[T]he causes of action relate to the allegedly unauthorized purchase and/or sale of various securities in Claimants' account, including, but not limited to, multiple auto-callable structured notes and various other securities for which Respondent JPM was a market maker, including Apple stock, as well as initial public offerings (IPOs) and follow-on offerings (FPOs).
[B]everley's granddaughter, Alexis Schottenstein ("Alexis"), has stoked the controversy based on her dissatisfaction with her treatment in Beverley's estate plan. [DE 1, p. 3]. Petitioners in this federal action believe that Alexis helped develop Beverley's claims against JP Morgan and themselves. Id. Beverley worked at Wells Fargo from 2009-2013 in its Largo, Florida bank branch. Id. Wells Fargo terminated Alexis in 2013 allegedly due to numerous customers' complaints that Alexis enrolled their respective Wells Fargo accounts in online statement delivery without the customers' knowledge and/or authorization. Id. So Petitioners in this federal action issued the subpoenas to Alexis Schottenstein and Wells Fargo requiring them to appear at the Arbitration, testify and produce documents.Beverley (the Claimant in the pending Arbitration) did not oppose Petitioners' Motion for the Alexis Schottenstein Trial Subpoena, but Alexis did object. [DE 20, p. 4]. On or about September 15, 2020, a majority of the Arbitration Panel signed the trial subpoena directed to Alexis. Id. On or about October 8, 2020, Petitioners provided the executed trial subpoena to Alexis Schottenstein's Florida counsel, and counsel advised Petitioners that Alexis would not comply with the Subpoena. Id.On or about June 24, 2020, Petitioners filed a Motion for Subpoena for the Production of Documents from Wells Fargo Pursuant to the FINRA Code of Arbitration Procedure. [DE 20, p. 5]. Beverley opposed the Motion, but the Arbitration Chairperson deemed the documents Petitioners sought from Wells Fargo to be relevant to Petitioners' defenses, and the Arbitration Chairperson executed a Subpoena for Production to Wells Fargo. Id. On or about July 29, 2020, Petitioners served Wells Fargo with the Wells Fargo Subpoena through its registered agent in Florida. Id. Shortly thereafter, Wells Fargo filed its objections. Id. Petitioners later requested that the Arbitration Panel execute a trial subpoena directed to the records custodian of Wells Fargo. Id. On or about September 23, 2020, the Arbitration Chairperson overruled the Wells Fargo Objections, and a majority of the Arbitration Panel executed a trial subpoena for the testimony and production of documents from the Wells Fargo records custodian. Id. On or about October 8, 2020, Petitioners provided the executed Wells Fargo Trial Subpoena to Wells Fargo's counsel. Id. at p. 6. Wells Fargo's counsel advised Petitioners that Wells Fargo would not comply with the Subpoena. Id.
SIDE BAR: By way of recap:
- Alexis is Beverley's granddaughter
- Beverley worked at Wells Fargo from 2009-2013
- Wells Fargo terminated Alexis in 2013
- Avi and Evan Schottenstein issued subpoenas to Alexis and Wells Fargo requiring their appearance at the FINRA arbitration and their production of documents
- Beverley did not oppose the subpoenas
- Alexis opposed the subpoena
- Wells Fargo refused to comply with its subpoena
- By a 2:1 vote, the FINRA arbitrators directed Alexis and Wells Fargo to comply with the subpoenas
(a)The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between --(1) citizens of different States;. . .
Here, Petitioners have conceded that there is not complete diversity of the parties in this subpoena enforcement proceeding because Respondent Alexis Schottenstein and Petitioners Avi and Evan Schottenstein are all citizens of New York. Thus, there is not complete diversity of parties in this federal subpoena enforcement proceeding. Moreover, Petitioners seemingly conceded at the hearing that the amount in controversy in this subpoena enforcement proceeding does not exceed $75,000; at the very least, Petitioners have made no effort to establish the value of the amount in controversy in this federal court proceeding. Instead, Petitioners argue that the relevant inquiry for determination of diversity jurisdiction is the amount in controversy and the state citizenship of the parties in the pending Arbitration, rather than in this federal court subpoena enforcement proceeding. That is, Petitioners argue that this Court should ignore the diversity problems which exist in this federal subpoena enforcement proceeding and instead look through to the Arbitration and determine diversity jurisdiction based on the parties and amount in controversy in the Arbitration.The Court rejects Petitioners' argument that the Court should ignore the lack of diversity jurisdiction in this subpoena enforcement proceeding and instead look to the Arbitration to determine diversity jurisdiction. Petitioners suggest that this is a "gray area." [DE 24, p. 2]. However, it is clear that the Arbitration is not before this Court; only the subpoena enforcement action is before this Court. There is an abundance of case law that holds that the relevant inquiry is not whether the parties to the underlying arbitration are diverse, but rather whether the parties to the federal court action are diverse. This case law also holds that courts should determine whether the amount in controversy in the federal court action, and not in the underlying arbitration, exceeds $75,000. . . .
FINRA Code of Arbitration Procedure for Customer Disputes / Rule 12104: Effect of Arbitration on FINRA Regulatory Activities; Arbitrator Referral During or at Conclusion of Case. . .(e) At the conclusion of an arbitration, any arbitrator may refer to FINRA for investigation any matter or conduct that has come to the arbitrator's attention during and in connection with the arbitration, either from the record of the proceeding or from material or communications related to the arbitration, which the arbitrator has reason to believe may constitute a violation of the rules of FINRA, the federal securities laws, or other applicable rules or laws.
[T]hey had reached an "oral agreement concerning the amount of a settlement sum to be paid by [R]espondents to [P]etitioner to resolve [the Petition and Motion to Vacate]." Id. at 1. The Stipulated Motion stated that a "written settlement agreement [would] be prepared, revised, agreed upon, and executed by March 24, 2021." Id. The Stipulated Motion further stated that, if "[R]espondents fail[ed] to timely make the settlement payment, the settlement agreement [would] be null and void and [the Parties would] return to their present postures and positions in [the] action." Id. at 1-2. However, if Respondents timely made the settlement payment, Petitioner and Respondents would "stipulate to the voluntary dismissal of [the] proceeding." Id. at 2.
On June 29, 2021, Respondents filed the instant Motion to Enforce, arguing that Petitioner and Respondents settled the case on two occasions - on March 18, 2021, and on May 6, 2021 - and requesting that the Court enforce the purported settlement. See ECF No.  at 1. On July 16, 2021, Petitioner filed her Response, arguing that Petitioner and Respondents did not reach a settlement agreement on either date. See generally ECF No. . On July 28, 2021, Respondents filed their Reply. See generally ECF No. .On January 14, 2022, Magistrate Judge Otazo-Reyes issued her R&R, recommending that the Motion to Enforce be denied. See ECF No. . The R&R states that: (1) the Parties did not reach an enforceable, oral settlement agreement on March 6, 2021; (2) the Parties did not reach an enforceable, oral settlement agreement on May 6, 2021; and (3) Mr. Guy Burns' ("Mr. Burns") interactions with Mr. Peter Fruin ("Mr. Fruin") did not bind Petitioner. See id. On January 28, 2022, Respondents filed their Objections, arguing that Magistrate Judge Otazo-Reyes erred because: (1) Mr. Burns did have the authority to bind Petitioner; (2) Mr. Burns did not tell Respondents' Counsel that his authority was limited; (3) Mr. Patrick Lannon ("Mr. Lannon") did authorize the sending of Petitioner's April 30 Settlement Draft; (4) the Court should receive additional evidence on the authority of Petitioner's Counsel; (5) Magistrate Judge Otazo-Reyes did not incorporate case law recognizing Florida's strong policy favoring settlements; (6) the R&R's conclusions on attorney authority will discourage, rather than encourage, settlements; and (7) Respondents' March 19 Settlement Draft did not omit a penalty for non-payment. See generally ECF No. .On January 28, 2022, Respondents also filed the instant Motion for Mediation. ECF No. . Respondents request that the Court refer this case to mediation and stay all deadlines while such mediation takes place. See id. at 1. Petitioner opposes the Motion for Mediation, arguing that mediation will serve no legitimate purpose other than to delay the case and force Petitioner to expend additional resources. See ECF No. . On February 18, 2022, Respondents' Reply followed. See ECF No. .
at Pages15 - 16 of the SDFL 2022 OrderThird, the Court is not persuaded by Respondents' contention that the Court should require mediation because Respondent Evan Schottenstein will have to declare bankruptcy if the Court does not require mediation. Petitioner is the master of her case, and she has decided to oppose mediation despite being aware of the risks of an Order confirming the arbitration award. The Court sees no reason to force Petitioner to take an alternative course of action based on Respondents' representation of Petitioner's best interest. As alluded to above, Petitioner may, of course, settle the case outside of mediation and avoid Evan Schottenstein's bankruptcy if she chooses to do so, and court-annexed mediation is not required for further settlement negotiations.Lastly, Respondents' argument that Petitioner has too many attorneys is not a proper ground to require mediation. Petitioner is free to choose who will represent her in this case, and the quality and quantity of her legal representation have no bearing on this Court's reasoning. As such, the Motion for Mediation is denied.
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