United States District Court, D. Delaware
T. Margolin, Esq., Gregory E. Stuhlman, Esq., Greenberg
Traurig LLP, Wilmington, Del.; Kenneth I. Schacter, Esq.,
Morgan Lewis & Bockius LLP, New York, N.Y., attorneys for
Plaintiff Merrill Lynch, Pierce, Fenner & Smith Inc.
J. Bellew, Esq., Cozen O'Connor, Wilmington, Del.; Eugene
L. Small, Esq., Small & Calvo, New York, N.Y., attorneys
for Plaintiffs J.P. Morgan Securities, LLC, JPMorgan Chase
Bank, N.A., Chase Bank USA, N.A., JP Morgan Chase & Co.,
and Rose Cohen.
E. Allinson III, Esq., Sullivan Hazeltine Allinson LLC,
Wilmington, Del.; Daniel J. Kornstein, Esq., Elizabeth
Saylor, Esq., Emery Celli Brinckerhoff & Abady LLP, New
York, N.Y., attorneys for Defendant.
Andrews, U.S. District Judge
case is about whether a party that chooses to litigate her
claims against one group of defendants is barred from
arbitrating related claims against a different group of
defendants. Presently before the Court are two requests for
preliminary injunctions against ongoing arbitrations and a
related request for a temporary restraining order. For the
following reasons, those requests are denied.
Jordan made many millions in home health care during the
1990s. She now contends her ex-husband and ex-business
partner, Raymond Mirra, along with several accomplices,
siphoned away much of those millions through fraud. From this
basic contention sprung at least two litigations and two
The Fraud Action
March 9, 2012, Jordan filed a complaint against Mirra in the
Southern District of New York claiming he defrauded her.
(Fraud Action D.I. I). That litigation was stayed from May 17,
2012 until February 19, 2015 while Jordan was on trial for
poisoning her eight-year-old son. (Fraud Action D.I. 23; 82).
In the interim, on December 8, 2014, the case was transferred
to the District of Delaware by joint stipulation of the
parties. (Fraud Action D.I. 68).
after the stay was vacated, on March 9, 2015, Jordan filed an
amended complaint adding three business and thirteen
individual defendants. (Fraud Action D.I. 84). One of the
added defendants was Patrick Walsh, a broker at Merrill
Lynch. On June 5, 2015, Walsh moved to dismiss the complaint
for failing to state a claim, or, in the alternative, to
compel arbitration. (Fraud Action D.I. 108). Dispositive
motions in that case are pending. In particular, the Court is
considering whether the claims are time-barred. (See D.I. 175
January 27, 2017, Jordan voluntarily dismissed Walsh. (Fraud
Action D.I. 188). This dismissal terminated his motion to
The RICO Action
December 23, 2013, in the District of Delaware,
Jordan filed a Racketeer Influenced and Corrupt
Organizations ("RICO") action against eight
business and eleven individual defendants. (RICO Action D.I.
1). On January 31, 2014, Jordan amended the complaint, adding
two more individual defendants, including Walsh. (RICO Action
was conducted in the RICO action starting in January 2015.
(See RICO Action D.I. 87 (scheduling order); 88 (initial
disclosures)). Merrill Lynch and J.P. Morgan Securities
("JPMS") both participated in third party discovery
in the RICO action. Merrill Lynch was served with two
requests to produce documents, information, or objects or to
permit inspection of premises and two subpoenas directed to
the same. (RICO Action D.I. 98, 99, 127, 128; see
also D.I. 152 (responding to subpoenas)). Merrill Lynch
was also served with and responded to a subpoena to testify.
(RICO Action D.I. 326, 332). JPMS was served with two
subpoenas to produce documents, information, or objects or to
permit inspection of premises. (RICO Action D.I. 151,
159). On January 22, 2015, Magistrate Judge
Sherry Fallon entered a protective order that covered
confidential documents produced by third parties. (RICO
Action D.I. 100). All of this discovery conducted in the RICO
action was "deemed to have been completed" in the
fraud action. (Fraud Action D.I. 166 at 2).
3, 2016, Judge Fallon issued a report and recommendation
recommending that the case be dismissed on statute of
limitations grounds. (RICO Action D.I. 457 at 29). On August
31, District Judge Sue Robinson adopted Judge Fallon's
recommendation and dismissed the action. (RICO Action D.I.
472). The dismissal is on appeal to the Third Circuit. (RICO
Action D.I. 473).
October 31, 2016, Jordan, together with The Hawk Mountain LLC
and Michelle E. Mitchell, filed a statement of claim against
Merrill Lynch, commencing a FINRA arbitration. (ML D.I. 7).
FINRA is a regulatory body for the financial industry that
also acts as an arbitration forum.
December 29, 2016, Jordan filed another statement of claim
with FINRA against several J.P. Morgan Chase entities along
with one employee, Rose Cohen. (JPM D.I. 7).
Motions for Injunctive Relief
January 13, 2017, Merrill Lynch moved for a temporary
restraining order and a preliminary injunction against Jordan
and The Hawk Mountain LLC to halt the ongoing FINRA
arbitration. (ML D.I. 1). On January 25, the Court issued a
temporary restraining order "to maintain the status
quo" and set an expedited briefing schedule on the
preliminary injunction request. (ML D.I. 18).
February 27, J.P. Morgan Securities, LLC. ("JPMS"),
JPMorgan Chase Bank, N.A., Chase Bank USA, N.A., JP Morgan
Chase & Co., and Rose Cohen filed their own action
seeking declaratory judgments that FINRA does not have
jurisdiction to arbitrate Jordan's claims against them
and that Jordan has waived her right to arbitrate. (JPM D.I.
2). The J.P. Morgan entities have moved for a temporary
restraining order and preliminary injunction on the same
grounds. (JPM D.I. 4).
following reasons, Merrill Lynch's motion for a
preliminary injunction (ML D.I. 1) and the J.P. Morgan
entities' motion for a temporary restraining order and a
preliminary injunction (JPM D.I. 4) are denied.
II. Standing Jordan argues that JPMorgan
Chase Bank ("JPMCB"), Chase Bank USA ("CB
USA"), and JP Morgan Chase & Co ("JPMCC")
lack standing to seek an injunction because they declined
arbitration. I agree.
to sue is a jurisdictional requirement under Article III of
the United States Constitution. Lujan v. Defs. of
Wildlife, 504 U.S. 555, 560 (1992). To establish
standing, a plaintiff must show it has suffered an
injury-in-fact. Id. An injury-in-fact ensures the
plaintiff has "a personal stake in the outcome...."
City of Los Angeles v. Lyons, 461 U.S. 95, 101
(1983) (internal quotation marks omitted). When a party seeks
prospective relief, such as an injunction, standing requires
an "injury or threat of injury" that is "real
and immediate, not conjectural or hypothetical."
Id. at 102 (internal quotation marks omitted).
"Past exposure to [the challenged] conduct does not in
itself show a present case or controversy... if unaccompanied
by any continuing, present adverse effects."
Id. (quoting O'Shea v. Littleton, 414
U.S. 488 (1974) (some alterations omitted)).
CB USA, and JPMCC are not FINRA members. (JPM D.I. 18-3).
Thus, they are not compelled by FINRA's rules to
participate in a FINRA arbitration. (Id.). JPMCB, CB
USA, and JPMCC exercised their option to decline arbitration.
(See id.; see also JPM D.I. 18-6, 19 at 5). As they
are not currently parties to an arbitration brought by
Jordan, they do not have standing to seek injunctive relief
against her. Any threat of future arbitration with Jordan is
only conjectural. Compare Lyons, 461 U.S. at 105
(finding fact that plaintiff had been choked by police in the
past insufficient to establish threat plaintiff would be
choked in the future).
arguing they do have standing, JPMCB, CB USA, and JPMCC rely
on J.P. Morgan Chase Bank, N.A. v. McDonald, 760
F.3d 646, 648-52 (7th Cir. 2014).
case, the McDonalds, the arbitration plaintiffs, were
customers of both JPMCB and JPMS, but brought an arbitration
against JPMS and two employees of JPMCB only; JPMCB itself
was not a party to the arbitration. The McDonalds held an
investment account with JPMCB and a brokerage account with
JPMS. The investment account with JPMCB was governed by a
contract that not only lacked an arbitration clause, but also
had a forum selection clause that required the parties to
bring any disputes arising from the contract in a state or
federal court in Cook County, Illinois. The crux of the
McDonalds' claim in arbitration was mismanagement of the
investment account by JPCMB.
Seventh Circuit found that JPMCB had standing to sue because
the arbitration against JPMS centered on a claim arising out
of the investment account held with JPCMB. Thus, the
arbitration violated the forum selection clause in the
contract between the McDonalds and JPCMB. It was the
violation of a contractual right that gave JPCMB standing.
See McDonald, 760 F.3d at 650 ("The
McDonalds' attempt to arbitrate appears to have violated
the clause of their contract with the Bank, and the
Bank's claim of the violation is enough to give the Bank
standing to bring this action to enforce the clause.").
CB USA, and JPMCC have not raised any argument that they are
seeking to enforce some contractual right they hold. Thus,
they do not have standing to seek injunctive ...