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PERRY v. ICN PHARMACEUTICALS

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


September 20, 1994

D.C. PERRY, Plaintiff,
v.
ICN PHARMACEUTICALS, et al, Defendants.

The opinion of the court was delivered by: VINCENT L. BRODERICK

MEMORANDUM ORDER

 VINCENT L. BRODERICK, U.S.D.J.

 I

 Plaintiff D.C. Perry ("Perry") was originally a potential member of a class on behalf of which suit had been brought against ICN Pharmaceuticals ("ICN") and various financial firms and their personnel based upon alleged securities violations growing out of asserted misinformation regarding ICN. *fn1" Perry has now opted out of the class action. *fn2" Defendants Prudential Securities Incorporated ("Prudential") and its employee John McEnroe (collectively the "moving defendants") have moved to compel arbitration of Perry's claims against them and to stay this litigation with respect to Perry's claims against them pending such arbitration. The motion is granted; the moving defendants are directed to submit a proposed order upon notice. Plaintiff has moved for adoption of a discovery schedule; that motion is denied as moot.

 II

 It is undisputed that on or about December 5, 1986, plaintiff signed a broadly phrased arbitration agreement applicable to his current claims. See Affidavit of Andrew Sidman (7/26/94) P 21 at 7-8. Instead, plaintiff contends that referral of his claims to arbitration has been waived by litigation activity on the part of the moving defendants, and would unfairly prejudice plaintiff.

  Plaintiff filed his suit in Indiana in 1987 and has taken no discovery or other affirmative steps to litigate the merits at any time, other than a 1994 request for a discovery schedule. The moving defendants successfully requested transfer of plaintiff's claims from Indiana to this district, but likewise have taken no affirmative steps to litigate the merits with plaintiff. Discovery has been taken in the class actions, from which plaintiff has opted out; such discovery may benefit plaintiff, and no harm to him from it has been suggested. Any inability to obtain judicial discovery if arbitration is ordered is a consequence of the arbitration agreement signed by plaintiff.

 Under these circumstances no waiver of arbitration can be inferred and no improper prejudice to plaintiff from referral to arbitration has been shown. See generally Rush v. Oppenheimer, 779 F.2d 885 (2d Cir 1985). Under the United States Arbitration Act (Title 9 USC), the agreement is enforceable. Moses H. Cone Memorial Hospital v. Mercury Construction, 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983); Dean Witter Reynolds v. Byrd, 470 U.S. 213, 84 L. Ed. 2d 158, 105 S. Ct. 1238 (1985); Deloitte Noraudit v. Deloitte Haskins & Sells, 9 F.3d 1060, 1063 (2d Cir 1993).

 Pendency of a suit by plaintiff against ICN and others concerning overlapping subject matter cannot deprive the moving defendants of the benefit of their arbitration agreement with plaintiff; otherwise arbitration could be defeated at any time when related litigation with nonsignatories of the arbitration agreement was initiated. This would destroy the usefulness of arbitration in many complex commercial contexts, contrary to the objectives of the United States Arbitration Act. No authority for giving effect to such a means of bypassing arbitration agreements has been provided.

 Arbitration agreements with institutional entities also cover claims against their employees based on the same facts, including here the defendant McEnroe. Scher v. Bear Stearns & Co., 723 F. Supp. 211, 212-17 (SDNY 1986); Roby v. Corporation of Lloyd's, 996 F.2d 1353, 1360 (2d Cir), cert. denied 114 S Ct 383 (1993). Plaintiff can hardly be prejudiced insofar as Prudential is a solvent and fully responsible party. Chambers v. Capital Cities, 851 F. Supp. 543, 546 (SDNY 1994).

 SO ORDERED.

 Dated: White Plains, New York

 September 20, 1994

 /s/ John S. Martin, USDJ for VINCENT L. BRODERICK, U.S.D.J.


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