Fed. Sec. L. Rep. P 98,206 Richard De Lancie v. Birr, Wilson & Co., a California Corporation, Brian Newman, and Don Mayo

Richard De Lancie appeals from the district court’s order staying his securities fraud action pending arbitration of the dispute. The major question is whether De Lancie is bound under Pacific Stock Exchange (PSE) rules to arbitrate his federal claims because defendant Birr, Wilson & Co. (Birr Wilson) is a PSE member and De Lancie became an associated person of that Exchange during the period in which the alleged securities violations were occurring. De Lancie claims he did not waive his right to bring a federal suit by virtue of his associated membership. We agree, and reverse the district court order.

I

De Lancie maintained a discretionary trading account with Birr Wilson from October 1976 through March 1978. Defendant Brian Newman, supervised by defendant Mayo, managed the account, primarily buying and selling option contracts.

In late 1977, De Lancie, Newman and a third person formed a partnership named Dever Associates. The Securities and Exchange Commission licensed Dever Associates as a securities dealer-broker, and on December 27, 1977, Dever became a member firm of the PSE. 1 Dever Associates’ “member firm” status was acquired in the name of Brian Newman, who remained…

Concurring in Part Only:

I concur in the result reached by the majority. I also concur in that part of the majority opinion that holds that PSE rule XII is inapplicable to De Lancie “because the churning controversy arose from circumstances that occurred before De Lancie became a member, i. e., from October 1976 through December 1978.”

This is sufficient to dispose of this case. It is unnecessary to consider whether the district court’s finding that De Lancie should have known of his claims at the time he joined the PSE is correct and, if so, whether Coenen v. R. W. Pressprich & Co., 453 F.2d 1209 (2d Cir.), cert. denied, 406 U.S. 949 , 92 S.Ct. 2045 , 32 L.Ed.2d 337 (1972) is controlling. The latter issue particularly is too complex, even when the applicable exchange rule is plainly applicable to disputes arising before the aggrieved party became a member, to be resolved by what at best is obiter dicta. I should think it better to confront this issue only when we must.

648 F.2d 1255 Fed. Sec. L. Rep. P 98,206 Richard DE LANCIE, Plaintiff-Appellant, v. BIRR, WILSON & CO., a California Corporation, Brian Newman, and Don Mayo, Defendants-Appellees. No. 79-4355. United States Court of Appeals, Ninth Circuit. Argued and Submitted March 9, 1981. Decided June 26, 1981. William H. Bachrach, Oakland, Cal., for plaintiff-appellant. James S. Barber, Chicago, Ill., argued for defendants-appellees; Edward Fisch, Birr, Wilson & Co., R. Stewart Baird, Jr., Bronson, Bronson & McKinnon, San Francisco, Cal., Arvey, Hodes, Costello & Burman, Chicago, Ill., on brief. Appeal from the United States District Court for the Northern District of California. Before SNEED, TANG and NORRIS, Circuit Judges. TANG, Circuit Judge. 1 Richard De Lancie appeals from the district court's order staying his securities fraud action pending arbitration of the dispute. The major question is whether De Lancie is bound under Pacific Stock Exchange (PSE) rules to arbitrate his federal claims because defendant Birr, Wilson & Co. (Birr Wilson) is a PSE member and De Lancie became an associated person of that Exchange during the period in which the alleged securities…