Smiga v. Dean Witter Reynolds, Inc.

Decision Date28 June 1985
Docket NumberNo. 798,D,798
Citation766 F.2d 698
Parties37 Empl. Prac. Dec. P 35,393 Marcy SMIGA, Plaintiff-Appellant, v. DEAN WITTER REYNOLDS, INC., and Raymond B. Anderson, Defendants-Appellees. ocket 84-7528.
CourtU.S. Court of Appeals — Second Circuit

Merrill J. Chapman, New York City, for plaintiff-appellant.

J. Robert Lunney, New York City (Michael P. Manning, Lunney & Crocco, New York City, of counsel), for defendants-appellees.

Before OAKES, MESKILL and PIERCE, Circuit Judges.

PIERCE, Circuit Judge:

Marcy Smiga (Smiga) appeals from confirmation of an arbitration award in favor of appellees Dean Witter Reynolds, Inc. and Raymond B. Anderson (hereinafter jointly referred to as DWR) and the grant of attorneys' fees and excess costs incurred Appellant Smiga primarily contends that the district court lacked jurisdiction to confirm the arbitration award and abused its discretion in awarding attorneys' fees and excess costs to DWR. Appellees maintain that the district court had jurisdiction to confirm the arbitration award and also that the court's award of attorneys' fees and excess costs was justified pursuant to 28 U.S.C. Sec. 1927. We affirm the decision of the district court in favor of appellees.

                in confirming the arbitration award by the United States District Court for the Eastern District of New York, Jacob Mishler, Judge.    See Opinion and Order dated January 9, 1984, and Partial Judgment dated May 14, 1984

Appellant Smiga was a registered representative with the New York Stock Exchange (NYSE) and was employed as a stockbroker by appellee Dean Witter Reynolds, Inc., at its Garden City, Long Island office, from March, 1980 until September, 1981.

On March 27, 1980, Smiga signed an agreement with the NYSE which contained the following provision concerning arbitration:

I agree that any controversy between me and any member or member organization [e.g. DWR] or affiliate or subsidiary thereof arising out of my employment or the termination of my employment shall be settled by arbitration at the instance of any such party in accordance with the arbitration procedure prescribed in the Constitution and Rules then obtaining of the New York Stock Exchange, Inc.

According to DWR, Smiga was mistakenly overpaid more than $13,000. DWR contends that when Raymond B. Anderson, branch manager of Dean Witter Reynolds, Inc., confronted Smiga with this claimed overpayment in September, 1981, she denied being overpaid and refused to return any of the funds. Thereupon, on September 9, 1981, Anderson terminated Smiga's employment.

On March 4, 1982, Smiga filed a complaint against DWR with the Equal Employment Opportunity Commission (EEOC) alleging sexual harassment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000-e et seq. According to Smiga, not only was she not overpaid, but her dismissal resulted from her refusal to grant the manager sexual favors and not from her failure to repay the alleged overpayment. Smiga contends that, in discussing the alleged overpayment and the promissory note which Anderson insisted she sign, Anderson conditioned her continued employment at Dean Witter Reynolds, Inc. on submitting to his sexual advances. According to Smiga, Anderson stated that, in return for the sexual favors, the overpayment would be forgotten. After an evidentiary hearing, the EEOC, on July 30, 1982, found "[n]o reasonable cause ... to believe that the allegations made in [Smiga's] charge are true." The EEOC then issued Smiga a "right to sue" letter.

In the interim, on May 13, 1982, DWR filed a claim against Smiga with the NYSE arbitration department demanding arbitration of its claim for overpayment. The claim was forwarded to Smiga by the NYSE on or about May 28, 1982. Smiga requested that the NYSE decline jurisdiction of this matter, stating that her claim for sexual harassment and DWR's claim for overpayment were "inextricably intertwined" and that an exchange proceeding could not preempt a Title VII action. The NYSE, however, maintained that it had jurisdiction and set November 17, 1982, as the date for the arbitration.

Within the statutory 90 day period provided for under Title VII after receipt of a "right to sue" letter from the EEOC, Smiga commenced an action on November 3, 1982, by filing a complaint in the District Court for the Eastern District of New York, claiming, inter alia, compensatory and punitive damages. Smiga alleged, in eight causes of action, that she was: 1) sexually discriminated against and sexually harassed; 2) deprived of a property right under 42 U.S.C. Sec. 1983; 3) subjected to discriminatory retaliation; 4) victimized by On November 12, 1982, Smiga moved for a preliminary injunction with respect to the arbitration hearing set for November 17, 1982. On November 16, 1982, Judge Mishler denied this motion and stated in part:

an anticompetitive group boycott by barring her from employment in the securities industry unless she signed the arbitration agreement; 5) deprived of rights and privileges secured by the Constitution; 6) defamed; 7) abusively discharged; and 8) deprived of her final paycheck. In addition, the complaint requested a declaratory judgment with appropriate injunctive relief holding that Smiga's arbitration agreement was null, void and unenforceable and that the NYSE be permanently enjoined from asserting jurisdiction over Smiga.

We have [a] strong public policy principle and [that] is the strong public policy that favors arbitration.

[Plaintiff] signed an arbitration agreement. I am convinced that the arbitration has nothing to do with a Title 7 claim. She still has a claim for sex discrimination, the claim that Dean Witter fired her because of her sex.

The motion for a preliminary injunction is denied and it is so ordered.

* * *

* * *

I will not interfere with the arbitration proceedings at all. In light of the history of this, I don't think it is fair to come in on a claim of sex discrimination in the firing and to claim that the arbitration on an overpayment should be denied where it is clear that the arbitration is directed solely to the question of overpayment and not the firing.

The next day, November 17, 1982, Smiga commenced a state action in the Supreme Court, New York County, again seeking a declaratory judgment that her arbitration agreement with DWR was null, void, and unenforceable on the grounds that it was against public policy and that it was an adhesion contract. Smiga also sought again to enjoin DWR from arbitrating its claim against her. Finding that the arbitration had nothing to do with Smiga's Title VII claim and referring to Judge Mishler's decision denying her motion for a preliminary injunction, the state court dismissed this further attempt to stay the arbitration proceeding. Marcy Smiga v. Dean Witter Reynolds, Inc., No. 26826/82, slip op. at 2 (N.Y.Sup.Ct. Jan. 11, 1983).

Thereafter, Smiga sought a stay of the NYSE arbitration proceeding from the Appellate Division, First Department, of the New York Supreme Court. On March 3, 1983, the Appellate Division denied her motion for a stay of arbitration. Marcy Smiga v. Dean Witter Reynolds, Inc., No. M-829, mem. at 1 (N.Y.Sup.Ct.App.Div. March 3, 1983). Although Smiga filed a notice of appeal, no appeal was ever pursued.

A NYSE arbitration hearing was held on February 17, 1983. Although Smiga's attorney, Merrill J. Chapman, was given the opportunity to participate in the hearing, Chapman merely attended the proceedings, but did not participate in them. On March 8, 1983, an arbitration award was unanimously rendered in DWR's favor in the sum of $13,182. Subsequent to this award by the arbitration panel, on May 17, 1983, Smiga filed an amended complaint in her federal action in the Eastern District of New York, deleting any request for injunctive relief and any reference to the arbitration, but reasserting her claim of sexual harassment. She also added claims for intentional infliction of emotional distress and invasion of privacy. In other respects, the amended complaint alleged essentially the same claims as the original complaint.

Following Smiga's failure to pay the March 8 award, DWR moved in Smiga's November 3, 1982 action in the Eastern District of New York to confirm the arbitration award and to dismiss the causes of action claiming abusive discharge and emotional distress pursuant to Fed.R.Civ.P. 12(b)(6). By order dated January 9, 1984, the district court granted DWR's motion to dismiss, treating it as a motion for partial summary judgment pursuant to Fed.R.Civ.P. 56. In addition, the district court granted DWR's motion to confirm the arbitration award. It also granted DWR's motion Thereafter, DWR moved for entry of judgment pursuant to Fed.R.Civ.P. 54(b), and Smiga moved under Fed.R.Civ.P. 59(e) to alter or amend the judgment. By order dated May 14, 1984, the district court denied Smiga's motion, granted appellee DWR's motion, and directed entry of a partial judgment against both Smiga and Chapman requiring them to satisfy the judgments by June 3, 1984. It is from these judgments that Smiga and Chapman now appeal.

                for attorneys' fees and excess costs reasonably incurred in confirming the arbitration award based upon the district court's finding that opposition to the motion to confirm was "frivolous, unreasonable and groundless."    The district court directed Smiga's attorney to pay DWR's attorneys' fees and costs totalling $1,700.23 and directed Smiga, within twenty days of the date of the decision, to pay $13,182, plus interest from March 8, 1983, to DWR.  Smiga's additional causes of action are still pending before the district court

On appeal, appellant Smiga contends that: 1) the arbitration panel lacked jurisdiction to grant, and the district court lacked jurisdiction to confirm, the arbitration award; 2) the arbitration agreement she signed with the NYSE was not enforceable by DWR; 3) the...

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