Brundage v. Pension Associates Retirement Planning LLC et al
Filing
27
OPINION AND ORDER: For the foregoing reasons, Defendant Morgan Stanley's motion to compel arbitration and stay this proceeding is GRANTED. Defendant Pension Associate's motion to dismiss is DENIED without prejudice to renew once the stay in this matter is lifted. The Clerk of the Court is directed to stay this case. Plaintiffs and Defendant Morgan Stanley are directed to promptly pursue arbitration and to notify the Court and Defendant Pension Associates when the arbitration is concluded. The Court is directed to terminate the motions at ECF Nos. 15, 20, and 21. SO ORDERED., Case stayed. (Signed by Judge Nelson Stephen Roman on 6/13/2019) (jca) Transmission to Orders and Judgments Clerk for processing.
UNITED STATES DISTRJCT COURT
SOUTHERN DISTRJCT OF NEW YORK
LYNNE BRUNDAGE and MICHAEL BRUNDAGE,
USDC SD~Y
DOCUMENT
ELECTRONICALLY FILED
DOC#: _ _ _ _ _ __
DATE FILED: (o
3 /J q ..
/I
Plaintiffs,
No. 18-cv-2473 (NSR)
-againstPENSION ASSOCIATES RETIREMENT PLANNING,
LLC and MORGAN STANLEY & CO., LLC,
OPINION & ORDER
Defendants.
NELSONS. ROMAN, United States District Judge
Plaintiffs Lynne Brundage and Michael Brundage bring this action against Defendants
Pension Associates Retirement Planning, LLC ("Pension Associates") and Morgan Stanley &
Co., LLC ("Morgan Stanley") pursuant to the Employment Retirement Income Act ("ERJSA"),
29 U.S.C. §§ 1024(b)(4), 1132(c), New York General Business Law§ 349, and New York
common law. (Compl., ECF No. 1.) Defendant Pension Associates filed a motion to dismiss
(ECF Nos. 15 & 20) and Defendant Morgan Stanley filed a motion to compel arbitration and stay
this matter or, in the alternative, to dismiss. (ECF No. 21.) For the reasons stated below,
Defendant Morgan Stanley's motion to compel arbitration and stay this matter is GRANTED,
and Defendant Pension Associates's motion to dismiss is DENIED.
BACKGROUND
Unless otherwise noted, the facts are drawn from Plaintiffs' Complaint or from
documents attached to the Complaint or incorporated by reference and are accepted as true for
the purposes of Defendants' motions.
Plaintiff Lynne Brundage was previously a partner at the now-defunct T.G. Elliott
Associates, Inc. ("T.G. Elliott"), a New York corporation. (Compl. ,r 4.) In January 2000, T.G.
Elliott entered into an agreement with Defendant Pension Associates to establish and administer
a pension plan for plan participants Lynne and Michael Brundage and Lisa Elliott ("Plan"). (Id.
1
¶¶ 6 – 7 & 10.) Defendant Pension Associates was designated as the Plan Sponsor. (Id. ¶ 17.)
Defendant Morgan Stanley, at all relevant times, held the Plan’s funds in a dedicated account and
was responsible for allocating the Plan’s earnings based on an agreed-upon percentage
allocation, forty percent to Ms. Elliott and sixty percent to Plaintiffs. (Id. ¶¶ 8 – 9 & 11 – 12.)
The Plan was amended in 2001, 2003, 2011, and 2012. (Id. ¶¶ 12 – 15.) During
discovery for litigation in New York state court,1 which did not involve either Defendant,
Plaintiffs learned that since approximately 2000, the allocation of assets from the Plan fluctuated
on an annual basis despite the agreement, resulting in an under-allocation to Plaintiffs. (Id. ¶¶
20, 22 & 24.) Plaintiffs also discovered that Ms. Elliott had taken multiple loans from her
accrued benefit, which meant that she had been permitted to exceed the maximum loan amount
allowed under the Plan and to take short-term withdrawals in violation of the Plan. (Id. ¶¶ 29 –
33.) Defendant Pension Associates did not provide any statements about the repayments or the
allocation of those repayments. (Id. ¶ 34.)
Based on these recently-discovered discrepancies, Plaintiff Lynne Brundage repeatedly
requested documents from Defendants, including, among other documents, plan statements,
transaction records, allocation of loan repayments, and statements from an annuity in which the
fund had invested; Defendant Pension Associates repeatedly refused to provide the requested
documents. (Id. ¶¶ 35 – 36, 45 & 50.) In October 2015, Plaintiff Lynne Brundage instructed
Defendant Morgan Stanley not to complete any further transactions for the Plan without approval
of both owners of T.G. Elliott and then, in April 2016, told both Defendants to permit no further
changes to the Plan. (Id. ¶¶ 37 – 38.) That same month, Defendant Morgan Stanley disbursed
$ 457,128.64 to Ms. Elliott from the Plan’s account. (Id. ¶ 39.) At some point, Plaintiff Lynne
1
This litigation settled on December 28, 2016 before any allegations were resolved on their merits. (Compl. ¶ 53.)
2
Brundage asked Defendant Morgan Stanley for statements and accounting for the Plan dating
back to October 2015. (Id. ¶ 42.) Defendant Morgan Stanley did not produce those documents
to Plaintiffs and told Plaintiff Lynne Brundage that it had actually provided them to Defendant
Pension Associates. (Id. ¶ 44.) In June 2016 and July 2016, Defendant Pension Associates
attempted to bill Plaintiffs for the time it took to provide them with documents they were entitled
to receive as Plan participants. (Id. ¶¶ 41 & 43.)
On July 16, 2016, the Plan was dissolved, and Plaintiffs received a disbursement of the
balance of their funds in October 2016. (Id. ¶¶ 46 & 51.) Both Defendants failed to provide
Plaintiffs with a closing statement following the dissolution of the Plan. (Id. ¶ 47.)
Defendant Morgan Stanley requests that the Court grant its motion to compel arbitration
and stay the action pending the results of the arbitration. In the alternative, it argues that
pursuant to Federal Rules of Civil Procedure Rule 12(b)(6) the Court should dismiss Plaintiffs’
claims against it because it was not a plan administrator under ERISA and because Plaintiffs did
not plausibly allege that it breached a fiduciary duty. Defendant Pension Associates argues that
Plaintiffs claims against it should be dismissed under Rule 12(b)(6) because T.G. Elliott, not
Pension Associates, was the Plan administrator and therefore Pension Associates cannot be liable
under ERISA. Defendant Pension Associates also asserts that even if ERISA applied, none of
the documents Plaintiffs requested were covered under the statute. Finally, according to Pension
Associates, Plaintiffs’ state law claims are preempted by ERISA.
STANDARDS OF REVIEW
I.
Motion to compel arbitration
When deciding whether to compel arbitration, courts consider whether (1) the parties
agreed to arbitrate and (2) the arbitration agreement includes the disputed claim or claims.
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Holick v. Cellular Sales of N.Y., LLC, 802 F.3d 391, 394 (2d Cir. 2015). According to the
Supreme Court, the Federal Arbitration Act (“FAA”)2 “embodies [a] national policy favoring
arbitration.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006). Due to the
“strong federal policy in favor of arbitration, the existence of a broad agreement to arbitrate
creates a presumption of arbitrability which is only overcome if ‘it may be said with positive
assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted
dispute. Doubts should be resolved in favor of coverage.’ ” WorldCrisa Corp. v. Armstrong,
129 F.3d 71, 74 (2d Cir. 1997) (quoting Associated Brick Mason Contractors of N.Y., Inc. v.
Harrington, 820 F.2d 31, 35 (2d Cir.1987)) (citation omitted).
Courts are required to analyze a motion to compel arbitration under a standard similar to
that applied to motions for summary judgment; if there is a genuine issue of fact surrounding the
purported agreement to arbitrate, the court cannot compel arbitration. Kutluca v. PQ N.Y. Inc.,
266 F. Supp. 3d 691, 700 (S.D.N.Y. 2017) (citing Bensadoun v. Jobe–Riat, 316 F.3d 171, 175
(2d Cir. 2003)). “A party to an arbitration agreement seeking to avoid arbitration generally bears
the burden of showing the agreement to be inapplicable or invalid.” Harrington v. Atl. Sounding
Co., Inc., 602 F.3d 113, 124 (2d Cir. 2010).
II.
Motion to dismiss
Under Rule 12(b)(6), the inquiry is whether the complaint “contain[s] sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007));
accord Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010). “While legal conclusions can
Parties do not dispute that the FAA applies. (Pls.’ Opp’n p. 12); (Def. Morgan Stanley & Co. LLC’s Mem. of Law
in Supp. of Mot. to Compel Arbitration and Stay Action or, in the Alternative, to Dismiss the Compl. p. 7, ECF No.
23.)
2
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provide the framework of a complaint, they must be supported by factual allegations.” Id. at
679. To survive a motion to dismiss, a complaint must supply “factual allegations sufficient ‘to
raise a right to relief above the speculative level.’” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly, 550 U.S. at 555). The Court must take all
material factual allegations as true and draw reasonable inferences in the non-moving party’s
favor, but the Court is “ ‘not bound to accept as true a legal conclusion couched as a factual
allegation,’ ” or to credit “mere conclusory statements” or “[t]hreadbare recitals of the elements
of a cause of action.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).
In determining whether a complaint states a plausible claim for relief, a district court
must consider the context and “draw on its judicial experience and common sense.” Id. at 662.
A claim is facially plausible when the factual content pleaded allows a court “to draw a
reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678.
“Where, as here, a plaintiff proceeds pro se, the court must ‘construe [ ] [his] [complaint]
liberally and interpret[ ] [it] to raise the strongest arguments that [it] suggest[s].’ ” Askew v.
Lindsey, No. 15-CV-7496 (KMK), 2016 WL 4992641, at *2 (S.D.N.Y. Sept. 16, 2016) (citing
Sykes v. Bank of Am., 723 F.3d 399, 403 (2d Cir. 2013)). Yet, “the liberal treatment afforded to
pro se litigants does not exempt a pro se party from compliance with relevant rules of procedural
and substantive law.” Id. (quoting Bell v. Jendell, 980 F. Supp. 2d 555, 559 (S.D.N.Y. 2013))
(internal quotation marks omitted).
DISCUSSION
For the reasons articulated below, the Court determines that Plaintiffs entered into a valid
arbitration agreement with Defendant Morgan Stanley, that the agreement applies to Plaintiffs’
claims against that Defendant, and that this matter should be stayed pending the outcome of
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arbitration.
Defendant Morgan Stanley argues that Plaintiffs should be required to arbitrate their
claims because (1) they signed the Client Agreement with Defendant Morgan Stanley which
included an arbitration clause or, alternatively, because (2) they sought to benefit from the
Retirement Plan Manager (“RPM”) agreement, signed by Lisa Elliott on behalf of the Plan in
2011, which included an arbitration clause.
After the Plan was terminated in 2016, Plaintiffs transferred the funds designated to them
to an Individual Retirement Account (“IRA”) that they opened with Defendant Morgan Stanley,
and, in doing so, they agreed to the terms of a Client Agreement. (Kauff Decl., Ex. B. (“Client
Agreement”) pp. 15 – 16, ECF No. 22.) The Client Agreement included a bolded arbitration
clause:
All parties to this Agreement are giving up the right to sue each other in
court . . . . You agree that all claims or controversies, whether such claims or
controversies arose prior, on or subsequent to the date hereof, between you and
MSSB and/or any of its present or former officers, directors, or employees
concerning or arising from (i) any account maintained by you with MSSB
individually or jointly with others in any capacity; (ii) any transaction involving
MSSB or any predecessor or successor firms by merger, acquisition or other
business combination and you, whether or not such transaction occurred in such
account or accounts; or (iii ) the construction, performance or breach of this or any
other agreement between you and us, any duty arising from the business of MSSB
or otherwise, shall be determined by arbitration before, and only before, any selfregulatory organization or exchange of which MSSB is a member.
(Id. pp. 9 – 10.) A bolded reminder of the arbitration clause appears on the signature page: “The
attached Client Agreement . . . includes a predispute arbitration clause in Section 15, beginning
on page 9.” (Id. p. 15.)
The question of whether the arbitration agreement included the disputed claims is easily
answered. The arbitration clause in the Client Agreement encompasses “all claims or
controversies,” including those arising prior to the Client Agreement, between Plaintiffs and
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Defendant Morgan Stanley relating to any account or transaction between those parties. Here,
Plaintiffs’ claims against Defendant Morgan Stanley arise from transactions between Plaintiffs
and Defendant Morgan Stanley. (Compl. ¶¶ 58 – 71) Those claims are plainly covered by the
arbitration clause. Therefore, the only remaining question for the Court to consider in
determining whether to compel arbitration under the Client Agreement is whether Plaintiffs and
Defendant Morgan Stanley agreed to arbitrate.
While Plaintiffs admit that they signed the Client Agreement, they were not provided
with the portion of the Client Agreement containing the arbitration clause. For this reason, and
because Plaintiffs believed that they had no choice but to execute the agreement or continue
incurring fees and penalties, Plaintiffs argue that the Client Agreement was unconscionable.
(Pls.’ Mem. of Law in Opp’n to Defs.’ Mot. to Compel Arbitration and Stay Action or, in the
Alternative, to Dismiss the Compl. (“Pls.’ Opp’n”) p. 13, ECF No. 25); (Brundage Decl. p 10,
ECF No. 26.) Unconscionability implicates the first prong of an analysis for a motion to compel
arbitration: whether the parties to an agreement actually agreed to arbitrate.
Under New York law, which applies here, an arbitration clause is unconscionable if it is
“so grossly unreasonable or unconscionable in the light of the mores and business practices of
the time and place as to be unenforcible [sic] according to its literal terms.” Nayal v. HIP
Network Serv. IPA, Inc., 620 F. Supp. 2d 566, 571 (S.D.N.Y. 2009) (quoting Gillman v. Chase
Manhattan Bank, N.A., 534 N.E.2d 824, 828 (N.Y. 1988)) (internal quotation mark omitted).
Generally, a plaintiff must show that an agreement is both procedurally and substantively
unconscionable. Nayal, 620 F. Supp. 2d at 573; see Ragone v. Atl. Video at Manhattan Ctr., 595
F.3d 115, 122 (2d Cir. 2010) (noting that a finding of unconscionability usually requires that
both the procedural and substantive components are present and that only in exceptional
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circumstances will a contract be unenforceable based solely on substantive unconscionability).
A contract is procedurally unconscionable if the circumstances surrounding the formation of the
contract show that the party alleging unconscionability lacked meaningful choice. Nayal, 620 F.
Supp. at 571. A contract is substantively unconscionable if the terms unreasonably favor the
opposing party. Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc., 191 F.3d 198, 207 (2d Cir.1999).
Courts should consider all facts and circumstances in determining whether a contract is
unconscionable. In re Estate of Friedman, 407 N.Y.S.2d 999, 1008 (2d Dep’t 1978). However,
“[a]bsent substantive unconscionability or fraud . . . , parties are charged with knowing and
understanding the contents of documents they knowingly sign.” Horvath v. Banco Comercial
Portugues, S.A., 461 F. App’x 61, 63 (2d Cir. 2012).
I.
Procedural unconscionability
The arbitration clause in the Client Agreement is not procedurally unconscionable.
Plaintiffs allege that they did not receive the portion of the Client Agreement containing the
arbitration clause, but they do not dispute that they signed the Client Agreement. (Pls.’ Opp’n p.
13); (Client Agreement pp. 16 – 17.) On both of the signature pages of that agreement, in bold
and about half a page above the signature lines, are clear references to the arbitration agreement
and citations to where to find it in the Client Agreement. (Client Agreement p. 15.) While
Defendant Morgan Stanley should have provided Plaintiffs with a complete version of the Client
Agreement, it was Plaintiffs’ responsibility to review the portions of the agreement provided.
“[I]t is settled New York law that ‘a party will not be excused from his failure to read and
understand the contents’ of a document.” Kutluca v. PQ N.Y. Inc., 266 F. Supp. 3d 691, 701
(S.D.N.Y. 2017) (quoting Johnson v. Thruway Speedways, Inc., 407 N.Y.S.2d 81, 83 (N.Y. App.
Div. 3d Dep’t 1978)).
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A contract is not unconscionable merely because the signatory did not receive the full
contract if the portions of the contract provided clearly alerted the signatory to the existence of
missing portions of the contract. See United States v. Kephart, 170 B.R. 787, 791 (Bankr.
W.D.N.Y. 1994) (“The unconscionability standard is strict and narrowly applied.”); Marvel
Entm’t Grp., Inc. v. Young Astronaut Council, No. 88-CV-5141(RLC), 1989 WL 129504, at *4
(S.D.N.Y. Oct. 27, 1989) (noting that there is a “high standard of proof required to
show unconscionability”). Here, because there was a citation to the location of the arbitration
clause in the Client Agreement, the signature pages notified Plaintiffs both that they had not
received the full contract and that there was an arbitration clause. Moreover, the reminder of the
arbitration clause was clear; it was in bold and set off from other text as part of a bulleted list.
See Carr v. Credit One Bank, No. 15-cv-6663 (LAK), 2015 WL 9077314, at *3 (S.D.N.Y. Dec.
16, 2015). There is no indication that Plaintiffs were denied an opportunity to review the
signature pages, requested to review the full Client Agreement or the portion with the arbitration
clause, or were denied a meaningful choice. If Plaintiffs had reviewed the document they signed,
they would have noticed that a portion of the contract was missing based on the citation provided
in the reference to the arbitration clause.
Plaintiffs also claim that they felt they had no choice but to sign the Client Agreement
because they believed that it was the only way to avoid incurring fees and penalties from the
delay in rolling over the funds from the Plan. (Pls.’ Opp’n p. 14); (Brundage Decl. ¶ 10.) This,
however, does not render the arbitration clause procedurally unconscionable. The circumstances
in Brennan v. Bally Total Fitness, 198 F. Supp. 2d 377 (S.D.N.Y. 2002), which Plaintiffs cite for
support that the Client Agreement was procedurally unconscionable, are distinct from those
currently before the Court. In Brennan, the plaintiff had about fifteen minutes to sign a form
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with an arbitration agreement provided by her employer. Id. at 384. Her employer “threatened
the employees that those [who] would not sign the document would not be promoted,” causing
the plaintiff to believe that her employment would be adversely impacted if she refused to sign
the agreement. Id. at 383. There was also a significant disparity in bargaining power; the
plaintiff was an unrepresented single mother who was also pregnant with twins and lacked other
financial support or access to health insurance beyond that provided through her job. Id.
Accordingly, the court held that the plaintiff lacked a meaningful choice in deciding whether to
sign the agreement. Id. Here, there is no indication that Plaintiffs were similarly pressured by
Defendant Morgan Stanley. Although Plaintiffs argue that the fees being imposed on their
allocation of the Plan’s fund pressured them to sign the Client Agreement, this allegation is not
enough to show that Plaintiffs did not have time for adequate review. There is also no indication
that anything prevented Plaintiffs from moving their funds and opening up an IRA with another
institution.
Additionally, there was also no significant imbalance in bargaining power between
Parties. Unlike the plaintiff in Brennan, Plaintiff Lynne Brundage had been a partner in a
business, owning fifty percent of T.G. Elliott. (Compl. ¶ 4.) Presumably, and no other facts or
evidence suggest otherwise, she was familiar with the binding effect of contracts or was at least
better equipped to review and understand a contract than the plaintiff in Brennan, who had no
evident business experience. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33
(1991) (holding that there was no indication that the plaintiff, “an experienced businessman, was
coerced or defrauded into agreeing to the arbitration clause”).
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II.
Substantive unconscionability
Likewise, the arbitration agreement was not substantively unconscionable. In their
opposition, Plaintiffs’ only offer a conclusory statement to show that the agreement was
substantively unconscionable: “[T]he agreement was substantively unconscionable because the
terms of the agreement heavily favored Defendant by shielding them form [sic] involvement in
the ongoing litigation.” (Pls.’ Opp’n p. 15.) This argument merely restates the standard for
substantive unconscionability and is not enough to meet Plaintiffs’ burden.
A review of the Client Agreement shows that there is no genuine dispute of material fact
that the agreement is not substantively unconscionable. The applicability of an arbitration clause
to actions predating the agreement is not enough to render that clause unconscionable under New
York law. See Williams v Dillon & Co., 243 A.D.2d 559, 560 (N.Y. App. Div. 2d Dep’t 1997).
Moreover, the clause in the Client Agreement applies equally to Plaintiffs and Defendant
Morgan Stanley; it does not prohibit Plaintiffs from initiating arbitration or provide Defendant
with special rights withheld from Plaintiffs. See Molina v. Kaleo, Inc., 363 F. Supp. 3d 344, 351
(S.D.N.Y. 2019) (holding that an arbitration agreement was not substantively unconscionable
even though the plaintiff argued that arbitration would be “cost prohibitive”); Isaacs v. OCE Bus.
Serv., Inc., 968 F. Supp. 2d 564, 570 (S.D.N.Y. 2013) (holding that because an arbitration
agreement applied equally to each party, and because the party accused of unconscionability was
required to pay any fees, it was not substantively unconscionable).
As Plaintiffs failed to show any genuine issue of material fact suggesting that the Client
Agreement was procedurally and substantively unconscionable, the Court finds that there was a
valid agreement between Parties to arbitrate. Plaintiffs argue that further discovery is needed to
determine “whether the circumstances surrounding the agreement support invalidating the
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agreement.” (Pls.’ Opp’n p. 15.) The Court disagrees. The evidence provided by Parties shows
no genuine dispute of material fact that the Client Agreement was not procedurally
unconscionable, as discussed supra. Even if additional discovery revealed other issues with the
circumstances, the fact remains that the agreement is not substantively unconscionable. Molina,
363 F. Supp. 3d at 351 (“Even assuming, arguendo, that Plaintiff could demonstrate procedural
unconscionability, there is nothing substantively unconscionable about the arbitration
provisions.”). It was Plaintiffs’ burden to show unconscionability, and they failed to do so.
Accordingly, because Parties agreed to arbitration and because the arbitration agreement
encompasses Plaintiffs’ claims against Defendant Morgan Stanley, the Court must compel
Plaintiffs to arbitrate their claims with Defendant Morgan Stanley. As the Court determines
arbitration is necessary under the Client Agreement, it need not decide whether the arbitration
clause in the RPM agreement applies to Plaintiffs.3
III.
Stay of litigation
To avoid confusion or prejudice to Plaintiffs, this matter is stayed in its entirety pending
the results of the arbitration. The decision of whether to grant a stay is left to the discretion of
the court. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983).
Although Plaintiffs’ claims against Defendant Pension Associates are not subject to an
arbitration agreement, they arise from the same set of facts and are related to Plaintiffs’ claims
3
Lisa Elliott signed the RPM agreement on behalf of the Plan in 2011 which established Defendant Morgan
Stanley’s role in relation to the Plan. (Kauff Decl. Ex. A (“RPM agreement”).) That agreement included an
arbitration clause similar to that in the Client Agreement. (Id. p. 10.) Plaintiffs, as Plan participants together with
Lisa Elliott, arguably knowingly benefited from the services Defendant Morgan Stanley provided to the Plan under
this agreement. “Under the direct benefits theory of estoppel, a non-signatory may be compelled to arbitrate where
the non-signatory ‘knowingly exploits’ the benefits of an agreement containing an arbitration clause, and receives
benefits flowing directly from the agreement.” Bausch & Lomb Inc. v. Mimetogen Pharm., Inc., No. 14-CV6640(FPG), 2016 WL 2622013, at *7 (W.D.N.Y. May 5, 2016) (quoting n. Belzberg v. Verus Inv. Holdings Inc., 21
N.Y.3d 626, 630 (2013)).
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against Defendant Morgan Stanley. Plaintiffs claim that both Defendants violated ERISA by
failing to provide requested documents related to the Plan and that both Defendants breached
their fiduciary duties to Plaintiffs under the Plan and relating to Plan funds. See Yee v. Roofing
by Classic Restorations, No. 09-CV-00311(DJS), 2010 WL 7864919, at *6 (D. Conn. June 8,
2010) (staying the entire litigation pending the outcome of arbitration between the plaintiff and
one of the defendants because the plaintiff’s claims against the arbitrating defendant arose from
the same facts as those against the nonarbitrating defendants). “A stay as to claims against a
non-arbitrating defendant is properly granted where the arbitration of the plaintiff's claims
against a defendant party to the arbitration would at least partially determine the issues which
form the basis of the claim against that non-arbitrating defendant.” Hikers Indus., Inc. v. William
Stuart Indust. (Far East) Ltd., 640 F. Supp. 175, 178 (S.D.N.Y. 1986); see Sierra Rutile Ltd. v.
Katz, 937 F.2d 743, 750 (2d Cir. 1991) (“It is appropriate, as an exercise of the district court’s
inherent powers, to grant a stay where the pending arbitration is an arbitration in which issues
involved in the case may be determined.”).
Based on Plaintiffs’ opposition, Plaintiffs agree that a stay is appropriate. In their
opposition, they argued that “[c]ompelling [a]rbitration with one defendant while a matter is
pending with the other would unfairly prejudice the Plaintiffs” because it would force Plaintiffs
“to pursue two separate avenues on the same set of circumstances.” (Pls.’ Opp’n p. 16.) As the
entire matter is stayed pending the results of arbitration between Plaintiffs and Defendant
Morgan Stanley, Plaintiffs will not be obligated to pursue two separate methods of relief from
similar claims arising out of the same set of circumstances.
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CONCLUSION
For the foregoing reasons, Defendant Morgan Stanley's motion to compel arbitration and
stay this proceeding is GRANTED. Defendant Pension Associate's motion to dismiss is DENIED
without prejudice to renew once the stay in this matter is lifted. The Clerk of the Court is directed
to stay this case. Plaintiffs and Defendant Morgan Stanley are directed to promptly pursue
arbitration and to notify the Court and Defendant Pension Associates when the arbitration is
concluded. The Court is directed to terminate the motions at ECF Nos. 15, 20, and 21.
Dated:
June
2019
White Plains, New York
SO ORDERED:
NEtS~MAN
UnitecfStates District Judge
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