Opposition Brief — Saari v. Smith Barney, Harris Upham & Co.

Ce") AS f ii Bupreme Court, U.S.

. FILED

| SEP 23 1992

No.

OFFICE OF THE CLERK

In the Supreme Colt

OF THE

United States

OCTOBER TERM, 1992

HOWARD E. SAARI,

Petitioner,

vs.

SMITH BARNEY, HARRIS UPHAM & Co., INC.,

Respondent.

Petition for Writ of Certiorari to the United States Court of

Appeals for the Ninth Circuit

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

KEESAL, YOUNG & LOGAN

ROBERT D. FEIGHNER —

A Professional Corporation

Catalina Landing - 310 Golden Shore

Post Office Box 1730

Long Beach, California 90801-1730

Telephone: (310) 436-9051

Attorneys for Respondent

Smith Barney, Harris Upham & Co.

Incorporated

Bowne of Los Argeles, Inc., Law Printers. (213) 627-2200

© BEST AVAILABLE COPY’ Same

i

TABLE OF CONTENTS

pe ge eh a ne rerrrre

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II

DR ALRCEIOE GOW CERES GARE 6k ck ee cd eecsicveanuces

Ii]

| Rage er ee ee PS eet yee ree

A. THE PETITION SHOULD BE DENIED AS SAARI

B.

HAS FAILED TO DEMONSTRATE ANY BASIS

PA GEES WEES BEM COUR COPUME on. cece eee

THE PETITION SHOULD BE DENIED AS SAARI

HAS FAILED TO DEMONSTRATE A BASIS FOR

DISTINGUISHING CLAIMS UNDER THE EPPA

. THE PETITION SHOULD BE DENIED AS

SAARI’S CENTRAL PREMISE FAILS TO DIF-

FERENTIATE BETWEEN VOLUNTARY SUB-

MISSION TO A POLYGRAPH EXAMINATION

AND VOLUNTARY EXECUTION OF AN ARBI-

pe eg ee ee

THE PETITION IS NOT SAVED BY SAARI’S

INCLUSION OF VARIOUS STATE LAW THEO-

| PTT Cee eT PTT TET TURTLE Ee Tee eee

5

i

TABLE OF AUTHORITIES

Cases

Page

Alford v. Dean Witter Reynolds Inc., 905 F.2d 104 (Sth

Oe, FOR oS aoe ee eee ae 4

Alford v. Dean Witter Reynolds Inc., 939 F.2d 229 (Sth

ee) ee re ie Pre ey PAM Lee

Bender v. A. G. Edwards & Sons Inc., 971 F.2d 698 (11th

Cm FOES os < eck kaos cee eee eos 3

Bender v. Smith Barney, Harris Upham & Co. Inc., 789 F.

ome. 255 COILS. THEE os sicen sc ee ean S

Bierdeman v. Shearson Lehman Hutton Inc., 1992 US.

App. Lexis 13271, Lexis p. 2 (9th Cir. May 28, 1992) 3

Boogher v. Stifel, Nicholaus & Co., 764 F. Supp. 574 (E.D.

OO. TOPE Dn osc cnwncdg hs 6 Rea OU eee eas 4

Foiey v. Presbyterian Ministers Fund, 1992 U.S. Dist.

Lexis 3572, Lexis pp. 5-6 (E.D. Pa. Mar. 20, 1992) .. 4

Friedman v. Hamilton Investments Inc., 1992 U.S. Dist.

Lexis 8258, Lexis p. 6 (N.D. IIl., Eastern Div., Jun. 9,

IDPED «.9-+0-<.0's 00s BeNen eaeeee Ener ee ee a 4

Gardner v. Benefits Communications Corp., 1991 U.S.

Dist. Lexis 18367, Lexis p. 2 (D.D.C. Dec. 31, 1991) 4

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. , 114

L.Ed. 2d 26, 111 S. Ct. 1647 (1991).......... 1, 2, 3, 4, 5, 6

Kaliden v. Shearson Lehman Hutton Inc., 789 F. Supp. 179

SA et ere re ain ope eae 4

King v. The First Boston Corp., 1992 U.S. Dist. Lexis 4745,

Lene p. 2 (5.0.0.7. Age. 15, FOOD cic hci inews cus 4

Mago v. Shearson Lehman Hutton Inc., 956 F.2d 932 (9th

eS ) EE Oe A ery eee 3

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc.,

473 U.S. 614, 87 L.Ed. 2d 444, 105 S. Ct. 3346 (1985) 3

Moses H. Cone Memorial Hospital v. Mercury Construc-

tion Corp., 460 U.S. 1, 74 L.Ed. 2d 765, 103 S. Ct. 927

(EDGED «onc anene caw balance aen eae Eee eee a 3

iil

TABLE OF AUTHORITIES

CASES

Nicholson vy. CPC International Inc., 877 F.2d 221 (3rd

eee Sn aks Gs tke MEK RK RWK SB MONS

Perry v. Thomas, 482 U.S. 483, 107 S. Ct. 2520, 96 L.Ed.

i ch ea ated cok ecb hee kas CoRR EN Aas

Rodriguez de Quijas v. Shearson/American Express Inc.,

490 U.S. 477, 104 L.Ed. 2d 526, 109 S. Ct. 1917 (1989)

Sacks v. Richardson Greenshields Securities Inc., 781 F.

Re A ee 2 eee

Scott v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1992

U.S. Dist. Lexis 13749, Lexis pp. 11-12 (S.D.N.Y. Sept.

SR OUR RETR on

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

220, 96 L.Ed. 2d 185, 107 S. Ct. 2332 (1987) .......

Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305 (6th

ee eC aN GS Ech eed AG kD SAO Am Rw KES

OU ON ccc cc cc ss sens vcscccuscesi

a

ee

No.

In the Supreme Court

OF THE

United States

OCTOBER TERM, 1992

HOWARD E. SAARI,

Petitioner,

VS.

SMITH BARNEY, HARRIS UPHAM & Co@., INC.,

Respondent.

Petition for Writ of Certiorari to the United States Court of

Appeals for the Ninth Circuit

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

I.

INTRODUCTORY STATEMENT

This brief in opposition to petition for writ of certiorari is filed

on behalf of SMITH BARNEY, HARRIS UPHAM & CO.

INCORPORATED (“Smith Barney”), defendant in the district

court and appellant in the Ninth Circuit proceedings. It is filed in

opposition to the petition filed by HOWARD E. SAARI

(“Saari”), plaintiff in the district court and appellee in the Ninth

Circuit proceedings.

Saari’s petition seeks review of the arbitrability of a federal

statute, an issue most recently resolved against Saari in this

Court’s decision entitled Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. ___., 114 L.Ed. 2d 26, 111 S. Ct. 1647 (1991).

L,

2

While Saari seeks to distinguish this Court’s decision in Gilmer

because a separate piece of federal legislation is involved, the

Employer Polygraph Protection Act (“EPPA’’) rather than the

Age Discrimination and Employment Act (“ADEA”), the Ninth

Circuit Court of Appeals properly found the polygraph statute to

be equally arbitrable based upon this Court’s directives in Gilmer.

There is neither need nor basis for this Court’s review of the

Ninth Circuit’s decision below. There is neither conflict between

the circuits nor an unsettled area of the law to resolve. The

continuous line of decisions from this Court extolling the virtues

of arbitration as applied to various and diverse federal legislation

contradicts Saari’s assertion that the issue is entitled to review.

Even if considered on its merits, Saari’s petition would be

denied. His central premise confuses the issue of voluntary

submission to a polygraph test with voluntary submission to an

agreement to arbitrate. Whatever substantive rights Saari may

possess with regard to the purportedly coercive use of polygraph

examinations, those rights can be fully discharged in arbitration.

II.

STATEMENT OF THE CASE

Saari’s statement of the case, as appears at pages two through

four of his petition, is essentially correct. Pursuant to an arbitra-

tion clause contained within a Uniform Application for Securities

Industry Registration (““U-4 Form’), together with Rule 347 of

the Rules of the New York Stock Exchange, Smith Barney

moved to compel arbitration of Saari’s various federal and state

claims.’

The original motion, filed prior to Gilmer, was denied by the

trial court. Prior to appellate briefing, this Court rendered its

decision in Gilmer, causing the Ninth Circuit to reverse the trial

court’s order and compel arbitration of all of Saari’s claims.

'Both the U-4 Form and Rule 347 were before this Court in Gilmer.

3

er While Smith Barney denies that there is any basis for granting

le this petition, it does not contest Saari’s assertion of jurisdiction at

1e any step of the proceedings.

th

@)

s III.

= ARGUMENT

[ A. THE PETITION SHOULD BE DENIED AS SAARI HAS

: FAILED TO DEMONSTRATE ANY BASIS FOR RE-

. VIEW IN THIS COURT.

This Court has consistently rendered a continuing line of

decisions confirming the arbitrability of specific federal legisla-

e tion: Gilmer [ADEA]; Shearson/American Express, Inc. v. Mc-

y Mahon, 482 U.S. 220, 96 L.Ed. 2d 185, 107 S. Ct. 2332 (1987)

n [Securities Exchange Act of 1934]; Rodriguez de Quijas v.

y Shearson/American Express Inc., 490 U.S. 477, 104 L.Ed. 2d

h 526, 109 S. Ct. 1917 (1989) [Securities Act of 1933]. Addition-

. ally, other recent decisions of this Court confirm the virtues of

arbitration as a dispute resolution process. Moses H. Cone Memo-

rial Hospital v. Mercury Construction Corp., 460 U.S. 1, 74 L.Ed.

2d 765, 103 S. Ct. 927 (1983); Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth Inc., 473 U.S. 614, 87 L.Ed. 2d 444, 105 S.

Ct. 3346 (1985).

Following Gilmer, which resolved a conflict between the Fourth

and Third Circuits concerning the arbitrability of claims under

the ADEA, various circuit and district courts have uniformly

applied the teaching of Gilmer: Claims under various forms of

federal legislation are properly subject to arbitration. These in-

clude the following: Alford v. Dean Witter Reynolds Inc., 939

F.2d 229 (Sth Cir. 1991) [Title VII]; Willis v. Dean Witter

Reynolds, Inc., 948 F.2d 305 (6th Cir. 1991) [Title VII and state

sexual discrimination statute]; Bierdeman v. Shearson Lehman

Hutton Inc., 1992 U.S. App. Lexis 13271, Lexis p. 2 (9th Cir.

May 28, 1992) [Title VII]; Mago v. Shearson Lehman Hutton

Inc., 956 F.2d 932 (9th Cir. 1992) [Title VII]; Bender v. A. G.

Edwards & Sons Inc., 971 F.2d 698 (11th Cir. 1992) [Title VII];

Sacks v. Richardson Greenshields Securities Inc., 781 F. Supp.

——————————————EeaaRae_QVw7N

eco >) DO F§ ww

o—_e WS iD

4

1475 (E.D. Cal. 1991) [gender discrimination under California’s

Fair Employment and Housing Act]; Kaliden v. Shearson Leh-

man Hutton Inc., 789 F. Supp. 179 (W.D. Pa. 1991) [ADEA and

State Human Relations Act]; Boogher v. Stifel, Nicholaus & Co.,

764 F. Supp. 574 (E.D. Mo. 1991) [ADEA]; Bender v. Smith

Barney, Harris Upham & Co. Inc., 789 F. Supp. 155 (D.E.N.J.

1992) [Title VII]; Gardner v. Benefits Communications Corp.,

1991 U.S. Dist. Lexis 18367, Lexis p. 2 (D.D.C. Dec. 31, 1991)

[D.C. Human Rights Act]; King v. The First Boston Corp., 1992

U.S. Dist. Lexis 4745, Lexis pg. 2 (S.D.N.Y. Apr. 13, 1992)

[Title VII]; Scott v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

1992 U.S. Dist. Lexis 13749, Lexis pp. 11-12 (S.D.N.Y. Sept. 14,

1992) [Title VII]; Foley v. Presbyterian Ministers Fund, 1992

U.S. Dist. Lexis 3572, Lexis pp. 5-6 (E.D. Pa. Mar. 20, 1992)

[ ADEA]; and Friedman v. Hamilton Investments Inc., 1992 U.S.

Dist. Lexis 8258, Lexis p. 6 (N.D. Ill., Eastern Div., Jun. 9,

_ 1992) [ADEA].

The appellate history in Alford v. Dean Witter Reynolds Inc.,

supra, is perhaps most instructive in demonstrating why Saari’s

petition should be denied. In the original Fifth Circuit opinion,

905 F.2d 104 (Sth Cir. 1990), the Court of Appeals refused to

compel arbitration. This Court then granted certiorari, vacating

the Fifth Circuit’s opinion and remanding the matter to the Fifth

Circuit in light of this Court’s decision in Gilmer. In a subsequent

opinion, 939 F.2d 229 (Sth Cir. 1991), the Fifth Circuit reversed

its earlier decision and compelled arbitration of all claims.

The more recent Sixth Circuit decision in Willis v. Dean Witter

Reynolds, Inc., supra, further illustrates the absence of any

present need for Supreme Court involvement. When faced with a

claim under Title VII and the Kentucky state sexual discrimina-

tion statute, the Court of Appeals compelled arbitration of Willis’

claims, specifically noting the following:

... We find Gilmer to be dispositive of every argument

presented by the plaintiff and the EEOC in this appeal.

(948 F.2d at 307.)

In Alford, the plaintiff attempted to distinguish the Gilmer

decision by asserting that the claim involved Title VII rather than

5

the ADEA. In granting certiorari to vacate the appellate court’s

original decision refusing to compel arbitration and mandating for

further proceedings in light of Gilmer, this Court specifically

found Alford’s distinction to be meaningless. The message from

Gilmer is clear and not nearly so limited as Saari’s petition would

suggest. Claims arising under various federal statutes, including

the ADEA, Title VII, the EPPA and others, are properly com-

pelled to arbitration pursuant to a validly executed U-4 Form.

Accordingly, Saari has demonstrated no basis for obtaining

review in this Court. The Ninth Circuit’s opinion properly corre-

sponds with this Court’s directives in Gilmer and is accord with

all circuit courts which have rendered decisions following Gilmer.

B. THE PETITION SHOULD BE DENIED AS SAARI HAS

FAILED TO DEMONSTRATE A BASIS FOR DISTIN-

GUISHING CLAIMS UNDER THE EPPA.

Saari attempts to argue that differences in wording between the

EPPA and the ADEA require that the Gilmer decision be

discarded in considering the arbitrability of Saari’s claim.’ Essen-

tially, Saari argues that because the EPPA anti-waiver provision

provides that the “rights and procedures” provided by this chapter

may not be waived by contract or otherwise, 29 U.S.C. § 2005(d),

arbitration cannot be compelled.

The Ninth Circuit expressly rejected Saari’s argument, advising

that Saari’s argument could not stand in light of Gilmer. (Appen-

dix A, at 9.) The Ninth Circuit stressed that in Gilmer this Court

"In briefing this issue at the district court level prior to the Gilmer

decision, Saari made no such attempts io differentiate between the

ADEA and the EPPA. To the contrary, because of then existing

precedent such as Nicholson v. CPC International Inc., 877 F.2d 221

(3rd Cir. 1981), Saari argued that similar results should obtain under

both Acts, specifically advising the trial court that ““a companson of the

ADEA and the EPPA reveals that the enforcement schemes are

virtually the same and, thus, the same reasons that compelled the

Nicholson court to conclude that arbitration is incompatible with the

ADEA also compelled the conclusion that arbitration is incompatible

with the EPPA.” (CR 10, P. 9, LL. 12-18.)

a a a ee

6

noted that the substantive rights enforced by arbitration are

identical to those enforced in a judicial forum, the only difference

being an agreement by the parties to submit the “resolution in an

arbitrable, rather than a judicial, forum. Gilmer, 111 S. Ct. at

1652.” (Appendix A, at 9.)

The Ninth Circuit then went on to note that the term “proce-

dures” is simply too broad to relate solely to forum selection. For

an employer to utilize the provisions relating to ongoing investiga-

tions under Section 2006(d), it would be required to follow

certain “procedures.” The type of protective procedures found in

Section 2006(d) (where polygraphs may be required under the

Act) are the “rights and procedures” properly subject to the anti-

waiver clause. (Appendix A, at 9-10.)

Finally, the Ninth Circuit emphasized that the “and proce-

dures” language in the EPPA is no stronger than the anti-waiver

provisions found’ in the Sherman Act, the Securities Exchange

Act of 1934, the Securities Act of 1933 and RICO. Despite

language in each of those Acts precluding waiver, this Court has

specifically held that arbitration should be compelled in each

context. (Appendix A, at 10.)

C. THE PETITION SHOULD BE DENIED AS SAARIS

CENTRAL PREMISE FAILS TO DIFFERENTIATE

BETWEEN VOLUNTARY SUBMISSION TO A POLY-

GRAPH EXAMINATION AND VOLUNTARY EXECU-

TION OF AN ARBITRATION PROVISION.

Even if Saari could demonstrate a basis for Supreme Court

review, his theory of relief is unsupportable. A fatal flaw in his

petition is his failure to distinguish between the substantive rights

under the EPPA (a prohibition against coerced or involuntary

polygraph testing) and the resolution of which forum should

properly resolve and discharge those rights. Specifically, Saari’s

petition asserts at page 9:

If the intent of Congress was, as it clearly was, to prohibit the

compelling of pelygraph examinations as a condition of

obtaining or keeping a job, then permitting an employer as a

condition of employment to compel a potential employee to

forego the judicial remedy and arbitrate a claim for violation

of the Act is inherently inconsistent.

Saani’s argument is both illogical and unsound. While Congress

indeed intended to prohibit the compelling of polygraph examina-

tions as a condition of obtaining or maintaining employment, that

right can and is being properly protected and enforced in both the

judicial and the arbitration forum. Saari’s rights to seek relief

under the Act are unaffected by whether or not he has executed

an agreement with his employer which contains an arbitration

clause.

D. THE PETITION IS NOT SAVED BY SAARIP’S INCLU-

SION OF VARIOUS STATE LAW THEORIES.

Finally, Saari argues that his California Labor Code claims

cannot be compelled to arbitration because there is a limitation on

federal preemption in the EPPA. (Petition, P. 10.) The Ninth

Circuit quickly disposed of Saari’s argument, noting that there is

no exemption of federal polygraph claims. (Appendix at 12.)

More specifically, with regard to the issue of preemption in

general, the Ninth Circuit’s opinion concluded as follows:

Section 2009 merely protects state statutory remedies which

are more protective of the employee than EPPA. !t does not,

however, determine whether the state law claim should be

arbitrated or adjudicated in the federal district court. To the

extent that California’s preference for a judicial forum would

interfere with the choice expressed by Congress and the

FAA, it is preempted. See Perry v. Thomas, 482 U.S. 483,

491 (1987) (state statute providing a judicial forum for a

wage/commission claim based on the sales of securities

which is in conflict with the FAA must give way).

8

IV.

CONCLUSION

For the reasons stated, the petition should be denied in its

entirety.

Dated: October 20, 1992

ROBERT D. FEIGHNER

KEESAL, YOUNG & LOGAN

Attorneys for Respondent

Smith Barney, Harris Upham

& Co. Incorporated