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McIntosh v. Morgan & Stanley

November 19, 2010

WALTER L. MCINTOSH AND DANIEL W. DUMONT, PLAINTIFFS,
v.
MORGAN & STANLEY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Thomas J. McAVOY Senior United States District Judge

DECISION and ORDER

Plaintiffs commenced the instant action against Defendants arising out of the alleged mishandling of certain financial accounts. Presently before the Court is Defendant Morgan Stanley's motion to compel arbitration.

I. FACTS

In 2002, Plaintiff Walter McIntosh opened an account with Morgan Stanley. Upon opening this account, McIntosh signed a Morgan Stanely IRA Adoption Agreement that stated, in bold letters:

I understand that this account is governed by a predispute arbitration clause which is set forth in Section 7.4 of the IRA document. I acknowledge receiving a copy of the predispute arbitration clause.

The "Disclosure Statement Morgan Stanley IRA" further provides that "[c]ontroversies arising in connection with your IRA are subject to arbitration under Section 7.4 of the Plan. Please see Section 7.4 for details." Section 7.4 of the Plan reads as follows:

(b) Arbitration of Controversies. The participant agrees that all controversies between the Participant or the Participant's Beneficiary, principals or agents and Morgan Stanley or its agents (including affiliated corporations) arising out of or concerning any of the Participant's accounts, orders or transactions, or the construction, performance or breach of this or any other agreement between the Participant and Morgan Stanley, whether entered into before or after the date an account is opened, shall be determined by arbitration only before the New York Stock Exchange, Inc.; the National Association of Securities Dealers, Inc.; or the Municipal Securities Rulemaking Board, as the Participant may elect. . . . The law of the State of New York will apply in all respects, including but not limited to determination of applicable statutes of limitation and available remedies.

McIntosh also signed the "Morgan Stanley Choice Client Service Agreement," in which he agreed that all controversies between you or your principals or agents and Morgan Stanley or its agents (including affiliated corporations) arising out of or concerning any of your accounts, orders or transactions, or the construction, performance, or breach of this or any other agreement between us, whether entered into before or after the date an account is opened, shall be determined by arbitration only. . . .

In 2005, Plaintiff Daniel Dumont opened an account with Morgan Stanley. Upon opening the account, Dumont signed the "Active Assets Account Application." That document stated that:

You understand that the Account is governed by the predispute arbitration clause located at pages 19 and 20 of the Active Assets Account Client Agreement. You acknowledge that you have received a copy of the Agreement, including the predispute arbitration clause. . . . "The Active Assets Account Client Agreement" provides, in pertinent part, as follows:

This Agreement contains a predispute arbitration clause. By signing an arbitration agreement the parties agree as follows:

a. All parties to this Agreement are giving up the right to sue each other 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. . . .

You*** agree that all controversies between you and your principals or agents and Morgan Stanley or any of its agents (including affiliated corporations) arising out of or concerning any of your accounts, orders or transactions, or the construction, performance, or breath of this or any other agreement between the parties, whether entered into before or after the date the Account is opened, shall be determined by arbitration only. . . .

In the "MoganStanely Choice Disclosures and Client Services Agreement," Dumont further agreed that: all controversies between you or your principals or agents and Morgan Stanley or its agents (including affiliated corporations) arising out of or concerning any of your account, orders or transactions, or the construction, performance or breach of this or any other agreement between the parties, whether entered into before or after the date the Account is opened, shall be ...


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