Peterson v. Philadelphia Stock Exchange, Civ. A. No. 89-0925.

• Decision Date: 28 July 1989
• Docket Number: Civ. A. No. 89-0925.
• Citation: Peterson v. Philadelphia Stock Exchange, 717 F.Supp. 332 (E.D. Pa. 1989)
• Parties: Christopher J. PETERSON v. PHILADELPHIA STOCK EXCHANGE, Murray L. Ross, Esq., and Bear Stearns & Co., Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

717 F. Supp. 332

Christopher J. PETERSON v.PHILADELPHIA STOCK EXCHANGE, Murray L. Ross, Esq., and Bear Stearns & Co., Inc.

Civ. A. No. 89-0925.

United States District Court, E.D. Pennsylvania.

July 28, 1989.

Phyllis Horn Epstein, Philadelphia, Pa., for plaintiff.

Barry F. Schwartz, Wolf, Block, Schorr et al., Philadelphia, Pa., Gary L. Leshko, for defendants.

Diana S. Donaldson, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for Philadelphia Stock Exchange, Murray L. Ross.

MEMORANDUM-ORDER

CLIFFORD SCOTT GREEN, District Judge.

Presently before me are Philadelphia Stock Exchange (the "Exchange" or "PHLX") and Murray L. Ross's Motion To Dismiss The Amended Complaint, Bear Stearns & Co., Inc.'s ("Bear Stearns")Motion To Dismiss The Amended Complaint, and various responses thereto.For the following reasons, the Motions will be granted, in part, and denied, in part.

BACKGROUND¹

The plaintiff, Christopher J. Peterson, is a former officer and employee of Lakshmi Securities Corporation("Lakshmi").In 1987, Lakshmi became insolvent and indebted to PHLX, in the amount of $18,507.27, and to Bear Stearns for $7,437,257.00.In an attempt to collect on its debt, Bear Stearns attached Mr. Peterson's personal assets, and filed arbitration actions with PHLX and the Chicago Board Options Exchange("CBOE").

In 1988, Mr. Peterson sought membership in PHLX in order to secure employment with Setsudo Securities Corporation, an Exchange member.At that time, PHLX, and its employee, Murray L. Ross, informed Mr. Peterson that, under the Exchange's rules, he could not become a member of PHLX unless he satisfied the claims of all Lakshmi creditors.Allegedly, Mr. Ross and Bear Stearns told Mr. Peterson, and others in the investment community, that Mr. Peterson would never work again on the Exchange.That Fall, Mr. Peterson was denied membership by the PHLX Admissions Committee.Mr. Peterson appealed this decision to the PHLX Board of Governors.

Soon thereafter, Mr. Peterson commenced this action against the defendants.In Count I of the Amended Complaint, Mr. Peterson asserts that the defendants have engaged in an illegal conspiracy in the restraint of trade under 15 U.S.C. §§ 1, and seeks remedies under the Clayton Act,15 U.S.C. §§ 15,26.Count II asserts defamation claims against Bear Stearns, and Mr. Ross.Mr. Peterson also claims that all of the defendants tortiously interfered with his contractual and business relationships in Count III of the Amended Complaint.In Count IV, the plaintiff alleges that the defendants acted in violation of the Hobbs Act,18 U.S.C. § 1951.The Amended Complaint also asserts claims against the defendants based on the Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. §§ 1961-1968.Finally, the plaintiff asks this court to enjoin the defendants from "continuing, maintaining or renewing the combination, conspiracy and/or agreement," and for an order "admitting him to membership with the PHLX."Amended Complaint, ¶ (C).These requests are based on 18 U.S.C. § 1964, and15 U.S.C. § 26.²

DISCUSSION

I.

The defendants move to dismiss the Amended Complaint, pursuant to Fed.R. Civ.P. 12(b)(6), for failure to state a claim.Such dismissal is appropriate only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."Conley v. Gibson,355 U.S. 41, 45-6, 78 S.Ct. 99, 102, 2 L.Ed.2d 80(1957).In making this determination, the court must accept all factual allegations of the complaint as true, and draw all reasonable inferences in favor of the non-moving party.See2A G.Grotheer, Jr., J.D. Lucas, & J. Moore, Moore's Federal Practice, ¶ 12.072.-5 (2d ed. 1985).With this in mind, I turn to the defendants' motions.

Count I

In Count I, Mr. Peterson asserts that the defendants' conspiratorial actions "constitute unreasonable restraints upon interstate trade and commerce so as to have prevented Plaintiff from carrying on a business on the PHLX or the CBOE,"Amended Complaint, ¶ 20, in violation of the Sherman Anti-Trust Act, 15 U.S.C. § 1.Accordingly, Mr. Peterson seeks damages and injunctive relief under the Clayton Act,15 U.S.C. §§ 15,26.For different reasons, the defendants assert that the Amended Complaint fails to state a claim under § 1.

BEAR STEARNS

Bear Stearns attacks the Amended Complaint by arguing that Mr. Peterson fails to allege sufficient facts to support his anti-trust claims.Under § 1 of the Sherman Anti-Trust Act, "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

In this Circuit:

to establish a civil cause of action under Section 1 of the Sherman Anti-Trust Act, a plaintiff must prove four elements:

(1) that the defendants contracted, combined or conspired among each other; (2) that the combination or conspiracy produced adverse, anti-competitive effects within the relevant product and geographic markets; (3) that the objects of and the conduct pursuant to that contract or conspiracy were illegal; and (4) that the plaintiffs were injured as a proximate result of that conspiracy.

Arnold Pontiac-GMC, Inc. v. General Motors Corp.,786 F.2d 564, 572(3d Cir.1986)(citations omitted).

In viewing all of the allegations of the Amended Complaint as true, I find that Mr. Peterson does allege facts to support the conspiracy³, illegal conduct⁴, and injury⁵ elements of his section 1 claim.Moreover, Mr. Peterson has alleged facts from which this court can infer that the defendants' conduct constitutes a per se violation of section 1⁶ had an adverse effect on the market⁷.See generallyAmended Complaint, ¶¶ 1-21.

Viewing the Amended Complaint liberally, Mr. Peterson is a person who has been, or shall be, injured by an anti-trust violation.Thus, his claims for relief, under sections 4and16 of the Clayton Act,15 U.S.C. §§ 15(a),26, do not warrant dismissal.Essentially, dismissal of the § 1 claim, at this stage of litigation, would be premature.SeeHospital Building Co. v. Trustees of the Rex Hospital,425 U.S. 738, 746-47, 96 S.Ct. 1848, 1853, 48 L.Ed.2d 338(1976)("In antitrust cases, where `the proof is largely in the hands of the alleged conspirators,' ... dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly.").Accordingly, Bear Stearns' Motion to Dismiss Count I must be denied.

THE EXCHANGE

PHLX and Mr. Ross move for dismissal based on the argument that the Exchange is immune from the anti-trust laws.Without question, immunity will be implied "where there is a `plain repugnancy between the antitrust and regulatory provisions.'"Gordon v. New York Stock Exchange,422 U.S. 659, 682, 95 S.Ct. 2598, 2611, 45 L.Ed.2d 463(1975)(citations omitted).See alsoWinkleman v. New York Stock Exchange,445 F.2d 786, 789(3d Cir.1971).That is not the situation here.

In viewing the facts in the Amended Complaint as true, and drawing all reasonable inferences in favor of the plaintiff, Mr. Peterson is not complaining about PHLX's adherence to its rules, but about its conspiracy to blacklist him from the securities market.This alleged conduct is outside agency regulation.Thus, the doctrine of "implied repeal" is inapplicable.SeeGordon v. New York Stock Exchange,422 U.S. at 686-89, 95 S.Ct. at 2613-14.PHLX's12(b)(6) Motion will therefore be denied.

Count IV

In Count IV of the Amended Complaint, Mr. Peterson sets forth a civil claim for treble damages based on the Hobbs Act,18 U.S.C. § 1951.The defendants assert, without opposition from the plaintiff, that the Hobbs Act provides no implicit civil remedy.I agree.

Under the Hobbs Act,

whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years or both.

18 U.S.C. § 1951(a).

As the Supreme Court has held, a private cause of action may be implied from a criminal statute, seeCort v. Ash,422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26(1975), where there is a factual basis for believing that Congress so intended.SeeMiddlesex County Sewerage Authority v. National Sea Clammers Assoc.,453 U.S. 1, 13, 101 S.Ct. 2615, 2622, 69 L.Ed.2d 435(1981).This court must first look to the language of the statute, and then to the legislative history in order to assess Congressional intent.453 U.S. at 13, 101 S.Ct. at 2623.

The Hobbs Act contains no language which suggests it can provide civil relief.Moreover, this court cannot find congressional concern for civil relief in the legislative history.See78 Cong.Rec. 448-60, 5735, 11402-03, 11482(1934);H.R.Rep. No. 238, 79th Cong., 2d Sess., 1360-70(1946)."In the absence of strong indicia of a contrary congressional intent, I am compelled to conclude that Congress provided precisely the remedies it considered appropriate."Middlesex County Sewerage Authority v. National Sea Clammers,453 U.S. at 15, 101 S.Ct. at 2623.Since the Hobbs Act only provides for criminal sanctions,⁸ Count IV fails to state a civil claim for relief.

Count V

In Count V of the Amended Complaint, Mr. Peterson alleges that the defendants acted in violation of sections (c), and (d) of the Racketeer Influenced and Corrupt Organization Act, 18 U.S.C. §§ 1962(c), (d)("RICO").Section 1962(c) prohibits:

any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or

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