Badgerow v. REJ Properties, Inc. et al

Filing 47

ORDER AND REASONS: IT IS ORDERED that 27 Motion to Dismiss for Failure to State a Claim and Motion to Compel Arbitration is GRANTED. IT IS FURTHER ORDERED that 26 Motion to Dismiss Class Claims and Motion to Compel Arbitration, Dismiss Action, and Strike Jury Demand is DENIED. Signed by Judge Jay C. Zainey on 1/10/2018. (ajn)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
DENISE A. BADGEROW

CIVIL ACTION

VERSUS

NO: 17-9492

REJ PROPERTIES, INC., ET AL.

SECTION: "A" (2)

ORDER AND REASONS
The following motions are before the Court: Motion to Dismiss for Failure to
State a Claim and to Compel Arbitration (Rec. Doc. 27) filed by defendant
Ameriprise Financial Services, Inc.; Motion to Dismiss Class Claims and Motion
to Compel Arbitration, Dismiss Action, and Strike Jury Demand (Rec. Doc.
26) filed by defendant REJ Properties, Inc. d/b/a Walters, Meyer, Trosclair &
Associates. Plaintiff Denise A. Badgerow opposes the motions. The motions, noticed for
submission on December 13, 2017, are before the Court on the briefs without oral
argument.1
I.

Background

Plaintiff Denise Badgerow has filed this action against REJ Properties, Inc. d/b/a
Walters, Meyer, Trosclair & Associates (“WMT”) and Ameriprise Financial Services, Inc.
WMT is domiciled in Lafourche Parish; Ameriprise’s principal place of business is
located in Minneapolis, Minnesota. Badgerow’s complaint alleges eleven causes of

Defendants have requested oral argument but the Court is not persuaded that oral argument
would be helpful.
1

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action arising out of her employment with WMT.
Ameriprise is a registered broker dealer that offers financial products and
services to customers through several models, including through a franchisee-based
platform of independent advisors who own and operate their own businesses, as
franchises. (Rec. Doc. 27-2, Odash decl. ¶ 3). The principals of WMT—Gregory Walters,
Thomas Meyer, and Roy Trosclair—were independent franchise advisors for Ameriprise
during the period of Badgerow’s employment. (Id. ¶ 4). Ameriprise did not have a
franchise agreement with REJ Properties, Inc. (Id. ¶ 5).2
After completing a 90-day probationary period with WMT, Badgerow was
promoted to Associate Financial Advisor (“AFA”) on January 1, 2014. (Rec. Doc. 1,
Complaint § 12). Her work as an AFA was supervised by Gregory Walters, one of three
directors at WMT. (Id. ¶ 12).
Badgerow contends that she had an oral agreement with WMT that she would
receive a base salary of $30,000 per year plus commissions. Badgerow was not provided
a written compensation agreement. (Id. ¶ 14). Badgerow complains that WMT
retroactively changed her compensation structure in October 2014 after she made a
large commissioned sale. (Id. ¶ 15). Badgerow alleges that the new compensation

Ameriprise alludes to the rule that when considering a motion to dismiss, the district court
generally must limit itself to the contents of the pleadings and the attachments thereto. See
Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000). The declaration
of Karen Odash, Senior Manager—Legal Affairs for Ameriprise’s parent entity, is not part of the
pleadings and is neither referred to in the complaint nor central to Badgerow’s claims. See id. at
499) (citing Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 249, 431 (7th Cir. 1993)).
Plaintiff has not objected to any of the documents attached to either motion to dismiss.
Nonetheless, the Court remains mindful when considering extraneous documents that discovery
is not complete. Thus, the Court includes the foregoing information from Odash’s declaration
merely as helpful background information and not as established fact.
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structure was enforced only against her and not against similarly situated male
employees. (Id. ¶ 17). She also alleges that she was earning quarterly bonuses that were
half the amount of her male counterparts. (Id. ¶ 24).
Badgerow also alleges that she was subjected to constant office harassment after
she declined to work as Walters’ assistant. The harassment was instigated by Tommy
Meyer, another director at WMT, and his team, including other females. (Id. ¶¶ 20-21).
Even though Badgerow was promoted to the role of Financial Advisor (“FA”), Meyer
determined that all FAs would keep the title of “associate” until they attained five years
of service with WMT. (Id. ¶ 23). In December 2015, after complaining constantly to
Walters, Badgerow was moved to a separate office to avoid any further distress to
Meyer, segregating her from the rest of the WMT team and putting her in an office all by
herself. (Id. ¶ 25).
On July 26, 2016, Walters terminated Badgerow after she refused to resign. (Id. ¶
29). According to the Complaint, Walters fired Badgerow in retaliation for speaking with
Marc Cohen, a compliance officer with Ameriprise.3 (Id. ¶ 29).

The first element of a prima facie case of Title VII retaliation is that the employee engaged in
activity protected by Title VII. Porter v. Houma Terrebonne Housing Auth. Bd., 810 F.3d 940,
945 (5th Cir. 2015) (citing Hernandez v. Yellow Trans., Inc., 670 F.3d 644, 657 (5th Cir. 2012)).
The Court notes from reading Badgerow’s FINRA Arbitration Statement of Claim that Cohen is
not an EEO compliance officer but rather works for Ameriprise as a compliance officer with
respect to its Compliance Financial Manual. (Rec. Doc. 27-2 at 2). In fact, Badgerow alleges in
her Complaint that Cohen had told her on several occasions that neither he nor Ameriprise
could help her with respect to discrimination issues at WMT. (Complaint ¶ 27). In her
Arbitration Statement Badgerow links her termination to reprisal based on her statements to
Cohen about the payment source of her commissions. Retaliation on this basis is not actionable
under Title VII because reporting non-compliance with Ameriprise’s Financial Manual is not a
protected Title VII activity. To the extent that Badgerow is alleging that she was fired in
retaliation for reporting sexual discrimination to Cohen, the question of whether this activity is
“protected activity” for purposes of Title VII is not currently before the Court.
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Badgerow filed a Charge of Discrimination against WMT on September 8, 2016,
claiming gender discrimination and retaliation. (Rec. Doc. 27-3 at 5). On October 6,
2016, she amended the charge to include class allegations. (Id. at 8). On June 27, 2017,
the EEOC issued a dismissal and notice of rights (Id. at 13).
Badgerow filed the instant action and jury demand on September 22, 2017,
against WMT and Ameriprise. Badgerow’s Complaint, which ostensibly alleges eleven
causes of action, asserts claims for violations of Title VII (gender-based hostile work
environment and retaliation), and the Equal Pay Act, 29 U.S.C. § 206(d)(1) (disparate
pay based on gender).4 Badgerow’s third cause of action is for disparate treatment
based on gender and she purports to bring that claim on behalf of a class of similarlysituated females. For purposes of the foregoing discrimination claims, Badgerow alleges
that WMT and Ameriprise were joint employers. Badgerow’s eleventh cause of action is
for breach of contract against WMT.5

These claims are also asserted under state law, Louisiana’s Employment Discrimination Law,
La. R.S. § 23:301, et seq. Louisiana courts rely upon Title VII standards when addressing
liability for LEDL claims, see Plummer v. Marriott Corp., 654 So. 2d 843 (La. App. 4th Cir.
1995), but the Louisiana legislature chose to deviate from Title VII when defining the term
“employer.” The definition of an “employer” for purposes of an LEDL claim is far narrower than
the Title VII definition. This Court has no doubt that Ameriprise will not satisfy the state law
definition of “employer” because there are no allegations suggesting that Ameriprise received
services from Badgerow or paid her compensation. See La. R.S. § 23:302(2); Dejoie v. Medley, 9
So. 3d 826 (La. 2009).
4

Two other causes of action fail as a matter of law. First, Badgerow’s eighth cause of action is
for a federal civil rights conspiracy under 42 U.S.C. § 1985(3). This statute, which requires racial
animus as an element, is inapplicable to Badgerow’s gender-based discrimination claims.
Second, Badgerow’s ninth cause of action is for conspiracy under state law pursuant to
Louisiana Civil Code article 2324. Civil conspiracy is not an actionable claim under Louisiana
law. Crutcher-Tufts Res., Inc. v. Tufts, 992 So. 2d 1091, 1094 (La. App. 4th Cir. 2008) (citing
Ross v. Conoco, Inc., 828 So. 2d 546 (La. 2002) (explaining that it is the tort that the
conspirators agreed to perpetrate and which they actually commit that constitutes the actionable
elements of the claim)). Article 2324 expressly pertains to intentional torts under Louisiana law.
No state law intentional tort is alleged in this case.
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WMT and Ameriprise now move separately to dismiss the case for failure to state
a claim and to compel arbitration.
II.

Discussion

The Court begins with Ameriprise’s motion to compel arbitration.6 The threshold
determination that the Court must make is whether the parties entered into “any
arbitration agreement at all.” Archer & White Sales, Inc. v. Henry Schein, Inc., No. 1641674, -- F.3d -- , 2017 WL 6523680 (5th Cir. Dec. 21, 2017) (quoting Kubala v. Supreme
Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016)). This inquiry is one of pure contract
formation, and it looks only at whether the parties formed a valid agreement to arbitrate
some set of claims. Id. (citing IQ Prods. Co. v. WD-40 Co., 871 F.3d 344, 348 (5th Cir.
2017)).
It is beyond dispute that Badgerow and Ameriprise have an agreement to
arbitrate. In fact, the record contains three agreements to arbitrate by Badgerow in favor
of Ameriprise. The first is contained in a FINRA Form U4 that Badgerow executed in
conjunction with her employment. (Rec. Doc. 27-2). Part 15A(5) of that document
provides that Badgerow will arbitrate any dispute, claim, or controversy that may arise
between her and her firm. The “firm” identified in the U4 is Ameriprise Financial

Ameriprise’s preference is to have this Court dismiss all of Badgerow’s claims pursuant to Rule
12(b)(6), and failing a dismissal of all claims, to compel arbitration as to any surviving claims.
While it is perfectly acceptable to move for dismissal as an alternative to a motion to compel
arbitration, Ameriprise cannot have it both ways without risking a waiver of its arbitration
rights. In short, since Ameriprise has moved to compel arbitration without agreeing to waive
arbitration as to any specific claims, this Court will not act on Ameriprise’s merits-based
arguments and instead leaves all of them for the arbitration.
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Services, Inc.7
The second is contained in Part 9A of an AFG Registered Staff Agreement
between Ameriprise and Badgerow. (Rec. Doc. 26-2 at 4). Pursuant to this arbitration
provision, unless otherwise agreed to in writing by both parties, Badgerow agreed to
arbitrate any claim that may arise between her and Ameriprise.
The third is contained in Part 9A of an Associate Financial Advisor Agreement
between Ameriprise and Badgerow. (Rec. Doc. 26-3 at 5). Pursuant to this arbitration
provision, unless otherwise agreed to in writing by both parties, Badgerow agreed to
arbitrate any claim that may arise between her and Ameriprise.
The Court is persuaded that Badgerow’s claims against Ameriprise must be
arbitrated. Ameriprise’s motion to compel arbitration is GRANTED in that all of
Badgerow’s claims against Ameriprise will be decided in the FINRA arbitration (and if
not FINRA, AAA)8 and shall be stayed in this Court.9

FINRA is “a quasi-governmental agency responsible for overseeing the securities brokerage
industry.” McCune v. United States Sec. & Exch. Comm'n, 672 F. App'x 865, 866 (10th Cir. 2016)
(quoting ACAP Fin., Inc. v. United States SEC, 783 F.3d 763, 765 (10th Cir. 2015)). FINRA
requires any person who works in the investment banking or securities business of a FINRA
member firm to register as a securities representative (e.g., a stockbroker) or principal, among
other categories. Mathis v. United States S.E.C., 671 F.3d 210, 211 (2nd Cir. 2012). To register,
applicants must complete a Form U4, in which they provide detailed information about their
personal, employment, disciplinary, and financial background. Id.
7

The AFG Registered Staff Agreement and the Associate Financial Advisor Agreement both
provide that claims not subject to FINRA arbitration will be subject to arbitration by the
American Arbitration Association.
8

Regarding the Form U4 arbitration clause, Badgerow points out that FINRA Rule 2263
requires that a written statement be provided when a person is asked to sign an amended Form
U4, and that Ameriprise has not included in its exhibits any evidence that such a statement was
given to Badgerow. Badgerow’s argument in this vein is confusing for several reasons, the most
obvious being that she does not suggest that the factual predicates necessary to trigger Rule
2263 were satisfied. And Badgerow cites no controlling authority for the proposition that she
can escape the otherwise valid agreement to arbitrate based on FINRA Rule 2263.
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The Court now turns to WMT’s motion which seeks various elements of relief
from the Court—dismiss Badgerow’s class claims, strike Badgerow’s jury demand,
compel arbitration for individual claims—all based on the second and third arbitration
agreements (the AFG Registered Staff Agreement and the Associate Financial Advisor
Agreement) between Badgerow and Ameriprise referred to above when the court
addressed Ameriprise’s motion. In other words, unlike Ameriprise, WMT and Badgerow
have not entered into an agreement to arbitrate their claims.
WMT makes two arguments that it has standing to enforce the Ameriprise
arbitration agreements against Badgerow. First, WMT points out that Gregory Walters,
one of its principals, signed the agreements. While Walters did sign the agreements, he
did so in his capacity as “independent advisor,” not as a principal of REJ
Properties/WMT, the defendant entity that actually employed Badgerow. (Rec. Doc. 262, 26-3). According to Ameriprise, and this point is undisputed, it had no contractual
relationship with an entity called REJ Properties much less WMT, which again is the
defendant in this case.10 Neither Walters nor any of the other WMT principals have
suggested that they should have been sued personally as Badgerow’s employer.
Nonetheless, the Ameriprise agreements that contain the arbitration clauses could not
be clearer in that the only two parties to those agreements are Badgerow and
Ameriprise. Neither Walters nor REJ Properties nor WMT are parties to those
agreements.

WMT attached a copy of the franchise agreement with American Express Financial Advisors,
Inc., presumably Ameriprise’s predecessor, but WMT is not a party to that agreement. (Rec.
Doc. 26-4).
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Second, WMT argues that it was a third-party beneficiary of the AFG Registered
Staff Agreement and the Associate Financial Advisor Agreement, again two contracts
between Ameriprise and Badgerow. WMT argues that it agreed to indemnify Ameriprise
for employment claims in consideration of being a beneficiary of the arbitration clauses.
This argument misses the mark because it focuses solely on agreements between
Walters, as an independent advisor, and Ameriprise. The issue is whether any contract
to arbitrate exists between Badgerow and REJ Properties/WMT. Simply, there is none.
And none of Badgerow’s claims against WMT in this case are grounded on obligations
arising out of her agreements with Ameriprise. WMT’s motion, which relies solely on
terms in agreements that Badgerow had with Ameriprise, is DENIED in all respects.
Accordingly, and for the foregoing reasons;
IT IS ORDERED the Motion to Dismiss for Failure to State a Claim and
to Compel Arbitration (Rec. Doc. 27) filed by defendant Ameriprise Financial
Services, Inc.is GRANTED insofar as all of Badgerow’s claims against Ameriprise in
this action are stayed pending arbitration;11
IT IS FURTHER ORDERED that the Motion to Dismiss Class Claims
and Motion to Compel Arbitration, Dismiss Action, and Strike Jury Demand
(Rec. Doc. 26) filed by defendant REJ Properties, Inc. d/b/a Walters, Meyer, Trosclair
& Associates is DENIED in all respects except that Badgerow’s eighth (federal civil

The Court has no concerns in essentially severing the claims against the two defendants even
though Badgerow has alleged joint employer status between them. The primary focus of the
joint employer test is to hold accountable the entity that actually discriminated against the
plaintiff. See Skidmore v. Precision Printing & Pkg., Inc. 188 F.3d 606, 617 (5th Cir. 1999) (citing
Trevino v. Celanese Corp., 701 F.2d 397 (5th Cir. 1983)). Badgerow’s own factual allegations that
recount the specific treatment that she believes to be discriminatory occurred at the hands of
WMT and its staff, not Ameriprise.
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rights conspiracy under 42 U.S.C. § 1985(3))and ninth (conspiracy under state law
pursuant to Louisiana Civil Code article 2324) causes of action are dismissed for failure
to state a claim.
January 10, 2018

JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE

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