Court Opinion

ID: 2963098
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Date Created: 2015-09-21 21:06:26.406636+00
Date Added: 2024-06-11T11:42:38.691797
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USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                                     
                                 ____________________        No. 94-1658                                   KENNETH P. WOLF,                                Plaintiff, Appellant,                                          v.                                 GRUNTAL & CO., INC.,                                 Defendant, Appellee.                                                     
                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                     [Hon. D. Brock Hornby, U.S. District Judge]
                                            ___________________                                                     
                                 ____________________                                        Before                            Cyr and Stahl, Circuit Judges,
                                           ______________                           and DiClerico,* District Judge.
                                           ______________                                                     
                                 ____________________             George S. Isaacson, with whom Brann & Isaacson  and Peter D. Lowe
             __________________            ________________      _____________        were on brief for appellant.             Joseph  P. Moodhe,  with  whom Debevoise  & Plimpton,  Ariadne D.
             _________________              _____________________   __________        Makris, John  P.  McVeigh, Preti,  Flaherty,  Beliveau &  Pachios  and
        ______  _________________  ______________________________________        Lionel G. Hest were on brief for appellee.
        ______________                                                     
                                 ____________________                                   January 25, 1995                                                     
                                 ____________________                            
        ____________________             *Chief  Judge  of  the  District  of  New  Hampshire,  sitting by        designation.

                    CYR,  Circuit Judge.  Plaintiff Kenneth P. Wolf appeals
                    CYR,  Circuit Judge.  
                          _____________          a  summary judgment order dismissing his Rule 10b-5 claim against          defendant-appellee  Gruntal  &  Co.  ("Gruntal"),  a   securities          brokerage firm,  for fraudulently  mismanaging Wolf's  investment          accounts  in violation  of Section  10(b) of  the Securities  and          Exchange Act of  1934, 15 U.S.C.   78j(b).  As the district court          erred in  ruling that  Wolf's claim was  precluded by  an earlier          arbitral  award, we vacate  the judgment  and remand  for further          proceedings.                                           I
                                          I                                      BACKGROUND
                                      BACKGROUND
                                      __________                    Viewed in the  light most favorable to  appellant Wolf,          see Velez-Gomez  v. SMA  Life Assurance Co.,  8 F.3d  873, 874-75
          ___ ___________     _______________________          (1st  Cir. 1993),  the  summary  judgment  record  discloses  the          following  facts.   In March  1988, Wolf  opened cash  and margin          accounts with Gruntal  at its branch  office in Portland,  Maine.          Wolf signed a Customer Agreement ("Agreement") which contained an          arbitration clause:  "[a]ny  controversy  between  [Gruntal]  and          [Wolf] arising out of or relating  to this contract or the breach          thereof, shall be settled by  arbitration. . . .  Notwithstanding
                                                            _______________          the  foregoing, arbitration  shall  not  be  mandated  on  claims
          ___  _________  ___________  _____  ___  __  ________  __  ______          asserting violation(s)  of Federal  securities/commodities laws."
          _________ ____________  __ _______  ______________________ ____          Agreement   16  (emphasis added).  Paragraph 17  further provided          that "th[e]  agreement and its  enforcement would be  governed by                                          2

          New York  law without giving effect to external  law."  Id.   17.
                                                                  ___          Thereafter, between 1988  and 1990, a Gruntal  agent fraudulently          mismanaged  Wolf's  accounts,  causing a  loss  approximating  $1          million.                    In December  1991,  Wolf initiated  the present  action          against  Gruntal  in the  United  States District  Court  for the          District  of Maine.    The  complaint  asserted  seven  state-law          claims, as  well as  one federal claim  under the  Securities and          Exchange Act of 1934, 15 U.S.C.   78j(b); Rule 10b-5, 17 C.F.R.                                            3

          240 (1993).1   Gruntal moved to stay the  district court proceed-          ings pending arbitration on all eight claims.                      The district court ruled that the arbitration clause in          the Agreement unambiguously permitted Wolf  to forego arbitration
                                      _________          and to litigate the Rule 10b-5 claim  in district court, but that          the seven state-law  claims were arbitrable.  Since  no party had          sought to compel arbitration, however, the district court refused                              
          ____________________               1Rule  10b-5,  promulgated  pursuant  to  section  78(j)(b),          provides in pertinent part:               It shall  be unlawful for  any person, directly  or in-               directly, by the use of any means or instrumentality of               interstate commerce, or of the mails, or of any nation-               al securities exchange,                                                                                                              (a)  to employ  any  device,  scheme,  or  artifice  to               defraud,               (b) to make any untrue  statement of a material fact or               to omit to state a  material fact necessary in order to               make  the statements made, in the  light of the circum-               stances under which they were made, not misleading, or               (c) to engage in any  act, practice, or course of busi-               ness which  operates  or would  operate as  a fraud  or               deceit upon any person,                in connection with the purchase  or sale of any securi-               ty.          17 C.F.R.   240 (1993).                 The Rule  10b-5  claim  alleged  that  Gruntal's  fraudulent          scheme  was  comprised  of three  basic  components:  (1) Gruntal          misrepresented  that its  investments would  comport  with Wolf's          low-risk investment objectives; (2) Gruntal fraudulently extended          the  one-month  term  of Wolf's  margin  account,  without Wolf's          knowledge or  consent, in  order to  promote Gruntal's  interests          (i.e., by  using Wolf's credit  to manipulate the price  of stock
           ____          (Secor/Novametrix)  in waging  its own  "trading  war"); and  (3)          Gruntal  repeatedly  concealed  the unauthorized  margin  account          activity  by  using  Wolf's investment  and  "safekeeping" assets          (e.g.,  treasury bills) as  collateral for his  burgeoning margin
           ____          account indebtedness to Gruntal.                                           4

          to stay its proceedings on  the Rule 10b-5 claim pending arbitra-          tion and the parties proceeded with discovery.                      In March 1993,  Wolf submitted a unilateral  demand for          arbitration on the seven state-law  claims; in December 1993,  he          recovered a  $200,000 arbitral  award against  Gruntal.   Gruntal          thereafter  moved for  summary judgment  in  the district  court,          contending  that the final arbitral award on the state-law claims          precluded the Rule 10b-5 claim  under the doctrine of res judica-
                                                                ___ _______          ta. 
          __                    The district court  granted summary judgment.   Wolf v.
                                                                    ____          Gruntal & Co., No. 91-426-P-H, 1994 U.S. Dist. LEXIS 7627 (D. Me.
          _____________          May 24,  1994).  It correctly concluded that the Rule 10b-5 claim          and the seven  state-law claims arose out of  the same "operative          nucleus  of fact"  (i.e., the  ongoing  account mismanagement  by
                              ____          Gruntal).  Id.  at *4 (citing Kale  v. Combined Ins. Co.  of Am.,
                     ___                ____     _________________________          924  F.2d  1161, 1166  (1st Cir.),  cert. denied,  112 S.  Ct. 69
                                              _____ ______          (1991)).   As  "Gruntal [had]  made  clear that  it would  accept          arbitration  of the  [Rule  10b-5]  claim,"  the  district  court          envisioned no  "jurisdictional obstacle"  in the  event Wolf  had          elected to  submit the Rule  10b-5 claim to arbitration.   Conse-          quently,  the court  reasoned, the  final arbitral  award  on the          state-law  claims precluded  the Rule  10b-5  claim because  Wolf          "could have" presented the federal  claim to arbitration.  Id. at
                                                                     ___          *5, 6-7 (citing Restatement (Second) of Judgments   84 (1982)).
                          _________________________________                    Wolf argues that  he reasonably relied on  the district          court's  retention of "exclusive"  (i.e., sole  and indefeasible)
                                              ____                                          5

          jurisdiction over  the Rule  10b-5 claim  and, as  a consequence,          that he was victimized by  an unfair procedural ambush.  Although          we reject  Wolf's characterization,2  we hold  that the  district          court erred  in  ruling that  the  federal securities  claim  was          precluded by the arbitral award on the state-law claims.                                           II
                                          II                                      DISCUSSION
                                      DISCUSSION
                                      __________          A.   Standards Of Review
          A.   Standards Of Review
               ___________________                    We review a  grant of summary  judgment de novo,  under
                                                            __ ____          the  identical legal standards  governing the district  court, in          order to  determine whether "the pleadings,  depositions, answers          to interrogatories,  and admissions  on file,  together with  the          affidavits, if any, show that there is no genuine issue as to any          material fact and  that the moving party is  entitled to judgment
                                  ___ ______ _____ __  ________ __ ________          as a matter of law."  Fed. R. Civ. P. 56(c) (emphasis added); see
          __ _ ______ __ ___                                            ___          Jirau-Bernal  v. Agrait, 37  F.3d 1, 3  (1st Cir. 1994).   As the
          ____________     ______          preclusive effect of a prior "judgment" is a question of New York                              
          ____________________               2The  district  court  did  not  purport  to  oust   or  bar          concurrent  arbitral jurisdiction over the Rule 10b-5 claim.  See
          __________                                                    ___          Wolf,  1994 U.S. Dist. LEXIS  7627, at *5-6.   Rather, its ruling
          ____          simply recognized that  the district court did  possess jurisdic-          tion over Wolf's Rule 10b-5 claim.                                           6

          law,3 it  too is subject to de novo  review.  See, e.g., Gonzalez
                                      __ ____           ___  ____  ________          v. Banco Central Corp., 27 F.3d 751, 755 (1st Cir. 1994). 
             ___________________                              
          ____________________               3Citing instead to federal decisional law addressing certain          generic  res judicata  concepts, see,  e.g.,  Pujol v.  Shearson/
          _______  ___ ________            ___   ____   _____     _________          American Express,  Inc., 829 F.2d  1201, 1206-07 (1st  Cir. 1987)
          _______________________          (prior  arbitral awards may have preclusive effect), the district          court did  not consider which  jurisdiction's law should  guide a
                                  _____  ______________          federal court in  assessing the preclusive effect of  a state-law          based arbitral award  which has not been confirmed  in a judicial
                                                   _________          proceeding.   Had Wolf's arbitral  award been confirmed by  a New          York court, the  resulting judgment presumably would  be entitled
                                     ________          to the  same preclusive effect  in federal court  as it would  be          accorded by a New York court.  See 28 U.S.C.    1738 ("full faith
                                         ___          and credit"); see also, e.g.,  Oliveras v. Miranda Lopo, 800 F.2d
                        ___ ____  ____   ________    ____________          3, 6 (1st Cir. 1986) (citing Migra  v. Warren City Sch. Dist. Bd.
                                       _____     __________________________          of Educ.,  465  U.S.  75,  81 (1984));  Restatement  (Second)  of
          ________                                _________________________          Judgments     84(1),  86.    As section  1738's  "full faith  and
          _________          credit"  provision does not apply to unconfirmed arbitral awards,
                                  ___          however, see McDonald v.  City of West Branch, 466 U.S. 284, 287-
                   ___ ________     ___________________          88  (1984) (for res  judicata purposes, unless  an arbitral award
                          ___  ________          has received  judicial confirmation, it  is not the product  of a          "judicial proceeding" as defined in 28 U.S.C.   1738), it afford-          ed no support for the  district court's ruling that Wolf's uncon-          firmed arbitral award  was entitled  to preclusive  effect.   Cf.
                                                                        ___          Wolf, 1994 U.S.  Dist. LEXIS 7627, at *4 (citing  Pujol, 829 F.2d
          ____                                              _____          1201, 1204 (1st  Cir. 1987) (where final arbitral  award had been          confirmed by state court)).  
          _________               Moreover, since it  is now settled law  that the contracting          parties may  accede  (or object)  to  an arbitral  submission  of          federal securities claims  based on Rule 10b-5,  see Shearson/Am.
                                                           ___ ____________          Express, Inc. v. McMahon, 482 U.S. 220, 227-38 (1987) (Rule 10b-5
          _____________    _______          claims  not presumptively nonarbitrable), we can discern no sound          reason for not according  comparable legal effect to  the reason-          able  expectations of the contracting parties  as embodied in the          choice-of-law  clause in their Agreement.  See Volt Info. Scienc-
                                                     ___ __________________          es, Inc.  v. Board of  Trustees of Leland Stanford  Junior Univ.,
          ________     ___________________________________________________          489 U.S. 468, 478 (1989) (arbitration law "simply requires courts          to  enforce privately  negotiated agreements  to  arbitrate, like
                                                                       ____          other  contracts,  in  accordance  with  their terms")  (emphasis
          _____  _________          added);  McCarthy v.  Azure, 22  F.3d  351, 356  (1st Cir.  1994)
                   ________     _____          (citing Restatement (Second) of the Conflict of Laws   187 (1971)
                  ____________________________________________          (courts  should   generally  respect   contractual  choice-of-law          provisions)).  We  therefore defer to the  emphatic choice-of-law          provision  in the  Wolf-Gruntal  Agreement,  see  supra  pp.  2-3
                                                       ___  _____          (contract  "governed by  New York  law without  giving  effect to          external  law"),  which  necessarily  encompassed  New  York  res
                                                                        ___          judicata principles.  
          ________                                          7

          B.   Res Judicata
          B.   Res Judicata
               ____________                    Res  judicata  is  not implicated  if  the  forum which
                    ___  ________          rendered the prior  "judgment" (viz., the arbitral  award) lacked
                                          ___          "jurisdiction"  over  the putatively  precluded claim  (viz., the
                                                                  ___          Rule 10b-5  claim).  See,  e.g., Fiore v. Oakwood  Plaza Shopping
                               ___   ____  _____    _______________________          Ctr., Inc., 592  N.Y.S.2d 720, 720-21 (App. Div.  1993); Handy v.
          __________                                               _____          Westbury  Teachers Ass'n, 480 N.Y.S.2d 728, 731 (App. Div. 1984);
          ________________________          see also Nottingham Partners v.  Trans-Lux Corp., 925 F.2d 29, 34
          ___ ____ ___________________     _______________          (1st  Cir. 1991); Kale, 924 F.2d at 1167; Pasterczyk v. Fair, 819
                            ____                    __________    ____          F.2d 12, 14 (1st Cir. 1987).                      Unlike  collateral  estoppel  (issue  preclusion),  res
                                                                        ___          judicata (claim  preclusion)  normally bars  (i) relitigation  of
          ________          claims actually asserted in a tribunal of competent jurisdiction,          see Restatement  (Second) of  Judgments    26(1)(c) (1982),4  and
          ___ ___________________________________          (ii) litigation of  claims that arose from the same set of opera-          tive facts  and could have  been raised in the  prior proceeding.
                          _____ ____  ____ ______          See,  e.g., Hodes  v. Axelrod,  515 N.E.2d  612, 616  (N.Y. 1987)
          ___   ____  _____     _______          (adopting  "pragmatic"  transaction  test  for determining  which          claims  could have  been raised  in prior  proceeding); see  also
                                                                  ___  ____                              
          ____________________               4Among  the circumstances in which claim preclusion does not          obtain are those in which "[t]he plaintiff was unable to rely  on          a certain theory  of the case or to seek a certain remedy or form          of  relief in the first action because  of the limitations on the
                                         _______  __ ___ ___________ __ ___          subject  matter jurisdiction  of the  courts  or restrictions  on
          _______  ______ ____________  __ ___  ______  __ ____________  __          their authority  to entertain  multiple theories  or demands  for
          _____ _________  __ _________  ________ ________          multiple remedies or forms of relief in a single action,  and the          plaintiff  desires in the second action to rely on that theory or          to seek  that remedy  or form  of relief  . .  . ."   Restatement
                                                                ___________          (Second) of Judgments   26(1)(c) (emphasis added). 
          ________ __ _________                                          8

          Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981).
          ____________________________    ______          C.   Arbitral Awards
          C.   Arbitral Awards
               _______________                    Final  arbitral awards are entitled to the same preclu-          sive effect as state court judgments, at least as concerns claims          and issues actually raised.  See Rembrandt Indus., Inc. v. Hodges
                                       ___ ______________________    ______          Int'l, Inc., 344  N.E.2d 383, 384 (N.Y. 1976);  see also Khandhar
          ___________                                     ___ ____ ________          v. Elfenbein,  943 F.2d 244, 247 (2d  Cir. 1991) (N.Y. law); Katz
             _________                                                 ____          v. Financial Clearing & Servs. Corp., 794 F. Supp. 88, 94 (S.D.N-
             _________________________________          .Y. 1992) (same);  cf. Pujol v. Shearson/American  Express, Inc.,
                             ___ _____    ________________________________          829 F.2d 1201, 1206-07 (1st Cir. 1987); infra note 6 and accompa-
                                                  _____          nying text.   By the same token, we conclude that New York recog-          nizes the same "jurisdictional" limitation upon the reach of  res
                                                                        ___          judicata coverage  with respect  to prior  arbitral awards  as is
          ________          generally applied to final judgments, cf. Restatement (Second) of
                                                ___ _______________________          Judgments   26(1)(c), supra note 4.  We explain.  
          _________             _____                    Because  arbitral awards are not "judgments" per se, it
                                                                 ___ __          cannot be presumed,  as the district court did,  that an arbitral          tribunal  acquired competent  authority over  the putative  "pre-          cluded" claim for  res judicata purposes.  Unlike  federal courts
                             ___ ________          of limited jurisdiction and state courts of general jurisdiction,          wherein  a litigant, with  standing, unilaterally may  invoke the
                                               ____________          appropriate judicial  tribunal's jurisdiction based  on extrinsic          constitutional, statutory,  or common  law  authority, see  Cine-
                                                                 ___  _____          Source, Inc.  v. Burrows,  581 N.Y.S.2d 9,  10 (App.  Div. 1992),
          ____________     _______          arbitral tribunals' authority over particular "claims" is for the                                          9

          most part predetermined  by contract; that is,  by written agree-
                    _____________  __ ________               _______ ______          ment of  the parties.   Id.  (noting, as  basis for  limiting res
          ____ __  ___ _______    ___                                   ___          judicata effect  of arbitral  awards, that  "the authority of  an
          ________          arbitrator to decide a controversy  is derived entirely from  the          consent of the parties").  
          _______                    Arbitral "claims" comprise two subsets for purposes  of          the jurisdictional analysis  required under the  present analogue          to  Restatement     26(1)(c).   First,  where  the  parties  have          contracted   to  submit   all   disputes   or  controversies   to
                                    ___          arbitration,  either  party  may  compel  arbitration  simply  by
                        ______          submitting  a unilateral "demand for arbitration," relying on the
                        __________          broad-based agreement to arbitrate as the sole source of arbitral
                                                         ______          authority.  See, e.g., N.Y. Civ. Prac. L. & R.    7503(c) (1993);
                      ___  ____          Cohen v. Cohen, 233 N.Y.S.2d  787, 791 (App. Div. 1962) (describ-
          _____    _____          ing  arbitration proceedings which may be commenced on unilateral          "demand").   Second, even  where the contract  either includes no          arbitration  clause or excludes particular kinds of "claims" from          arbitration, the contracting  parties later may agree  in writing          to  arbitrate  any  or all  such  otherwise  nonarbitrable claims          ("uncovered  claims"), simply by  entering into a  joint arbitral          "submission."  Id.   As arbitral "jurisdiction" is dependent upon
                         ___          a written agreement  between the parties,5 however,  any exercise          of arbitral  authority over uncovered claims    absent a "meeting                              
          ____________________               5Although there no  longer exists an  impenetrable extrinsic          "jurisdictional" obstacle to  arbitral authority over Rule  10b-5          claims, see McMahon,  482 U.S. at 227-38, supra  note 3, arbitral
                  ___ _______                       _____          authority over such  a claim nonetheless depends  upon the mutual          consent of the parties.                                          10

          of the minds" duly memorialized in a joint arbitral submission             would constitute an exces de pouvoir.   See N.Y. Civ. Prac. L.  &
                              _____ __ _______    ___          R.    7501 (putative  agreements to  arbitrate are  unenforceable
                                                              _____________          unless reduced to writing).          D.   The Scope of the Arbitration Clause
          D.   The Scope of the Arbitration Clause
               ___________________________________                    The arbitration clause in the Agreement, which provides          that  "arbitration  shall  not be  mandated  on  claims asserting          violation(s)  of  Federal  securities/commodities  laws,"  places          Wolf's Rule 10b-5  claim squarely into the latter  category.  Cf.
                                                                        ___          Church v. Gruntal & Co., 698 F. Supp. 465, 468-69 (S.D.N.Y. 1988)
          ______    _____________          (holding  that identical  contract language  excluded  Rule 10b-5
                         _________          claim from arbitration).   As the district  court recognized, the          Agreement  expressly  provided  that  all non-federal  securities
                                                    ___________          disputes were to be arbitrated but conferred no arbitral authori-          ty over the Rule 10b-5 claim.  Nor did the Agreement require Wolf
                                                               _______          to  initiate an arbitral "submission" encompassing the Rule 10b-5          claim.   See Rembrandt  Indus., Inc. v.  Hodges Int'l,  Inc., 359
                   ___ _______________________     ___________________          N.Y.S.2d  807, aff'd,  344  N.E.2d at  384  ("Where, however,  [a
                         _____          'compulsory' counterclaim,  arising from  the same  transaction,]          not  passed upon  by the  arbitrators is  the subject of  a later          action;  obviously the  [arbitral] award  is  not a  bar to  that          action."); Cine-Source,  581 N.Y.S.2d  at 10  (rejecting, in  the
                     ___________          context  of a broad-based arbitration clause, the contention that          "res judicata  applies not only  to [claims] which  were actually          decided in  arbitration but also  to those which could  have been
                                                           _____  ____ ____          asserted .  . . ."); Lopez  v. Parke Rose Management  Sys., Inc.,
          ________             _____     _________________________________                                          11

          526  N.Y.S.2d 156,  158  (App. Div.  1988)  ("[T]he doctrines  of          collateral estoppel and res judicata apply to arbitration awards,          . . . [h]owever, where an issue  not passed upon by an arbitrator          is the subject of a subsequent action, the  award is not a bar to          that  action .  . . .");  Conforti &  Eisele, Inc. v.  William J.
                                    ________________________     __________          Scully, Inc., 469 N.Y.S.2d 400, 400-01  (App. Div. 1983) (holding
          ____________          no res  judicata effect  to "limited"  arbitral submission,  even
             ___  ________          where  plaintiff presented, then withdrew, the same "claims" from
                           _________       ________          the first arbitrator during arbitration).6                       As  the proponent of the res judicata defense, Gruntal
                                              ___ ________          was charged with the burden of proving, see Rembrandt, 344 N.E.2d
                                                  ___ _________          at  384 (claim  and issue  preclusion); see  also Kaufman  v. Eli
                                                  ___  ____ _______     ___          Lilly  & Co.,  482 N.E.2d  63, 67  (N.Y. 1985)  (same, collateral
          ____________          estoppel);  Clark  v.  Scoville, 91  N.E.  800,  802  (N.Y. 1910)
                      _____      ________          (same); cf. also Blonder-Tongue Lab., Inc.  v. University of Ill.
                  ___ ____ _________________________     __________________          Found., 402 U.S.  313, 350 (1971); Clark  v. Bear Stearns &  Co.,
          ______                             _____     ___________________          966 F.2d 1318, 1321 (9th Cir. 1992), at a bare minimum, cf. supra
                                                         _______  ___ _____          note 6,  that the arbitral forum possessed  jurisdiction over the          Rule 10b-5  claim at  the time Wolf  demanded arbitration  on the
                            __  ___ ____ ____  ________ ___________  __ ___          state-law claims.  Notwithstanding the prediction indulged by the
          _________ ______                              
          ____________________               6Indeed, as  indicated in  the accompanying  text, the  cir-          cumstances in these New York  cases suggest a far narrower appli-          cation of  res judicata  principles in  the  context of  arbitral
                     ___ ________          awards than need  be deployed here.  Thus,  even in circumstances          where either party  could have  submitted a  particular claim  or
                ______          issue to compelled arbitration pursuant to a broad-based, written          arbitration  clause conferring  "jurisdiction"  upon an  arbitral          forum, the  governing preclusion  principles under  New York  law          would bar  only claims or  issues actually submitted  to arbitra-
                                            ________ _________          tion.                                            12

          district  court     that  Gruntal  would  have been  amenable  to          arbitration in  March 1993     the Rule 10b-5 claim  was mutually
                                                                   ________          withheld   from  arbitration  under  the  express  terms  of  the
          ________          Agreement, and no joint arbitral submission was ever attempted or          memorialized between Wolf and Gruntal.                      Under  New York law, see, e.g., Cine-Source, 581 N.Y.S.
                                         ___  ____  ___________          2d at  10, absent  a bilateral, written  submission, an  arbitral
                               _________  _______          forum  (unlike a judicial forum exercising its presumptive juris-
                                                         ___________          diction)  could not acquire "jurisdiction" over Wolf's Rule 10b-5          claim.  Consequently, the arbitral award could not preclude later
                                                   _____ ___          litigation of  the Rule 10b-5  claim in  federal district  court.          See, e.g., Clark, 966 F.2d  at 1321 ("[P]ursuant to the  terms of
          ___  ____  _____          Bear  Stearns'  [contractual]  agreement  with Clark  .  .  . the          arbitration panel did  not have subject matter  jurisdiction over          Clark's federal claims, [and]  Clark could not have  brought them          in  the prior  [arbitration]  proceeding.").7    Of  course,  had                              
          ____________________               7The  district court apparently misapprehended the thrust of          the Clark  case citation to  Dean Witter Reynolds, Inc.  v. Byrd,
              _____                    __________________________     ____          470 U.S. 213, 220 n.6  (1985), for the overbroad proposition that          enforcement  of an  arbitration agreement  "ousts"  a court  from          jurisdiction over the entire dispute.   See Wolf, 1994 U.S. Dist.
                                                  ___ ____          LEXIS 7627, at  *7 (citing Clark, 966  F.2d at 1321).   Viewed in
                                     _____          context,  the Clark citation  to Byrd merely  emphasized that the
                        _____              ____          Federal  Arbitration Act  had been  enacted  to "ensure  judicial          enforcement  of privately made  agreements to arbitrate"  even if
                                                                    ____ __          that  "require[ed] piecemeal  resolution when  necessary  to give
                             _________  __________          effect to  an arbitration agreement."   Byrd, 470 U.S.  at 220-21
                                                  ____          (quoting Moses H. Cone  Memorial Hosp. v. Mercury Constr.  Corp.,
                   _____________________________    ______________________          460  U.S. 1, 24-25 (1983)) (emphasis added).   Thus, in Clark, as
                                                                  _____          here, the district court retained exclusive jurisdiction over the
                                            _________          Rule 10b-5  claim absent a  written, bilateral  agreement to  the          contrary.                Gruntal  cites  Kelly  v. Merrill  Lynch,  Pierce,  Fenner &
                               _____     __________________________________          Smith, 985 F.2d  1067, 1069-70 (11th Cir.), cert.  denied, 114 S.
          _____                                       _____  ______          Ct 600 (1993), to no avail.  There, the "precluding" judgment had                                          13

          Gruntal wished to impress the ensuing arbitral award with preclu-          sive effect vis-a-vis the Rule 10b-5 claim, it could have endeav-          ored to persuade Wolf to join an arbitral submission.  See Ticker
                                                                 ___ ______          v. Trager,  482 N.Y.S.2d  535, 536 (App.  Div. 1984) ("No  one is
             ______          under a duty to resort to arbitration unless by clear language he          has so agreed.") (quoting Lehman  v. Ostrovsky, 264 N.Y. 130, 132
                                    ______     _________          (1934)).                                         III
                                         III                                      CONCLUSION
                                      CONCLUSION
                                      __________                    Although Wolf incorrectly  represents that the district          court ousted or impeded arbitral jurisdiction over the Rule 10b-5          claim, see supra note 2, the district court nonetheless  retained
                 ___ _____          exclusive  jurisdiction over  the  Rule  10b-5  claim  absent  an
          _________          enforceable  arbitral  submission  encompassing  the  Rule  10b-5          claim.  Consequently,  Gruntal was not entitled to  judgment as a          matter of law, see Jirau-Bernal,  37 F.3d at 3, and  the district
                         ___ ____________          court judgment dismissing the  Rule 10b-5 claim on claim  preclu-          sion grounds must be vacated.                               
          ____________________          been  rendered by a  federal district court  presumptively vested          with "federal question" jurisdiction over the plaintiff's  uncov-          ered Rule 10(b)(5)  claim, as well  as with pendent  jurisdiction          over his four  state-law claims.  As the  defendant's consent was
                                                                _______          not necessary to  enable plaintiff Kelly to assert  his state-law          claims in  the federal  district court  action, res judicata  did
                                                          ___ ________          indeed  preclude  later  arbitration  of  the  pendent  state-law          claims.  Id.
                   ___                                          14

                    The district  court judgment is  vacated.  The  case is
                    The district  court judgment is  vacated.  The  case is
                    _______________________________________________________          remanded for  further proceedings  consistent with  this opinion.
          remanded for  further proceedings  consistent with  this opinion.
          ________________________________________________________________          Costs to appellant.
          Costs to appellant.
          __________________                                                      15