author: FARNAN, District Judge.

text:
    James L. MARTIN, Plaintiff, v. DELAWARE LAW SCHOOL OF WIDENER UNIVERSITY, et al., Defendants.
    Civ. A. No. 85-53.
    United States District Court, D. Delaware.
    Dec. 23, 1985.

      James L. Martin, pro se.
    Somers S. Price, Jr., of Potter, Anderson & Corroon, Wilmington, Del., for defendant Widener University.
    F. Alton Tybout, and Anne L. Naczi, of Tybout, Redfearn, Casarino & Pell, Wilmington, Del., for defendants Polyclinic Medical Center and Philhaven Hosp.
    Robert B. Young, and Mary E. Sherlock, of Young & Sherlock, Dover, Del., for defendant Commonwealth Nat. Bank.
    Stuart B. Young, of Young, Conaway, Stargatt & Taylor, Wilmington, Del., for defendants Lebanon Valley College, Lebanon County Legal Services, and Messrs. Reilly and Feather.
    Paul J. Gelman, and Nancy Gilberg, Philadelphia, Pa.,- for defendants Pennsylvania Board of Law Examiners, Judges Gates and Walter.
    Gwendolyn T. Mosley, Deputy Atty. Gen., Harrisburg, Pa., for defendant Dept, of Transp.
   OPINION

FARNAN, District Judge.

Plaintiff, James L. Martin, has brought this action against twelve separate defendants, alleging violations of 42 U.S.C. §§ 1983, 1985, and 1986, Title 7 of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., the Buckley/Pell Amendment to the Educational Rights Act of 1976, 20 U.S.C. § 1232, as well as the Thirteenth and Fourteenth Amendments to the U.S. Constitution. Plaintiff also seeks a declaration of his rights pursuant to 28 U.S.C. §§ 2201 and 2202, as well as attorneys’ fees pursuant to 42 U.S.C. § 1988. He invokes this Court’s jurisdiction pursuant to 28 U.S.C. §§ 1343 and 1331. Plaintiff also requests the Court to exercise its pendent jurisdiction over state law claims of breach of contract and intentional infliction of emotional distress.

Plaintiff alleges numerous causes of action. Plaintiff claims that the Pennsylvania Department of Transportation (“D.O. T.”), the Pennsylvania Board of Law Examiners (“Law Examiners”), the Lebanon County Legal Services Association, James T. Reilly, and John E. Feather (collectively “Lebanon County Defendants”), Judge Thomas Gates, and Judge John Walter, acted under color of state law to deprive Plaintiff of the opportunity to practice law, in violation of 42 U.S.C. § 1983, and that all other Defendants conspired to deprive Plaintiff of his civil rights, in violation of 42 U.S.C. § 1985, as well as the due process and equal protection clauses of the Fourteenth Amendment. Plaintiff also alleges that “the state authorities refusal to and neglect to prevent further deprivations” violates 42 U.S.C. § 1986. Plaintiff alleges that the acts of Polyclinic Medical Center (“Polyclinic”), Philhaven Hospital (“Philhaven”), Lebanon Valley College (“L.V.C.”), Judge Gates and Judge Walter, in causing Plaintiff’s detention in psychiatric hospitals, constituted involuntary servitude in violation of the Thirteenth Amendment. In his “Second Claim for Relief", Plaintiff alleges that all Defendants “made secret unilateral determinations that I was guilty of certain dishonest or fraudulent acts”, and “punished” him in violation of Title 7 of the Civil Rights Act of 1964. He also alleges that all Defendants violated the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., by discriminating against him on the basis of his medical history. In his “Third Claim for Relief”, Plaintiff alleges that the Law Examiners “waived the privilege of further inquiry into my fitness to practice law” by allowing him to sit for the Bar Exam, that they were estopped from denying him admission to the Bar by their act of publishing his name as a successful candidate, and that they violated State Bar admission rules requiring the examiners to notify applicants of any finding of unfitness to practice. Plaintiff also alleges that Delaware Law School (“D.L.S.”) breached its contract with him by incorrectly informing various state Boards of Law Examiners that Plaintiff had falsified a question on his law school admissions application. He alleges that L.V.C. also breached its contract with him by falsifying his academic transcript. He alleges that Commonwealth National Bank (“C.N.B.”) wrongfully dishonored his checks. As a “Fourth Claim for Relief”, Plaintiff alleges common law defamation of character and intentional infliction of emotional distress by all Defendants. As a “Fifth Claim for Relief”, Plaintiff seeks a declaratory judgment that “the unlawful acts set forth herein were and are still being unconstitutionally perpetrated on behalf of the state, and that such acts shall forthwith cease ...” Complaint, Docket No. 2

BACKGROUND FACTS.

The relevant facts, as alleged by Plaintiff in his Complaint and various briefs, are as follows. Plaintiff claims that Polyclinic and Philhaven admitted and detained him against his will without cause or hearing. Apparently, this action occurred in 1975. Plaintiff alleges that Philhaven subsequently erroneously informed the Law Examiners that he had voluntarily admitted himself to Philhaven for psychiatric care. He alleges that L.V.C., where Plaintiff had been an undergraduate student, falsified his transcripts and supplied “disinformation” to employees of Polyclinic and Philhaven, which was later given to the Law Examiners. Plaintiff alleges that Defendants James Reilly and John Feather, in their capacities as Lebanon County Legal Services attorneys, acted improperly by agreeing to represent Plaintiff in a proceeding against L.V.C., while they were associates of the law firm which was representing L.V.C. Plaintiff alleges that Defendants Judge Gates and Judge Walters improperly “issued orders against him” in his efforts to “get relief from the college’s disinformation scheme”. Plaintiff alleges that D.L.S. refused to send his transcript to the U.S. Department of Justice, thus preventing him from obtaining full-time employment. Plaintiff alleges that D.L.S. also erroneously concluded that he had falsified his law school application by denying that he had been committed to a mental hospital, and later sent this information to each of the State Boards of Law Examiners to which Plaintiff had applied for admittance. Plaintiff alleges that the Law Examiners refused to admit him to the Bar after he passed the Bar Examination. Plaintiff alleges that the D.O.T. improperly revoked his driver’s license in 1981 by relying upon “not [sic] existent medical reports about a neuro-psychiatric condition”, and that C.N.B. wrongfully dishonored his checks following his enrollment in law school after agreeing not to do so.

All defendants except Polyclinic have moved to dismiss. Each motion will be dealt with separately.

I. Pennsylvania Board of Law Examiners, Hon. G. Thomas Gates, Hon. John Walter.

These Defendants collectively moved to dismiss on eight separate grounds: (1) improper venue; (2) lack of in personam jurisdiction; (3) the Board of Law Examiners is not a person for purposes of 42 U.S.C. § 1983; (4) failure to join an indispensable party; (5) absolute judicial immunity; (6) the Eleventh Amendment bars Plaintiffs claim for damages; (7) failure to state a claim; and (8) failure to state a claim under 42 U.S.C. §§ 1985 and 1986. The Court finds that venue in this district is improper, and that this Court cannot exercise in personam jurisdiction over these Defendants. Therefore, the Court does not reach the other grounds raised.

A. Venue.

Venue in this action is controlled by 28 U.S.C. § 1391(b), which provides:

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside or in which the claim arose, except as otherwise provided by law.

Subject matter jurisdiction in this case is not founded solely on diversity of citizenship, but rather is conferred by 28 U.S.C. §§ 1331 and 1343. The Complaint indicates that all Defendants except D.L.S. reside in the State of Pennsylvania. Also, Plaintiffs allegations indicate that any claim he has against the Law Examiners, Gates or Walter arose in Pennsylvania. Therefore, venue in the District of Delaware is improper.

B. In Personam Jurisdiction.

Plaintiff attempted service of process upon these defendants by certified mail at their residences in Pennsylvania. In order for this Court to exercise jurisdiction over these defendants, this service must be adequate under the provisions of F.R.C.P. Rule 4(e) or 4(f).

Under Rule 4(f), service of process, by registered mail or otherwise, is limited to the territorial boundaries of the state in which the District Court is located, unless a federal statute or the Federal Rules of Civil Procedure allow otherwise. The only applicable federal statutes here are the civil rights statutes under which Plaintiff alleges this Court’s subject matter jurisdiction. However, although these statutes confer subject matter jurisdiction on the Federal Courts, they do not confer in personam jurisdiction. See Mabery v. Garrison, 405 F.Supp. 134, 138 (E.D.N.C.1975). Neither do they authorize national service of process. See Safeguard Insurance Co. v. Maxwell, 53 F.R.D. 116, 117 (E.D.Pa.1971). Thus, since Plaintiff served these Defendants outside Delaware, Rule 4(f) is inapplicable.

Rule 4(e) allows out-of-state service of process by mail whenever a statute or rule of court of the state in which the District Court sits so provides. Apparently, the only applicable state statute here would be the Delaware Longarm Statute, 10 Del.C. § 3104. That statute provides for jurisdiction over a non-resident defendant who:

(1) transacts any business or performs any character of work or service in this state; (2) contracts to supply services or things in this state; (3) causes tortious injury in this state by an act or omission in this state; (4) causes tortious injury in this state or outside of this state by an act or omission outside this state if he regularly does or solicits business, engages in any other persistent course of conduct in this state or derives substantial revenue from services, or things used or consumed in this state; (5) has an interest in, uses or possesses real property in this state; or (6) contracts to insure or act as surety for, or on, any person, property, risk, contract, obligation or agreement located, executed or to be performed within this state at the time the contract is made, unless the parties otherwise provide in writing.

10 Del.C. § 3104(c).

Defendants claim that the acts they are alleged to have committed took place solely in Pennsylvania and that none of them engage in any activities in Delaware or have any contact with Delaware. Plaintiff alleges that Defendants have had sufficient contact with Delaware. Specifically, he states that the Law Examiners wrote a letter addressed to him in Delaware, that they communicated with D.L.S. in Wilmington, and that they released his name as a successful Bar Examination candidate to Philadelphia newspapers, which circulate in Delaware. Also, in his various briefs, Plaintiff alleges that the Law Examiners participated in the overall conspiracy against him by denying him a license to practice law in Pennsylvania, and that Judge Gates and Judge Walter participated in this conspiracy by denying him due process of law through their “blatant prejudice and improper orders”. Judge Gates and Judge Walter are also alleged to have somehow assisted L.V.C. in its actions against Plaintiff because of their positions as L.V.C. alumni.

Accepting Plaintiffs allegations as true, the Court finds that these acts are insufficient to confer jurisdiction on this Court through the Delaware Longarm Statute and Rule 4(e). Plaintiff has alleged no facts showing that the Defendants transacted any business or performed any work or service within Delaware, or that they contracted to supply services or things in Delaware. To the extent that Plaintiff alleges tortious injuries, the alleged acts leading to these injuries occurred outside Delaware, and Plaintiff has not shown that Defendants engage in any regular course of business or other conduct within Delaware. Also, he has not alleged that Defendants have any interest in real property in Delaware, or that they have contracted to insure any person or property within Delaware. Thus, the Delaware Longarm Statute does not apply, and this Court cannot exercise jurisdiction over these defendants.

II. Philhaven Hospital.

Philhaven moved to dismiss on the grounds of insufficient process, insufficient service of process, and lack of in person-am jurisdiction. In support of this motion, Philhaven asserted by affidavit that it had not transacted any business or performed any work or services in Delaware, that it had not contracted to supply services or things in Delaware, had caused no tortious injury in the state, that it had no interest in real property in Delaware, and that it had not regularly engaged in or solicited business within Delaware.

Accepting plaintiffs allegations as true, Philhaven’s alleged actions did not subject it to this Court’s jurisdiction under the Delaware Longarm Statute, Rule 4(e), or Rule 4(p). As with the Law Examiners, Judge Gates, and Judge Walter, the wrongful acts alleged here all took place in Pennsylvania. Defendants were served in Pennsylvania. Plaintiff has alleged no other acts by Philhaven which could confer jurisdiction on this Court pursuant to the Delaware Longarm Statute. Although Plaintiff has alleged that Philhaven’s acts in Pennsylvania caused tortious injury in Delaware, he has not alleged, and Philhaven has affirmatively denied, that Philhaven has engaged in any regular course of activity in Delaware, as required under subsection (c)(4) of the Longarm Statute. Thus, this Court cannot exercise jurisdiction over Phil-haven under Rule 4(e) or Rule 4(f).

III. Lebanon Valley College, Lebanon County Legal Services, James Reilly, John Feather.

These Defendants collectively moved to dismiss, asserting lack of in personam jurisdiction and improper venue. They assert, •by affidavits, that none of them has conducted any business in Delaware, and that none has any domicile or any interest in real property in Delaware. Defendants also challenge venue on the same grounds as outlined above.

Plaintiff has alleged no facts which could establish this Court’s jurisdiction over these defendants. As with the other defendants, the wrongful acts plaintiff alleges occurred solely in Pennsylvania. Plaintiff alleges that these Defendants sent “disinformation” by mail or telephone into Delaware, and that they participated in the overall conspiracy among all Defendants, and that these acts had a tortious impact within Delaware. However, as with the other Defendants, Plaintiff does not allege that these defendants engage in or solicit business, or engage in any other persistent course of conduct in Delaware, as required by subsection (c)(4) of the Longarm Statute. Thus, this Court cannot exercise jurisdiction over these Defendants under Rule 4(e) or 4(p). Also, for the reasons outlined above, venue in this district would be improper as to these Defendants.

IV. Commonwealth National Bank.

C.N.B. filed a Motion for a More Definite Statement pursuant to F.R.C.P. 12(e) on April 5, 1985, and filed a Motion to Dismiss on July 26,1985. The Motion for a More Definite Statement requested Plaintiff to provide the specific dates of any alleged breach of contractual obligations by Defendant, and the date of any alleged conspiracy to intentionally dishonor Plaintiff's checks. The Motion to Dismiss asserted lack of in personam jurisdiction, insufficient service of process, improper venue, failure to state a claim, failure to allege conspiracy with sufficient particularity, as well as any other reasons as might appear in its brief.

Plaintiff alleges that C.N.B. conspired with the other Defendants to deprive him of his civil rights, in violation of 42 U.S.C. § 1985. He also alleges that C.N.B., along with the other Defendants, violated the Rehabilitation Act and Title 7 of the Civil Rights Act. As a pendant state claim, Plaintiff also alleges that C.N.B. wrongfully dishonored his checks and terminated his credit, in breach of its contractual duties and in violation of the Uniform Commercial Code.

The only facts plaintiff has alleged to support his conspiracy allegations are that C. N.B.’s wrongful dishonor of his checks occurred at approximately the same time as D. O.T.’s temporary restoration of his driving privileges. In his Brief in Response to C.N.B.’s Motion to Dismiss, Plaintiff alleges that these acts were coordinated for the specific purpose of rendering “moot” Plaintiff’s action in Pennsylvania Superior Court. In addition, he alleges that all Defendants “relied upon the removal or misfiling of court documents so that an appeal was either impossible or incomplete.” Plaintiff’s Brief in Opposition to C.N.B.’s Motion to Dismiss, Docket No. 77, at 10.

A. The 1985 Claim.

It has long been settled in this Circuit that claims under Section 1985 must be pleaded with specificity in order to withstand a motion to dismiss. Fletcher v. Hook, 446 F.2d 14, 16 (3rd Cir.1971); Negrich v. Hohn, 379 F.2d 213 (3rd Cir.1967); Ross v. Meagan, 638 F.2d 646, 650 (3rd Cir.1981). Broad, conclusory allegations, unsupported by specific facts implicating specific defendants are insufficient to state a claim upon which relief can be granted. Negrich, 379 F.2d at 215; Scott v. University of Delaware, 385 F.Supp. 937, 944 (D.Del.1974). The rationale for this requirement was stated in Kauffman v. Moss, 420 F.2d 1270, 1276, n. 15 (3rd Cir. 1970) (quoting Valley v. Maule, 297 F.Supp. 958 (D.Conn.1968)):

In recent years there has been an increasingly large volume of cases brought under the Civil Rights Acts. A substantial number of these cases are frivolous or should be litigated in the state courts; they all cause defendants — public officials, policemen and citizens alike — considerable expense, vexation and perhaps unfounded notoriety. It is an important public policy to weed out the frivolous and insubstantial cases at an early stage in the litigation, and still keep the doors of the federal courts open to legitimate claims.

Proof of conspiracy is an essential element of a claim for relief under Section 1985. Griffin v. Breckenridge, 403 U.S. 88, 102, 91 S.Ct. 1790, 1798, 29 L.Ed.2d 338 (1971); Smith v. Butler, 507 F.Supp, 952, 953 (E.D.Pa.1981). Thus, under Third Circuit standards, it is insufficient for a plaintiff alleging conspiracy to violate civil rights merely to make broad, conclusiory allegations of such a conspiracy, or to show merely that the defendants had a common goal or acted in concert. See Chicarelli v. Plymouth Garden Apartments, 551 F.Supp. 532, 539 (E.D.Pa.1982). Rather, plaintiffs must show through specific facts that the defendant reached an understanding or agreement to violate plaintiff’s federally created rights. See Id.

In this case, Plaintiff has clearly failed to show specific facts supporting his allegations of conspiracy by C.N.B. In his Complaint, Plaintiff merely asserted that all Defendants, presumably including C.N.B., conspired to deprive him of his civil rights. In his Brief in Response to C.N. B.’s Motion to Dismiss, Plaintiff alleged that C.N.B.’s dishonor of his checks was undertaken in conspiracy with the other defendants, and that all defendants conspired to remove or misfile court documents. The only specific fact Plaintiff alleged in support of any of these allegations was that, “my application for reopening my bank account was unlawfully denied at essentially the same time that the Pa. Bureau of Traffic Safety temporarily restored my license ...” Plaintiffs Brief in Opposition to C.N.B.’s Motion to Dismiss, Docket No. 77, at 10. Clearly, this isolated fact does not approach the showing of an “agreement or understanding” plaintiff must make in order to withstand a motion to dismiss.

B. The Rehabilitation Act

Plaintiff also alleges that C.N.B., along with the other Defendants, violated Section 504 of Title 5 of the Rehabilitation Act of 1973, 29 U.S.C. § 794. Section 794 provides, in pertinent part, that:

No otherwise qualified handicapped individual in the United States, as defined in Section 706(7) of this Title, shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance ...

29 U.S.C. § 794.

In order to state a claim under Section 794, the handicapped plaintiff must be the intended beneficiary of or participant in a federally funded program or activity. N.A.A.C.P. v. Wilmington Medical Center, Inc., 426 F.Supp. 919, 923 (D.Del.1977); Simpson v. Reynolds Metals Co., Inc., 629 F.2d 1226 (7th Cir.1980). Plaintiff has not alleged that C.N.B. receives any federal financial assistance, or operates any program or activity receiving federal financial assistance, within the meaning of Section 794. Therefore, Plaintiff does not state a claim under Section 794 upon which relief may be granted. Sheeran v. M.A. Bruder & Sons, Inc., 524 F.Supp. 567, 572 (E.D.Pa.1981). Also, Plaintiff has not alleged that he has exhausted available administrative remedies under the Rehabilitation Act. Wilmington Medical Center, 426 F.Supp. at 924; Sheeran, 524 F.Supp. at 572.

C. Title 7.

Plaintiff alleges that C.N.B., along with the other Defendants, “made secret unilateral determinations that I was guilty of certain dishonest or fraudulent acts, which the evidence refuted; but nonetheless, they proceeded to punish me in violation of Title 7 of the Civil Rights Act ...” Complaint, Docket No. 2,11 28.

Section 703 of Title 7 of the Civil Rights Act, 42 U.S.C. § 2000(e)-2(a) states:

(a) It shall be an unlawful employment practice for an employer—
(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or
(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.

The purpose of Title 7 is “the elimination of discrimination in employment.” E.E.O.C. v. E.I. du Pont de Nemours & Co., 445 F.Supp. 223, 232 (D.Del.1978). See Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). Generally, to state a claim under Section 2000(e)-2 of Title 7, a plaintiff must show that there is either a current or prospective employer-employee relationship between the parties. See Delgado v. McTighe, 442 F.Supp. 725, 729 (E.D.Pa.1977); Hackett v. McGuire, 445 F.2d 442 (3rd Cir.1971). Courts in other circuits have determined that, even where a formal employment relationship is lacking, it is sufficient for the plaintiff to assert that the defendant exercised significant control over his access to employment opportunities in a discriminatory manner. Sibley Memorial Hospital v. Wilson, 488 F.2d 1338 (D.C.Cir.1970); Puntolillo v. New Hampshire Racing Commission, 375 F.Supp. 1089 (D.N.H.1974).

Plaintiff here has not alleged that he was either an employee or a potential employee of C.N.B., or that C.N.B. exercised control over his access to employment opportunities. Thus, he has not stated a claim for which relief can be granted under Title 7.

D. Pendent State Claims.

Plaintiff requests this Court to exercise its pendent jurisdiction over the state law claims raised against C.N.B. in the Complaint. For this Court to exercise pendent jurisdiction, two requirements must be satisfied. First, the underlying federal claims must be sufficiently substantial to support federal jurisdiction, and second, the state and federal claims must derive from a common nucleus of operative fact, or be such that a plaintiff would ordinarily be expected to try them all in one proceeding. United Mine Workers of America v. Gibbs, 383 U.S. 715, 725-27, 86 S.Ct. 1130, 1138-39, 16 L.Ed.2d 218 (1966); Blake v. Town of Delaware City, 441 F.Supp. 1189, 1203-04 (D.Del.1977). Even when these requirements are satisfied, however, the exercise of pendent jurisdiction is within the court’s sound discretion. Blake, 441 F.Supp. at 1204. Because the federal claims against C.N.B. have been dismissed, the Court will not exercise its pendent jurisdiction to hear the state law claims asserted. Id.

C.N.B.’s Motion to Dismiss the Complaint for Failure to State a Claim shall be granted. Although it appears unlikely that Plaintiff can allege further facts sufficient to withstand the Motion to Dismiss, the Court will allow Plaintiff leave to amend his Complaint against C.N.B. Rotolo v. The Borough of Charleroi, 532 F.2d 920 at 923 (3rd Cir.1976).

V. Pennsylvania Department of Transportation.

Plaintiff alleges that Defendant D.O.T. improperly revoked his driver’s license “because of nonexistent medical reports about a neuropsychiatric condition”, thus depriving him of his civil rights in violation of 42 U.S.C. § 1983. Plaintiff also alleges that D.O.T. conspired with other Defendants to deprive him of his civil rights, in violation of 42 U.S.C. § 1985, and that it neglected to prevent further deprivations, in violation of 42 U.S.C. § 1986. Plaintiff seeks declaratory relief, compensatory and punitive damages, and attorneys fees.

It is clear that suits against a state by private parties in federal court, seeking to impose a liability which must be paid from public funds in the state treasury, are barred by the Eleventh Amendment. Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979); Alabama v. Pugh, 438 U.S. 781, 98 S.Ct. 3057, 57 L.Ed.2d 1114 (1978). This immunity extends as well to departments and agencies of the state. Mount Healthy City Board of Education v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1974).

Because Plaintiff has directly sued an arm of the State of Pennsylvania, and seeks damages directly payable from the state treasury, this Court has no jurisdiction to grant the relief requested. Edelman v. Jordan, 415 U.S. 651, 678, 94 S.Ct. 1347, 1363, 39 L.Ed.2d 662 (1974). Therefore D.O.T.’s Motion to Dismiss shall be granted. However, Plaintiff has the opportunity to amend his Complaint to name as defendants any individual state officials who he alleges have violated his civil rights. See Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908); Myers v. Anderson, 238 U.S. 368, 35 S.Ct. 932, 59 L.Ed. 1349 (1915).

VI. Delaware Law School.

Plaintiff alleges that D.L.S. erroneously determined that he had falsified his law school admissions application by denying that he had ever been committed to a mental institution. He alleges that D.L.S. sent this information to each State Board of Law Examiners to which he had applied for admission, thus denying him the opportunity to gain admittance to the Bar. He also alleges that D.L.S. refused to retract and correct the “disinformation” it had distributed. Plaintiff also alleges that D.L.S. improperly refused to forward his law school transcript to the U.S. Department of Justice, thereby denying him the opportunity to obtain full-time employment. Plaintiff alleges that D.L.S. also participated in the overall conspiracy among all defendants. He alleges that these acts violated 42 U.S.C. §§ 1983, 1985 and 1986, Title 7, the Rehabilitation Act, as well as state law contractual obligations.

D.L.S. moved to dismiss, alleging failure to state a claim, lack of subject matter jurisdiction, and failure to join an indispensable party.

A. Section 1983.

D.L.S. argues that Plaintiff has failed to state a claim under 42 U.S.C. § 1983. The essential elements of a claim under Section 1983 are (1) deprivation of a constitutional right or privilege; and (2) action under color of state law. See Baker v. McCollan, 443 U.S. 137, 140, 99 S.Ct. 2689, 2692, 61 L.Ed.2d 433 (1979). Thus, in order to state a claim, Plaintiff must show that D.L.S. acted under color of state law. Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982); Krynicky v. University of Pittsburgh, 742 F.2d 94, 97 (3rd Cir.1984), cert. denied, - U.S. -, 105 S.Ct. 2018, 85 L.Ed.2d 300 (1985).

No single standard has developed for determining when private conduct can be considered state action. However, the two relevant tests in this case are the “nexus” test of Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974), and the “symbiotic relationship” test of Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). The “nexus” test requires a showing of a “sufficiently close nexus between the state and the challenged action”, such that the action may be “fairly treated as that of the state itself.” Jackson, 419 U.S. at 351, 95 S.Ct. at 453. This nexus can be found only when “the state participated in the challenged conduct itself by ‘putting its weight’ behind the challenged activity” itself. Fitzgerald v. Mountain Laurel Racing, Inc., 607 F.2d 589, 597 (3rd Cir.1979) (quoting Jackson, 419 U.S. at 357, 95 S.Ct. at 456). The “symbiotic relationship” test requires a showing that the state has “so far insinuated itself into a position of interdependence with [the private actor] that it must be recognized as a joint participant in the challenged activity, which, on that account, cannot be considered to have been so ‘purely private’ as to fall without the scope of the Fourteenth Amendment.” Burton, 365 U.S. at 725, 81 S.Ct. at 862. See Braden v. University of Pittsburgh, 552 F.2d 948, 957 (3rd Cir.1977). Under the “nexus” test,, the court focuses on state involvement in the challenged activity itself, whereas under the “symbiotic relationship” test, the focus is on the overall relationship between the state and the private entity, and the plaintiff need not show state involvement in the particular challenged activity. See Rendell Baker, 457 U.S. at 839-43, 102 S.Ct. at 2770-72; Benner v. Oswald, 592 F.2d 174, 179 (3rd Cir.1979).

Plaintiff here has alleged no facts from which the Court could conclude that D.L.S. acted under color of state law under either test. In his complaint, he merely alleges that “all defendants” acted under color of state law. In his response to D.L.S.’s Motion to Dismiss, plaintiff again merely alleges that “the Law School’s activities are so imbued with state action to be under ‘color of state law’ ”. Docket No. 39. At oral argument on D.L.S.’s Motion to Dismiss, plaintiff appeared to base his allegation of state action on the fact that D.L.S. students received government-insured student loans to finance their law school education. He stated that he did not rely on D.L.S.’s direct receipt of any such government aid. He also stated that the fact that D.L.S. was licensed by the State of Delaware, and fulfilled a “public function”, as well as the fact that D.L.S. had allegedly conspired with the State of Pennsylvania, was sufficient for this Court to consider D.L.S. a state actor.

Plaintiff here has not alleged that the state has participated or otherwise “put its weight” behind the challenged activity itself; that is, the alleged dissemination of “disinformation”. See Fitzgerald, 607 F.2d at 597. Also, the mere receipt of financial assistance from the federal government, no matter how extensive, is insufficient to meet the requirements for state action. Rendell-Baker v. Kohn, 457 U.S. 830, 840, 102 S.Ct. 2764, 2770, 73 L.Ed.2d 418 (1982); Krynicky v. University of Pittsburgh, 742 F.2d 94, 102 (3rd Cir.1984). It is irrelevant whether this aid is contributed to the school directly, or through some indirect means such as student loans. See Murphy v. Villanova University, 547 F.Supp. 512, 517-18 (E.D.Pa. 1982, aff'd, 707 F.2d 1402 (3rd Cir.1983). Also, neither the presence of extensive state regulation, nor the existence of a state-granted charter can show the type of pervasive interdependence required to convert private action to state action. Rendell-Baker, 457 U.S. at 841-842, 102 S.Ct. at 2771-72. Thus, plaintiff has failed to show either a “symbiotic relationship” between Delaware and D.L.S., or a “close nexus” between the state and the challenged activity.

Plaintiff’s allegations that D.L.S. conspired with the State of Pennsylvania to deprive him of his constitutional rights are also insufficient to state a claim under Section 1983. While private action conducted jointly with state officials can constitute a violation of Section 1983, such conspiratorial conduct must be pleaded with specificity. See Negrich v. Hohn, 379 F.2d 213, 215 (3rd Cir.1967), Chicarelli v. Plymouth Garden Apartments, 551 F.Supp. 532, 539 (E.D.Pa.1982). Plaintiff here has made no more than merely conclusory allegations of conspiracy.

B. Rehabilitation Act of 1973.

Plaintiff also alleges that D.L. S.’s actions violated the Rehabilitation Act of 1973, 29 U.S.C. § 794. However, as with his similar allegation against C.N.B., plaintiff has not alleged that D.L.S. participated in any program or activity receiving federal assistance, or that he was denied participation in such a program on the basis of a handicap. N.A.A. C.P. v. Wilmington Medical Center, Inc., 426 F.Supp. 919, 923 (D.Del.1977); Sheeran v. M.A. Bruder & Sons, Inc., 524 F.Supp. 567 (E.D.Pa.1981).

C. Title 7.

Plaintiff alleges that D.L.S.’s actions also violated Title 7, 42 U.S.C. § 2000e-2. However, plaintiff has not alleged any existing or prospective employer-employee relationship with D.L.S. E.E.O.C. v. E.I. duPont deNemours & Co., Inc., 445 F.Supp. 223, 232 (D.Del.1978); Delgado v. McTighe, 442 F.Supp. 725, 729 (E.D.Pa.1977). Also, D.L.S. cannot be considered to exercise the degree of control over plaintiff’s access to employment sufficient to bring this case within Title 7 under the analysis of Sibley Memorial Hospital v. Wilson, 160 U.S.App.D.C. 14, 488 F.2d 1338 (1973), discussed supra. Although D.L.S. is alleged to have wrongfully supplied various state bar examiners with “disinformation” which resulted in plaintiff’s denial for admission to the bar, D.L.S. does not have the direct nexus with plaintiff’s potential employers required to bring its relationship with plaintiff under Title 7 under the analysis of Sibley. Sibley Memorial Hospital, 488 F.2d at 1342. It is also noted that at least one court in this Circuit has held that the relationship between bar applicants and bar examiners is not covered by Title 7. Delgado, 442 F.Supp. at 730. Since plaintiff here alleges that D.L.S. interfered with his employment opportunities through various state boards of bar examiners, the Court fails to see how D.L.S. can violate Title 7 if the bar examiners cannot.

D. State Claims.

Plaintiff also asserts state law breach of contract claims against D.L.S. Because plaintiff’s federal claims are insufficient to support the exercise of this Court’s jurisdiction, and because no independent basis of jurisdiction exists for the state claims, this Court cannot exercise jurisdiction over the state law claims asserted. United Mine Workers v. Gibbs, 383 U.S. 715, 725-27, 86 S.Ct. 1130, 1138-39, 16 L.Ed.2d 218 (1966).

Because plaintiff has failed to state a claim against D.L.S. under any of his theories, D.L.S.’s Motion to Dismiss shall be granted. Although it does not seem likely that plaintiff can allege sufficient facts to state a claim, an opportunity to amend shall be granted.

      . The Court notes that several of these claims have been the subject of prior litigation. On June 16, 1980, Plaintiff brought suit against L.V.C. in the Court of Common Pleas of Lebanon County, Pennsylvania, alleging that L.V.C. falsified his transcripts and issued "disinformation” about him. That court subsequently granted L.V.C.’s Motion for Summary Judgment (Affidavit of Timothy D. Sheffey, March 21, 1985, Docket No. 51), and Plaintiff’s appeal to the Pennsylvania Supreme Court was denied (Plaintiffs Supplementary Answering Brief in Opposition to L.V.C.'s Motion to Dismiss, Exhibit 1, Docket No. 71). Also, on September 25, 1981, Plaintiff filed suit in the United States District Court for the Middle District of Pennsylvania against Polyclinic Medical Center, Philhaven Hospital, employees and officials of Polyclinic and Philhaven, officials of L.V.C., as well as "solicitors for Lebanon County”, alleging the same wrongs Plaintiff raises in this action. The Court, per R. Dixon Herman, J., dismissed the action as frivolous, pursuant to 28 U.S.C. § 1915(d) (Affidavit of Timothy D. Sheffey, April 25, 1985, Docket No. 68). C.N.B., in its Brief in support of its motion to dismiss, also indicates that Plaintiffs claims here might arise out of the same issues previously heard and decided in an action by Plaintiff against C.N.B. in the Court of Common Pleas of Lancaster County, Pennsylvania, on October 3, 1983.

      . At oral argument, Plaintiff appeared to concede that the service of process effected here did not comply with Rule 4. However, Plaintiff stated that he did not rely upon Rule 4 to effectuate service, but rather upon paragraph 3 of Judge Stapleton’s Order granting Plaintiffs Motion to Proceed In Forma Pauperis, in which Judge Stapleton instructed Plaintiff to "attempt to effect service of process on the Defendants” (Order of Judge Stapleton, January 24, 1985, Docket No. 1). Judge Stapleton did not, by this instruction, grant Plaintiff permission to avoid the Federal Rules of Civil Procedure. The service of process effected by Plaintiff must still comply with Rule 4, or this Court cannot exercise personal jurisdiction over the Defendants.

      . On March 8, 1985, Plaintiff moved for default judgment against Philhaven because Philhaven had not entered an appearance or responded to the Complaint served upon it on January 28, 1985. Philhaven filed an Answer and Motion to Dismiss on March 11, 1985.
      Before this Court can enter a default judgment, an entry of default must be made by the Clerk pursuant to Rule 55(a). Plaintiff, in his Answering Brief to Philhaven’s Motion to Dismiss, indicates that he requested the Clerk to enter a default, but the Clerk did not do so. However, even if default had been properly entered, the entry of judgment by default pursuant to Rule 55(b)(2) is within the discretion of the trial court. Duling v. Markum, 231 F.2d 833 (7th Cir.1956), cert. denied, 352 U.S. 870, 77 S.Ct. 96, 1 L.Ed.2d 76 (1956); Georgia Power Project v. Georgia Power Co., 409 F.Supp. 332, 336-37 (N.D.Ga.1975). It appears that Philhaven filed an Answer less than three days after Plaintiff moved for default judgment. Although Philhaven was not timely in its response to the Complaint, Plaintiff has shown no prejudice by this delay. Therefore, the Court declines to enter default judgment against Philhaven.

      . Defendants’ Motion to Dismiss challenging personal jurisdiction and venue was filed on April 11, 1985. Plaintiff asserts that Defendants waived the right to assert these defenses by motion when they raised them in their Answer filed February 15, 1985. He apparently relies on F.R.C.P. 12(b) which states that a motion making any of the enumerated defenses “shall be made before pleading if a further pleading is permitted.”
      Such a rigid interpretation of Rule 12(b) is improper. Although Rule 12(h) requires that a defendant assert lack of in personam jurisdiction or improper venue at the first opportunity, it is perfectly acceptable to raise these defenses by either motion or responsive pleading. Filing an Answer which properly raises these defenses prior to the filing of a Motion to Dismiss does not remove the Motion to Dismiss from consideration by the Court on the ground that it is untimely. In Re Arthur Treacher’s Franchisee Litigation, 92 F.R.D. 398, 413 (E.D.Pa.1981); Cf. Aldabe v. Aldabe, 616 F.2d 1089, 1093 (9th Cir.1980).

      . By filing a Motion for a More Definite Statement under Rule 12(e) prior to filing its Motion to Dismiss, C.N.B. has waived the defenses of lack of personal jurisdiction, improper venue, and insufficient service of process. Rule 12(g) and Rule 12(h)(1) clearly provide that these defenses are waived if not raised in any Rule 12 motion. A Rule 12(e) Motion for a More Definite Statement is clearly such a Rule 12 motion. Thus, by not raising these defenses at the time it filed its Motion for a More Definite Statement, C.N.B. waived the right to assert them by a subsequent Motion to Dismiss.

      . This specificity requirement has been determined not to be inconsistent with the less stringent standards for formal pleadings required of pro se civil rights litigants enunciated by the Supreme Court in Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972). Gray v. Creamer, 465 F.2d 179, 182 n. 2 (3rd Cir.1972).

      . The Court notes that Plaintiff's allegations of a conspiracy between C.N.B. and D.O.T. could also form the grounds for a claim against C.N.B. under Section 1983. That section prohibits violations of constitutional rights under color of state law, and is applicable to private parties who wilfully participate in joint activty with the state or its agents. Adickes v. S.H. Kress & Co., 398 U.S. 144, 152, 90 S.Ct. 1598, 1605, 26 L.Ed.2d 142 (1970). However, Plaintiff must still make the requisite factual showing of conspiracy in order to succeed under § 1983, and, as stated above, he has not done so. See Chicarelli, 551 F.Supp. at 539-40.

      . The Third Circuit has held that a private cause of action exists under Section 794. N.A.A.C.P. v. Medical Ctr., Inc., 599 F.2d 1247 (3rd Cir.1979).

      . In Sibley, the defendant hospital referred patients requiring the services of a private duty nurse to an independent nurses registry, which would match the request with the name of an available nurse. The hospital did not actually employ the nurses. On two occasions when plaintiff was selected, the hospital refused to allow plaintiff, who was male, to report to female patients who had requested nurses. The court found that the hospital exercised sufficient control over plaintiffs access to employment to bring the case within the purview of Title 7. Sibley, 488 F.2d at 1342.

      . The requirement of Section 1983 that the action be under color of state law has been interpreted to be identical to the state action requirement of the Fourteenth Amendment. Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 929, 102 S.Ct. 2744, 2749, 73 L.Ed.2d 482 (1982).

      . The other two tests are the “public function” test and the "state compulsion” test. The "state compulsion” test only applies to cases where the state has compelled a particular action. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 170, 90 S.Ct. 1598, 1615, 26 L.Ed.2d 142 (1970). Although Plaintiff argues that D.L.S. serves a "public function” in providing legal education, it is clear that private activity can be a "public function" only when the activity performed has been "traditionally the exclusive perogative of the state.” Jackson v. Metropolitan Edison Co., 419 U.S. 345, 353, 95 S.Ct. 449, 455, 42 L.Ed.2d 477 (1974); Rendell-Baker v. Kohn, 457 U.S. 830, 842, 102 S.Ct. 2764, 2772, 73 L.Ed.2d 418 (1982). Operating a law school is clearly not such an exclusive activity.

      . Similarly, conclusory allegations of conspiracy are insufficient to state a claim under Section 1985. Kauffman v. Moss, 420 F.2d 1270, 1275-76 (3rd Cir.1970).

      . "Assistance” connotes the transfer of government funds by way of subsidy, not merely exemption from taxation. See Bachman v. American Society of Clinical Pathologists, 577 F.Supp. 1257 (D.N.J.1983).

      . In his brief in response to D.L.S.’s Motion to Dismiss, plaintiff obliquely raises inferences that D.L.S.'s conduct violated the Buckley/Pell Amendment to the Family Educational Rights and Privacy Act of 1976, 20 U.S.C. § 1232g. Although it is unclear whether plaintiff is raising a claim against D.L.S. under this Act, such a claim must be dismissed because this Act does not provide a private cause of action. See 20 U.S.C. § 1232g(f). Girardier v. Webster College, 563 F.2d 1267, 1276-77 (8th Cir.1977); Price v. Young, 580 F.Supp. 1, 2 (E.D.Ark.1983); Daniel B. v. Wisconsin Dept. of Public Instruction, 581 F.Supp. 585, 592 (E.D.Wisc.1984). But see Rios v. Read, 73 F.R.D. 589, 600 (E.D.N.Y.1977).
      Plaintiff also asserts in his brief that the procedures followed by D.L.S. in determining that he had falsified his application for admission did not comply with the procedures required by the 14th Amendment for educational disciplinary proceedings, as suggested by the Supreme Court in Board of Curators of the University of Missouri v. Horowitz, 435 U.S. 78, 98 S.Ct. 948, 55 L.Ed.2d 124 (1978), and Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975). However, the procedures outlined in Horowitz and Goss apply only to state institutions, and, as discussed above, D.L.S. is a private institution.


source: Caselaw Access Project

author: SWEET, District Judge.

license: Public Domain

text:
    INTRE SPORT LTD., Plaintiff, v. KIDDER, PEABODY & CO., INCORPORATED, Defendant.
    85 Civ. 1968 (RWS).
    United States District Court, S.D. New York.
    Dec. 23, 1985.

      Rogers, Hoge & Hills, New York City, for plaintiff; Lynda G. Jacobs, William J. Foster, IV, of counsel.
    Shanley & Fisher, P.C., New York City, for defendant; Matthew Farley, of counsel.
   OPINION

SWEET, District Judge.

Defendant Kidder, Peabody & Co., Inc. (“Kidder, Peabody”) moves for an order of dismissal under Rule 12(b), Fed.R.Civ.P., or in the alternative, arbitration of the claims of plaintiff Intre Sport, Ltd. (“Intre Sport”) which arise out of two sets of allegedly fraudulent transactions in securities. Kidder Peabody seeks the following relief: 1) dismissal of all claims alleged under section 12(2) of the Securities Act of 1933; 2) dismissal of the claim arising under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq (hereinafter “RICO”); 3) compelled arbitration of all other claims, including any remaining RICO claims and implied causes of action under the federal securities laws; and 4) dismissal of the federal securities laws claims if they are not referred to arbitration. For the reasons set forth below, the motion to dismiss the claims under RICO and Section 12(2) of the Securities Act of 1933 is granted, and the remaining federal securities law and common law fraud claims are referred to arbitration.

Prior Proceedings

Intre Sport filed this action on March 13, 1985, alleging claims arising under section 12(2) of the Securities Act of 1933, 15 U.S.C. § 111(2), section 10(b) and 15(c) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78o(c) and various common law breaches of contract, breaches of fiduciary duty, and fraud.

Kidder, Peabody filed a motion seeking dismissal and arbitration of the initial complaint on May 3, 1985, and on August 13, 1985, Intre Sport filed both an opposing brief and an amended complaint, adding a claim under section 1964(d) of RICO. Kidder, Peabody withdrew its original motion, and on September 6, 1985 made a motion to dismiss the amended complaint, or alternatively, to submit all of Intre Sport’s claims, except for those arising under section 12(2) of the Securities Act, to arbitration. For the convenience of the court, Kidder, Peabody consolidated all of its arguments in its September 1985 brief, superseding the earlier May 3, 1985 brief. Matters outside the pleadings and the memoranda of law have not been considered in deciding this motion, and it remains a motion to dismiss on the pleadings pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(c).

The Parties

Intre Sport, formerly known as International Trends, Inc. (“International Trends”) is a corporation duly incorporated in the State of New York, with its principal place of business at 350 Fifth Avenue, New York, New York.

Kidder, Peabody is a corporation with its principal place of business at 10 Hanover Square, New York, New York, and is a registered broker-dealer under section 15 of the Securities Exchange Act and is a member of the National Association of Securities Dealers, Inc. (“NASD”), the New York and American Stock Exchanges and most major securities, options and commodities exchanges.

The Pleadings

For the purposes of this motion, the facts as alleged in the complaint are accepted as true. In April, 1982, Robert J. Turner (“Turner”), President and Chief Executive Officer of International Trends (now Intre Sport), met Peter N. Brant (“Brant”), a Vice President of Kidder, Peabody employed at its 101 Park Avenue, New York City branch office, who introduced himself to Turner as a highly successful broker with Kidder, Peabody who insisted on complete discretion over his customer’s accounts. Turner reported to Brant that his company maintained securities brokerage accounts at other investment firms and had substantial investments in the stock market. Brant told Turner that he never followed Kidder, Peabody’s recommendations but instead “specialized in identifying small companies with significant growth potential” and that he was able to develop close confidential relationships with the management of these companies which enabled him to “obtain valuable information in advance of the public.”

In April, 1982, Intre Sport opened a margin account with Kidder, Peabody and executed a standard Customers Agreement which provided in relevant part as follows:

Any controversy arising out of or relating to accounts of or transactions with or for the undersigned or to this agreement or the breach thereof shall be settled by arbitration in accordance with the rules of either the American Arbitration Association or the New York stock Exchange as the undersigned may elect. If the undersigned does not make such election by registered mail addressed to you at your main office in New York City within five days after demand by you that such election be made, then you may make such election. Judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

Both Turner and Intre Sport’s Executive Vice President Peter J. MacLeod (“MacLeod”) were listed as having authority over the corporation’s account.

Two sets of transactions are involved: Intre Sport’s purchase of the stock of American Surgery Centers, and Brant’s alleged failure to sell certain securities in January, 1984.

American Surgery Centers Stock

In March, 1983, Brant purchased 25,000 shares of American Surgery common stock for Intre Sport’s account, at a price of $6.4780 per share for a total investment of $161,950.00. Brant told Turner and MacLeod that he had extensive knowledge about American Surgery and that he was personal friends with and regularly contacted employees of the company, including Greg Michael, its Executive Vice President. By May of 1983, American Surgery’s price per share had doubled to $12,875.

During this period of rapid increase in the value of the stock, Brant telephoned Turner and MacLeod with what he described as “a deal which will change your lifestyle.” He explained that American Surgery was issuing an unregistered secondary offering of common stock. While the offering was already oversubscribed, Brant told Turner and MacLeod that since he had been instrumental in assisting the company in arranging for the sale, he would be able to obtain 25,000 shares at $4.00 for the Intre Sport account. Brant also told them he had discussed the issue with Kidder, Peabody but was being paid for his efforts by American Surgery, either through cash commissions or American Surgery common stock.

Familiar with both the risks and nature of a restricted offering, Turner expressed concern about investing $100,000 in a restricted stock. Allegedly, Brant reassured him that there was no reason for concern since he had an arrangement with the management whereby American Surgery would register the first 25% of the private placement issue within three months of the offering; 50% by year end, and would register the balance of the offering “soon thereafter.” Turner and MacLeod visited Brant at his office on or about May 12, 1983 and expressed concern about the restricted nature of the stock. Brant repeated his earlier representation that the company had agreed to register the securities in a very short period of time. He also predicted that the value of American Surgery shares would continue to rise to the point where they would be worth $16.00 per share by the time the restricted shares were freed for trading.

During the same meeting, Brant told Turner and MacLeod that they should not hesitate to invest in American Surgery stock because he had personally invested approximately $800,000 in the restricted offering and produced a check to this effect. Again, Brant repeated to Turner and MacLeod that he was close to the top management of American Surgery, and that they “were going to make a lot of money on the deal.”

Brant gave Turner and MacLeod further assurances that “if there was ever any reason for concern about the company they would, in any event, be the first to know since he would receive such information in advance of the general public.” In reliance on these representations, Turner and MacLeod agreed to purchase approximately $100,000 of the restricted stock.

The factual accounts of the parties diverge somewhat over the events surrounding the “Limited Offering Memorandum.” Intre Sport contends that Brant filled out the name of the purchaser and the distribution date, and tore off the back pages of the document which contained financial information relative to the purchasers and to the subscription agreement. Brant then asked Turner and MacLeod to sign the subscription agreement as “a formality.” Kidder, Peabody’s memorandum of law is silent on this incident, other than to state that Turner and MacLeod signed the agreement.

The American Surgery restricted shares were never registered in 1983 as Brant promised, and are currently not saleable in the secondary (public) securities market. The price of the common stock plummeted from $14.25 per share in June, 1983 to $3,125 in February, 1984. From May, 1983 through February, 1984, Turner and MacLeod had numerous conversations about the declining value of the shares and the company’s failure to live up to the registration commitments. Brant continued to assure them that American Surgery was financially sound, and that the drop in stock price had prompted the company to postpone registering the private placement. Brant also insisted that the company intended to register the stock as soon as the secondary market price improved, and Intre Sport continued to hold, as of February, 1984, the original 25,000 shares of publicly traded stock and the 25,000 shares of private placement stock.

In April, 1984, Turner and MacLeod read a series of newspaper articles in The Wall Street Journal indicating that the Securities and Exchange Commission was investigating Brant’s activities. The following month, the two officers learned that an action was filed against Kidder, Peabody in this court entitled Huang v. Kidder, Peabody, No. 84 Civ. 1798 (S.D.N.Y.1984), alleging securities fraud in connection with the American Surgery private placement stock. Intre Sport then retained counsel to prosecute this action.

The January 1984 Sell Orders

As the second component to its claim, Intre Sport alleges that Brant failed to liquidate certain securities in its account despite the fact that Turner and MacLeod gave clear and definite orders to sell the shares. In May, 1983, the equity in Intre Sport’s Kidder Peabody account reached its highest level, $1,644,272.10, from its low of $28,750.00 in April, 1982. During the summer of 1983 several of the stocks began to decline in value and the equity began to fall. Turner and MacLeod had telephone conversations discussing these falling prices with Brant on numerous occasions from May, 1983 through September, 1983, in which they expressed their opinion that Brant should consider liquidating the account before any more losses were incurred. Brant, by contrast, expressed confidence that the market would recover and urged them to hold their positions.

On or about October 13, 1983, Turner spoke to Brant over the telephone and allegedly instructed him to start selling nine of the twelve securities positions then open in the account. However, Brant failed to sell seven of the nine positions as instructed. During the months of November and December, 1983 there were several more telephone conversations between Turner, MacLeod, and Brant. Asked to explain his failure to sell as directed, Brant responded that he did not execute the orders because it would have caused a significant drop in the market price of the thinly traded stock, and would have caused harm to himself and his other customers maintaining substantial positions in the stock. Because of a slight recovery in two of the stocks, it was agreed that the sale of the seven positions in question would be postponed.

On January 26, 1984, Turner telephoned Brant and instructed him to sell six of the remaining securities positions at the market. Rather than selling the securities on January 26, as allegedly instructed, Brant sold the securities four to six days later. When Turner received the trade confirmation statements and learned that the securities had not been sold on January 26, 1984, he contacted Brant to demand an explanation. Brant acknowledged that he had disregarded Turner’s instructions because he refused to sell when the market price was rapidly falling and a sudden sale would have further “destroyed” stock prices. As a result of this alleged failure to sell, Intre Sport claims to have sustained damages of $17,912.50.

Intre Sport alleges that this failure to sell “was part of a fraudulent scheme between Brant and others to avoid depressing the market further in each of the securities in question and to otherwise permit Brant and other customers to sell the same securities at more favorable prices” and before Intre Sport could sell its shares. Discussion

The Civil RICO Claim

Intre Sport claims that Brant and Kidder, Peabody violated section 1962(c) of the Racketeer Influenced and Corrupt Organizations Act, by engaging in a “pattern of racketeering activity,” entitling Intre Sport to recover treble damages, the cost of suit, and reasonable attorney’s fees under § 1964(c) which creates a private civil right of action under the statute. Section 1962(c) provides:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities which affect interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.

Section 1961(5) defines a “pattern of racketeering” to include the commission of two or more specified predicate criminal acts within a ten-year period, including fraud in the sale of securities, and acts of mail and wire fraud under 18 U.S.C. § 1341 and § 1343. 18 U.S.C. § 1961(1)(A) and (D).

Kidder, Peabody claims that Intre Sport’s civil RICO claim is defective because: 1) Kidder, Peabody cannot be named as both “person” or violator and “enterprise”; 2) Kidder, Peabody is not a “person” who violated the requisite criminal predicate acts; and 3) Intre Sport has not pleaded the existence of a “pattern” of racketeering activity under the statute.

“Enterprise” or “Person”

Kidder, Peabody contends that Intre Sport must differentiate between an “enterprise” and “person” under section 1962(c), because the statute contemplates a violator who conducts his affairs through an enterprise. The Second Circuit in Ben nett v. United States Trust, 770 F.2d 308 (2d Cir.1985) recently endorsed this requirement that “enterprise” and “person” be separate and distinct entities in a RICO claim under section 1962(c):

... requiring a complaint to distinguish between the enterprise and the person conducting the affairs of that enterprise in the prohibited manner is supported by the plain language of section 1962(c), which clearly envisions two entities. Moreover, requiring a distinction between the enterprise and the person comports with legislative intent and policy. Such a distinction focuses the section on the culpable party and recognizes that the enterprise itself is often the victim of the racketeering activity (citing cases). Thus, we follow the majority view and hold that under section 1962(c) a corporate entity may not be simultaneously the “enterprise" and the “person” who conducts the affairs of the enterprise through a pattern of racketeering activity.

Id. at 315 (emphasis added).

Intre Sport claims that Bennett does not control the situation at bar because “The circumstances and concerns which led the Second Circuit to its decision in Bennett are inapposite here, where the corporation, while cast as both the ‘person’ and the ‘enterprise’ was an active perpetrator of the fraud, and not a passive tool or instrument.” (Plaintiff’s supplemental memorandum, p. 10) However, this interpretation of the Bennett holding disregards both the line of cases endorsed by the Bennett court requiring the pleading of distinct “enterprise” and “person” under section 1962(c), and inaccurately describes the factual allegations contained in Intre Sport’s amended complaint.

First, the holding in Bennett, emphasized above, was an endorsement of the Court of Appeals majority view that the language and intent of section 1962(c) requires this pleading distinction and was not limited to its own factual circumstance when no individual employee was named as a violator apart from the corporation. Bennett v. United States Trust Co., supra, 770 F.2d at 315 (and cases cited therein). Indeed, Intre Sport’s argument that section 1962(c) should not be read to require the separation of enterprise and person when the corporation has actively participated in the fraud was addressed and rejected by the Seventh Circuit in Haroco v. American Natl. Bank & Trust Co. of Chicago, 747 F.2d 384 (7th Cir.1984), aff'd on other grounds, - U.S.-, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985), a case endorsed by the Bennett Court for its construction of section 1962(c):

The Eleventh Circuit argued in [United States v. ] Hartley [678 F.2d 961 (11th Cir.1982) ] that where the defendant corporation is the central figure in a criminal scheme, as it was in that case, Congress could not have meant to let the perpetrator escape RICO liability while subjecting only the sidekicks to RICO’s severe penalties. 678 F.2d at 989. ... In Parnés, Judge Shadur argued that it would make little sense to hold a corporation liable under RICO for the misconduct of lower level employees, at least where it appears that the corporation is a passive instrument or even a victim of the racketeering activity. [Parnes v. Heinold Commodities] 548 F.Supp. [20] at 23-24 [(N.D.ILL.1982) ].
In our view, the RICO provisions have already taken into account these competing policies in different situations, and a careful parsing of section 1962 reveals a sensible balance among these policies ... In our view, the tensions between these powers may be resolved sensibly and in accord with the language of section 1962 by reading subsection (c) together with subsection (a). As we read subsection (c), the “enterprise” and the “person” must be distinct. However, a corporation-enterprise may be held liable under subsection (a) when the corporation is also a perpetrator.

Id. at 401-402.

Further, Intre Sport has not alleged any facts which portray the company as “active perpetrator of the fraud,” or which place Kidder, Peabody in the role of “central figure in the criminal scheme.” Id. at 401. Although the amended complaint calls Brant a “vice president” of the company, Kidder, Peabody states that there are hundreds of such vice presidents at the company who function as registered account representatives and who are not involved in firm management. Furthermore, the amended complaint does not name a single officer at Kidder, Peabody who “aided and abetted” Brant in any of his dealings with Turner and MacLeod.

Many district courts have dismissed strikingly similar claims which name brokerage firms as both “enterprise” and “person” or violator of section 1962 because the plaintiffs could not allege that the firms actively participated in the misconduct of the employee and because the claims could not plead the firms as both “enterprise” and “person” under the statute. Rush v. Oppenheimer, No. 84 Civ. 8219 (Dec. 24, 1985 S.D.N.Y.) (Brokerage firm not a proper “person” under § 1962 because not an active participant in account executive’s “churning” and not properly named as both “person” and “enterprise”); Schofield v. First Commodity Corp. of Boston, No. 83-4137-Z (D.Mass., April 29, 1985) (commodities firm cannot be named as person and enterprise under section 1962 when it did not participate in the commission of the predicate acts); Dakis ex rel. Dakis Pension Fund v. Chapman, 574 F.Supp. 757 (N.D.Cal.1983) (Brokerage firm not actively engaged in the “churning” of employee registered representative and not properly named as both enterprise and person); Parnes v. Heinold Commodities, Inc., 548 F.Supp. 20 (N.D.Ill.1982) (Commodities brokerage firm cannot be named as both person and enterprise under section 1962(c) for its employees’ pattern of racketeering activity).

Intre Sport claims that Kidder, Peabody’s vicarious liability for the acts of its employee Brant, makes it proper to name the company as a “person” or violator of the predicate criminal acts constituting a pattern of racketeering under section 1962. This argument has, however, been rejected by the majority of courts considering the issue, as it accomplishes an end-run around the required distinction between “enterprise” and violator of the statute, and uses concepts of civil vicarious liability to impute the responsibility for the criminal predicate acts of the employee onto the employer. As the Court stated in Parnes v. Heinold Commodities Inc., supra, 548 F.Supp. at 24 n. 9, “that sort of respondeat superior application, perhaps permissible to establish ordinary civil liability would be bizzare indeed as a means to warp the facts alleged in this case into the RICO mold. On that theory malefactors at a low corporate level could thrust treble damage liability on a wholly unwitting corporate management and shareholders.” Accord Rush v. Oppenheimer, supra, No. 84 Civ. 3219 (Dec. 24, 1985 S.D.N.Y.); Schofield v. First Commodity Corp. of Boston, supra, No. 83-4137-Z (April 29, 1985, D.Mass.); Dakis ex rel Dakis Pension Fund v. Chapman, supra, 574 F.Supp. at 759; Haroco v. American National Bank & Trust, supra, 747 F.2d at 402 n. 20 (there is no statutory grounds for asserting that respondeat superior liability differentiates civil from criminal RICO under § 1962(c) permitting a corporation to be both a defendant and enterprise under the statute). Contra, Bernstein v. I.D.T. Corp., 582 F.Supp. 1079 (D.Del.1984); Morley v. Cohen, 610 F.Supp. 798 (D.Md.1985).

The same facts which indicate that Kidder, Peabody was not a “central figure” in Brant’s alleged frauds would make criminal respondeat superior RICO liability for these frauds a “bizzare result” in this case. In short, Kidder, Peabody cannot be named as both “enterprise” and “person” under § 1962(c) and is not a proper defendant in this civil RICO claim. Because Intre Sport has failed to meet this threshold pleading burden, there is no need to reach the question of whether Intre Sport has established a “pattern of racketeering activity.”

The 12(2) Claim

Intre Sport also asserts a claim under section 12(2) of the Securities Act of 1933, 15 U.S.C. § 111 (2), which provides a private civil cause of action against persons who sell or offer to sell unregistered securities on the basis of misleading prospectuses or oral cummunications. Kidder, Peabody contends that Intre Sport’s claim under section 12(2) for negligent untrue statements or omissions in the sale of the American Surgery stock must be dismissed because the claim is time-barred. Section 13, 15 U.S.C. § 77m, which sets the statute of limitations for section 12(2) violations, provides in relevant part:' “No action shall be maintained to enforce any liability created under section ... Ill (2) of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence ...” 15 U.S.C. § 77m. Because this action was filed more than .one year after the May, 1983 sale, the question to be resolved is whether Turner and MacLeod should have discovered the allegedly fraudulent misstatements more than one year before the commencement of this action.

A claim under section 12(2) must affirmatively plead compliance with the statute of limitations contained in section 13, and must include a statement of the plaintiff’s “due diligence” in seeking discovery of these untruths or omissions. Hill v. Der, 521 F.Supp. 1370, 1389 (D.Del.1981). Kidder, Peabody claims that Intre Sport’s pleading of compliance with this statute of limitations is defective as a matter of law, and Intre Sport contends that the question of reasonable diligence is one for the jury.

While the court in Cook v. Avien, Inc., 573 F.2d 685 at 697 n. 27 (1st Cir.1978) noted that when a question of reasonable diligence arises it is normally for the jury to decide, other courts have acknowledged that “where it is clear that the defendants cannot, as a matter of law, refute the defendant’s plea of limitations, summary judgment may be granted.” (citations omitted) Buder v. Merrill Lynch, Pierce, Fenner & Smith, 644 F.2d 690 (9th Cir.1981), see also In Re Caesar’s Palace Securities Litigation, 360 F.Supp. 366, 377 (S.D.N.Y.1973) (further discovery was required before the court could rule on compliance with the statute of limitations in section 13). While the Buder court was determining that this question of fact would not preclude summary judgment in the context of an alleged violation of Rule 10b-5, this rule has been applied without distinction to questions of reasonable diligence in the section 12(2) context. Hagert v. Glickman, Lurie, Eiger & Co., 520 F.Supp. 1028 (D.Minn.1981) (summary judgment is an appropriate vehicle for determining compliance with the statute of limitations, but summary judgment should be denied where there áre issues of fact as to when the limitations period begins). Here there are no disputed facts which need further development, and Intre Sport’s own contentions in the amended complaint establish that the statute of limitations bars this claim. Cf Freschi v. Grand Coal Venture, 583 F.Supp. 780 (S.D.N.Y.1984) (in extreme circumstances summary judgment is appropriate on the question of when the statute of limitations in a § 10(b) action begins to run).

According to Kidder, Peabody, Intre Sport should have been on notice of Brant’s misrepresentations about the American Surgery stock when the company failed to register its stock by the end of 1983, as Brant had promised. Although Intre Sport does not contest that it bases the section 12(2) claim on Brant’s alleged promise that the shares would be registered in 1983, Turner and MacLeod contend that this failure to register the stock did not alert them to Brant’s alleged fraudulent misrepresentations because Brant engaged in continuing misrepresentations to lull the pair into inaction on their potential section 12(2) claim. According to Intre Sport, Turner and MacLeod fulfilled their “reasonable diligence” requirements by making repeated demands for an explanation from Brant, who met these inquiries with assurances that the failure to register the private placement shares was merely temporary, and that the shares would be registered as soon as the price of the publicly traded shares “stabilized.”

To comply with the reasonable diligence standard, Intre Sport must show that it filed suit when the possibility of suit should have become apparent, Ingenito v. Bermec Corp., 441 F.Supp. 525, 554 (S.D.N.Y.1977) and that it did not engage in “leisurely discovery of the full details of the scheme.” Hill v. Der, supra, 521 F.Supp. at 1370, citing Klein v. Bower, 421 F.2d 338, 343 (2d Cir.1970).

As the First Circuit stated in Cook v. Avien, 573 F.2d 685, 698 (1st Cir.1978), “[T]he exercise of reasonable diligence requires an investor to be reasonably cognizant of financial developments relating to his investment, and mandates that early steps be taken to appraise those facts which come to the investor’s attention. Although this principle is particularly true when the non-disclosed facts are negligently omitted, even where facts are fraudulently withheld, a plaintiff cannot be allowed to ignore the economic status of his or her investment.”

Intre Sport has failed to demonstrate that it appraised the facts which came to its attention about the American Surgery offering in a timely fashion. There are no factual disputes surrounding this issue. The misrepresentation which forms the basis of the section 12(2) complaint was Brant’s alleged promise that by the end of 1983, the privately placed American Surgery stock would be registered and publicly tradeable. Intre Sport admits in its amended complaint that by the end of 1983 Turner and MacLeod knew this promise had been a misrepresentation because none of the shares had been so registered. Intre Sport thus had an obligation to act with reasonable diligence within a year of Brant’s obvious failure to fulfill this registration promise.

Intre Sport’s belief that the statute of limitations did not begin to run until the April, 1984 Wall Street Journal article on Brant's alleged insider trading activities is also unfounded because Turner and MacLeod knew by late 1983 that the American Surgery shares were not registered, and it was this knowledge of the untrue statement or omission which triggered the running of the statute of limitations. The fact that Brant persuaded Turner and MacLeod that “the company fully expected market conditions and the stock price to improve very shortly at which point the company would register the private placement stock” was not concealment of the failure to register the stock in 1983 but was an explicit admission of this misstatement. Intre Sport knew that none of the stock had been registered in 1983, and Brant’s urging of a “wait and see” attitude as to the recovery of the stock price was not a concealment or a continuing misrepresentation but was a truthful acknowledgment that his promise that the stock would be fully tradeable by 1983 was false. The strict statute of limitations in section 13 was meant to prevent plaintiffs from delaying action on potential section 12(2) claims as a hedge against the future lack of success of the unregistered shares:

To hold otherwise would permit the securities acts to be used as havens for speculation and a buffer against any investment loss. When faced with knowledge of a company’s serious financial difficulty, an investor cannot be allowed to wait for market increases knowing that if growth does not take place the securities acts will provide the insurance against loss.

Cook v. Avien, supra, 573 F.2d at 698. Because Intre Sport admits that it possessed knowledge of its potential section 12(2) claim in 1983, its section 12(2) claim is time-barred.

Arbitration

Kidder, Peabody has moved for an order requiring Intre Sport to submit its federal securities claims to arbitration based on the signed Customer’s Agreement, which calls for arbitration of any and all controversies relating to the account. Kidder, Peabody claims that the Supreme Court’s recent opinion in Dean Witter Reynolds, Inc. v. Byrd, - U.S. -, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) requires that Intre Sport’s agreement to arbitrate be enforced even as to these federal securities claims. Intre Sport contends that the Court’s analysis in Byrd does not alter current Second Circuit precedent holding federal securities claims non-arbitrable. However, the Byrd opinions’ strong language casting doubt on the continued non-arbitrability of federal securities law claims, the Supreme Court’s renewed vigor in enforcing agreements to arbitrate under the Federal Arbitration Act, and the significant differences between the implied private rights of action under the 1934 Act and the 1933 Act sections held non-arbitrable by the Supreme Court, I require that these federal securities claims must be referred to arbitration.

The Federal Arbitration Act, 9 U.S.C. § 1 et seq, mandates that a federal or state court compel arbitration whenever the controversy at bar is referrable to arbitration under a contract “involving commerce,” a fact which both parties concede in this action. Section 2 of the Act sets the standards for the enforceability of arbitration agreements:

A written provision in any ... contract evidencing a transaction involving commerce to settle by Arbitration a controversy thereafter arising out of such contract of transaction or the refusal to perform the whole or part thereof, or an agreement in writing to submit to Arbitration an existing controversy arising out of such a contract, transaction or refusal, shall be valid, irrevocable, and enforceable,_upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. As the Supreme Court stated in Moses H. Cone Memorial Hospital v. Mercury Construction Corp. 460 U.S. 1, 22 n. 27, 103 S.Ct. 927, 940 n. 27, 74 L.Ed.2d 765 (1983), the federal courts are obliged to grant a stay and order arbitration when the subject matter of the suit is referrable to arbitration, and the party applying for the stay is not in default in proceeding to such arbitration.

Intre Sport insists that federal securities law claims are exempted from the scope of the Federal Arbitration Act, and that the Supreme Court’s opinion in Dean Witter Reynolds, Inc. v. Byrd, supra, - U.S. -, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) does not alter this non-arbitrability. Intre Sport’s position that 10(b) and 15(c) claims are non-arbitrable was the prevailing law of the Second Circuit prior to Byrd. In Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953) the Supreme Court held that an agreement to arbitrate disputes arising from a broker-dealer relationship cannot include arbitration of the plaintiff’s 1933 Act Claim because enforcement of that arbitration agreement would contravene the anti-waiver provisions of section 14 of the Securities Act of 1933. The Second Circuit, noting the strong policy in favor of resolving federal securities fraud questions in the federal courts, extended the Wilko doctrine to prevent compulsory arbitration of claims under section 10(b) of the 1934 Act. Greater Continental Corp. v. Schechter, 422 F.2d 1100, 1103 (2d Cir.1970).

However, Dean Witter Reynolds, Inc. v. Byrd, supra, - U.S. -, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), considered in conjunction with collateral developments restricting federal statutory exemptions from compulsory arbitration, dramatically alters the presumption of non-arbitrability of section 1934 claims.

In Byrd, the Supreme Court upheld the right of a brokerage firm to arbitrate the common law fraud claims of the plaintiff, despite the fact that they were “intertwined” with the plaintiff’s non-arbitrable federal securities claims. While the Court declined to determine whether the plaintiff’s section 10(b) claim was arbitrable, as it was not properly before the court, both the majority opinion and in particular Justice White’s concurring opinion, cast doubt on the continued applicability of the Wilko doctrine to claims arising under the 1934 Act:

“The premise of the controversy before us is that respondent’s claims under the Securities Exchange Act of 1934 are not arbitrable, notwithstanding the contrary agreement of the parties. This court’s opinion rightly concludes that the question whether that is so is not before us. Ante, at 1, n. 1. Nonetheless, I note that this is a matter of substantial doubt.” Id.-, 105 S.Ct. at 1244.

Justice White’s Byrd analysis consisted of a comparison between the three statutory sections of the 1933 Act upon which the Court based its Wilko opinion, and their analogous sections in the 1934 Act, and concluded that “Wilko’s reasoning cannot be mechanically transplanted to the 1934 Act.” Id. The Court in Wilko based the non-arbitrability of the section 12(2) 1933 Act claim on: 1) the existence of § 14 of the Act, the non-waiver provision; 2) section 12(2) of the Act, and its creation of a “special right to recover for misrepresentations which differs substantially from the common law action,” and; 3) section 22 which provides concurrent state and federal jurisdiction for 1933 Act claims. Wilko v. Swan, 346 U.S. at 434-436, 74 S.Ct. at 186-187; 15 U.S.C. §§ 77n, 77i(2), 77v. Justice White, observing that only one of these provisions, the non-waiver clause, has a 1934 Act counterpart in section 29(a), 15 U.S.C. § 78cc(a), reiterated the Supreme Court’s reasoning in Scherk v. Alberto-Culver Co., 417 U.S. 506, 513-14, 94 S.Ct. 2449, 2454, 41 L.Ed.2d 270 (1974) where the Court first expressed reservations about extending the Wilko doctrine to 1934 Act claims:

Wilko’s reasoning cannot be mechanically transplanted to the 1934 Act. While § 29 of that Act, 15 U.S.C. § 78cc(a), is equivalent to § 14 of the 1933 Act, counterparts of the other two provisions are imperfect or absent altogether. Jurisdiction under the 1934 Act is narrower, being restricted to the federal courts. 15 U.S.C. § 77aa. More important, the cause of action under § 10(b) and Rule 10b-5, involved here, is implied rather than express. See Herman & MacLean v. Huddleston, 459 U.S. 375, 380 and nn. 9-10, [103 S.Ct. 683, 686 and nn. 9-10, 74 L.Ed.2d 548] (1983). The phrase “waive compliance with any provision of this chapter.” 15 U.S.C. § 78cc(a) (emphasis added) is thus literally inapplicable. Moreover, Wilko’s solicitude for the federal cause of action — the “special right” established by Congress, 346 U.S. at 431 [74 S.Ct. at 184] — is not necessarily appropriate where the cause of action is judicially implied and not so different from the common law action.

Id. - U.S. at -, 105 S.Ct. at 1244.

On the basis of this analysis that the 1934 Act did not contain the statutory indications for special exemption from the reach of the Federal Arbitration Act, Justice White concluded that “the contrary holdings of the lower courts must be viewed with some doubt.” Id.

Intre Sport contends that the private causes of action implied under the fraud provisions of the 1934 Act are different from the common law fraud remedies available prior to its enactment, and that they deserve the same solicitude as the Wilko Court extended to 1933 Act claims. To support this contention, Intre Sport points to the Court’s opinion in Herman & MacLean v. Huddleston, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983), which recognizes that “the antifraud provisions of the securities laws are not co-extensive with common-law doctrines of fraud. Indeed, an important purpose of the federal securities statutes was to rectify perceived deficiencies in the available common-law protections by establishing higher standards of conduct in the securities industry.” Id. at 388-89, 103 S.Ct. at 691. According to Intre Sport, there is no reason to have a lesser right to bring a cause of action implied from the statute rather than one specified in the statute.

However, this line of argument ignores the jurisprudential context of the Byrd opinion. The Court’s observation that the anti-waiver provisions in section 29(a) do not extend to the implied rights of action under section 10(b) are significant because of the Supreme Court’s recent attempt to make federal statutory causes of action arbitrable absent express Congressional intent to remove them from arbitration. This renewed emphasis on the paramount importance of the Federal Arbitration act is evident in Moses H. Cone Memorial Hospital v. Mercury Construction Corp., supra, 460 U.S. at 24-25, 103 S.Ct. at 941, where the Court stated: “Section 2 is a congressional declaration of a liberal federal policy favoring arbitration of agreements, notwithstanding any state substantive or procedural policies to the contrary. The effect of the section is to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.” ... “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.” See also Development Bank of the Phillipines v. Chemtex Fibers, Inc., 617 F.Supp. 55 (per Weinstein, J.) (S.D.N.Y.1985) (the Supreme Court has stressed that the Federal Arbitration Act establishes a strong preference for arbitration, which is to be given presumptive effect in doubtful cases).

The Court’s recent opinion in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., - U.S. -, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) demonstrates this renewed commitment to the arbitrability of statutory claims. In Mitsubishi, the Supreme Court held that federal antitrust claims in the international context are fully arbitrable and enjoy no blanket or presumptive immunity from arbitration. The Court’s explanation of how to construe the Federal Arbitration Act illustrates the weakness of Intre Sport’s argument that even implied federal securities claims should be considered non-waivable under section 29(a) and should come under the rationale of Wilko:

“Just as it is the congressional policy manifested in the Federal Arbitration Act that requires courts liberally to construe the scope of arbitration agreements covered by the Act, it is the Congressional intent expressed in some other statute on which the courts must rely to identify any category of claims as to which agreements to arbitrate will be held unenforceable ... we must assume that, if Congress intended the substantive protection afforded by a given statute to include protection against the waiver of a right to a judicial forum, that intention will be deducible from text or legislative history

- U.S. at -, 105 S.Ct. at 3355.

Thus, the Supreme Court’s emphasis on the requirement that Congress specify which federal statutory claims are outside the scope of the Federal Arbitration Act is inconsistent with Intre Sport’s belief that the Wilko doctrine should be extended to exempt even implied causes of action under the federal securities law, despite the fact that these remedies are not explicitly within the non-waiver provisions of the 1934 Act. This court joins the growing list of district courts which have interpreted the Byrd decision as a mandate for the arbitrability of 10(b) claims. See e.g., Dees v. Smith Barney, Harris Upham & Co., No. 848676-PAR (July 31, 1985, C.D.Cal.); Bateh v. Prudential Bache Securities, Inc., et al., No. 84-526-Civ-J-14 (July 29, 1985, M.D.Fla.); Sevinor v. Merrill Lynch, Pierce, Fenner & Smith, et al., No. 84-3240-N (July 19, 1985, D.Mass.); Finn v. Prudential-Bache Securities, 610 F.Supp. 1079 (S.D.Fla.1985); Coonly v. Rotan Mosle, Inc., et al., No. A-83-CA-529, (June 4, 1985, W.D.Tex.); and Johnson v. Kidder, Peabody & Co., et al, No. 85-CV-178 (July 30, 1985, N.D.N.Y.), but see Jacobson v. Merrill Lynch, Pierce Fenner & Smith, et al., No. 84-1844 (April 22, 1985, W.D.Pa.); Luce v. Edelstein, [current] Fed.Sec.L.Rep. (CCH) ¶ 92,258 (S.D.N.Y.1985) (Retaining jurisdiction over 10(b) claim without reference to Byrd).

On the basis of the foregoing analysis, I hold that Intre Sport is required to submit both its common law fraud and 1934 Act claims to arbitration, pursuant to the Kidder, Peabody Customer’s Agreement. Because Intre sport’s 12(2) claim is barred by the statute of limitations, and its RICO claim is improperly pleaded, this action is hereby dismissed.

IT IS SO ORDERED.

      . An “enterprise” under section 1961(4) includes an individual, partnership, corporation, association, or any other legal entity, and any union or group of individuals associated in fact nor not a legal entity.

      . Section 1962(a), a claim which Intre Sport has not alleged against Brant but against Kidder, Peabody, provides in relevant part:
      § 1962. Prohibited activities
      (a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal within the meaning of section 2, title 18, United States Code, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. A purchase of securities on the open market for purposes of investment, and without the intention of controlling or participating in the control of the issuer, or of assisting another to do so, shall be unlawful under this subsection if the securities of the issuer held by the purchaser, the members of his immediate family, and his or their accomplices in any pattern or racketeering activity or the collection of an unlawful debt after such purchase do not amount in the aggregate to one percent of the outstanding securities of any one class, and do not confer, either in law or in fact, the power to elect one or more directors of the issuer.

      . Although the cases discussed herein do not explicitly refer to section 15 of the 1934 act, both parties agree that the arbitrability of this claim is governed by the same principles which govern arbitrability of section 10(b) claims.