Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Webb v. Financial Industry Regulatory Authority, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 5, 2017

NICHOLAS WEBB, et al., Plaintiffs,
v.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          ANDREA R. WOOD, UNITED STATES DISTRICT JUDGE

         Plaintiffs Nicholas Webb and Thad Beversdorf agreed to use Defendant Financial Industry Regulatory Authority (“FINRA”) to arbitrate a dispute with their former employer. Plaintiffs' contract with FINRA included a promise that the arbitration would achieve fair, just, and equitable results. Plaintiffs now claim that FINRA failed to fulfill this promise-and thus breached the contract-by failing to provide its arbitrators with requisite sources of authority, by not properly training the arbitrators, and by not having certain procedural mechanisms in place to accomplish a just and equitable arbitration. Before this Court is FINRA's motion to dismiss the complaint. (Dkt. No. 9.) FINRA argues, first, that Plaintiffs' claim is barred by the doctrine of arbitral immunity; second, that Plaintiffs were required to exhaust their administrative remedies prior to filing suit yet failed to do so; and third, that FINRA is not a proper party to this suit and Plaintiffs have failed to name an indispensable party. Because the Court agrees that FINRA is entitled to arbitral immunity, FINRA's motion to dismiss is granted without need to reach the other arguments.

         BACKGROUND

         Plaintiffs went to work for Jeffries & Company, Inc. (“Jeffries”), a financial services firm, in June 2012. (Compl. ¶¶ 11-13, Dkt. No. 1-1.) Their employment contracts with Jeffries each contained the same arbitration provision referencing FINRA. (Id. ¶ 14.) That arbitration provision required any arbitration proceeding with respect to Plaintiffs' employment or their employment agreements to be brought before FINRA. (Id. ¶ 15.) In November 2012, Plaintiffs entered into a contract with FINRA to arbitrate disputes with Jeffries (“Arbitration Submission Agreement”). (Id. ¶ 25.) The Arbitration Submission Agreement provides that claims are to be submitted in accordance with FINRA By-Laws, Rules, and Code of Arbitration Procedure and also incorporates promises to enforce and promote just and equitable principles of trade and business, to maintain high standards of commercial honor and integrity and to prevent fraudulent and manipulative acts and practices. (Id. ¶¶ 30, 33.)

         Jeffries fired Plaintiffs for “poor performance” in October 2013. (Id. ¶ 22) Plaintiffs then immediately began to prepare claims against their former employer alleging breach of contract, retaliation, violations of wage and hour statutes, and fraudulent conduct. (Id. ¶¶ 21-24.) Upon submission of Plaintiffs' claims against Jeffries, FINRA applied the Code of Arbitration Procedure for Industry Disputes (“FINRA rules”). (Id. ¶ 35.) It is unclear what exactly went wrong during the arbitration proceedings, but Plaintiffs ultimately “were forced to withdraw their claims.” (Id. ¶ 38.) Plaintiffs now allege that FINRA breached the Arbitration Submission Agreement in at least the following ways:

a. by failing to provide the requisite sources of authority to its arbitrators to facilitate a just and equitable resolution of the pending disputes;
b. by failing to provide arbitrators the appropriate procedural mechanisms and safeguards to fulfill FINRA's contractual promises;
c. by failing to provide its arbitrators with procedural mechanisms to certify and authorize the exchange of information between the parties to a dispute;
d. by failing to properly train its arbitrators;
e. by interfering in its arbitrators' exercise of their discretion and imposing interpretations of its Rules that are contrary to the facilitation of a just and equitable resolution of disputes submitted to FINRA; and,
d. by failing to provide arbitrators with the necessary authority to enforce just and equitable principles of trade and business, to maintain high standards of commercial honor and integrity and to prevent fraudulent and manipulative acts and practices.

(Id. ¶ 36.)

         After Plaintiffs withdrew their claims from arbitration, they sued FINRA in the Circuit Court of Cook County, Illinois. Plaintiffs' complaint asks for monetary damages for the alleged breach of contract (Count I) and requests a declaratory judgement that FINRA rules are unable “to enforce and promote just and equitable principles of trade and business, to maintain high standards of commercial honor and integrity and to prevent fraudulent and manipulative acts and practices” and “to create fair, just, and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.