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Price v. UBS Financial Services Inc.

United States District Court, D. New Jersey

March 8, 2018

CRAIG D. PRICE, Plaintiff,


          WILLIAM J. MARTINI, U.S.D.J.

         Plaintiff Craig D. Price brings this action against UBS Financial Services, Inc. (“Defendant”), alleging claims of whistleblowing retaliation under the Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), 15 U.S.C. § 78u-6, and the Florida Whistleblower Act (the “FWA”), Fla. Stat. § 448.102. This matter comes before the Court on Defendant's motion to compel arbitration pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq. There was no oral argument. Fed.R.Civ.P. 78(b). For the reasons set forth below, Defendant's motion is DENIED.

         I. BACKGROUND

         The Court assumes the parties' familiarity with the facts and procedural history of the case. The Court's November 2017 opinion provides a more complete recitation. ECF No. 19 at 1-2. The following facts are relevant to the instant motion.

         On March 22, 2017, Plaintiff filed a complaint (“Complaint”), alleging that Defendant retaliated against him for making disclosures protected under Dodd-Frank and the FWA. ECF No. 1. Approximately two and a half months later, Defendant filed a motion to dismiss both counts of the Complaint. ECF No. 11. In its motion, Defendant did not alternatively argue for the Court to compel arbitration nor did it state its intent to do so on a later date.

         On July 20, 2017, the parties sought a consent for an adjournment of Defendant's motion until September 5, 2017, which the Court granted. ECF Nos. 15 & 16. The Court subsequently decided the merits of Defendant's motion, denying dismissal of the FWA claim but staying the Dodd-Frank claim pending a decision by the Supreme Court in Digital Realty Trust, Inc. v. Somers. ECF Nos. 19 & 20.

         Approximately two weeks later, Defendant filed the instant motion to compel arbitration, arguing that Plaintiff's claims fall squarely within the scope of the arbitration agreements that he executed in exchange for compensation packages from Defendant. See Def.'s Mem. of Law in Supp. of Its Mot. to Compel Arbitration (“Def.'s Mem.”) 8-13, ECF No. 22-3. Defendant preemptively argues that it did not waive its right to compel arbitration by first filing a motion to dismiss. Id. at 13-14. Specifically, it argues that the factors enumerated by the Third Circuit in Hoxworth v. Blinder, 980 F.2d 912 (3d Cir. 1992), favor arbitration because it filed its motion to compel in a timely fashion, it provided notice to Plaintiff of its intent to arbitrate, and neither party has engaged in discovery. Id. at 14. Defendant states that the Third Circuit has unequivocally held that a single merits-based motion to dismiss does not waive a party's right to arbitration. Id. Finally, Defendant argues that the Court should dismiss the Complaint or, in the alternative, stay proceedings in this Court pending arbitration. Id. at 15.

         Plaintiff opposes, arguing first that Defendant has not shown a valid arbitration agreement under New Jersey law. See Pl.'s Resp. in Opp'n to Def.'s Mot. (“Pl.'s Opp'n”) 5-8, ECF No. 26. Plaintiff submits that the agreements do not satisfy New Jersey's “express waiver rule” because they fail to reference statutory whistleblower rights. Id. at 6-7. Plaintiff further argues that Defendant waived its arbitration right because Defendant's motion to dismiss prejudiced Plaintiff through the expenditure of substantial resources in litigating that motion. See id. at 8-11. Alternatively, Plaintiff argues that the Court should stay proceedings pending arbitration as opposed to dismissing its Complaint. Id. at 12-13.

         In its reply, Defendant counters that the agreements are valid and enforceable because they provide for arbitration of “any disputes, ” including related to termination of employment and retaliation whether they arise by statute or otherwise. See Def.'s Reply in Supp. of Its Mot. (“Def.'s Reply”) 2-7, ECF No. 28. Defendant also reiterates that a single merits-based motion to dismiss is not sufficient to find that it waived its right to arbitrate. Id. at 8-11. Finally, Defendant reargues for dismissal over a stay in the interest of judicial efficiency. Id. at 11-13.


         The FAA “creates a body of federal substantive law establishing and governing the duty to honor agreements to arbitrate disputes” and expresses “a strong federal policy in favor of resolving disputes through arbitration.” See Century Indem. Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 522 (3d Cir. 2009). “Before compelling a party to arbitrate pursuant to the FAA, a court must determine that (1) there is an agreement to arbitrate and (2) the dispute at issue falls within the scope of that agreement.” Id. at 523. “To determine whether the parties have agreed to arbitrate, [courts] apply ‘ordinary state-law principles that govern the formation of contracts.'” Id. at 524 (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). “[O]nce a court has found that there is a valid agreement to arbitrate, . . . the determination of whether a particular dispute is within the class of those disputes governed by the arbitration clause . . . is a matter of federal law.” See id. (quotation omitted). In making such a determination, “‘there is a presumption of arbitrability[:] an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'” Id. (quoting AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986)).

         Courts in the Third Circuit apply two different standards when considering a motion to compel arbitration. “[W]hen it is apparent, based on ‘the face of a complaint, and documents relied upon in the complaint, ' that certain of a party's claims ‘are subject to an enforceable arbitration clause, a motion to compel arbitration should be considered under a Rule 12(b)(6) standard without discovery's delay.'” Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 776 (3d Cir. 2013) (quoting Somerset Consulting, LLC v. United Capital Lenders, LLC, 832 F.Supp.2d 474, 482 (E.D. Pa. 2011)). “But if the complaint and its supporting documents are unclear regarding the agreement to arbitrate, or if the plaintiff has responded to a motion to compel arbitration with additional facts sufficient to place the agreement to arbitrate in issue, then ‘the parties should be entitled to discovery on the question of arbitrability before a court entertains further briefing on [the] question.” Id. (quoting same). Under such circumstances, courts apply a summary judgment standard. See id.

         Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).

         III. ...

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