Opposition Brief — Singh v. Drexel Burnham Lambert Inc.

re

%, Supreme Court, U.S.

iA FILED

No. 88-1012 a MAR 3 1989

4 SPANIOL, JR.

CLERK

In The , re:

Supreme Court of the United States

October Term, 1988

7%

vv

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.

&

4

RESPONDENTS’ BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

y%

a

Curtis CARLSON

Counsel of Record

and

LLoyp R. SCHWED

175 N.W. First Avenue

Courthouse Center, 14th Flr.

Miami, Florida 33128-1817

(305) 358-6550

———-——

COCKLE LAW BRIEF PRINTING CO,, (800) 225-6964

OR CALL COLLECT (402) 342-2831

—— +

—_>

"BEST AVAILABLE COPY

LO GAT IR ERR Te iy GREED TS INES Oy STEN Ta Beis aitreeesseaneue y nai hom

QUESTION PRESENTED

Whether the decision of the Florida Court of Appeal -

that claims asserted under § 12(2) of the Securities Act of

1933, 15 U.S.C. § 771(2) (1982), are arbitrable - conflicts

with Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182 (1953), in the

wake of Shearson/American Express, Inc. v. McMahon, 482

U.S. 220, 197 S.Ct. 2332 (1987)?

li

TABLE OF CONTENTS

Page

Comestion. Peehenied. . ......6300lda ose eee i

Seeee Ch GCOMIDEE 3. 6.5056 ns ccscecsen eee ii

SAO Of AGO oo ic cen ekcd ose eee eee ii

ee PPE Pe Terr er a 1

Reasons for Denying Writ ................6. ee 3

CIN 5.55 ce Le es manne andere 4

TABLE OF AUTHORITIES

Page

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.

hip EE TEE Or :

Shearson/American Express, Inc. v. McMahon, 482

CS. Zoe, Ty GAL Zoe CIS). ocean i, 22

Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182 (1953) ..i, 2, 3

STATEMENT OF THE CASE

Petitioners filed a two-count Complaint in state court

against Drexel Burnham Lambert, Inc. (“Drexel Burn-

ham”) and its two employees, David Pines and Gregory

Yankwitt, alleging violations of Section 12(2) of the Secu-

rities Act of 1933 and 18 U.S.C. § 1962 (“RICO”). Peti-

tioners alleged misrepresentations and omissions in

connection with investment accounts Petitioners opened

at Drexel Burnham.

At the time Petitioners opened their accounts at

Drexel Burnham, Petitioners executed written customer

agreements in which they agreed to arbitrate “any contro-

versy” arising out of their account. One of the agreements

signed by Petitioners provided the following:

Any controversy between you and the undersigned

arising out of said contract or relating to this 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.

Drexel Burnham filed a motion to compel arbitration of

the dispute pursuant to the Federal Arbitration Act, 9

U.S.C. § 2 et seq. (1982). On October 27, 1987, the state

tourt granted the motion to compel arbitration based on

this Court’s decision in Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220, 107 S.Ct. 2332 (1987).

The trial court’s order was affirmed by Florida’s

Fourth District Court of Appeal on August 10, 1988. The

Florida Supreme Court denied a petition to invoke discre-

tionary jurisdiction on October 21, 1988. This petition for

writ of certiorari followed.

Petitioners take the position that the decision of the

Florida court conflicts with the Supreme Court’s decision

in Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182 (1953). Peti-

tioners further assert that certiorari jurisdiction is appro-

priate because the Supreme Court has already granted

certiorari on the identical issue in 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). |

To the extent that Petitioners seek review to resolve

the conflict that exists between various federal and state

courts, Drexel Burnham agrees that a decision by the

Supreme Court is appropriate to provide uniformity

throughout the nation on the issue of whether Section

12(2) claims are presently arbitrable in light of McMahon.

However, Drexel Burnham also maintains that (1) in this

instance no conflict exists with Wilko in light of McMahon

and (2) certiorari review in this case is unnecessary and

duplicative since the Rodriguez case is legally and factu-

ally identical.?

t

1 The Rodriguez case is slightly different from a procedural

standpoint because Rodriguez involves a petition for writ of

certiorari to the U.S. Fifth Circuit Court of Appeals, as opposed

to a state appellate court in this case. However, in substantive

terms, the two cases present the identical legal issue.

REASONS FOR DENYING THE WRIT

First, Drexel Burnham asserts that the decision of

Florida’s Fourth District Court does not conflict with

Wilko, supra, in view of the Supreme Court's analysis of

Wilko in McMahon. More specifically, this Court in

McMahon effectively overruled Wilko because “most of

the reasons given in Wilko have been rejected subse-

quently by the Court as a basis for holding claims to be

nonarbitrable.” 107 S.Ct. at 2340. Therefore, no conflict is

presented in this case and the Court could properly deny

the petition for writ of certiorari.

Second, this Court granted certiorari in Rodriguez on

the issue of whether claims under Section 12(2) of the

Securities Act of 1933 are arbitrable in light of the

McMahon decision. The parties have completed briefing

in the Rodriguez case and oral argument is scheduled for

March 27. Without question, the Court’s decision in

Rodriguez will be dispositive of this case.

Drexel Burnham has reviewed the brief submitted by

the Respondent in Rodriguez and believes that all signifi-

cant legal issues have been addressed in a thorough and

effective manner. Therefore, Drexel Burnham respectfully

submits that granting certiorari in this case will not bene-

fit the Court or the parties herein. To the contrary, Drexel

Burnham suggests that granting certiorari would be inef-

ficient and would waste the Court’s precious resources.

4

vr

CONCLUSION

For all the foregoing reasons, Respondents

respectfully request that the Court deny the petition for

writ of certiorari.

Dated: Miami, Florida

March 2, 1989

Respectfully submitted,

Curtis CARLSON

Counsel of Record for Respondents

and

Litoyp R. ScCHWED

Fow.er, WHITE, BURNETT, HURLEY,

BANICK & StrRICKROOT, P.A.

Courthouse Center, 11th Floor

175 Northwest First Avenue

Miami, Florida 33128-1817