Plaintiff also argues that his claims arising out of transactions within the CNB account should not go to arbitration. Specifically, plaintiff argues that the agreement which addresses the issue of arbitration does not apply to his account with CNB. We disagree.
The Securities Account Agreement signed by plaintiff covers "all of [his] accounts, in which [he] has an interest alone or with others, which [he has] opened or open in the future, with [Pru-Bache] for the purchase and sale of securities and commodities." In addition, the arbitration provision of this agreement covers "any controversy arising out of or relating to [his] account, to transactions with or for [him] or to this Agreement. . . ." We find that for purposes of defining the limits of the arbitration clause, plaintiff, in granting authority to defendants to transact within his CNB account, in effect opened another account with Pru-Bache. In both accounts, plaintiff contracted for Pru-Bache and Harold Wenger to buy and sell certain securities; it is true that one account was held by Pru-Bache and the other by CNB, but the investment arrangement was basically the same. In the Securities Agreement and in the Options Agreement, the parties effectuated their intent to arbitrate disputes arising out of Pru-Bache's handling of plaintiff's accounts, and disputes arising out of "transactions with or for him." We consider defendants' transactions within the CNB account to be transactions for the plaintiff in an account controlled by Pru-Bache, a de facto Pru-Bache account. Thus, in light of the Supreme Court's counsel to favor arbitration where the scope of the agreement is ambiguous, we will read the language of the agreement broadly, and direct the parties to arbitrate the claims arising out of the activity of the CNB account.
B. Motion to Stay Discovery
Defendants argue that we should stay discovery under the Federal Rules of Civil Procedure while the parties are arbitrating the controversy. Specifically, they argue that because the entire matter will go to arbitration, plaintiff can not use federal discovery to gather information for arbitration. In support of this contention defendant cites Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 353, n.17, 57 L. Ed. 2d 253, 98 S. Ct. 2380 (1978), in which the Supreme Court asserted that "when the purpose of a discovery request is to gather information for use in proceedings other than the pending suit, discovery properly is denied." See Levin v. Ripple Twist Mills, Inc., 416 F. Supp. 876, 880 (E.D. Pa. 1976) (in a proceeding to compel arbitration, where other proceedings stayed, discovery not permitted into underlying grievance) Suarez-Valdez v. Shearson Lehman/American Express, Inc., 858 F.2d 648, 649 (11th Cir. 1988) (court reversed district court's decision to allow discovery to proceed during arbitration). In the case at bar, however, plaintiff's 1933 Act claims remain in federal court. Thus, discovery should proceed where it is relevant to those claims. Accordingly, defendant's motion to stay discovery is Denied.
An appropriate order follows.
AND NOW, this 21st day of December, 1988, upon consideration of MOTION TO STAY PROCEEDINGS filed by defendants on October 31, 1988, plaintiff's RESPONSE thereto filed on November 7, 1988, defendants' RESPONSE thereto filed on November 14, 1988, along with supplemental responses filed thereto, it is hereby ORDERED that defendants' motion is GRANTED in part and DENIED in part as follows:
1. We direct that Plaintiff's claims arising out of the CNB account go to arbitration pursuant to the parties' written agreement.
2. We direct that Plaintiff's claims arising under § 12(2) of the Securities Act of 1933 remain in federal court.
In addition, upon consideration of MOTION TO STAY DISCOVERY filed by defendants on November 23, 1988, and plaintiff's RESPONSE thereto filed on December 2, 1988, it is hereby ORDERED that defendants' motion is DENIED.