Petition for Writ of Certiorari — In re Ronwin

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IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1992

In re EDWARD RONWIN,

Petitioner.

PETITION FOR WRIT OF MANDAMUS

Edward Ronwin

P.O. Box 88746

Sioux Falls, SD 57105

(605) 338-3924

Petitioner pro se and

Attorney at Law (Iowa)

QUESTION FOR REVIEW

Can a federal judge order publication of

a decision or persist in such order when

the judge has undisputable evidence that

the decision contains untrue premises as

the basis for dismissal of claims?

OTHER PARTIES BELOW

The other parties below are: Hon. WILLIAM

G. CAMBRIDGE, Judge, United States District

Court, District of Nebraska. SMITH BARNEY,

HARRIS UPHAM & CO., INC. and JOHN SPAUSTAT,

Defendants, in Ronwin v. Smith Barney, et

al., No. 8:CV 92-232, United States Dist-

rict Court, District of Nebraska.

TABLE OF CONTENTS

Question for Review

Other Parties Below

Table of Contents”

Table of Authorities

Opinions Below

Jurisdiction

Statutory Provisions Involved

Statement of the Case

Reasons for the Writ

As to Count I

As to Count II

Conclusion

Appendix

iii

TABLE OF AUTHORITIES

Page

Cases

Dirks v. SEC, 681 F.2d 824

(10th Cir. 1982); rev'd 13

other gds, 463 U.S. 646 (1983)

Ernst & Ernst v. Hochfelder,

425 u.S. 185, 96 S.Ct. 1375 13

(1976)

In re Ronwin, Court of Appeals, 5

8th Cir., No. 92-3878

Kennett v. Chambers, 14

55 U.S. 38, 14 L.Ed. 316 (1852)

Mitsubishi Motors Corp. v. Solar

Chrysler-Plymouth, 473 U.S. 614 9

(1985)

Rodriques de Quijas v. Shearson/

American Express, Inc., 490 U. 9,11-13

S. 477, 109 S.Ct. 1917 (1989)

Ronwin v. Smith Barney et al.,

No. 8:CV 92-232, U.S. Dist. Ct., i,2,

Dist. Neb.; became 807 F.Supp. 7,11

87 (D.-Neb. 1992)

Ronwin v. Smith Barney, et al.,

U.S. Court of Appeals, 8th Cir., 5

No. 92-3788

Shearson/American Express Inc.

vy. McMahon, 482 U.S. 220, 9,11,12

107 S.Ct. 2332 (1987)

Cir. 1987), 484 U.S. 807, 108

S.Ct. 53: on remand (other gds)

840 F.2d 1343; 486 U.S. 1035, 15,16

108 S.Ct. 2022

TABLE OF AUTHORITIES —- CONT'D.

Wilko ve. Swan, 346 Vee 427,

74 S.Ct. 182 (1953)

Page

United States Constitution

Article III, Section l

United States Code

9 U.S.C.3

Sec. l, et seq. ,

15 U.S.C.$

Sec. 77a

Sec. /7h

Sec. 77v

Sec. 78a

Sec. 78aa

Sec. 78cc

46 UsSsCa 2

Sec. 1254(1)

Sec. 1291

Sec. 1294

Sec. 1331

Sec. 1332

Sec. 1337

Sec. 1367

Sec. 165l(a)

11,14

4,10,12,13

11,14

& b H SH DB DB P

WwW

No.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1992

In re EDWARD RONWIN,

Petitioner.

PETITION FOR WRIT OF MANDAMUS

OPINIONS BELOW

On December 29, 1992, the Court of Appeals,

Eighth Circuit, entered an unpublished

Order denying Petitioner's, ("“RONWIN"),

Petition for a Writ of Prohibition and a

Writ of Mandamus, ("petition for the writs");

see Appendix. Subsequently, the Court of

Appeals entered an Order on February 4,

1993, denying RONWIN'sS Petition for

Rehearing; see Appendix.

On October 29, 1992, the United States

District Court for the District of Nebraska

entered an Entry of Judgment and a separate

Order and Memorandum, ("OPINION"), copy

reproduced in the Appendix. OPINION has

now been published at 807 F.Supp. 87 (D.

Neb. 1992). *

JURISDICTION

RONWIN filed a timely Notice of Appeal

from OPINION and Entry of Judgment. The

Court of Appeals' Orders, mentioned above,

on RONWIN'sS pe~ “ion for the writs arose

out of an ancillary matter which the

Court of Appeals treated as separate from

the appeal of OPINION. This Petition for

a Writ cf Mandamus is filed within 90 days

after February 4, 1993, and this Court's

jurisdiction is invoked under 28 U.S.C.,

Secs. 1254(1) and 165l(a).

STATUTORY PROVISIONS INVOLVED

U.S. Constitution, Art. III, Sec. lL:

---The Judges, both of the supreme and in-

ferior Courts, shall hold their Offices

during good Behavior,...

United States Code, Title 28, Sec. 165l(a),

The Supreme Court and all courts estab-

lished by Act of Congress may issue all

writs necessary or appropriate in aid of

their respective jurisdiction and agreeable

to the usages and principles of law.

STATEMENT OF THE CASE

On January 15, 1992, RONWIN executed a

customer agreement with SMITH BARNEY,

HARRIS UPHAM & CO., INC., ("SB," which

will include as the use implies SB's Omaha

office manager, JOHN SPAUSTAT, ("SPAUSTAT")),

for a cash only securities account. Prior

to entering the agreement, RONWIN objected

to the pre-dispute arbitration clause and

SB's representatives agreed to delete same.

Later that day, SPAUSTAT reversed SB's

position and after further interaction

between SB and RONWIN, SB refused service

to RONWIN and unilaterally closed the

account.

On May 6, 1992, RONWIN filed a four-Count

Complaint: Count I, [unenforceable]

contract of adhesion; Count II, violation

of Securities Acts; Count III, breach of

contract and Count IV, breach of fiduciary

duty. The jurisdictional bases pled were:

15 U.S.C., Secs. 77v and 78aa; 28 U.S.C.,

Secs. 1331, 1332, 1337 and 1367. SB met the

Complaint with a motion to dismiss and to

strike and RONWIN filed a motion for

partial summary judgment. On October 29,

1992, the District Court entered Judgement

and OPINION. A timely notice of appeal was

filed on November 30, 1992. Jurisdiction

in the Court of Appeals was based on 28

U.S.C., Secs. 1291 and 1294. By letter dated

Nov. 5, 1992, SB requested Judge

CAMBRIDGE to publish OPINION for its

alleged "precedential value." By letter

dated Dec. 4, 1992, RONWIN opposed publi-

cation on the grounds that the positions

alleged in OPINION to be RONWIN's and al-

leged as the bases for dismissal of Counts

I and II, and partially for dismissal of

the other Counts, were not truthful nor

were said untrue positions to be found

anywhere in the record. In fact, the oppo-

site was the case. Soon after learning

from Judge CAMBRIDGE's secretary that the

Judge had ordered publication of OPINION,

and failing to receive a response to his

letter, and on or about Dec. 21, 1992,

RONWIN filed the petition for the writs

in the Court of Appeals, which treated

same as a separate action, No. 92-3878. The

petition for the writs was denied on Dec.

29, 1992. RONWIN filed a timely petition

for rehearing on January 18, 1993 and on

February 4, 1993, the Court of Appeals

denied same.

REASONS FOR THE WRIT

The underlying Appeal, No. 92-3788, is

separate and apart from the issue on this

Petition. As discussed below, the stated

reasons in OPINION for the dismissals of

Counts I and II of the Complaint are abso-

lutely untrue. Nevertheless, the Court of

Appeals can still determine that the dis-

missals of said Counts were proper even if

the District Court stated untrue reasons.

This Court is not being asked to make

that determination at this time. Rather,

this Court is being asked whether or not

a federal judge can persist with his/her

Order to publish his/her decision if he/she

had sufficient information to know that

at the time that publication is ordered,

or shortly thereafter, the decision is

premised on stated, but untruthful reasons.

The denials of the petition for the writs

and for rehearing signify the Court of

Appeals' determination that a federal judge

can knowingly persist in publishing a

decision with stated, but untruthful

premises for dismissing claims. For the

reasons given below, RONWIN disagrees and

urges that the Writ sought hereby be issued.

As to Count I:

Judge CAMBRIDGE alleged in OPINION, »p.

3-4;

807 F.Supp. @89:;

Ronwin has made no allegation of

unconscionability separate from the

general assertion that the predispute

arbitration clause is a contract of

adhesion, and the apparent, albeit

erroneous, presumption that all such

Clauses are inherently unconscionable.

Count I of the complaint must accord-

ingly be dismissed for failure to

state a claim.

The first sentence quoted above is untrue.

In Count I, RONWIN pled, Para. XVII, pp.

5-6

The actions of the Defendants in de-

manding as a condition for the provi-

sion of their Federal and State regu-

lated services,...RONWIN and any other

prospective customer unconditionally

accept said pre-dispute arbitration

clause, and thereby denying RONWIN...,

the free choice of whether or not to

agree to said pre-dispute arbitration

clause, whether fr a cash or a margin

account, and denying to RONWIN,...the

right to seek redress of grievances

-»ein the Courts of the United States

and/or in the Courts of the several

states, constitute a contract of ad-

hesion and/or an impermissible demand

for same, and said action by SB is

against public policy, unenforceable

and an unconscionable business tactic.

(First emphasis added; other emphasis

in RONWIN's letter of Dec. 4, 1992 to

Judge CAMBRIDGE).

As noted on p.2, RONWIN'S -etter of Dec.

4, 1992 to Judge CAMBRIDGE, RONWIN did

not plead that all broker-customer agreements

containing predispute arbitration clauses

are “contracts of adhesion" and, consequ-

ently, "inherently unconscionable";

rather, RONWIN pled that the reason the

predispute arbitration clause in SB's

customer agreement becomes a "contract of

adhesion" and an “unconscionable business

tactic" is that, as RONWIN had pled, SB

refuses service to RONWIN unless RONWIN

"unconditionally accepts said predispute

arbitration clause."

There was no pleading by RONWIN, apparent

or otherwise, of an “albeit erroneous,

presumption that all such [predispute ar-

bitration] clauses are inherently unconsci-

onable;" p.2, said letter.

As also noted on pp.2-3, said letter,

RONWIN amplified on the above theme in

"[RONWIN'] Brief in Support of [RONWIN's]

Response to Defendants' Motions to Dismiss

and to Strike," bringing to Judge CAMBRIDGE's

attention that the case of Mitsubishi Motors

Corp. v. Solar Chrysler-Plymouth, 473 U.S.

614, 628 (1985), comprehends a "bargain to

arbitrate", and that this Court in Rodriquez

de Quijas _v. Shearson/American Express,

Inc., 490 U.S. 477, 482-483, 109 S.Ct. 1917,

1921 (1989),recognizes "the broader right"

of the “buyers of securities..to select the

forum for resolving disputes, whether it

be judicial or otherwise." Following that,

RONWIN explained in said letter, p.3, the

gist of the Rodriquez case and the case of

Shearson/American Express, Inc. v. McMahon,

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

which is that where an agreement

containing a predispute arbitration

clause is freely executed by the brokerage

house customers, such agreements must be

honored, but RONWIN added that said theme

was of "no import" to RONWIN's case;

(referring Judge CAMBRIDGE to pp. 6-7,

said Brief). The foregoing arguments were

then summarized as follows, p. 7, said Brief,

and p. 3, said letter:

eeeTO emphasize the point: The

Complaint does not challenge the provi-

sions of the Federal Arbitration Act, 9

U.S.C., Sec. 1, et seg.; and agrees that

an arbitral forum can replace a statutor-

ily provided judicial forum in the secur-

ities area, as in other fields, but, the

Complaint insists in line with Rodriquez

that the agreement to arbitrate must

be an unfettered choice of the customer

and not required as a non-negotiable

demand by the broker/dealers... (Emphasis

in said letter, p.3).

As to Count II:

Judge CAMBRIDGE contended with respect

to Count II that, p. 4, OPINION; 807 F.

Supp. @89:

The essence of Ronwin's contention

is that these Acts, at Sec. 22 of

the Securities Act of 1933 (15 U.S.C.,

Sec. 77v) and at Sec. 27 of the Secur-

ities Exchange Act of 1934 (15 U.S.C.,

Sec. 78aa), vest exclusive jurisdic-

tion for violations of the

respective Acts in the district

courts of the United States; the pre-

dispute arbitration clause, Ronwin

argues, constitutes a waiver of

compliance with those respective

provisions,..

And, upon which contention Judge CAMBRIDGE

based his dismissal of Count III, p.5,

OPINION; 807 F.Supp. @90.

Proof that Judge CAMBRIDGE's contention

with respect to Count II was not only in-

correct, but utterly contrary to RONWIN's

Stated position, is found at Dp. 9, said

Brief, which RONWIN quoted at p.- 4 in

said letter, as follows:

Thus, the element central to both

McMahon and Rodriguez reduced to a

question of whether the arbitration

clause accepted by the customers in

each case could be enforcedto require

the customer-claimants to arbitrate

the disputes each had with the

broker/dealer, (the same firm in

both cases), and which arose in each

case subsequent to the execution: of

the respective customer agreements

or whether the right to a judicial

forum provided in 15 U.S.C., Sec 77a,

et seq., and 15 U.S.C., Sec. 78a, et

seq., excluded arbitral forums pursuant

to the provisions of 15 U.S.C, Sec.

77n and 15 U.S.C., Sec. 78cc, respec-

tively. That question is not an

issue, central or otherwise, in this

action. (Emphasis in said letter).

Can there be any doubt that the very

premise, quoted above, upon which Judge

CAMBRIDGE based his dismissal of Count II

——

was specifically identified as not an issue

in RONWIN's action?

Rather, RONWIN'sS argument quoted above

at 10, (p. 4, said letter), was that:

-ethe Complaint insists in line with

Rodriquez that the agreement to arbi-

trate must be an unfettered choice

of the customer and not required as

a non-negotiable demand by the broker/

dealers.

In the Dec. 4, 1992, letter, pp. 4-5,

RONWIN called Judge CAMBRIDGE's attention

to RONWIN'S arguments on pp. 12-22 of

said Brief in which section RONWIN

presented his arguments on Count II to

Judge CAMBRIDGE in significant detail and

presented an explanation therein of what

was being violated by SB's actions of

which RONWIN complained, as found in said

Brief at pp. 17-18 and as reproduced on

p. 5, said letter and as follows:

The Courts have not voided Secs. 77v

and 78aa. Certainly McMahon and Rodri-

quez did not do so; rather, the U.S.

Supreme Court simply approved

arbitral forums as an acceptable al-

ternative to, not as a replacement of,

judicial forums. In fact, as was

related at p. 6 [in said Brief],

the U.S. Supreme Court in Rodriquez

made it very clear that the Court's

condonation of the arbitral forum

in securities cases served, 109 S.Ct.

@1921:

--to advance the objective of

allowing buyers of securities a

broader right to select’ the

forum for resolving disputes,

whether it be judicial or other-

wise...

In this case, RONWIN exercised his

right to [reserve the right to]

demand a judicial forum for [future]

dispute resolution between RONWIN

and SB; SB refused to respect

that right. (Bracketted phrases

added here. At the initiation of

the securities account, there

existed no dispute requiring imme-

diate forum selection as part of

the SB/RONWIN agreement).

Under the exposition of Congressional

purpose, Dirks [v. SEC, 681 F.2d 824,

840 (10th Cir. 1982), rev'd other

gds, 463 U.S. 646 (1983)], and the

recognition thereof by [this Court],

Ernst & Ernst [v. Hochfelder, 425

U.S. 185, 194-195, 96 S.Ct. 1375,

1381-1382 (1976)]...Rodriquez,

[490 U.S. 484, 109 S.ct. 1921],

[SB] had no equivalent right; rather,

[SB], as all broker/dealers, have

a duty, fiduciary or otherwise, to

protect and respect customer

rights under the Securities Acts of

1933 and 1934, among which is the

right given by 15 U.S.C., Secs.77v

and 78aa to a judicial forum for

a a ee ee eee

dispute resolution. Failure by bro-

ker/dealers to protect and respect

that customer right, as when the

broker/dealer forces a contract on

the customer which denies that

right, and public policy of the U.S.,

or, alternatively refuses service

unless the customer accepts a

denial of the customer's right to

free choice of dispute resolution

form (sic), and denial of the

public policy of the U.S., is a

failure to comply with the Securities

Acts of 1933 and 1934 and

constitutes a violation of Secs.

77n and 78cc(a) and (b). And such

contracts or refusals of contract

are unenforceable contracts of

adhesion, (Justice FRANKFURTER's

dissent), Wilko [v. Swan, 346 U.S.

427, 440, 74 S.Ct. 182, 189 (1953)],

--as well as actions void as against

public policy of the United States,

Kennett [v. Chambers, 55 U.S. 38,

51, 14 L.Ed. 316 (1852)]).

(Emphasis as in Ronwin's letter,

12/4/92).

Again, can there be any doubt that the

substance of RONWIN'sS position on Count

II of the Complaint is utterly at odds

with what Judge CAMBRIDGE alleged in OPINION

as the basis of Count II?

Nowhere in the record below are there to

be found the premises for Counts I and II

attributed to RONWIN by Judge CAMBRIDGE.

The entire foregoing argument was

presented to the Court of Appeals in the

petition for the writs and for rehearing.

In U.S. v. Holzer; 816 F.2d 304, 307 (7th

Cir. 1987), 484 U.S. 807, 108 S.Ct. 53;

on remand (other gds), 840 F.2d 1343; 486

U.S. 1035, 108 S.Ct. 2022, the Court

declared:

Fraud...includes the deliberate

concealment of material information

in a setting of fiduciary obligation.

A public official is a fiduciary

toward the public, including, in

the case of a judge, the litigants

who appear before him, and if he

deliberately conceals material

information from them he is guilty

of fraud...

This matter pivots on a single theme:

Preliminarily, it is of no value to argue

that if the Court of Appeals, in acting

on the related appeal, should reverse,

the net effect will be to nullify the pub-

lished OPINION. Of more critical import

is the notion that no federal judge may

knowingly perpetrate a fraud. Reduced to

its basic essence, the publication of a

judge's decision which contains essential

material that the judge has ample reason

to know is untrue, and thereby to present

that untruthful material as a precedent

Or part thereof, is a fraud on the public,

as well as an unethical and unconscionable

act, inconsistent with the standards

governing judicial conduct, Holzer, supra,

as well as inconsistent with the United

States Constitution's requirement that

federal judges hold their life tenure on

"good Behavior," Art. III, Section l,

U.S. Constitution.

Alternatively, the theme is: error by a

judge is lawful; deliberate error by a

judge is unlawful.

Having exhausted all judicial avenues

below, this Court is now the Court of

last resort on this matter and this

Petition presents this Court with an

exceptional circumstance of arch import

to judicial conduct and ethics warranting

the exercise of this Court's discretionary

powers.

CONCLUSION

For the foregoing reasons, this Court

is asked to issue a Writ of Mandamus

requiring Judge CAMBRIDGE to order WEST

PUBLISHING COMPANY to publish a

retraction of OPINION.

Respectfully submitted

Edward Ronwin

P.O. Box 88746

Sioux Falls, SD 57105

(605) 338-3924

Petitioner pro se and

Attorney at Law (Iowa)

Date: March 26, 1993

(Appendix follows)

A-1

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 92-3878NEO

In re: Edward Ronwin, ,Petition for Writ

Petitioner. Of Prohibition/

Mandamus

Judgement

Petition for writ of prohibition/mandamus

has been considered by the court and is

denied.

December 29, 1992

Order Entered at the Direction of the Court:

/3/ Michael E. Gans

Clerk, U.S. Court of Appeals, Eighth Circuit.

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 92-3878

Petition for Writ

of Prohibition/

Mandamus

In re: Edward Ronwin,

Petitioner.

+ + + + +

Petitioner is hereby granted to and in-

Cluding January 28, 1993, within which to

file a petition for rehearing.

Order Entered Under Rule 27B

/3/ Michael E. Gans

Clerk, U.S. Court of Appeals, Eighth Circuit

A-2

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 92-3878NEO

Appeal from the

United States

District Court for

the District of

Nebraska

In re Edward Ronwin,

Petitioner.

+ ener he he

The petition for rehearing by the panel

is denied.

February 4, 1993

Order Entered at the Direction of the

Court:

/s/ Michael E. Gans

Clerk, U.S. Court of Appeals, Eighth Circuit

IN THE UNITED STATES DISTRICT CCURT

FOR THE DISTRICT OF NEBRASKA

EDWARD RONWIN, d/b/a

Plaintiff,

VS.

SMITH BARNEY, HARRIS

UPHAM & CO., INC.,

and JOHN SPAUSTAT,

Defendants.

8:CV92-00232

)

) MEMORANDUM and

) ORDER

)

THIS MATTER is before the Court on the

Defendants' motion to dismiss and to

strike (Filing No. 13). For the reasons

A-3

set out below, this action will be dismissed,

pursuant to Rule 12(b)(6) of the Federal

Rules of Civil Procedure, for failure to

state a claim.

The plaintiff in this action, Edward

Ronwin, doing business as Index

Investments, alleges (Filing No. 1) that

he had sought to open a securities account

with defendant Smith Barney, Harris Upham

& Co., Inc.; defendant John Spaustat is

and was, at all times relevant, resident

manager of Smith Barney's Omaha office.

Ronwin alleges that he was initially

permitted to open a cash account without

Signing an agreement containing a predis-

pute arbitration agreement, but that

Smith Barney later determined that it

would not permit him to have an account

without such an arbitration agreement and

returned his money. Ronwin further alleges

that he was damaged by the defendants' re-

fusal to do business with him on his terms.

A-4

He seeks to recover compensatory and puni-

tive damages and attorney fees, as weli

as injunctive relief.

Jurisdiction is asserted upon the bases

of the existence of a federal question

(28 U.S.C., Sec. 1331), diversity of citi-

zenship (28 U.S.C., Sec 1332), commerce

and antitrust regulations (28 U.S.C., Sec.

1337), upon supplemental jurisdiction pur-

Suant to 28 UyS-C., Sec. 1367, and upon

the Securities Act of 1933 (15 U.S.C.,

Sec. 77v) and the Securities Exchange Act

of 1934 (15 U.S.C., Sec. 78aa).

The standards for dismissal pursuant to

Rule 12(b)(6) are well established. In con-

sidering a motion to dismiss under F.R.Civ.P.

12(b)(6), the allegations in the complaint

must be viewed in the light most favorable

to the plaintiff. Fusco v. Xerox Corp.,

676 F.2d 332, 334 (8th Cir. 1982). "[A]

complaint should not be dismissed for fail-

ure to state a claim unless it appears be-

A-5

yond doubt that the plaintiff can prove no

set of facts in support of his claim which

would entitle him to relief." Conley v. Gibson,

355 U.S. 41, 45-46 (1957) (footnote omitted).

"Thus, aS a practical matter, a dismissal

under Rule 12(b)(6) is likely to be granted

only in the unusual case in which a plain-

tiff includes some insuperable bar to relief.

Jackson Sawmill Co. v. United States, 580

F.2d 302, 306 (8th Cir. 1978), cert. denied,

439 U.S. 1070 (1979).

The Court finds this to be such a case.

In the first count of his complaint,

ROnwin asserts that the defendants' insis-

tence that he agree to the predispute arbi-

tration clause as a condition of doing

business with Smith Barney constitutes an

attempt to impose an unenforceable contract

of adhesion. He accordingly seeks to

have Smith Barney enjoined from requiring

such clauses as a prerequisite for accepting

accounts, and seeks unspecified compensatory

and punitive damages, as well as attorney

fees and costs.

This count of the plaintiff's complaint

rests upon an erroneous presumption and

must therefore be dismissed. The defendants

do not deny, and this Court finds, that the

contract in questionisa contract of adhesion

Such contracts may be said to exist where,

as here, a standardized form of agreement,

drafted by the party with superior bargain-

ing power, is presented to a party on a

take it or leave it basis. As the plaintiff

points out, and the defendants do not dis-

pute, insistence upon such predispute arbi-

tration clauses are an industry-wide practice

However, the mere fact that a contract

falls under the rubric of the adhesion

doctrine does not make it unenforceable.

See, @.g. Webb v. R. Rowland & Co., 800

F.2d 803, 807 (8th Cir. 1986) ("the use

of a standard form contract between two

parties of admittedly unequal bargaining

A-7

power does not invalidate an otherwise

valid contractual provitsion. To be invalid,

the provision at issue must be unconscion-

able"). See also Finkle and Ross v. A.G.

Becker Paribas, Inc., 622 F.Supp. 1505,

1512 (S.D.N.Y. 1985) (holding that such

contracts may be considered contracts of

adhesion but are nonetheless enforceable

in the absence of a showing of

"unfairness, undue oppression or unconscion-

ability").

Ronwin has made no ailegation of uncon-

scionability separate from that the (sic)

general assertion that the predispute arbi-

tration clause is a contract of adhesion,

and the apparent, albeit erroneous, presump-

tion that all such clauses are inherently

unconscionable. Count I of the complaint

must accordingly be dismissed for failure

to state a claim.

In Count II of his complaint, Ronwin al-

leges that the defendants' insistence upon

A-8

the predispute arbitration clause was an

attempt to impose a condition’ that

violates Sec. 14 of the Securities Act of

1933 (15 U.S.C., Sec. 77n) and Sec. 29(a)

of the Securities Exchange Act of 1934

(15 U.S.C., Sec 78cc). Each of those

provisions forbids the imposition of "any

condition, stipulation or provision binding

any person to waive compliance with any

provision [of the respective Acts]".

Ronwin asserts that the predispute arbi-

tration clause falls within those proscrip-

tions. In this Count, Ronwin seeks compen-

satory and punitive damages, injunctive

relief, and an award of attorney fees and

costs.

The essence of Ronwin's contention is

that these Acts, at Sec. 22 of the Secur-

ities Act of 1933 {15 U.S.C., Sec. 77v)

and at Sec. 27 of the Securities Exchange

Act of 1934 (15 U.S.C., Sec. 78aa), vest

exclusive jurisdiction for violations of

the respective Acts in the district courts

A-9

of the United States; the predispute

arbitration clause, Ronwin argues, consti-

tutes a waiver of compliance with those

respective provisions.

This argument, in the context of the

Securities Exchange Act of 1934, was con-

sidered and rejected by the Supreme Court

of the United States in Shearson/American

Express, Inc. v. McMahon, 482 U.S. 220, 107

S.Ct. 2332, 96 L.Ed.2d 185 (1987). In McMahon

the Court reasoned that

The McMahons contend that an agree-

ment to waive this jurisdictional

provision is unenforceable because

Sec. 29(a) voids the waiver of "any

provision" of the Exchange Act. The

language of Sec. 29(a), however,

does not reach so far. What the anti-

waiver provision of Sec. 29(a) forbids

is enforcement of agreements to

waive “compliance” with the provi-

sions of the statute. But Sec. 27

itself does not impose any duty

with which persons trading in

securities must "comply." But its

terms, Sec. 29(a) only prohibits

waiver of the substantive obliga-

tions imposed by the Exchange Act.

Because Sec. 27 does not impose any

statutory duties, its waiver does

not constitute a waiver of "compli-

ance with any provision" of the

Exchange Act under Sec. 29(a).

A-10

482 U.S. at 228. The Supreme Court

expressly adapted that same reasoning to

the Securities Act of 1933 in Rodriquez de

Quijas v. Shearson/American Express, Inc.,

490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d

526 (1989). The predispute arbitration

Clause insisted upon by the defendants

simply does not contravene the respective

Acts; Count II of Ronwin's complaint must

accordingly be dismissed for failure to

state a claim.

The two remaining Counts of the plaintiff's

complaint are based upon common law

Claims of breach of contract and breach of

fiduciary duties. Having dismissed the

Counts of the plaintiff's complaint which

would have established jurisdiction on the

basis of a federal question, securities

laws or antitrust laws, or which would

have provided a basis for supplemental

jurisdiction, the Court must face the ques-

tion of whether diversity jurisdiction re-

mains pursuant to 28 U.S.C., Sec. 1332.

a ee ee

A-1l

As further explained below, the Court

finds that it does.

The burden of proof on a Rule 12(b)(1)

motion is upon the party asserting juris-

diction. Estate of Blakely v. Asbestos

Corp., 766 F.Supp. 7/721 (E.D. Ark. 1991);

12 Wright and Miller, Federal Practice &

Procedure, Sec. 1350 (1990). Ronwin has

clearly pled diversity among the parties

(Filing No. 1 at Paras. II, III and IV),

but has pled damages only "in an amount to

be determined at trial" (Filing No. 1 at

Paras. XVIII, XXI, XXIV, and the prayer for

relief). Although the Court has serious

doubts that the plaintiff would recover

an amount in excess of Sec. 1332's $50,000

amount in controvery requirement, the Court

is also cognizant that "the claim is deemed

to have been made in good faith so long

as it is not clear to a legal certainty

that the claimant could not recover a

judgment exceeding the jurisdictional amount."

A-12

Id. at 23l. Accordingly, the Court holds

that diversity jurisdiction exists.

Nonetheless, the Court further finds

that these remaining two counts should be

dismissed for failure to state a claim.

Count III is a breach of contract claim

in which Ronwin alleges that Smith Barney's

refusal to permit Ronwin to participate

in an account without a predispute arbitra-

tion agreement constituted a breach of

the agreement for a cash account.

However, it is uncontroverted that Smith

Barney returned Ronwin's funds and the

account was closed. See, e.g., Complaint

(Filing No. 1) at Para. XV. Assuming arguendo

that a contract had existed, Smith Barney

clearly had the right to end the contract

in the manner it did.

Notice to this Supreme Court:

The following portion of the decision did

not appear on the pages supplied by the

District Clerk's office, but was taken

A-13

from the published decision at 807

F.Supp. @90:

"The general rule is that contracts having

no fixed term are terminable at will by

either party." Martin v. Equitable Life

Assurance Soc. of the United States, 553

F.2d 573, 574 (8th Cir.

End of portion missing from the copy of

the decision distributed by the District

Court Clerk's office.

1977); See also Federal Deposit Insurance

Corp. v. Northwood Projects, Inc., 95 Misc.2d

373, 407 N.Y.S.2d 424 (1978) and Muller

Enterprises v. Samuel Gerber, Advertising

Agency, Inc., 182 Neb. 261, 153 N.W.2d

920 (8th Cir. 1967) (sic). Again, the

plaintiff has failed to state a claim

upon which relief could be granted.

Ronwin's fourth and final Count is pre-

mised upon an alleged breach of fiduciary

duty. Assuming arcguendo that a fiduciary

relationship existed, Ronwin has simply

A-14

failed, for the reasons described above,

to allege any circumstances that could

conceivably constitute a breach of any fidu-

Ciary duty. This Count, like the others,

must be dismissed for failure to state a

Claim. Accordingly,

(1) the motion on to (sic) dismiss

(Filing No. 13) is granted;

(2) the plaintiff's motion for partial

summary judgment (Filing No. 21) is denied

as moot; and

(3) an Order of Dismissal consistent

with this Memorandum and Order will be

entered this date.

DATED this 29 day of October, 1992.

BY THE COURT:

/s/ William G. Cambridge

WILLIAM G. CAMBRIDGE,

United States District Court Judge

A-15

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEBRASKA

EDWARD RONWIN, d/b/a (sic)

Plaintiff, 8:CV92-00232

VS.

SMITH BARNEY, HARRIS

UPHAM & CW 5. | oe

and JOHN SPAUSTAT,

JUDGMENT

Filed Oct. 29,

1992)

)

) ENTRY OF

)

Defendants. )

)

Tn accordance with the Order entered

this date, IT IS ORDERED that this matter

is dismissed.

DATED this 29 day of October, 1992.

BY THE COURT:

/s/ William G. Cambridge

WILLIAM G. CAMBRIDGE,

United States District Court

Notice: The portion noted as missing from

the District Court Clerk's copy of the

Memorandum and Order, as supplied on

pages A-l2 and A-13, supra, and as found

in 807 F.Supp. @90, was officially made

part of the record below by an Amendment

to Memorandum and Order filed January 20,

1993 by the District Clerk's office. Said

Amendment was signed by Judge CAMBRIDGE on

January 20, 1993.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.