Dickstein v. DuPont, Civ. A. No. 70-400-M.

• Court: United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
• Writing for the Court: FRANK J. MURRAY
• Citation: 320 F. Supp. 150
• Parties: Merritt DICKSTEIN, Plaintiff v. Edmond duPONT et al., as they are the partners of Francis I. duPont & Co., Defendants.
• Decision Date: 08 December 1970
• Docket Number: Civ. A. No. 70-400-M.

320 F. Supp. 150

Merritt DICKSTEIN, Plaintiff
v.
Edmond duPONT et al., as they are the partners of Francis I. duPont & Co., Defendants.

Civ. A. No. 70-400-M.

United States District Court, D. Massachusetts.

December 8, 1970.

320 F. Supp. 151

David S. Mortensen, C. Keefe Hurley, Earle C. Cooley, Hale & Dorr, Boston, Mass., for plaintiff.

James C. Heigham, Choate, Hall & Stewart, Boston, Mass., for defendants.

MEMORANDUM

FRANK J. MURRAY, District Judge.

This case came to be heard upon defendants' motion to stay proceedings pursuant to 9 U.S.C. § 3,¹ and upon plaintiff's

320 F. Supp. 152

motion to stay the arbitration. This is a diversity action in contract brought against all the partners of Francis I. duPont & Co. (duPont), a member firm of the New York Stock Exchange (NYSE), by Dickstein, a former "account executive" for duPont. In his complaint he alleges the defendants failed to pay him a fair and reasonable "finder's fee" for procuring a customer for defendants' services. The defendants have moved that all the proceedings be stayed until the matter is settled according to the arbitration procedures of NYSE as required in the "Application for Approval of Employment" (NYSE Form No. RE-1),² executed by the plaintiff as a condition of his employment.³ The court rejects all of plaintiff's objections to the stay and will comment on several in this memorandum

The plaintiff contends his employment with defendants was that of a worker engaged in foreign or interstate commerce and thus excluded from the arbitration requirements of 9 U.S.C. § 1.⁴ But as an account executive, plaintiff was not "engaged in the movement of interstate or foreign commerce or in work so closely related thereto as to be in practical effect part of it".⁵

Although his duties were not those of a "worker" within the meaning of 9 U.S.C. § 1, defendants, nevertheless, must show that plaintiff's employment with defendants was under or in pursuance of "a contract evidencing a transaction involving commerce", as required by section 2 of 9 U.S.C.⁶ This requirement is satisfied if plaintiff's employment contract involved work "`in' commerce, * * * producing goods for commerce, or * * * engaging in activity that affected commerce". Bernhardt v. Polygraphic Co., 350 U.S. 198, 201, 76 S.Ct. 273, 100 L.Ed. 199 (1956). Unlike the local supervisory duties in the Bernhardt employment contract,⁷ Dickstein's

320 F. Supp. 153

duties, as an account executive, contemplated that he would be free to find prospective customers for defendants' services anywhere, and not within the confines of a designated State. Defendants' business was conducted in many states, utilizing interstate facilities. What was expected of plaintiff when he entered defendants' employ, and assuredly what plaintiff himself expected, is that in performing his duties he would either travel to or reach out for prospective customers of defendants wherever they might be found. Such activity clearly contemplated use of interstate travel or communication facilities whenever necessary to find the prospect and was thus an activity that affected commerce. See Prima Paint v. Flood & Conklin, 388 U.S. 395, 401, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Hilti, Inc. v. Oldach, 392 F.2d 368, 371 n. 6 (1st Cir. 1968). In passing it is observed that the prospective customer for which plaintiff claims a finder's fee in this action is a Maine corporation, also engaged in business in other New England States and New York. The court concludes the employment contract falls within section 2 as one evidencing a transaction affecting interstate commerce

The plaintiff also argues that the stay should be refused because the NYSE Form RE-1 violates the Sherman Act, 15 U.S.C. §§ 1 and 2,⁸ and thereby constitutes grounds "for the revocation of the contract", as provided by 9 U.S.C. § 2.⁹ Resolution of this claim of illegality is a matter for this court and not the arbitrators. American Safety Equipment Corp. v. J. P. Maguire & Co., 391 F.2d 821 (2d Cir. 1968); cf. Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953). Plaintiff does not contend that NYSE approval of employment in itself violates the Sherman Act, but does assert that conditioning the approval upon an employee's consent to arbitration tends to restrain trade and monopolize commerce among the several states. Stock exchanges stand in a somewhat favored position relative to the Sherman Act. They have been given a broad self-regulatory grant of authority under the Securities Act of 1934, 15 U.S.C. § 78a et seq.; and though their activities are not wholly exempt from the antitrust regulations, yet they enjoy freedom from the strictures of the Sherman Act within the scope of the self-regulatory grant. See Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963) (antitrust violation might be "justified" and, hence, unenforceable, if the Exchange's activity fell within the scope and self-regulatory purposes of the Securities Act of 1934).¹⁰ It is not readily apparent that duPont's requirement of submission to arbitration, as a condition of employment approval, would...