author: FEINBERG, Circuit Judge:

text:
    BLUEBIRD PARTNERS, L.P., Plaintiff-Appellant, v. FIRST FIDELITY BANK, N.A. NEW JERSEY; Midlantic National Bank; Riker, Danzig, Scherer, Hyland & Perretti; Crummy, Del Deo, Dolan, Griffinger & Vecchione, P.C.; United Jersey Bank; NationsBank of Tennessee; Constellation Bank, N.A.; CoreStates New Jersey National Bank; Wolff & Samson, P.A.; Kelley Drye & Warren; Wilentz, Goldman & Spitzer, P.C., Defendants-Appellees.
    Nos. 1122, 1123, Dockets 95-7891, 95-7893.
    United States Court of Appeals, Second Circuit.
    Argued March 15, 1996.
    Decided June 4, 1996.

      David M. Friedman, New York City (Kasowitz, Hoff, Benson, Torres & Friedman, L.L.P., Martin P. Russo, of counsel), for Plaintiff-Appellant.
    Edward J. Yodowitz, New York City (Skadden, Arps, Slate, Meagher & Flom, of counsel), for Defendant-Appellee Midlantic Bank.
    Robert Baron, New York City (Cravath, Swaine & Moore, Rory O. Millson, of counsel), for Defendant-Appellee Riker, Danzig, Scherer, Hyland & Perretti.
    LeBoeuf, Lamb, Greene & MaeRae, LLP, New York City (Lawrence E. Miller, of counsel), for Defendant-Appellee First Fidelity Bank, N.A.
    Battle Fowler, LLP, New York City (Michael J. Malone, Steven B. Carlin, Paul A. Straus, of counsel), for Defendant-Appellee Crummy, Del Deo, Dolan, Griffinger & Vecchione, P.C.
    Shereff, Friedman, Hoffman & Goodman, LLP, New York City (Andrew J. Levander, of counsel), for Defendant-Appellee Wolff & Samson, P.A.
    Kaye, Scholer, Fierman, Hays & Handler, New York City (Lester M. Kirschenbaum, of counsel), for Defendant-Appellee United Jersey Bank.
    Wachtell, Lipton, Rosen & Katz, New York City (Marc Wolinsky, of counsel), for Defendant-Appellee NationsBank of Tennessee.
    Kelley, Drye & Warren, New York City, pro se (Steven P. Caley, of counsel).
    Windels, Marx, Davies & Ives, New York City (Craig Murphy, of counsel), for Defendants-Appellees Constellation Bank, N.A. and CoreStates New Jersey National Bank.
    Wilson, Elser, Moskowitz, Edelman & Dicker, New York City (Thomas W. Hyland, of counsel), for Defendant-Appellee Wilentz, Goldman & Spitzer, P.C.
    Before: FEINBERG, WALKER and PARKER, Circuit Judges.
   FEINBERG, Circuit Judge:

Plaintiff Bluebird Partners, L.P. (Bluebird) appeals from an order of the United States District Court for the Southern District of New York, Michael B. Mukasey, J., dismissing, pursuant to Fed.R.Civ.P. 12(b)(1), its action against defendants under the Trust Indenture Act, 15 U.S.C. § 77aaa et seq. (frequently referred to hereafter as the Act). The district court held that Bluebird lacked standing because a bondholder’s claim under the Act against an indenture trustee is not automatically assigned to a subsequent purchaser of the bond — here Bluebird — as a matter of law. Bluebird Partners, L.P. v. First Fidelity Bank, 896 F.Supp. 152, 153 (S.D.N.Y.1995). Although this question has been raised elsewhere, apparently this is a case of first impression in this circuit. We agree with the reasoning of the district court and affirm.

I. Background

In March 1987, Continental Airlines, Inc. (Continental) issued three series of bonds (the Bonds) secured by a pool of used jet aircraft and engines owned by Continental. The Bonds were issued under an indenture agreement (the Indenture) that is governed by New York law. Defendants-appellees First Fidelity Bank, N.A. New Jersey, Midlantic National Bank, United Jersey Bank, NationsBank of Tennessee, Constellation Bank, N.A. and CoreStates New Jersey National Bank (the Trustees) are or were at one time trustees under the Indenture. The remaining defendants-appellees are law firms that represented the Trustees.

In December 1990, Continental filed for bankruptcy protection, which constituted an event of default under the Indenture. Thereafter, three of the Trustees filed a motion for “adequate protection” under § 363(e) of the Bankruptcy Code (the Code). 11 U.S.C. § 363(e). Generally, the right to adequate protection allows a secured creditor or its representative to propose a method of protecting its interest against the diminution in value of the security during a bankruptcy proceeding. 11 U.S.C. §§ 361-364. The Trustees’ motion did not seek to lift the automatic stay that had been imposed under § 362 of the Code upon Continental’s bankruptcy filing. Bankruptcy Judge Balick of the United States Bankruptcy Court for the District of Delaware denied the Trustees’ motion, holding that there had been no decline in the value of the security from January 1991 through July 1991, although there had been a decline before the motion was filed. In re Continental Airlines, 146 B.R. 536, 542 (Bankr.D.Del.1992). The bankruptcy judge, however, rejected the argument that the motion was improper because there had been no motion to lift the stay. Id. at 540.

In August 1992 the Trustees filed a motion to lift the stay, and in September 1992 the Trustees again moved for adequate protection, this time pursuant to § 362(d) of the Code. 11 U.S.C. § 362(d). Judge Balick held in April 1993 that a party seeking adequate protection under § 362(d) of the Code must file a motion to lift the automatic stay. She then denied both the motion to lift the automatic stay and the motion for adequate protection. In re Continental Airlines, 154 B.R. 176, 180-81 (Bankr.D.Del.1993). The same day, Continental’s plan of reorganization was confirmed.

Judge Mukasey found that Bluebird purchased the Bonds at a discount after Continental emerged from bankruptcy. Bluebird now owns in excess of $80 million face value of the Bonds. Soon after Bluebird purchased the Bonds, it commenced this action.

Bluebird contends that the Trustees failed to take the proper procedural steps to obtain adequate protection of the collateral securing the Bonds. Bluebird’s complaint against defendants alleges breach of the Trust Indenture Act, which provides:

The indenture trustee shall exercise in case of default (as such term is defined in such indenture) such of the rights and powers vested in it by such indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

15 U.S.C. § 77ooo(e). Bluebird’s complaint also contains various state law claims against the Trustees and the law firm defendants.

Judge Mukasey held that because Bluebird purchased the Bonds after Continental’s bankruptcy proceeding, it suffered no injury and therefore did not have standing to assert a claim under the Trust Indenture Act. The judge also held that under federal law, the claims of the previous bondholders under the Act were not automatically assigned to Bluebird upon its purchase of the Bonds. The court therefore dismissed Bluebird’s claims under the Act. The district court also declined to exert jurisdiction over the remaining state law claims.

Bluebird then appealed to this court.

II. Discussion

Bluebird must plead facts showing that it has standing to assert its claim. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 607-08, 107 L.Ed.2d 603 (1990). In order to have standing, a party must allege “a distinct and palpable injury to himself,” Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975), and “cannot rest his claim to relief on the legal rights or interests of third parties,” id. at 499, 95 S.Ct. at 2205. Bluebird purchased the Bonds at a discount in 1994 after the acts that form the basis of its complaint took place. It is clear then that Bluebird itself was not injured by those acts. However, Bluebird argues to us that the claims of the previous owners of the Bonds were automatically transferred to it when it acquired the Bonds. Bluebird contends that (1) New York’s law of automatic assignment applies to a claim arising under the Trust Indenture Act and (2) if federal law applies, federal law should require automatic assignment. We reject these arguments and hold that (1) federal law controls and (2) a claim arising under the Act is not automatically assigned to a subsequent purchaser.

A. Federal law applies.

The federal courts have consistently determined that federal law governs the assignability of claims under the federal securities laws. See, e.g., In re Nucorp Energy Securities Litig., 772 F.2d 1486, 1489 (9th Cir.1985) (Trust Indenture Act); Lowry v. Baltimore & O. R.R., 707 F.2d 721, 727 (3d Cir.) (in banc) (Garth, J., concurring) (Securities Exchange Act), cert. denied, 464 U.S. 893, 104 S.Ct. 238, 78 L.Ed.2d 229 (1983); Huddleston v. Herman & MacLean, 640 F.2d 534, 557 & n. 40 (5th Cir.1981) (same), rev’d on other grounds, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983); In re Saxon Securities Litig., 644 F.Supp. 465, 473-74 & n. 16 (S.D.N.Y.1985) (same); see also Drachman v. Harvey, 453 F.2d 722, 727 (2d Cir.1971) (applying federal law to determine standing to bring a shareholder derivative action under the Securities Exchange Act), rev’d on other grounds, 453 F.2d at 736 (in banc); cf. Phelan v. Middle States Oil Corp., 154 F.2d 978, 1000-01 (2d Cir.1946) (applying federal law to determine assignability of bondholder’s claims against a federal receiver).

The Trust Indenture Act was enacted because previous abuses by indenture trustees had adversely affected “the national public interest and the interest of investors in notes, bonds [and] debentures,” 15 U.S.C. § 77bbb(a), and Congress sought to address this national problem in a uniform way, S.Rep. No. 248, 76th Cong., 1st Sess. 3 (1939). The Act is “designed to vindicate a federal policy of protecting investors.” Nucorp, 772 F.2d at 1489 (internal citations omitted) (emphasis added). Applying state law would mean that this federal statute could be interpreted differently in all 50 states. In Zeffiro v. First Pennsylvania Banking & Trust Co., 623 F.2d 290 (3d Cir.1980), cert. denied, 456 U.S. 1005, 102 S.Ct. 2295, 73 L.Ed.2d 1299 (1982), which established a private cause of action under the Act, the Third Circuit pointed out:

It is hard to believe that Congress would have established uniform standards to govern indentures and then paradoxically have allowed the application of those standards to depend on the law of the state of the suit. The interpretation of the indenture provisions mandated by the Act does not depend on ordinary contract principles— the intent of the parties — but depends on an interpretation of the legislation. It would be contrary to the purposes of the Act to have the trustee held to certain standards in one state court and potentially different standards in another.

Id. at 299 (footnote omitted). We agree with those observations.

Bluebird emphasizes that the choice of law provision in the Indenture states that New York law governs its interpretation. But we do not have to interpret the Indenture (and thus apply New York law) to decide whether a federal claim under the Act is automatically assigned to a subsequent purchaser. See Nucorp, 772 F.2d at 1489.

B. Claims under the Act are not automatically assigned.

Applying federal law, the courts have held that federal securities law claims are not automatically assigned to a subsequent purchaser upon the sale of the underlying security. See Nucorp, 772 F.2d at 1490 (Trust Indenture Act); Lowry, 707 F.2d at 729 (Garth, J., concurring) (Securities Exchange Act); Soderberg v. Gens, 652 F.Supp. 560, 563-64 (N.D.Ill.1987) (Securities Exchange Act and Investment Advisers Act); Saxon, 644 F.Supp. at 474 (Securities Exchange Act); Independent Investor Protective League v. Saunders, 64 F.R.D. 564, 572 (E.D.Pa.1974) (Trust Indenture Act); but see Lowry, 707 F.2d at 740-43 (Gibbons, J., dissenting); id. at 747 (Seitz, J., dissenting). We see no persuasive reason to disagree with these cases and impose a rule of automatic assignment here. Bluebird presents a parade of horribles growing out of rejection of their proposal of automatic assignment. But the weight of authority has been the other way for some time, and we are unaware of any significant adverse consequences.

We recognize that the question of assignability of claims under the Trust Indenture Act is a substantial one, and we do not suggest this is an open and shut case. There are respectable arguments on both sides of the issue. Compare David C. Profilet, Note, Express Versus Automatic Assignment of Section 10(b) Causes of Action, 1985 Duke L.J. 813 (1985) with William K.S. Wang, Is a Seller’s Rule 10b-5 Cause of Action Automatically Transferred to the Buyer?, 1988 Colum.Bus.L.Rev. 129 (1988). However, the policy underlying the Act is contrary to a rule of automatic assignment. The Act creates a uniform scheme of federal regulation to protect those who are injured, see 15 U.S.C. § 77bbb, including those who have sold their securities at a reduced price after the Act has been violated, not those who subsequently purchase securities at the reduced price.

Bluebird argues that under a rule of automatic assignment, the market would compensate injured investors because the price for these bonds would adjust to reflect the value of the claims attached to them. Since the courts that have addressed this issue have usually held that claims under the securities acts are not automatically assigned, it is at least questionable how the markets would react to a contrary decision of this court. Additionally, bonds subject to the Act generally are traded on public exchanges, not in face-to-face transactions, making it difficult for an ordinary investor to contract out of a rule of automatic assignment. Such a rule would thus require injured investors to retain their securities in order to preserve their claims under the Act.

Bluebird cites this court’s decision half a century ago in Phelan in support of a federal rule of automatic assignment. In that case, we held that a purchaser of a bond automatically obtained the right to sue a federal receiver for the receiver’s failure to make full disclosure to bondholders. In Phelan, however, it is clear that the court was primarily concerned with ensuring the integrity of a court-appointed receiver, 154 F.2d at 1001, and the ease has been limited to that context. See Lowry, 707 F.2d at 730; Saxon, 644 F.Supp. at 472. We agree with Judge Garth in Lowry that:

Phelan did not involve an action under the federal securities laws, but instead was a receivership case. The court based its decision that the claim there asserted ran with the bonds on the belief that a wrongdoing trustee should not be relieved of liability if a bondholder, unaware of the trustee’s malfeasance, sells his bonds.

Lowry, 707 F.2d at 730.

Bluebird’s reliance on Leverso v. South-Trust Bank, 18 F.3d 1527 (11th Cir.1994), is similarly misplaced. Leverso was a straight contract case which held that a settlement agreement that treated bonds differently was contrary to the terms of the trust indenture; the parties did not rely on the Trust Indenture Act. Id. at 1529. Moreover, the court expressly declined to rule on whether bondholders who purchased after default received an automatic assignment of claims because no objections were made as to the standing of such bondholders. Id. at 1533 n. 9.

Finally, to the extent that Bluebird asserts a claim under the Act against the law firm defendants, this claim is based on allegations that the law firms acted as agents of the Trustees. Because Bluebird does not have standing to assert a claim under the Act against the Trustees, it cannot assert such a claim against the law firm defendants. Bluebird’s remaining claims are all based upon state law. The district court decided not to retain jurisdiction over these pendent claims, and we cannot say that this was an abuse of discretion.

We have considered all of Bluebird’s arguments regarding standing and find them without merit. Accordingly, we affirm the judgment of the district court.

      . Bluebird filed two complaints, one against First Fidelity Bank and Midlantic National Bank and their counsel, and the other against the remaining defendants. For convenience, we treat the two complaints as one.

      . Bluebird claims that these Trustees did not file the motion until June 1991, six months after Continental filed for bankruptcy. The Trustees allege that First Fidelity Bank joined in an omnibus motion for adequate protection in February 1991, but withdrew from that motion and filed a separate motion with two additional Trustees on June 28. Apparently the bankruptcy court considered the separate motion as filed as of February 1991. See In re Continental Airlines, 146 B.R. 536, 542 (Bankr.D.Del.1992).

      . The bankruptcy court concluded that the decline in value had "most likely” taken place prior to Continental's bankruptcy petition. 146 B.R. at 542.

      . The Trustees thereafter appealed to the United States District Court for the District of Delaware. That court dismissed the Trustees' appeal as moot on the ground that the plan of reorganization had already been consummated. In re Continental Airlines, Inc., No. 93-195-JJF, at 4 (D.Del. Dec. 30, 1993). We are informed that the judgment of the district court was affirmed in February 1996 by the United States Court of Appeals for the Third Circuit, but that thereafter that court vacated the decision and reheard the appeal in banc last month.

      .Bluebird states that it is a partnership that purchased the Bonds from related entities. Allegedly these related entities began purchasing the Bonds "in December 1991, while the bankruptcy was still pending and while the Trustees were continuing to fail in their duties to protect the Collateral.” Bluebird alleges that "[t]he District Court's factual finding that [Bluebird] purchased these bonds on January 27, 1994, shortly before commencing this action” was based on an improperly submitted document. In its complaint, Bluebird states only that it “purchased these Certificates at varying amounts at various times.” In any event, Bluebird does not argue that it suffered any injury from the Trustees' actions, but relies only on the argument that the claims of the previous bondholders were automatically assigned to it.

      . New York General Obligations Law § 13-107(1) provides:
      Unless expressly reserved in writing, a transfer of any bond shall vest in the transferee all claims or demands of the transferor, whether or not such claims or demands are known to exist, ... for damages against the trustee or depository trader any indenture under which such bond was issued or outstanding____
      New York Uniform Commercial Code § 8-301(1) provides:
      Upon transfer of a security to a purchaser ... the purchaser acquires the rights in the security which his transferor had or had actual authority to convey____


source: Caselaw Access Project

author: McLAUGHLIN, Circuit Judge:

license: Public Domain

text:
    DOCTOR’S ASSOCIATES, INC., Plaintiff-Appellee, v. Donald A. STUART and Martin Schwarze, Defendants-Appellants.
    No. 1340, Docket 95-7760.
    United States Court of Appeals, Second Circuit.
    Argued April 18, 1996.
    Decided June 4, 1996.

      Edward W. Dunham, Wiggin & Dana, New Haven, CT, for Plaintiff-Appellee.
    David Duree, Reinert & Duree, P.C., St. Louis, MO (Nicholas Wocl, Tooher, Puzzuoli & Wocl, Stamford, CT, of counsel), for Defendants-Appellants.
    Before: MINER, McLAUGHLIN, and LEVAL, Circuit Judges.
   McLAUGHLIN, Circuit Judge:

Plaintiff, Doctor’s Associates, Inc., is the franchisor for the popular “Subway” sandwich shops. Defendants, Donald Stuart and Martin Schwarze, two Subway franchisees, appeal from a decision and order of the United States District Court for the District of Connecticut (Peter C. Dorsey, Chief Judge), ordering them to arbitrate with Plaintiff, and issuing a preliminary injunction that barred them from prosecuting a lawsuit against Doctor’s Associates, Inc. in Illinois state court.

BACKGROUND

Doctor’s Associates, Inc. (“DAI”) is a Florida corporation with its principal place of business in Florida. Defendants own and operate two Subway sandwich shops in Illinois.

Pursuant to Federal Trade Commission disclosure regulations, see 16 C.F.R. § 436.1 et seq., promulgated under the Federal Trade Commission Act, 15 U.S.C. § 45, DAI provides all prospective franchisees with a Uniform Franchise Offering Circular (“UFOC”). The UFOC contains copies of both a standard Subway franchise agreement and a Subway sublease agreement. Franchisees then have some time to review those documents before deciding whether to purchase a Subway franchise.

After a Subway franchise is purchased, DAI helps the franchisee to find a site for the Subway shop. If DAI approves the site, it requires each franchisee to sublease the premises from one of several real-estate leasing companies that are affiliated with DAI.

All franchise agreements (though not the subleases) contain an arbitration clause, substantially identical to the following:

Any controversy or claim arising out of or relating to this contract or the breach thereof shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association at a hearing to be held in Bridgeport, Connecticut, or whichever city in which the Company is then headquartered, and judgment upon an award rendered by the arbitrator^) may be entered in any court having jurisdiction thereof. The commencement of arbitration proceedings by an aggrieved party to settle disputes arising out of or relating to this contract is a condition precedent to the commencement of legal action by either party.

The franchise agreements also contain a Connecticut choice of law clause.

As noted, the sublease agreements contain no arbitration clause; they do, however, have a “cross-default” provision, which provides, in relevant part:

If at any time during the term of this Sublease, Sublessee shall default in the performance of any of the terms, covenants or conditions of the aforesaid Franchise Agreement ... Sublessor, at its option, may terminate this lease ... and upon such termination, Sublessee shall quit and surrender the leased premises to Sub-lessor. ...

Under this provision, therefore, the franchisee’s breach of the franchise agreement is also a breach of the sublease; and the sub-lessor may bring an action to evict the franchisee/sublessee.

In 1990, Defendants opened their first Subway sandwich shop in Granite City, Illinois. Later they bought a second Subway franchise. DAI allegedly promised to approve any appropriate site Defendants found for the second franchise in Bethalto, Illinois. After locating two potential spots in Bethalto, Defendants asked DAI for approval, but were told that both sites were too close to another Subway sandwich shop located in Wood River, Illinois.

DAI then allegedly permitted another franchisee to open a Subway shop in Bethalto, at or near the spots picked by Defendants. Despite Defendants’ objections, DAI made Defendants locate their second Subway store in Granite City, less than two miles from Defendants’ first store. The opening of this second shop cut into the sales of Defendants’ first Granite City shop.

Defendants sued DAI, its owners, and development agents in Illinois state court (the “Illinois action”), seeking a declaratory judgment that the arbitration clause in the franchise agreement is unenforceable. They also sought damages for violation of the Illinois Franchise Disclosure Act, breach of the covenant of good faith and fair dealing, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and common law fraud.

Within two weeks, DAI filed a petition, in the United States District Court for the District of Connecticut, to compel arbitration against Defendants, pursuant to 9 U.S.C. § 4. DAI also asked for a preliminary injunction, barring Defendants from prosecuting their Illinois action. The district court held a hearing on the petition to compel arbitration and the motion for a preliminary injunction.

Meanwhile, back in Illinois, the state court entered summary judgment, declaring the arbitration clause void and unenforceable.

Ignoring the state judgment, the district court in Connecticut entered an order, compelling Defendants to arbitrate with DAI. It also issued a preliminary injunction, enjoining Defendants from further prosecuting their Illinois action. The district court did not require DAI to post an injunction bond.

After the district court issued that order, this Court issued its opinion in Doctor’s Associates v. Distajo, 66 F.3d 438 (2d Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 1352, 134 L.Ed.2d 520 (1996), a consolidation of seventeen cases involving disputes between DAI and various franchisees. In Distajo, we reversed orders entered in the United States District Court for the District of Connecticut compelling arbitration and issuing preliminary injunctions, and we remanded for further hearings solely to evaluate the franchisees’ defenses to arbitration of fraud, alter ego, and waiver. See id.

Defendants went back to Illinois where they filed with the Illinois Supreme Court a “Motion for Supervisory Order,” collaterally attacking both the district court’s decision in this case and our decision in Distajo. The Illinois Supreme Court summarily denied the motion.

Defendants now return to us, appealing the order that compelled arbitration and that enjoined them from prosecuting their Illinois action. They contend that: (1) the district court does not have personal jurisdiction over them, because the arbitration clause is unenforceable and service was improper; (2) venue is improper in Connecticut; (3) they are entitled to a jury trial; (4) the district court does not have the authority to enjoin the Illinois action; and (5) the district court abused its discretion in not requiring DAI to post an injunction bond. We reject all the claims raised in this scattershot appeal.

DISCUSSION

1. Personal Jurisdiction

Defendants argue that the district court lacked personal jurisdiction over them for two reasons: (A) they cannot be found to have consented to contractual personal jurisdiction if the arbitration agreement is unenforceable; and (B) DAI served its Petition to Compel Arbitration and Summons on Defendants’ attorney, rather than on Defendants personally. We reject both contentions.

A Contractual Personal Jurisdiction

When a party agrees “to arbitrate in [a state], where the [Federal Arbitration Act] makes such agreements specifically enforceable, [that party] must be deemed to have consented to the jurisdiction of the court that could compel the arbitration proceeding in [that state]. To hold otherwise would be to render the arbitration clause a nullity.” Victory Transp. Inc. v. Comisaria General de Abastecimientos y Transportes, 336 F.2d 354, 363 (2d Cir.1964), cert. denied, 381 U.S. 934, 85 S.Ct. 1763, 14 L.Ed.2d 698 (1965); see also Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Lecopulos, 553 F.2d 842, 844 (2d Cir.1977); Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313, 1317 (2d Cir.1973), cert. denied, 416 U.S. 986, 94 S.Ct. 2389, 40 L.Ed.2d 763 (1974).

Defendants argue, however, that they cannot be deemed to have consented to personal jurisdiction if the arbitration clause is unenforceable. And, they assert the arbitration clause is unenforceable because: (1) DAI fraudulently induced them into the arbitration agreement; (2) the arbitration agreement is unconscionable; and (3) DAI waived its right to arbitrate.

(1) Fraudulent Inducement

Defendants contend that DAI fraudulently induced them into executing the franchise agreements by falsely representing that arbitration was a condition precedent to the institution of legal action by either party to the franchise agreement. DAI, however, had reserved to itself the right to bring summary eviction proceedings against its franchisees through DATs affiliated leasing companies. Defendants also claim that DAI failed to mention that its standard operating procedure was to bring summary eviction actions against franchisees for alleged breaches of the franchise agreement. The district court found this defense insufficient as a matter of law, and we agree.

In Distajo, we held that it is the district court’s responsibility—not the arbitrators’— to decide whether an arbitration clause was fraudulently induced. See Distajo, 66 F.3d at 457.

“The essential elements of an action in fraud ... are: (1) that a false representation was made as a statement of fact; (2) that it was untrue and known to be untrue by the party making it; (3) that it was made to induce the other party to act on it; and (4) that the latter did so act on it to his injury.” Miller v. Appleby, 183 Conn. 51, 54-55, 438 A.2d 811 (1981) (citation omitted); see also Clark v. Haggard, 141 Conn. 668, 672-73, 109 A.2d 358 (1954); 12 Samuel Williston, The Law of Contracts § 1487, at 324-27 (Walter H.E. Jaeger ed., 3d ed.1970).

Defendants have utterly faded to allege, much less prove, sufficient facts indicating that they were defrauded into agreeing to arbitrate. Before purchasing their franchises, Defendants received a Uniform Franchise Offering Circular (“UFOC”) from DAI. The UFOC included copies of both the standard franchise agreement and the sublease. Although the franchise agreement contains an arbitration clause, the sublease does not; rather, it provides that if the sublessee breaches the franchise agreement, the sub-lessor may terminate the sublease and bring an eviction action. These clauses were not camouflaged, and Defendants cannot now complain that they failed to read or inquire into the meaning of those documents. Cf. Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282, 288 (9th Cir.1988) (“Whether [plaintiffs] read the agreement but did not notice the arbitration clause, or chose not to read the agreement at all, their reliance on [defendant’s] alleged misrepresentation was unreasonable in light of the clear and explicit language of the contract.”); Pierson v. Dean, Witter, Reynolds, Inc., 742 F.2d 334, 339 (7th Cir.1984) (parties “cannot use their failure to inquire about the ramifications of [an arbitration] clause to avoid the consequences of agreed-to arbitration”).

Even if we were satisfied that DAI made false representations to these franchisees, Defendants have failed to show that they relied on those statements to their injury. No Subway leasing company has ever sued Defendants, and DAI has demanded that Defendants’ claims be sent to arbitration. Thus, Defendants’ assertion that DAI concealed an intention not to arbitrate is absurd on its face, since arbitration is precisely what DAI is attempting to compel in this proceeding. We therefore find that the district court properly held, as a matter of law, that DAI did not fraudulently induce Defendants into signing the agreement to arbitrate.

(2) Unconscionability

Defendants next claim that the arbitration clause, as enforced by DAI, is unconscionable, because the franchise agreement does not disclose that: (1) the American Arbitration Association (“AAA”) charges as much as $5,000 for filing and administration fees; (2) the high cost of arbitrating in Connecticut—including travel and lodging expenses for the franchisee and his or her attorney—necessitates the franchisee to win the arbitration to break even financially; (3) the franchisee must pay half of the hourly charges of the arbitrators, who are often attorneys with high-priced rates; (4) the AAA relies on DAI to provide it with repeat business and thus has a bias in favor of DAI; and (5) DAI primarily resolves its disputes with the franchisees by filing, or threatening to file, eviction lawsuits in the name of its affiliated leasing companies, instead of arbitrating as represented by the franchise agreements. We are unpersuaded by Defendants’ claims.

The ‘“purpose of the unconscionability doctrine is to prevent unfair surprise and oppression.’ ” David L. Threlkeld & Co. v. Metallgesellschaft Ltd. (London), 923 F.2d 245, 249 (2d Cir.) (quoting Pierson, 742 F.2d at 339), cert. dismissed, 501 U.S. 1267, 112 S.Ct. 17, 115 L.Ed.2d 1094 (1991); see also Restatement (Second) of Contracts §§ 208, 211. We find that the arbitration clause in the DAI franchise agreement did not ambush these Defendants.

First, Defendants were aware, based on the language of the arbitration agreement, that they would have to travel to either Florida or Connecticut if an arbitrable dispute arose. See infra pt. II. Such forum selection clauses are not unconscionable. See Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 476, 109 S.Ct. 1248, 1254, 103 L.Ed.2d 488 (1989) (“[T]he federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate.”); see also Snyder v. Smith, 736 F.2d 409, 419 (7th Cir.), cert. denied, 469 U.S. 1037, 105 S.Ct. 513, 83 L.Ed.2d 403 (1984). Moreover, the arbitration clause itself provides that:

[e]ach party will be responsible for their [sic] own costs in conjunction with the arbitration proceeding. If Franchisee commences action in any court prior to an arbitrator’s final decision on the controversy or claim, Franchisee will be responsible for all expenses incurred by both [DAI] and Franchisee in the Arbitration and the Court proceedings.

Thus, Defendants were on notice that they were at least liable for their own costs in the arbitration proceedings. Certainly they could have inquired about the typical fees charged by the AAA and its arbitrators. See generally Volt Info. Sciences, 489 U.S. at 479, 109 S.Ct. at 1256 (“Arbitration under the [FAA] is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit.”).

In addition, Defendants have failed to present any credible evidence indicating bias on the part of the AAA — or its arbitrators— in favor of DAI in this case, particularly because Defendants’ claims have not yet gone to arbitration. See 9 U.S.C. § 10(a); see also Sheet Metal Workers Int'l Ass’n v. Kinney Air Conditioning Co., 756 F.2d 742, 746 (9th Cir.1985) (“The party alleging evident partiality must establish specific facts which indicate improper motives on the part of the [arbitrators].”); In re Andros Compania Maritima, S.A., 579 F.2d 691, 700-01 (2d Cir.1978).

And, finally, we reject Defendants’ claim that the arbitration clause is unconscionable because it does not disclose that DAI primarily resolves its disputes with franchisees, not by actual arbitration, but by filing, or threatening to file, eviction lawsuits in the name of its affiliated leasing companies. As noted previously, no Subway leasing company has ever brought or threatened to bring eviction proceedings against these Defendants; and, in fact, DAI is attempting to compel arbitration through this federal action. Thus, we find that the arbitration clause is not unconscionable.

(3) Waiver

Defendants assert that DAI acted inconsistently with the right to arbitrate, by customarily filing or threatening to file eviction lawsuits, in the name of its alter ego leasing companies, against its franchisees, instead of submitting disputes to arbitration. On the facts of this particular case, we disagree.

The question whether a party’s conduct amounts to waiver of arbitration is purely a legal one, subject to de novo review. Leadertex, Inc. v. Morganton Dyeing & Finishing Corp., 67 F.3d 20, 25 (2d Cir.1995). The factual determinations upon which to base the waiver determination, however, will not be reversed unless clearly erroneous. Id.

“We recognize that there are strong federal policies in favor of arbitration and that a waiver of arbitration ‘ “is not to be lightly inferred.’”” Com-Tech Assocs. v. Computer Assocs. Int'l, Inc., 938 F.2d 1574, 1576 (2d Cir.1991) (quoting Rush v. Oppenheimer & Co., 779 F.2d 885, 887 (2d Cir.1985) (quoting Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968))); see also Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225-26, 107 S.Ct. 2332, 2336-37, 96 L.Ed.2d 185 (1987). This preference for arbitration “ha[s] led to its corollary that any doubts concerning whether there has been a waiver are resolved in favor of arbitration.” Leadertex, 67 F.3d at 25 (citing Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983)).

Nonetheless, a court may refuse to enforce an arbitration agreement where, for example, “the alleged defaulting party has acted inconsistently with the right to arbitrate.” St. Mary’s Medical Ctr. v. Disco Aluminum Prods. Co., 969 F.2d 585, 588 (7th Cir.1992). The waiver determination must be based on the circumstances and context of the particular case, “with a healthy regard for the policy of promoting arbitration.” Leadertex, 67 F.3d at 25; see also St. Mary’s Medical Ctr., 969 F.2d at 588.

In Distajo, DAI franchisees raised the same waiver defense as here. In that case, we held:

that the issue of DATs waiver of arbitration is for the district court to resolve on remand [in the first instance]. The factual contentions to be resolved include whether the leasing companies were mere alter egos of DAI. If DAI was responsible for the eviction proceedings, it must then be determined whether prosecution of those eviction actions constituted litigation of “substantial issues going to the merits.” This inquiry will require a determination of whether, in fact, the particular eviction proceedings were based on the cross-default provisions of the subleases.

Distajo, 66 F.3d at 456-57 (citation and footnote omitted) (emphasis added). In so holding, however, we did not “reach the question of how the district court should resolve this issue” on remand. Id. at 456 n. 13.

Although DAI concedes that it controls the decisions to file eviction actions in general, it has never brought, nor has it threatened to bring, eviction proceedings against these Defendants. Where, as here, DAI has not instituted any “particular eviction proceedings” against the franchisee/ sub-lessee, DAI obviously cannot be deemed to have waived its right to arbitrate with that franchisee. See id. at 457. As the district court held, Defendants cannot rely on the fact that DAI has brought eviction proceedings against other franchisees as a basis for DATs waiver of its contractual right to arbitrate in this case. See Doctor’s Assocs. v. Stuart, No. 3:95CV01065, slip op. at 3-4 (D.Conn. July 27, 1995); see also Leadertex, 67 F.3d at 25 (“waiver is decided in the context of the case”).

(4) Hearing

Defendants add a contention that, at the very least, the district court was required to conduct a hearing on the personal jurisdiction issue. See Fed.R.Civ.P. 12(d); AAA-CON Auto Transp., Inc. v. Klee, 356 F.Supp. 319, 321 (S.D.N.Y.1973). Here, the district court did hold a hearing on whether the arbitration agreement was enforceable, and it concluded that it was. Although the court did not specifically label the hearing as one to ascertain personal jurisdiction, its finding that the arbitration agreement was valid clearly indicates the nature of the hearing.

Having thus rejected all Defendants’ defenses to the arbitration clause, we find that the district court properly exercised personal jurisdiction over Defendants. See Victory Transp., 336 F.2d at 363.

B. Service of Process

Defendants further cavil that their attorney, rather than Defendants themselves, was served with the papers to compel arbitration. The arbitration clause here provides that “[a]ny controversy or claim arising out of or relating to this contract or the breach thereof shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.” (Emphasis added). Because the arbitration clause specifically incorporates the AAA’s Commercial Arbitration Rules, we look to those rules to determine the method for service of process to which the parties have agreed. See, e.g., Martin Domke, Domke on Commercial Arbitration § 14.02, at 220 (Gabriel M. Wilner ed., 1995).

AAA Rule 40, entitled “Serving of Notice,” provides, in relevant part:

Each party shall be deemed to have consented that any papers, notices, or process necessary or proper for the initiation or continuation of an arbitration under these rules; for any court action in connection therewith; ... may be served on a party by mail addressed to the party or its representative at the last known address or by personal service, in or outside the state where the arbitration is to be held, provided that reasonable opportunity to be heard with regard thereto has been granted to the party.
The AAA and the parties may also use facsimile transmission ... or other written forms of electronic communication to give the notices required by these rules.

AAA Commercial Arbitration Rule 40 (emphasis added).

Here, Defendants’ attorney, David Duree, is unquestionably their representative, and there is no dispute that Duree received DATs papers in accordance with applicable AAA rules. Thus, service of process was proper. See Victory Transp., 336 F.2d at 364; Lawn v. Franklin, 328 F.Supp. 791, 794 (S.D.N.Y.1971) (Gurfein, J.); see also Lecopulos, 553 F.2d at 845.

II. Venue

Defendants also assert that the district court erred by holding Connecticut a proper venue for this action. We find this argument bewildering.

A party who agrees to arbitrate in a particular jurisdiction consents not only to personal jurisdiction but also to venue of the courts within that jurisdiction. See, e.g., Farr & Co. v. Cia. Intercontinental De Navegacion De Cuba, S.A., 243 F.2d 342, 346 (2d Cir.1957). Because Defendants consented to personal jurisdiction in the District of Connecticut, see supra pt. I, they also consented to venue there.

Defendants, however, attempt to cozen us with a semantic sleight-of-hand. In its Petition to Compel Arbitration, DAI averred that: “[v]enue is proper under 28 U.S.C. § 1391(a)(3) because this Court has personal jurisdiction over the defendants, and the District of Connecticut is the only judicial district in which this action may be brought under 9 U.S.C. § 4.” Plaintiffs Petition to Compel Arbitration ¶ 5. Pursuant to the arbitration clause in one of Defendants’ franchise agreements, however, arbitration may be commenced “in Bridgeport, Connecticut, or whichever city in which the company is then headquartered.” (Emphasis added); see supra note 1 and accompanying text. DAI is now headquartered in Fort Lauder-dale, Florida. Thus, pursuant to the language of the arbitration clause, Defendants claim:

[t]hat means arbitration is required to take place in either Fort Lauderdale, Florida or Bridgeport, Connecticut. Accordingly, venue does not lie in Connecticut under 28 U.S.C. § 1391(a)(3) because there is another district in which the action may otherwise be brought.
Defendants have argued that venue lies in the Southern District of Florida, not Connecticut. Defendants would be es-topped to make the same argument about venue in the Southern District of Florida. Accordingly, this Court has no choice but to transfer this case to the Southern District of Florida.

Appellants’ Brief at 12 (citation omitted).

This argument borders on the absurd. Section 1391(a) provides:

(a) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which the defendants are subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.

28 U.S.C. § 1391(a) (emphasis added). The phrase “if there is no district in which the action may otherwise be brought” indicates that venue may be based on § 1391(a)(3) “only if neither [§ 1391(a)(1) or (2) ] can be satisfied.” 1A Moore’s Federal Practice ¶ 0.342[3], at 4083. It does not mean that venue is improper in one district merely because there is another equally appropriate district in which the defendants are subject to personal jurisdiction at the time the action is commenced. See id. Pursuant to the arbitration agreement, both Florida and Connecticut are proper venues, and thus Defendants “consented to the jurisdiction of the district court in [Connecticut], where the petition [to compel arbitration] was filed.” Farr & Co., 243 F.2d at 346.

III. Jury Trial Demand

Defendants assert that they are entitled to a jury trial on their arbitration defenses of fraud and waiver. A party resisting arbitration “cannot obtain a jury trial merely by demanding one;” rather, he bears “ ‘the burden of showing that he is entitled to a jury trial under § 4 of the [FAA].’ ” Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1154 (5th Cir.1992) (citation omitted), cert. denied, 506 U.S. 1079, 113 S.Ct. 1046, 122 L.Ed.2d 355 (1993). “[T]o warrant a trial under 9 U.S.C. § 4, the issue raised must be ‘genuine.’” Interbras Cayman Co. v. Orient Victory Shipping Co., S.A., 663 F.2d 4, 7 (2d Cir.1981) (quoting Almacenes Fernandez S.A. v. Golodetz, 148 F.2d 625, 628 (2d Cir.1945)).

To establish a genuine issue entitling a party to a jury trial, “‘an unequivocal denial that the agreement [to arbitrate] had been made [is] needed, and some evidence should [be] produced to substantiate the denial.’ ” Id. (quoting Almacenes Fernandez, 148 F.2d at 628); see also Interocean Shipping Co. v. National Shipping & Trading Corp., 462 F.2d 673, 677 (2d Cir.1972); Dillard, 961 F.2d at 1154 (party demanding jury trial “must make at least some showing that under prevailing law, he would be relieved of his contractual obligation to arbitrate if his allegations proved to be true,” and must also “produce at least some evidence to substantiate his factual allegations”).

In Distajo, the franchisees also made a demand for a jury trial on their arbitration defense issues. We noted that:

[b]y so holding [that the issues of waiver and fraudulent misrepresentation are matters for the district court, not the arbitrators], we do not purport to reach the question of how the district court should resolve this issue. The defendants’ jury demands should be considered by the district court in the first instance.

Distajo, 66 F.3d at 456 n. 13; see also id. at 457 n. 15. As discussed in Part I, supra, Defendants have totally failed to establish that there are genuine issues concerning their defenses of fraud and waiver. We conclude, therefore, that the district court properly found that there was no genuine issue for trial.

IV. Authority to Enjoin Illinois suit

Defendants next argue that the district court erred by enjoining Defendants from prosecuting their Illinois action because: (1) the district court did not have personal jurisdiction over them; and (2) the scope of the preliminary injunction is overly broad in that it prevents Defendants from suing not only DAI, but also DATs agents and owners. We reject these claims.

As discussed in Part I, supra, the.district court did have personal jurisdiction over Defendants.

In regard to the scope of the injunction, Defendants’ counsel raised this precise argument before the Seventh Circuit in Kroll v. Doctor’s Assocs., 3 F.3d 1167 (7th Cir.1993), a case which, now at a later stage in its proceedings, was heard in tandem with the instant appeal. In Kroll, a franchisee, represented by Defendants’ attorney, David Duree, sued DAI, its agents, and owners in Wisconsin state court. DAI removed the case to federal court, and moved to dismiss or stay the Wisconsin action pending arbitration in accordance with the franchise agreement. The district court stayed the Wisconsin action, and the Seventh Circuit affirmed.

In so holding, the Court explained:

Kroll also argues that his [Wisconsin] lawsuit should, at the very least, be allowed to proceed against the individual [agents and owners of DAI] since he “did not agree to arbitrate anything with [those agents and owners].” We have previously observed, however, that section three of the Federal Arbitration Act “plainly requires that a district court stay litigation where issues presented in the litigation are the subject of an arbitration agreement.” We went on to hold that a stay must be granted, even in favor of persons that are not party to the agreement containing the arbitration clause, if the litigation is an attempt “to evade the agreed-upon resolution of their disputes in the arbitration forum by introducing the identical controversy against a party who is ultimately liable for the arbitrating party’s acts.” ...
Kroll’s suit against [DATs owners and agents] has no plausible purpose other than to evade its duty to arbitrate its disputes with DAI. Accordingly, a stay must issue in favor of [those agents and owners].

Kroll, 3 F.3d at 1171 (citations omitted); see also Mosca v. Doctors Assocs., 852 F.Supp. 152, 155 (E.D.N.Y.1993) (“This court will not permit Plaintiffs to avoid arbitration simply by naming individual agents of the party to the arbitration clause and suing them in their individual capacity.”).

We likewise find that Defendants’ Illinois action against DAI and its owners and agents is a bald attempt to evade its duty to arbitrate with DAI. Thus, the district court properly enjoined Defendants’ Illinois action. See, e.g., ACLI Gov’t Sec., Inc. v. Rhoades, 963 F.2d 530, 532-33 (2d Cir.1992).

V. Bond Requirement

Finally, Defendants are distressed that the district court did not require a preliminary injunction bond. Again, we disagree.

Federal Rule of Civil Procedure 65(c) provides that “[n]o ... preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper....” Fed.R.Civ.P. 65(c) (emphasis added). The phrase “in such sum as the court deems proper”:

indicates that the District Court is vested with wide discretion in the matter of security and it has been held proper for the court to require no bond where there has been no proof of likelihood of harm, or where the injunctive order was issued “to aid and preserve the court’s jurisdiction over the subject matter involved.”

Ferguson v. Tabah, 288 F.2d 665, 675 (2d Cir.1961) (citations omitted); see also Clarkson Co. v. Shaheen, 544 F.2d 624, 632 (2d Cir.1976) (“[B]ecause, under Fed.R.Civ.P. 65[c], the amount of any bond to be given upon the issuance of a preliminary injunction rests within the sound discretion of the trial court, the district court may dispense with the filing of a bond.” (citations omitted)).

Here, Defendants have not shown that they will likely suffer harm absent the posting of a bond by DAI. Moreover, the purpose of the injunction here was merely to preserve the district court’s jurisdiction over the action to compel arbitration. Thus, we find that the district court did not abuse its discretion in dispensing with the bond.

CONCLUSION

We have fully considered all other claims advanced on this appeal, and find them unavailing. For the foregoing reasons, the deeision of the district court is AFFIRMED.

      . Defendants entered into two franchise agreements with DAI. The first agreement provides that arbitration is only "to be held in Bridgeport, Connecticut.” The second agreement contains the language as it appears here.

        . On this appeal, Defendants raise several other issues, which they concede this Court flatly rejected in Distajo. Defendants say they raised these issues solely to preserve them in the event the Supreme Court granted certiorari in Distajo. In any event, the Supreme Court has now denied certiorari. See - U.S. -, 116 S.Ct. 1352, 134 L.Ed.2d 520 (1996).


author: WINTER, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. ONE PARCEL OF PROPERTY LOCATED AT 194 QUAKER FARMS ROAD, OXFORD, CONNECTICUT, with all Appurtenances and Improvements Thereon, Defendant, Richard J. Scianna, Claimant-Appellant, Money Store/Connecticut, Inc.; John Santangelo; and Builders Lumber & Supply Co., Inc. Claimants.
    No. 915, Docket 95-6105.
    United States Court of Appeals, Second Circuit.
    Argued Jan. 22, 1996.
    Decided June 4, 1996.

      Norman A. Pattis, New Haven, Connecticut (Law Offices of John R. Williams, John R. Williams, New Haven, Connecticut, of counsel), for Claimant-Appellant Richard J. Scianna.
    David X. Sullivan, Assistant United States Attorney, New Haven, Connecticut (Christopher F. Droney, United States Attorney, Lisa M. Krai, Lauren M. Nash, Assistant United States Attorneys, Craig Lyle Perra, Law Student Intern, New Haven, Connecticut, of counsel), for Plaintiff-Appellee.
    Before WINTER, JACOBS, and PARKER, Circuit Judges.
   WINTER, Circuit Judge:

Richard J. Scianna appeals from a judgment of forfeiture after a jury trial before Judge Eginton. He brings three claims on appeal. Scianna argues first that the allocation of burdens of proof in civil forfeiture cases under 21 U.S.C. § 881(a)(7) violates due process by imposing on claimants the burden of proving an innocent owner defense. He argues second that counsel for the government engaged in prejudicial misconduct by improperly vouching for the credibility of a witness and bolstering a witness’s credibility through the invocation of God and Jesus Christ. Finally, Scianna contends that the district court erred in not granting a mistrial based on the conduct of a witness’s private attorney.

We hold that it does not violate due process to place the burden of proving an innocent owner affirmative defense on the claimant. We hold that the question of whether it violates due process to limit the government’s burden in securing a forfeiture to a showing of probable cause has been waived. We reject the claims of trial error and affirm.

BACKGROUND

On August 15,1991, the government filed a complaint pursuant to 21 U.S.C. § 881(a)(7), alleging that real property located at 194 Quaker Farms Road, Oxford, Connecticut, was used or intended to be used to commit or to facilitate a violation of the Controlled Substances Act, 21 U.S.C. §§ 801 et seq. Scianna was record owner of the property. On September 3,1991, the district court issued a Notice of Probable Cause Hearing. On the day before the hearing was to commence, Scianna’s attorney notified the district court that Scianna would waive the probable cause hearing. On October 11, 1991, Magistrate Judge Latimer found probable cause for the seizure and issued a Warrant of Arrest In Rem for the property. On October 15,1991, Scianna filed a claim to the property. After discovery and entry of a new attorney representing Scianna, a jury was selected, and the case proceeded to trial before Judge Eginton.

The probable cause hearing having been waived, the trial began with Scianna’s seeking to prove an “innocent owner” defense— that is, that the property should not be forfeited because Scianna either did not know that the property was being used for illegal drug activity or, if he did know, he had not consented to such use. See United States v. One Parcel of Property Located at 121 Allen Place, Hartford, Connecticut, 75 F.3d 118, 121 (2d Cir.1996). After Scianna rested, the government, in rebuttal, elicited testimony from law enforcement officers and various alleged associates of Scianna that Scianna participated in illegal drug activity on his property, distributing both cocaine and marijuana from the property to the associates, who would thereafter deliver the cash proceeds to Scianna. At least two of the government’s witnesses — William Doyle, Jr. and his son, William Doyle, III — had state narcotics charges pending against them at the time of trial. Counsel for Scianna sought to undermine the Doyles’ testimony by suggesting through lengthy and aggressive cross-examination that both Doyles had been promised favorable treatment in their pending prosecutions in exchange for testimony against Seianna. During the cross-examination of the younger Doyle and in the presence of the jury, Doyle’s attorney, who was present in the courtroom, interrupted the proceedings to request that he be permitted to approach the bench and to “proffer or testify or tell the Court whatever concerning the conversations with the state’s attorney.” Counsel for Seianna subsequently moved for a mistrial, which was denied.

In the course of seeking to undermine the credibility of Dwayne Thomas, another witness who testified that he participated in drug activity with Seianna, Scianna’s counsel focused on the length of time that Thomas and his attorney had spent with government lawyers preparing to testify, presumably to suggest that three hours could not have been spent solely on trial preparation but must also have involved the negotiation of a leniency-for-testimony bargain. Counsel for the government responded with a series of questions as follows:

Q: Mr. Thomas, how did I instruct you to answer the questions? What did I tell you the only thing I wanted you to do was?
A: Tell the truth.
Q: May I approach the witness for a moment. When we’ve met before you have had this New Testament in your hands?
Mr. Pattis: Objection. Religion can’t be used.
Mr. Sullivan: He wants to know what we talked about.
Mr. Pattis: I’m going to object on relevance.
Mr. Sullivan: He opened the door.
The Court: Go ahead.
Q: Did we talk about Jesus Christ?
A: Yup.
Q: Did we talk about God?
A: Yup.
Q: Did we talk about doing things the right way?
A: Yes.
Q: Taking responsibility for our lives?
A: Yes.
Q: We didn’t talk about the substance of the case, did we?
A: No.
Q: We talked about the philosophies, life, God, family, isn’t that correct?
A: Yes.

After the jury was excused, Scianna’s counsel again requested a mistrial. This request was also denied.

DISCUSSION

Seianna argues first that the allocation of burdens of proof directed by Section 881(a)(7) violates due process. In proceedings under Section 881(a)(7), the government must first demonstrate probable cause that the property is subject to forfeiture. See 21 U.S.C. § 881(d); 19 U.S.C. § 1615. See also United States v. $37,780 in United States Currency, 920 F.2d 159, 162 (2d Cir.1990). The burden then rests upon a claimant asserting an innocent owner defense to prove that defense by a preponderance of the evidence. See, e.g., United States v. Milbrand, 58 F.3d 841, 844 (2d Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 1284, 134 L.Ed.2d 228 (1996).

The process generally proceeds as follows. Absent exigent circumstances, a hearing, with notice to record owners, is held before seizure. United States v. James Daniel Good Real Property, 510 U.S. 43, -, - - -, 114 S.Ct. 492, 498, 500-04, 126 L.Ed.2d 490 (1993). At this hearing, the government must show probable cause that the property has been used for narcotics trafficking. Milbrand, 58 F.3d at 844; see generally, Good, 510 U.S. 43, 114 S.Ct. 492. If the government meets this burden, a warrant in rem issues, and the property is seized. If no claimant appears, the government may dispose of the property. If a claimant appears and asserts an innocent owner defense, the burden is on the claimant to prove that defense by a preponderance of the evidence. Milbrand, 58 F.3d at 844. By waiving the probable cause hearing, Seianna also waived any sufficiency challenge to the evidence underlying issuance of the warrant in rem and any constitutional challenge to the probable cause standard. As a result, Scianna’s present challenge must be limited to the constitutionality of requiring a claimant to prove by a preponderance of the evidence the affirmative defense of innocent owner.

Scianna bases his due process challenge on the Supreme Court’s decisions in Good, 510 U.S. 43, 114 S.Ct. 492, and Austin v. United States, 509 U.S. 602, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993). Good held that the protections available to forfeiture claimants were not limited to those provided by the Fourth Amendment and that, where the government seizes property not to preserve evidence but to assert ownership, Fifth Amendment due process protections also apply. 510 U.S. at - - -, 114 S.Ct. at 499-500. In Austin, the Court held that the Excessive Fines Clause of the Eighth Amendment is applicable to civil drug forfeitures. 509 U.S. at 622, 113 S.Ct. at 2812. Austin reexamined the “guilty property fiction,” id. at 613-616, 113 S.Ct. at 2808-10, under which the property is viewed as the offender, and considered whether the civil drug forfeiture statute was or was not intended to punish the property’s owner. The Court rejected the guilty property fiction. It stated that the historical antecedents of modern drug forfeiture statutes were at least in part punitive, and that the “legislative history of § 881 confirms the punitive nature of these [modem] provisions.” Id. at 620, 113 S.Ct. at 2811. Indeed, the Court found that the “innocent owner” defense in modem civil drug forfeiture statutes “serve[s] to focus the provisions on the culpability of the owner in a way that makes them look more like punishment, not less.” Id. at 617-619, 113 S.Ct. at 2810-11. We do not regard this observation as undercut by the recent decision in Bennis v. Michigan, — U.S. -, 116 S.Ct. 994, 134 L.Ed.2d 68 (1996), which noted that forfeiture laws serve a deterrent as well as punitive purpose. Id. at -, 116 S.Ct. at 1000-01.

Prior to Austin, we had held that the forfeiture statute’s shift of the burden of proof of the innocent owner defense to the claimant did not violate due process. See United States v. $2,500 in United States Currency, 689 F.2d 10 (2d Cir.1982), cert. denied sub. nom., Aponte v. United States, 465 U.S. 1099, 104 S.Ct. 1591, 80 L.Ed.2d 123 (1984). In $2,500 in U.S. Currency, the claimant argued that the allocation of burdens was unconstitutional because it imposed “punishment” on the claimant, calling for the procedural safeguards associated with a criminal trial, including the requirement that the government prove its case beyond a reasonable doubt. Id. at 12. We rejected the argument. Although we acknowledged that even nominally civil statutes could be so punitive in purpose or effect as to trigger the procedural protections required in criminal cases, id. at 12 (quoting United States v. Ward, 448 U.S. 242, 248-49, 100 S.Ct. 2636, 2641-42, 65 L.Ed.2d 742 (1980)), we held that the drug forfeiture statute did not rise to that level, id. at 12-16. In $2,500 in U.S. Currency, we also noted that “[historically, forfeitures have always been regarded as civil.” Id. at 14 (citing United States v. Regan, 232 U.S. 37, 34 S.Ct. 213, 58 L.Ed. 494 (1914)). We therefore declined to overturn the statute’s allocation of burdens of proof.

Scianna maintains that because Austin established that seizures of real property are punitive in character, we must reexamine the constitutionality of the statute’s requirement that the claimant bear the burden of proving an innocent owner defense. We do not agree. Generally, Congress may alter the traditional allocation of the burden of proof without infringing upon the litigant’s due process rights unless the statute is criminal in nature. United States v. $250,000 in United States Currency, 808 F.2d 895, 900 (1st Cir.1987). Scianna is correct that after Austin, it is now an open question whether Section 881(a)(7) warrants civil or criminal due process protections, or possibly some hybrid of the two. Nevertheless, even if criminal procedural standards were applied to proceedings under Section 881(a)(7), it would still be constitutional to place on the claimant the burden of proving the innocent owner defense, once we assume (as we do for this case) that the government’s main case is constitutionally sufficient. We have held that it does not violate the Due Process Clause to allocate to defendants the burden of proving affirmative defenses so long as the defense does not, “in operation, negate an element of the crime which the government is required to prove.” United States v. Johnson, 968 F.2d 208, 213-14 (2d Cir.), cert. denied, 506 U.S. 964, 113 S.Ct. 436, 121 L.Ed.2d 355 (1992); see also Walton v. Arizona, 497 U.S. 639, 650, 110 S.Ct. 3047, 3055, 111 L.Ed.2d 511 (1990) (plurality opinion) (“[A] State’s method of allocating the burdens of proof [may] not lessen the State’s burden to prove every element of the offense charged.”). Here, the government must simply establish that the property was “used ... to commit, or to facilitate the commission of,” a drug crime. 21 U.S.C. § 881(a)(7). Requiring Scianna to prove that he did not know or consent to the particular use of the property does not require him to negate any element of the government’s case.

Moreover, those who assert the innocent owner defense have unique access to evidence regarding such claims. They know precisely what information was brought to their attention and why facts of which owners are generally aware were unknown to them. If knowledge of drug transactions on the premises is conceded, they also know precisely what steps they took to prevent use of the premises for drug trafficking. See 121 Allen Place, 75 F.3d at 121-22. Burden-shifting where one party has superior access to evidence on a particular issue is a common feature of our law. See John W. Strong et al., McCormick on Evidence § 337, at 570 94th ed.(1992).

We do note that while Congress may shift the burden of proof of an affirmative defense to a civil forfeiture claimant, Good and Austin reopen the question of whether the quantum of evidence the government needs to show in order to obtain a warrant in rem allowing seizure — probable cause — suffices to meet the requirements of due process. As noted above, $2,500 in U.S. Currency, which held that the “beyond a reasonable doubt” standard of In re Winship, 397 U.S. 358, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970), does not apply to civil forfeitures under the drug forfeiture statute, 689 F.2d at 12, has been opened for reexamination by Austin. Independent of this question, we also note that it is an open issue “whether the due process clause requires the government to sustain a burden falling between the extremes of probable cause and proof beyond a reasonable doubt” before a seizure is made and a claimant is put to proof of the innocent owner defense. Peter Petrou, Note: Due Process Implications of Shifting the Burden of Proof in Forfeiture Proceedings Arising out of Illegal Drug Transactions, 1984 Duke L.J. 822, 827 (1984). We, of course, do not reach that issue in this case because of Scianna’s waiver discussed above.

We turn next to Seianna’s attorney misconduct claims. First, Scianna argues that the government’s trial attorney impermissibly injected himself into the proceedings, bolstering a witness’s credibility. We find no such misconduct in the portions of the trial transcript quoted by Scianna. Furthermore, to the extent that Scianna’s counsel’s cross- and reeross-examinations sought to accuse the government of witness-coaching or making a deal for testimony, he invited the exchange: “Q: What did I tell you the only thing I wanted you to do was? A: Tell the truth.” See United States v. Young, 470 U.S. 1, 12, 105 S.Ct. 1038, 1044-45, 84 L.Ed.2d 1 (1985) (discussing invited error).

Seianna’s second claim of misconduct concerns the government’s invocation of God and Jesus Christ during the questioning of Dwayne Thomas. Here, too, Scianna’s counsel invited the government’s line of questioning. By hammering home the length of time that Thomas and his attorney spent with prosecutors in an attempt to suggest that they were in fact negotiating a deal for immunity, Scianna’s counsel opened the door to questions eliciting the actual discussions and events transpiring during that time.

Finally, we turn to the actions of the attorney for the younger Doyle in offering before the jury to testify concerning any conversation between his client and the state’s attorney. Scianna’s suggestion that this behavior warranted a mistrial is without merit. Although this interruption was certainly a bizarre event, we perceive no prejudice to Scianna that would alter the outcome. The only prejudice claimed at trial was that the jury might draw a negative inference from the fact that the attorney would not be called by the defense-. Refusing a mistrial on this claim is not an abuse of discretion.

We therefore affirm.

      . In making the determination in $2,500 in U.S. Currency that the forfeiture statute's shift of the burden of proof to the claimant did not violate due process of law, this court looked to a number of the factors suggested by the Supreme Court in Kennedy v. Mendoza-Martinez, 372 U.S. 144, 83 S.Ct. 554, 9 L.Ed.2d 644 (1963) and found, inter alia, that the drug forfeiture statute was not punitive in aim but remedial, 689 F.2d at 13-14, and that "the statute makes no attempt to tailor the amount of the loss to the degree of culpability, a strong indication that any punitive effect is incidental.” 689 F.2d at 14. Finally, $2,500 in U.S. Currency found that "historically, forfeitures have always been regarded as civil.” Id. We therefore declined to overturn the statute’s burden-shifting mechanism.
      Austin's holding that drug forfeiture is punitive in intent, its historical analysis, and its rejection of the government’s proffered reasons why the drug forfeiture statute is remedial all directly contradict some of the holdings made by this court when it made its Ward/Mendoza-Martinez analysis of § 881(a)(6) (the § 881(a)(7) analogue applicable to drug money) in $2,500. Thus, although the Austin Court did not go on to engage in the full Ward/Mendoza-Martinez analysis of the drug forfeiture statute — it did not need to for purposes of its Excessive Fines Clause inquiry, 509 U.S. at 607, 113 S.Ct. at 2804 — Austin sufficiently vitiated the rationale of $2,500 that we regard its continued viability as an open question. See generally Terrence G. Reed, On the Importance of Being Civil: Constitutional Limitations on Civil Forfeiture, 39 N.Y.L. Sch. L.Rev. 255 (1994) (arguing that proper Mendoza-Martinez inquity identifies civil drug forfeiture statute as penal with respect to non-contraband property).

      . Only one case in this circuit explicitly discusses the adequacy of the evidentiary burdens of the civil drug forfeiture statute. It states:
      [Appellant] also suggests in passing that the burden-shifting procedure of the statutory forfeiture scheme is unconstitutional when applied to the proceeds of drug activity rather than to property that is itself contraband. His argument seems to be that real property is "somewhat sacred”, and so when real property constitutes the "proceeds" to be forfeited, a higher standard than that of probable cause should be applied. We find nothing unconstitutional in congress’s allocation of the burdens of proof in forfeiture cases, and therefore also reject this argument.

        United States v. 228 Acres of Land and Dwelling Located on Whites Hill Road, 916 F.2d 808, 814 (2d Cir.1990), cert. denied sub nom., Moreno v. United States Drug Enforcement Admin., 498 U.S. 1091, 111 S.Ct. 972, 112 L.Ed.2d 1058 (1991). However, this decision was rendered before the Supreme Court decided Good and Austin.

      The government points out that we have continued to apply the statutory forfeiture framework in post-Austin/Good cases, see, e.g., Milbrand, 58 F.3d at 844. We agree but also recognize that the sum total of our pronouncements on the issue since Austin and Good has been a recognition that "the Constitutionality of Congress's allocation of the burdens of proof in forfeiture cases has been upheld," United States v. Daccarett, 6 F.3d 37, 57 (2d Cir.1993), cert. denied, - U.S. -, 114 S.Ct. 1294, 127 L.Ed.2d 648 (1994), with a citation to the page of Whites Hill Road quoted above. In United States v. Premises and Real Property at 4492 South Livonia Road, 889 F.2d 1258, 1270 (2d Cir.1989), we noted that: "[a]t some point, it seems that a forfeiture would cross the line of condemning an instrumentality of crime and move into the area of punishing a defendant by depriving him of his estate. If punishment is involved, the Constitution requires many more procedural protections than are available under civil forfeiture.” Good and Austin without a doubt reopen the issue.

      . Only one Court of Appeals opinion, a dissent, conducted a full Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) analysis of the civil drug forfeiture statute’s probable cause requirement. That opinion, authored by Judge Beam of the Eighth Circuit, concluded that the fact that "the government may divest claimant of title with a mere probable cause showing, often established through the use of inadmissible evidence ... [is] a denial of due process.” United States v. $12,390.00, 956 F.2d 801, 810 (8th Cir.1992) (Beam, J., dissenting in part).

      . We note that this proceeding is at least nominally a civil case, calling into question the extent to which we should apply the standards governing prosecutorial conduct. However, the government appears to concede that "[standards of conduct for government attorneys at trial should be applied uniformly in both civil and criminal cases,” although it suggests that we keep in mind "obvious distinctions between civil in rem asset forfeitures [sic] proceedings and criminal in personam actions.” Our resolution of this issue makes it unnecessary to discuss what differences, if any, might apply to our treatment of government misconduct in criminal cases, on the one hand, and civil forfeiture proceedings, on the other.