failed to exhaust his state court remedies, and, alternatively, that this petition is barred by the procedural default rule of Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977). Pursuant to 28 U.S.C. § 636(b)(1)(B) and Rule 8(b)(4) of the Rules Governing Section 2254 Cases in the United States District Courts, this Opinion and Order constitutes the Court’s de novo determinations with respect to the matters objected to.

The facts of the case are set forth at length in the Magistrate’s Report and Recommendation, and only a brief summary is necessary herein.

Petitioner was convicted of the murder of 11 year old Juan Antonio Rodriguez, and the robbery and burglary of the Rodriguez home. He was tried along with his co-defendant and step-brother, Jose Osorio. Osorio, a friend of the victim, had been seen on the day of the crimes running down the fire escape of the apartment building where the victim had resided. Osorio’s fingerprints were found in the Rodriguez apartment.

Osorio told the police that on the day in question he had gone home from school to have lunch and was then on his way to the home of Juan Antonio Rodriguez, when he met a friend he knew as “Indio” whom he hadn’t seen in about three months, and whom he had known for about a year and a half. Indio accompanied Osorio to the Rodriguez apartment, where Juan Antonio let them in. Upon entering, Indio pulled a knife, grabbed Juan Antonio, handcuffed him and tied his legs, and stabbed him. Osorio said he became frightened and ran to the roof and down the fire escape. The police were never able to identify or locate the “Indio” referred to in Osorio’s statement. Osorio never testified at trial and was therefore never subject to cross-examination.

Petitioner claims that the admission into evidence of Osorio’s statement regarding “Indio,” without proper limiting instructions, violated his Sixth Amendment right to confront the witnesses against him because the prosecutor “carefully choreographed the presentation of the evidence and argument” to convince the jury that the “Indio” referred to in Osorio’s statement was actually Lopez.

In order to raise his Sixth Amendment claim before this Court, petitioner must have exhausted the remedies available to him in state court. See, e.g., 28 U.S.C. § 2254(b) & (c); Picard v. Connor, 404 U.S. 270, 275, 92 S.Ct. 509, 512, 30 L.Ed.2d 438 (1971); Daye v. Attorney General of the State of New York, 696 F.2d 186, 190 (2d Cir.1982) (en banc), cert. denied, — U.S. -, 104 S.Ct. 723, 79 L.Ed.2d 184 (1984). To satisfy the exhaustion requirement, the same federal claim must have been fairly presented to the state court, see, e.g., Picard, supra, 404 U.S. at 275, 92 S.Ct. at 512; Daye, supra, 696 F.2d at 191, by informing the state court of both the factual and legal premises of the claim asserted in the federal habeas action. See, e.g., Daye, supra, 696 F.2d at 191; Twitty v. Smith, 614 F.2d 325, 331 (2d Cir.1979). As the Second Circuit noted in Daye, this means that petitioner “must have set forth in state court all of the essential factual allegations asserted in his federal petition,” see 696 F.2d at 191, and must have argued on the basis of a legal doctrine which is the “substantial equivalent” of that argued before the federal court. See id. at 192; see also Picard, supra, 404 U.S. at 278, 92 S.Ct. at 513.

In light of the argument made by petitioner on appeal from his conviction, the Court cannot say he has exhausted his state remedies with respect to the claim that the lack of proper limiting instructions violated his right of confrontation. In his brief to the Appellate Division petitioner argued that the trial court violated its obligation to sua sponte sever the trials of petitioner and his co-defendant Osorio, despite the facts that no party had moved to sever and neither defendant had objected to consolidation, because the two defendants had “at some point in the proceeding made statements which while not directly implicating each other in the crime did serve to place each one as acting directly contrary to the interest of each other.” See Appellant’s Brief at 12-13. Petitioner cited Bruton and People v. Owens, 22 N.Y.2d 93, 238 N.E.2d 715, 291 N.Y.S.2d 313 (1968), which relate to severance. Petitioner also noted that a motion for severance had been made after trial but before sentencing, but was denied, and that this, too, was erroneous because, despite the fact that the motion was made so late, the court should have granted the severance since Osorio had implicated Lopez and “in all probability had caused his being found guilty by the jury.” Id. at 13. Petitioner did not argue that the lack of proper limiting instructions had violated his Sixth Amendment rights.

In the instant petition, Lopez alleges that the trial court erred in failing to give appropriate instructions to the jury cautioning them that Osorio’s statement could not be considered against Lopez. No argument is raised regarding the failure to grant a severance. The Court cannot agree with the Magistrate’s conclusion that the factual and legal basis underlying the habeas claim is “clearly the same as that of the severance claim in the state appeal,” see Report & Recommendation at 12, especially since a Bruton claim presupposes that no limiting instructions can cure the prejudice flowing from the statement of a co-defendant. Thus the state court was not fairly presented with the issue now raised, that the failure to give limiting instructions required a reversal of petitioner’s conviction.

In Bruton, the Supreme Court held that the introduction of an extrajudicial confession of a co-defendent which incriminated Bruton violated his right of confrontation and held that a severance was required because it assumed that limiting instructions would not be adequate to protect the defendant’s confrontation rights. This Court has found no case where the alleged Bruton violation arose from the failure to give proper limiting instructions, rather than the failure to grant a severance or to exclude the challenged statement. The Court concludes that since the state court was never given a fair opportunity to decide whether the failure of the trial court to give limiting instructions required a reversal of petitioner’s conviction, petitioner has not exhausted this claim. Cf. Twitty, supra, 614 F.2d at 332; Callahan v. LeFevre, 605 F.2d 70, 72-73 (2d Cir.1979).

Even assuming, arguendo, that the citation to Bruton was sufficient to satisfy the exhaustion requirement, the habeas petition would still have to be denied. In Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977), the Supreme Court held that failure of a state court defendant to comply with a state’s procedural requirements constitutes a procedural default barring consideration of that claim on federal habeas review, unless both cause for the default and actual prejudice are shown. Id. at 86-87, 97 S.Ct. at 2506-2507. See also Engle v. Isaac, 456 U.S. 107, 129, 102 S.Ct. 1558, 1572, 71 L.Ed.2d 783 (1982).

The State contested petitioner’s Bruton claim before the Appellate Division on the ground that he was procedurally barred from raising that claim on appeal because he had failed to object to the consolidation of the cases, or to move for a severance before trial, and that any objection to the consolidated trial was therefore waived. The State cited People v. Minor, 49 A.D.2d 828, 373 N.Y.S.2d 354 (1st Dept.1975), where the court had held that the failure to object to consolidation constitutes a waiver. The Appellate Division affirmed petitioner’s conviction without opinion.

Where the prosecution argues procedural default on appeal and the appellate court affirms the conviction without opinion, the federal habeas court must assume that the state court ruled on the basis of the procedural bar. See, e.g., Johnson v. Harris, 682 F.2d 49, 51 (2d Cir.), cert. denied, 459 U.S. 1041, 103 S.Ct. 457, 74 L.Ed.2d 609 (1982); Martinez v. Harris, 675 F.2d 51, 54-55 (2d Cir.), cert. denied, 459 U.S. 849, 103 S.Ct. 109, 74 L.Ed.2d 97 (1982). Therefore, this Court must assume pursuant to Johnson and Martinez that the Appellate Division accepted the State’s procedural default argument.

It follows that the Court can only consider petitioner’s claim if he has demonstrated both cause for his failure to comply with New York’s procedural rule, and actual prejudice resulting from the allegedly inadequate instructions. Where petitioner objects to jury instructions, the allegedly improper charge must have worked to his actual and substantial disadvantage, see, e.g., United States v. Frady, 456 U.S. 152, 170, 102 S.Ct. 1584, 1595, 71 L.Ed.2d 816 (1982), such that “ ‘the ailing instruction by itself so infected the entire trial that the resulting conviction violates due process.’ ” See Henderson v. Kibbe, 431 U.S. 145, 154, 97 S.Ct. 1730, 1736, 52 L.Ed.2d 203 (1977) (quoting Cupp v. Naughten, 414 U.S. 141, 147, 94 S.Ct. 396, 400, 38 L.Ed.2d 368 (1973) ).

Petitioner has not even attempted to demonstrate cause for his failure to comply with New York’s procedural requirements. Indeed, the record reflects that counsel did not avail himself of a court offered opportunity to request an amplification of the charge given and to renew an earlier request for a generic limiting instruction. See note 3, supra. Moreover, as Lopez himself recognizes in his petition, and as Magistrate Tyler noted in his Report and Recommendation, there was more than sufficient evidence against Lopez, in addition to Osorio’s statement, upon which the jury could rely to convict him. Thus, considering the nature of the statement, which was not in itself inculpatory of Lopez, and the overall strength of the prosecution’s case, there is no basis to conclude that the failure to give a limiting instruction deprived Lopez of due process. Cf. Frady, supra, 456 U.S. at 174, 102 S.Ct. at 1597; Wainwright, supra, 433 U.S. at 91, 97 S.Ct. at 2508; Sales v. Harris, 675 F.2d 532, 541 (2d Cir.), cert. denied, 459 U.S. 876, 103 S.Ct. 170, 74 L.Ed.2d 140 (1982); Forman v. Smith, 633 F.2d 634, 642-43 (2d Cir.1980), cert. denied, 450 U.S. 1001, 101 S.Ct. 1710, 68 L.Ed.2d 204 (1981). Therefore, Lopez is procedurally barred from raising his claim in this petition.

It follows that the petition for a writ of habeas corpus must be denied.

It is SO ORDERED.

      . While petitioner states in his petition and briefs that the prosecutor impermissibly attempted to convince the jury that "Indio" was in fact Lopez, petitioner did not object to that aspect of the prosecutor’s summation at trial or on appeal, and has not raised it as a ground for i diet herein. The Court therefore does not consider whether this provides a basis for granting n writ of habeas corpus.

      . The trial record reflects that counsel for Lopez did not state that he was moving for a severance. Rather, he said that an appellate court would require reversal of the conviction because there was "a Bruton situation" due to the statement about Indio. The Court apparently treated this as a motion for a severance, noted that no prior motion had been made, and denied the motion as untimely.

      . The Court also notes that petitioner failed to object to the jury instructions given by the trial court. Defense counsel had requested that the jury be instructed that “any statements allegedly given by the defendant, Osorio, is [sic] not binding upon [Lopez].” See Trial Transcript (“Tr.”) at 266. The court responded that it had told the jury to consider the two defendants individually, and would so instruct them again. See id. at 266. Defense counsel made no objection to this. He later advised the court, before the jury was charged, that he requested no special jury instructions, except with respect to circumstantial evidence. Id. at 322. Counsel did not object to the jury charge given, nor did he request any additional charges when the court gave him that opportunity. Id. at 411.
      N.Y.Crim.Proc.Law § 470.05(2) provides that:
      a party who without success has either expressly or impliedly sought or requested a particular ruling or instruction, is deemed to have thereby protested the court's ultimate disposition of the matter or failure to rule or instruct accordingly sufficiently to raise a question of law with respect to such disposition or failure regardless of whether any actual protest thereto was registered.
      However, the Court of Appeals has held that when a judge agrees to a requested charge, and then fails to deliver the charge as requested, failure to draw the inadequacy to the court’s attention is deemed a waiver of any objection to the instruction. See, e.g., People v. Whalen, 59 N.Y.2d 273, 280, 451 N.E.2d 212, 215, 464 N.Y.S.2d 454, 457 (1983); People v. Santiago, 52 N.Y.2d 865, 866, 418 N.E.2d 668, 669, 437 N.Y.S.2d 75, 76 (1981); People v. Dawson, 50 N.Y.2d 311, 316, 406 N.E.2d 771, 774, 428 N.Y.S.2d 914, 917 (1980).

      . The Supreme Court has noted that only rarely will an improper jury charge justify reversal of conviction in the absence of an objection at trial, and that "[t]he burden of demonstrating that an erroneous instruction was so prejudicial that it will support a collateral attack on the constitutional validity of a state court’s judgment is even greater than the showing required to establish plain error on direct appeal.” Henderson, supra, 431 U.S. at 154, 97 S.Ct. at 1736. It is insufficient to show that the instruction was “merely ... ‘undesirable, erroneous, or even universally condemned.’” Id. (quoting Cupp v. Naughten, supra, 414 U.S. at 146, 94 S.Ct. at 400).

      . This evidence came from a prosecution witness who testified that she was a friend of petitioner, and that petitioner had confessed to her that he killed Juan Antonio Rodriguez. She also testified that approximately one week after the murder and robbery petitioner gave her a gold bracelet, which was put into evidence and which two other witnesses identified as one of the items in the Rodriguez home on the day of the robbery and murder.

      . While the Court need not reach the merits of the petition, it notes its agreement with the Magistrate's finding that Lopez’ claim lacks merit.
      In Bruton, the Supreme Court held that severance was required where the extra-judicial statement of a non-testifying co-defendant, which was "powerfully incriminating” as to Bruton, was introduced at trial. See 391 U.S. at 135-36, 88 S.Ct. at 1627-28. The Second Circuit has recognized an exception to the Bruton severance requirement where the co-defendant’s statement, standing alone, is neither clearly inculpatory of the petitioner, nor vitally important to the prosecution's case against him. See, e.g., United States v. Rubio, 709 F.2d 146, 155 (2d Cir.1983); United States v. Slocum, 695 F.2d 650, 655 (2d Cir.1982), cert. denied, 460 U.S. 1015, 103 S.Ct. 1260, 75 L.Ed.2d 487 (1983); United States ex rel. Nelson v. Follette, 430 F.2d 1055, 1058 (2d Cir.1970), cert. denied, 401 U.S. 917, 91 S.Ct. 899, 27 L.Ed. 2818 (1971). The challenged statement is not clearly inculpatory where, standing alone, it does not connect the petitioner to the crime, and where the jury must make a substantial inference to identify the petitioner as the person referred to. See, e.g., United States v. Marin, 669 F.2d 73, 83 (2d Cir.1982); United States v. Knuckles, 581 F.2d 305, 312-13 (2d Cir.), cert. denied, 439 U.S. 986, 99 S.Ct. 581, 58 L.Ed.2d 659 (1978); United States v. Gonzalez, 555 F.2d 308, 316 (2d Cir.1977); United States v. Wingate, 520 F.2d 309, 314 (2d Cir.1975), cert. denied, 423 U.S. 1074, 96 S.Ct. 858, 47 L.Ed.2d 84 (1976); Follette, supra, 430 F.2d at 1057-58.
      This is precisely the situation here. Osorio’s statement made no mention of Lopez, but only referred to "Indio.” The jury would have had to rely on other evidence to infer that “Indio” was really Lopez. Under these circumstances, since the "inculpatory impact upon [Lopez] of the statement ] is defused because it depends upon other prosecution evidence to connect [Lopez] to the subject of the statement ], the Bruton Rule is not violated.” Slocum, supra, 695 F.2d at 655.
      The Court disagrees with petitioner's contention that this case is like United States v. Gonzalez, supra. In Gonzalez, the court noted that because Gonzalez was not named in the challenged statement that statement was not clearly inculpatory, but found that the exception to the Bruton severance requirement could not be applied because the statement of the co-defendant was the only direct evidence against Gonzalez, and therefore was a vital part of the prosecution's case. See 555 F.2d at 316-17. This is not the case here. There was other direct evidence of petitioner’s guilt upon which the jury could properly convict. See note 5, supra. Therefore, Osorio's statement was not vitally important to the case against Lopez. See also Slocum, supra, 695 F.2d at 655-56; Knuckles, supra, 581 F.2d at 313; Wingate, supra, 520 F.2d at 313-14.
      It is true, as petitioner suggests, that in the cases discussed above the court assumed and relied on the fact that appropriate limiting instructions were given. However, that circumstance is not dispositive with respect to their relevance here. In those cases, the Bruton issue arose in the context of a claimed error resulting from the denial of a timely motion for a severance which alerted the court to the need for limiting instructions. In this case no timely motion for a severance was made and the Court never had occasion to focus on the need for such instructions. Moreover, while a generic request for limiting instructions was made, and while the court indicated its willingness to charge as requested, the matter was never again pursued. Given these circumstances, the Court may properly consider the nature of the statement which allegedly violated petitioner’s confrontation rights, and its overall importance to the prosecution’s case.


author: YOUNG, District Judge.

text:
    John SINGER v. DEAN WITTER REYNOLDS INC., et al.
    Civ. A. No. 84-1984-Y.
    United States District Court, D. Massachusetts.
    Aug. 6, 1985.

      Jeffrey V. Boxer, Boston, Mass., for plaintiffs.
    Gerald F. Rath, David C. Boch, Herrick & Smith, Boston, Mass., for defendants.
   MEMORANDUM AND ORDER

YOUNG, District Judge.

This action arises out of a 1982 agreement under which the plaintiff John Singer (“Singer”) invested approximately $65,000 through defendant Dean Witter Reynolds Inc. (“Dean Witter”), a securities broker-dealer. Under that agreement, the funds in Singer’s account were to be used for the trading of securities and commodities, as well as for other financial services. According to Singer, in five months time his account lost $50,000 and Dean Witter earned $27,000 in commissions.

On June 26, 1984, Singer brought this action against Dean Witter and certain Dean Witter representatives for alleged violations of the Securities Exchange Act of 1934, § 10(b) (Counts One and Two); churning (Count Three); violations of the Commodity Exchange Act (Count Four); violation of the Massachusetts Uniform Securities Act (Count Five); misrepresentation (Count Six); breach of fiduciary duty (Count Seven); violation of Mass.Gen.Laws Chapter 93A (Count Eight); and breach of contract (Count Nine). The defendants have now moved to compel arbitration of Counts One, Two, Three, Five, Six, Seven, and Nine, and to dismiss Count Eight. For the reasons stated below, the motion to compel arbitration is denied and the motion to dismiss Count Eight is granted.

I. Arbitration

When Singer invested his funds with Dean Witter in 1982, he signed an “Active Assets Account” agreement providing that any controversy between Dean Witter and Singer “arising out of or relating to this contract or the breach thereof, shall be settled by arbitration, in accordance with the rules, then obtaining, of either the American Arbitration Association, or the Board of Arbitration of the New York Stock Exchange.” Citing this provision, the defendants have moved to compel arbitration of all Counts except Count Four and to stay all proceedings relating to those counts. Singer has opposed the defendants’ motion on several grounds.

The threshold question is whether the defendants have waived their rights to arbitration. The Federal Arbitration Act, 9 U.S.C. §§ 1-14, provides that arbitration agreements “shall be valid, irrevocable, and enforceable, save üpon such grounds as exist at law or equity for the revocation of any contract.” Id. § 2. The Act authorizes parties to an arbitration agreement to petition a federal district court for an order compelling arbitration of any issue referable to arbitration under the agreement. Id. at §§ 3, 4.

There is a strong federal policy favoring the arbitration of contractual disputes when the parties have so agreed to arbitrate. Dean Witter Reynolds Inc. v. Byrd, — U.S. -, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). “The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Moses H. Cone Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-42, 74 L.Ed.2d 765 (1983).

Despite the policies favoring arbitration, however, it has long been held that parties may waive their rights to arbitration and present their dispute to a court. See, e.g., Caribbean Ins. Serv. v. American Bankers Life Assur. Co., 715 F.2d 17, 18-19 (1st Cir.1983). Such a waiver need not be express; rather, courts can infer a waiver from the circumstances. Jones Motor Co. v. Chauffeurs, Teamsters and Helpers Local Union No. 633, 671 F.2d 38, 44 (1st Cir.1982), cert. denied, 459 U.S. 943, 103 S.Ct. 257, 74 L.Ed.2d 200 (1983).

Singer filed his complaint in this action on June 26, 1984. The defendants answered on August 6, 1984, without raising the issue of arbitration. Over the course of the next nine months, the defendants continually sought to employ the machinery available through this Court to defend and resolve this dispute. At or about the time it filed its answer, Dean Witter initiated discovery requests, including interrogatories and a request for production of documents. On October 26, 1984, the parties participated in a scheduling conference with the Court pursuant to Fed.R. Civ.P. 16(b), at which time it was ordered that all discovery would be completed by June 1, 1985, and all dispositive motions would be filed by that same date. At that same scheduling conference, the parties requested that the case be referred to a Magistrate for purposes of settlement negotiations. On October 30, 1984, counsel for the defendants proposed a specific short-term discovery schedule prior to a settlement conference.

During the next several months, there was considerable skirmishing over various discovery requests. In particular, Dean Witter moved to compel production of Singer’s federal income tax records, and a limited order to that effect was issued by the Magistrate on January 4, 1985. When Singer failed to comply promptly with that order, Dean Witter moved for sanctions and attorney’s fees, arguing that “the plaintiff’s callous disregard of the discovery process should not be permitted.” During the spring of 1985, there was further wrangling over certain interrogatories and document production requests directed to Dean Witter, which again required the involvement of both a District Judge and a Magistrate.

This brief summary of certain discovery proceedings is not meant to suggest that any of the parties in this case have abused the .discovery process. Rather, it is offered to show that all parties, including the defendants, engaged in vigorous discovery and proceeded with the intent to resolve this dispute through the judicial process and not through arbitration. Consistent with the discovery schedule established in October 1984, the parties promptly sought to complete discovery and then proceed to a trial on the merits. On several occasions during these discovery proceedings, Dean Witter sought the intervention of the Court. See Caribbean Ins. Serv., supra, 715 F.2d at 19-20 (“a party’s willingness to submit a dispute to trial on the merits may imply a waiver of the right to arbitration”); Jones Motor Co., supra, 671 F.2d at 44.

At no time during this active discovery period did the defendants ever mention the possibility or prospect of arbitration. As late as May 17, 1985, the defendants noticed the taking of Singer’s deposition and filed with the Court a nine-page memorandum arguing various discovery matters, with no reference to arbitration. On May 30, 1985, the parties filed a joint motion to extend the time for discovery from June 1, 1985 to September 1, 1985, on the ground that certain discovery issues soon would be resolved in a hearing before the Magistrate; the defendants still made no reference to arbitration. On June 4, 1985, this Court allowed the motion to extend the time for discovery and set the case for trial on September 3, 1985. Two days later— nearly a year after the complaint was filed — the defendants first raised the issue of arbitration and filed the motion that is presently before the Court.

In Jones Motor Co., the Court of Appeals outlined the relevant factors to be considered in deciding whether a party has waived its right to arbitration:

In determining whether a party to an arbitration agreement, usually a defendant, has waived its arbitration right, federal courts typically have looked to whether the party has actually participated in the lawsuit or has taken other action inconsistent with his right, ... whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit by the time an intention to arbitrate was communicated by the defendant to the plaintiff, ... whether there has been a long delay in seeking a stay or whether the enforcement of arbitration was brought up when trial was near at hand____
Other relevant factors are whether the defendants have invoked the jurisdiction of the court by filing a counterclaim without asking for a stay of the proceedings, ... whether important intervening steps \e.g., taking advantage of judicial discovery procedures not available in arbitration ...] had taken place, ... and whether the other party was affected, misled, or prejudiced by the delay____

671 F.2d at 44 (bracketed text in original) (reversible error to order arbitration where the defendant engaged in considerable discovery, prepared the case for summary judgment, and waited until after the district court had decided that issue before advocating arbitration) (quoting Reid Burton Constr. Inc. v. Carpenters District Council, 614 F.2d 698, 702 (10th Cir.), cert. denied, 449 U.S. 824, 101 S.Ct. 85, 66 L.Ed.2d 27 (1980)); see Caribbean Ins. Serv., supra, 715 F.2d 17 (defendant waived arbitration right when it first moved for a stay six months after complaint was filed and three weeks after entering into stipulation providing for an expeditious trial); Gutor International AG v. Raymond Packer Co., 493 F.2d 938, 945 (1st Cir.1974).

Applying these standards to the circumstances of this case, this court rules that the defendants have waived their rights to arbitration. Therefore, the defendants’ motion to compel arbitration and for a stay is denied.

II. Chapter 93A Claim

The defendants have moved to dismiss Count Eight on the ground that Chapter 93A of the Massachusetts General Laws does not apply to the transactions at issue in this case. The defendants rely on the recent opinion in Cabot Corp. v. Baddour, 394 Mass. 720, 477 N.E.2d 399 (1985), in which the Supreme Judicial Court held that c. 93A does not apply to conduct alleged to violate Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under that Act. In response, Singer argues that Cabot is limited solely to Section 10(b) and Rule 10b-5 claims and does not apply to his claims arising under the Commodity Exchange Act or to his common law claims.

The Supreme Judicial Court in Cabot held that the Massachusetts Legislature did not intend to regulate securities transactions under c. 93A because those transactions are not regulated by the Federal Trade Commission, see Mass.Gen.Laws c. 93A, § 2(b) (providing that courts are to be guided by interpretations of the FTC Act in applying c. 93A), and are pervasively regulated by federal securities laws. 394 Mass. at 722-23, 477 N.E.2d 399. The Court further emphasized that the Massachusetts Uniform Securities Act, Mass.Gen.Laws c. 110A, was enacted just four days after the Legislature enacted c. 93A, § 11. Because e. 110A provides a comprehensive regulatory scheme for the registration and sale of securities, the Legislature did not intend c. 93A to regulate the securities field. 394 Mass. at 723-26, 477 N.E.2d 399.

The Supreme Judicial Court distinguished its prior holdings in Dodd v. Commercial Union Ins. Co., 373 Mass. 72, 365 N.E.2d 802 (1977) (applying c. 93A to the insurance industry), and Raymer v. Bay State Nat’l Bank, 384 Mass. 310, 424 N.E.2d 515 (1981) (applying c. 93A to the banking industry). While the insurance and banking industries are “areas in which the states have long played a primary role in regulation,” federal law has largely superseded state regulation of securities. Cabot, 394 Mass. at 722-23, 477 N.E.2d 399, quoting Conkling v. Moseley, Hallgarten, Estabrook & Weeden, Inc., 575 F.Supp. 760, 761 (D.Mass.1983) (holding that c. 93A does not apply to a claim of churning).

Although the question certified to the Supreme Judicial Court in Cabot was limited to Section 10(b) and Rule 10b-5 claims under the Securities Exchange Act of 1934, the reasoning of Cabot applies equally to the types of commodities transactions involved in this dispute. True, there are many different types of commodities transactions and it is a vast oversimplification to simply state that “commodities” are “securities” for purposes of analyzing investors’ rights. See generally Bromberg, Commodities Law and Securities Law—Overlaps and Preemptions, 1 J.Corp.Law 217, 220-21 (1976). In this case, however, Singer’s contract with Dean Witter was an investment contract in which Singer invested his money with an expectation that Dean Witter would turn a profit for him, and depended on Dean Witter to make the investment decisions. See Glen-Arden Commodities, Inc. v. Constantino, 493 F.2d 1027, 1034-35 (2d Cir.1974); Bromberg, supra, at 223-27. Under these circumstances, the commodity transactions at issue are very similar to securities transactions, and should be treated in a similar fashion. See Mass.Gen.Laws c. 110A, § 401(k) (the term “security” for purposes of the Uniform Securities Act includes “investment contract”).

With respect to the regulatory aspects of this question, Congress has long provided for comprehensive federal regulation in the commodities field. In fact, federal commodities law is older than federal securities law, with extensive regulation beginning as early as 1922 with passage of the Grain Futures Act. See generally Bromberg, supra, at 268-72. In 1974, Congress established the Commodity Futures Trading Commission as an independent regulatory agency to oversee the trading of commodity futures contracts and to provide uniform regulation of all commodity futures trading. Although the defendants have suggested that the Futures Trading Act of 1982 cuts back on this extensive federal regulation, that argument is not persuasive. See 1982 U.S.Code Cong. & Ad. News (96 Stat.) 3871 (legislative history of Futures Trading Act of 1982).

There is additional guidance from the Cabot decision itself. There, the Supreme Judicial Court included in its discussion the decision in Sullivan v. Dean Witter Reynolds Inc., No. 82-3300, slip. op. at 8-9 (D.Mass. June 9, 1983), a case involving commodities trading, and quoted that part of Sullivan which stated that “[t]here is nothing in the Supreme Judicial Court’s interpretations of ch. 93A that would justify varying treatment of commodities trading and securities violations.” 394 Mass. at 722 & n. 2, 477 N.E.2d 399. Although the Supreme Judicial Court did not explicitly adopt this statement as its own, its discussion gives strong support for the proposition that the commodities transactions at issue here would be treated the same as securities transactions for purposes of c. 93A. With respect to Singer’s common law claims, those claims all arise out of the securities and commodities transactions, and c. 93A cannot be applied separately to them.

For the reasons stated, the motion to dismiss the c. 93A claim (Count Eight) is ALLOWED, and the motion to compel arbitration is DENIED.

      . The defendants also moved to dismiss Count Five to the extent it alleges violations of Sections 201(a), 301, 303(d), 403, or 405(b) of Mass. Gen.Laws c. 110A, the Uniform Securities Act. The plaintiff has agreed to limit Count Five to recovery based on Section 410(a)(2) of that Act.

      . Both parties agree that the claims under the Commodities Exchange Act (Count Four) are not subject to arbitration.

      . Because the defendants have waived their arbitration right, it is unnecessary to decide whether the claims contained in Counts One, Two, Five and Eight are arbitrable. With respect to Counts One and Two, see Dean Witter Reynolds Inc. v. Byrd, — U.S. -, 105 S.Ct. 1238, 1244, 84 L.Ed.2d 158 (1985) (White, J., concurring). Compare Sibley v. Tandy Corp., 543 F.2d 540, 543 & n. 3 (5th Cir.1976) (claims under 1934 Securities Exchange Act not arbitrable), cert. denied, 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82 (1977) with Raiford v. Merrill Lynch, Pierce, Fenner & Smith, Inc., slip op. (N.D.Ga. May 16, 1985) (claims under section 10(b) of 1934 Act arbitrable).

      . Singer attempts to bring this case within the scope of Raymer by arguing that the account he opened with Dean Witter included banking and checking functions. Assuming this to be so, there is nothing in the record to suggest that any of Singer's claims relate in any way to these functions.


author: COFFRIN, Chief Judge.

text:
    Tim JARVIS v. DEAN WITTER REYNOLDS, INC., Edward Sullivan and Peter R. Woodworth.
    Civ. A. No. 83-383.
    United States District Court, D. Vermont.
    Aug. 6, 1985.

      Robert B. Hemley, Gravel & Shea, Burlington, Vt., for plaintiff.
    Gary Barnes, Downs, Rachlin & Martin, South Burlington, Vt., for defendants.
   COFFRIN, Chief Judge.

Plaintiff Tim Jarvis brought this action against Defendants Dean Witter Reynolds, Inc. (“Dean Witter”), Edward Sullivan and Peter R. Woodworth, alleging violations of the Securities Exchange Act of 1934 (the “1934 Act”), and the following state law claims: fraud, breach of contract, negligence and breach of fiduciary duty. Defendants move to compel arbitration of all claims or, alternatively, to stay the proceedings of the federal claims.

This is the second time Defendants’ motion is before this court. In an earlier opinion issued in this case, Jarvis v. Dean Witter Reynolds, Inc., No. 83-383 (D.Vt. Feb. 13, 1985), wé denied Defendants’ motion to compel arbitration on the ground that the federal and state claims were so inextricably intertwined that they should be heard in the same proceeding. Since our decision, however, the Supreme Court has expressly rejected the doctrine on which our holding was based and ruled that the Federal Arbitration Act, 9 U.S.C. §§ 1-14 (1982), requires district courts to compel arbitration of pendent arbitrable claims upon a party’s motion to compel. Having reconsidered Defendants’ motion under the law as it now stands, we hereby GRANT Defendants’ motion to compel arbitration of both the federal and the state claims.

Background

Because of the familiarity with the facts of this case by the parties, the facts, as alleged, require only a brief summary. Plaintiff Tim Jarvis, a young, inexperienced investor, opened up an account with Dean Witter in November, 1982. Plaintiff claims that he informed the Dean Witter representative, Defendant Woodworth, that he was interested in investing in stable, high tech companies. Based on the reputation of Dean Witter and on Woodworth’s representation that he could double Plaintiff’s initial investment of $32,000 in one year, Plaintiff authorized Woodworth to buy and sell securities in his account, provided that Woodworth inform him of each purchase or sale before it was made.

According to Plaintiff, Defendants immediately began to buy and sell securities, and to trade stock options, without Plaintiff’s prior approval and without having provided Plaintiff with any options prospectus. Plaintiff claims that such trading was excessive in terms of size and frequency. Based on further representations of Defendants, Plaintiff invested an additional sum of approximately $6,000.

Plaintiff claims that he never executed any written options agreement with Defendants until January 19, 1983, when Woodworth informed him that Pláintiff’s option agreement was lost and requested that he sign another. The options agreement contained the. following arbitration clause:

Any controversy between us arising out of or relating to this agreement or the breach thereof, shall be settled by arbitration.

Section 6, Options Trading Agreement, if 16 Amended Complaint.

In March, 1983, Plaintiff changed account executives at Dean Witter. By July, 1983, Plaintiff claims, Defendants had lost a substantial portion of his account.

The issue presently before the court is whether the options trading agreement executed by the parties mandates arbitration or whether some or all of Plaintiffs claims may be litigated in this court.

DISCUSSION

1. Determination of the validity of the arbitration clause.

There are two preliminary issues which arise in ruling on a motion to compel arbitration: one, whether a valid arbitration agreement exists and second, whether the court or the arbitrator should determine the validity of the arbitration agreement. Defendants assert that the question of the validity of the arbitration clause contained in the option agreement is a question for the arbitrator; Plaintiff contends that it is for the court.

The law in this area has been clearly set forth in Prima Paint Corp. v. Flood and Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). In that case a consulting contract between the parties contained an arbitration clause similar to that currently in issue. Plaintiff sought to invalidate the arbitration clause on the ground that defendant fraudulently induced it to enter into the consulting agreement. The court held that since the claim of fraud was not directed at the arbitration clause itself, the issue of fraudulent inducement as to the entire agreement was an issue for the arbitrator to decide. Id., at 406, 87 S.Ct. at 1807.

In devising the above analysis, the Court relied on section 4 of the Arbitration Act, which provides a remedy to a party seeking to compel compliance with an arbitration agreement. Under section 4, as soon as jurisdiction but for the existence of the arbitration clause is established, the federal court, once it is satisfied that “the making of the agreement for arbitration or the failure to comply ... is not in issue, is instructed to order arbitration to proceed.” Id., at 403, 87 S.Ct. at 1806. Thus, to raise an issue as to the making of the agreement to arbitrate there must be a specific allegation that the arbitration clause, taken separately, was induced by fraud.

Plaintiff claims that his allegations of fraudulent inducement “implicate specifically the agreement to arbitrate itself,” as opposed to the entire contract. Plaintiffs Supp. Reply Brief, at 9. See 11 52a Amended Complaint. As support, Plaintiff relies on Moseley v. Electronic & Missile Facilities, Inc., 374 U.S. 167, 83 S.Ct. 1815, 10 L.Ed.2d 818 (1963). In Moseley a plumbing and heating subcontractor, seeking compensation in the amount of $125,000, for work performed in Georgia, brought suit against the prime contractor, who had instituted arbitration proceedings in New York under provisions of a subcontract, alleging breach of contract or, alternatively, recission for fraud. Petitioner attacked both the subcontracts and the arbitration provision. Petitioner claimed that the subcontract with him, as well as with other subcontractors, was part of a fraudulent scheme to obtain work and materials from the subcontractors while forcing them to accept much less than the value of their claims. To effect the fraudulent scheme, petitioner contended that the prime contractor inserted an arbitration clause requiring arbitration in New York, despite the fact that the place of performance was Georgia. After determining that the allegation of fraud “goes to the arbitration clause itself,” id., the Court determined that the court, and not the arbitrator, should rule on the issue of the validity of the arbitration clause.

Plaintiff claims that his allegation of fraud is similar to that of the petitioner in Moseley, since he has alleged that he was induced to sign the option agreement, which included an arbitration clause, “as part of a pattern and scheme of fraud.”

We are not persuaded by Plaintiffs analogy. Moseley is distinguishable from the instant case in at least one significant respect. The petitioner in that case alleged that the arbitration clause itself was procured by fraud. The clause stated that arbitration would occur in New York City. By providing that arbitration would take place in New York, instead of in Georgia, where the worksite was located and the subcontracts performed, the subcontract gave the prime contractor the right to nullify the provisions of the Miller Act, which expressly guarantees a plaintiff s right to sue on a contract in federal court in the district in which the contract was to be performed — which was Georgia, not New York.

In contrast to the petitioner in Moseley, Plaintiff Jarvis has not alleged anything fraudulent about the arbitration clause itself. The language of his amendment to the complaint makes it clear that the fraudulent inducement claim goes to the signing of the option agreement as a whole, of which the arbitration clause is but one provision:

Defendants fraudulently induced and coerced Plaintiff to sign the option agreement dated January 19, 1983, and specifically the arbitration provisions therein ...

Amended Complaint ¶ 52e (emphasis supplied).

Absent a showing that the arbitration clause itself was impermissibly obtained, we are bound to submit the matter to an arbitrator. Prima Paint, supra, at 403-404, 87 S.Ct. at 1805-1806. “[Section 4 of the Arbitration Act] does not permit the federal court to consider claims of fraud in the inducement of the contract generally.” Id. See also Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852, 858-89, 79 L.Ed.2d 1 (1984); Sharon Steel Corp. v. Jewell Coal and Coke Co., 735 F.2d 775 (3rd Cir.1984). See generally Annot., 11 A.L.R. 4th 774 (1982).

Recently, the Supreme Court had occasion to address the issue of the enforceability of arbitration agreements. Dean Witter Reynolds, Inc. v. Byrd, — U.S.-, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). In considering a motion to compel arbitration, the Court emphasized the strong presumption in favor of arbitrability: “ ‘The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.’ ” id., at -, 105 S.Ct. at 1242, quoting Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-942, 74 L.Ed.2d 765 (1983). Moreover, the Court pointed out that under the Arbitration Act a district court has no discretion to hear matters that the parties have agreed to arbitrate: “By its terms, the Act leaves no place for the exercise of discretion by a District Court, but instead mandates that District Courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Id., — U.S. at -, 105 S.Ct. at 1241.

In the instant case the parties signed an options contract which contained an arbitration clause. Since we do not find that Plaintiff has raised a specific claim of fraud in the inducement of the arbitration clause itself, we order that this matter proceed to arbitration.

2. Arbitrability of Pendent Claims

In Byrd, the Supreme Court also issued a clear pronouncement on the issue of the arbitrability of pendent state law claims. Confronted with a complaint raising factually inseparable federal securities claims and pendent claims, the Supreme Court rejected the intertwining doctrine, under which a district court would hear both federal and state claims, holding that “the Arbitration Act requires district courts to compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel, even where the result would be the possibly inefficient maintenance of separate proceedings in different forums.” Id., at -, 105 S.Ct. at 1241 (emphasis added).

In addition, the Byrd Court instructed district courts that arbitration of pendent claims should not be stayed for fear of the preclusive effect of parallel arbitration proceedings:

... neither a stay of proceedings, nor joined proceedings, is necessary to protect the federal interest in the federal -court proceeding, and ... the formulation of collateral-estoppel rules affords adequate protection to that interest.

Id., at-, 105 S.Ct. at 1243.

In light of the clear directive in Byrd, we grant Defendants’ motion to compel arbitration of Plaintiff’s state law claims.

3. Arbitrability of Plaintiff s Federal Claims

Plaintiff’s federal claims arise under the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (1982). In Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953), the Supreme Court held that federal claims arising under the 1933 Act were non-arbitrable. Since Wilko it has been widely held by courts in other circuits that the doctrine advanced in that case applies to both the 1933 and the 1934 Acts. See e.g., DeLancie v. Birr, Wilson & Co., 648 F.2d 1255, 1257-59 (9th Cir.1981); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moore, 590 F.2d 823, 827-29 (10th Cir.1978); Weissbuch v. Merrill Lynch, Pierce, Fenner & Smith, 558 F.2d 831, 833-35 (7th Cir.1977); Sibley v. Tandy Corp., 543 F.2d 540, 543 n. 3 (5th Cir.1976) reh’g denied, 547 F.2d 286, cert. den. 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82 (1977). Thus, under the rationale of the above cases, Plaintiffs 1934 Act claim would be non-arbitrable.

The Second Circuit has leaned in the direction of applying Wilko to the 1934 Act, but has not been obliged to take a definitive stance. In Colonial Realty Corp. v. Bache & Co., 358 F.2d 178, 183 n. 5 (2d Cir.), cert. den. 385 U.S. 817, 87 S.Ct. 40, 17 L.Ed.2d 56 (1966), Judge Friendly noted in dictum that the provision in the 1933 Act on which the Court relied in Wilko — section 14 — is “almost identical” to section 29(a) of the 1934 Act and that a distinction between the two acts “would seem unlikely.” Id.

Although the Supreme Court has also taken notice of the similarity between section 14 of the 1933 Act and section 29(a) of the 1934 Act, specifically, the fact that both sections bar “waiver of compliance with any ‘provision’ ” of the two acts, it has noted that the provisions of the two acts are different and has questioned the extension of Wilko to the 1934 Act. Scherk v. Alberto-Culver Co., 417 U.S. 506, 514, 94 5. Ct. 2449, 2454, 41 L.Ed.2d 270 (1974).

In Scherk the Supreme Court, without deciding the issue, expressed reservations about the applicability of Wilko to the 1934 Act. Id., at 513-14, 94 S.Ct. at 2454-55. The Court explained that Wilko involved an action brought under section 12(2) of the 1933 Act which provides a defrauded purchaser with the “special” right of a private remedy for civil liability. Id. The 1934 Act, however, has no counterpart. Moreover, unlike the 1933 Act, it has a judicially implied, rather than an express, remedy for violations of section 10(b) and Rule 10b-5. “[T]he [1934 Act] does not establish the ‘special right’ that the Court in Wilko found significant.” Id., at 514, 94 S.Ct. at 2454. Finally, the jurisdictional provisions of the two acts differ. Under the 1933 Act, a plaintiff can bring suit in either federal or state court. The 1934 Act, in contrast, gives “exclusive jurisdiction” to federal district courts.

In Byrd the Supreme Court left open the question of whether section 10(b) securities claims under the 1934 Act are subject to arbitration, for the reason that the defendant in that case had apparently assumed that claims under the 1934 Act were within the scope of Wilko. Although it did not address the issue directly, the Court, in a footnote, signaled the advent of a future holding by pointing out significant differences between the two securities acts and by reiterating that it had questioned the practice of applying Wilko to the 1934 Act in Scherk, suyra. Byrd, — U.S. at-n. 1, 105 S.Ct. at 1240 n. 1.

In his concurring opinion, Justice White suggested that Wilko’s concern for preserving a plaintiff’s federal cause of action in the face of arbitration is not necessarily transferable to the 1934 Act because that act “is judicially implied and not so different from the common law [fraud] action.” at-, 105 S.Ct. at 1244. Stressing that Wilko is not “mechanically” applicable to 1934 Act claims, he concluded that the premise that claims arising under the 1934 Act are not arbitrable “is a matter of substantial doubt.” Id.

In light of the Supreme Court’s ruling in Byrd, we doubt that the decisions cited above — holding that 1934 Act claims are non-arbitrable — retain viability. In recent weeks, at least four other federal district courts, on the strength of Byrd, have held that claims arising under the federal securities laws are arbitrable. See Gregory v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 84-1647 (M.D.Fla. March 9, 1985) (ordering arbitration of 10b-5 claims); accord, Niven v. Dean Witter Reynolds, Inc., [Current] Fed.Sec.L.Rep. (CCH) ¶ 92,-059 (M.D.Fla. March 28, 1985); Greenstein v. First Biscayne Corporation, et al., No. 84-1594 (S.D.Fla. May 16, 1985); see also Raiford v. Merrill Lynch, Pierce, Fenner & Smith, Inc. et al., No. C83-65A (N.D.Ga. May 16, 1985) (ordering arbitration of 10b-5 claims and removing the case from court’s July trial calendar).

Given the strong national policy favoring arbitration, see Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), the Byrd decision, and the decisions of other federal courts in the wake of Byrd, we think that there is abundant authority for submitting Plaintiff’s 1934 Act claims, as well as the state claims, to arbitration. Accordingly, we hereby GRANT Defendants’ motion to compel arbitration of both the state and federal claims.

The action is stayed pending arbitration of the claims stated in the complaint, providing any party applies for arbitration within thirty (30) days of this date. If such application is made and the arbitration proceedings go forward the stay will remain in effect until the arbitrator’s final decision is rendered and filed with the court and/or until further order of the court. Within 60 days of the date hereof counsel for the defendant shall inform the court in writing of the status of the proceedings at that time.

      . After their motion was denied, Defendants took an interlocutory appeal from this court's order. While the appeal was pending, the Supreme Court issued Byrd, infra, holding that district courts must compel arbitration of pendent arbitrable claims upon a party’s motion to compel. Pursuant to a stipulation by the parties, the Second Circuit has remanded the case to this court.

      . On June 24, 1985, at a rehearing on the motion to compel arbitration in light of Byrd, Defendants presented to the court for the first time a Securities Account Agreement signed by the Plaintiff on November 12, 1982, which contains a substantially similar arbitration clause to that in the options contract. This document adds nothing to the discussion on Defendants’ motion to compel. We agree with the Plaintiff that this case primarily concerns allegedly fraudulent churning of options and that, therefore, the Securities Account Agreement, is not particularly relevant. Even if it were on point, however, it would not change the court’s decision that an arbitrator should decide whether or not the contract is enforceable because it contains a substantially similar arbitration clause as that contained in the options contract. Moreover, there is no serious allegation that the arbitration clause in the Securities Account Agreement itself was procured through fraud. Further, the evidence in this case indicates that Plaintiff freely signed that contract. Deposition of Tim Jarvis, at 55, 57.

      . For a more elaborate discussion of the factual background of Moseley, supra, see the opinion of the lower court. Electronic & Missile Facilities, Inc., v. United States, 306 F.2d 554 (5th Cir.1962).

      . Plaintiff claims that the arbitration agreement contained in the options contract applies only to Dean Witter and not to Defendants Sullivan and Woodworth. We find this argument to be without merit. The first phrase of the arbitration agreement provides that "[a]ny controversy between us, arising out of or relating to this agreement ... shall be arbitrated.” (emphasis added). From other Dean Witter documents, it is clear that “any controversy between ‘us’ ” means contracts between customers and Dean Witter, including Dean Witter's agents. See e.g., Securities Account Agreement, appended to Defendant’s Memorandum, filed June 17, 1985 (which provides that all transactions entered into, where “executed by DWR or its agents,” shall be subject to the rules, regulations, and customs of the exchange or market). Since Sullivan and Woodworth are agents of Dean Witter, we think that the arbitration clause contained in the options contract covers their activity. Further, it is well settled that a principal, such as Dean Witter, is liable to third parties for all tortious acts committed by an agent within the scope of his authority even though the principal did not expressly direct his agent to commit the act. Employers’ Liability Assur. Corp. v. L.J. Marcotte Ins. Agency, 314 F.2d 470 (8th Cir.1963). We think that the arbitration agreement in the options contract applies to Sullivan and Wood-worth as employees and agents of Dean Witter.

      . In a letter dated July 17, 1985, Plaintiffs counsel argues that the arbitration agreement is voidable because there existed a fiduciary relationship between Dean Witter and Jarvis, under which Dean Witter had an obligation to provide Plaintiff with "full understanding of his legal rights and of all relevant facts that the fiduciary knows or should know." Rest. 2d Contracts, § 173, Comment a. Whether the parties’ broker-customer relationship rises to a fiduciary relationship is a question of fact. Fey v. Walston & Co., Inc., 493 F.2d 1036, 1049 (7th Cir.1974); Russo v. Bache Halsey Stuart Shields, Inc., 554 F.Supp. 613, 621 (N.D.Ill.1982). Even if a fiduciary relationship does exist between these parties, however, this court may not decide this issue as it is a pendent state law claim which must, pursuant to Byrd, supra, be sent to arbitration. Moreover, Plaintiff has already raised this claim in Count V of the Complaint. Thus, to raise it again at this point is redundant.

      . Section 14 of the Securities Act of 1933, 15 U.S.C. § 77n, provides as follows:
      Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this subchapter or of the rules and regulations of the Commission shall be void.
      Section 29(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78cc(a), provides:
      Any condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or of any rule or regulation thereunder, or of any rule of an exchange required thereby shall be void.