Court Opinion

ID: 3020015
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:22:06.152861+00
Date Added: 2024-06-11T15:03:29.430610
License: Public Domain

United States Court of Appeals
                              FOR THE EIGHTH CIRCUIT
                                  ___________

                                 No. 97-1259
                                  ___________
Isadore Fendelman; Bernice              *
Fendelman,                              *
                                        *   Appeal from the United States
              Plaintiffs -              *   District Court for the
Appellees,                              *   Eastern District of Missouri
                                        *
     v.                                 *
                                        *
Jerry Stein;                            *
                                        *          [UNPUBLISHED]
              Defendant - Appellant,    *
                                        *
Newhard Cook & Company; Advest,         *
Inc.,                                   *
                                        *
                      Defendants.
                                 ___________

                         Submitted: September 9, 1997
                                        Filed: January 6, 1998
                                  ___________

Before McMILLIAN, HANSEN, and MURPHY, Circuit Judges.
                               ___________

PER CURIAM.
      Jerry    Stein     appeals   the    district   court’s1    order   confirming       an
arbitration award and entering judgment in favor of                Isadore and Bernice
Fendelman.       Stein    argues   the    district   court      lacked   subject   matter
jurisdiction to enter this order.          We affirm.

      On January 25, 1990, the Fendelmans brought suit in federal district
court against their broker, Jerry Stein, and other defendants not involved
in this appeal.    Their    complaint alleged federal securities law violations,
federal Racketeer Influenced and Corrupt Organizations Act (RICO) violations,
and various state law claims.            In April 1994, the district court granted
Stein’s request to stay the proceedings in the district court pending
arbitration by the National Association of Securities Dealers, Inc. (NASD).
In the NASD arbitration, the Fendelmans made the same factual allegations and
legal claims against Stein as they had made in their complaint filed in
district court.     The arbitrators ruled in favor of the Fendelmans based on
their state law claims, awarding $338,000 in actual damages, $165,000 in
punitive damages, $24,000 for attorneys’ fees, and $250 for the arbitration
filing fee.    The arbitrators denied all the Fendelmans’ federal law claims.

      In September 1995, the Fendelmans moved the district court to confirm
the NASD arbitration award and enter judgment against Stein.             Stein responded
by filing a motion to dismiss, arguing the district court lacked subject
matter jurisdiction because the arbitrators had denied the Fendelmans relief
on their federal law claims, and

      1
        The Honorable Edward L. Filippine, United States District Judge for the Eastern
District of Missouri.

                                           -2-
therefore, the court no longer had federal question or pendent jurisdiction2
over the remaining state law claims.             The district court denied Stein’s
motion to dismiss, confirmed the arbitration award, and entered judgment in
favor of the Fendelmans.

      Stein argues that the NASD arbitrators’ denial of the Fendelmans’
federal    law   claims   divested    the      district    court   of   subject   matter
jurisdiction.    All parties agree that the district court had subject matter
jurisdiction over the Fendelmans’ complaint.         The court had jurisdiction over
the federal law claims pursuant to federal question jurisdiction, 28 U.S.C.
§ 1331, and pendent jurisdiction over the state law claims because they arose
from the same “common nucleus of operative fact” as the federal claims.
United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966).            Under the common law
doctrine of pendent jurisdiction, a federal court can decide a plaintiff’s
state law claims arising from the same set of facts as the plaintiff’s
federal claim even if the court rules against the plaintiff on the federal
claims.   Siler v. Louisville & Nashville R.R., 213 U.S. 175, 191 (1909).            The
NASD arbitrators ruled in favor of the Fendelmans on their state law claims,
but against them on their federal law claims.             This was analogous to a jury
award finding for the plaintiffs on their state law claims and against them
on their federal law claims, which certainly would not divest the federal
court of jurisdiction to enter judgment on the award.              Under the holding in
Siler, it is clear that the arbitration award did not divest the federal
court of its subject matter jurisdiction.

      2
        Subsequent to the filing of the Fendelmans’ complaint in this case, Congress
codified the common law doctrine of pendent jurisdiction in 28 U.S.C. § 1367 (1994),
as “supplemental jurisdiction.” Because this case was filed prior to its enactment, we
refer to the common law terminology of “pendent” jurisdiction.

                                         -3-
Therefore, we hold the district court had subject matter jurisdiction to
confirm the arbitration award and enter judgment in favor of the Fendelmans.

     A true copy.

           Attest:

                 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                   -4-