Martensv.Smith Barney Inc.

United States District Court, S.D. New YorkMay 2, 2002
CLASS ACTION 96 Civ. 3779 (CBM) (S.D.N.Y. May. 2, 2002)

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CLASS ACTION 96 Civ. 3779 (CBM)

May 2, 2002

Attorney(s) For Plaintiff Class, Mary Stowell, Linda Friedman, Stowell Friedman, Ltd., Chicago, IL.

Attorney(s) For Class Counsel Stowell Friedman, Ltd. Tom Johnson, Anne Davis, Johnson, Jones, Snelling, Gilbert Davis, Chicago, IL.

Attorney(s) For Plaintiffs Pamela Martens and Judith Mione, Gary Phelen, Klebanoff Phelan, West Hartford, CT.

Attorney(s) For Plaintiff, Edna V. Broyles, Daniel H. Greenberg, Esq.

Attorney(s) For Moving Plaintiffs, Kent Spriggs, Spriggs Davis, Tallahassee, FL.

Attorney(s) For Defendants, Brad S. Karp, Joyce S. Huang, Daniel J. Toal Paul, Weiss, Rifkind, Wharton Garrison, New York, NY.



This class action is again before this court, following remand from the United States Court of Appeals for the Second Circuit. The procedural history and factual background are set forth in detail in the appellate court's decision and will not be revisited here. See Martens v. Thomann, 273 F.3d 159, 164-72 (2d Cir. 2001).

On February 20, 2002, having received the mandate from the Court of Appeals, this court entered a scheduling order which set a timetable for all parties to file post-remand motions for relief. On May 1, 2002, the court heard oral argument on the pending motions and at that time reserved decision. Several of the motions can be dispensed with quickly, and the court does so in this memorandum opinion and order.


In August 1999 defendants Smith Barney and James Dimon filed a motion to compel arbitration and to dismiss plaintiffs Pamela Martens and Judith Mione's individual claims. (Plaintiffs Martens and Mione had opted out of the settlement class and decided to pursue their own individual claims.) Defendants' motion to compel arbitration was premised on three different documents which Ms. Martens and Ms. Mione had executed during their employment: (1) Uniform Application for Securities Industry Registration (generally referred to as a "Form U-4"); (2) Application for Employment; (3) Smith Barney Employee Handbooks. Each of these documents contained arbitration clauses.

In a letter submitted to the court on December 11, 2001, defendants Smith Barney and James Dimon withdrew the portion of their motion which sought dismissal of Ms. Martens's and Ms. Mione's claims.

Ms. Martens and Ms. Mione concede that they each signed a Form U-4.See Martens and Mione's Mem. of Law in Opp. to Defs.' Mot. to Compel Arbitration and for a Stay (dated March 28, 2002) at 15-17. The Second Circuit held in Desiderio v. National Association of Securities Dealers, Inc., 191 F.3d 198 (2d Cir. 1999), that the arbitration clause contained in Form U-4 is fully enforceable. See id. at 206 ("[T]he arbitration provision in Form U-4 may be applied to [plaintiffs] Title VII claims.");see also id. at 207 ("[Form U-4] it is not a contract of adhesion."). Every case in this district since Desiderio has likewise upheld the enforceabilility of Form U-4's arbitration clause. See Marcus v. Masucci, 118 F. Supp.2d 453, 455-457 (S.D.N.Y. 2000); Gordon v. Volt Info. Scis., Inc., 41 No. 00 Civ. 4188, 2000 WL 1358646, at 1 (S.D.N.Y. Sep. 20, 2000); Ahing v. Lehman Bros., No. 94 Civ. 9027, 2000 WL 460443, at 5-6 (S.D.N.Y. Apr. 18, 2000); Moorning-Brown v. Bear, Stearns Co., Inc., No. 99 Civ. 4130, 2000 WL 16935. at 1 (S.D.N.Y. Jan. 10, 2000). In sum, Desiderio and its progeny have repeatedly rejected the arguments advanced by Ms. Martens and Ms. Mione. The instant court rejects them as well.

The court will therefore grant defendants Smith Barney and James Dimon's motion to compel arbitration pursuant to the Form U-4 signed by Ms. Martens and Ms. Mione. The court expresses no opinion as to the enforceability of the other, non-Form U-4 arbitration agreements into which Ms. Martens and Ms. Mione may have entered. Ms. Martens and Ms. Mione's motion to file a supplemental memorandum and for a scheduling order will be denied as moot.


On March 11, 2002, plaintiff Edna Broyles filed a "Notice of Appeal from the Decision and Order of the ADR Arbitration Panel." Ms. Broyles had submitted her individual claims to an arbitration panel pursuant to the Dispute Resolution Process provided for in the Consolidated Stipulation of Settlement ("Settlement Stipulation") which the court approved in July 1998. On January 11, 2002, the arbitration panel issued an opinion rejecting each of Ms. Broyles fourteen claims against Smith Barney.

Counsel for Ms. Broyles then wrote the court on March 20, 2002, requesting a conference "with respect to the preparation of a scheduling order to accomplish [plaintiff Broyles's] appeal, together with a discussion and order of the contents, number of copies to be prepared for an appendix and briefs for such appeal." Apparently Ms. Broyles believes that she has the right to appeal the judgment of the arbitration panel directly to this court.

The letter from Ms. Broyle's counsel is dated October 19, 2002 — undoubtedly a typographical error. The court received the letter by fax on March 20, 2002.

In a letter to the court dated March 25, 2002, defendant Smith Barney responded to Ms. Broyle's Notice of Appeal and her request for a conference. As Smith Barney notes, according to the Settlement Stipulation, "[t]he ADR Panel's decision shall be final and binding on the Firm and Claimant except that the ADR Panel's decision may be reviewed and vacated by any state or federal court of competent jurisdiction on the application of any party to the particular ADR proceeding as provided in the Federal Arbitration Act, 9 U.S.C. § 10." Settlement Stipulation ¶ 7.14(12)(a). Moreover, "nothing in the Settlement Stipulation . . . is intended, nor shall be construed, to give the District Court jurisdiction to review or make orders concerning any claim submitted through the Dispute Resolution Process, including, without limitation, any ruling made in the course of the Dispute Resolution Process or any decision rendered in the ADR or any other aspect of procedure regarding any claim submitted through the Dispute Resolution Process." Id. ¶ 16.9A.

Ms. Broyles points out that paragraph 34 of the Final Order and Judgment Approving Class Action Settlement and Dismissing Claims ("Final Order") dated July 21, 1998, provides that "this Court retains exclusive jurisdiction over the implementation and enforcement of this Final Order and Judgment." That retention clause, while insuring that this court oversees implementation of the Settlement Stipulation itself, cannot be read to extend this court's jurisdiction over the individual cases of every claimant. Indeed, members of the settlement class had their individual cases dismissed as part of the settlement arrangement. See Final Order ¶¶ 22-23. Ms. Broyles's "appeal" is therefore not properly before this court. Should Ms. Broyles wish to challenge the decision of her arbitration panel, she should file a new, separate application for vacatur pursuant to 9 U.S.C. § 10 in a state or federal court of competent jurisdiction.

Ms. Broyles's written request for a scheduling conference will therefore be denied, and Smith Barney's written request to strike Ms. Broyle's Notice of Appeal will be granted.


Plaintiff Cara Beth Walker, representing herself pro se, has submitted a "Motion for Default" against Smith Barney "for failure to comply in good faith with the terms of the Consolidated Stipulation of Settlement." Walker's Mem. of Law in Supp. of Mot. for Default at 1. The substance of Ms. Walker's motion consists of allegations that Smith Barney has engaged in stalling and delay tactics undertaken in bad faith which merit the entry of a default judgment. Ms. Walker also seeks the appointment of a "special master" to determine the amount of damages to which she is entitled as a result of Smith Barney's purported default. Smith Barney responds by stating that the motion is not properly before the court and should be stricken because, according to the terms of the Settlement Stipulation, the court does not have jurisdiction. In the alternative, Smith Barney argues that the motion is without merit because blame for the delays are all to be laid at the feet of Ms. Walker and her retention of five different sets of counsel in connection with her claims. Moreover, Smith Barney alleges, it is Ms. Walker who has acted in bad faith, having offered to settle with Smith Barney in return for "walk[ing] away from this whole mess" and no longer serving as class representative. Smith Barney's Mem. of Law. in Opp. to Mot. for Default and in Supp. of Its Cross-Mot. to Strike at 6.

While plaintiff Walker is a class representative, her memoranda of law in support of her motion make clear that her motion for default relates only to her individual claims and does not purport to seek relief on behalf of the entire class. See, e.g., Walker's Reply at 4 ("I chose . . . to file a Motion for Default based on an unquestionable breach of contract by Smith Barney . . . by denying me a timely hearing.") (emphasis added); Walker's Mem. at 9 ("The breaches . . . have prejudiced my claim . . . .") (emphasis added). Additionally, in a letter to the court dated March 16, 2002, Ms. Walker informed the court that she was not joining a motion filed by the law firm of Spriggs Davis which seeks relief on behalf of the entire class.

The court agrees with Smith Barney that Ms. Walker's motion is not properly before the court. Ms. Walker's motion concerns her efforts to pursue her individual claims and in no way implicates the Settlement Stipulation or any class-wide issues. The court will therefore grant Smith Barney's cross-motion to strike. See Discussion of Broyles's Notice of Appeal, supra, at 3-4. Since the court is striking Ms. Walker's motion, it need not address its merits. Ms. Walker is free to raise again the issue of Smith Barney's purported default before her arbitration panel.


Plaintiff Phyllis Jamison is a class member who worked for Smith Barney from November 1993 through February 1994. In July 1999 class counsel Stowell Friedman submitted an initial claim on Ms. Jamison's behalf pursuant to the terms of the Settlement Stipulation. In November 1999 Smith Barney responded to Ms. Jamison with a settlement offer of $105,000. In December 1999 Ms. Jamison contacted counsel for Smith Barney directly. She entered into settlement negotiations with counsel for Smith Barney herself and successfully negotiated a settlement of $200,000. On December 28, 1999, Ms. Jamison executed a Release of Claims that memorialized the terms of her settlement with Smith Barney. Ms. Jamison expressly acknowledged in the Release of Claims that Smith Barney had allowed her at least twenty-one days to consider her decision to sign the release and afforded her the opportunity to consult with counsel. The Release further advised Ms. Jamison that she would be permitted to revoke the release within seven calendar days of its execution. Ms. Jamison did not attempt to exercise this right.

Ms. Jamison filed her instant motion pro se on March 8, 2002, asking the court for a sixty day extension of time in which to file a motion, beyond the March 8, 2002 deadline set by this court's Order dated February 20, 2002. Ms. Jamison indicates that she needs the extension because she has been unable to retain counsel. In her motion of March 8, however, she goes on to argue the ostensible merits of her would-be motion, explicitly asking the court to "re-open the settlement of Phyllis Jamison, as well as making a motion to conduct discovery. The court will treat Ms. Jamison's filing as three different motions.

Ms. Jamison's motion for an extension of time will be denied for two reasons. First, one of the motions she seeks to file is improperly before the court and the other motion she intends to file appears to be without merit. Second, and more importantly, Ms. Jamison has not offered a persuasive reason for the court to grant an extension of time. Ms. Jamison has been following this litigation closely, having communicated with the court by letter and telephone several times over the past two years. Ms. Jamison has also had at least two different sets of counsel working for her during that time and she has discharged them both. She has had more than enough time over the course of this litigation to retain and keep counsel. She has failed to do so. Her motion for an extension of time will therefore be denied.

Ms. Jamison's "motion to re-open" is, in effect, an attempt to rescind the settlement she negotiated and into which she entered with Smith Barney in December 1999. This court is not the forum in which to seek this relief. The motion is, therefore, not properly before the court.See Discussion of Broyles's Notice of Appeal, supra, at 3-4. Smith Barney's cross-motion to strike will therefore be granted and the court need not reach the merits of Ms. Jamison's motion to re-open.

While the court need not reach the merits of Ms. Jamison's motion, the court does note that under fundamental principles of contract law, the fact that she may be unhappy with her lawyers' performance does not provide a basis for rescission of the agreement she independently negotiated with Smith Barney. See, e.g., Petty v. Timken Corp., 849 F.2d 120, 133 (4th Cir. 1988) ("When a litigant voluntarily accepts an offer of settlement, either directly or indirectly through the duly authorized actions of his attorney, the integrity of the settlement cannot be attacked on the basis of inadequate representation by the litigant's attorney."); Taylor v. Gordon Flesch Co., 793 F.2d 858, 863 (7th Cir. 1986) (holding that plaintiff may not avoid settlement agreement merely because he subsequently believes settlement agreement to be insufficient, even when alleged incompetency of counsel deprived plaintiff of full information).

Finally, with respect to Ms. Jamison's motion to conduct discovery, she has failed to provide any reason for why she should be entitled to discovery and she has failed to identify what sort of discovery she seeks. That motion will therefore be denied as well.


For the foregoing reasons, it is hereby ORDERED as follows:

1. Defendants Smith Barney and James Dimon's motion to compel arbitration pursuant to Pamela Martens and Judith Mione's Form U-4's is GRANTED.
2. Pamela Martens and Judith Mione's motion for permission to file a supplemental memorandum and for a scheduling order is DENIED as moot.
3. Plaintiff Edna Broyles's written request for a scheduling conference is DENIED. Smith Barney's written request to strike Ms. Broyle's Notice of Appeal (document # 271) is GRANTED.
4. Defendant Smith Barney's cross-motion to strike plaintiff Cara Beth Walker's Motion for Default (document # 278) is GRANTED.
5. Plaintiff Phyllis Jamison's motion for an extension of time is DENIED. Her motion to conduct discovery is DENIED. Smith Barney's cross-motion to strike plaintiff Phyllis Jamison's motion to re-open (document # 279) is GRANTED.