Petition for Writ of Certiorari — UBS PaineWebber Inc. v. Cohen

~\ Supreme Court, U.S.

() FILED

02 247 wv 132002

No. 02- OFFICE OF THE CLERK

IN THE

Supreme Court of the Anited States

UBS PAINEWEBBER INC. AND RICHARD WILHELM.

Petitioners,

V.

ALFRED COHEN, EXECUTOR OF THE

ESTATE OF SAMUEL GINSBURG,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

COURT OF APPEALS FOR HAMILTON COUNTY, OHIO

PETITION FOR A WRIT OF CERTIORARI

JEFFREY S. SUTTON

Counsel of Record

JEFFREY J. JONES

DOUGLAS M. MANSFIELD

BRIAN G. SELDEN

JONES, DAY, REAVIS & POGUE

41 South High Street, Suite 1900

Columbus, Ohio 43215

(614) 469-3855

Counsel for Petitioners

QUESTION PRESENTED

Whether the Federal Arbitration Act, 9 U.S.C. § 1 ef seg.,

contains a state common-law intentional-tort exception to the

enforcement of arbitration clauses that cover “any and all”

disputes between a broker-dealer and a client?

il

PARTIES TO THE PROCEEDING

Petitioners in this case are UBS PaineWebber Inc., a

wholly-owned subsidiary of UBS AG, and Richard Wilhelm,

an employee of UBS PaineWebber Inc. The respondent is

Alfred Cohen, executor of the estate of Samuel Ginsburg.

With the exception of Richard Wilhelm, this case involves

the same parties and the same underlying dispute as Case No.

01-1665, in which Alfred Cohen is the petitioner and UBS

PaineWebber Inc. is the respondent.

iil

TABLE OF CONTENTS

Page

QUESTION DRMRGENTED ......0sssccccsceseseeer® i

PARTIES TO THE PROCEEDING .....-----seer'? ii

TABLE OF AUTHORITIES ....-------+srtrrrtt’ iV

OPINIONS BELOW .....----s-ssrrrr rr |

JURISDICTION .....----eeesee rere Eee eaues ass

STATUTORY PROVISIONS INVOLVED .....----:> l

METRO ICTION «0 .00ssc2sscseocerersenssseee® |

I Lic gasetabsnsessesesroceesarece® 3

REASONS FOR GRANTING THE WRIT ....-.-----:> 7

1. A Division Of Authority Exists On The Question

So apaepss ts xaevawss seus sve ess 7

Il. The Ohio Courts Erred In Creating An Intentional-

Tort Exception To The FAA Under That State’s

Common Law “Public Policy” ...----++++++7: 12

II]. The Question Presented Is Important And

Recurring In Nature .....-----sssrecrrrn

ENTE cs xe ancencerscvesnessoscestes

iV

TABLE OF AUTHORITIES

Page

Cases

Allied-Bruce Terminix Companies, Inc. v.

eR ee | y am

Am. Recovery Corp. v. Computerized Thermal

Imagery, Inc., 96 F.3d 88 (4th Cir. 1996) ........... 9

Aspero v. Shearson American Express, Inc.,

poe ee ee eee ee 8

Barker v. Golf U.S.A., Inc., 154 F.3d 788

Ce ee ee errr ee res re 9

Brown v. Coleman Co., 220 F.3d 1180

toe a Pree err ree ee ere 10

Cipollone v. Liggett Group, Inc., 505 U.S. 504

EE «hc baodane sche Wchabes peeeee has on 16-17

Circuit City Stores, Inc. v. Adams, 532 U.S. 105

2 | Pe Tere eS roe ty Perr ere 12,14

Cohen v. PaineWebber, Inc. No. A0004567

(Ohio Ct. Com. PI. filed July 28, 2000) ............. 4

Cohen v. PaineWebber, Inc., No. C-010312

(Ohio Ct. App. filed July 26, 2001) ................ 5

Coudert v. Paine Webber Jackson & Curtis,

poke woe le | ee re 8

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213

to SPO ee Pree Tere PEs ee ee ee 12

Ex parte Discount Foods, 711 So. 2d 992 (Ala. 1998) .. 10

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681

TOR hi ek ccd cee edad cack area oes y Me S|

Vv

TABLE OF AUTHORITIES

(Continued)

Page

Dusold v. Porta-John Corp., 807 P.2d 526

(Az. Ct. App. 1990) .......- 2 ee eee rere eerrrees 1]

Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991)... eee e eee erecescccececee® 13

Gregory V. Electro-Mechanical Corp.,

83 F.3d 382 (11th Cir. 1996) .....-- ee eee eee eeee: 8

Harter v. lowa Grain Co., 220 F.3d 544 (7th Cir. 2000) . 9

Hirschfeld Prods. v. Mirvish, 673 N.E.2d 1232

CALY. 1996). 2. ccc nnccdccccsnscovessvesnecerss 10

Kerr-McGee Ref. Corp. v. M/T Triumph,

924 F.2d 467 (2d Cir. 1991) ...--- eee eee rere 9

LaPrade v. Kidder, Peabody & Co.,

246 F.3d 702 (D.C. Cir. 2001) ....-- +e ee eee tees 10

Long v. Silver, 248 F.3d 309 (4th Cir. 2001) ......----- 8

Marchese v. Shearson Hayden Stone, Inc.,

734 F.2d 414 (9th Cir. 1984) .....--- eee eee eee: 6,9

Mitsubishi Motors Corp. v. Soler C hrysler-Plymouth,

Inc.. 473 U.S. 614 (1985)... eee eee eee rere: 13,14

Moses H. Cone Mem’! Hosp. v. Mercury Constr. Corp.,

AGO U.S. 1 (1963) bac cv ccivcecccccccrcccesess 13

Perry v. Thomas, 482 U.S. ol, era SS

Pers. Sec. & Safety Sys., Inc. v. Motorola, Inc.,

No. 01-11040, 2002 WL 1413702 (Sth Cir. 2002) .... 9

Rodriguez de Quijas v. Shearson/American Express,

Inc., 490 U.S. 477 (1989) ...--- eee cere etree 13

Rossi Fine Jewelers, Inc. v. Gunderson, No. 2002 SD 82,

2002 WL 1483225 (S.D. July 10, SEs ceastanee’ 10

vi

TABLE OF AUTHORITIES

(Continued)

Page

Seifert v. U.S. Home C. orp., 750 So. 2d 633

PW FIVEE +n heneVevececs sched’ bts 1]

Shearson/American-Express Inc. v. McMahon,

sede seston cet nina OEE et ee 13

Southland Corp. v. Keating, 465 U.S. | (1964) ...... 11,13

Supervalu Inc. v. Discount Foods, Inc., 525 U.S. 825

(SPEND sh See icheeec sulcatus Shire keyalc mes 10

Sweet Dreams Unlimited, Inc. y. Dial-a-Mattress Int’)

Lid., | F.3d 639 (7th Cir. 1993) ................... 9

Weitz v. Hudson, 546 S.E.2d 732 Pewee Scewcckas 10

Wood v. Prudential Ins. Co. of America,

ed te ee 9

Constitution & Statutes

PP Ce Sisto is Le l

Federal Arbitration Act, 9 U.S.C. § 1 ef seg.

FUME Shi day cgtigeee tty et ee Passim

Arpescsgn § eg MEE CRIT RCD i eh DiS 2 15

Miscellaneous

NASD Code of Arbitration _ 2 Cae ears 15

l

OPINIONS BELOW

The decision of the Ohio Supreme Court denying review of

the Hamilton County Court of Appeals’ decision is unreported

and is reproduced (Pet. App. la) in the appendix to this

petition. The decision of the Hamilton County Court of

Appeals is unreported and is reproduced (Pet. App. 4a-10a) in

the appendix to this petition. The decision of the Hamilton

County Court of Common Pleas is unreported and is

reproduced (Pet. App. | 1a) in the appendix to this petition.

JURISDICTION

The Ohio Supreme Court declined to review the Hamilton

County Court of Appeals’ decision on May 15, 2002. Pet.

App. la. Jurisdiction in this Court exists under 28 U.S.C.

§ 1257(a).

STATUTORY PROVISIONS INVOLVED

Section 2 of the Federal Arbitration Act, 9 U.S.C. § 1 ef

seq., provides:

A written provision in any maritime transaction or a

contract evidencing a transaction involving commerce to

settle by arbitration a controversy thereafter arising out of

such contract or transaction, or the refusal to perform the

whole or any part thereof, or an agreement in writing to

submit to arbitration an existing 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 revocation of any contract.

INTRODUCTION

Despite the unyielding language of the Federal Arbitration

Act (FAA), which makes “enforceable” in state or federal

court any arbitration agreement “involving commerce,” id.,

this Court has frequently been asked to turn back state-law

attempts to undermine the national enforceability of arbitration

agreements. In Perry v. Thomas, 482 U.S. 483 (1987), the

2

Court held that a former Kidder, Peabody salesman could not

invoke a California law that attempted to create a judicial

forum for all wage disputes. The FAA, the Court concluded,

preempted such state-law efforts to undermine the

enforceability of a valid arbitration agreement between the

salesman and his former employer. In Doctor's Assocs., Inc.

v. Casarotto, 517 U.S. 681 (1996), the Court determined that

the FAA preempted a Montana law that required all arbitration

clauses to appear on the first page of a contract. And in

Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S.

265 (1995), the Court determined that the FAA preempted an

Alabama law invalidating all pre-dispute arbitration

agreements. In doing so, the Court rejected the contention that

an arbitration contract could not be enforceable if the parties

did not “contemplate” that their dispute would involve

interstate commerce. 513 U.S. at 278-79. In each of these

cases, the Court held that the Supremacy Clause prevented the

States from enacting legislation that undercut the

enforceability of valid arbitration contracts in particular and

the FAA’s national policy in favor of arbitration in general.

Today’s case presents a variation on a theme. Rather than

enact a state law that directly alters the FAA’s broad

presumption in favor of the enforceability of arbitration

agreements, Ohio has tried indirectly to do the same thing

through the common law of its courts. In this instance, the

Ohio courts innovated an intentional-tort exception to a run-

of-the-mill securities arbitration agreement that applies by its

broad terms to “any and all controversies” between the parties.

To date, no federal court of appeals has adopted this gaping

exception to the FAA, and numerous circuits and state courts

have expressly rejected it. At the same time, however, the

Alabama and Florida Supreme Courts (like the Ohio courts

here) have developed an intentional-tort exception to the FAA

that, like the decision here, utterly dilutes the federal policy in

favor of arbitration. If this intentional-tort exception is

allowed to take root in other States, none of which must follow

3

contrary federal court of appeals precedent, it is no

exaggeration to conclude that the enforceability of arbitration

provisions in collective bargaining agreements, accounts with

member firms of the National Association of Securities

Dealers, and all manner of other commercial settings will be

severely disrupted. The enforceability of such agreements will

turn not on Congress’s national policy of encouraging

arbitration but simply on the causes of action pleaded in the

first-filed civil complaint. Review is needed to put this issue

to rest before the gulf between state and federal court

interpretations of arbitration agreements broadens any further.

STATEMENT

On August 11, 1992, Samuel Ginsburg entered into a

“Client’s Agreement” with UBS PaineWebber Inc. f/k/a

PaineWebber, Incorporated (“PaineWebber”), under which

Ginsburg agreed to arbitrate “any and all controversies”

between him and PaineWebber. Among other things, the

detailed arbitration provision states:

I agree, and by carrying an account for me Paine Webber

agrees, that any and all controversies which may arise

between me and PaineWebber concerning any account,

transaction, dispute or the construction, performance, or

breach of this or any other agreement, whether entered into

prior, on or subsequent to the date hereof, shall be

determined by arbitration. Any arbitration under this

agreement shall be held under and pursuant to and be

governed by the Federal Arbitration Act....

Pet. App. 5a-6a.

Ginsburg and PaineWebber subsequently executed a

“Master Account Agreement” that contains a second

arbitration-agreement. This agreement mirrors the first one,

except that it not only references disputes between Ginsburg

and PaineWebber but also specifies that it governs disputes

between Ginsburg and “{PaineWebber’s] employees or

4

agents.” Master Account Agreement, filed as Exhibit | to

Defendants PaineWebber’s and _ Richard Wilhelm’s

Memorandum in Opposition to Plaintiff's Motion for

Temporary Restraining Order, Cohen v. PaineWebber, Inc.,

No. A0004567 (Ohio Ct. Com. PI. filed July 28, 2000). Like

the first agreement, the second one specifies that, in the event

of his death, Ginsburg’s “personal representatives, heirs,

estate, executors, administrators, committee and/or

conservators, successors and assigns” are bound by the

agreement. /d.

On October 9, 1999, Ginsburg died. /d. at 6a. Soon

thereafter, Alfred Cohen was appointed to be the executor of

Ginsburg’s estate.

On July 26, 2000, Cohen (in his capacity as executor of the

Ginsburg estate) filed this civil action in state court against

PaineWebber and one of PaineWebber’s managers, Richard

Wilhelm. The action sought damages for alleged wrongdoing

by a former broker of PaineWebber, Richard Zenni. In

bringing the complaint, Cohen claimed that PaineWebber and

Wilhelm committed two torts, unlawful conversion and

fraudulent concealment, and sought compensatory and

punitive damages. /d. Cohen did not name Mr. Zenni, the

individual directly involved in the alleged torts, as a

defendant. Rather, respondent’s claims were premised

entirely on a failure-to-supervise theory.

Because Cohen’s action violated not just one, but two,

arbitration agreements, PaineWebber sought to halt the state-

court litigation. On July 28, 2000, just two days after the

commencement of the state-court action, PaineWebber filed a

diversity action in federal district court, seeking to compel

Cohen to arbitrate his claims under the FAA. /d. At the same

time, and again in accordance with the underlying arbitration

agreements, PaineWebber filed a motion in state court seeking

to stay the action there pending a ruling by the district court on

PaineWebber’s claim. Because the parties ultimately agreed

5

not to proceed with the state court action while the federal

petition was pending, the state court did not rule on the motion

and with one minor exception no further proceedings occurred

in the state court until January 2001. At that time, the district

court dismissed PaineWebber’s action for failure to name an

indispensable party, Richard Wilhelm, who (like Cohen) was

a resident of Ohio. /d.

On January 12, 2001, PaineWebber moved the state court

to compel Cohen to arbitrate his claims in accordance with the

arbitration agreements. In opposition, Cohen conceded that

the agreements existed, that they were valid, and that they

were binding on the estate. He argued, however, that

conversion and fraudulent concealment claims were exempt

from arbitration and from the FAA as a matter of law. Ina

one-sentence analysis, the Hamilton County Court of Common

Pleas agreed, stating merely that the motion to enforce the

arbitration agreement was “not well taken” as a matter of law.

Pet. App. | la.

PaineWebber and Wilhelm appealed the trial court’s

decision. Relying on decisions from this Court confirming the

FAA’s strong national presumption in favor of arbitration,

they argued that the trial court’s decision would create a

conspicuous exception to most arbitration agreements. “By

overruling PaineWebber’s and Wilhelm’s motion to stay and

declining to enforce the written arbitration agreements that

Ginsburg signed,” petitioners argued, “the trial court’s

decision below directly undermines the arbitration provisions

of the FAA and. . . breeds the very type of litigation that such

well-settled law seeks to avoid.” Brief of Appellants

PaineWebber Incorporated and Richard E. Wilhelm, at 8

(quotation omitted), Cohen v. PaineWebber, Inc.,

No. C-010312 (Ohio Ct. App. filed July 26, 2001).

Nevertheless, on January 18, 2002, the Hamilton County

Court of Appeals affirmed. Pet. App. 4a-10a. It

acknowledged (by citation) the applicability of decisions

6

arising under the FAA, see Pet. App. 8a n.5 (citing Marchese

v. Shearson Hayden Stone, Inc., 734 F.2d 414, 423 (9th Cir.

1984)), and recognized that the arbitration agreement was

“broad,” Pet. App. 9a. But it nonetheless proceeded to ignore

the federal policy in favor of arbitration and the numerous

precedents from this Court respecting that policy. Instead, it

determined that unlawful conversion and _ fraudulent

concealment claims are not subject to arbitration as a matter

of law:

Although the arbitration provision is broad, stating that it

covers “any and all controversies” pertaining to the

brokerage account, we cannot say, as a matter of law, that

a claim alleging such tortious conduct as the “aiding and

abetting” of a theft is subject to the arbitration provision

here. An arbitration clause itself is a contract. A contract

requires a “meeting of the minds” as to the terms contained

within. At the time the parties entered into the contract,

there was no meeting of the minds that the arbitration

provision would cover claims alleging tortious forms of

theft. If the parties had contemplated, at the time they

entered into the arbitration agreement, that PaineWebber

would possibly steal from Ginsburg, that would surely be

against public policy. ... Accordingly, under the stated

circumstances in this case, we hold that, as a matter of law,

the claims of unlawful conversion and fraudulent

concealment, were not subject to the arbitration provision.

Pet. App. 9a. In the view of the appellate court, in other

words, the enforceability of an arbitration agreement turned

not on federal “public policy” favoring arbitration but instead

on an Ohio “public policy” disallowing the arbitration of

intentional torts.

Petitioners sought discretionary review in the Ohio

Supreme Court. In doing so, they explained that the court of

appeals’ decision would create a gaping hole in the FAA, was

inconsistent with numerous precedents from this Court, and in

$$$ $$ — ese

7

the end would dramatically undermine the national policy in

favor of enforcing arbitration agreements. On May 15, 2002,

however, the Ohio Supreme Court refused to hear the appeal.

Pet. App. la.

REASONS FOR GRANTING THE WRIT

This petition satisfies each of the traditional hallmarks for

obtaining review. There is a division of lower-court authority

between those courts that have innovated an intentional-tort

exception to the FAA and those courts that have held the

FAA’s policy in favor of arbitration preempts such

innovations. The Ohio courts erred in ruling that the FAA’s

policy in favor of arbitration may be trumped by a State’s

common law “public policy” against the arbitration of

intentional torts. And the issue is one of surpassing

importance because the theory of the Ohio courts—that an

arbitration clause covering “any and all controversies”

between the parties does not extend to intentional

torts—knows no boundaries, is endlessly manipulable, and in

the final analysis will severely upset Congress’s broad

national mandate in favor of arbitration. The Court should

grant review or at a minimum summarily reverse the decision

below.

I. A Division Of Authority Exists On The Question

Presented.

The conflict of authority implicated by the question

presented is primarily between the federal courts of appeal on

the one hand and several state courts on the other. On one

side of the ledger, numerous federal courts of appeals have

held that when two parties have entered into an arbitration

agreement covering “any” oF “all” or “any and all”

controversies between them, those words carry their

customary meaning and encompass all causes of action,

including intentional torts. On the other side of the ledger, a

handful of state courts have limited the enforceability of

8

similar arbitration clauses to contract-based causes of action

and specifically refused to extend them to intentional torts.

The position favoring the arbitration of intentional-tort

claims has considerable company. One federal appellate court

after another has held that when two parties agree to arbitrate

“any” or “all” disputes between them, the agreement covers

intentional torts ranging from fraud and conspiracy, see Long

v. Silver, 248 F.3d 309 (4th Cir.), cert. denied, 122 S. Ct. 213

(2001), to defamation, see Coudert v. Paine Webber Jackson

& Curtis, 705 F.2d 78, 81-82 (2d Cir. 1983), to intentional

infliction of emotional distress, see Aspero v. Shearson

American Express, Inc., 768 F.2d 106, 107 (6th Cir. 1985)

(quotation omitted) (holding that arbitration agreement

encompassing “[aJny controversy . . . arising out of

employment or termination of employment” included former

broker’s claims for defamation, invasion of privacy, and

intentional infliction of emotional distress), cert. denied, 474

U.S. 1026 (1985).

Typical of these cases is Gregory v. Electro-Mechanical

Corp., 83 F.3d 382 (11th Cir. 1996). There, disgruntled

purchasers of stock in a closely-held corporation brought

seven claims against the sellers with whom they had a written

contract that included an arbitration agreement. At the trial

level, the district court held that the plaintiffs’ seven claims,

including counts for “fraud, fraudulent inducement, deceit,

misrepresentation, conversion, breach of good faith and fair

dealing, and outrage,” fell outside the parties’ agreement to

arbitrate all disputes “arising under” the stock purchase

agreement. /d. at 384. Not so, the Eleventh Circuit held.

Where the underlying contract formed the foundation of the

parties’ relationship, and the claims arose from one side’s

“failure to fulfill its perceived obligations,” the parties’

disputes are fully arbitrable no matter how denoted. /d.

The Seventh Circuit has taken a similar position. “[A] party

may not avoid a contractual arbitration clause,” it has

9

concluded, “merely by casting its complaint in tort.” Sweet

Dreams Unlimited, Inc. v. Dial-A-Mattress Int'l, Ltd., | F.3d

639. 643 (7th Cir. 1993) (quotation omitted). Indeed, the

arbitrability of intentional tort claims has become, at least for

the federal courts of appeal, relatively routine. See, ¢.g., Kerr-

McGee Ref. Corp. v. M/T Triumph, 924 F.2d 467, 468, 469 (2d

Cir. 1991) (affirming award of treble damages for RICO and

civil conversion claims under arbitration agreement applicable

to “any and all . . . disputes of whatever nature arising out of”

the parties’ contract); Wood v. Prudential Ins. Co. of America,

207 F.3d 674, 681 (3d Cir. 2000) (common law defamation

and intentional infliction of emotional distress claims within

scope of NASD arbitration clause); Am. Recovery Corp. Vv.

Computerized Thermal Imagery, Inc., 96 F.3d 88, 90 (4th Cir.

1996) (quotation omitted) (breach of fiduciary duty, tortious

interference, quantum meruit claims arbitrable under clause

conceming “{a]ny dispute, controversy, or claim arising out of

or related to” contract); Pers. Sec. & Safety Sys., Inc. v.

Motorola, Inc., No. 01-11040, 2002 WL 1413702, at *4 (Sth

Cir. 2002) (holding common law fraud claim arbitrable under

agreement covering “matters . . . arising out of or relating to

this [a]greement”); Harter v. lowa Grain Co., 220 F.3d 544,

549 (7th Cir. 2000) (holding federal RICO, state RICO,

Commodities Act, common law fraud, breach of fiduciary

duty, intentional infliction of emotional distress claims all

arbitrable under contract calling for arbitration of “any

disputes or controversies arising out of’ hedge-to-arrive

commodities contracts); Barker v. Golf U.S.A., Inc., 154 F.3d

788, 793 (8th Cir. 1998) (holding fraud claim arbitrable);

Marchese v. Shearson Hayden Stone, Inc., 734 F.2d 414, 419

(9th Cir. 1984) (holding common law breach of fiduciary duty

claim arbitrable under arbitration clause applicable to “[a]ny

controversy arising out of or relating to my account”)

(quotation omitted); Brown v. Coleman Co., 220 F.3d 1180,

1184 (10th Cir. 2000) (holding defamation claim and equitable

remedies within scope of “all disputes or controversies arising

under or in connection with” contract) (quotation omitted),

10

cert. denied 531 U.S. 1192 (2001); LaPrade v. Kidder,

Peabody & Co., 246 F.3d 702, 705 (D.C. Cir. 2001) (affirming

confirmation of award in case where arbitration had been

compelled for federal and state employment discrimination

claims, federal and state equal pay claims, and common law

defamation and fraud claims).

Some state supreme courts have taken a similar view. See,

e.g., Rossi Fine Jewelers, Inc. v. Gunderson, No. 2002 SD 82,

2002 WL 1483225 (S.D. July 10, 2002) (applying FAA to

hold that arbitration clause in franchise agreement was broad

enough to include common law claims for breach of covenant

of implied duty of good faith and fair dealing, actual fraud,

constructive fraud, deceit and misrepresentation); Weitz v.

Hudson, 546 S.E.2d 732 (Va. 2001) (holding that claims for

conversion of partnership assets were subject to arbitration

under partnership agreement); Hirschfeld Prods. v. Mirvish,

673 N.E.2d 1232, 1233 (N.Y. 1996) (holding that arbitration

clause encompassed claims for common law tortious

interference and breach of fiduciary duty).

While the contrary position adopted by the Ohio courts

represents a distinct minority view, it is not without company.

In Ex parte Discount Foods Inc., 711 So. 2d 992 (Ala.), cert.

denied sub nom. Supervalu Inc. v. Discount Foods, Inc., 525

U.S. 825 (1998), reconsidered in part 789 So. 2d 842 (2001),

the Alabama Supreme Court considered an arbitration

agreement obligating a grocery store and its suppliers to

arbitrate “[a]ny controversy or claim arising between the

parties, including, but not limited to, disputes relating to this

[a]greement.” Jd. at 993 (quotation omitted). In the court’s

view, the clause did not govern the grocer’s claims for tortious

interference with contract, unfair competition and violation of

trade secret laws. “To hold otherwise,” the Alabama Supreme

Court concluded, “would allow persons signing broad

arbitration provisions to commit intentional torts against one

another, which torts are outside the scope of their

contemplated dealings, without concern that they might have

11

to answer for their actions before a jury of their peers.” /d. at

994.

The Florida Supreme Court has followed a similar path. In

Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999), the

court considered a wrongful death claim brought by a home

purchaser against a builder who installed an allegedly faulty

air conditioner. That court, like the Alabama and Ohio courts,

held that the claim was not subject to arbitration because

wrongful death was “predicated upon a tort theory of common

law negligence unrelated to the rights and obligations of the

Contract.” Jd. at 640. Before reaching this conclusion, the

Florida Supreme Court—without citing the

FAA—acknowledged that this Court has held that “claims for

fraud, misrepresentation, breach of contract, breach of

fiduciary duty, and violation of state franchise investment

law” all fall within the contractual promise to arbitrate “[a]ny

controversy or claims arising out of or relating to” a contract.

Id. at 637, (citing Southland Corp. v. Keating, 465 U.S. |, 15

n.7 (1984)). But rather than follow that guidance, the Florida

Supreme Court tured instead to an Arizona lower court

decision. See Seifert, 750 So. 2d 639-641 (discussing Dusold

v. Porta-John Corp., 807 P.2d 526 (Ariz. Ct. App. 1990)).

“<If _. the duty alleged to be breached is one imposed by law

in recognition of public policy,”” the Florida Supreme Court

quoted, a claim brought for violation of that duty “sounds in

tort” and is not subject to arbitration. Seifert, 750 So. 2d at

639 (emphasis omitted) (quoting Dusold, 807 P.2d at 531).

In the face of this mature and increasingly deep division of

authority, review is appropriate. As the case reporters

confirm, not only have several state courts charted a different

course on this issue from the uniform holdings of the federal

courts of appeal, but many of those decisions conflict with

respect to the same state jurisdiction. The writ should be

granted (1) to establish uniform commercial expectations

regarding the enforceability and scope of traditional arbitration

clauses and (2) to ensure that Congress’s national policy in

12

favor of arbitration is not diluted by inconsistent state court

decisions.

II. The Ohio Courts Erred In Creating An

Intentional-Tort Exception To The FAA Under

That State’s Common Law “Public Policy.”

Besides implicating a deep division of lower-court

authority, the lower courts erred in resolving the question

presented. No precedent of this Court supports the creation of

such an imposing state exception to the FAA’s national policy

in favor of arbitration, and many of the Court’s precedents

specifically contradict such state authority. For this reason

alone, the petition should be granted.

At this late date, there can be little doubt that federal law

affirmatively “compels judicial enforcement of a wide range”

of arbitration agreements. Circuit City Stores, Inc. v. Adams,

532 U.S. 105, 111 (2001). And this “strong federal policy in

favor of enforcing arbitration agreements,” Dean Witter

Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 (1985), not only

compels courts “ngorously [to] enforce agreements to

arbitrate,” id. at 221, but also creates a strong presumption in

favor of arbitration. As the Court has explained:

The [FAA] establishes that, as a matter of federal law, any

doubts concerning the scope of arbitrable issues should be

resolved in favor of arbitration, whether the problem at

hand is the construction of the contract language itself or an

allegation of waiver, delay or a like defense to arbitration.

Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460

U.S. 1, 24-25 (1983). If two parties choose voluntarily to sign

an arbitration agreement covering their disputes, in other

words, the National Legislature has left the courts with “no

place for the exercise of discretion” in enforcing the terms of

that agreement. Dean Witter, 470 U.S. at 218.

Neither has the Court left open the question whether non-

contractual theories of relief must be arbitrated: They

13

assuredly must be. The Court has consistently concluded that

arbitration agreements of comparable breadth cover disputes

as diverse as age discrimination, see Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), violations

of the Securities Act of 1933, see Rodriguez de Quijas v.

Shearson/American Express, Inc., 490 U.S. 477 (1989),

actions under the Securities Exchange Act of 1934,

Shearson/American Express, Inc. v. McMahon, 482 U.S. 220

(1987), anti-fraud actions under RICO, id., and antitrust

violations under the Sherman Act, Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).

The Court also has not hesitated to strike state statutes that

conflict with the FAA’s pro-arbitration mandate. Perry v.

Thomas, 482 U.S. 483 (1987), for example, held that a former

Kidder, Peabody salesman could not rely upon a California

law that attempted to create a judicial forum for all wage

disputes. In the Court’s view, the FAA preempted such state-

law efforts to undermine the enforceability of a valid

arbitration agreement between the salesman and his former

employer. In Doctor's Associates, Inc. v. Casarotto, 517 U.S.

681 (1996), the Court determined that the FAA preempted a

Montana law that required all arbitration clauses to appear on

the first page of a contract. And in Allied-Bruce Terminix

Companies, Ine. v. Dobson, 513 U.S. 265 (1995), the Court

determined that the FAA preempted an Alabama law

invalidating all pre-dispute arbitration agreements. In doing

so, the Court rejected the same “meeting of the minds” school

of thought embraced by the Ohio courts here—that an

arbitration contract could not be enforceable if the parties did

not “contemplate” that their dispute would involve interstate

commerce. See 513 U.S. at 278-79. Confirming the

consistency of this line of decisions, the Court recently

rejected a state-law argument that an individual’s right to

judicial review survived a parties’ arbitration agreement to the

contrary. Circuit City, 532 U.S. at 121-22. One cannot

respect the Ohio courts’ “public policy” exception to the FAA

os

without slighting this Court’s uniform body of precedent to the

contrary.

Not only do the Court’s decisions fail to suggest that the

enforceability of an arbitration agreement stops at the

threshold of a common-law intentional tort, but every relevant

decision in the last two decades points directly in the opposite

direction. In the first and final analysis, the federal policy in

favor of arbitration requires the parties’ agreement to be

“generously construed” in favor of private resolution.

Mitsubishi Motors, 473 U.S. at 626. The Ohio courts’ failure

to hew to this well-traveled path supports the writ or in the

alternative requires a summary reversal.

Itl. The Question Presented Is Important And

Recurring In Nature.

The subject matter of this dispute—the enforceability of

arbitration clauses—also supports the writ. The sheer number

of alternative-dispute cases, as an initial matter, makes

arbitration-related issues of this magnitude uniquely essential

to resolve. By definition, such disputes affect large numbers -

of people and large amounts of money. And by definition, any

ambiguity about the scope of federal preemption of state law

arbitration exceptions leads to litigation that it is the essential

purpose of the FAA to circumscribe.

Nor may these concerns lightly be dismissed. Arbitration

remains the primary device for resolving disputes arising from

securities transactions, securities-industry employment,

collective bargaining agreements and international commercial

transactions. See, e.g., NASD Code of Arbitration Rule

10101; 9 U.S.C. § 301. It also continues to be a pivotal device

for resolving controversies between domestic commercial

enterprises, between landlords and contractors, and between

many non-unionized employees and their employers. If left to

stand or, worse, if embraced by other courts, the decision in

this case will spawn protracted litigation over the question of

arbitrability itself—a particularly pointless exercise given the

15

clarity of traditional arbitration clauses of this type—and may

well jeopardize this method of dispute resolution in many

settings.

The growing tension between federal and state courts over

the existence of an intentional-tort exception to the FAA,

moreover, only compounds these problems. In this case, as in

many others like it, the parties have pursued parallel

proceedings in state and federal court—with the plaintiff

racing to state court to obtain an intentional tort judgment and

with the defendant racing to federal court to enforce the

arbitration agreement signed by the parties. This takes an

already-inefficient situation—apparent uncertainty over the

FAA’s application to intentional torts—and doubles the

inefficiency by clogging two dockets with expedited

proceedings designed to get a single result regarding a single

dispute. See, e.g., Cohen v. PaineWebber, Inc., 6th Cir. Case

No. 01-3228, petition for cert. filed, No. 01-1665. Conceived

as a device to avoid litigation, arbitration clauses in these

situations have become handmaidens of “prolonged litigation,

one of the very risks the parties, by contracting for arbitration,

sought to eliminate.” Southland Corp. v. Keating, 465 U.S. 1,

7 (1984). Surely this is not alternative dispute resolution at its

best, and it assuredly is not the national arbitration policy that

Congress set in motion by enacting the FAA.

As this dispute well illustrates, the conflict in the lower

courts over these issues also has generated uncertainty even

for residents of the same State. Residents of Florida and

Alabama must grapple with disparate precedents from the

Eleventh Circuit on the one hand and the Florida and Alabama

Supreme Courts on the other regarding the arbitrability of an

intentional-tort claim. And the same is now true for litigants

in Ohio in view of the lower-court decisions in this case and

the existing Sixth Circuit authority rejecting the claim that an

intentional-tort exception to the FAA exists. Because no one

litigant and the residents of no one State should have to face

16

such unpredictable consequences stemming from the same

dispute, this factor by itself supports the wnt.

If the Ohio decision stands, moreover, the enforceability of

an arbitration agreement also would turn, anomalously, on the

creativity of the party’s lawyer. By _ simply crafting the

dispute as one sounding in tort or intentional tort, a litigant

could remove the claim from the once-ample realm of

traditional arbitration agreements. Worse, the artificial

distinction between claims that are pleaded as intentional torts

and those that are not will lead to claim-splitting, with some

causes decided by arbitration while other issues in the very

same case—and likely involving the very same facts—being

decided in the court system by a jury.

One final point deserves mention. As noted above, the

Court has issued several decisions in the last fifteen years

making it clear that the FAA preempts state statutes that

undermine the National Government’s policy in favor of

arbitration. What it has not done and what presumably led to

the confusion that generated these lower-court decisions is

clarify that the FAA equally preempts state common-law

doctrines that come to the same thing—namely, undermine or

conflict with Congress’s effort to protect the enforceability of

traditional arbitration clauses. The Court faced a similar

dilemma ten years ago in Cipollone v. Liggett Group, Inc., 505

U.S. 504 (1992). There the question was whether the federal

statute preempted state common-law, as opposed to state

statutory, claims. For many of the same reasons that the Court

concluded that the Cipollone statute preempted state statutory

and state common-law claims, it should reach a similar

conclusion here.

In the last analysis, this petition squarely raises a

compelling federal question arising from the latest state

attempt to excuse litigants from the deeply-embedded federal

policy in favor of arbitration. The case should be reviewed on

the merits or at a minimum it should be summarily reversed.

17

CONCLUSION

The petition for a writ of certiorari should be granted, or at

a minimum the decision below should be summarily reversed.

Respectfully submitted,

JEFFREY S. SUTTON

Counsel of Record

JEFFREY J. JONES

DOUGLAS M. MANSFIELD

BRIAN G. SELDEN

JONES, DAY, REAVIS & POGUE

41 South High Street, Suite 1900

Columbus, Ohio 43215

(614) 469-3855

Counsel for Petitioners

August 2002

APPENDIX

la

[Filed 5/15/02]

The Supreme Court of Ohio

Alfred Cohen, Executor of : Case No. 02-375

the Estate of Samuel Ginsburg,

Appellee,

V.

[UBS] PaineWebber, Inc., and:

Richard Wilhelm, >: ENTRY

Appellants. :

Upon consideration of the jurisdictional memoranda filed

in this case, the Court declines jurisdiction to hear the case and

dismisses the appeal as not involving any substantial

constitutional question.

COSTS:

Docket Fee, $40.00, paid by Jones, Day, Reavis & Pogue.

(Hamilton County Court of Appeals; No. C010312)

/s/ Thomas J. Moyer

THOMAS J. MOYER

Chief Justice

2a

IN THE COURT OF APPEALS

FIRST APPELLATE DISTRICT OF OHIO

HAMILTON COUNTY, OHIO

ALFRED COHEN APPEAL NO. C-010312

Appellee,

ENTRY OVERRULING

MOTION TO CERTIFY

AND OVERRULING

PAINEWEBBER MOTION TO

INCORPORATED, et al. CONTINUE STAY

Appellants,

This cause came on to be considered upon the motion of the

appellants filed herein to certify the Ohio Supreme as a

conflict and the motion of the appellants to continue the stay

pending an appeal to the Ohio Supreme Court and upon the

responses thereto, and

The Court, upon consideration thereof, finds that the

motions are not well taken and are overruled.

| Lan! Hatten PS al SP bees ut Ae Sl

To The Clerk:

Enter upon the Journal of the Court on 2/22/02 per order of the

Court.

By: /s/ Gorman, J.

Acting Presiding Judge

3a

Case No. C-010312

ALFRED COHEN EXEVUTOR [sic] OF

EST OF SAMUAL [sic] GINSBURG

-VS-

PAINEWEBBER INCORPORATED

HAMILTON COUNTY CLERK OF COURTS

230 EAST NINTH ST ROOM 12100

CINCINNATI OH 45202

IN ACCORDANCE WI7H APPELLATE RULE 30(A), YOU

ARE HEREBY GIVEN NOTICE THAT THE FOLLOWING

ORDER OR JUDGMENT HAS BEEN JOURNALIZED ON

THE 18TH OF JANUARY, 2002, IMAGE NUMBER 93.

JUDGMENT ENTRY AFFIRMING JUDGMENT OF TRIAL

COURT (A-0004567). NOTICE IS SENT BY ORDINARY

MAIL TO ALL PARTIES REQUIRED BY LAW.

Deputy: SHERRY SIBERT

JAMES CISSELL - Clerk of Courts

4a

[Presented to the Clerk of Courts for Filing 1/18/02]

IN THE COURT OF APPEALS

FIRST APPELLATE DISTRICT OF OHIO

HAMILTON COUNTY, OHIO

ALFRED COHEN, : APPEAL NO. C-010312

Executor of the Estate of : TRIAL NO. A-0004567

Samuel Ginsburg,

DECISION.

Plaintiff-Appellee,

VS.

PAINEWEBBER, INC.,

and

RICHARD WILHELM,

Defendants-Appellants.

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: January 18, 2002

Waite, Schneider, Bayless & Chesley Co., L.P.A., Stanley M.

Chesley, Terrence L. Goodman, Barrett & Weber, L.P.A., and

Michael R. Barrett, for Plaintiff-Appellee,

Jones, Day, Reavis & Pogue, Jeffrey J. Jones, and Douglas M.

Mansfield, for Defendants-Appeliants.

Please Note: We have sua sponte removed this case from the

accelerated calendar.

Per Curiam.

Sa

Defendants-appellants PaineWebber, Inc., and Richard

Wilhelm appeal the trial court’s order denying their motion to

stay proceedings and their motion to compel arbitration

pursuant to the agreement signed by plaintiff-appellee Alfred

Cohen’s deceased, Samuel Ginsburg, and PaineWebber. Upon

our conclusion that the arbitration agreement did not cover

claims that essentially alleged theft, we affirm the judgment of

the trial court.

The record transmitted to this court demonstrates the

following facts. PaineWebber is an investment firm based in

Delaware with an office in downtown Cincinnati. Richard

Wilhelm, at all times relevant to this dispute, was the manager

of PaineWebber’s Cincinnati office. Wilhelm’s duties

included supervising and monitoring all employees and

accounts in the Cincinnati office. PaineWebber employed

Richard Zenni as a registered securities broker for its

Cincinnati office from 1992 to 1999. Zenni, through

bankruptcy-court filings, has allegedly admitted to stealing

millions of dollars from PaineWebber’s elderly investors,

which included Samuel Ginsburg.

Ginsburg opened a PaineWebber account with Zenni in

August 1992, and, at that time, Ginsburg executed an account

application and a client’s agreement that included an

arbitration clause. The arbitration agreement provided, in part,

as follows:

I agree, and by carrying an account for me PaineWebber

agrees, that any and all controversies which may arise

between me and PaineWebber concerning any account,

transaction, dispute or the construction, performance, or

breach of this or any other agreement, whether entered into

prior, on or subsequent to the date hereof, shall be

determined by arbitration. Any arbitration under this

agreement shall be held under and pursuant to and be

governed by the Federal Arbitration Act * * *.

6a

There is not dispute that Ginsburg signed the agreement

containing this arbitration provision, and that Ginsburg’s heirs

and executors are also bound by the agreement.

Ginsburg died on October 9, 1999. Shortly after his death,

it was discovered that over one million dollars had been stolen

from his PaineWebber account. On July 26, 2000, Alfred

Cohen, in his capacity as the executor of Ginsburg’s estate,

filed a complaint in the Hamilton County Court of Common

Pleas against PaineWebber and Wilhelm, alleging unlawful

conversion and fraudulent concealment. Specifically, Cohen

alleged that PaineWebber and Wilhelm had aided and abetted

Zenni in stealing money from Ginsburg. On July 28, 2000,

PaineWebber filed a petition in the United States District

Court for the Southern District of Ohio, seeking to compel

arbitration and to stay the civil action. Cohen contested the

federal district court’s jurisdiction to stay the civil proceedings

and compel arbitration, arguing that Wilhelm was a necessary

and indispensable party to the lawsuit, and that once Wilhelm

was joined as a party, the district court’s diversity jurisdiction

would be defeated. The district court agreed and dismissed

PaineWebber’s petition. That decision is currently on appeal

to the United States Court of Appeals for the Sixth Circuit.

In response to the complaint filed by Cohen in the Hamilton

County Court of Common Pleas, PaineWebber and Wilhelm

moved for a stay of the action and an order compelling

arbitration pursuant to the agreement signed by Ginsburg and

PaineWebber. The trial court denied this motion, and this

timely appeal followed.’

In their sole assignment of error, PaineWebber and Wilhelm

assert that the trial court erred in denying their motion for a

' Pursuant to R.C. 271 1.02(C), an order that denies a stay of the trial of

any action pending arbitration is a final order that may be appealed.

a

Ta

stay of the proceedings pending arbitration. We are

unpersuaded.

An appellate court reviews the denial of a stay of

proceedings pending arbitration under an abuse-of-discretion

standard.’ An abuse of discretion contemplates more than an

error of law or judgment; it implies that the court’s attitude

was unreasonable, arbitrary or unconscionable.*> The Ohio

Supreme Court has adopted four rules, common to both state

and federal courts, for reviewing a decision concerning a

dispute’s “arbitrability”: (1) that “‘arbitration is a matter of

contract and a party cannot be required to so submit to

arbitration any dispute which he has not agreed to so submit”;

(2) that the question whether a particular claim is arbitrable is

one of law for the court to decide; (3) that, when deciding

whether the parties have agreed to submit a particular claim to

arbitration, a court may not rule on the potential merits of the

underlying claim; and (4) that, when a “contract contains an

arbitration provision, there is a presumption of arbitrability in

the sense that ‘[a]n order to arbitrate the particular grievance

should not be denied unless it may be said with positive

assurance that the arbitration clause is not susceptible of an

interpretation that covers the asserted dispute.”

Here, the parties’ dispute centers on whether the claims

alleging fraudulent concealment and unlawful conversion are

arbitrable. We note that the trial court denied the stay pending

? See Harsco v. Crane Carrier Co. (1997), 122 Ohio App. 3d 406, 410,

701 N.E.2d 1040, 1043.

3 See id.

* Council of Smaller Enterprises v. Gates, McDonald & Co. (1998), 80

Ohio St. 3d 661, 665-666, 687 N.E.2d 1352, 1355, citing AT & T

Technologies, Inc. v. Communications Workers of Am. (1986), 475 U.S.

643, 648-650, quoting Steelworkers v. Am. Mfg. Co. (1960), 363 U.S. 564;

Steelworkers v. Warrior & Gulf Navigation Co. (1960), 363 U.S. 574; and

Steelworkers v. Enterprise Wheel & Car Corp. (1960), 363 U.S. 593.

ri 5 men a ee eee

8a

arbitration without opinion. But because there is no dispute as

to whether a valid arbitration provision existed within the

contract, we may presume that the trial court based its decision

on the premise that the fraudulent-concealment and unlawful-

conversion claims were not subject to the arbitration provision

contained in the contract. As the arbitrability of a claim is a

question of law for the trial court, we review the issue of the

arbitrability of the specific claims de novo.°

It has been held that the resolution of the question

“{wjhether a claim falls within the scope of an arbitration

agreement turns on the factual allegations in the complaint

rather than on the legal causes of action asserted.”® Here, the

facts underpinning the unlawful-conversion claim are the same

facts offered to support the claim of fraudulent concealment.

In the complaint, Cohen alleged that Wilhelm and

Paine Webber had had direct notice of, and thus knowledge of,

Zenni’s conduct because of the obvious pattern of risky and

questionable trades made by Zenni on behalf of Ginsburg, and

because of the numerous accounts opened in Ginsburg’s name

when only one account would have sufficed. Cohen also

alleged that PaineWebber and Wilhelm had encouraged Zenni

to befriend elderly investors, and that Wilhelm and

PaineWebber had chosen to disregard their knowledge of

Zenni’s conduct and had failed to notify their elderly

investors, including Ginsburg, of the theft. These facts

essentially alleged a form of theft, i.e., that Paine Webber and

Wilhelm had “aided and abetted” Zenni in stealing Ginsburg’s

money.

Although the arbitration provision is broad, stating that it

covers “any and all controversies” pertaining to the brokerage

> See Marchese v. Shearson Hayden Stone, Inc. (C.A.9, 1984), 734 F. 2d

414, 423.

© Duryee v. Rogers (Sept. 23, 1999), Franklin App. Nos. 98-AP-1255 and

98-AP-1256, unreported.

9a

account, we cannot say, as a matter of law, that a claim

alleging such tortious conduct as the “aiding and abetting” of

a theft is subject to the arbitration provision here. An

arbitration clause itself is a contract. A contract requires a

“meeting of the minds” as to the terms contained within. At

the time that the parties entered into the contract, there was no

meeting of the minds that the arbitration provision would

cover claims alleging tortious forms of theft. If the parties had

contemplated, at the time that they entered into the arbitration

agreement, that PaineWebber would possibly steal from

Ginsburg, that would surely be against public policy. Matters

more likely to have been contemplated by both parties would

have involved questions of whether a particular transaction

was authorized or whether there was any miscalculation in the

sum of money contained in the account. Here, the claims filed

by Cohen alleged that Paine Webber and Wilhelm had engaged

in conduct beyond the scope of the brokerage agreement.

Zenni, allegedly with the knowledge of PaineWebber and

Wilhelm, had sent altered and false monthly account

statements to Ginsburg. Accordingly, under the stated

circumstances in this case, we hold that, as a matter of law, the

claims of unlawful conversion and fraudulent concealment,

were not subject to the arbitration provision.

As the claims alleged here, by the facts in the complaint,

were not subject to the arbitration provision, the trial court did

not abuse its discretion in denying the motion of PaineWebber

and Wilhelm to stay the proceedings and to compel arbitration.

The sole assignment of error is overruled, and we affirm the

judgment of the court below.

Judgment affirmed.

10a

DOAN, P.J., WINKLER and SHANNON, JJ.

RAYMOND E. SHANNON, retired, from the First Appellate

District, sitting by assignment. )

Please Note:

The court has placed of record its own entry in this case on

the date of the release of this Decision.

lla

[Entered 4/25/01]

IN THE COURT OF COMMON PLEAS

HAMILTON COUNTY, OHIO

ALFRED M. COHEN, : Case No. A0004567

Executor of the Estate of

Samuel Ginsburg

Plaintiff,

. Judge Robert Ruehlman

PAINEWEBBER

INCORPORATED, et al.

Defendants.

ORDER AND ENTRY DENYING

DEFENDANTS’ MOTION TO STAY

PROCEEDINGS PENDING ARBITRATION

The Defendants’ Motion to Stay Proceedings Pending

Arbitration came on for a hearing before the Court on April 5,

2001. Based on the arguments of counsel and the briefs, the

Court finds that the request to vacate the current schedule is

moot in that the Court previously vacated the schedule by

entry dated February 26, 2001. The Court further finds that

the request to stay proceedings pending arbitration is not well

taken.

IT IS ORDERED AND ADJUDGED that Defendants’

Motion to Vacate the Current schedule is moot and that the

Court will establish a new schedule including a trial date at the

April 25, 2001 conference and that the Defendants’ Motion to

Stay Proceedings Pending Arbitration is denied.

/s/ Robert Ruehlman

Judge Robert Ruehiman