Dean Witter Reynolds Inc. v. Byrd

PETITIONER: Dean Witter Reynolds Inc.
RESPONDENT: Byrd
LOCATION: United States Courthouse

DOCKET NO.: 83-1708
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 470 US 213 (1985)
ARGUED: Dec 04, 1984
DECIDED: Mar 04, 1985

ADVOCATES:
Eric V. Benham - on behalf of the respondent
Eugene W. Bell - on behalf of the petitioner

Facts of the case

Question

Media for Dean Witter Reynolds Inc. v. Byrd

Audio Transcription for Oral Argument - December 04, 1984 in Dean Witter Reynolds Inc. v. Byrd

Warren E. Burger:

We will hear arguments next in Reynolds against Byrd.

Mr. Bell, you may proceed whenever you are ready.

Eugene W. Bell:

Thank you.

Mr. Chief Justice, and may it please the Court, this case is here today, I believe, because the District Court did precisely that which this Court subsequently declared in its decision Southland versus Keating that a federal judge should not do.

That is, the District Court undermined the expectations of the petitioner who desired arbitration pursuant to a contract related to interstate commerce.

This case involves a civil suit filed in the Federal District Court by a customer against the securities broker/dealer.

The complaint asserts four claims under state law, all of which are subject to a valid preexisting agreement to arbitrate.

The customer, in addition to asserting those four state law claims, asserts one claim under the Securities and Exchange Act of 1934.

The petitioner sought arbitration of the four state law claims, but the District Court denied that arbitration, because that court in its subjective determination felt that the factual and legal issues involved in all of the claims were intertwined.

The Ninth Circuit affirmed.

In this regard, the Ninth Circuit is joined by two other circuits who have come down in effect in the same way on a similar issue.

On the other side of the coin, there are three circuits that have come down on the opposite side of this issue.

Thus, there is an even split between six circuits that have considered this issue called intertwining.

The question thus presented today is whether the District Court erred in denying the petitioner's motion for an order compelling arbitration of the respondent's state law claims and staying that arbitration pending judicial resolution of the respondent's claim under the federal securities laws.

Sandra Day O'Connor:

Mr. Bell--

Eugene W. Bell:

Yes?

Sandra Day O'Connor:

--do you think we should assume that a prior arbitration of the state law claims would have preclusive effect in a subsequent federal trial involving the same issues?

Eugene W. Bell:

If you are talking collateral estoppel, I do not believe so, because the mechanisms of arbitration generally are such.

There are no findings of fact.

There is no record.

There is really nothing that would be available to a court, state or federal, subsequently to determine whether or not there was anything decided that would really--

Sandra Day O'Connor:

So in your view, at least, the prior arbitration of the state claims would not have preclusive effect?

Eugene W. Bell:

--Absolutely not.

The facts underlying this case are as follows.

John Paul Stevens:

Mr. Bell, is it not your view, though, that the arbitration should await the federal case?

Eugene W. Bell:

No, sir.

John Paul Stevens:

Oh, you want the arbitration to proceed?

Eugene W. Bell:

I personally would subscribe to the Dickenson theory approach, and that is one of the circuits that have decided against intertwining, and it feels that the protections afforded under the '34 Act are better served by reserving to the federal district court the right of priority to determine the federal securities law claim and thus stay the arbitration until that federal securities law claim has in fact been determined.

John Paul Stevens:

We must have misunderstood one another.

Eugene W. Bell:

I am sorry.