The Prudential Insurance Company of America et al v. Sandvold

Filing 61

ORDER granting 56 Motion to Stay; denying 26 Motion to Dismiss for Lack of Jurisdiction (Written Opinion). Signed by Senior Judge David S. Doty on 5/21/2012. (PJM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 12-132(DSD/JJK)
The Prudential Insurance
Company of America and
Pruco Securities, LLC,
Plaintiffs,
ORDER

v.
Terry C. Sandvold,
Defendant.

This matter is before the court upon the motion to dismiss by
defendant Terry C. Sandvold and the motion to stay proceedings by
plaintiff The Prudential Insurance Company of America and Pruco
Securities, LLC (collectively, Prudential).

Based on a review of

the file, record and proceedings herein, and for the following
reasons, the court grants the motion to stay.

BACKGROUND
The background of this action is set out in prior orders and
the court recites only those facts necessary to dispose of the
instant motions.

See ECF Nos. 20, 48.

The parties agree that this

matter is subject to arbitration before the Financial Industry
Regulatory Authority (FINRA).
for February 8, 2012.

FINRA scheduled an initial hearing

See Paduano Decl. ¶¶ 8-9, ECF No. 37.

Prudential objected to the composition of the arbitration panel,
and at the time of oral argument, on April 6, 2012, FINRA had yet

to rule on Prudential’s objection.

Sandvold moves to dismiss, and

Prudential moves to stay the proceedings.

The court now considers

the motions.

DISCUSSION
The Federal Arbitration Act (FAA) establishes a strong policy
in favor of arbitration.

See 9 U.S.C. §§ 1-16; Shearson/Am.

Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987). Arbitration is
proper when a valid agreement to arbitrate exists and encompasses
the subject matter of the dispute.

See Pro Tech Indus., Inc. v.

URS Corp., 377 F.3d 868, 871 (8th Cir. 2004).

The parties do not

dispute the presence of a valid agreement to arbitrate or that
Prudential’s claims fall within the scope of the agreement.
Compl. ¶ 6; Def.’s Mem. Supp. 7.

See

Rather, the parties disagree as

to whether this court should dismiss or stay the matter pending
arbitration.
Once satisfied that an action involves issues referable to
arbitration, the court “shall ... stay the trial of the action
until such arbitration has been had.”

9 U.S.C. § 3.

Despite the

mandatory language directing the court to stay a matter pending
arbitration, some courts allow dismissal without prejudice.

See

Green v. SuperShuttle Int’l, Inc., 653 F.3d 766, 770-71 (8th Cir.
2011) (Shepherd, J., concurring) (acknowledging circuit split and
noting that majority viewpoint is to allow dismissal).

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The Eighth

Circuit has yet to determine whether dismissal is permitted under
the FAA. See Pickering v. Urbantus, LLC, No. 4:11-cv-0411, 2011 WL
6076332, at *6 (S.D. Iowa Nov. 23, 2011). The court, however, need
not answer this question, because, even if permitted to dismiss, it
may need to resolve disputes regrading appointment of arbitrators,
enforce

subpoenas

or

rule

on

post-arbitration

motions.

And

although Sandvold explains that such oversight is unnecessary since
FINRA rules address these concerns, the presence of FINRA rules
does not guarantee compliance. Further, even if no court oversight
is necessary, Sandvold fails to demonstrate how he is prejudiced by
a stay in the proceedings.

Therefore, dismissal is not warranted,

and the court stays the proceedings.

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that:
1.

The motion to dismiss [ECF No. 26] is denied; and

2.

The motion to stay this action [ECF No. 56] is granted.

Dated:

May 21, 2012
s/David S. Doty
David S. Doty, Judge
United States District Court

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