This action was brought below by plaintiffs-appellees, Frederick J. Page, Jr. and Kristin D. Page, against their former stockbroker Joseph McDonald, and his employer, a Cambridge, Massachusetts stockbrokerage firm known as Moseley, Hallgarten, Estabrook & Weedon, Inc. Plaintiffs' basic claim below was for alleged excessive trading or "churning" of their accounts by defendants. Plaintiffs sought to recover damages pursuant to Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78j(b) (1982), and Rule 10b-5 promulgated thereunder, 17 C.F.R. Sec. 240.10b-5 (1985). Plaintiffs also alleged that defendants' conduct violated the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Sec. 1964(c). Finally, plaintiffs alleged a violation of Massachusetts General Law Chapter 93A, pertaining to deceptive and unfair trade practices.

After defendants answered the complaint and upon the completion of discovery, defendants moved, on November 30, 1984, to dismiss the RICO and state law counts for failure to state a claim, but requested that the motion not be briefed until trial due to rapid developments of the law in each area. Plaintiffs opposed the motion, but joined in the request that briefing be delayed.

On January 4, 1985, plaintiffs filed a motion for partial summary judgment as to the 10b-5 claim. For reasons that are not apparent from the record, the district court took no immediate action on this motion.

On March 29, 1985, approximately twelve months after plaintiffs filed their complaint and 3 1/2 weeks after the Supreme Court decision in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985), defendants moved to compel arbitration. Again, this motion was not acted upon by the court at that time.

On June 17, 1985, the district court denied plaintiffs' motion for partial summary judgment, noting the presence of material issues of fact with respect to the 10b-5 claim. Defendants then moved, on December 16, 1985, to dismiss the state law claim on the ground that the Massachusetts Supreme Court had decided that securities fraud does not suffice to state a claim under Massachusetts General Law ch. 93A. See Cabot Corp. v. Baddour, 394 Mass. 720, 477 N.E.2d 399 (1985).

On January 6, 1986, the district court held a hearing to decide all pending motions before it. By stipulation of the parties, the court dismissed the state law claim. As to the motion to compel arbitration on the 10b-5 and RICO counts, the court noted that the law favoring arbitrability is unclear and that, given "the stage at which this case now stands," it would deny defendants' motion. This appeal followed.

On appeal, defendants-appellants urge us to reverse the district court and find that the 10b-5 and RICO claims were arbitrable. Plaintiffs-appellees suggest a contrary result, adding that we need not reach the issue of arbitrability given our alleged lack of appellate jurisdiction and plaintiffs' claim that defendants waived their right to compel arbitration.

For reasons stated more fully below, we hold that appellate jurisdiction exists, that defendants did not waive their right to compel arbitration, that the 10b-5 claim was arbitrable and that the RICO claim was not. Accordingly, the order of the district court is vacated with instructions to compel arbitration on the 10b-5 claim and to stay litigation on the RICO claim pending arbitration on the 10b-5 count.

Plaintiffs-appellees do not dispute that their action is one for damages, and hence, is legal in nature. Appellees also acknowledge the "Enelow-Ettelson" doctrine.1 This doctrine establishes that if the underlying action is one at law, orders compelling arbitration, 9 U.S.C. Sec. 4, or staying district court proceedings pending arbitration, 9 U.S.C. Sec. 3, are appealable under 28 U.S.C. Sec. 1292(a)(1). See Mowbray v. Moseley, 795 F.2d 1111, 1113 (1st Cir.1986); Langley v. Colonial Leasing Co. of New England, 707 F.2d 1, 5 (1st Cir.1983); Hartford Financial Systems v. Florida Software Services, Inc., 712 F.2d 724, 726-727 (1st Cir.1983).

Appellees, however, argue that the rule of appealability should be modified where a denial, and not a grant, of a motion to compel arbitration is at issue. Appellees further suggest that, even assuming appellate jurisdiction can be found under Enelow-Ettelson, the same should be struck down. See Mowbray, supra, at 1114 n. 5 (noting that "some courts and commentators have urged abandonment of the ... doctrine.").

We reject both of appellees' propositions. The rule of this circuit is clear that the grant or denial of Sec. 3 motions to stay district court proceedings pending arbitration and Sec. 4 motions to compel arbitration is appealable where the underlying action is one at law. Langley, supra. Since it is undisputed that appellees' action is one at law, appellate jurisdiction clearly exists. The suggestion that we overrule Enelow-Ettelson itself addresses powers beyond our domain. Enelow-Ettelson was a creation of the Supreme Court, and only that tribunal, or Congress, can overrule it.

In considering the issue of waiver, it is paramount that we keep in mind the Supreme Court's admonition that, due to the strong federal policy favoring arbitration agreements, any doubt concerning arbitrability "should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927, 941, 74 L. Ed. 2d 765 (1983).

It is in deference to this policy favoring arbitration that courts have stated that "[w]aiver is not to be lightly inferred, and mere delay in seeking [arbitration] without some resultant prejudice to a party cannot carry the day." Rush v. Oppenheimer & Co., 779 F.2d 885 (2d Cir.1985) (citing Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968)); see also Hilti, Inc. v. Oldach, 392 F.2d 368, 371 (1st Cir.1968).

Thus, in order for plaintiffs-appellees to prevail on their claim of waiver, they must show not only that defendants delayed in seeking arbitration, but also that such delay caused plaintiffs prejudice. For reasons elaborated below, we find that appellees have not shown sufficient prejudice to make out a claim of waiver.2

In order properly to understand plaintiffs' claim of prejudice, it is necessary to reiterate the events prior to and after defendants' motion to compel arbitration. Plaintiffs' complaint was filed on March 15, 1984. Discovery was completed on November 7, 1984. On January 4, 1985, plaintiffs filed a motion for partial summary judgment as to the 10b-5 claim. Approximately twelve months after plaintiffs had filed their complaint, and 3 1/2 weeks after the Supreme Court opinion in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985), the defendants moved to compel arbitration on March 29, 1985. No immediate action was taken on this motion by the district court.

Three months later, and without addressing defendants' still pending motion to compel arbitration, the district court denied plaintiffs' motion for summary judgment on June 13, 1985. Finally, on January 6, 1986, nine months after defendants moved to compel arbitration, the district court held a hearing. At that hearing, plaintiffs' counsel represented that they would be willing to waive a jury trial. The court then denied defendants' motion and told the parties to be prepared to try the case on 72 hours notice.

On appeal, plaintiffs claim prejudice from the fact that they were at the stage of complete readiness to try the case, and if made to arbitrate, will be forced to "restart the entire process before a new tribunal." This argument, while compelling if defendants had indeed filed their motion 72 hours before trial, obfuscates the fact that the defendants filed their motion nine months prior, at which point the only prejudice incurred by plaintiffs was having to engage in discovery.3 As to the alleged burden of discovery, plaintiffs have stipulated in their brief that it caused them no prejudice. Accordingly, we hold that, because plaintiffs have neither alleged nor shown any prejudice from the discovery prior to defendants' motion to compel arbitration, defendants cannot at that point be said to have waived their right to compel arbitration. See J & S Construction Co., Inc. v. Travelers Indemnity Co., 520 F.2d 809 (1st Cir.1975) (no showing of prejudice by plaintiffs, and hence, no waiver by defendants, despite 13 month delay in seeking arbitration and participation in discovery).

III. Arbitrability of Claims Under Section 10(b) of the Securities Exchange Act of 1934

This issue currently divides the circuits. The Second, Third, Fifth, Sixth, Seventh, Ninth, Tenth and Eleventh Circuits have adopted a rule of nonarbitrability.4 The Eighth Circuit, standing alone, has recently ruled that, where the parties agree, arbitration can be allowed.5 We are persuaded by the result reached by the Eighth Circuit, although for somewhat different reasons, and rule that, where private parties agree to arbitrate a 10b-5 dispute, this agreement is legally enforceable.

The Supreme Court, in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S. Ct. 3346, 87 L. Ed. 2d 444 (1985), set out the standard by which lower courts are to assess the arbitrability of federal statutory claims. First, it is imperative that the agreement to arbitrate be a valid one, and it is our role to "... remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds 'for the revocation of any contract.' " Id. 105 S.Ct. at 3354 (citing 9 U.S.C. Sec. 2; Southland Corp. v. Keating, 465 U.S. 1, 16, n. 11, 104 S. Ct. 852, 861, n. 11, 79 L. Ed. 2d 1 (1984); The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S. Ct. 1907, 1916, 32 L. Ed. 2d 513 (1972)). We therefore conclude that, because there has been no challenge to the agreement qua agreement in this case, Mitsubishi requires us to give it credence, and forbids indulgent presumptions as to systemic overreaching in the investor-broker context. Id. 105 S.Ct. at 3357.6

Given the existence of a valid agreement to arbitrate, and even where a federal statutory right is involved, the Supreme Court has made clear that it is our obligation to enforce the agreement unless we find that the Congressional intent in enacting the statute was to preclude the waiver of judicial remedies. Mitsubishi, supra, at 3355. The dilemma before us, therefore, is whether Congress, in enacting the Securities Exchange Act of 1934 ("1934 Act"), intended to preclude parties from agreeing to arbitrate disputes involving Rule 10b-5.

In Wilko v. Swan, 346 U.S. 427, 74 S. Ct. 182, 98 L. Ed. 168 (1953), the Supreme Court ruled that, despite the United States Arbitration Act, 9 U.S.C. Sec. 1 et seq., private parties cannot agree to arbitrate disputes arising under Sec. 12(2) of the Securities Act of 1933 ("1933 Act"), 15 U.S.C. Sec. 771(2) (1982). The Court offered two central justifications for this holding. First, it noted that, in Sec. 22(a) of the 1933 Act, Congress provided individuals an express right of action in federal and state courts, and that therefore, such an express right of action amounted to a "provision" of the Act that, under Sec. 14,7 could not be waived. Id. at 434-435, 74 S.Ct. at 186. Second, the Court concluded that Congress regarded the determination of rights under the 1933 Act as an area of vital federal concern that could only be entrusted to the federal courts, the express assumption being that arbitration provides an ineffective forum for the vindication of federal statutory rights. Id. at 435-437, 74 S.Ct. at 186-188.

In determining whether the Wilko rule of nonarbitrability should be extended to claims under the 1934 Act, courts have focused on both prongs of the Wilko analysis. Examination of the first prong--i.e., whether the right to a judicial forum can be regarded as a nonwaivable "provision" of the 1934 Act subject to its similar anti-waiver clause8--leads us to conclude that arbitration cannot be barred. As Justice White noted in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S. Ct. 1238, 1244, 84 L. Ed. 2d 158 (1985), and as five members of the court observed in Scherk v. Alberto-Culver Co., 417 U.S. 506, 513-514, 94 S. Ct. 2449, 2454, 41 L. Ed. 2d 270 (1974), the 1934 Act, unlike the 1933 Act, does not expressly provide individuals a right to a judicial forum.9 Because of the absence of any express "provision" for a judicial forum under the 1934 Act, we conclude that the 1934 Act's anti-waiver clause, by itself, does not suffice to indicate a Congressional intent to preclude arbitration.

We now address what we regard as the second prong of Wilko, supra. The issue here is whether, due to the legislative history or any other provision of the Securities Act of 1934, we can infer that Congress regarded the securities laws as an area of critical federal import such that the adjudication of such federal statutory rights can only be entrusted to the federal judiciary. For reasons stated more fully below, we reject both the conclusion that Congress' unmistakable intent was to preclude arbitration of 1934 Act claims, as well as the predicate assumption that, with respect to this particular federal statute, arbitration does not provide an effective forum for the resolution of disputes.

As to the Congressional intent to preclude arbitration of 1934 Act claims, we cannot deny two central facts. First, Congress expressly provided in the 1934 Act that the jurisdiction of the federal courts is exclusive, thus arguably allowing for the inference that Congress regarded the federal court forum to be an important one. See Conover v. Dean Witter Reynolds, Inc., 794 F.2d 520, 527 (9th Cir.1986). Second, and more importantly, we do not dispute that Congress, in enacting both the 1933 and 1934 Acts, regarded the legislation as establishing significant federal rights in an area of undisputed federal importance. See, e.g., Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194-196, 96 S. Ct. 1375, 1381-1382, 47 L. Ed. 2d 668 (1976).10

Given the above realities, as well as our general knowledge of the financial world, we do not believe it reasonable to conclude that the securities laws of this nation are not a matter of federal importance. Neither, however, do we believe it proper after Mitsubishi to hold that the United States Arbitration Act, and the sophisticated commercial arbitration structure which has evolved therefrom, are of any less significance. A balance therefore must be struck, keeping in mind what we consider are certain "maxims" propounded by Mitsubishi.

First, the Mitsubishi Court made clear that the presence of a federal statutory right cannot, without more, prevent private parties from agreeing to arbitrate. Id. 105 S.Ct. at 3354-3355. Thus, it is not enough to find that a federal statute covers an area of federal import. All federal statutes do this, and Mitsubishi teaches that the Arbitration Act, itself a federal statute, deserves at least equal deference. Id. at 3354.

The second axiom set forth in Mitsubishi is that, in determining whether federal statutory rights are to be arbitrable, we are not to be influenced by concerns of the alleged inferiority of the arbitral forum in deciding the content of "complex" federal statutory rights. Id. at 3354, 3357-3358. Thus, we reject the proposition that, after Mitsubishi, courts can consider the alleged ineffectiveness of the arbitral forum in deciding the arbitrability of a federal statutory right.11

The third axiom that we find in Mitsubishi may perhaps serve to distinguish Wilko as well as the Alexander v. Gardner-Denver line of cases. The notion, simply, is that we will not preclude parties from arbitrating disputes involving federal statutory rights unless we find that Congress, either implicitly or explicitly, intended otherwise. Thus, to distinguish Wilko, we rely on the failure of Congress to provide for an express right of action in the 1934 Act. Had Congress regarded an exclusive federal court forum as so critical, it would have been simple for Congress to provide, as it did in the 1933 Act, that individuals be able to bring a cause of action in that forum. To distinguish the Alexander v. Gardner-Denver line of cases, we note the express private right of action contained in the federal statutes at issue there, and that, at least with respect to Alexander and McDonald, the federal statute at issue involved adjudication of the rights of an individual under the Constitution, an inquiry that, with all due respect to arbitration, has historically been the sole province of Article III adjudication. Thus, we regard the central question before us as whether, given the failure of Congress to provide individuals an express right of action under the 1934 Act, it is possible to conclude that the securities laws implicate rights more akin to those present in Alexander, Barrentine, and McDonald, or whether the rights at issue more closely approximate the sort of commercial dispute that, absent a clear indication from Congress to the contrary, we would readily approve as arbitrable. We conclude that disputes involving Rule 10b-5 of the 1934 Act more closely approximate the latter, that a Congressional intent to preclude arbitration of claims arising under the 1934 Act cannot otherwise be readily found, and that therefore, appellants' motion to compel arbitration was improperly denied.

IV. Arbitrability of Claims Under the RICO Statute

Having stated that we can find no Congressional intent to preclude arbitration of claims under Rule 10b-5, we now explain why, as to claims arising under the RICO statute, we reach a contrary result.

Our reasons for not allowing arbitration of RICO claims are two. First, unlike 10b-5 actions under the 1934 Act, Congress provided civil RICO plaintiffs an express private right of action. 18 U.S.C. Sec. 1964(c). Second, while many civil RICO claims can perhaps be characterized as "glorified" common law fraud allegations, we cannot overlook the clear legislative history of that statute to the effect that when Congress enacted the RICO provisions, it did so with a view toward the eradication of organized crime. See United States v. Turkette, 452 U.S. 576, 589, 101 S. Ct. 2524, 2531, 69 L. Ed. 2d 246 (1981). A civil RICO judgment against a defendant effectively amounts to an accusation that the defendant participated in a "pattern of racketeering activity." See 18 U.S.C. Secs. 1962, 1961(1). A civil RICO suit is in effect quasi-criminal in nature.12 Thus, in light of the arguable parallels between criminal and civil RICO proceedings, and given the Congressional policy of eradicating organized crime through the express use of a private right of action, we believe the Congressional intent to have been one of precluding arbitration and limiting determinations of liability under this statute to the sole province of Article III courts.

We note that two circuit courts have addressed the issue of the arbitrability of civil RICO claims, and, in one case, wish to distinguish their reasoning from our own. The Third Circuit, in Jacobson, et al. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., 797 F.2d 1197 (3d Cir.1986), held that where a civil RICO claim is based on predicate act 10b-5 violations, the RICO claim is arbitrable if the underlying 10b-5 claims are arbitrable. Id. at 1202-1203. Because the Third Circuit found 10b-5 claims not arbitrable, it likewise found RICO not arbitrable. Id. If we were to apply the Third Circuit's reasoning to this case, we would be obliged to find the RICO claim arbitrable along with 10b-5. We have, of course, rejected that view.

We decline to adopt the Third Circuit's reasoning on the ground that a civil RICO violation is made up of more than the predicate act. Specifically, plaintiffs must show that the series of predicate acts amounted to a "pattern of racketeering activity." 18 U.S.C. Secs. 1962 and 1964(c). The meaning of this additional element of a civil RICO claim has yet to be clearly established in the law. See Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 105 S. Ct. 3275, 3285 n. 14, 87 L. Ed. 2d 346 (1985). We note, however, that the obligation of plaintiffs to establish the existence of a "pattern of racketeering activity" is not meaningless, id., and that it is precisely this element of a RICO claim that carries with it the compelling public policy considerations which were so important to Congress, and which, in our view, preclude arbitrability. Accordingly, while we can find no Congressional intent precluding arbitration of 10b-5 claims (either alone or where these are alleged as the predicate acts for a civil RICO violation), we must conclude that Congress intended the "pattern of racketeering activity" aspect of RICO to be the sole province of Article III courts. That the result under our rule is bifurcated litigation cannot affect our conclusion. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S. Ct. 1238, 1241-1243, 84 L. Ed. 2d 158 (1985) (holding that considerations of efficiency cannot override the command of the Arbitration Act, even where bifurcated proceedings would result).

The Second Circuit, in McMahon v. Shearson/American Express, Inc., 788 F.2d 94 (2d Cir.1986), cert. granted, --- U.S. ----, 107 S. Ct. 60, 93 L. Ed. 2d 20 (1986), held that civil RICO claims are not arbitrable. The court there stated, inter alia, that a civil RICO plaintiff can be analogized to the private antitrust plaintiff, whose claims are not arbitrable under the doctrine of American Safety Equipment v. J.P. Maguire, 391 F.2d 821 (2d Cir.1968). The American Safety court stated as follows:

"A claim under the antitrust laws is not merely a private matter. The Sherman Act is designed to promote the national interest in a competitive economy; thus, the plaintiff asserting his rights under the Act has been likened to a private attorney-general who protects the public interest." Id. at 826.

We agree with the Second Circuit that this element of the American Safety doctrine remains alive after Mitsubishi, which only criticized the private attorney general concept in the context of an international dispute.13 105 S.Ct. at 3355, 3358-3360. Thus, we note that, as in Wilko, Alexander, Barrentine and McDonald, the provision by Congress to individuals of an express right of action is not to be taken lightly by the courts, and when combined with compelling public policy considerations requiring Article III determination of rights under a statute, can serve to bar arbitration altogether, see Wilko, supra; American Safety, supra; or render it clearly secondary by allowing plaintiffs to litigate in federal court anew. See Alexander, supra; Barrentine, supra; and McDonald, supra.

That we find a compelling Congressional policy to preclude arbitration of civil RICO claims, and not to preclude arbitration of 10b-5 claims, is not in our view contradictory. As noted above, Congress failed to provide individuals an express right of action in the Securities Exchange Act of 1934. This omission, we believe, places a greater burden on those arguing for a compelling area of public concern such that arbitration of federal statutory rights is prohibited. The inquiry, under Mitsubishi, is one of Congressional intent. And while we do not foreclose the possibility of finding a Congressional intent to preclude arbitration of federal statutory rights where no express right of action is provided, we do not believe actions under the 1934 Act present such a compelling case, and therefore, conclude that their arbitrability cannot be barred on mere inferences. The RICO statute, by contrast, contains express rights of action and, in our view, perilously overlaps with its criminal counterpart so as to render determinations of liability a matter of exclusive Article III concern. We therefore affirm the decision of the district court to deny arbitration of plaintiffs' RICO claim, and reverse the district court's denial of arbitration on the 10b-5 count.

The case is remanded with instructions that the district court order arbitration of the 10b-5 dispute and stay the RICO claims pending the outcome of the arbitration. No costs.