Patteson v. McAdams Tax Advisory Group, LLC et al

Filing 29

REPORT AND RECOMMENDATIONS re 8 MOTION to Compel Arbitration filed by Gregory Gibson, McAdams Tax Advisory Group, LLC, Investors Capital Corp. ANY OBJECTIONS OR EXCEPTIONS TO THIS REPORT MUST BE FILED WITHIN FOURTEEN (14) DAYS AFTER BEING SERVED WITH A COPY OF THE REPORT. 28 U.S.C. § 636(b)(1)(C). FAILURE TO FILE THEM WITHIN FOURTEEN (14) DAYS MAY CONSTITUTE A WAIVER OF OBJECTIONS, EXCEPTIONS, AND ANY FURTHER APPEAL. Signed by Magistrate Judge Tu M. Pham on 02/14/10. (Pham, Tu)

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION _________________________________________________________________ DAVID PATTESON, ) ) ) Plaintiff, ) ) v. ) McADAMS TAX ADVISORY GROUP, LLC, ) ) GREGORY GIBSON, ALLIANZ LIFE ) INSURANCE COMPANY OF NORTH ) AMERICA, GENWORTH FINANCIAL TRUST COMPANY, INVESTORS CAPITAL ) ) CORP., and Unknown and Unnamed ) Individuals, ) ) Defendants.

No. 09-2085 Ma/P

________________________________________________________________ REPORT AND RECOMMENDATION _________________________________________________________________ Before the court by order of reference is defendants Investors Capital Corporation ("ICC"), McAdams Tax Advisory Group, LLC

("McAdams"), and Gregory L. Gibson's (collectively "the McAdams Defendants") Motion to Dismiss Complaint and Compel Arbitration or Alternatively, to Stay Proceedings. (D.E. 8.) For the reasons

below, the court recommends that the motion to compel be granted and that all claims against the McAdams Defendants be dismissed without prejudice.1

Some courts have held that motions to compel arbitration are dispositive motions, while other courts have treated them as nondispostive motions. Compare Costello v. Patterson Dental Supply, Inc., No. 5:06-CV-213, 2007 WL 4178942, at *3 (W.D. Mich. Nov. 20, 2007) (dispositive motion), JTH Tax, Inc. v. Lee, No.

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I.

PROPOSED FINDINGS OF FACT

The following facts are based on Patteson's complaint, the Investor Profile and New Account Agreement, the affidavit of Gregory L. Gibson, and Patteson's response in opposition to the motion to compel.2 In March of 2007, David Patteson, a retiree who at the time was in his seventies, received a solicitation from Gregory Gibson, an investment advisor employed by ICC and McAdams, to prepare his taxes at a reduced rate of $50.00. In response to this

solicitation, Patteson met with Gibson in June of 2007.

Patteson

told Gibson that he had $210,780.29 invested in a retirement account with the Lincoln Financial Group, and that the account contained a five-year surrender penalty which would expire During

approximately thirty days from the date of their meeting.

2:06cv486, 2007 WL 1795751, at *1-2 (E.D. Va. June 19, 2007) (same), and Flannery v. Tri-State Div., 402 F. Supp. 2d 819, 821 (E.D. Mich. 2005) (same), with Gonzalez v. GE Group Adm'rs, Inc., 321 F. Supp. 2d 165, 166-67 (D. Mass. 2004) (nondispositive), Third Millennium Techs., Inc. v. Bentley Sys., No. 03-1145-JTM, 2003 WL 22003097, at *1 (D. Kan. Aug. 21, 2003) (same), and Herko v. Metro. Life Ins. Co., 978 F. Supp. 141, 142 n.1 (W.D.N.Y. Jan. 29, 1997) (same). Out of an abundance of caution, this court submits a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B) & (C).
2

The court may consider matters beyond the pleadings in resolving motions to compel arbitration. See Capitol Leasing Co. v. Fed. Deposit Ins. Corp., 999 F.2d 188, 191 (7th Cir. 1993); Jann v. Interplastic Corp., 631 F. Supp. 2d 1161, 1162 n.1 (D. Minn. 2009); Safranek v. Copart, Inc., 379 F. Supp. 2d 927, 928 (N.D. Ill. 2005); Boulet v. Bangor Sec. Inc., 324 F. Supp. 2d 120, 123-24 (D. Me. 2004). -2-

that meeting, Gibson persuaded Patteson to allow him to reinvest the funds in Patteson's retirement account. Patteson alleges that

he insisted that any new investment with the defendants be put in a low-risk investment vehicle that would not penalize him for withdrawing funds. During his June 2007 meeting with Gibson, Patteson opened an investment account with ICC. Gibson obtained information from

Patteson and prepared for him a four-page Investor Profile and New Account Agreement ("Agreement"), which Patteson and Gibson signed and dated.3 (D.E. 8-2, Aff. of Gregory L. Gibson ¶ 2.) following paragraph, typed in all capital letters, The

appeared

directly above their signatures on page two of the Agreement: Signatures I REPRESENT THAT I HAVE READ THE ATTACHED TERMS AND CONDITIONS GOVERNING THIS ACCOUNT (THE AGREEMENT) AND AGREE TO BE BOUND BY SUCH TERMS AND CONDITIONS AS CURRENTLY IN EFFECT AND AS BE AMENDED FROM TIME TO TIME. BY SIGNING BELOW I AKNOWLEDGE [sic] THAT THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION CLAUSE, WHICH IS LOCATED IN PARAGRAPHS 13 AND 14 IN THIS AGREEMENT AND FURTHER AKNOWLEDGE [sic] THAT I HAVE RECEIVED A COPY OF THE AGREEMENT AND HAVE BEEN PROVIDED OR WILL BE PROVIDED WITHIN 30 DAYS, A COPY OF THIS COMPLETE INVESTOR PROFILE.

Patteson apparently questions the authenticity of the Agreement by pointing out in his response to the motion to compel that although pages three and four of the Agreement indicate "Page 3 of 4" and "Page 4 of 4," pages one and two indicate "Page 1 of 2" and "Page 2 of 2," instead of "Page 1 of 4" and "Page 2 of 4." However, Gibson's affidavit states "[a]ttached as Exhibit A to this Affidavit is a true and correct copy of the [Agreement] executed by Mr. Patteson on June 11, 2007," and Patteson has not presented any evidence to challenge Gibson's affidavit. -3-

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_______________________________ Customer Signature Date _______________________________ Representative Signature Date (D.E. 8-2 at 14.)

______________________________ Customer Signature Date ______________________________ Principal Signature Date

The sentence beginning "BY SIGNING BELOW . . ." None of the other provisions on pages

appeared in bold lettering.

one and two were typed in all capital letters. The third and fourth pages of the Agreement, titled "Customer Account Agreement ­ Terms and Conditions" ("Terms and Conditions") contained the terms and conditions referenced on page two.

Paragraph 13 of the Terms and Conditions, found on page three, stated in all capital letters as follows: 13. ARBITRATION DISCLOSURES

THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION CLAUSE. BY SIGNING AN ARBITRATION AGREEMENT THE PARTIES AGREE AS FOLLOWS: · ALL PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE EACH OTHER IN COURT, INCLUDING THE RIGHT TO A TRIAL BY JURY, EXCEPT AS PROVIDED BY THE RULES OF THE ARBITRATION FORUM IN WHICH A CLAIM IS FILED. · ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING: A PARTY'S ABILITY TO HAVE A COURT REVERSE OR MODIFY ARBITRATION AWARD IS VERY LIMITED. · THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS STATEMENTS AND OTHER DISCOVERY IS GENERALLY MORE LIMITED IN ARBITRATION THAN IN COURT PROCEEDINGS. · THE ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR THEIR AWARD. · THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY. · THE RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME LIMITS FOR BRINGING A CLAIM IN ARBITRATION. IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR ARBITRATION MAY BE BROUGHT IN COURT. · THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY AMENDMENTS THERETO, SHALL BE INCORPORATED INTO THIS AGREEMENT. -4-

(Id. at 15.)

Paragraph 14 of the Terms and Conditions, located

on page four, stated in all capital letters as follows: 14. ARBITRATION AGREEMENT

ANY CONTROVERSY BETWEEN YOU AND US SHALL BE SUBMITTED TO ARBITRATION BEFORE THE NEW YORK STOCK EXCHANGE, INC., ANY OTHER NATIONAL SECURITIES EXCHANGE ON WHICH A TRANSACTION GIVING RISE TO THE CLAIM TOOK PLACE (AND ONLY BEFORE SUCH EXCHANGE), OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. . . . (Id. at 16.) None of the other provisions on pages three and four

were typed in all capital letters. Patteson alleges that after he signed the Agreement, Gibson failed to follow his instructions and placed Patteson's money in high risk investments with defendants Allianz Life Insurance In

Company of North America and Genworth Financial Trust Company.4

addition, Patteson alleges that, contrary to his instructions, Gibson invested the money in accounts that subjected him to new surrender penalties and withdrawal fees. filed a complaint on February 20, As a result, Patteson alleging that the

2009,

defendants violated the Securities Investor Protection Act, 15 U.S.C. § 78a et seq., the Tennessee Consumer Protection Act, Tenn. Code. Ann. §§ 47-18-109 and 47-18-125, and the Tennessee Insurance Code, Tenn. Code. Ann. § 56-8-104. He also alleges causes of

action for negligence, detrimental reliance, conversion, and breach

The other defendants have not asserted that the arbitration provision governs the claims brought against them. Allianz Life Insurance has filed a motion to dismiss on other grounds. -5-

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of fiduciary duty against the defendants. In response, the McAdams Defendants filed the instant Motion to Dismiss Complaint and Compel Arbitration or Alternatively, to Stay Proceedings. They ask the court to either dismiss or stay the present litigation and order the parties to proceed to arbitration as required by the Agreement. II. PROPOSED CONCLUSIONS OF LAW

The Federal Arbitration Act ("FAA") provides that written agreements to arbitrate "shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA was

enacted with the purpose "to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements on the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). When a party files a motion to compel arbitration, the court "must follow the procedure set forth in section 4 of the FAA."5

Section 4 of the FAA does not require an evidentiary hearing. Thus, the court submits this report and recommendation based on the parties' submissions. See Cincinnati Gas & Elec. Co. v. Benjamin F. Shaw Co., 706 F.2d 155, 159 (6th Cir. 1983) (stating that § 4 does not require an evidentiary hearing); see also Armstrong v. Assocs. Int'l Holdings Corp., No. 06-11177, 2007 WL 2114512, at *4 (5th Cir. July 24, 2007) (concluding that district court was not required to conduct an evidentiary hearing before compelling the parties to proceed to arbitration); Marks 3-Zet-Ernst Marks Gmbh & Co. KG v. Presstek, Inc., 455 F.3d 7, 14 (1st Cir. 2006) (stating that under § 4 "a `hearing' on the papers may be all that is -6-

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Highlands Wellmont Health Network, Inc. v. John Deere Health Plan, Inc., 350 F.3d 568, 573 (6th Cir. 2003). follows: A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed . . . . [U]pon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. 9 U.S.C. § 4; see also Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). As this court stated in Terry v. Labor Ready, Section 4 provides as

Inc., No. 02-1035, 2002 WL 1477213 (W.D. Tenn. July 2, 2002), Under the Federal Arbitration Act, a district court must stay proceedings if satisfied that the parties have agreed in writing to arbitrate the issue(s) presented in the lawsuit. The district court has no discretion to refuse to compel arbitration if the court finds that the parties have so agreed. Any limitation of an arbitration provision must be read narrowly in order to effectuate the strong national policy of favoring enforcement of agreements to arbitrate, and any doubts must be resolved in favor of arbitration. Arbitration should be ordered unless it can be said that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Id. at *1 (internal citations omitted); see also Fazio v. Lehman Bros., 340 F.3d 386, 392 (6th Cir. 2003). Patteson, as the party

opposing arbitration, carries the burden of proving that the claims

required") (citing Cincinnati Gas & Elec. Co., 706 F.2d at 159); Acosta v. Fair Isaac Corp., No. 3:09-CV-0378, 2009 WL 3487833, at *2 (N.D. Tex. Oct. 28, 2009) (stating that there is "no requirement that an evidentiary hearing be convened on motions to compel arbitration"). -7-

at issue are unsuitable for arbitration. See Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 91 (2000); Johnson v. Long John Silver's Rests., Inc., 320 F. Supp. 2d 656, 667 (M.D. Tenn. 2004); Terry, 2002 WL 1477213, at *1, *3 (citing Gilmer, 500 U.S. 20). In determining the whether must to grant a motion the to compel

arbitration,

court

consider

whether

arbitration

provision is valid and enforceable.

Morrison v. Circuit City

Stores, Inc., 317 F.3d 646, 665-66 (6th Cir. 2003). The court must then consider whether the dispute falls within the scope of the provision. Javitch v. First Union Sec., Inc., 315 F.3d 619, 624

(6th Cir. 2003). The court finds that the arbitration provision is valid and enforceable, and that Patteson's claims against the McAdams

Defendants are covered by the provision.

When Patteson entered

into the investment relationship, he signed the Agreement which contained the arbitration provision. Specifically, located

directly above his signature was a paragraph that clearly stated (in bold and capital letters) that he acknowledged the Agreement contained a predispute arbitration clause located in paragraphs 13 and 14 of the Agreement. Paragraphs 13 and 14 set forth (in all

capital letters) the terms of the arbitration provision, which included submitting "ANY CONTROVERSY BETWEEN YOU AND US . . . TO ARBITRATION." (D.E. 8-2 at 16.) This broad language covers all

claims relating to the investment relationship. See Terry, 2002 WL

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1477213, at *1 (stating that "[w]hen a contract contains a broad arbitration clause covering all controversies arising under the agreement, arbitration must be ordered unless the party seeking to avoid it can show that the particular dispute was expressly excluded") (citing Cincinnati Gas & Elec. Co., 706 F.2d at 160). In other cases where investors have entered into similarly worded arbitration agreements with their investment advisors, courts have compelled the parties to arbitrate all of their claims. See, e.g., Safer v. Nelson Fin. Group, Inc., 422 F.3d 289, 292-93, 297-98 (5th Cir. 2005); Wald v. 1 Fin. Marketplace Sec., L.L.C., No. 2:09-cv1116, 2009 WL 3209930, at *2, *9 (E.D. Pa. Oct. 5, 2009); Al-Thani v. Wells Fargo & Co., No. C 08-1745, 2009 WL 55442, at *2-3 (N.D. Cal. Jan. 7, 2009); Shammami v. Broad Street Sec., Inc., 544 F. Supp. 2d 585, 586 (E.D. Mich. 2008). Therefore, Patteson must

arbitrate all of the claims that he now seeks to bring against the McAdams Defendants in this lawsuit.6

Although defendant McAdams is not a signatory to the Agreement, it is well settled that "[n]on-signatories to an arbitration agreement may be bound by or enforce an arbitration agreement executed by other parties under theories arising out of common law principles of contract and agency law." Broaddus v. Rivergate Acquisitions, Inc., No. 3:08-0805, 2008 WL 4525410, at *2 (M.D. Tenn. Oct. 1, 2008) (citations omitted); see also E.I. Dupont De Nemours & Co. v. Phone Poulenc Fiber & Resin Intermediates, S.A.A., 269 F.3d 187, 198 (3d Cir. 2001). "When an agency relationship has been established, the principal may be bound by the acts of the agent performed on the principal's behalf and within the actual or apparent scope of the agency." Creech v. Addington, 281 S.W.3d 363, 373 (Tenn. 2009). Patteson alleges in his complaint that Gibson is an agent of McAdams, and the allegations establish that there is a clear and close nexus between Gibson and McAdams and -9-

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In his response in opposition to the motion to compel, Patteson attempts to challenge the arbitration provision on three state law grounds.7 should not First, be he argues that it the is arbitration an adhesion

agreement contract.

enforced

because

Tennessee law defines a contract of adhesion as "a

standardized contract form offered to consumers of goods and services on essentially a `take it or leave it' basis, without affording the consumer a realistic opportunity to bargain and under such conditions that the consumer cannot obtain the desired product or service except by acquiescing to the form of the contract." Buraczynski v. Eyring, 919 S.W.2d 314, 320 (Tenn. 1996) (citations omitted). Although the Agreement in this case is a standardized The Sixth Circuit has

contract, it is not a contract of adhesion.

that Patteson's claims arise in large part out of Gibson's alleged conduct. Wald, 2009 WL 3209930, at *6. Moreover, in his response in opposition to the motion to compel arbitration, Patteson raises no objections to McAdams's ability to enforce the arbitration agreement, even though the issue was raised in the motion to compel arbitration. McAdams is therefore entitled to enforce the arbitration provision. In analyzing Patteson's state law grounds for challenging the arbitration provision, the court applies Tennessee law. In Tennessee, "a contract is presumed to be made with reference to the law of the place where it was entered into unless it appears it was entered into in good faith with reference to the law of some other state." Ohio Cas. Ins. Co. v. Travelers Indem. Ins. Co., 493 S.W.2d 465, 467 (Tenn. 1973) (citations omitted). "Tennessee generally applies the lex loci contractus, but sometimes it applies the law of the place of performance." Cooper v. MRM Inv. Co., 367 F.3d 493, 499 (6th Cir. 2004). Here, Tennessee is the location where the Agreement was executed, where Gibson performed on the Agreement, and where the alleged mismanagement of Patteson's investments occurred. -107

determined that "[a] contract is not adhesive merely because it is a standardized form offered on a take-it-or-leave-it basis," and that "[e]ven after Buraczynski, Tennessee courts decline to find arbitration provisions adhesive where the consumer fails to prove that refusal to sign would cause some detriment other than not being able to buy from the particular merchant (such as not being able to obtain the goods or services elsewhere)." Cooper, 367 F.3d at 500; see also Davis v. Morningside of Jackson, L.L.C., No. 1:05CV-1284, 2006 WL 889325, at *4 (W.D. Tenn. Mar. 28, 2006) (stating that although "adhesion contracts typically involve boilerplate, take-it-or-leave-it terms offered by a `superior' party, the

`distinctive' indicia of a true adhesion contract is that `the weaker party has no realistic choice as to [the] terms") (citations omitted); Wallace v. Nat'l Bank of Commerce, 938 S.W.2d 684, 687-88 (Tenn. 1997) (finding no contract of adhesion where "there is no showing in the record that the customers had no realistic choice but to acquiesce in the imposition of the bank's charges . . . [and] no showing that the fees were the same at all the defendant banks or that banking services could not be obtained from other institutions"); Pyburn v. Bill Heard Chevrolet, 63 S.W.3d 351, 35960 (Tenn. Ct. App. 2001) (finding arbitration agreement between car dealer and buyer was not adhesive, as there was no evidence that the buyer's refusal to agree would have caused some detriment other than being unable to come to terms with the particular dealer).

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Patteson has not alleged, much less presented any evidence to show, that he would have been unable to find other investment services had he refused to sign the Agreement. Cooper, 367 F.3d at 502-03.

Therefore, Patteson has not shown that the arbitration agreement is a contract of adhesion. Second, Patteson argues that the arbitration term of the contract is unconscionable. Tennessee recognizes two types of unconscionability: Unconscionability may arise from a lack of a meaningful choice on the part of one party (procedural unconscionability) or from contract terms that are unreasonably harsh (substantive unconscionability). In Tennessee we have tended to lump the two together and speak of unconscionability resulting when the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and where the terms are so oppressive that no reasonable person would make them on one hand, and no honest and fair person would accept them on the other. Trinity Indus., Inc. v. McKinnon Bridge Co., 77 S.W.3d 159, 170-71 (Tenn. Ct. App. 2001) (citations omitted). Patteson does not specifically address procedural

unconscionability in his response, but he implies that because he had little bargaining choice. power, it follows of that he had little is

meaningful

While

inequality

bargaining

power

relevant to the procedural unconscionability analysis, the party opposing enforcement of the contract must present evidence on "factors bearing on the relative bargaining position of the

contracting parties, including their age, education, intelligence,

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business acumen and experience, relative bargaining power . . . [and] whether the terms were explained to the weaker party." Cooper, 367 F.3d at 504 (quoting Morrison, 317 F.3d at 666). As to

his age, Patteson alleges that he is retired and, in 2007, was in his seventies. (D.E. 1 at 3.) experience, it appears that As to his business or investment Patteson has some investment

experience, as he had an investment account with Lincoln Financial Group at the time he initiated an investment relationship with the defendants. (Id. at 5.) However, he has not presented the court

with any evidence, by affidavit or otherwise, relating to the other relevant factors. As for substantive unconscionability, "[a] contract is

substantively unconscionable . . . when its terms `are beyond the reasonable expectations of an ordinary person, or oppressive.'" Cooper, 367 F.3d at 504 (quoting Buraczynski, 919 S.W.2d at 320). Patteson has simply not shown that the arbitration provision is oppressive, unreasonably harsh, or unfair. See Howell v. Rivergate Toyota, Inc., 144 F. App'x 475, 479 (6th Cir. 2005) (finding the "terms of the arbitration agreement . . . are not so one-sided . . . that an ordinary person would regard them as unreasonable, oppressive, or unconscionable"). The court concludes that Patteson has not demonstrated that the arbitration provision is

unconscionable. Finally, Patteson argues that the contract lacks mutual

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assent, contending that his signature "only appears on the form which refers to a `Predispute Arbitration Clause,'" and that his signature "is not on the actual agreement which outlines the terms of this `Predispute Arbitration Clause.'" (D.E. 19 at 4.) "In

determining mutuality of assent, courts use an objective standard based on the manifestations of the parties." T.R. Mills

Contractors, Inc. v. WRH Enters., L.L.C., 93 S.W.3d 861, 866 (Tenn. Ct. App. 2002). Under Tennessee law, "a party is obligated to be Plyler v. BDO

bound by the terms of an agreement he or she signs."

Seidman, L.L.P., No. 04-2146, 2004 WL 5039850, at *7 (W.D. Tenn. Dec. 15, 2004). "If a person `fails to read the contract or

otherwise learn of its contents, he signs the same at his peril and is estopped to deny his obligations, will be conclusively presumed to know the contents of the contract, and Id. must suffer the

consequences of his own negligence."

(quoting Giles v.

Allstate Ins. Co., 871 S.W.2d 154, 156 (Tenn. Ct. App. 1993)). "It is not up to the Court to notify Plaintiffs of Id. a specific

incorporated provision within a contract . . . ."

As discussed earlier, Patteson's signature on the Agreement appears immediately below the paragraph that clearly stated that the Agreement contains a predispute arbitration clause in

paragraphs 13 and 14.

Although Patteson did not sign pages three

or four, those pages do not contain any signature lines, and in any event, a separate signature on those pages was not required to

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trigger the arbitration provision.

Patteson has not shown that he

was denied a fair opportunity to read over the Agreement or that Gibson deceived him in any way regarding the arbitration provision. III. RECOMMENDATION

For the reasons above, it is recommended that the motion to compel arbitration be granted and that the claims against the McAdams Defendants be dismissed without prejudice.8 Respectfully submitted, s/ Tu M. Pham TU M. PHAM United States Magistrate Judge February 14, 2010 Date NOTICE ANY OBJECTIONS OR EXCEPTIONS TO THIS REPORT MUST BE FILED WITHIN FOURTEEN (14) DAYS AFTER BEING SERVED WITH A COPY OF THE REPORT. 28 U.S.C. § 636(b)(1)(C). FAILURE TO FILE THEM WITHIN FOURTEEN (14) DAYS MAY CONSTITUTE A WAIVER OF OBJECTIONS, EXCEPTIONS, AND ANY FURTHER APPEAL.

As all claims against the McAdams Defendants are subject to arbitration, the court may dismiss the claims against these defendants without prejudice. See Green v. Ameritech Corp., 200 F.3d 967, 973 (6th Cir. 2000). -15-

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