Opinion
05 Civ. 4894 (WHP).
September 28, 2005
Lorin L. Reisner, Esq. Debevoise Plimpton LLP, New York, NY, Counsel for Plaintiffs.
Michael J. Sullivan, Esq. Coughlin Duffy, LLP, Morristown, NJ, Counsel for Defendants.
MEMORANDUM AND ORDER
Defendants move to compel arbitration of Plaintiffs' claims pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq. For the reasons set forth below, Defendants' motion is denied.
BACKGROUND
Plaintiffs The Phoenix Companies, Inc. ("PNX"), Phoenix Life Insurance Co. (" PLIC") and Phoenix Investment Partners, Ltd. ("PIP") (PNX and PLIC together "Phoenix" and Phoenix and PIP collectively the "Plaintiffs") are a group of related companies that provide insurance and asset management products and services. (Declaration of John Ruben Flores, dated Dec. 15, 2005 ("Flores Decl.") ¶¶ 5-6.) PNX is a holding company. PLIC is a wholly owned subsidiary of PNX that designs and markets various insurance and other financial products. (Flores Decl. ¶ 5.) PIP is an indirect, wholly owned subsidiary of PNX. (Flores Decl. ¶ 6.) Defendants are a group of 36 individuals referred to as "career producers" or "financial advisors" (the "Financial Advisors" or "Defendants"). (Declaration of Michael J. Sullivan, dated Nov. 30, 2005 ("Sullivan Decl."), Ex. 3, Tab 24: Exhibit D-1 to Transcript of Deposition of Joseph E. Kelleher, dated Oct. 25, 2005.)
For reasons that are unclear, Defendants' motion papers make no mention of PIP.
I. The Parties' Relationships
During the time period relevant to the parties' disputes, PLIC sold its products and services through unaffiliated insurance companies, banks and other entities. (Sullivan Decl., Ex. 3, Tab 24; Flores Decl. ¶¶ 8-10, Exs. 1-3.) In addition, PLIC marketed its products through career producers, such as the Financial Advisors, with whom it executed Standard Career Contracts. (Sullivan Decl., Ex. 3, Tab 25; Flores Decl. ¶¶ 8-10, Exs. 1-3.) The Financial Advisors had to devote most of their efforts to selling Phoenix products but were contractually permitted to sell non-Phoenix products as well. (Declaration of Lorin L. Reisner, dated Dec. 15, 2005 ("Reisner Decl.") Ex. 1: Transcript of Deposition of Brian Vitale, at 10-12.) The Standard Career Contracts did not require the arbitration of disputes. (Sullivan Decl., Ex. 3, Tab 25.)
Each of the Financial Advisors also executed a Standard Representative Contract with W.S. Griffith Securities, Inc. ("Griffith"), an indirect subsidiary of PNX. (Declaration of Joseph E. Kelleher, dated Dec. 15, 2005 ("Kelleher Decl.") ¶¶ 2-4, Ex. 1: Standard Representative Contract; Reisner Decl. Ex. 3: Defendant Brian Vitale's Standard Representative Contract.) Griffith operated as a broker-dealer registered with the NASD during the relevant period. (Kelleher Decl. ¶¶ 2-4, Exs. 1, 3.) Pursuant to the Standard Representative Contracts, Griffith sold Phoenix products that are considered "registered products" under the federal securities laws. Only registered broker-dealers can sell registered products. (Sullivan Decl., Ex. 3, Tab 24.) The Standard Representative Contracts did not expressly require arbitration of disputes; however, they required compliance with NASD regulations. (Kelleher Decl., Ex. 1.)
Griffith also sold non-Phoenix products. (Kelleher Decl. ¶ 2.)
To register as broker-dealer associates, the Financial Advisors each executed an NASD Form U-4. (Sullivan Decl. Ex. 3, Tab 19.) The Form U-4 is the standard form used to obtain registration to sell securities. (Sullivan Decl., Ex 2: Transcript of Deposition of Joseph Kelleher, at 106.) Griffith annexed an "NASD Arbitration Disclosure Form" to each Form U-4, which stated, in relevant part:
You are agreeing to arbitrate any dispute, claim or controversy that may arise between you and [Griffith], or a customer, or any other person, that is required to be arbitrated under the rules of the self-regulatory organizations with which you are registering. This means you are giving up the right to sue a member, customer, or another associated person 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.
(Sullivan Decl. Ex. 3, Tab 19.)
II. The Sale of Griffith
In March 2004, various parties including PNX, PLIC, and Linsco/Private Ledger Corp. ("LPL") executed a Stock and Asset Purchase Agreement (the "Purchase Agreement") pursuant to which Griffith was sold to LPL. (Sullivan Decl., Ex. 3, Tab 9.) Both PNX and PLIC received proceeds from the Purchase Agreement transaction. (Sullivan Decl., Ex. 3, Tab 9.) After the execution of the Purchase Agreement, Griffith cancelled its contracts with the Financial Advisors. (Reisner Decl., Exs. 1, 6-7.) The transaction with LPL became effective on May 31, 2004. The Financial Advisors object to the terms of the LPL transaction and contend that the termination of the contracts was unlawful.
III. The NASD Arbitration
On March 18, 2005 the Financial Advisors commenced an NASD arbitration against PNX, PLIC, PIP and Griffith alleging, inter alia, fraud, misrepresentation, and violations of the federal securities laws and seeking in excess of $46 million in damages. (Sullivan Decl., Ex. 6: Statement of Claim.) The service letter from the NASD to Griffith noted: "You are required by the rules of NASD Dispute Resolution to arbitrate this dispute." (Flores Decl., Ex. 4: NASD Service Letters.) By contrast, the service letters the NASD sent PNX, PLIC and PIP stated: "[S]ince you have not signed an agreement to arbitrate, your submission to arbitration must be voluntary." (Flores Decl., Ex. 4 (emphasis added).)
Griffith appeared in the arbitration. Plaintiffs commenced this action on May 23, 2005 seeking a declaration of non-liability on the Financial Advisors' claims, as well as a declaration that the claims against them are not arbitrable. On notice from Defendants that they intended to move to compel arbitration, this Court issued an Order granting them permission to conduct pre-motion discovery on the relationships between PNX, PLIC, PIP and Griffith. Thereafter, the Financial Advisors filed the instant motion to compel arbitration of Plaintiffs' claims.
IV. Plaintiffs' Relationships to Griffith
PNX, PLIC, PIP and Griffith were closely connected during the relevant period. Among the ways in which these entities were related are the following:
• PNX owned PLIC and Griffith. (Flores Decl. ¶¶ 5-6.)
• PNX and PLIC had offices in Hartford, CT directly across the street from Griffith. (Sullivan Decl., Ex. 2.)
• PNX, PLIC and Griffith had approximately twenty officers and directors in common, including Joseph Keller (Senior Vice President of PNX, Senior Vice President of PLIC, and President of Griffith) and Dona Young (President, CEO and Chairman of PNX, President, CEO and Chairman of PLIC). (Sullivan Decl., Exs. 2-4.)
• Griffith's officers were paid exclusively by PLIC. (Sullivan Decl., Ex. 2.)
• PLIC's and Griffith's strategy meetings overlapped. (Sullivan Decl., Ex. 2.)
• PLIC and Griffith shared administrative and other support systems. (Sullivan Decl., Exs. 2-3.)
• PLIC paid salaries and benefits for Griffith employees. (Sullivan Decl., Ex. 2.)
• PNX and PLIC operated Griffith as a registered broker-dealer to sell a wide array of their financial products and plotted a coordinated strategy for all three companies. (Sullivan Decl., Ex. 2.)
• The Purchase Agreement was signed by PNX, PLIC and Griffith. Joseph Kelleher signed it on behalf of Griffith and another PNX subsidiary. (Sullivan Decl., Exs. 2-3.)
• PNX owned the Griffith trademark. (Sullivan Decl., Ex. 2.)
• Griffith's letterhead referred to PNX and used its logo. (Sullivan Decl., Exs. 2-3.)
In addition, the following facts are relevant:
• Griffith sold Phoenix and non-Phoenix products, and many of the Financial Advisors sold primarily non-Phoenix products. (Reisner Decl., Ex. 1.)
• Each corporation performed separate functions — PNX was a holding company, PLIC provided life insurance, and Griffith was a broker-dealer. (Flores Decl. ¶¶ 2-6.)
DISCUSSION
Defendants contend that Plaintiffs should be required to arbitrate their claims for three reasons. First, Defendants argue that the NASD Code of Arbitration Procedure (the "NASD Rules") requires the arbitration of Plaintiffs' claims. Second, Defendants assert various common law theories on which Plaintiffs may be contractually bound to arbitrate because their subsidiary Griffith executed arbitration agreements. Finally, Defendants argue that Plaintiffs are collaterally estopped from disputing that they are required to arbitrate their claims. The Court considers each of these arguments seriatim.I. Legal Standard
"[T]he summary judgment standard is appropriate in cases where the District Court is required to determine arbitrability, regardless of whether the relief sought is an order to compel arbitration or to prevent arbitration." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003); see also 9 U.S.C. § 4. The summary judgment standard, set forth in Fed.R.Civ.P. 56(c), provides that summary judgment is appropriate when "there is no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." Bensadoun, 316 F.3d at 175-78; Oppenheimer Co., Inc. v. Neidhart, 56 F.3d 352, 358 (2d Cir. 1995).
II. Compulsory Arbitration Under the NASD Rules
NASD Rule 10101 defines the matters that may be eligible for arbitration expansively: "This Code of Arbitration Procedure is prescribed and adopted . . . for the arbitration of any dispute, claim, or controversy arising out of or in connection with the business of any member of the Association . . . (a) between or among members; (b) between or among members and associated persons; [and] (c) between or among members or associated persons and public customers, or others."
NASD Rule 10201(a), in turn, describes a narrower range of matters as to which certain parties may compel arbitration against certain other parties: "[A] dispute, claim, or controversy eligible for submission under the Rule 10100 Series between or among members and/or associated persons, and/or certain others, arising in connection with the business of such member(s) or in connection with the activities of such associated person(s) . . . shall be arbitrated under this Code, at the instance of: (1) a member against another member; (2) a member against a person associated with a member or a person associated with a member against a member; and (3) a person associated with a member against a person associated with a member." Thus, Rule 10101 describes "the scope of permissive arbitration," while "Rule 10201 limits the scope of mandatory arbitration to disputes that are initiated by specified classes of persons . . . against specified classes of persons and that are `between or among members and/or associated persons, and/or certain others.'" Burns v. New York Life Ins. Co., 202 F.3d 616, 619 (2d Cir. 2000) (internal citation omitted); Goldstein v. Visconti, No. 00 Civ. 5729 (WHP), 2001 WL 585633, at *4-5 (S.D.N.Y. May 30, 2001).
The parties do not dispute that the Financial Advisors are associated persons or that Griffith is a member of the NASD. The Financial Advisors, however, argue that Plaintiffs are "certain others" for purposes of Rule 10201(a) and that they should therefore be entitled to compel arbitration against Plaintiffs. Plaintiffs dispute the Financial Advisors' reading of Rule 10201(a) and contend that the Rule impliedly bars associated persons from compelling arbitration against "certain others."
Rule 10201(a) limits mandatory arbitration to situations where arbitration is initiated by "(1) a member against another member; (2) a member against a person associated with a member or a person associated with a member against a member; and (3) a person associated with a member against a person associated with a member." This action involves — at most — a claim by associated persons against "certain others." Thus, Rule 10201(a) does not require arbitration of the claims at issue in this case.Sands Bros. Co. v. Al Nasser, No. 03 Civ. 8128 (BSJ), 2004 WL 26550, at *4 (S.D.N.Y. Jan. 5, 2004) ("The current version [of the NASD Rules] does not include `certain others' as those who may insist on or must submit to mandatory arbitration."); see also Burns, 202 F.3d at 622 (similarly reasoning that parties qualifying as "certain others" under Rule 10201 cannot compel arbitration against associated persons).
Defendants' reliance on McMahan Securities Co. L.P. v. Forum Capital Markets L.P., 35 F.3d 82, 87-88 (2d Cir. 1994) for the proposition that a party "sufficiently immersed in the underlying controversy" can be compelled to arbitrate as a "certain other" under Rule 10201 is misplaced. McMahan involved a situation where defendants sought to compel arbitration and plaintiffs opposed the motion on the ground that four of the defendants and one of the plaintiffs could not be compelled to arbitrate under the NASD Rules. Defendants argued that three of the defendants and the plaintiff in question were "associated persons" and that the remaining defendant could join in the action as a "certain other." Thus, McMahan is inapposite, as it involved a situation where the "certain other" was one of several parties seeking to compel arbitration, as opposed to part of a group of "certain others" resisting it. See CDC Capital Inc. v. Gershon, 282 A.D.2d 217, 218-19, 923 N.Y.S.2d 166, 168 (1st Dep't 2001) (declining to apply McMahan in the context of an attempt to compel unwilling non-signatory corporate affiliates of an NASD member to arbitrate).
Similarly, Defendants' reliance on In re Salomon Inc. Shareholders' Derivative Litigation, No. 91 Civ. 5500 (RPP), 1994 WL 533595 (S.D.N.Y. Sept. 30, 1994), is unavailing. Salomon applied McMahon to compel an unwilling non-signatory parent corporation of an NASD member to arbitrate derivative claims brought on its behalf against directors of the subsidiary who had signed agreements to arbitrate. However, Salomon was decided prior to the Second Circuit's decision in Thomson-CSF, S.A. v. Am. Arbitration Ass'n, 64 F.3d 773, 779 (2d Cir. 1995) — a case that, as discussed below, narrowly circumscribed the conditions under which non-signatories to arbitration agreements may be compelled to arbitrate. Subsequent cases have read Salomon to render it consistent with Thomson-CSF. See, e.g., Heller v. MC Fin. Servs. Ltd., No. 97 Civ. 5317, 1998 WL 190288, at *3 (S.D.N.Y. Apr. 21, 1998) (characterizing Salomon as applying an "`agency' theory of arbitrability" consistent with Thomson-CSF);Vitzethum v. Dominick Dominick Inc., No. 94 Civ. 4938, 1996 WL 19062, at *7 (S.D.N.Y. Jan. 18, 1996) (same). Thus, Salomon establishes merely that courts may compel arbitration against non-signatories to an arbitration agreement on an agency theory. It does not establish that NASD Rule 10201 requires the arbitration of claims against "certain others," when the "certain others" are corporate parents, nor does it establish a standard of "sufficient immers[ion] in the underlying controversy" that is more lenient than the one in Thomson-CSF. Cf. McMahan, 35 F.3d at 87-88.
III. Common Law Theories
"Absent an express agreement to arbitrate, [the Second Circuit] has recognized only `limited theories upon which [it] is willing to enforce an arbitration agreement against a non-signatory.'"Merrill Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 58, 71 (2d Cir. 2005) (quoting Thomson-CSF, 64 F.3d at 780). These theories are limited to (1) incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter ego; and (5) estoppel. Thomson-CSF, 64 F.3d at 776; see also Denney v. BDO Seidman, LLP, 412 F.3d 58, 71 (2d Cir. 2005); Sarhank Group v. Oracle Corp., 404 F.3d 657, 662 (2d Cir. 2005). The Financial Advisors argue that Plaintiffs can be compelled to arbitrate on theories of agency, veil-piercing/alter ego, and estoppel.
A. Agency
"Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." Merrill Lynch, 337 F.3d at 129 (quoting Restatement (Second) of Agency § 1 (1958)). "[M]utual benefits derived from affiliation . . . [are] insufficient to bind a non-signatory on agency principles to an arbitration agreement signed by an affiliate." Merrill Lynch, 337 F.3d at 130 (discussing Thomson). Defendants contend that Phoenix and Griffith were involved in "a symbiotic relationship of mutual agency" because Phoenix expressly authorized Griffith to sell its products, represent itself as a Phoenix affiliate, and to contract with and compensate the Financial Advisors.
The evidence put forth by the Financial Advisors is insufficient as a matter of law to establish that Griffith consented to act "on [Phoenix's] behalf and subject to [its] control." Merrill Lynch, 337 F.3d at 129. It establishes only that the parties had a mutually beneficial affiliation. PLIC had its own independent contractual relationships with each of the Financial Advisors throughout the relevant period and PNX was merely a holding company. Moreover, PNX did not exist when Griffith entered into the Standard Representative Contracts with the Financial Advisors, and accordingly, Griffith could not have been acting as its agent in executing those agreements. For these reasons, Defendants' motion to compel arbitration on an agency theory is denied. See Merrill Lynch, 337 F.3d at 130 (rejecting argument that two subsidiaries of the same parent were each other's agents because they were commonly controlled, marketed the entire family of companies to potential customers, sought to project the image of a single, integrated firm and marketed each other's products).
B. Veil-Piercing/Alter Ego
"[A] parent corporation and its subsidiaries lose their distinct corporate identities where their conduct demonstrates a virtual abandonment of separateness." Thomson-CSF, 64 F.3d at 777-78 (internal citations and quotations omitted). In determining whether to pierce the corporate veil and treat a parent as the subsidiary, "courts consider many factors, including: (1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers, directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arms length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of the corporation's debts by the dominating entity; and (10) intermingling of property between the entities." MAG Portfolio Consultant, GMBH v. Merlin Biomed Group LLC, 268 F.3d 58, 63 (2d Cir. 2001) (quoting Freeman v. Complex Computing Co., 119 F.3d 1044, 1053 (2d Cir. 1997)). Defendants argue that an analysis of these factors shows Griffith was "largely controlled and dominated" by Phoenix. This Court disagrees.
While there was a certain amount of overlap between the officers and directors of Phoenix and Griffith, there is virtually no evidence that this resulted in a disregard of corporate formalities. Similarly, although Phoenix and Griffith held joint strategy meetings, the Financial Advisors point to no evidence that Griffith's commercial interests were subordinated to those of Phoenix. Phoenix and Griffith maintained separate offices (albeit in close proximity to one another) and had different business models, and there is no evidence for the claim that Phoenix and Griffith improperly commingled property or funds. Indeed, the Financial Advisors received separate payments from Griffith and Phoenix under their respective contracts with those entities. And, to the extent Phoenix provided payroll, administrative and other services to Griffith, the parties did so on an arms-length basis pursuant to formal contracts. See, e.g., Sullivan Decl., Ex. 3, Tabs 3-4, 6-7; see also Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 135 (2d Cir. 1997) (finding that a failure to observe corporate formalities, the use of shared office space and letterhead, and a lack of capital in the subsidiary were insufficient to show domination as a matter of law); Am. Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d Cir. 1988) (holding that interlocking directorates are typical of modern business and do not support piercing the corporate veil); Thomson-CSF, 64 F.3d at 778 (declining to pierce corporate veil to compel arbitration where petitioner had not shown directors in common, disregard of corporate formalities or intermingling of corporate finances). Accordingly, the Financial Advisors' motion to compel arbitration on the basis of an alter-ego/veil-piercing argument is denied.
C. Estoppel
Under the estoppel theory, a company "knowingly exploiting [an] agreement [with an arbitration clause can be] estopped from avoiding arbitration despite having never signed the agreement."Thomson-CSF, 64 F.3d at 778; see also Deloitte Noraudit A/S v. Deloitte Haskins Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993);MAG, 268 F.3d at 61. However, the benefits of the agreement to the non-signatory must be direct — that is, flow directly from the agreement. MAG, 268 F.3d at 61; Thomson-CSF, 64 F.3d at 779. Where the benefit derived from the agreement is indirect, the non-signatory may not be compelled to arbitrate on an estoppel theory. MAG, 268 F.3d at 61; Thomson-CSF, 64 F.3d at 779. The benefit derived from an agreement is indirect where the non-signatory exploits the contractual relation of parties to an agreement, but does not exploit (and thereby assume) the agreement itself. Thomson-CSF, 64 F.3d at 778-79.
The Financial Advisors do not establish a genuine issue of material fact regarding whether Phoenix directly benefited from the Standard Representative Contracts. Although Phoenix derived benefits from Griffith's relationships with the Financial Advisors, it did not have any involvement in the execution or performance of the Standard Representative Contracts. Phoenix is not even mentioned in the Standard Representative Contracts. Nor did Phoenix have anything to do with the Financial Advisors' decision to sign U-4 Forms; indeed, PLIC had its own separate relationships and agreements with the Financial Advisors, from which it benefited directly. Because there is no evidence that Phoenix realized any direct benefits from Griffith's relationships with the Financial Advisors, this Court finds that it would be improper to compel arbitration on an estoppel theory.See Veera v. Janssen, No. 05 Civ. 2145 (SHS), 2005 WL 1606054, at *3-5 (S.D.N.Y. July 5, 2005) (declining to compel a parent company to arbitrate on an estoppel theory where the subsidiary's arbitration agreement did not mention the parent and where the parent did not receive any direct benefit from the agreement);Schaad v. Susquehanna Capital Group, No. 03 Civ. 9902 (LTS), 2004 WL 1794481, at *5 (S.D.N.Y. Aug. 10, 2004) (declining to confirm arbitration award against a parent company on an estoppel theory where there was no evidence the parent had directly benefited from the agreement signed by its subsidiary).
III. Collateral Estoppel
The doctrine of "[c]ollateral estoppel, or issue preclusion, bars the relitigation of issues actually litigated and decided in the prior proceeding, as long as that determination was essential to that judgment." Central Hudson Gas Elec. Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359, 368 (2d Cir. 1995). For a party to bar another from litigating an issue on collateral estoppel grounds, "(1) the issues in both proceedings must be identical, (2) the issue in the prior proceeding must have been actually litigated and actually decided, (3) there must have been a full and fair opportunity for litigation in the prior proceeding, and (4) the issue previously litigated must have been necessary to support a valid and final judgment on the merits." Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 44 (2d Cir. 1986). Use of collateral estoppel "must be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged." Faulkner v. Nat'l Geographic Enters. Inc., 409 F.3d 26, 37 (2d Cir. 2005) (quoting Comm'r v. Sunnen, 333 U.S. 591, 599-600 (1948)). Even if the technical requirements of the doctrine can be met, a court must satisfy itself that the application of the doctrine is fair. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 329-31 (1979); see also Bear, Stearns Co. v. 1109580 Ontario, Inc., 409 F.3d 87, 91 (2d Cir. 2005). The Second Circuit has held that collateral estoppel is improper where the controlling law in the putative new action differs from that in the original case. See Faulkner, 409 F.3d at 37 (finding an intervening change in applicable law sufficient to bar the application of collateral estoppel).
Defendants argue that an unpublished New Jersey opinion,Phoenix Life Ins. Co. v. Narduzzi, No. A-0528-02T2 (NJ Super., App. Div., Sept. 18, 2003), precludes PLIC from arguing that it need not submit to arbitration of its claims in this action. This argument is without merit.
First, Narduzzi did not involve PNX or PIP. In light of the different relationships between those entities, Griffith and the Financial Advisors, it would be improper to collaterally estop PNX and PIP from litigating an issue that they have not previously had an opportunity to contest. Moreover, even assuming that the factual circumstances in Narduzzi were identical to those in this case, Narduzzi applied the law of New Jersey and a Third Circuit case — In re Prudential Ins. Co. of America Sales Practice Litigation, 133 F.3d 225, 230 (3d Cir. 1998) — to arrive at a conclusion different from the one required by the controlling authority in the Second Circuit. See supra. Accordingly, the legal issues inNarduzzi cannot be said to be identical to those present in this case, and Plaintiffs are not collaterally estopped from resisting the Financial Advisors' attempts to compel them to arbitrate. See Faulkner, 409 F.3d at 37.
CONCLUSION
For the foregoing reasons, Defendants' motion to compel arbitration is denied.
SO ORDERED