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Murray v. UBS Securities, LLC

United States District Court, S.D. New York

April 1, 2014

TREVOR MURRAY, Plaintiff,
v.
UBS SECURITIES, LLC AND UBS AG, Defendants.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge.

On January 27, 2014, this Court issued an order (the "January 27 Order") granting Defendants' motion to compel arbitration of this action, and staying the action pending resolution of that arbitration. The Court's decision to stay the action effectively prevented the parties from appealing the January 27 Order. Plaintiff now moves, pursuant to 28 U.S.C. § 1292(b) and Federal Rule of Appellate Procedure 5(a)(3), for an order amending the January 27 Order to permit Plaintiff to petition the United States Court of Appeals for the Second Circuit for an immediate interlocutory appeal of certain sections of that Order. Because Plaintiff has not satisfied the statutory requirements for Section 1292(b) certification, his motion for amendment and certification for interlocutory appeal is denied.

BACKGROUND[1]

A. The Underlying Litigation

On August 2, 2012, Trevor Murray filed this action against UBS Securities, LLC, and UBS AG (collectively, "Defendants") under 15 U.S.C. § 78u-6(h), the anti-retaliation provision (the "Anti-Retaliation Provision") of the Dodd-Frank Wall Street Reform and Consumer Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376 ("Dodd-Frank"). (Dkt. #1). In short, Plaintiff alleged that Defendants violated the Anti-Retaliation Provision in terminating Plaintiff's employment after, and as a result of, Plaintiff making certain disclosures protected under Section 806 of the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 ("Sarbanes-Oxley"). ( See id. )

B. The Motion to Compel Arbitration and the January 27 Order

On June 14, 2013, Defendants moved pursuant to the Federal Arbitration Act (the "FAA"), 9 U.S.C. §§ 1-14, to compel Plaintiff to arbitrate the claim raised in his Complaint in accordance with Plaintiff's employment agreement with UBS AG (the "Employment Agreement") and with the Uniform Application for Securities Industry Registration or Transfer ("Form U-4") that Plaintiff completed as a condition of his employment. (Dkt. #27). In Plaintiff's opposition, filed on July 19, 2013, he argued that (i) his claim - which he contended arose under Sarbanes-Oxley, and not the Anti-Retaliation Provision - was not arbitrable because the Employment Agreement and Form U-4 exempted Plaintiff's claim from arbitration, and (ii) mandatory arbitration of his action was precluded as a matter of law under Sarbanes-Oxley's prohibition of predispute arbitration agreements. (Dkt. #34). The motion was fully submitted on August 2, 2013, when Defendants filed their reply. (Dkt. #35).

The Court's January 27 Order, as noted, granted Defendants' motion to compel arbitration of this action and stayed the action pending resolution of the arbitration. Murray v. UBS Sec., LLC, No. 12 Civ. 5914 (KPF), 2014 WL 285093, at *14 (S.D.N.Y. Jan. 27, 2014). In so doing, the Court issued two rulings that Plaintiff seeks to appeal. First, in Section 2(b)(i) of the Order, the Court held that Plaintiff's claim arises under the Anti-Retaliation Provision, which does not include a prohibition against predispute arbitration agreements, and not under Sarbanes-Oxley. Id. at *9. As support, the Court noted that Plaintiff's Complaint recited only a violation of the Anti-Retaliation Provision; it stated that the Court's jurisdiction arose under the Anti-Retaliation Provision; and it demanded the enhanced remedy only available under the Anti-Retaliation Provision. Id. Further proof that Plaintiff had not brought a claim under Sarbanes-Oxley included the fact that Plaintiff had not exhausted his statutorily mandated administrative remedies for a Sarbanes-Oxley claim, as evidenced by his pending claim with the Occupational Safety and Health Administration of the Department of Labor ("OSHA"). Id. Second, in Section 2(b)(ii) of the Order, the Court held that Plaintiff's claim was not within the exceptions in the parties' arbitration agreements (i.e., the Employment Agreement and Form U-4) because those agreements precluded arbitration of claims under Sarbanes-Oxley, which, the Court had just held, Plaintiff's was not. Id. at *10.

The Court stayed, rather than dismissed, the action pending resolution of the arbitration, in accordance with the Second Circuit's admonitions in Salim Oleochemicals v. M/V Shropshire, 278 F.3d 90, 93 (2d Cir. 2002) (instructing that "[d]istrict courts should continue be mindful of this liberal policy favoring arbitration agreements, " and that "unnecessary delay of the arbitral process through appellate review is disfavored"). Murray, 2014 WL 285093, at *14. Because the Court's decision to stay the action precluded the parties from appealing the January 27 Order, on February 27, 2014, Plaintiff filed the pending motion requesting that the Court amend the Order to include language that would permit Plaintiff to petition the Second Circuit for an immediate interlocutory appeal of Sections B(2)(i) and (ii) of the Order. (Dkt. #37). Defendant filed an opposition on March 3, 2014 (Dkt. #42), and on March 7, 2014, the motion was fully submitted when Plaintiff filed his reply (Dkt. # 43).[2]

DISCUSSION

A. Applicable Law

Section 16(b) of the FAA provides generally that "an appeal may not be taken from an interlocutory order... granting a stay of any action under section 3 of this title, " 9 U.S.C. § 16(b)(1), or "compelling arbitration under section 206 of this title, " id. § 16(b)(3). The Second Circuit has recognized that this provision "furthers [the FAA's] aim of eliminating barriers to arbitration by promoting appeals from orders barring arbitration and limiting appeals from orders directing arbitration." Ermenegildo Zegna Corp. v. Zegna, 133 F.3d 177, 180 (2d Cir. 1998) (internal quotation marks and brackets omitted).

Section 16(b) permits appellate review of orders that a district court certifies for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). See 9 U.S.C. § 16(b) ("Except as otherwise provided in section 1292(b) of title 28, an appeal may not be taken from an interlocutory order...."); 28 U.S.C. § 1292(b) (noting that, upon certification as an interlocutory appeal from the district court, the relevant Court of Appeals may, " in its discretion, permit an appeal to be taken from such order" (emphasis added)); see generally Accenture LLP v. Spreng, 647 F.3d 72, 74-75 (2d Cir. 2011) (concluding that the Second Circuit lacked jurisdiction to review an order refusing to enjoin arbitration that the district court had not certified for immediate interlocutory review). Under Section 1292(b), a district court may certify an order for interlocutory appeal when it is "of the opinion that such order [i] involves a controlling question of law [ii] as to which there is substantial ground for difference of opinion and [iii] that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b); see also Casey v. Long Island R.R. Co., 406 F.3d 142, 145-46 (2d Cir. 2005).[3] Section 1292(b) must be strictly construed because "the power to grant an interlocutory appeal must be strictly limited to the precise conditions stated in the law." Klinghoffer v. S. N.C. Achille Lauro, 921 F.2d 21, 25 (2d Cir. 1990) (internal quotation marks and brackets omitted). The movant bears the burden of demonstrating that all three of the substantive criteria are met. See Casey, 406 F.3d at 146 ("[Section 1292(b)], by its terms, thus imposes both procedural and substantive requirements on a would-be appellant.").

"It is a basic tenet of federal law to delay appellate review until a final judgment has been entered." Koehler v. Bank of Bermuda LTD, 101 F.3d 863, 865 (2d Cir. 1996). In that regard, "federal practice strongly disfavors discretionary interlocutory appeals [as they] prolong judicial proceedings, add delay and expense to litigants, burden appellate courts, and present issues for decisions on uncertain and incomplete records, tending to weaken the precedential value of judicial opinions.'" S.E.C. v. Straub, No. 11 Civ. 9645 (RJS), 2013 WL 4399042, at *2 (S.D.N.Y. Aug. 5, 2013) (quoting In re World Trade Ctr. Disaster Site Litig., 469 F.Supp.2d 134, 144 (S.D.N.Y. 2007)); see also Glatt v. Fox Searchlight Pictures, Inc., No. 11 Civ. 6784 (WHP), 2013 WL 5405696, at *1 (S.D.N.Y. Sept. 17, 2013) ("Interlocutory appeals are strongly disfavored in federal practice"). The Second Circuit has further emphasized that Section 1292(b) certification should be "strictly limited ...


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