21

- 3069

- cv Dowe v. Leeds, Morelli and Brown

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT ’ S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WI TH THE NOTATION “ SUMMARY ORDER “ ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, 1 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the 2 City of New York, on the 1 4 t h day of J u n e , two thousand twenty

- three

. 3 4 PRESENT: BARRINGTON D. PARK ER, 5 GERARD E. LYNCH, 6 RAYMOND J. LOHIER, JR., 7 Circuit Judges

. 8

------------------------------------------------------------------ 9 MAUREEN DOWE, individually and on behalf 10 of those Class Members similarly situated , ELVIE 11 MOORE, ESTHER BUCKRAM , 12 13 Plaintiff s

- Appellants , 14 15

v. No. 21

- 3069

- cv 16 17 LEEDS, MORELLI AND BROWN PC, LEEDS, 18 MORELLI AND BROWN LLP, LENARD LEEDS, 19 STEVEN A. MORELLI, JEFFREY K. BROWN, 20 ERIC SCHWIMMER, LEEDS BROWN LAW P.C., 21 LEEDS AND MORELLI, PC; PRUDENTIAL 22 FINANCIAL INC., parent and successor in interest 232 to PRUDENTIAL SECURITIES INC ORPORATED , 1 2 Defendants

- Appellees

. * 3

------------------------------------------------------------------ 4 FOR PLAINTIFFS

- APPELLANTS : M AX F OLKENFLIK , Folkenflik & 5 McGerity, New York, NY 6 7 FOR DEFENDANTS

- APPELLEES V INCENT A. S AMA , Seyfarth 8 SCHWIMMER AND PRUDENTIAL Shaw LLP , New York, NY 9 FINANCIAL INC.: 10 11 FOR OTHER DEFENDANTS

- C HERYL F. K ORMAN ( Janice J. 12 APPELLEES : DiGennaro, Shari Claire Lewis , 13 on the brief ), Rivkin Radler LLP, 14 Uniondale, N Y 15 16 Appeal from a judgment of the United States District Court for the 17

Southern District of New York ( Denise L. Cote , Judge )

. 18

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, 19
AND DECREED that the judgment of the District Court is AFFIRMED. 20

Plaintiffs Maureen Dowe, Elvie Moore, and Esther Buckram appeal from a 21

November 16, 2021 judgment of the United States District Court for the Southern 22
District of New York (Cote, J. ) granting a motion to compel arbitration as to both 23

Prudential Financial, Inc. , as successor in interest to Prudential Securities Inc. 24
(“PSI”), an d Eric Schwimmer , a PSI officer (collectively , the “Prudential 25

* The Clerk of Court is directed to amend the caption as set forth above.3 Defendants”) , and granting a motion to dismiss under Federal Rule of Civil 1
Procedure 12(b)(6) as to the law firm Leeds, Morelli and Brown P

. C

. , its alt er 2
egos, and its named attorneys (collectively , the “LMB Defendants ”)

. The 3
Plaintiffs challenge both rulings

. We assume the parties’ familiarity with the 4
underlying facts and the record of prior proceedings, to which we refer only as 5

necessary to explain our decision to affirm. 6
Our brief recitation of the factual background is based on the allegations in 7
the Plaintiffs’ second amended complaint. At various times in the late 1990s 8

each of the Plaintiffs engaged Leeds & Morelli, P.C. (“LMB”) to brin g racial 9

discrimination claims against their employer, PSI . Unbeknownst to the 10

Plaintiffs, however, LMB separately agreed with PSI to ensure that the Plaintiffs 11
would “go through a fake mediation process, called ‘binding mediation,’” in 12
which they would s ettle their claims for much less than they were worth . App’x 13
237. In exchange, LMB received additional payments from PSI. All of the 14

Plaintiff s ultimately settled their claims with PSI and, on the advice of LMB , were 15
presented with and signed the signat ure page of a settlement agreement between 16

LMB and PSI without being presented with the remainder of the agreement. 17

On December 15, 2016, Dowe learned of the undisclosed payment 184 arrangement between LMB and PSI . On December 12, 2018, t he Plaintiffs filed 1
this lawsuit. All of the Defendants moved to compel arbitration, or in the 2

alternative , as relevant here, to dismiss the complaint on statute of limitations 3
grounds . The District Court granted the Prudential Defendants’ motion to 4
compel arbitration. See Dowe v. Leeds Brown Law, P.C. , 419 F. Supp. 3d 748, 5
759 (S.D.N.Y

. 2019). And although it denied the LMB Defendants’ motion to 6
compel arbitration, it granted the ir motion to dismiss the complaint because it 7

fo und that the statute of limitations barred the Plaintiffs’ claims. Id. at 759, 763. 8
On appeal, the Plaintiffs argue that the District Court erred in granting the 9
motion to compel arbitration because the Plaintiffs never validly consented to 10

arbitration with PSI and never form ed a valid contract with PSI . The Plaintiffs 11
further argue that the District Court should not have d is missed their claims as 12

time

- barred because neither the settlement agreement nor subsequent news 13

coverage or litigation provided them with notice that LMB had probably 14

defrauded them in a manner such that they could have, by “exercis[ing] 15
reasonable dilig ence,

. . . discovered the basis for [their] claims.” Epiphany 16
Cmty. Nursery Sch. v. Levey , 94 N.Y.S.3d 1, 7 (1st Dep’t 2019). In the 17
alternative, the Plaintiffs argue that the LMB Defendants are equitably estopped 185 from raising the statu t e of limitations defense. 1
The District Court considered and rejected each of these arguments. 2

H aving considered the parties’ arguments on app eal and reviewed the District 3
Court’s dismissal of the Plaintiffs’ complaint de novo , see Alix v. McKinsey & 4

Co., Inc. , 23 F.4th 196, 202 (2d Cir. 2022), we affirm substantially (except as noted 5
in footnote 1) for the reasons stated by the District Court. A s the District Court 6
correctly determined, s ubsequent news coverage and litigation placed the 7

P laintiffs on inquiry notice prior to 2016 under New York law

. 1 We also agree 8
with the District Court’s conclusion that the LMB Defendants are not equi tably 9
estopped from raising the statute of limitations defense. Finally, as for the 10

arbitration clause, t he District Court correctly determined that the P laintiffs 11

claimed fraud in the inducement of the settlement agreements generally rather 12

than “ fraud in the inducement of the arbitration clause itself, ” and that their 13

claim was therefore for “ arbitrator s to decide. ” Dowe , 419 F. Supp. 3d at 759 14

1 The District Court separately held that LMB’s advice to the Plaintiffs that they sign the settlement agreement without having read it in full , despite the fact that the signature page indicated that the signor had in fact read the agreement , placed the Plaintiffs on inquiry notice of LMB’s fraud

. E ven if the P laintiffs had read the full agreement, however, we are not persuaded that they would have been on inquiry notice, as nothing in th e agreement could have reasonably alerted a reader to the secret payment arrangement

.6 (quot ing Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440, 445 (2006) )

. 1
We have considered the parties’ remaining arguments not addressed in 2

this order and conclude that they are without merit. For the foregoing reasons, 3
the judgment of the District Court is AFFIRMED. 2 4

FOR THE COURT: 5 Catherine O’Hagan Wolfe, Clerk of Court 6

2 While this appeal was pending, one of the appellees, Lenard Leeds, died. In a series of letters, the Plaintiffs requested that we substitute Leeds’s estate for him and the LMB Defendants requested that we dismiss any claim against Leeds. Because we affi rm , however,

no ne of the D efendants

- A ppellees are subject to liability . Construing the requests as motions under Federal Rule of Appellate Procedure 43(a)(1), the motions are denied as moot

. See Fed. R. App. P. 43(a)(1) (“ If a party dies after a notice o f appeal has been filed or while a proceeding is pending in the court of appeals,

. . . [and i] f the decedent has no representative, any party may suggest the death on the record, and the court of appeals may then direct appropriate proceedings. ”).