Source: https://law.justia.com/cases/federal/district-courts/FSupp/675/1324/1638121/
Timestamp: 2019-02-22 01:38:56
Document Index: 481643687

Matched Legal Cases: ['§ 77', '§ 78', '§ 240', '§ 1963', '§ 517', '§ 1', '§ 12']

Aronson v. Dean Witter Reynolds, Inc., 675 F. Supp. 1324 (S.D. Fla. 1987) :: Justia
Justia › US Law › Case Law › Federal Courts › District Courts › Florida › Southern District of Florida › 1987 › Aronson v. Dean Witter Reynolds, Inc.
Aronson v. Dean Witter Reynolds, Inc., 675 F. Supp. 1324 (S.D. Fla. 1987)
U.S. District Court for the Southern District of Florida - 675 F. Supp. 1324 (S.D. Fla. 1987)
675 F. Supp. 1324 (1987)
Russell L. Forkey, Fort Lauderdale, Fla., for plaintiff.
THIS CAUSE came on for hearing upon Defendant Philips, Appel & Walden, Inc.'s, Motion To Compel Arbitration and To Stay Proceedings. The court has considered the supporting and opposing momoranda of law and the oral argument of able counsel and being otherwise duly advised, finds as follows:
Plaintiff, Leonard Aronson, in his complaint alleges that Philips, Appel & Walden Inc., ("Philips"), through its Account Executive, Judith A. Thomaselli, mismanaged Aronson's security accounts through the buying and selling of unsuitable securities as well as "churning". Aronson alleges causes of action for violations of sections 12(2) of the Securities Act of 1933 ("the 1933 Act"), 15 U.S.C. § 77l(2), 10(b) of the Securities Exchange Act of 1934 ("the 1934 Act"), 15 U.S.C. § 78j(b) and Rule 10b-5, 70 C.F.R. § 240.10b-5 (1987), violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1963, and pendant claims for fraud, breach of fiduciary duty, negligent supervision and violations of Florida Statute § 517.301 (1985).
Defendant Philips seeks arbitration of the claims and a stay of proceedings pursuant to Federal Arbitration Act, 9 U.S.C. § 1, et seq, which mandates arbitration when the parties have so agreed. The Arbitration Act ... "leaves no place for the excercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S. Ct. 1238, 1241, 84 L. Ed. 2d 158 (1985). Thus, if there exists an enforceable Arbitration Agreement, plaintiff and defendant, as parties to such an agreement, are required to resolve arbitrable claims in arbitration proceedings.
Plaintiff asserts that the arbitration agreements are unconscionable adhesion contracts and therefore unenforceable. The court agrees that a court may not order arbitration "until it is satisfied that a valid arbitration agreement exists." Miller v. Drexel Burnham Lambert, Inc., 791 F.2d 850, 854 (11th Cir. 1986) Aronson, however, has produced no evidence to indicate that the arbitration agreements are adhesion contracts. First, there is nothing inherently unfair or oppressive about arbitration clauses. See Coleman v. Prudential Bache, 802 F.2d 1350 (11th Cir.1986). Second, the arbitration agreements themselves do not indicate a lack of meaningful choice. Driscoll v. Smith Barney, Harris, Upham & Company, Inc., 815 F.2d 655, 659 (11th Cir.1987). Further, and more importantly, Aronson has failed to allege any facts to support his contention that the arbitration agreements are invalid.
The party opposing arbitration bears the initial responsibility of informing the court of the basis for its opposition. This burden is not unlike that of a party seeking summary judgment. See Celotex Corporation v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). Aronson, as the party opposing the Motion To Compel Arbitration, has the affirmative duty of coming forward by way of affidavit or allegation of fact to show cause why the court should not compel arbitration. The party opposing arbitration should identify those portions of "the pleadings, depositions, answers to interrogatories, and ..." affidavits which support its contention. Celotex supra 106 S. Ct. at 2553.
Having determined the validity of the arbitration agreement between plaintiff and defendant, the court turns to plaintiff's assertion that his 1933 Act claim is not arbitrable. Plaintiff relies on the Supreme Court decision of Wilko v. Swan, 346 U.S. 427, 74 S. Ct. 182, 98 L. Ed. 168 (1953). In Wilko, the Court held that because of the antiwaiver and jurisdictional provisions contained in the 1933 Act, an agreement to arbitrate 1933 Act disputes was void, notwithstanding the Federal Arbitration Act.
Defendant Philips, in response, claims that the recent Supreme Court decision, Shearson/American Express v. McMahon, ___ U.S. ___, 107 S. Ct. 2332, 96 L. Ed. 2d 185 (1987), does not prohibit the arbitration of 1933 Act claims. In McMahon, the Supreme Court was unwilling to apply the Wilko reasoning to 1934 Act claims or to RICO claims. This court recognizes that McMahon did not involve a 1933 Act claim nor did McMahon expressly overturn Wilko. However, it is this court's position that the McMahon decision so eroded Wilko's rationale that Aronson's 1933 Act claims should be sent to arbitration.
As noted in McMahon, Wilko held the waiver of the judicial forum unenforceable because it judged arbitration inadequate to protect the substantive rights at issue. However, as McMahon recognized, arbitration today is capable of resolving claims of this type. 107 S. Ct. at 2341. ("Thus, the mistrust of arbitration that formed the basis for the Wilko opinion in 1953 is difficult to square with the assessment of arbitration that has prevailed since that time.... Even if Wilko's assumptions regarding arbitration were valid at the time Wilko was decided, most certainly they do not hold true today for arbitration procedures subject to the SEC's oversight authority.").
This court, reading Wilko in light of McMahon, holds that Wilko does not impose a blanket prohibition on arbitration of § 12(2) claims. See Staiman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 673 F. Supp. 1009 (C.D.Cal.1987) ("McMahon held that an arbitration held pursuant to ... NYSE procedures did not effect a waiver of the 1934 Act. A similiar conclusion is compelled for claims under the 1933 Act.") (citation omitted). Where arbitration adequately protects the substantive rights at issue, the court must compel arbitration. Accordingly, for the reasons set forth above, it is