Habliston v. Finra Dispute Resolution, Inc.

251 F. Supp. 3d 240, 2017 WL 1906584, 2017 U.S. Dist. LEXIS 70003
CourtDistrict Court, District of Columbia
DecidedMay 8, 2017
DocketCivil Action No. 15-2225 (ABJ)
StatusPublished
Cited by9 cases

This text of 251 F. Supp. 3d 240 (Habliston v. Finra Dispute Resolution, Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Habliston v. Finra Dispute Resolution, Inc., 251 F. Supp. 3d 240, 2017 WL 1906584, 2017 U.S. Dist. LEXIS 70003 (D.D.C. 2017).

Opinion

MEMORANDUM OPINION

AMY BERMAN JACKSON, United States District Judge

Pursuant to Federal Rule of Civil Procedure 59(e), plaintiffs have moved for reconsideration of the Court’s order dismissing this case with prejudice, Pis.’ Mot. to Amend or Alter Final J,'[Dkt, # 25] (“Pis.’ Mot.”), and plaintiffs have also moved for leave to file a substitute amehded complaint under Federal Rule of Civil Procedure 15(a)(2). Pis.’ Mot, & Mem.' of Authorities for Leave to File First Substitute Am. Compl. [Dkt. # 31] (“Pis,’ Mot. Am. Compl.”). Because plaintiffs have not identified any proper basis for the Court to alter Or set aside its judgment, and because aliy amendment to the complaint would be futile, the Court will deny the motions.

BACKGROUND

Plaintiffs aré involved in an arbitration against Wells' Fargo Advisors,' LLO concerning their deceased parents’ brokerage accounts, and they brought this action against defendant FINRA Regulation, Inc.-(“FINRA Regulation”) while the proceedings were ongoing. See Substitute Am. Compl. [Dkt. # 10] (“Compl.”). On July 29, 2016, defendant moved to dismiss the complaint on a number of grounds, including Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), 12(b)(7), and 12(h)(3). Mot. to Dismiss Compl. [Dkt. # 16] (“Def.’s Mot.”). They argued that: plaintiffs’ claims are not ripe for review; defendant= is immune from suit under the doctrines of arbitral and regulatory immunity; plaintiffs- failed-to name indispensable' parties; defendant is not a state actor; the Securities and Exchange'Act does not create a private right of action for alleged violations of rules enacted under the Act; and plaintiffs’ request that the Court appoint new arbitrators- is moot because replacement [243]*243arbitrators have already been appointed. Mem. of Law in Supp. of Def.’s Mot. [Dkt. # 17] (“Def.’s Mem.”) at 1-2. Plaintiffs opposed the motion, but they only briefed the issues of arbitral immunity, whether FINRA Regulation is a state actor, and whether their claims were ripe for review. Pis,’ Mem. in Opp. to Def.’s Mot. [Dkt. #21] (“Pis.’ Opp.”) at 8-11, 18-19. Plaintiffs failed to respond to any of defendant’s other contentions. On January 27, 2017, the Court granted defendant’s motion to dismiss. See Habliston v. FINRA Regulation, Inc., No. 15-2225, 2017 WL 396580 (D.D.C. Jan. 27, 2017).

In granting the motion to dismiss, the Court found that the four arguments plaintiffs failed to address had been conceded. Id. at *4. But the dismissal of the case was ultimately predicated upon lack of subject matter jurisdiction and failure to state a claim under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), Id. at *7. The Court concluded that plaintiffs’' claims that their constitutional rights had been violated in an allegedly unfair arbitration process were not ripe for review and should be dismissed for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Id. at *5. And the Court held that all of plaintiffs’ claims should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) because FINRA Regulation is immune from suit under the doctrine of arbitral immunity. Id. at *6-7.

On February 16, 2017, plaintiffs filed a motion to amend or alter the final judgment under Rule 59(e), arguing that it was an abuse of discretion for the Court to deem issues not opposed as conceded, and asking the Court to dismiss all counts without prejudice. Pis.’ Mot. at 1; Pls.’ Mem. of P. & A. to Alter or Amend Final J. [Dkt. # 25-1] (“Pis.’ Mem.”) at 1. Plaintiffs also stated that they intended to file a motion for leave to file an amended complaint that would be limited to the topics of “adhesion, unconseionability and material breach of contract to have the arbitration agreements ‘ declared unenforceable under 9 U.S.C. § 2, and [to] add new facts to appoint new arbitrators under 9 U.S.C. § 5.” Pls.’ Mem. at 1. Defendant opposed the motion on March 2, 2017, arguing that plaintiffs had failed “to meet the stringent standards established by Rule 59(e),” and that they should have filed a Rule 15 motion accompanied by their proposed amended complaint. together with their Rule 59(e) motion if they intended to seek leave to amend. Opp, to Pls.’ Mot. [Dkt. # 26] (“Def.’s Opp.”) at 1-2 & n.2, Defendant also took the position that any amendment would be futile. Id. at 10. Plaintiffs replied in support of their motion on March 8, 2017. Pis.’ Reply in Supp. of Pls,’ Mot. [Dkt. #27] (“Pls.’ Reply”).

On March 10, 2017, the Court directed plaintiffs to file any motion for leave to file an amended complaint by March 31, 2017, stating that it would be “in a better position to consider such issues as the futility of any amendment once the proposed amended complaint [was] before the Court.” Min. Order (Mar. 10, 2017). Plaintiffs filed their motion on April 3, 2017, attaching a copy .of the amended complaint. See Pls.’ Mot. Am, Compl.; Ex. 1, First Substitute Am. Compl. [Dkt. # 31-1] (“Am. Compl.”). On April 10, 2017, FINRA Regulation opposed the motion, arguing that the motion should be denied because: (1) plaintiffs have failed to satisfy their burden under Rule 59(e); and (2) the motion for leave to file an amended complaint was futile because plaintiffs’ substitute amended complaint would not survive a motion to dismiss. Opp. to Pis,’ Mot. Am. Compl. [Dkt. #32] (“Def.’s Opp. to Pis.’ Mot. Am. Compl.”) at 1. Plaintiffs replied on April 17, 2017. Pis.’ Reply in Supp. of Pis.’ Mot. Am. Compl. [Dkt. # 33].

[244]*244STANDARD OF REVIEW

Under ordinary circumstances, when a party seeks to amend its pleading after a responsive pleading has been served, the Court should “freely give leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2); Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996) (per curiam). When evaluating whether to grant leave to amend, however, the Court must consider these factors: (1) undue delay; (2) prejudice to the opposing party; (3) futility of the amendment; (4) bad faith; and (5) whether the plaintiff has previously amended the complaint. Atchinson v. District of Columbia, 73 F.3d 418 (D.C. Cir. 1996), quoting Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). The Court may deny leave to amend based on futility if the proposed claims would not survive a motion to dismiss. Rumber v. District of Columbia, 598 F.Supp.2d 97, 102 (D.D.C. 2009), citing James Madison Ltd. v.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Nyc C.L.A.S.H., Inc. v. Carson
District of Columbia, 2020
Lee-Thomas v. Labcorp
316 F. Supp. 3d 471 (D.C. Circuit, 2018)
Gavin v. Dep't of the Air Force
314 F. Supp. 3d 297 (D.C. Circuit, 2018)
Davis v. Transportation Security Administration
264 F. Supp. 3d 6 (District of Columbia, 2017)
Johnson v. Bolden, Jr.
273 F. Supp. 3d 278 (District of Columbia, 2017)
Koch v. White
District of Columbia, 2017

Cite This Page — Counsel Stack

Bluebook (online)
251 F. Supp. 3d 240, 2017 WL 1906584, 2017 U.S. Dist. LEXIS 70003, Counsel Stack Legal Research, https://law.counselstack.com/opinion/habliston-v-finra-dispute-resolution-inc-dcd-2017.