Pearl Kehr v. Smith Barney, Harris Upham & Co., Incorporated Glenn Nordskog and Jim Martin

concurring:

I concur in the result reached in Judge Nelson’s carefully written Opinion. At the same time, however, I disassociate myself from some of the majority’s comments in respect to the conduct of the appellee’s attorney. At one point, the majority characterizes some of the attorney’s comments as “offending,” and at another point, the majority writes “We have no trouble concluding that Lauchengco’s remarks were improper.” Since I have more than even slight “trouble” in so concluding, I cannot conscientiously endorse or approve the quoted sentence.

The appellee alleged, in effect, that she had been swindled by the appellants, designated collectively by the majority as “Smith Barney.” Smith Barney is a large, nationally respected investment firm, and the jury determined, as alleged, that two individual agents of the firm had betrayed the trust that the appellee, an unsophisticated lady, had reposed in Smith Barney. Comments made by attorneys in opening statements are, of course, not evidence, and no citation is required for the elementary proposition that attorneys are allowed wide latitude in their closing arguments to juries. This being true, it seems to me that when one…

A jury found Smith Barney, Harris Up-ham & Co., Inc. and two of its employees (“Smith Barney”) liable to Pearl Kehr under section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 for improperly involving her in sophisticated options transactions, the riskiness of which she was unable to understand. On appeal, Smith Barney contends that the district court improperly 1) denied its motion for a new trial based on the misconduct of Kehr’s attorney at trial; 2) denied its motion for judgment notwithstanding the verdict based on Kehr’s failure to prove scienter; and 3) refused to consider its motion to compel arbitration of Kehr’s pendent state claims. We affirm.

FACTS AND PROCEDURE

Pearl Kehr, a client of Smith Barney, sued the firm and two of its employees in 1981 alleging violations of both federal and state securities laws resulting in losses of over $100,000 to her accounts. She claimed that Smith Barney had misled her into believing that her speculative investments were in fact safe.

The district court originally ruled that it would exercise pendent jurisdiction to retain all of the state claims in the federal court action. The case was then unexpectedly transferred…

736 F.2d 1283 39 Fed.R.Serv.2d 924 , Fed. Sec. L. Rep. P 91,547 Pearl KEHR, Plaintiff/Appellee, v. SMITH BARNEY, HARRIS UPHAM & CO., INCORPORATED; Glenn Nordskog; and Jim Martin, Defendants/Appellants. No. 83-5930. United States Court of Appeals, Ninth Circuit. Submitted April 3, 1984. Decided June 25, 1984. As Amended July 5, 1984. Michael J. Abbott, Jones, Bell, Simpson & Abbott, Los Angeles, Cal., for defendants/appellants. Jose Y. Lauchengco, Los Angeles, Cal., for plaintiff/appellee. Appeal from the United States District Court for the Central District of California. Before ELY, SCHROEDER and NELSON, Circuit Judges. NELSON, Circuit Judge: 1 A jury found Smith Barney, Harris Upham & Co., Inc. and two of its employees ("Smith Barney") liable to Pearl Kehr under section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 for improperly involving her in sophisticated options transactions, the riskiness of which she was unable to understand. On appeal, Smith Barney contends that the district court improperly 1) denied its motion for a new trial based on the misconduct of Kehr's attorney at trial; 2) denied its motion for judgment notwithstanding the verdict…