Case ID: f-appx_566/html/0032-01.html
Source: Caselaw Access Project
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Date Created: 2024-08-24T03:29:51.129683

SUNTRUST BANKS, INC., Suntrust Robinson Humphrey, Inc., Plaintiffs-Appellees, v. TURNBERRY CAPITAL MANAGEMENT LP, Turnberry Master, Ltd, Defendants-Appellants.
    No. 13-2075-cv.
    United States Court of Appeals, Second Circuit.
    May 15, 2014.
    
      Kevin J. O’Brien, Harris, O’Brien, St. Laurent & Houghteling LLP, New York, NY, for Appellants.
    Cory Hohnbaum, (David G. Giudry, on the brief), King & Spalding LLP, Charlotte, NC, for Appellees.
    PRESENT: BARRINGTON D. PARKER, PETER W. HALL, Circuit Judges, KIYO A. MATSUMOTO, District Judge.
    
      
       The Honorable Kiyo A. Matsumoto, of the United States District Court for the Eastern District of New York sitting by designation.
    
   SUMMARY ORDER

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

Defendants-Appellants Turnberry Capital Management LP, a hedge fund, and Turnberry Master, Ltd., the master investment vehicle for the hedge fund, (collectively, “Turnberry”) appeal the May 17, 2013 judgment of the district court granting a permanent injunction in favor of Plaintiffs-Appellees SunTrust Banks, Inc. (“STB”) and SunTrust Robinson Humphrey, Inc. (“STRH”) (collectively, “Sun-Trust”) enjoining Turnberry from proceeding with the arbitration proceedings it commenced against SunTrust before the Financial Industry Regulatory Authority (“FINRA”). We assume the parties’ familiarity with the underlying facts, the procedural history, and the issues presented for review.

We review the district court’s grant of a permanent injunction for abuse of discretion. Roach v. Morse, 440 F.Bd 53, 56 (2d Cir.2006). We review de novo the district court’s determination as to the issue of arbitrability and review its factual findings for clear error. See id.; John Hancock Life Ins. Co. v. Wilson, 254 F.3d 48, 57 (2d Cir.2001).

Under FINRA Rule 12200, “[pjarties must arbitrate a dispute under the Code if: [ajrbitration ... is ... [requested by the customer; [t]he dispute is between a customer and a member or associated person of a member; and [t]he- dispute arises in connection with the business activities of the member or the associated person.” See FINRA R. 12200. The main issue on appeal is whether Turnberry is a customer of STRH within the meaning of FINRA Rule 12200 and thus entitled to arbitrate its dispute with STRH. The district court properly concluded that it is not.

Turnberry asserts that the district court defined the term “customer” too narrowly by requiring Turnberry to have engaged in “the direct acquisition of goods or services” as a prerequisite to being a customer. We are not persuaded by Turnberry’s characterization of the district court’s decision. In determining whether Turnberry was a “customer,” the district court not only relied on the fact that Turnberry had not acquired goods or services from STRH, but it also reviewed other indicia of a customer relationship, such as, (a) the receipt of financial advice, (b) the existence of a brokerage agreement, (c) the payment of a fee, and (d) the utterance of statements that could have been perceived by Turnberry as establishing a customer relationship. See UBS Fin. Servs. Inc. v. W. Va. Univ. Hosps., Inc., 660 F.3d 643, 650-52 (2d Cir.2011) (holding that advice given by the FINRA member and a fee paid by the investor to the FINRA member indicates a customer relationship); Citigroup Global v. VCG Special Opportunities Master Fund Ltd., 598 F.3d 30 (2d Cir.2010) (affirming the district court’s finding); Bensadoun v. Jobe-Riat, 316 F.3d 171, 177 (2d Cir.2003) (noting that where a FINRA member or its associated person is somehow “complicit in a fraudulent scheme that involved misleading the [investors into believing that they were customers of [that FINRA member] ... then the [investors were customers for the purposes of the [FINRA] code”). The district court found no such indicia of a customer relationship — a finding we determine is not clearly erroneous — and correctly held that Turn-berry is not a customer of STRH under FINRA Rule 12200. Turnberry’s remaining arguments are without merit.

The judgment of the district court is hereby AFFIRMED. 
      
      . FINRA Rules available at http://finra. complinet.com/en/display/display_(l)6dmain. html?rbid=2403 & element_(l)6did=4105 (last visited Apr. 12, 2014).
     
      
      . Turnberry conceded below that STB is not a FINRA member and thus may not be compelled to arbitrate. SunTrust Banks, Inc. v. Turnberry Capital Mgmt. LP, 945 F.Supp.2d 415, 418 n. 3 (S.D.N.Y.2013).