Broker-Dealer Litigation - Greenberg Traurig LLP

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Citibank, N.A. v. Franco, 2011 U.S. Dist. LEXIS 150741 (S.D.N.Y. Dec. 29, 2011).
Defendants initiated a FINRA arbitration, alleging fraud by Plaintiff with respect to
Defendants’ non-discretionary accounts. Plaintiff filed a petition with the district court to stay
the arbitration, arguing that there was no agreement requiring the parties to arbitrate the
underlying claims since the dispute was outside the scope of the agreement because the
transactions at issue were banking transactions under an International Swap Dealers Association
agreement, not brokerage trades under the arbitration agreement. Defendants contended that
their claim included both brokerage and banking accounts and was therefore arbitrable.
Reaffirming the general rule that doubts concerning the scope of arbitrable issues should be
decided in favor of arbitration, the district court held that this particular arbitration agreement’s
broad scope encompassed the dispute. The arbitration agreement explicitly covered “all claims
and controversies” arising in “any and all accounts.” The district court thus compelled
arbitration pursuant to the arbitration agreement.
Hook v. UBS Fin. Servs., Inc., 2011 WL 1741997 (D. Conn. May 4, 2011).
Plaintiff brought this action to enjoin defendant from enforcing a promissory note
executed when plaintiff commenced his employment at the Firm. Defendant moved to compel
arbitration and for dismissal or a stay of the litigation pending arbitration. Plaintiff objected,
contending that a number of the claims he raised were outside the scope of the arbitration
provision in the Promissory Note, which he contended only applied to his employment at the
Firm and not thereafter as he was no longer an employee. The court rejected this argument.
Plaintiff also pointed to the carve-out provision for injunctive relief in the arbitration clause. The
Court, however, held that it did not need to consider whether the carve-out provision for
injunctive relief exempted that claim from arbitration because plaintiff failed to establish that he
was entitled to injunctive relief. The court concluded that the broad arbitration clause
necessitated that plaintiff’s claims be arbitrated, and granted defendant’s motion to dismiss and
compel arbitration.
Spaz Bev. Co. Defined Benefit Pension Plan v. Douglas, 2011 U.S. Dist. LEXIS 86019 (E.D. Pa.
Aug. 4, 2011).
This was an action for breach of fiduciary duty stemming from losses in plaintiffs’
benefit pension plan allegedly caused by defendants’ alleged mismanagement of the assets.
defendants moved to stay the action and compel arbitration, citing two separate arbitration
provisions in their agreements with respect to plaintiffs. Plaintiffs alleged that their claims for
breach of fiduciary duty did not fall within the scope of either arbitration provision. The court
disagreed, holding that courts within the Third Circuit have consistently found that claims for
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