BENEZRA v. ZACKS INVESTMENT RESEARCH, INC. et al
Filing
32
MEMORANDUM OPINION AND ORDER signed by JUDGE THOMAS D. SCHROEDER on 3/30/2012, Defendants' Motion to Strike (Doc. 16 ) is DENIED; 2. Defendants' Motion to Compel Arbitration and to Dismiss or Stay Proceedings as Restated (Docs. 11 , 18 ) is GRANTED insofar as it seeks to compel arbitration of Plaintiff Steven Benezra's claims not otherwise disposed of in this Order and insofar as it seeks to dismiss the claims of Plaintiff Melissa York, and her claims are DISMISSED WITHOUT PREJ UDICE; 3. Because the positions of the parties were set out adequately in the briefing, Plaintiffs' Request for Hearing (Doc. 23 ) is DENIED; 4. This case is STAYED pending further order of the court. The Clerk of the Court is directed to administratively close the file. The parties shall file a joint report of arbitration every ninety (90) days. Failure to file such reports may result in dismissal of the action. (Lloyd, Donna)
IN THE UNITED STATES DISTRIT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
STEVEN BENEZRA and MELISSA
YORK,
)
)
)
Plaintiffs,
)
)
v.
)
)
)
ZACKS INVESTMENT RESEARCH,
INC., ZACKS INVESTMENT
)
)
MANAGEMENT, INC., LEONARD
HARVEY ZACKS, BENJAMIN LAIB
)
ZACKS, and MITCHEL ETHAN
)
)
ZACKS,
)
Defendants.
)
)
______________________________)
No. 1:11-CV-596
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
Plaintiffs
(“York”)
assert
Steven
Benezra
(“Benezra”)
claims
arising
from
relationship with Defendants.
their
and
Melissa
investment
York
adviser
Before the court is Defendants‟
motion to compel arbitration and to dismiss or stay this case.
(Docs. 11, 18.)
Defendants
also move to strike
response to the motion as untimely.
(Doc. 16.)
Plaintiffs‟
For the reasons
set out below, the court will deny the motion to strike, grant
the
motion
to
compel
arbitration
with
respect
to
Benezra,
dismiss the claims of York without prejudice, and stay further
proceedings pending arbitration.
I.
BACKGROUND
This initial state court action was removed to this court
pursuant
to
28
jurisdiction,
alternative,
U.S.C.
§
1441(b)
supplemental
diversity
based
on
federal
jurisdiction,
jurisdiction
(Doc.
and,
1
question
in
¶¶
the
9-11).
Plaintiffs‟ initial complaint sought damages under a number of
legal
theories
Defendants.
from
Benezra‟s
investment
of
funds
with
(See Doc. 1-1.)
On August 2, 2011, after removal, Defendants moved pursuant
to Rules 12(b)(1), 12(b)(3), and 12(b)(6) of the Federal Rules
of Civil Procedure and the Federal Arbitration Act, 9 U.S.C. § 1
et seq., for an order compelling Plaintiffs to arbitrate all
claims and to dismiss or stay all proceedings.
(Doc. 11.)
support
an
of
their
motion,
Defendants
submitted
In
“Investment
Advisory Agreement” (“IAA”) signed by Benezra, which contains
the following clause:
18. Arbitration. I [Benezra] hereby waive my right to
seek remedies in any court or before any governmental
agency, including any right to a jury trial. In the
event of any dispute between us arising out of,
relating to or in connection with this Agreement, such
dispute shall be resolved exclusively by arbitration
in Cook County in the state of Illinois, under the
auspices of JAMS. No punitive damages shall be
awarded. Any award rendered by the arbitrator shall be
final and binding, and judgment may be entered upon it
in any court of competent jurisdiction in Cook County
in the state of Illinois or as otherwise provided by
law.
2
(Doc. 11-1 IAA ¶ 18.)
Although it contains the notation “Agreed
to and Accepted by: ZACKS INVESTMENT MANAGEMENT, INC. [“ZIM”],”
the IAA contains no signature by any representative in the space
provided.
On
(Id. at 6.)
August
Defendants‟
9,
2011,
motion,
Plaintiffs‟
informed
all
counsel,
Defendants
upon
that
receiving
because
ZIM
failed to execute the IAA, there was no binding contract and
Plaintiffs
were
withdrawing
assent” to the IAA.
their
“signature
and
perceived
(Doc. 14-2.)
On August 18, 2011, Plaintiffs filed their unverified First
Amended Complaint (“FAC”), which asserts claims for fraud in the
inducement, rescission, breach of fiduciary duty in violation of
the Investment Advisers Act of 1940, violation of the Securities
and
Exchange
Act
of
Securities
Act,
declaratory
relief,
investment
of
Defendant ZIM.
1934,
unfair
and
and
$550,000
violation
(Doc. 13.)
the
deceptive
false
of
of
advertising
Benezra‟s
North
trade
practices,
related
retirement
Carolina
to
fund
the
with
Also named as Defendants are Zacks
Investment Research, Inc. (“ZIR”), parent company of ZIM, and
Leonard Harvey Zacks, Benjamin Laib Zacks, and Mitchel Ethan
Zacks, all of whom are officers or directors of ZIM or ZIR.
(Id. 13 ¶ 7; Doc. 11-1 Frank C. Lanza Affidavit (“Lanza Aff.”)
¶ 5.)
3
Plaintiffs contend that they invested $550,000 with ZIM on
September 30, 2008, based on Defendants‟ misrepresentation that
the funds would be invested in “#1 Rank” stocks (defined in the
FAC
as
the
researched
top
200
stocks
stocks).
from
(Doc.
13
a
¶¶
“universe”
10-23.)
of
After
over
4,000
suffering
losses, Plaintiffs allege, Benezra directed ZIM on January 5,
2009, to “pull his cash out of the account and return his money
to him.”
fraud,
(Id. ¶ 66.)
“Benezra
$80,156.99.”
Plaintiffs claim that, as a result of
suffered
the
(Id. ¶ 67.)
loss,
in
just
a
few
weeks,
of
Plaintiffs seek general, exemplary
and/or treble damages, as well as other relief.
(Id. at 46-47.)
On August 31, 2011, after the period for responding to the
motion to compel expired, Plaintiffs filed an opposition and
response.
(Docs. 14, 15.)
Defendants in turn moved to strike
Plaintiffs‟ opposition as untimely.
(Doc. 16.)
Apparently out
of an abundance of caution, Defendants renewed their motion to
compel on September 2, 2011.
(Doc. 18.)
This led to a flurry
of motions and briefing (Plaintiffs filing six, and Defendants
filing four).
II.
All motions are now ripe for decision.
ANALYSIS
A.
Defendants’ Motion to Strike
Defendants
move
to
strike
Plaintiffs‟
motion to compel arbitration as untimely.
response
to
the
Defendants also argue
that Plaintiffs‟ FAC, which was filed shortly after the motion
4
to compel arbitration, cannot be considered a proper response.
Thus,
Defendants
treated
as
an
reason,
their
uncontested
motion
motion
to
under
compel
Local
should
Rule
be
7.3(k)
(providing discretion to consider motion as uncontested).
Plaintiffs
timely
filed
the
FAC
within
21
days
of
Defendants‟ motion to compel, which also contained motions under
Federal Rule of Civil Procedure 12(b).
Federal Rule of Civil
Procedure 15(a)(1)(B) permits a plaintiff to amend a complaint
as a matter of course within 21 days of a motion under Rule
12(b), (e) or (f).
determinations
seriatim.
notes.
that
of
issues
that
otherwise
might
be
raised
Fed. R. Civ. P. Rule 15, 2009 advisory committee
Here, the FAC was filed as a matter of right and alleged
the
IAA
(containing
properly executed.
having
One purpose of this rule is to expedite
mooted
the
the
arbitration
clause)
was
not
Thus, the court will consider the FAC as
motion
to
dismiss.
See
Colin
v.
Marconi
Commerce Sys. Employees‟ Ret. Plan, 335 F. Supp. 2d 590, 614
(M.D.N.C.
2004)
(holding
moot
defendants‟
filed prior to amended complaint).
arbitration
was
integral
to
motion
to
dismiss
Because the motion to compel
Defendants‟
motions
and
the
FAC
alleged that the IAA was never valid, and because the parties
have
nevertheless
now
fully
briefed
the
motion
to
compel
arbitration, the court declines to consider the motion to compel
5
to be an uncontested motion and will consider all the briefing.
The motion to strike (Doc. 16) will therefore be denied.
B.
Defendants’ Motion to Compel Arbitration
Relying on the arbitration clause in the IAA, Defendants
move pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et
seq. (“FAA”), and Federal Rules of Civil Procedure 12(b)(1),
12(b)(3), and 12(b)(6) for an order that compels Plaintiffs to
arbitrate all claims and either dismisses those claims or, in
the
alternative,
arbitration.
stays
this
case
pending
(Doc. 11 at 4-5; Doc. 18.)
completion
of
the
Plaintiffs contend
that they are not bound by the arbitration clause because, they
have now come to learn, Defendants failed to execute the IAA
containing
it
and,
if
the
IAA
is
enforceable,
they
were
fraudulently induced into agreeing to its arbitration clause.
Defendants
arbitration
contend
that
provision
Benezra
contained
agreed
in
it
to
the
and
Plaintiffs‟ claims are subject to arbitration.
IAA
and
the
that
all
of
Both parties
accept that if the arbitration provision was agreed to, the FAA
applies.1
1
The FAA applies to a written provision to arbitrate in any contract
“evidencing a transaction involving commerce to settle by arbitration
a controversy thereafter arising out of such contract or transaction.”
9 U.S.C. § 2.
Commerce is defined broadly under the FAA. Id. § 1.
The parties reside in different states, and the transactions related
to the IAA were conducted across state lines through interstate
commerce. (See Doc. 1 ¶¶ 7-8, 11; Doc. 13 ¶¶ 1-2, 14-27, 31, 74-78,
92-98, 102-03, 184 (alleging use of interstate commerce).) Thus, the
FAA applies provided the court determines the parties entered into a
6
The party seeking to compel arbitration must establish an
agreement to arbitrate.
See In re Mercury Constr. Corp., 656
F.2d 933, 939 (4th Cir. 1981), aff‟d sub nom. Moses H. Cone
Mem‟l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983); see
Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir.
2002)
(requiring
litigant
seeking
to
compel
arbitration
to
demonstrate “a written agreement that includes an arbitration
provision which purports to cover the dispute”).
A court may
order arbitration of a dispute only where it is satisfied that
the parties entered into an agreement to arbitrate it.
Granite
Rock Co. v. Int‟l Bhd. of Teamsters, 130 S. Ct. 2847, 2856
(2010) (citing First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 943 (1995)).
In this case, Plaintiffs challenge both
the formation of the arbitration provision as well as its scope.
Disputes as to contract formation are “generally for the
courts to decide,” Granite Rock, 130 S. Ct. at 2855-56, applying
ordinary state-law principles of contract law, Am. Gen. Life &
Accident Ins. Co. v. Wood, 429 F.3d 83, 87 (4th Cir. 2005) (also
noting
that
generally
applicable
contract
defenses
such
as
valid agreement to arbitrate. See Circuit City Stores, Inc. v. Adams,
532 U.S. 105, 112 (2001) (noting Court had interpreted FAA “as
implementing Congress‟ intent to exercise its commerce power in full”
(alterations and internal quotation marks omitted)). Further, the FAA
preempts conflicting state law. Allied-Bruce Terminix Cos. v. Dobson,
513 U.S. 265, 272 (1995) (“[S]tate courts cannot apply state statutes
that invalidate arbitration agreements.” (citing Southland Corp. v.
Keating, 465 U.S. 1, 15-16 (1984))).
7
fraud, duress, or unconscionability may be applied to invalidate
arbitration agreements).
In resolving such disputes, “the court
must resolve any issue that calls into question the formation or
applicability of the specific arbitration clause that a party
seeks to have the court enforce,” including whether the clause
was agreed to.
Granite Rock, 130 S. Ct. at 2856.
“[T]he FAA
was intended to create a body of federal substantive law of
arbitrability, applicable to any arbitration agreement within
the
coverage
of
the
Act.”
Am.
Gen.
Life,
429
(internal quotation marks and citations omitted).
F.3d
at
87
Challenges to
the scope of an arbitration provision, therefore, are also for
the
court
to
decide.2
Id.
Because
substantive
federal
arbitration law declares an arbitration provision severable from
the remainder of the contract, however, a general challenge to
the contract containing an arbitration provision (e.g., that the
contract is usurious or against public policy) must be left to
the arbitrator.
Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440, 445 (2006).
The question, therefore, is whether the parties agreed to
the arbitration clause contained in the IAA.
If so, the court
will consider the scope of the arbitration clause, i.e., which
Plaintiffs‟ claims, if any, are subject to arbitration.
2
The only exception, not relevant here, is when there is “clear and
unmistakable” evidence the parties agreed to arbitrate the question of
arbitrability.
Granite Rock, 130 S. Ct. at 2858; First Options, 514
U.S. at 942-43.
8
1.
Existence of Valid Arbitration Agreement
Plaintiffs argue that Benezra did not enter into the IAA,
and
thus
its
arbitration
provision,
“offer” before ZIM ever signed it.
22 at 2-3.)
because
he
revoked
his
(E.g., Doc. 14 at 2-3; Doc.
Plaintiffs also point to paragraph 16 of the IAA,
which states, in part, “This Agreement shall not become binding
on you [ZIM] unless accepted in writing by you [ZIM]” (Doc. 151) and argue that where the drafter of a contract sets his own
requirements for acceptance but fails to meet them, no valid
contract was formed.3
(Doc. 15 at 4.)
Consequently, Plaintiffs
contend, the parties did not enter into the IAA and necessarily
did not enter into the agreement to arbitrate contained within
it.
(E.g., Doc. 14 at 2; Doc. 19 at 2; Doc. 29 at 2.)
Defendants point out that the IAA requires a writing only
for Defendants to be bound and argue that under both Illinois
and North Carolina law, a party who acts upon a contract in
writing is bound by it even though he did not sign it.
3
Plaintiffs also argue that the requirement of “accepted in writing”
means “signed,” relying on an unspecified Webster‟s dictionary and a
definition from MacMillian [sic] Illustrated Dictionary for Children
796 (2007) (giving, as an example, “His writing is neat and tidy”).
(Doc. 22 at 3.)
A “writing” need not be a signature, however.
See
Webster‟s Third New International Dictionary 2641 (1986) (defining
“writing” as “something written,” including “a written or printed
paper or document (as a deed, contract, pleading in court)”); Black‟s
Law Dictionary 1748 (9th ed. 2009) (defining a writing to which a
signature is attached as a “signed writing”).
Even if it did, it
would not matter for the reasons noted later in this opinion.
9
As
noted,
general
state
law
principles
apply
to
the
determination of whether the parties agreed to arbitrate their
dispute.
First Options, 514 U.S. at 944.
Plaintiffs cite to
North Carolina law, and Defendants cite to both North Carolina
and Illinois law.
Because there is no substantive difference
between the two on the issue of contract formation, and because
both are proper candidates for consideration,4 the court need not
choose between them.
Under North Carolina law “[i]t is equally
efficacious if a written contract is prepared by one party and
delivered to the other party, and acquiesced in by the latter
without objection.”
W.B. Coppersmith & Sons, Inc. v. Aetna Ins.
Co.,
21
222
N.C.
14,
S.E.2d
838,
840
(1942).
Similarly,
Illinois courts have held that if a document “is signed by the
party
being
charged,
the
other
party‟s
signature
is
not
necessary if the document is delivered to that party and she
indicates
acceptance
through
performance.”
Meyer
v.
Marilyn
Miglin, Inc., 273 Ill. App. 3d 882, 891, 652 N.E.2d 1233, 1239
(1995).
Plaintiffs
point
out
that
where
a
party
specifies
the
manner of acceptance, acceptance by a different manner will not
4
The IAA provides that, except as controlled by federal law, it is
governed by the law of Illinois, where ZIM and all Defendants but
Benjamin Laib Zacks reside. (Doc. 11-1 IAA ¶ 21; Doc. 1 ¶ 11; Doc. 13
¶¶ 1-3.)
Plaintiffs are residents of North Carolina.
Defendants in
Illinois sent the IAA to Plaintiffs in North Carolina, where Benezra
apparently signed it and then returned it to Defendants in Illinois.
(Doc. 1 ¶¶ 7-8.)
10
usually
result
in
a
contract.
See
Restatement
(Second)
of
Contracts § 60 (1981) (“If an offer prescribes the . . . manner
of acceptance its terms in this respect must be complied with in
order to create a contract.”).
Armed with this proposition,
they rely on Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d
211 (5th Cir. 2003), to argue that the arbitration clause was
never adopted by the parties because ZIM failed to accept the
IAA in the manner it had required.
In
Will-Drill,
a
party
seeking
to
avoid
arbitration
asserted that no contract existed because the Proposed Sales
Agreement (“PSA”) it had signed constituted an offer to purchase
that was contingent on all owners of the property listed in the
PSA joining in the agreement.
Several of the proposed sellers
decided not to sell their property, however, and they did not
sign the PSA.
Several of the signing sellers brought an action
for specific performance and invoked the arbitration clause in
Id. at 213.
the PSA.
The district court ordered arbitration,
but the Fifth Circuit reversed, concluding that it was for the
district
court to
determine
agreement had been reached.
as an initial matter
whether an
Id. at 218-19.
Will-Drill is unhelpful to Plaintiffs, however, because the
proposed contract was contingent on the participation of all
potential
Defendants
parties,
seek
to
some
bind
of
whom
Benezra,
11
had
who
refused.
signed
Here,
the
the
IAA
and
delivered it to ZIM.
in
writing”
condition
was
therefore,
imposed
on
the
of
not
imposed
ZIM
application
The requirement that the IAA be “accepted
against
where
IAA
an
on
Benezra;
itself
and
“offeror,
ZIM.
as
rather,
it
purported
to
This
master
is
of
not
the
was
a
limit
a
case,
offer,
[]
prescribe[d] the manner of acceptance, in which case the offeree
would
have
to
contract.”
comply
with
that
term
in
to
form
a
2 Williston on Contracts § 6:2 (4th ed.) (citing
Restatement (Second) of Contracts § 60).
his
order
signature
and
delivery
of
Instead, Benezra, by
investment
funds
to
ZIM,
manifested a clear intent to enter into the IAA and to be bound
by it; and ZIM, by accepting the funds and investing them, did
so as well.
under
the
remaining
Thus, the parties mutually assented to operate
IAA
his
Benezra
account
directed
ZIM
to
return
funds
more
than
three
months
And
even
then,
Plaintiffs
never
contended that a contract was not formed but instead
sought
investment
in
until
relationship.
into
the
rescission of it in this lawsuit until they learned, some two
and one-half years later, that ZIM failed to sign it.
Under these facts, the court finds that the arbitration
agreement in paragraph 18 of the IAA may be enforced against
Benezra.5
5
Evangelistic Outreach Ctr. v. Gen. Steel Corp., 181 N.C. App. 723,
640 S.E.2d 840 (2007), cited by Plaintiffs, does not alter the result.
12
2.
Plaintiffs’ Claim of Fraudulent Inducement
Plaintiffs argue that even if they entered into the IAA,
they
were
fraudulently
induced
arbitration agreement itself.
19;
Doc.
27
Defendants
at
(1)
3.)
had
In
already
into
entering
into
the
(Doc. 15 at 4-8; Doc. 22 at 12the
FAC,
Plaintiffs
“concocted
a
fraud
allege
that
scheme,”
(2)
inserted the arbitration clause to limit their liability for
their fraud and tortious conduct, as well as punitive damages,
and
(3)
phrased
the
IAA
“to
prevent
Plaintiffs,
and
others
similarly situated, from contacting the FBI, SEC, North Carolina
Securities Divisions, and others” to complain while including
misleading provisions in the IAA that Benezra was not waiving
any such rights.
(Doc. 13 ¶ 214; see id ¶¶ 211-13, 215-18.)
Though Plaintiffs give lip service to “fraud,” their fraudulent
inducement
argument
is
founded
on
a
contention
paragraphs 9, 10, and 21 “contradict” the arbitration
and
thus
“lure[d]”
particularly
those
Benezra
arising
preserved in a court of law.
into
under
believing
securities
that
that
provision
his
laws,
IAA
claims,
would
be
(Doc. 15 at 4-8; Doc. 22 at 14-19;
In Evangelistic the court of appeals concluded that the evidence
supported the trial court‟s conclusion that defendant had not carried
its burden of showing that an agreement‟s second page, which contained
an arbitration provision, had been faxed to or received by the
plaintiff, who claimed he received and signed only the first page of
the fax. Id. at 728, 640 S.E.2d at 843-44. The court affirmed based
on the trial court‟s finding that the defendant did not prove that the
plaintiff received a document with the arbitration agreement. In this
case, the IAA signed by Benezra contains an arbitration agreement.
13
Doc. 27 at 3.)
are
in
fact
As such, Plaintiffs‟ alleged misrepresentations
the
express
terms
of
the
IAA.
Therefore,
Plaintiffs‟ argument is more accurately an attack on the scope
of
the
arbitration
provision:
namely,
an
argument
that
the
arbitration provision, when read in conjunction with these three
paragraphs of the IAA, fails to encompass their claims or is at
least
ambiguous.
(See
Doc.
13
¶
218.)
No
matter
how
Plaintiffs‟ argument is characterized, it is unpersuasive.6
As noted, the Supreme Court has directed that courts apply
ordinary state law principles that govern contract formation and
the “federal substantive law of arbitrability.”
Int‟l Paper Co.
v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 417 n.4
(4th
Cir.
2000)
(internal
citations
omitted)
(citing
First
Options, 514 U.S. at 944, and Moses H. Cone, 460 U.S. at 24).
The court must be satisfied that the parties agreed to arbitrate
6
Even if Plaintiffs‟ claim could somehow be construed as one of
fraudulent inducement, it would still fail. State law would apply to
the determination of this claim.
Am. Gen. Life, 429 F.3d at 87.
Under North Carolina law, the essential elements of fraud in the
inducement of a contract are: a false representation or concealment of
a material past or existing fact which one had a duty to disclose;
made knowingly or recklessly; with the intent to deceive; that was
reasonably relied on; causing injury. Harton v. Harton, 81 N.C. App.
295, 298-99, 344 S.E.2d 117, 119-20 (1986).
The FAC‟s fraudulent
inducement allegations amount to nothing more than a claim that
paragraphs 9, 10, and 21 of the IAA were included simply to lure
Plaintiffs into arbitration. Of course, the arbitration provision was
not concealed. And in relying on the express terms of the IAA for the
alleged fraud, Plaintiffs fail to allege or explain how paragraphs 9,
10, and 21 constitute a material misrepresentation rather than a term
of a contract.
Finally, any attempt to construe Plaintiffs‟
fraudulent inducement claim as a general challenge to the IAA requires
that it be resolved by the arbitrator. Prima Paint Corp. v. Flood &
Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967).
14
the particular disputes at issue.
2856.
This
is
a
matter
of
Granite Rock, 130 S. Ct. at
contract
interpretation.
Am.
Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d
88, 92 (4th Cir. 1996) (“A party cannot be required to submit to
arbitration any dispute which he has not agreed to submit.”
(quoting United Steelworkers of Am. v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 582 (1960))).
Plaintiffs rightly point out that under North Carolina law,
Cowell v. Gaston County, 190 N.C. App. 743, 745, 660 S.E.2d 915,
917 (2008), any ambiguity in a contract must be resolved against
the
drafter,
here
ZIM.
To
be
sure,
the
Supreme
Court
has
acknowledged that in determining the scope of an arbitration
agreement,
the
court
should
apply
“the
common-law
rule
of
contract interpretation that a court should construe ambiguous
language against the interest of the party that drafted it.”
Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62-63
(1995).7
However,
federal
policy,
7
grounded
in
the
FAA,
In Mastrobuono, the drafter argued that the arbitration agreement did
not permit arbitration of a punitive damages claim even though such
claims were not expressly barred in the agreement. The Court, finding
a choice-of-law provision in the contract at most introduced an
ambiguity, applied the principle that ambiguities to the scope of the
arbitration clause itself must be resolved in favor of arbitrability.
514 U.S. at 62. Unlike the usual case in which the party drafting the
arbitration clause asserts an inclusive interpretation (and unlike
this case), the drafter in Mastrobuono sought to exclude the claim.
Thus, the Court observed, “Moreover, [the drafter] cannot overcome the
common-law rule of contract interpretation that a court should
construe ambiguous language against the interest of the party that
drafted it.” Id. at 62-63 (emphasis added) (noting the “rationale is
15
establishes
that
as
concerning
the
scope
“construction
of
a
the
matter
of
of
federal
arbitrable
contract
“any
issues,”
language
resolved in favor of arbitration.
law,
doubts
including
itself,”
should
be
Aggarao v. MOL Ship Mgmt.
Co., Ltd., --- F.3d ---, 2012 WL 887595, at *8 (4th Cir. 2012)
(quoting Moses H. Cone, 460 U.S. at 24-25).
validly
formed
and
enforceable
agreement
Where there is a
to
arbitrate
that
contains an ambiguity, therefore, the court must also apply the
federal presumption of arbitrability.
Granite Rock, 130 S. Ct.
at 2858-59; see Levin v. Alms & Assocs., Inc., 634 F.3d 260,
266-67 (4th Cir. 2011) (the “heavy presumption of arbitrability
requires that when the scope of the arbitrable clause is open to
question,
a
court
must
decide
the
question
in
favor
of
arbitrability”); Morgan v. Smith Barney, Harris Upham & Co., 729
F.2d 1163, 1165 (7th Cir. 1984) (noting that
“when contract
language is ambiguous or unclear, a „healthy regard‟ for the
federal policy favoring arbitration requires that „any doubts
concerning the scope of arbitrable issues should be resolved in
favor
of
Circuit
arbitration‟”
recently
containing
an
put
(citations
it,
arbitration
omitted)).
“[w]hen
clause,
As
interpreting
there
is
a
the
a
Fourth
contract
presumption
of
well suited to the facts of this case”).
The Fourth Circuit cited
Mastrobuono for this proposition in United States v. Bankers Ins. Co.,
245 F.3d 315 (4th Cir. 2001), a case in which the drafter of the
arbitration agreement also sought to limit its reach. Id. at 319-21 &
n.7. In this case, Defendants do not seek to limit the scope of the
arbitration agreement.
16
arbitrability
in
the
sense
that
an
order
to
arbitrate
the
particular grievance should not be denied unless it may be said
with
positive
susceptible
assurance
of
dispute.”
an
that
the
arbitration
interpretation
that
covers
clause
the
is
not
asserted
Peabody Holding Co., LLC v. United Mine Workers of
Am., 665 F.3d 96, 104 (4th Cir. 2012) (internal quotation marks
and citation omitted).
Applying those standards to this case, the court notes that
Paragraph
18
of
the
IAA
provides,
in
relevant
part,
for
arbitration “[i]n the event of any dispute between us arising
out
of,
relating
to
(Doc. 11-1 IAA ¶ 18.)
or
in
connection
with
this
Agreement.”
This language is broad, encompassing not
only disputes “arising out of” the IAA but also those “relating
to or in connection with” the IAA.
See Prima Paint Corp. v.
Flood & Conklin Mfg. Co., 388 U.S. 395, 398 (1967) (describing
“Any controversy or claim arising out of or relating to this
Agreement” as “a broad arbitration clause”); Levin, 634 F.3d at
267-68 (referring to “any dispute” as broad); see also Long v.
Silver, 248 F.3d 309, 313 (4th Cir. 2001) (referring to similar
language as “very broad”).
Plaintiff Benezra‟s claims fall within IAA paragraph 18‟s
arbitration
agreement.
His
claims
of
fraud
(First
Cause),
rescission (Second Cause), and false advertising (Eighth Cause)
all
“relate
to”
the
IAA.
Plaintiffs‟
17
claims
of
breach
of
fiduciary duty, including engaging in prohibited transactions
under the Investment Act of 1940 (Third Cause), violation of the
Securities and Exchange Act of 1934 (Fourth Cause), violation of
the North Carolina Securities Act (Fifth Cause), and unfair and
deceptive trade practices (Sixth Cause), all either “relate to”
or
“arise
Express,
out
Inc.
of”
v.
the
IAA.
McMahon,
See,
482
U.S.
e.g.,
220,
Shearson/American
226-27,
238
(1987)
(anti-fraud claims under section 10 of the Securities Exchange
Act of 1934 generally arbitrable); Prima Paint, 388 U.S. at 40206
(claim
of
arbitrable);
against
general
Levin,
advisers
fraud
634
for
F.3d
in
the
at
negligence,
inducement
262,
269
negligent
of
contract
(investor
claims
misrepresentation,
violation of the Investment Advisers Act of 1940, and breach of
contract arbitrable pursuant to an arbitration clause similar to
that in the IAA); Long, 248 F.3d at 319 (unfair and deceptive
trade
practices
claim
arbitrable);
Feller
v.
Wells
Fargo
Advisors, LLC, No. 6:11-cv-345-Orl-28GJK, 2011 WL 3331265, at *2
(M.D. Fla. Aug. 3, 2011) (claims of fraud in the inducement and
rescission of the contract generally, and not the arbitration
provision
Cashing,
specifically,
546
U.S.
at
arbitrable
444-46));
(citing
Jones
v.
Buckeye
Genus
Credit
Check
Mgmt.
Corp., 353 F. Supp. 2d 598, 602 (D. Md. 2005) (misrepresentation
and false advertising claim arbitrable); cf. Jeske v. Brooks,
875
F.2d
71,
72,
76
(4th
Cir.
18
1989)
(dismissing
appeal
of
district court‟s order to arbitrate claims brought under the
North Carolina Securities Act, although on the ground of lack of
jurisdiction to review).
The three paragraphs relied on by Plaintiffs do not limit
the
arbitration
provision.
Paragraph
9
acknowledges
that
securities laws may impose liabilities upon persons acting in
good faith and provides that “nothing in this Agreement shall in
any way constitute a waiver or limitation of any rights that I
[Benezra]
may
Paragraph
21
have
under
provides
that
any
applicable
“Nothing
in
securities
this
Agreement
laws.”8
shall
constitute a waiver or limitation of any rights I [Benezra] may
8
Paragraph 9 provides:
Standard of Care. Neither your acceptance of my investment
objectives, nor any other provision of this Agreement,
shall be considered a guarantee or representation that any
specific result will be achieved. You shall not be liable
for any losses that I may sustain by reason of either your
investment decisions or recommendations or your failure to
make decisions or recommendations at any time. Neither you
nor your officers, directors or employees shall be liable
under this agreement for any action performed or omitted to
be performed or for any errors in judgment, except for
violation of applicable federal or state law. I understand
that the federal and state securities laws may impose
liabilities under certain circumstances on persons who act
in good faith, and, therefore, that nothing in this
Agreement shall in any way constitute a waiver or
limitation of any rights that I may have under any
applicable
securities
laws.
I
understand
that
your
recommendations will be based upon information from sources
that you regard as reliable, but I also recognize that you
cannot guarantee the accuracy of such information.
(Doc. 11-1 IAA ¶ 9.)
19
have under applicable securities laws or regulations.”9
And
Paragraph 10 provides that ZIM may require Benezra to indemnify
its costs and expenses incurred in the course of threatened or
actual
agency,
litigation
or
any
by
other
a
participant,
person
beneficiary,
pertaining
to
either
government
Benezra‟s
account with ZIM or the IAA, unless a “final judgment of a court
of competent jurisdiction” adjudicates that ZIM breached the IAA
or applicable law or committed negligence or malfeasance.10
9
Paragraph 21 provides:
Construction. Headings used in this Agreement are for
convenience only, and shall not affect the construction or
interpretation of any of the provisions of this Agreement.
Each of the provisions of this Agreement is severable, and
the
invalidity
or
inapplicability
of
one
or
more
provisions, in whole or in part, shall not affect any other
provision.
This
Agreement
shall
be
construed
and
interpreted under the laws of the State of Illinois without
regard to conflict of laws principles, except to the extent
controlled by applicable federal law. Nothing in this
Agreement shall constitute a waiver or limitation of any
rights I may have under applicable securities laws or
regulations.
(Doc. 11-1 IAA ¶ 21.)
10
Paragraph 10 provides:
Indemnification of Adviser. I agree to indemnify you and
hold you harmless against all damages, costs and expenses,
including reasonable attorney's fees and costs, incurred by
you in the course of any threatened or actual litigation,
arbitration or administrative proceeding brought by a
participant, beneficiary, governmental agency or any other
person pertaining to the Account or otherwise relating to
this Agreement, provided, however, that I shall not be
liable in any such case to the extent that, in the final
judgment of a court of competent jurisdiction, it is
adjudicated that (i) your action or omission resulted in
the violation of the provisions of this Agreement or
applicable law, or (ii) your action or omission constituted
20
Plaintiffs assert that the purpose of paragraphs 9 and 21
was “to deceive [them] with an understanding that all their
rights, as pertaining to applicable securities laws, are not
waived or limited in any way by anything in the IAA.”
at 18.)
(Doc. 22
The court cannot say that paragraphs 9 and 21 create
ambiguity
arbitration
with
respect
provision.
to
the
scope
of
even
if
Moreover,
paragraph
the
18‟s
arbitration
provision is somehow ambiguous, it cannot be said with positive
assurance that paragraphs 9 and 21 render it susceptible of an
interpretation that Plaintiffs‟ securities law claims would not
be
subject
to
arbitration.
Paragraphs
9
and
21
preserve
substantive rights, but neither paragraph purports to preserve
any particular forum in which to decide them.
The only mention
of a judicial forum appears in paragraph 10‟s provision that
precludes Benezra‟s liability for indemnification if there is a
“final
judgment
of
a
court
of
competent
jurisdiction”
adjudicating ZIM‟s breach of the IAA or applicable law or ZIM‟s
tortious conduct.
On its face, this provision does not apply to
Plaintiffs’ claims here; whether paragraph 10 applies to any
claim for indemnification that ZIM may later bring (and whether
paragraph 10 merely reflects paragraph 18‟s allowance that any
negligence or malfeasance with respect to your obligations
and duties under this Agreement.
(Doc. 11-1 IAA ¶ 10.)
21
arbitration award may be enforced by judgment by any competent
court) is not before the court.
Plaintiffs also contend that paragraph 9 deceived them into
believing they had preserved their rights to punitive damages
under
the
North
Carolina
Stat. § 78C-38(g).
Investment
Advisers
(Doc. 22 at 16-17.)
Act,
N.C.
Gen.
Yet, they point out,
paragraph 18 of the IAA states that “[n]o punitive damages shall
be awarded.”
(Doc. 11-1 IAA ¶ 18.)
Notably, Plaintiffs do not
bring a cause of action under the North Carolina Investment
Advisers Act, and thus N.C. Gen. Stat. § 78C-38(g) does not
apply.11
11
Plaintiffs do bring a claim under the North Carolina Securities Act,
N.C. Gen. Stat. § 78A-1 et seq. (Doc. 13 ¶¶ 172-81).
The court‟s
independent research reveals that it contains a similar provision
allowing for punitive damages if the requirements of Chapter 1D of the
General Statutes are met.
See N.C. Gen. Stat. § 78A-56(j).
Plaintiffs argue only that Benezra was fraudulently induced into
entering into the arbitration provision because of paragraphs 9 and 21
and do not raise any claim that the arbitration provision‟s purported
waiver of punitive damages should render it unenforceable as against
public policy.
On this record, therefore, the court need not
determine whether any waiver of punitive damages is unenforceable or
renders the arbitration provision void in whole or in part.
Compare
Hawkins v. Aid Assoc. for Lutherans, 338 F.3d 801, 807 (7th Cir. 2003)
(“[C]omplaints about the unavailability of such remedies [including
punitive damages] first must be presented to the arbitrator.”), and
Inv. Partners, L.P. v. Glamour Shots Licensing, Inc., 298 F.3d 314,
316-18 & n.1 (5th Cir. 2002) (noting that “[p]rovisions in arbitration
agreements that prohibit punitive damages are generally enforceable”),
and Larry‟s United Super, Inc. v. Werries, 253 F.3d 1083, 1086 (8th
Cir. 2001) (reserving initially for arbitrator the question of the
validity of any waiver of punitive damages under federal claim), and
Great Western Mortg. Corp. v. Peacock, 110 F.3d 222, 232 (3d Cir.
1997) (“[A]vailability of punitive damages cannot enter into a
decision to compel arbitration.”), with Booker v. Robert Half Int‟l
Inc., 413 F.3d 77, 83 (D.C. Cir. 2005) (finding arbitration provision
barring punitive damages unenforceable in civil rights action where
22
Thus, Plaintiffs‟ claims (at least those of Benezra; York‟s
claims are addressed below) are referable to arbitration, with
the
exception
of
those
raised
by
Plaintiffs‟
request
for
declaratory relief (Seventh Cause) related to the formation of
the arbitration agreement contained in the IAA and the validity
of
the
arbitration
agreement,
which
were
addressed
in
this
opinion.
3.
Defendants covered by Arbitration Agreement
All Defendants seek to invoke the arbitration agreement in
the
IAA.
Plaintiffs
do
not
address
whether
Defendants, other than ZIM, can do so.
the
Benezra and ZIM are
parties to the IAA, the remaining Defendants are not.
“[w]ell-established
common
law
principles
remaining
dictate
However,
that
in
an
appropriate case a nonsignatory can enforce, or be bound by, an
arbitration
parties.”
provision
within
a
contract
executed
by
other
Schwabedissen Maschinen, 206 F.3d at 416-17 (citing
cases).
ZIR is the parent company of ZIM.
Aff. ¶ 5; Doc. 13 ¶ 7.)
(Doc. 4; Doc. 11-1 Lanza
When allegations against “a parent
company and its subsidiary are based on the same facts and are
inherently inseparable, a court may refer claims against the
District of Columbia law provided for such damages).
Notably,
Plaintiffs do not argue that punitive damages are available under
their claim under the Securities Exchange Act of 1934.
See Hunt v.
Miller, 908 F.2d 1210, 1216 n.13 (4th Cir. 1990) (noting that claims
for punitive damages are foreclosed in a Rule 10b-5 action by
Securities Exchange Act § 28(a), codified at 15 U.S.C. § 78bb(a)).
23
parent to arbitration even though the parent is not formally a
party to the arbitration agreement.”
J.J. Ryan & Sons v. Rhone
Poulenc Textile, S.A., 863 F.2d 315, 320-21 (4th Cir. 1988)
(noting that to hold otherwise would effectively thwart federal
policy
in
favor
of
arbitration);
see
Long,
248
F.3d
at
320
(stating that when claims against shareholders and corporation
are “closely intertwined,” shareholders may enforce arbitration
agreement).
which
is
typically
A review of the FAC reveals no claim against ZIR
independent
makes
generally.
of
claims
that
against
against
ZIM
(See Doc. 13 ¶¶ 88-193.)
ZIM.
or
Indeed,
against
the
FAC
Defendants
Thus, ZIR may properly
invoke the arbitration clause.
The remaining defendants are officers or directors of ZIM
or ZIR: (1) Leonard H. Zacks (Chief Executive Officer of ZIR);
(2) Benjamin L. Zacks (President of ZIM); and (3) Mitchel E.
Zacks (Managing Director of ZIM).
8.)
A
party
to
an
arbitration
(Doc. 11-1 Lanza Aff. ¶¶ 6agreement
may
not
avoid
arbitration by naming defendants not a party to the agreement
when those defendants are a party‟s agents, including employees.
Collie
v.
Wehr
Dissolution
Corp.,
345
F.
Supp.
2d
555,
562
(M.D.N.C. 2004) (“If plaintiffs could sue individual defendants,
they could too easily avoid the arbitration agreement that they
signed
with
corporate
entities.”
(citation
omitted));
see
Schwabedissen Maschinen, 206 F.3d at 416-17 (“Well-established
24
common law principles dictate that in an appropriate case a
nonsignatory can enforce . . . an arbitration provision within a
contract executed by other parties.” (citing cases)).
Plaintiffs‟
claims
against
ZIM
and
the
other
Here,
Defendants
are
“inherently inseparable” and “closely intertwined” and apply to
all Defendants, corporations and individuals alike.
All of the
FAC allegations regarding individual Defendants involve conduct
occurring in their official capacities with ZIM or ZIR.
See
Collie, 345 F. Supp. 2d at 562 (“By allowing the individual
defendants the protection of the [arbitration agreement], the
court prevents Plaintiff from circumventing arbitration by suing
an individual defendant.”).
Thus, these Defendants may also
invoke the arbitration agreement.
Under the circumstances of this case and in light of the
allegations in the
factual
and
legal
FAC,
therefore,
bases
for
the court finds that the
Plaintiffs‟
claims
against
Defendants are inherently inseparable and closely intertwined,
and that all Defendants may properly compel arbitration to the
same extent as ZIM.
4.
Plaintiff York’s Claims
Defendants move to compel York to arbitration or, in the
alternative, to dismiss her claims pursuant to Federal Rule of
Civil
Procedure
12(b)(6).
(Doc.
11;
Defendants also challenge York‟s standing.
25
Doc.
12
at
17-18.)
(Doc. 12 at 17; see
Doc. 11 (bringing motion, inter alia, under Rules 12(b)(1) and
12(b)(6)).)
Plaintiffs do not directly respond.
(See Docs. 14,
15, 19, 20, 22, 23, 27, 29.)
Under certain circumstances, an arbitration agreement may
be
enforced
example,
against
under
signatories
someone
principles
can
be
who
of
bound
did
not
contract
to
agree
law
and
arbitration
to
it.
For
agency,
agreements
nonunder
theories of incorporation by reference, assumption, agency, veil
piercing/alter ego, and equitable estoppel.
See Schwabedissen
Maschinen, 206 F.3d at 417.
It is not readily apparent that any
of
to
these
theories
applies
York‟s
claims.
Most
notably,
equitable estoppel, a commonly invoked theory, applies where a
party
denies
she
has
signed
an
arbitration
agreement
but
simultaneously seeks the benefits from the contract containing
it.
Inc.,
R.J. Griffin & Co. v. Beach Club II Homeowners Assoc.,
384
F.3d
157,
161-62
Maschinen, 206 F.3d at 418.
(4th
Cir.
2004);
Schwabedissen
Here, by contrast, York, in the
FAC, repudiates the IAA on the ground that it is invalid because
her husband, Benezra, revoked his signature before ZIM signed
it.
Thus,
because Defendants have failed to
articulate
basis for imposing the arbitration agreement on York,12
12
any
the
York is not named as a joint account holder. (Doc. 11-1 Lanza Aff.
¶ 13.) Defendants do state that she is a “beneficiary” of Benezra‟s
account. (Id.) In certain circumstances, an intended beneficiary may
be bound by an arbitration clause in a contract. E.g., McCutcheon v.
THI of S.C. at Charleston, LLC, No. 2:11-CV-02861, 2011 WL 6318575
26
court will examine whether she has stated a claim upon which
relief may be granted.
The purpose of a Rule 12(b)(6) motion to dismiss is to
“test[] the sufficiency of a complaint” and not to “resolve
contests surrounding the facts, the merits of a claim, or the
applicability of defenses.”
980
F.2d
943,
952
(4th
Republican Party of N.C. v. Martin,
Cir.
1992).
In
considering
a
Rule
12(b)(6) motion, a court “must accept as true all of the factual
allegations contained in the complaint,” Erickson v. Pardus, 551
U.S.
89,
94
(2007)
(per
curiam),
and
draw
all
reasonable
inferences in the plaintiff‟s favor, Ibarra v. United States,
120 F.3d 472, 474 (4th Cir. 1997).
Under Federal Rule of Civil Procedure 8(a)(2), a complaint
must contain “a short and plain statement of the claim showing
that the pleader is entitled to relief.”
Although the complaint
need only “give the defendant fair notice of what the . . .
claim is and the grounds upon which it rests,” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson,
355 U.S. 41, 47 (1957)), a plaintiff‟s obligation “requires more
than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do,” id.
Rule 12(b)(6)
protects against meritless litigation by requiring sufficient
(D.S.C. Dec. 15, 2011) (discussing South Carolina law).
However,
Defendants have not cited any case where the non-signatory defendant
did not also seek to benefit from the contract, thus invoking estoppel
grounds as well.
27
factual
allegations
“to
raise
a
right
to
relief
above
the
speculative level” so as to “nudge[] the[] claims across the
line
from
conceivable
to
plausible.”
Id.
at
555,
570;
see
Ashcroft v. Iqbal, 556 U.S. 662, ---, 129 S. Ct. 1937, 1949-51
(2009).
Despite
its
length,
the
FAC,
taken
in
the
light
most
favorable to York, contains no material allegation forming the
basis for the Defendants‟ liability as to her.
The FAC alleges
that Benezra signed “papers” related to the transaction and that
his signature was procured by fraud.
(Doc. 13 ¶¶ 143, 149.)
York‟s name, by contrast, does not appear on the IAA.
the
IAA
states
that
the
account
is
the
Further,
“Steve
Benezra
Traditional IRA” and that the “undersigned client,” which refers
solely to Benezra, “agrees to engage” ZIM “as adviser for the
Account named above.”
The
FAC
also
(Doc. 13-1.)
alleges
that
Benezra
had
“intelligently
managed” the retirement fund at issue himself previously and
concluded that he needed assistance of an investment adviser,
investigated Defendants and, based on their representations to
him, invested $550,000 of his retirement fund with ZIM.
(Doc.
13
(“The
¶¶
4-23
(“General
Representations”).)
The
Preamble
same
is
Allegations”),
true
with
Fraud, the Bait and Switch” section of the FAC.
45-51
respect
to
“The
(Id. ¶¶ 52-61.)
The FAC charges that “Zacks [i.e., Defendants] misrepresented
28
its obligations to Dr. Benezra, and defrauded him and thousands
of other investors.”
Defendants‟
Benezra.
section
actions
(Id.
styled
¶¶
(Doc. 13 ¶ 61.)
after
the
62-70
(“The
“Rescission
Allegations related to
investment
also
Result”).)
of
the
reference
The
Contract,”
FAC,
only
in
alleges
the
that
Defendants “lured Dr. Benezra,” that he never would have signed
any papers but for Defendants‟ “deceitful lies,” and that “Dr.
Benezra is entitled to rescission under substantive law of the
State North Carolina.”
The
only
factual
(Id. ¶¶ 83-87.)
allegations
relating
to
York
merely
identify her as Benezra‟s wife (id. ¶ 3), list her residence in
Hillsborough, North Carolina (id.), and allege that Defendants
met with her and Benezra “for purposes of inducing them to do
business and to give monies to said Defendants” (id. ¶ 90).
Although the FAC routinely lists the “Plaintiffs” collectively
in
the
Benezra.
causes
of
action,
the
factual
allegations
relate
to
For example, on several occasions the invested funds
in question are referred to collectively as “Plaintiffs‟” (id.
¶¶ 95, 111, 129, 130, 158, 160; see id. ¶ 104 (“Benezra and his
family”)), but the FAC alleges factually that they were from
Benezra‟s retirement savings (e.g., id. ¶¶ 4-33, 36, 44, 48, 62,
66,
67,
114).
And,
where
claims
allege
that
Defendants
defrauded “Plaintiffs” (e.g., id. ¶¶ 126, 127, 167, 175, 188,
190), earlier factual allegations of the same events speak only
29
to alleged fraud against Benezra (e.g., id. ¶¶ 4-33, 61, 68,
105, 106).
By failing to address Defendants‟ motion to dismiss York‟s
claims
(Doc.
11
at
3;
Doc.
12
at
17-18;
Doc.
18
at
2),
Plaintiffs have not pointed to, nor can the court find, any
allegations which “nudge[] the[] claims [of York] across the
line from conceivable to plausible.”
Twombly, 550 U.S. at 570.
Accordingly, the court concludes that the FAC fails to allege
sufficient facts to state
a
plausible claim with respect to
York, and her claims will be dismissed without prejudice.13
5.
Stay of Action
Defendants argue that the court should dismiss the action
because all issues should be referred to arbitration.
In the
alternative, they seek a stay of all proceedings pending the
arbitration.
Though the court may have the authority to dismiss
the action, see, e.g., Aggarao, --- F.3d at ---, 2012 WL 887595,
at *15, and Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161,
1164 (5th Cir. 1992), a stay is consistent with the provisions
of the FAA, which provides that the court shall stay an action
until the arbitration is complete.
13
9 U.S.C. § 3.
Therefore,
The court, therefore, need not consider Defendants‟ alternative
arguments that York lacks standing and whether her claims, if
plausibly stated, would be subject to arbitration.
To be sure,
nothing in this disposition should be construed to prevent York from
participating in any arbitration proceeding.
30
the
court
will
stay
this
action
pending
resolution
of
the
arbitration.
III. CONCLUSION
For the foregoing reasons, IT IS THEREFORE ORDERED that:
1.
Defendants‟ Motion to Strike (Doc. 16) is DENIED;
2.
Defendants‟
Dismiss
or
to
Compel
Proceedings
Stay
Motion
Arbitration
as
Restated
(Docs.
and
11,
to
18)
is
GRANTED insofar as it seeks to compel arbitration of Plaintiff
Steven Benezra‟s claims not otherwise disposed of in this Order
and
insofar
as
it
seeks
to
dismiss
the
claims
of
Plaintiff
Melissa York, and her claims are DISMISSED WITHOUT PREJUDICE;
3.
Because
adequately
in
the
the
positions
briefing,
of
the
parties
Plaintiffs‟
were
Request
for
set
out
Hearing
(Doc. 23) is DENIED;
4.
court.
close
This
case
is
STAYED
pending
further
order
of
the
The Clerk of the Court is directed to administratively
the
arbitration
file.
every
The
parties
ninety
shall
(90)
days.
file
a
joint
Failure
to
report
file
of
such
reports may result in dismissal of the action.
/s/
Thomas D. Schroeder
United States District Judge
March 30, 2012
31
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?