Oppenheimer & Co Inc v. Mitchell

• Court: District Court, W.D. Washington
• Decided: April 5, 2024
• Docket: 2:23-cv-00067
• Status: Unknown

Opinion

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5 6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 9 10 OPPENHEIMER & CO. INC., CASE NO. C23-67 MJP 11 Plaintiff, ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT 12 v. 13 STEVEN MITCHELL, DORI MITCHELL, JEROME HOPPER, and 14 LORI HOPPER, 15 Defendants. 16 17 This matter comes before the Court on Plaintiff’s Motion for Summary Judgment and 18 Defendants’ Motion for Summary Judgment. (Dkt. Nos. 69, 71.) Having reviewed the Motions, 19 the Responses (Dkt. Nos. 76, 78), the Replies (Dkt. Nos. 80, 81), and all supporting materials, 20 the Court GRANTS Plaintiff’s Motion and DENIES Defendants’ Motion. 21 BACKGROUND 22 Plaintiff Oppenheimer & Co., Inc. filed this declaratory judgment action to avoid having 23 to arbitrate claims that the four Defendants assert against it in a Financial Industry Regulatory 24 1 Authority (FINRA) arbitration. (See Complaint ¶ 67 (Dkt. No. 1).) Oppenheimer is a member of 2 FINRA, which is “a non-governmental, self-regulatory agency that has the authority to exercise 3 comprehensive oversight over all securities firms that do business with the public.” See 4 Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733, 737 (9th Cir. 2014). Defendants

5 commenced the arbitration to recover funds they invested and lost in a private equity fund called 6 Horizon Private Equity III LLC (“Horizon”) that an Oppenheimer-registered broker, John 7 Woods, created and operated as a Ponzi scheme. 8 The Parties have now filed cross-motions for summary judgment, which ultimately 9 requires the Court to examine whether the FINRA arbitration was properly commenced against 10 Oppenheimer. The parties agree the Defendants can only force Oppenheimer to arbitrate if they 11 were Oppenheimer’s “customers,” as that term is used by FINRA Rule 12200. Although the 12 FINRA rule defines “customer” with great breadth, the Ninth Circuit has narrowed its reach to 13 include only those who “purchase[] commodities or services from a FINRA member [or 14 associated person of the FINRA member] in the course of the member’s FINRA-regulated

15 business activities, i.e., the member’s investment banking and securities business activities.” 16 FINRA Rule 12200, Reno, 747 F.3d at 741. To understand whether Defendants are “customers” 17 of Oppenheimer, the Court reviews the facts surrounding the Horizon Ponzi scheme and 18 Defendants’ investment in Horizon. 19 A. John Woods and the Horizon Fund 20 The four Defendants and one other individual commenced a FINRA arbitration 21 proceeding against Oppenheimer, which is a member of FINRA. (Declaration of William E. 22 Mahoney, Jr. Ex. A (Dkt. No. 23) (Statement of Claim).) In the arbitration, Defendants allege 23 that from 2003 through the end of 2016, an Oppenheimer broker, John Woods, operated Horizon

24 1 as a Ponzi scheme that sold $110 million to the public, including over several million dollars to 2 Defendants. (Id. at 1-2.) They allege that Woods created Horizon while at Oppenheimer and that 3 Woods convinced the public to invest given his status as a registered broker of Oppenheimer. 4 The Parties have now provided further information concerning John Woods and the

5 entities related to the Ponzi scheme. First, it is undisputed that Woods was a registered broker of 6 Oppenheimer until December 2016. (Declaration of Craig H. Kuglar ¶ 5 & Ex. B at 3 (Dkt. No. 7 33).) Second, it is undisputed that Woods controlled and had use of the funds invested into 8 Horizon. (SEC Complaint ¶ 17 (Ex. A to the Declaration of Craig Kuglar (Dkt. No. 33) (“First 9 Kuglar Decl.”); Woods’ Answer to the SEC Complaint ¶ 1 (Ex. D to the Declaration of Craig 10 Kuglar ISO Defs. MSJ (Dkt. No. 70) (“Second Kuglar Decl.” SEC Compl. ¶ 17; Woods’ Answer 11 to SEC Compl. ¶ 17.) Third, Woods owned and controlled Livingston Group Asset Management 12 Company d/b/a Southport Capital (“Southport”), a registered investment adviser firm that helped 13 generate investments in Horizon. (See SEC Complaint ¶ 1; Woods’ Answer to the SEC Compl. ¶ 14 1.) As is relevant here, Southport employed Michael Mooney, a former Oppenheimer broker who

15 worked to sell investments in Horizon. (Deposition of Michale Mooney at 55-56 (Ex. J to 16 Second Kuglar Decl.).) Mooney earned commissions from Horizon for any investments he 17 helped facilitate in the fund, and he also received fee income from Southport for such 18 investments. (Id. at 55-57.) 19 B. Defendants’ Investments in Horizon 20 Resolution of the pending motion turns largely on an assessment of how Defendants 21 came to invest in Horizon and whether they purchased their interests in the fund from Woods. 22 The Court therefore examines the facts surrounding the purchases in some detail. 23

24 1 Defendants Steven and Dori Mitchell allege that they lost their $1.6 million investment in 2 Horizon after being told by “Woods’ agent, Michael Mooney, that Horizon was a safe, low-risk 3 investment.” (Statement of Claim at 2.) Both Mitchells testified at their depositions that Mooney 4 advised them Horizon was a safe investment in part because of Woods’ long track-record with

5 Oppenheimer. (Deposition of Dori Mitchell at 44; Deposition of Steven Mitchell at 30.) Mooney 6 confirmed that he spoke to the Mitchells, advised them he worked for Southport, and told them 7 that investing in Horizon was “a good investment for them.” (Mooney Dep. at 80.) He also 8 testified that he was their investment advisor at Southport with respect to the Horizon 9 investment. (Id. at 52.) The Mitchells provide little evidence of any interactions with Woods. At 10 most, the Mitchells claim that after they invested, Woods sent them Seahawks tickets as a “thank 11 you, and that Woods countersigned their subscription agreement into Horizon—though it has not 12 been provided to the Court. (D. Mitchell Decl. ¶ 10; S. Mitchell Decl. ¶ 10; D. Mitchell Dep. at 13 101.) But neither of the Mitchells met with Woods, corresponded with him, or spoke to him. (D. 14 Mitchell Dep. at 44-45; Deposition of S. Mitchell at 30.) And Dori Mitchell testified that in order

15 to invest in Horizon, she caused funds to move from certain third-party accounts into Provident 16 Trust, which then purchased and held their interests in Horizon. (D. Mitchell Dep. at 54, 63-64, 17 106.) The Mitchells also confirmed that Oppenheimer was not involved in the purchase or 18 holding of their Horizon investments. (Id. at 64.) 19 Defendants Jerome and Lori Hopper invested $600,000 in Horizon in 2016 after being 20 pitched by “Oppenheimer financial advisor John Woods and Michael Mooney” that the 21 investment was ‘virtually risk-free.’” (Statement of Claim at 3, 5.) Jerome Hopper spoke with 22 Woods about Horizon at some point before making his initial investment. (Dep. of J. Hopper at 23 60-61, 63.) But the Hoppers admit that they did not invest through Oppenheimer and the only

24 1 materials they received about Horizon came from Mooney. (J. Hopper Dep. 47-48.) Instead, the 2 Hoppers testified that their Horizon investment was custodied at Provident Trust and that 3 Southport was the investment advisor on their investment in Horizon and that it received fees 4 from the investment. (J. Hopper Dep. at 53, 54, 58; Dep. of L. Hopper at 38.) Like the Mitchells,

5 the Hoppers testified that Mooney was the broker who helped them make the investment. (L. 6 Hopper Dep. at 39.) As with the Mitchells, the Hoppers provide no evidence that they purchased 7 any interest in Horizon directly from Woods or Oppenheimer. 8 The Court reviews briefly what the Parties have explained regarding Provident Trust, the 9 entity that allowed the Defendants to make their investments in Horizon. According to the SEC’s 10 complaint against Woods, Southport employees helped Horizon investors create accounts with 11 Provident Trust to purchase interests in Horizon. (SEC Compl. ¶ 36; Woods’ Answer ¶ 36.) 12 Ultimately, Provident Trust would then pass investor funds to Horizon’s bank account. (Id.) 13 Mooney testified that he would not assist clients with the mechanics of the investment, and 14 instead call Iris Israel at Oppenheimer to get the paperwork to the investor. (Mooney Dep. at 26-

15 27.) But Mooney’s testimony was not specific as to the time frame. Defendants claim that “John 16 Woods then directed Provident Trust to deposit new investor funds into Horizon bank accounts.” 17 (Defs. MSJ at 13 (citing SEC Compl. ¶ 38 & Woods’ Answer ¶ 38).) But the information 18 Defendants cite to as support for this statement says only that “[w]hen it first established a 19 relationship with the Trust Company [Provident] in 2015, Woods and Southport directed the 20 Trust Company to deposit new investor funds to bank accounts in the name of Horizon.” (SEC 21 Compl. ¶ 38; see Woods’ Answer ¶ 38.) There is therefore no evidence in the record that Woods 22 himself directed Provident with regard to Defendants’ investment into Horizon. 23

24 1 C. Procedural History 2 The Court previously entered a preliminary injunction in this matter, preventing 3 Defendants’ arbitration claims to proceed. (Dkt. No. 49.) Oppenheimer now asks the Court to 4 convert the preliminary injunction into a permanent injunction.

5 ANALYSIS 6 A. Subject Matter Jurisdiction 7 The Court independently reviews whether it has subject matter jurisdiction over this 8 matter. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999). Oppenheimer alleges 9 that the Court has diversity jurisdiction under 28 U.S.C. § 1332(a) because the parties are diverse 10 and the amount in controversy exceeds $75,000. (Compl. ¶¶ 6-9.) The Court agrees. It is 11 uncontested that the parties are diverse. And where a lawsuit seeks declaratory or injunctive 12 relief, “it is well established that the amount in controversy is measured by the value of the 13 object of the litigation.” Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 347 (1977); 14 Int’l Padi, Inc. v. Diverlink, No. 03–56478, 2005 WL 1635347, at *1 (9th Cir. July 13, 2005)

15 (unpublished). The object of the litigation here is the underlying arbitration, which involves 16 amounts well in excess of the $75,000 threshold. (See Compl. ¶ 16.) As such, the Court has 17 jurisdiction under 28 U.S.C. § 1332(a). 18 B. Legal Standards 19 The Federal Arbitration Act (“FAA”) provides that agreements to arbitrate “shall be 20 valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the 21 revocation of any contract.” 9 U.S.C. § 2. This provision reflects “both a liberal federal policy 22 favoring arbitration, and the fundamental principle that arbitration is a matter of contract.” 23 AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (citation and quotation omitted).

24 1 The Court places arbitration agreements on “equal footing with other contracts” and “enforce[s] 2 them according to their terms.” Id. “Both the arbitrability of the merits of a dispute and the 3 question of who has the primary power to decide arbitrability depend on the agreement of the 4 parties.” Reno, 747 F.3d at 738 (citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943

5 (1995)). “But, unlike the arbitrability of claims in general, whether the court or the arbitrator 6 decides arbitrability is an issue for judicial determination unless the parties clearly and 7 unmistakably provide otherwise.” Id. (quotation and citation omitted). 8 Here, the Court has the authority to determine arbitrability. The Parties agree that the 9 relevant “agreement” for the Court to review is FINRA Rule 12200, which binds members like 10 Oppenheimer to arbitrate disputes brought in certain circumstances. And Oppenheimer has 11 provided no “clear and unmistakable” evidence to rebut the presumption that the Court 12 determines arbitrability. Id., 747 F.3d at 739. As a result, “the liberal federal policy regarding the 13 scope of arbitrable issues is inapposite.’” Rajagopalan v. NoteWorld, LLC, 718 F.3d 844, 847 14 (9th Cir. 2013) (quoting Comer v. Micor, Inc., 436 F.3d 1098, 1104 n.11 (9th Cir. 2006)).

15 “The relevant arbitration provision is FINRA Rule 12200, which requires FINRA 16 members like [Oppenheimer] to arbitrate disputes arising out of their business activities at the 17 request of a ‘customer.’” Reno, 747 F.3d at 741. In relevant part,1 FINRA Rule 12200 requires 18 Oppenheimer to arbitrate if: (1) “[r]equested by the customer”; (2) “[t]he dispute is between a 19 customer and a member or associated person of a member”; and (3) “[t]he dispute arises in 20 connection with the business activities of the member or the associated person, except disputes 21 22

23 1 Because the parties agree that no separate written contract exists between Defendants and Oppenheimer, the Court does not discuss this aspect of FINRA Rule 12200. 24 1 involving the insurance business activities of a member that is also an insurance company.” 2 FINRA Rule 12200. 3 The definition of the term “customer” requires some unpacking. “The FINRA Rules 4 define ‘customer’ only in the negative: ‘A customer shall not include a broker or dealer.’” Reno,

5 747 F.3d at 739 (quoting FINRA Rule 12100(i)). The Ninth Circuit has defined “customer” to be 6 “a non-broker and non-dealer who purchases commodities or services from a FINRA member in 7 the course of the member’s FINRA-regulated business activities, i.e., the member’s investment 8 banking and securities business activities.” Reno, 747 F.3d at 741. The Second Circuit has been 9 more explicit, creating a bright line rule: “[t]he only relevant inquiry in assessing the existence of 10 a customer relationship is whether an account was opened or a purchase made.” Citigroup Glob. 11 Markets Inc. v. Abbar, 761 F.3d 268, 276 (2d Cir. 2014) (citation and quotation omitted). And 12 the Fourth Circuit similarly defines a “customer” as “one who purchases commodities or 13 services from a FINRA member.” Raymond James Fin. Servs., Inc. v. Cary, 709 F.3d 382, 388 14 (4th Cir. 2013) (citation and quotation omitted).

15 Though not expressly resolved by Reno, an investor who purchases commodities or 16 services from a FINRA member’s “associated person” may also qualify as a “customer.” FINRA 17 Rule 12200’s plain language supports this conclusion because the Rule applies equally to “a 18 member or associated person of a member.” And the Eleventh Circuit has expressly held that 19 “[w]hen an investor deals with a [FINRA] member’s agent or representative, the investor deals 20 with the member.” Multi-Fin. Sec. Corp. v. King, 386 F.3d 1364, 1370 (11th Cir. 2004). In King, 21 the court found that the investor was a “customer” of a National Association of Securities 22 23

24 1 Dealers, Inc. (“NASD”)2 member where “the parties agree[d] that King [the investor] was a 2 customer of Micciche [the registered advisor] and that Micciche was a person associated with 3 IFG [the NASD member].” King, 386 F.3d at 1368. The Court held that King was a “customer” 4 of the NASD member even though Micciche never reported his activities involving King or the

5 investments to IFG, IFG did not approve of the sale of the securities, IFG had no record of the 6 purchase of the investment by or for King, King never opened an account with IFG, King had no 7 written contract with IFG, and IFG did not receive or disburse funds for the transaction. Id. at 8 1366. The outcome in King is similar to a case from this District on which Defendants rely. See 9 The O.N. Equity Sales Co. v. Venrick (ONESCO), 508 F. Supp. 2d 872, 873 (W.D. Wash. 10 2007). In ONESCO, the investor was found to be a “customer” of an NASD member where the 11 investor purchased a security directly from a registered broker of the NASD member. See id. at 12 873-75. The investor was deemed a “customer” even though the registered broker had only 13 joined the NASD member a few weeks prior to the investment and had created the investment 14 scheme before joining the NASD member. Id. at 874-75.

15 C. Defendants Not Customers of Woods 16 Defendants have failed to produce any evidence they purchased their interests in Horizon 17 through or from Woods or Oppenheimer and they cannot be considered “customers” under 18 FINRA Rule 12200. 19 First, Defendants have provided no evidence that they held any accounts with 20 Oppenheimer or that they are direct customers of Oppenheimer. 21 22

23 2 NSAD is the predecessor entity to FINRA. See Reno, 747 F.3d at 749 n.3 (Battaglia, J., concurring in part and dissenting in part). 24 1 Second, Defendants identify no evidence that they purchased any commodity or service 2 from Woods while he was associated with Oppenheimer. Critically, Defendants fail to show that 3 Woods had any personal involvement in either the Mitchell’s or the Hopper’s investment in 4 Horizon. Although Jerome Hopper testified that he spoke to Woods before investing, the

5 evidence shows that it was Mooney who facilitated the purchase as the investment advisor to the 6 Hoppers. (Mooney Dep. at 52.) Mooney similarly acted as the investment advisor to the 7 Mitchells to make their investment. (Id.) None of the Defendants testified that they spoke with 8 Woods or that Woods acted as their broker or advisor in making their investments in Horizon. 9 And while Mooney testified generally that he acted at Woods’ direction to sell interests in 10 Horizon, there is no evidence that Woods specifically directed the transactions. Mooney acted 11 for himself as a Southport employee, acting as the investment advisor to Defendants at 12 Southport, obtaining a commission from Horizon, and earning fees from Southport. (Mooney 13 Dep. at 55-56, 58.)3 Nor have Defendants shown that Woods had any role in facilitating the 14 purchase through Provident Trust. It is true that Defendants placed their investment funds into

15 accounts at Provident Trust that then completed the purchases of interests in Horizon. But there 16 is nothing in the record to suggest that Woods was involved in those transactions. Defendants 17 certainly argue that Woods had some role, but the evidence does not support the claim. (Defs. 18 MSJ at 13.) Rather, the evidence on which Defendants rely on shows that in 2015 Woods was 19 involved in directing Provident “to deposit new investor funds to bank accounts in the name of 20 Horizon.” (SEC Compl. ¶ 38; see Woods’ Answer ¶ 38.) But there is no evidence that Woods 21 actually directed Provident to complete the transactions for either the Mitchells or the Hoppers. 22

3 After the Court rejected Defendants’ agency theory, Defendants no longer content that Mooney 23 acted as Woods’ agent and therefore Woods they were effectively customers of Woods. (See Order at 12-13 (Dkt. No. 49).) 24 1 On this record, there simply is no evidence of Woods’ participation such that the Court could 2 conclude he sold Defendants any commodities or services as required to be “customers” under 3 FINRA Rule 12200. 4 The Court also rejects Defendants’ argument that because Horizon and Southport were

5 Woods’ “alter egos,” Defendants necessarily purchased their interests in Horizon from Woods. 6 The Court previously dismissed Defendants’ theory that any investment in Horizon or through 7 Southport must also be considered a purchase from Woods because Woods ran and owned 8 Horizon and Southport. (See Order on Mot. for Prelim. Inj. at 11-12 (rejecting this same theory).) 9 The Court finds insufficient reasons to reconsider this determination. There is some tenuous 10 logical appeal to Defendants’ alter-ego theory—i.e., if Woods ultimately benefitted financially 11 from Defendants’ investment in Horizon, one could say that Defendants purchased a commodity 12 from Woods. But this argument does not track the FINRA rule, which defines a “customer” as 13 someone who purchases a commodity or received a service from a broker or its registered agent. 14 FINRA Rule 12200. The Rule focuses on the broker’s action in facilitating the purchase, not on

15 the entity or person who may have derived an ultimate financial benefit from the investment. See 16 Reno, 747 F3d at 741; King, 386 F.3d at 1370 (noting that the focus is on whether “the investor 17 deals with the [FINRA] member”). Ultimately, Defendants’ argument would lead to rather 18 absurd results. For example, under Defendants’ theory, if a person invested through a registered 19 broker in a publicly-traded stock, the investor would be a “customer” under FINRA Rule 12200 20 of the company whose stock they purchased. That makes little sense, particularly given that 21 FINRA “has the authority to exercise comprehensive oversight over all securities firms that do 22 business with the public,” not the ultimate investments in which the public invests. Reno, 747 23 F.3d at 737 (emphasis added). Focusing here on who actually sold the investments in Horizon,

24 1 the record shows that it was Mooney who facilitated and caused the investments to occur, not 2 Woods. He was the investment advisor to both sets of Defendants and earned his fees and 3 commissions in so doing. (Mooney Dep. at 52, 58.) So while Woods benefitted from the 4 investments, he has not been shown to have any active role in the actual purchases. Without such

5 evidence, the Court remains unconvinced that Defendants qualify as purchasers of commodities 6 from Woods, as is required to be a “customer” under the FINRA rule. 7 The Court therefore GRANTS Oppenheimer’s Motion and DENIES Defendants’ Motion. 8 Oppenheimer is entitled to complete relief on declaratory judgment action, and DECLARES that 9 Oppenheimer has no obligation to arbitrate any and all claims Defendants asserted or could have 10 asserted against Oppenheimer in the FINRA arbitration Mitchell v. Oppenheimer & Co. Inc., 11 FINRA Arb. No. 21-02818.. 12 D. Permanent Injunction 13 The Court finds that Oppenheimer is entitled to a permanent injunction barring 14 Defendants from pursuing their claims in a FINRA arbitration.

15 “‘[A] plaintiff seeking a permanent injunction must satisfy a four-factor test before a 16 court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable 17 injury; (2) that remedies available at law, such as monetary damages, are inadequate to 18 compensate for that injury; 3) that, considering the balance of hardships between the plaintiff and 19 defendant, a remedy in equity is warranted; and (4) that the public interest would not be 20 disserved by a permanent injunction.’” Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 21 156–57 (2010) (quoting eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006)). 22 First, without a permanent injunction, Oppenheimer will suffer an irreparable injury that 23 cannot be compensated through other remedies available at law. First, Oppenheimer will be

24 1 irreparably harmed if it is forced to spend money and human resources on claims it should not 2 have to arbitrate and for which it cannot recover the costs. “Typically, monetary harm does not 3 constitute irreparable harm.” Calif. Pharmacists Ass'n v. Maxwell–Jolly, 563 F.3d 847, 852 (9th 4 Cir. 2009), vacated on other grounds sub nom. Douglas v. Indep. Living Ctr. of So. Calif., Inc.,

5 565 U.S. 606 (2012). But time and resources spent in arbitration constitute irreparable harm 6 where neither the arbitration agreement nor the Arbitration Act allows for monetary awards of 7 attorneys’ fees and costs. Maryland Cas. Co. v. Realty Advisory Bd. on Lab. Rels., 107 F.3d 979, 8 985 (2d Cir. 1997). There is no evidence presented that Oppenheimer could recover its fees or 9 costs if successful in the arbitration. And it is uncontroverted that Oppenheimer will incur 10 additional costs in defending the arbitration against all five claimants instead of just one. As 11 such, this is an irreparable harm. Second, Oppenheimer would also be irreparably injured if it is 12 forced to arbitrate when it does not have to. Forcing a party to arbitrate may cause an irreparable 13 injury if the party being compelled is not required to arbitrate, even if the arbitration award can 14 be set aside. McLaughlin Gormley King Co. v. Terminix Int’l Co., L.P., 105 F.3d 1192, 1194

15 (8th Cir. 1997). Indeed, “‘several courts have held that forcing a party to arbitrate a dispute that it 16 did not agree to arbitrate constitutes per se irreparable harm.” Morgan Keegan & Co. v. 17 McPoland, 829 F. Supp. 2d 1031, 1036 (W.D. Wash. 2011) (quoting Chicago Sch. Reform Bd. 18 of Trs. v. Diversified Pharm. Servs., Inc., 40 F. Supp. 2d 987, 996 (N.D. Ill. 1999)). 19 Second, the equities here favor Oppenheimer. Forcing a party to engage in arbitration 20 where that party is not bound to arbitrate serves no equitable purpose. If Oppenheimer is not 21 bound to arbitrate Defendants’ claim, then it would be inequitable to force them to do so. And 22 Defendants have not identified any particularly adverse consequence that will result from 23 issuance of the permanent injunction.

24 1 Third, there is no public interest in compelling Oppenheimer to arbitrate if it does not 2 have to. See NYLIFE Sec., LLC v. Duhame, No. 20-CV-07413-JSC, 2020 WL 7075599, at *4 3 (N.D. Cal. Dec. 3, 2020). While the FINRA rules are intended to help investors, they should not 4 be applied in a manner that would coerce FINRA members to arbitrate claims when they do not

5 have to. Accordingly, the Court finds this factor this favors Oppenheimer. 6 Having considered the relevant factors, the Court finds that Oppenheimer is entitled to a 7 permanent injunction. The Court therefore PERMANENTLY ENJOINS Defendants from 8 arbitrating against Oppenheimer any claims they asserted or could have asserted against 9 Oppenheimer in the FINRA arbitration Mitchell v. Oppenheimer & Co. Inc., FINRA Arb. No. 10 21-02818. 11 CONCLUSION 12 Oppenheimer has demonstrated that Defendants are not “customers,” as that term is 13 defined in FINRA Rule 12200. As such, Oppenheimer is entitled to the declaratory relief and 14 permanent injunction they seek. The Court GRANTS Oppenheimer’s Motion for Summary

15 Judgment and DENIES Defendants’ Motion for Summary Judgment. The Court DECLARES 16 that Oppenheimer has no obligation to arbitrate any and all claims Defendants asserted or could 17 have asserted against Oppenheimer in the FINRA arbitration Mitchell v. Oppenheimer & Co. 18 Inc., FINRA Arb. No. 21-02818. And the Court PERMANENTLY ENJOINS Defendants from 19 arbitrating against Oppenheimer any claims they asserted or could have asserted against 20 Oppenheimer in the FINRA arbitration Mitchell v. Oppenheimer & Co. Inc., FINRA Arb. No. 21 21-02818. 22 \\ 23 \\

24 1 The clerk is ordered to provide copies of this order to all counsel. 2 Dated April 5, 2024. A 3 4 Marsha J. Pechman United States Senior District Judge 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23