# Petition for Writ of Certiorari — Singh v. Drexel Burnham Lambert Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0606%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1989 - **Citation:** 490 U.S. 1080 ## Text — Poe a he Se 58-1012 | Supreme Court,’U.S. & FILED ‘p | No. 88- ! DEC 15 1988 | JOSEPH F. SPANIOL, JR. —" IN THE ‘! Supreme Court of the United States OCTOBER TERM, 1988 GULSHAN B. SINGH, M.D. and DALJIT SINGH, INDIVIDUALLY AND AS TRUSTEES FOR THE GULSHAN B. SINGH, M.D., P.A. PROFIT SHARING PLAN, DEFINED BENEFIT PENSION PLAN AND MONEY PURCHASE PENSION PLAN, Petitioners, VS. DREXEL BURNHAM LAMBERT INCORPORATED, DAVID PINES and GREGORY YANKWITT, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE FOURTH DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA Michael R. Casey Suite 1500 500 East Broward Boulevard Fort Lauderdale, FL 33394-3099 (305) 527-1000 Attorney for Petitioners Counsel of Record QUESTION PRESENTED Whether claims brought under Section 12(2) of the Securities Act of 1933 are subject to predispute arbitration agreements? TABLE OF CONTENTS oc scaaisnnxrenvsatvaseancasenasovsbeceseuessaunanactons i nc cess eves snuvn nusasasenvedinntunsonassovioosans ii TABLE OF AUTHORITIES ................ eeiinistaakannasetaenesiaaeats iii Neen ea oc cacssasennducesssankhsiskvsnsaraasdesaausiats 1 RTT EUR 2 I ED occ ccvecerevsacnessusecernashsenesdsosenssenengeesesssecenecs 2 I I ovo cccdecnsasassnessccnsenessesesnasssecvsvesesncs 3 REASONS FOR GRANTING THE WRIT ....00........cccceceeeeseeeeeeee 6 Needs au serthccienchessascasdsnsves cenvstssesnnidnonssnunacdes 7 Neen graces ciksstieiesdinsesdeisnciecdéesensensenatexesneceones A Broward County, Florida, Circuit Court Order .............. Al Decision of Florida Fourth District Court of Appeal ...... A2 Order of Florida Fourth District Court of Appeal Denying Motion for Rehearing .......................c::cccesseeeeeeeees A3 Order of Supreme Court of Florida Dismissing Petition for Review ....................ccsccseseeeeeeeeeeees A4 Lil TABLE OF AUTHORITIES CASES: Rodriguez de Quijas v. Shearson/American Express, Inc., 845 F.2d 1296 (5th Cir. 1988), cert. granted, 57 U.S.L.W. 3343 (U.S. Nov. 15, 1988) (No. 88-385) .........00..e. 6 Shearson/American Express, Inc. v. McMahon, 482 US. ,107 S.Ct. 2332, 96 L.Ed.2d 185 (1987)............ 5,6 Wilko v. Swan, 346 U.S. 427 (1953) ..............scsscsccssecseesseessereeeee 5,6 FEDERAL STATUTES: United States Arbitration Act, Section 2, 9 U.S.C. §2 ......00......... 3 Securities Act of 1933, Section 12(2) A es ee PI Gectecchtina theo eeaaceiecs eresenosenatatinn es Passim Securities Act of 1933, Section 14, ORES TR AHO ta er Sa ASO Rie NTO TN ERA ARETE Ore lge i ae 2 Securities Exchange Act of 1934, Section 10(b) BA Rs Rss osccncscecacntadie ecca cas mcs anaeacake se deere shommeeen ipsa! 6 NF ht EE A SRM BE na tesen Lene MIM tae Leal 4 gk Ree Ser re eM ie aac en RRR SBMA NN 2 See ee ITD ehecscvcnenspvnniiscbheaintincacieasecnsensabssauicinansioabiiien een manaal 2 No. 88- IN THE Supreme Court of the United States OCTOBER TERM, 1988 GULSHAN B. SINGH, M.D. and DALJIT SINGH, INDIVIDUALLY AND AS TRUSTEES FOR THE GULSHAN B. SINGH, M.D., P.A. PROFIT SHARING PLAN, DEFINED BENEFIT PENSION PLAN AND MONEY PURCHASE PENSION PLAN, Petitioners, vs. DREXEL BURNHAM LAMBERT INCORPORATED, DAVID PINES and GREGORY YANKWITT, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE FOURTH DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA OPINIONS BELOW The Order of the trial court is reprinted in the Appendix as Al. The decision of the Florida Fourth District Court of Appeal and that Court’s subsequent order denying a Motion for Re- hearing are reprinted in the Appendix as A2 and A3, respec- tively. The Order of the Supreme Court of Florida dismissing a Petition for Review is reprinted in the Appendix as A4. JURISDICTION The decision of the Florida Fourth District Court of Appeal was entered on August 10, 1988 and the denial of the Motion for Rehearing was entered on September 14, 1988. A petition for review by certiorari to the Supreme Court of Florida was dismissed for lack of jurisdiction on October 21, 1988. This Petition for a Writ of Certiorari was filed within ninety (90) days of either September 14, 1988 or October 21, 1988. This Court has jurisdiction pursuant to 28 U.S.C. §1257(3) or 28 U.S.C. §1257(a). STATUTES INVOLVED Section 14 of the Securities Act of 1933, 15 U.S.C. §77n, pro- vides in pertinent part that: Any condition, stipulation or provision binding any person acquiring any security to waive compliance with any provi- sion of this subchapter or of the rules and regulations of the Commission shall be void. Section 12(2) of the Securities Act of 1933, 15 U.S.C. §771(2), provides in pertinent part that: Any person who— (2) offers or sells a security (whether or not exempted by the provisions of section 77c of this title, other than paragraph (2) of subsection (a) of said section), by the use of any means or instruments of transportation or com- munication in interstate commerce or of the mails, by means of a prospectus or oral communication, which in- cludes an untrue statement of a material fact or omits to state a material fact in order to make the statements, in the light of the circumstances under which they were OE 3 made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable to the person purchasing such security from him, who may sue either at law or in equity in any court of competeut jurisdiction... The United States Arbitration Act, 9 U.S.C. §2, provides in pertinent part that: ...an agreement in writing to submit to arbitration an exist- ing controversy arising out of such a contract, transaction or refusal shall be valid, irrevocable, and enforceable save upon such grounds as exist at law or in equity for the revo- cation of any contract. STATEMENT OF THE CASE Petitioners, Gulshan B. Singh and Daljit Singh (hereinafter the "Singhs"), at all times mentioned herein, were husband and wife and also served as trustees for the Gulshan B. Singh, M.D., P.A. Profit Sharing Plan, Defined Benefit Pension Plan and Money Purchase Pension Plan (hereinafter collectively the "Plans"). The Singhs’ investment objectives, both as individuals and as trustees of the Plans, were safety of principal and long term growth. Respondent, Gregory Yankwitt (hereinafter “Yank- witt") served as the Singhs’ account executive/customer repre- sentative at Dean Witter Reynolds, Inc. When Yankwitt left Dean Witter to join Respondent, Drexel Burnham Lambert In- corporated (hereinafter "Drexel"), he prevailed on the Singhs to | move their accounts to that firm. At the time the accounts were | opened at Drexzl, the Singhs signed various agreements, the most recent of which contained the following arbitration clause: a eee + Any controversy between you and the undersigned arising out of said account or relating to the contract or the breach thereof, shall be settled by arbitration in accordance with the rules, then obtaining, of the American Arbitration Association, the New York Stock Exchange, Inc. or the National Association of Securities Dealers, Inc., as the undersigned may elect. Thereafter, utilizing the relationship of confidence and trust he had developed, Yankwitt made fraudulent misrepresenta- tions and omissions to the Singhs to induce them to invest in an options trading program that was totally contrary to their in- vestment objectives, which program resulted in substantial losses to their accounts. The Singhs filed suit against Drexel, Yankwitt and David Pines, the Branch Office Manager at Drexel (hereinafter collec- tively "Defendants") in the Circuit Court of the Seventeenth Ju- dicial Circuit in and for Broward County, Florida, alleging vio- lations of Section 12(2) of the Securities Act of 1933 and 18 U.S.C. §1962 (hereinafter "Federal RICO"). Upon Petition of the Defendants, the suit was removed to the United States District Court for the Southern District of Florida. Defendants filed an "Answer and Affirmative Defenses” and thereafter filed a "Motion to Stay Action and Compel Arbitra- tion”. In response, the Singhs filed their "Reply Memorandum in Opposition to Defendants’ Motion to Stay Action and Compel Arbitration". Without ruling on the Motion to Compe! Arbitra- tion, the United States District Court remanded the action to state court. - After remand, Defendants filed a "Renewed Motion to Stay Action and Compel Arbitration". The Defendants argued in their Motion that, in the recent decision of Shearson/American Express, Inc. v. McMahon, 482 U.S. , 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), the Supreme Court had effectively overruled Wilko v. Swan, 346 U.S. 427 (1953), and that the trial court should compel arbitration of the Singhs’ claims under Section 12(2) of the Securities Act of 1933. In response, the Singhs +) filed a "Reply Memorandum in Opposition to Defendants’ Re- newed Motion to Stay Action and Compel Arbitration". On October 17, 1987, after oral argument, the trial court granted Defendants’ Motion and entered its Order compelling arbitration of both the federal RICO and the Section 12(2) claims. Based on the McMahon decision, the Singhs conceded the arbitrability of the Federal RICO claim. Thereafter, the Singhs appealed the Order of the trial court to the Florida Fourth District Court of Appeal. In their Briefs on Appeal, the Singhs argued that the Supreme Court's deci- sion in McMahon dealt with claims under Section l(b) of the Exchange Act of 1934 and did not overrule the Court's earlier decision in Wilko v. Swan, holding that claims arising under Section 12(2) of the Securities Act of 1933 are not subject to pre- dispute arbitration agreements. On August 10, 1988, the Fourth District Court of Appeal af- firmed the order of the tril court compelling arbitration, citing McMahon. Rehearing was denied on September 13, 1987 and a Petition for Review to the Supreme Court of Florida was dis- missed for lack of jurisdiction on October 21, 1988. REASONS FOR GRANTING THE WRIT 1. The decision of the Florida Fourth District Court of Ap- peal conflicts with the Supreme Court's decision in Wilko v. Swan, 346 U.S. 427 (1953), which held that claims under section 12(2) of the Securities Act of 1933 are not subject to arbitration pursuant to predispute arbitration agreements. The Fourth District's reliance on Shearson/American Ex- press, Inc. v. McMahon, 482 U.S.___, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), in affirming the trial court's order compe!- ling arbitration of the 12(2) claims, is misplaced. The McMa- hon holding involved claims under Section l|(b) of the Exchange Act of 1934 and, on the grounds of stare decisis, the Supreme Court there expressly declined to reverse its holding in Wilko that claims under Section 12(2) of the Securities Act of 1933 are subject to predispute avbitration agreements. EE 6 The other decisions cited by the Fourth District as authority for its affirmance emanate from lower federa! courts that also construed McMahon as overruling Wilko. 2. On November 14, 1988, this Court granted a petition for a writ of certiorari in the case of Rodriguez de Quijas v. Shear- son/American Express, Inc., 845 F.2d 1296 (5th Cir. 1988), cert. granted, 57 U.S.L.W. 3343 (U.S. Nov. 15, 1988XNo. 88-385). The basic question presented in that petition, to wit: "Are claims under Section 12(2) of the 1933 Securities Act now arbitrable un- der predispute broker contracts?" is identical to the question presented in this case. CONCLUSION For the foregoing reasons, the Petition for a Writ of Certiora- ri should be granted. Respectfully submitted, Michael R. Casey Suite 1500 500 East Broward Boulevard Fort Lauderdale, FL 33394-3099 (305) 527-1000 Counsel of Record Attorney for Petitioners APPENDIX Al IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE NO. 86-16132 CS Paul M. Marko III, Circuit Judge GULSHAN B. SINGH, M.D. and DALJIT SINGH, INDIVIDUALLY AND AS TRUSTEES FOR THE GULSHAN B. SINGH, M.D., P.A. PROFIT SHARING PLAN, DEFINED BENEFIT PENSION PLAN AND MONEY PURCHASE PENSION PLAN, Petitioners, vs. DREXEL BURNHAM LAMBERT INCORPORATED, DAVID PINES and GREGORY YANKWITT, Respondents. ORDER THIS CAUSE having come on to be heard on Defendants’ Motion to Stay Action and Compel Arbitration and the Court having heard argument of counsel, and being otherwise ad- vised in the Premises, it is hereupon, ORDERED AND ADJUDGED that said Motion be, and same is hereby GRANTED. DONE AND ORDERED in Chambers, at Fort Lauderdale, Broward County, Florida, this 27th day of October, 1987. /s/PAUL M. MARKO III Circuit Judge } A2 IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT CASE NO. 87-2963 GULSHAN B. SINGH, M.D. and DALJIT SINGH, Appellants vs. DREXEL BURNHAM LAMBERT INCORPORATED, DAVID PINES and GREGORY YANKWITT, Appellees. OPINION FILED AUGUST 10, 1988 NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DISPOSED OF Appeal of a non-final order from the Circuit Court for Broward County; Paul M. Marko III, Judge Michael R. Casey Fort Lauderdale, for Appellants Lloyd R. Schwed of Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., Miami, for Appellees PER CURIAM. AFFIRMED on the authority of Shearson/American Ex- press, Inc. v. McMahon, 482 U.S. , 107 S.Ct. 2332, 96 L. Ed.2d 185 (1987); Kavouras v. Visual Products Systems, Inc., 680 F.Supp. 205, 207-08 (W.D. Pa. 1988); Aronson v. Dean Witter Reynolds, Inc., 675 F.Supp. 1324, 1326 (S.D. Fla. 1987); Staiman v. Merrill Lynch, Pearce, Fenner & Smith, 673 F.Supp. 1009, 1011 (C.D. Cal. 1987). LETTS, DELL and WALDEN, JJ., concur. IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT CASE NO. 87-2963 GULSHAN B. SINGH, M.D. and DALJIT SINGH, Appellants, vs. DREXEL BURNHAM LAMBERT INCORPORATED, DAVID PINES and GREGORY YANKWIT, Appellees. September 14, 1988 BY ORDER OF THE COURT: ORDERED that Appellants’ August 22, 1988 Motion for Re- hearing is denied. I hereby certify the foregoing is a true copy of the original court order. /s/CLYDE L. HEATH, Clerk cc: Kathleen Molchan, Esq. Lloyd R. Schwed, Esq. A4 SUPREME COURT OF FLORIDA FRIDAY, OCTOBER 21, 1988 CASE NO. 73,182 DISTRICT COURT OF FOURTH DISTRICT - NO. 87-2963 GULSHAN B. SINGH, M.D. and DALJIT SINGH, Petitioners, vs. DREXEL BURNHAM LAMBERT INCORPORATED, DAVID PINES and GREGORY YANKWIT, Respondents. It appearing to the Court that it is without jurisdiction,the Petition for Review is hereby dismissed. Dodi Publishing Co. v. Editorial America, S.A., 385 So.2d 1369 (Fla. 1980). A TRUE COPY TEST: Sid J. White Clerk, Supreme Court cc: Hon. Clyde L. Heath, Clerk Hon. Robert E. Lockwood, Clerk Hon. Paul M. Marko III, Judge (seal) Supreme Court of the Michael R. Casey, Esquire State of Florida Lloyd R. Schwed, Esquire /s/Phyllis Bamburg Deputy Clerk i = sete --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_0606%3A1. Public record. Not legal advice.