Source: https://law.justia.com/cases/federal/appellate-courts/F2/766/698/302840/
Timestamp: 2020-06-06 05:40:28
Document Index: 607262352

Matched Legal Cases: ['§ 1927', '§ 2000', '§ 1983', '§ 2', '§ 2', '§ 4', '§ 9', '§ 4', '§ 10', '§ 9', '§ 9', '§ 9', '§ 1927', '§ 1927', '§ 10', '§ 11']

Marcy Smiga, Plaintiff-appellant, v. Dean Witter Reynolds, Inc., and Raymond B. Anderson,defendants-appellees, 766 F.2d 698 (2d Cir. 1985) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Second Circuit › 1985 › Marcy Smiga, Plaintiff-appellant, v. Dean Witter Reynolds, Inc., and Raymond B. Anderson,defendants-...
Marcy Smiga, Plaintiff-appellant, v. Dean Witter Reynolds, Inc., and Raymond B. Anderson,defendants-appellees, 766 F.2d 698 (2d Cir. 1985)
U.S. Court of Appeals for the Second Circuit - 766 F.2d 698 (2d Cir. 1985) Argued Feb. 26, 1985. Decided June 28, 1985
Appellant Smiga primarily contends that the district court lacked jurisdiction to confirm the arbitration award and abused its discretion in awarding attorneys' fees and excess costs to DWR. Appellees maintain that the district court had jurisdiction to confirm the arbitration award and also that the court's award of attorneys' fees and excess costs was justified pursuant to 28 U.S.C. § 1927. We affirm the decision of the district court in favor of appellees.
On March 4, 1982, Smiga filed a complaint against DWR with the Equal Employment Opportunity Commission (EEOC) alleging sexual harassment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000-e et seq. According to Smiga, not only was she not overpaid, but her dismissal resulted from her refusal to grant the manager sexual favors and not from her failure to repay the alleged overpayment. Smiga contends that, in discussing the alleged overpayment and the promissory note which Anderson insisted she sign, Anderson conditioned her continued employment at Dean Witter Reynolds, Inc. on submitting to his sexual advances. According to Smiga, Anderson stated that, in return for the sexual favors, the overpayment would be forgotten. After an evidentiary hearing, the EEOC, on July 30, 1982, found " [n]o reasonable cause ... to believe that the allegations made in [Smiga's] charge are true." The EEOC then issued Smiga a "right to sue" letter.
Within the statutory 90 day period provided for under Title VII after receipt of a "right to sue" letter from the EEOC, Smiga commenced an action on November 3, 1982, by filing a complaint in the District Court for the Eastern District of New York, claiming, inter alia, compensatory and punitive damages. Smiga alleged, in eight causes of action, that she was: 1) sexually discriminated against and sexually harassed; 2) deprived of a property right under 42 U.S.C. § 1983; 3) subjected to discriminatory retaliation; 4) victimized by an anticompetitive group boycott by barring her from employment in the securities industry unless she signed the arbitration agreement; 5) deprived of rights and privileges secured by the Constitution; 6) defamed; 7) abusively discharged; and 8) deprived of her final paycheck. In addition, the complaint requested a declaratory judgment with appropriate injunctive relief holding that Smiga's arbitration agreement was null, void and unenforceable and that the NYSE be permanently enjoined from asserting jurisdiction over Smiga.
Following Smiga's failure to pay the March 8 award, DWR moved in Smiga's November 3, 1982 action in the Eastern District of New York to confirm the arbitration award and to dismiss the causes of action claiming abusive discharge and emotional distress pursuant to Fed. R. Civ. P. 12(b) (6). By order dated January 9, 1984, the district court granted DWR's motion to dismiss, treating it as a motion for partial summary judgment pursuant to Fed. R. Civ. P. 56. In addition, the district court granted DWR's motion to confirm the arbitration award. It also granted DWR's motion for attorneys' fees and excess costs reasonably incurred in confirming the arbitration award based upon the district court's finding that opposition to the motion to confirm was "frivolous, unreasonable and groundless." The district court directed Smiga's attorney to pay DWR's attorneys' fees and costs totalling $1,700.23 and directed Smiga, within twenty days of the date of the decision, to pay $13,182, plus interest from March 8, 1983, to DWR. Smiga's additional causes of action are still pending before the district court.
Thereafter, DWR moved for entry of judgment pursuant to Fed. R. Civ. P. 54(b), and Smiga moved under Fed. R. Civ. P. 59(e) to alter or amend the judgment. By order dated May 14, 1984, the district court denied Smiga's motion, granted appellee DWR's motion, and directed entry of a partial judgment against both Smiga and Chapman requiring them to satisfy the judgments by June 3, 1984. It is from these judgments that Smiga and Chapman now appeal.
We find this argument to be without merit. Contrary to International Controls Corp. v. Vesco, 556 F.2d 665, 669 (2d Cir. 1977) cited by Smiga, in which an amended complaint was filed prior to any action being taken in the case, Smiga's amended complaint herein was served in May, 1983, six months after the district court denied Smiga's motion to enjoin proceedings under the arbitration agreement by order dated November 16, 1982 and two months after the arbitration award was rendered on March 8, 1983. The purpose of amending a pleading "is to assert matters that were overlooked or were unknown ... at the time ... [of the] original complaint or answer." 6 C.A. Wright and A.R. Miller, Federal Practice and Procedure Sec. 1473 (1971). Amendment of a pleading in an effort to rescind jurisdiction over an issue on which a court has already acted is not permitted. Therefore, since, as discussed below, the court had jurisdiction to confirm the arbitration award by virtue of Smiga's original complaint, this jurisdiction would not be eliminated merely by her filing of an amended complaint at a later date.
In Metro Industrial Painting Corp. v. Terminal Construction Co., 287 F.2d 382, 384 (2d Cir. 1961), this Court held: " [I]n addition [to diversity], the contract in which the arbitration clause is included must be one 'evidencing a transaction involving commerce' within the meaning of Sections 1 and 2 of the Act." In an affidavit submitted in support of its motion to confirm, DWR asserted diversity as a basis for the court's jurisdiction. DWR alleged that it is a corporation organized under the laws of Delaware; that it has its principal place of business in New York; that Smiga is a citizen of New Jersey; that Raymond B. Anderson is a citizen of New York; and that the amount in controversy exceeds $10,000. In addition, since Smiga's contract with the NYSE contemplates using interstate communication facilities and engaging in interstate activities, Dickstein v. duPont, 320 F. Supp. 150, 152-153 (D. Mass. 1970), aff'd, 443 F.2d 783, 785 (1st Cir. 1971), in our view, the arbitration clause in Smiga's agreement with the NYSE was part of a "contract evidencing a transaction involving commerce" within the meaning of 9 U.S.C. § 2. Wilko v. Swan, 346 U.S. 427, 430, 74 S. Ct. 182, 184, 98 L. Ed. 168 (1953); Brown v. Gilligan, Will & Co., 287 F. Supp. 766, 770 (S.D.N.Y. 1968).
Appellant further argues that the district court lacked jurisdiction to confirm the arbitration award since the arbitration panel itself allegedly lacked jurisdiction. An arbitration panel derives its jurisdiction from an agreement of the parties, 9 U.S.C. § 2, Boston and Maine Corporation v. Illinois Central Railroad Company, 274 F. Supp. 257, 260 (S.D.N.Y. 1967), aff'd, 396 F.2d 425 (2d Cir. 1968), or from an order of a court compelling arbitration. 9 U.S.C. § 4. Herein, Smiga entered into an agreement giving an arbitration panel jurisdiction over "any controversy ... arising out of [Smiga's] employment or the termination of [her] employment." As the district court found, the question of overpayment, at issue herein, is a controversy arising out of Smiga's employment.
However, Smiga and the NYSE entered into a separate agreement which contained an arbitration clause. Smiga contends that this arbitration clause is part of an agreement between only herself and the NYSE and that therefore it cannot be enforced by DWR. We believe that, since Smiga did not allege the absence of an agreement to arbitrate, enforceable by DWR, as a basis for her motion in the district court for an order staying arbitration, she has waived this objection. In any event, Smiga's argument is without merit. This Court has held that arbitration contracts between a stock exchange and registered representatives are valid and enforceable agreements between the representatives and the broker. See Downing v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 725 F.2d 192, 195 (2d Cir. 1984). Therefore, we conclude that, even in the absence of a submission agreement, the arbitration panel herein had jurisdiction pursuant to the separate agreement to arbitrate entered into between Smiga and the NYSE, and DWR could invoke it.
This Court has held that for a federal court to have jurisdiction to confirm an arbitration award and enter judgment, it is not sufficient that the parties have merely agreed to settle their disputes by arbitration. Varley v. Tarrytown Associates, Inc., 477 F.2d 208, 210 (2d Cir. 1973). Rather, " [t]he [Arbitration] Act provides that confirmation of an arbitration award is appropriate only where the parties 'in their agreement have agreed that a judgment of the court shall be entered upon the award....' 9 U.S.C. § 9." Herein, as in Varley, there was no such explicit agreement, but only a clause providing for the settlement of disputes by arbitration.
This Court has held that a court which orders arbitration retains jurisdiction to determine any subsequent application involving the same agreement to arbitrate, including a motion to confirm the arbitration award. Marchant v. Mead-Morrison Mfg. Co., 29 F.2d 40, 43 (2d Cir. 1928); Lesser Towers, Inc. v. Roscoe-Ajax Construction Co., 258 F. Supp. 1005, 1007 (S.D. Cal. 1966). The Marchant court held that the application for an order to arbitrate, up to and including the confirmation award, was all one proceeding, and thus, were not separable controversies. Id. Smiga contends that there was no order to compel arbitration herein, as is required by N.Y.Civ.Prac.Law Sec. 7503(a) (McKinney 1980) and therefore that the Marchant holding is inapplicable.
Smiga next maintains that she was improperly denied a jury trial on the issue of arbitrability pursuant to 9 U.S.C. § 4. Section 4 states in pertinent part:
In our view, the district court correctly found that Smiga had entered into an agreement to arbitrate. We therefore conclude that she had no right to a jury trial on this issue. In any event, because Smiga failed to contest the existence of an arbitration agreement enforceable by DWR before the district court, we conclude that she has waived this issue for purposes of appeal. With regard to Smiga's contention that the overpayment question was not arbitrable, although Smiga contested this issue before the district court by means of her motion to stay the arbitration, such an objection does not constitute adequate grounds to contest confirmation of an arbitration award pursuant to 9 U.S.C. §§ 10, 11.1 Therefore, the district court properly denied Smiga's request for a jury trial.
Next, Smiga argues that venue for the confirmation motion was incorrect and that service was improper. Section 9 of the Arbitration Act states that " [i]f no court is specified in the agreement of the parties, then such application [for an order confirming the arbitration award] may be made to the United States court in and for the district within which such award was made" (emphasis added). Since the award was rendered in the Southern District of New York, Smiga maintains that venue for the confirmation motion should have been in the Southern District, rather than in the Eastern District.
We hold that venue for the confirmation motion was proper in the Eastern District of New York, where Smiga herself commenced the November 3, 1982 action and sought to enjoin enforcement of the arbitration provision to which she had agreed. Once a federal court has subject matter jurisdiction over an action, it may confirm an arbitration award even though it was not the district where the award was granted. We agree with the district court in NII Metals Services, Inc. v. ICM Steel Corporation, 514 F. Supp. 164 (N.D. Ill. 1981), which stated:
We also agree with the views expressed in Paul Allison, Inc. v. Minikin Storage of Omaha, Inc., 452 F. Supp. 573 (D. Neb. 1978), which held that the venue provision of section 9 should be read as permissive rather than exclusive. The court stated that " [o]rdinary canons of statutory construction suggest that Congress would have used stronger language than 'such application may be made' or 'may apply' if the intention was to restrict the power of a federal court in Arbitration Act cases." Id. at 574. See generally Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 408 (2d Cir. 1959), cert. dismissed, 364 U.S. 801, 81 S. Ct. 27, 5 L. Ed. 2d 37 (1960).
Since Smiga is a resident of New Jersey, and therefore a non-resident of the district within which the award was made, she contends that she should have been personally served by a marshal. DWR maintains that Fed. R. Civ. P. 5 is applicable herein, rather than 9 U.S.C. § 9. Fed. R. Civ. P. 5(b) states in part:
Smiga was already before the court by virtue of her Title VII claim and her motion to stay the arbitration. Thus, Smiga waived the provision regarding service by a marshal of 9 U.S.C. § 9, and, as DWR contends, Fed. R. Civ. P. 5 is controlling. We agree and therefore find that service was proper. Murray Oil Products Co., Inc. v. Mitsui and Co., Ltd., 55 F. Supp. 353, 356 (S.D.N.Y. 1944), aff'd, 146 F.2d 381 (2d Cir. 1944).
None of Smiga's objections to the confirmation motion constitute adequate grounds to contest confirmation of an arbitration award. The Arbitration Act is clear that a motion to confirm must be granted "unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title." 9 U.S.C. § 9.2 Moreover, this Court has held that only clear evidence of impropriety in the arbitration proceedings would justify denial of the award. Sommer v. National Bulk Carriers, Inc., 597 F.2d 819, 825 (2d Cir. 1979). Accord Ormsbee Development Company v. Grace, 668 F.2d 1140, 1150 (10th Cir. 1982), cert. denied, 459 U.S. 838, 103 S. Ct. 84, 74 L. Ed. 2d 79 (1982). Since none of Smiga's objections falls within the enumerated grounds of section 10 or 11 for opposing a motion to confirm, and given that we find Smiga's objections, in any event, to be without merit, we affirm the district court's confirmation of the arbitration award.
Finally, Smiga asserts that the district court abused its discretion in awarding attorneys' fees and excess costs to DWR pursuant to 28 U.S.C. § 1927, and also that the district court denied Smiga's attorney due process by not giving him an opportunity to be heard.
We therefore find that the district court did not abuse its discretion in assessing costs and attorneys' fees against Chapman pursuant to 28 U.S.C. § 1927.3
Chapman next argues that he was denied due process by the district court's failure to provide him with notice and an opportunity to be heard. We find that due process did not require the district court to give Chapman any more notice or hearing than he received. The district court assessed costs, a deprivation less severe than contempt. Therefore, Smiga's references to United States of America v. Lumumba, 741 F.2d 12 (2d Cir. 1984) and to Taylor v. Hayes, 418 U.S. 488, 498-99, 94 S. Ct. 2697, 2703, 41 L. Ed. 2d 897 (1974) are inapposite. Furthermore, the district court gave Chapman notice that it was considering the imposition of costs against him, informed him that the grounds for opposition were narrow, and gave him the opportunity to explain the basis for the opposition. Chapman's reliance on Miranda v. Southern Pacific Transport Co., 710 F.2d 516, 522 (9th Cir. 1983), is misplaced, since he had adequate notice and opportunity to respond to the motion for costs but failed to take advantage of the opportunity. Thus, we find Chapman's argument that he was denied notice and an opportunity to be heard to be without merit.
9 U.S.C. § 10 provides:
9 U.S.C. § 11 provides: