*

 The Clerk of Court is directed to amend the official

caption as set forth above.

10-3399

Ameriprise Financial Services, Inc. v. Beland

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3 August Term, 2011

4 (Argued: May 26, 2011 Decided: November 3, 2011)

5 Docket No. 10-3399

6 -------------------------------------

7 IN RE AMERICAN EXPRESS FINANCIAL ADVISORS SECURITIES LITIGATION

8 -------------------------------------

9 CAROL M. ANDERSON, LEONARD D. CALDWELL, DONALD G. DOBBS, KATHIE

10 KERR, SUSAN M. RANGELEY, PATRICK J. WOLLMERING, NARESH CHAND, on

11 behalf of himself and all others similarly situated, JOHN B.

12 PERKINS, ELIZABETH FLENNER, GALE D. CALDWELL, RICHARD T. ALLEN,

13 individually and on behalf of all others similarly situated,

14 Plaintiffs,

15 AMERICAN EXPRESS COMPANY, AMERICAN EXPRESS FINANCIAL CORPORATION,

16 AMERICAN EXPRESS FINANCIAL ADVISORS, INC., JAMES M. CRACCHIOLO,

17 Defendants,

18 AMERIPRISE FINANCIAL SERVICES, INC.,

19 Defendant–Appellee,

20 - v -

21 JOHN BELAND, ELAINE BELAND,

Class Members–Appellants.* 22

23 -------------------------------------
2

1 Before: POOLER, SACK, and LYNCH, Circuit Judges.

2 Appeal from a judgment entered by the United States

3 District Court for the Southern District of New York (Deborah A.

4 Batts, Judge) in favor of the defendant–appellee Ameriprise

5 Financial Services, Inc. In an arbitration before the Financial

6 Industry Regulatory Authority, the appellants -- a married couple

7 -- brought claims against the defendant–appellee for, inter alia,

8 breach of fiduciary duty, breach of contract, fraud, and

9 negligent misrepresentation related to the decline in value of

10 various personal financial assets managed by the

11 defendant–appellee. The defendant–appellee then moved before the

12 district court, which had retained exclusive jurisdiction over a

13 2007 class-action settlement, to enforce that settlement

14 agreement against the couple and order them to withdraw their

15 pending arbitration claims. The court, granting the

16 defendant–appellee's motion, determined that the appellants, who

17 had been class members in the prior class action, had expressly

18 released all of their arbitration claims by virtue of their

19 failure to timely opt out of the class-action settlement. But

20 the appellants' arbitration claims include "suitability" claims

21 that are preserved by a carve-out clause in the settlement

22 agreement, in addition to other claims falling outside the bounds

23 of the class settlement and release; therefore, the district

24 court erred in directing the appellants to withdraw their entire

25 arbitration complaint.
3

1 Accordingly, we AFFIRM in part and VACATE in part the

2 judgment of the district court, and we REMAND in part to the

3 district court for resolution consistent with this opinion. 

4 DAVID A. GENELLY, Vanasco Genelly &

5 Miller (James E. Judge, of counsel),

6 Chicago, Illinois, for Appellants.

7 DAVID W. BOWKER, Wilmer Cutler Pickering

8 Hale and Dorr LLP (Sue-Yun Ahn, of

9 counsel), Washington, D.C., for

10 Appellee.

11 SACK, Circuit Judge:

12 This appeal requires us to address several unsettled

13 issues concerning the effect of a class-action settlement on an

14 individual class member's preexisting right to arbitrate certain

15 claims. The appellants, John and Elaine Beland (the "Belands"),

16 brought various claims before Financial Industry Regulatory

17 Authority ("FINRA") arbitrators against Ameriprise Financial

18 Services, Inc. ("Ameriprise"), a financial-services company, for,

19 inter alia, breach of fiduciary duty, breach of contract, fraud,

20 and negligent misrepresentation related to the decline in value

21 of various financial assets owned by the Belands and managed by

22 Ameriprise. The claims are based on Ameriprise's alleged failure

23 to adhere to the Belands' conservative investment strategy and

24 its "steering" of the Belands' assets into mutual funds that

25 allowed Ameriprise to collect excessive fees.

26 Ameriprise answered the Belands' FINRA complaint by

27 asserting, principally, that the Belands released their claims by
4

1 operation of a settlement agreement in a class-action suit that

2 had proceeded between 2004 and 2007 in the United States District

3 Court for the Southern District of New York. The Belands were

4 class members in the class action, but -- in part, they allege,

5 on the advice an Ameriprise financial advisor -- they took no

6 action at the time of the settlement, failing to either opt out

7 of the class or submit a claim to share in the settlement funds. 

8 By the terms of the settlement agreement, the district court

9 (Deborah A. Batts, Judge) had retained exclusive jurisdiction

10 over disputes arising from the class litigation.

11 After FINRA arbitrators denied Ameriprise's motion to

12 stay the Belands' arbitration, Ameriprise moved in the United

13 States District Court for the Southern District of New York, in

14 which the class action had been litigated and settled, for an

15 order to enforce the settlement agreement that would enjoin the

16 Belands from pressing any of their claims before FINRA

17 arbitrators. The district court concluded that the class

18 settlement barred all of the Belands' arbitration claims, and

19 therefore granted Ameriprise's motion and ordered the Belands to

20 dismiss their FINRA complaint with prejudice.

21 We conclude that the district court had the power to

22 enter such an order and that several of the Belands' arbitration

23 claims were barred by the 2007 class-action settlement. We

24 therefore affirm in part. But because we conclude that the

25 Belands' arbitration complaint pleads claims -- including so-
1

 On August 1, 2005, American Express Financial Corporation

and American Express Financial Advisors officially changed their

names to, respectively, Ameriprise Financial, Inc. and Ameriprise

Financial Services, Inc. On September 30, 2005, these two

entities became independent from the American Express Company.

5

1 called "suitability claims" -- that were not, and could not have

2 been, released by the class settlement, we vacate in part the

3 district court's judgment, and we remand the case for the entry

4 of an order permitting the non-Released claims to proceed in

5 FINRA arbitration. In light of our disposition of this appeal,

6 we dismiss as moot the Belands' appeal from the district court's

7 denial of their motion for reconsideration.

8 BACKGROUND

9 The In re AEFA Class-Action Complaint

10 Between March 4, 2004, and May 4, 2004, various persons

who had had dealings with Ameriprise1 11 (the "Class Plaintiffs")

12 brought a total of five separate class-action lawsuits before the

13 United States District Court for the Southern District of New

14 York against several Ameriprise affiliates. The Class Plaintiffs

15 asserted various federal- and common-law claims based on

16 Ameriprise's alleged conflicts of interest, misrepresentations

17 and omissions, biased and "canned" financial advice and advisory

18 services, failure to disclose financial incentives and fees, and

19 so-called "steering" of clients' money into investments that

20 benefited the defendants without regard to their clients' best

21 interests. On June 25, 2004, the district court consolidated the
2

 The Shelf Space Funds were mutual funds sold by companies

who made undisclosed payments to American Express in order to

promote their mutual funds; these payments were "referred to as

buying 'shelf space' at American Express." Class Complaint ¶ 1. 

The Proprietary Funds were owned and operated by American Express

itself. Id.

6

1 five class actions into In re American Express Financial Advisors

2 Securities Litigation ("In re AEFA"), No. 04 Civ. 1773 (S.D.N.Y.,

3 consolidated June 25, 2004).

4 The Second Consolidated Amended Class Action Complaint

5 (the "Class Complaint"), dated September 29, 2005, described the

6 class action as "arising out of the failure of American Express

7 to disclose an unlawful and deceitful course of conduct they

8 engaged in that was designed to improperly financially advantage

9 Defendants to the detriment of [Class] Plaintiffs and other

10 members of the Class." Class Complaint ¶ 1, In re AEFA, No. 04

11 Civ. 1773 (S.D.N.Y. Sept. 29, 2005), ECF No. 119. The Class

12 Plaintiffs alleged that "instead of offering fair, honest and

13 unbiased recommendations to Plaintiffs and other investors,

14 American Express 'financial advisors' gave pre-determined

15 recommendations, pushing clients into a pre-selected, limited

16 number of mutual funds in order to reap millions of dollars in

17 secret kickbacks from the Shelf Space Funds and millions more

from sales of American Express Proprietary Funds."2 18 Id. ¶ 2. 

19 They alleged further that the defendants "had an undisclosed,

20 material conflict of interest that made it impossible for them to

21 render impartial advice." Id. ¶ 10. Based on those allegations,
7

1 the Class Plaintiffs brought claims for violations of the

2 Securities Act of 1933, the Securities Exchange Act of 1934 and

3 various Rules promulgated thereunder, the Investment Advisers Act

4 of 1940, and assorted state-law claims including for breach of

5 fiduciary duty, deceptive trade practices, and unjust enrichment.

6 The Class Period was defined as March 10, 1999, to April 1, 2004,

7 and was later extended to April 1, 2006. 

8 In January 2007, the lead plaintiffs in In re AEFA

9 moved for provisional certification of a settlement class and

10 preliminary approval of a settlement agreement pursuant to

11 Federal Rule of Civil Procedure 23. See Stipulation of

12 Settlement ("Class Settlement" or "Settlement Agreement"), Lead

13 Pls.' Notice of Mot. for Prelim. Approval of Settlement Exh. 2,

14 In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Jan. 18, 2007), ECF No.

15 135-3. They simultaneously submitted a draft Notice of Proposed

16 Settlement of Class Action (the "Class Notice") to the court. On

17 February 15, 2007, the district court provisionally certified the

18 class and approved the Class Notice. In February and March 2007,

19 the parties mailed the Class Notice to roughly 2.8 million

20 potential class members. 

21 The Class Notice served several functions. First, it

22 described the lawsuit in general terms:

23 In their lawsuits, the investors complain

24 that they were sold financial plans and/or

25 advice that, instead of being tailored to

26 their individual circumstances, contained

27 standardized recommendations designed to
8

1 steer them into investing in Defendants'

2 proprietary mutual funds and other

3 proprietary investment products [(the

4 Proprietary Funds)] and certain non5 proprietary "Preferred" or "Select" mutual

6 funds [(the Shelf Space Funds)].

7 . . . Plaintiffs claim that the conflicts of

8 interest inherent in Defendants' financial

9 plans and/or financial advisory services, and

10 the compensation arrangements between

11 Defendants and the Preferred Funds, were

12 inadequately disclosed to investors. . . .

13 Class Notice at 1, Decl. of Jennifer M. Keough in Supp. of Final

14 Approval of Settlement Exh. 1, In re AEFA, No. 04 Civ. 1773

15 (S.D.N.Y. May 29, 2007), ECF No. 143-2. 

16 Second, the Class Notice explained the options

17 available to potential class members in acting on the Class

18 Settlement. In particular, as relevant here, the Class Notice

19 stated: "Unless you exclude yourself, you will continue to be a

20 member of the class, and that means that if the settlement is

21 approved, you will release all 'Released Claims' against the

22 'Released Persons,' and you will be prohibited from bringing or

23 participating in any other cases concerning the 'Released Claims'

24 against the 'Released Persons.'" Id. at 7. The Class Notice

25 also included a description of "Released Claims" and "Released

26 Persons" taken from the Settlement Agreement. The definition of

27 Released Claims included, inter alia,

28 any and all claims, debts, demands, rights or

29 causes of action or liabilities

30 whatsoever . . . , whether based on federal,

31 state, local, statutory or common law or any

32 other law, rule or regulation, . . .

33 including both known claims and Unknown
3 The phrase "common course of conduct" is not defined in

the Class Settlement; neither is "suitability claim." However, a

suitability claim, generally, is a claim that a "broker knew or

reasonably believed that the securities he recommended to the

customer were unsuitable in light of the customer's investment

objectives but that he recommended them anyway." Murray v.

Dominick Corp. of Can., 117 F.R.D. 512, 516 (S.D.N.Y. 1987). 

Suitability claims -- sometimes called "unsuitability claims" --

are often brought "as a distinct subset" of section 10(b) claims

under the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). 

Dodds v. Cigna Sec., Inc., 12 F.3d 346, 351 (2d Cir. 1993), cert.

denied, 511 U.S. 1019 (1994); see Brown v. E.F. Hutton Grp.,

Inc., 991 F.2d 1020, 1031 (2d Cir. 1993) (discussing the elements

of a federal unsuitability claim).

9

1 Claims . . . that (i) have been asserted in

2 this Action by the Plaintiffs . . . or (ii)

3 could have been asserted in any forum by the

4 Plaintiffs or Class Members . . . against any

5 of the Released Persons; including claims

6 that arise out of or are based upon (a) the

7 allegations, transactions, facts, matters or

8 occurrences, representations or omissions

9 alleged, involved, set forth, or referred to

10 in the [Class Complaint] . . . .

11 Id. at 8. Importantly for present purposes, the Class Notice

12 stated that "'Released Claims' shall not include suitability

13 claims unless such claims are alleged to arise out of the common

14 course of conduct that was alleged, or could have been alleged,

in the Action, as more fully described herein."3 15 Id. 

16 The Class Notice further explains that releasing claims

17 "will prevent you from suing Defendants over claims that arise

18 from or are based on the offer and sale of financial planning

19 services or financial advice provided to you by Defendants,

20 including claims to recover the fees you paid for financial

21 advisory services or advice and claims that you were 'steered'
10

1 toward particular investments that were more profitable for

2 [Ameriprise]." Id. It also warned potential class members,

3 under the heading "EXCLUDING YOURSELF FROM THE SETTLEMENT," that

4 if "you want to retain any right to sue or continue to assert any

5 of the Released Claims on your own against any Defendant or other

6 Released Person, then you must take steps to get out of the

7 class." Id.; see id. at 8–9, 11 (explaining how to "opt[] out"

8 of the Class Settlement and the consequences of "do[ing]

9 nothing"). 

10 On July 18, 2007, the district court issued an Order

11 and Final Judgment in In re AEFA approving the Class Settlement,

12 dismissing all class members' claims with prejudice, and barring

13 and enjoining class members from asserting Related Claims against

14 Released Persons. The court retained "[e]xclusive

15 jurisdiction . . . over the Parties and the Class Members for all

16 matters relating to this Action and the Settlement,

17 including . . . [the] interpretation, effectuation, or

18 enforcement of the [Settlement Agreement] and this Order and

19 Final Judgment." Order and Final Judgment at 10, In re AEFA, No.

20 04 Civ. 1773 (S.D.N.Y. July 18, 2007), ECF No. 170. 

21 The Belands

22 John and Elaine Beland are a retired married couple

23 living on a 4.1-acre parcel of farmland in New Lenox, Illinois,

24 that, together with a much larger tract, had been in John's

25 family for more than a century. For many years, John, whose
11

1 formal education ended in eighth grade, "farmed the family

2 homestead" for the Pesters, his aunt and uncle. Claim in

3 Arbitration Before FINRA ("FINRA Complaint") (filed Feb. 17,

4 2009) ¶ 1, Decl. of David W. Bowker in Supp. of Ameriprise Fin.

5 Servs., Inc.'s Mem. of Law in Supp. of Mot. to Enforce In re AEFA

6 Settlement and Inj. ("Bowker Decl.") Exh. 6, In re AEFA, No. 04

7 Civ. 1773 (S.D.N.Y. Mar. 9, 2010), ECF No. 193-7. After the

8 death of his uncle, John continued to farm the land for his aunt,

9 Hazel Pester.

10 According to the Belands, in 1995, acting on the

11 financial advice of Ronald Miller -- an Ameriprise financial

12 consultant based in Joliet, Illinois -- Hazel sold a large

13 portion of the family farm for approximately $2.6 million. The

14 proceeds of the sale were immediately deposited into two

15 different trusts -- a charitable trust worth $1.757 million and a

16 revocable trust worth $886,000. Hazel was the charitable trust's

17 lifetime beneficiary, and she held a life estate in the revocable

18 trust. In 2004, Hazel died. John Beland took the corpus of the

19 revocable trust, while various local churches and charities, as

20 residuary beneficiaries, received the assets in the charitable

21 trust. John, allegedly on Miller's advice, then converted the

22 revocable trust into an Ameriprise investment account, jointly

23 held by the Belands and managed by Miller. 

24 The Belands' FINRA Complaint asserts that Ameriprise

25 and Miller agreed to invest the Belands' funds "in a conservative
4

 The Belands allege that "[t]hese 'house' mutual funds were

purchased not because they fit the preservation of capital and

income approach (with growth only a secondary feature), but

because they generated fees for Ameriprise." FINRA Complaint

¶ 14. 

5

 These "'tech' heavy stock" stocks included: Check Point

Software; Flextronics; Analog Devices; Applied Microcircuits;

Brocade Communications; Ciena Corp.; Enron Corp.; I 2

Technologies, Inc.; Maxim Integrated Products; Selectron Corp.;

and Univision Communications. FINRA Complaint ¶ 16. 

12

1 fashion, preserving capital and obtaining income from which the

2 life beneficiaries could receive a return." Id. ¶ 9. However,

3 the Belands allege, "[a] conservative asset allocation approach

4 was not taken." Id. ¶ 13. In the FINRA Complaint, the Belands

5 express two main grievances: (1) "Miller and Ameriprise invested

6 in many house American Express mutual funds including various

7 high yield junk bond funds, as well as risky small cap or startup funds";4 8 and (2) "Ameriprise invested in many risky small-cap

9 technology stocks which led to huge, significant losses over

time."5 10 Id. ¶¶ 14–15. They similarly contend that Ameriprise

11 "allocat[ed] the trust assets inappropriately which left the

12 Trusts exposed to greater than expected losses." Appellants' Br.

13 at 7; see FINRA Complaint ¶ 27. 

14 The Belands state that their combined account balances

15 dwindled from more than $2.6 million at inception in 1995 to

16 approximately $800,000 in early 2009. FINRA Complaint ¶ 7. John

17 admits that he did not review the account statements until after

18 Hazel's death, when he noticed the "precipitous[]" drop. Id.
6

 The Belands did receive a $25 payment from an SEC

disgorgement and restitution fund related to its investigation

into Ameriprise's investment-advisory activities. 

13

1 ¶¶ 18–19. The Belands allege that when they confronted Miller

2 about the accounts' declining assets, "Miller set a course of

3 cover-up, lies and deceit in order to obscure the mishandling" of

4 the accounts, providing false justifications for investment

5 decisions and shielding the truth about Ameriprise's motives and

6 conflicts of interest. Id. ¶ 20. Among the allegedly false

7 reasons for the losses were the September 11 terrorist attacks

8 and that the charitable trust was intended to diminish in value

9 "by design." Id. ¶¶ 21–24 (internal quotation marks omitted). 

10 Over time, the Belands received notices of myriad

11 class-action lawsuits against or involving various companies in

12 which Ameriprise and Miller had invested on the Belands' behalf. 

13 In addition, John Beland conceded that in early 2007 he received

14 multiple notices relating to the In re AEFA action. Decl. of

15 John Beland ¶ 5, Reply in Supp. of Mot. for Ltd. Disc. Exh. A, In

16 re AEFA (S.D.N.Y. June 22, 2010), ECF No. 204-2. Because he

17 found the notices, including the In re AEFA notices, "complex and

18 confusing," he asked Miller for advice. Id. ¶ 6. According to

19 John, "Miller told [the Belands] to do nothing about these

20 notices and [they] followed his advice." Id. As a result of

21 their failure to take any action with respect to the In re AEFA

Class Settlement, the Belands did not share in its proceeds.6 22 
14

1 The Belands' FINRA Action

2 In late 2008, the Belands sought legal advice regarding

3 their accounts' declining values, and on February 17, 2009, they

4 filed an arbitration complaint with FINRA. They made claims

5 (collectively, the "FINRA Claims") against Miller and Ameriprise

6 for: (1) breach of fiduciary duty for "failing to manage the

7 trusts according to their investment objectives, and by self8 dealing," FINRA Complaint ¶ 31; (2) breach of contract for

9 "mishandling the [Belands'] assets and . . . covering up the

10 mishandling," id. ¶ 35; (3) common-law fraud for "mak[ing]

11 material misstatements of fact" regarding the reasons for the

12 assets' decline in value, among other things, id. ¶ 39; and (4)

13 negligent misrepresentation, id. ¶ 44. See generally id. ¶¶ 29-

14 45. The Belands sought an arbitration award of "not less than

15 $1,500,000 for 'well managed' account damages . . . , for

16 punitive damages[,] and [for] their costs and fees of [the FINRA]

17 action." Id. at 11. 

18 In response before the FINRA arbitrators, Miller and

19 Ameriprise (collectively, the "FINRA Defendants") filed a

20 Statement of Answer, Defenses and Affirmative Defenses on

21 September 18, 2009. At the same time, the FINRA Defendants moved

22 before the arbitrators to stay the arbitration proceedings on the

23 basis that, as members of the In re AEFA class, the Belands had

24 "released Ameriprise Financial and its agents and affiliates for"

25 the Released Claims defined in the Class Settlement and Class
7

 In a July 28, 2009 letter, the FINRA Defendants requested

that the Belands "withdraw their claims related to" the eighteen

accounts listed. Letter from Ameriprise Counsel to Belands at 2,

Mem. in Supp. of Mot. for Reconsideration ("Mot. for

Reconsideration") Exh. D, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y.

Aug. 17, 2010), ECF No. 209-5. The Belands have identified seven

of their Ameriprise accounts that were not listed in the July 28

letter or the Motion to Stay. 

15

1 Notice. Mot. to Stay Arbitration of Released Claims ("Motion to

2 Stay") at 2, Bowker Decl. Exh. 7, In re AEFA, No. 04 Civ. 1773

3 (S.D.N.Y. Mar. 9, 2010), ECF No. 193-8. In the Motion to Stay,

4 the FINRA Defendants listed eighteen separate Ameriprise account

5 numbers as to which, they contended, the Belands' allegations

were barred by the Class Settlement.7 6 The FINRA Defendants

7 stated in their motion that "[u]nless Claimants withdraw their

8 Released Claims in this action, Respondents will be forced to

9 protect their rights by filing a Motion to Enforce Class Action

10 Settlement as to the Released Claims," and that, therefore, "a

11 stay of th[e FINRA] action as it pertains to the released claims

12 is appropriate." Id. at 4. On October 27, 2009, the Belands

13 filed an opposition to the FINRA Defendants' Motion to Stay,

14 arguing that the "class action specifically excluded the causes

15 of action the Belands assert" in the FINRA arbitration. 

16 Claimants' Opp'n to Resp'ts' Mot. to Stay Arbitration at 2,

17 Bowker Decl. Exh. 4, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Mar.

18 9, 2010), ECF No. 193-5. 

19 A three-member FINRA arbitration panel held a

20 telephonic hearing regarding the Motion to Stay on January 5,
8 The Belands represent that the FINRA arbitrators

originally set the arbitration hearing for March 2010; however,

the hearing was eventually rescheduled to take place in August

2010. [Blue 14; A329.] It was thereafter postponed indefinitely

pending the resolution of the parties' litigation before the

district court. 

9 In Martens v. Thomann, 273 F.3d 159 (2d Cir. 2001), we

noted that "there is nothing in the Federal Rules of Civil

Procedure styled a 'motion to enforce.' Nor is there approval

for such a motion to be found in this Circuit's case law, except

in situations inapposite to the case before us." Id. at 172. In

Martens, we did "not ourselves define the nature of this motion

because the district court's failure to state its reasons for

denying it [wa]s sufficient to warrant reversal." Id.

From time to time, however, we have reviewed districtcourt judgments that ruled on purported motions to enforce. See,

e.g., Vemics, Inc. v. Meade, 371 F. App'x 181 (2d Cir. 2010)

(summary order); Surac v. Cavalry Portfolio Servs., LLC, 357 F.

App'x 344 (2d Cir. 2009) (summary order). Because we conclude

that the district court's judgment in this case presents an

appealable question to this Court, we choose to ignore any

potential error of terminology here.

16

1 2010. After the hearing, the panel issued an order denying the

2 Motion to Stay "without prejudice." FINRA Order at 1, Mem. in

3 Supp. of Mot. for Reconsideration ("Mot. for Reconsideration")

4 Exh. F, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Aug. 17, 2010),

5 ECF No. 209-5. The panel then scheduled an arbitration hearing

for March 20108 6 to try the issues raised in the Belands' FINRA

7 Complaint and the FINRA Defendants' answer. 

8 Ameriprise's Motion to Enforce the Class Settlement in

9 the S.D.N.Y. and Belands' Cross-Motion to Clear

10 Technical Defaults and for Limited Discovery

11 Before the scheduled arbitration hearing could be held,

however, the FINRA Defendants filed a "Motion to Enforce"9 12 the In

13 re AEFA Settlement Agreement before the district court, which had
10 The Belands argue that the FINRA Defendants qualitatively

altered their position in the Motion to Enforce vis-à-vis the In

re AEFA Class Settlement's effect on the Belands' FINRA Complaint

because that document represented "the first time" that

Ameriprise had argued "that all claims and facts alleged in the

Illinois Arbitration were of the same 'course of conduct' alleged

in the New York Class Action." Appellants' Br. at 15 (emphasis

in original). The Belands also characterize the Motion to

Enforce as misleading because it argued that the Belands sought a

"double recovery" despite the fact that they had not received any

payments from the Class Settlement, and because it did not

indicate that the FINRA panel had denied the FINRA Defendants'

Motion to Stay. Id. (internal quotation marks omitted).

17

1 retained jurisdiction over the In re AEFA class litigation. In

2 their March 9, 2010 Motion to Enforce, the FINRA Defendants

3 requested that the court "order[] the Belands to dismiss with

prejudice their pending FINRA action against Ameriprise."10 4 Mem.

5 in Supp. of Ameriprise's Mot. to Enforce In re AEFA Settlement

6 and Inj. ("Motion to Enforce") at 2, In re AEFA, No. 04 Civ. 1773

7 (S.D.N.Y. Mar. 9, 2010), ECF No. 192. The Belands did not, in

8 response, file a direct opposition to the motion. Instead, they

9 filed a cross-motion, styled as a "Motion to Clear Technical

10 Defaults [and] for Limited Discovery," seeking to litigate the

11 issue of whether the Class Settlement's definition of Released

12 Claims covered all of the claims that the Belands asserted in

13 their FINRA Complaint. Specifically, the Belands argued that

14 depositions should be taken to determine whether evidence

15 supported their assertion that "Miller's conduct . . . deprived

16 them of any meaningful opportunity to opt out of the class

17 action," as well as to determine which of their investments did
18

1 "not fall within the ambit of the" Class Settlement. Mot. to

2 Clear Technical Defaults, for Ltd. Disc. and to Set Briefing

3 Schedule at 2, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Mar. 30,

4 2010), ECF No. 196. The Belands proposed a deposition and

5 briefing schedule that would culminate in an evidentiary hearing

6 before the district court. The FINRA Defendants opposed the

7 cross-motion by arguing, principally, that even the facts as

8 alleged by the Belands would not, under the "excusable neglect"

9 standard, justify their failure to opt out of the Class

10 Settlement. 

11 The Belands filed a reply, arguing that the district

12 court

13 should allow the arbitration to proceed for

14 two reasons: first, because the issues of

15 Miller's breach of fiduciary duty and

16 misrepresentation go well beyond any issue

17 that was or could have been raised in the

18 Class Action; and second, because the

19 arbitration panel is uniquely positioned to

20 make factual determinations as to which

21 accounts may or may not be encompassed within

22 this Court's Confirmation Order.

23 Reply in Supp. of Mot. for Ltd. Disc. at 1–2, In re AEFA, No. 04

24 Civ. 1773 (S.D.N.Y. June 22, 2010), ECF No. 204. Finally, the

25 FINRA Defendants filed, together, a reply in support of their

26 Motion to Enforce and a sur-reply in opposition to the Belands'

27 cross-motion. 
19

1 The District Court's Order Enforcing the Settlement

2 In a seven-page order dated August 11, 2010 (the

3 "Enforcement Order"), the district court granted the FINRA

4 Defendants' Motion to Enforce and ordered the Belands to dismiss

5 with prejudice their pending FINRA Complaint against Ameriprise

6 and Miller. The court concluded that the Belands' claims "f[ell]

7 within the definition of 'Released Claims' barred by the Court's

8 July 18, 2007 Order." Enforcement Order at 1–2, In re AEFA, No.

9 04 Civ. 1773 (S.D.N.Y. Aug. 11, 2010), ECF No. 206. The court

10 characterized the Belands' FINRA Claims thus:

11 Here, the Belands claim that rather than

12 managing their accounts in a conservative,

13 minimal risk manner as promised, Miller and

14 Ameriprise invested in many house American

15 Express mutual funds including various high

16 yield junk bond funds, as well as risky small

17 cap or start-up funds in order to generate

18 fees for Ameriprise and promote in-house

19 mutual funds of American Express.

20 Id. at 2 (brackets and internal quotation marks omitted). The

21 court concluded that those "allegations arise from the same

22 transactions, facts, matters, occurrences, and representations as

23 the claims of the [Class Complaint]." Id. 

24 The district court further determined that the Belands

25 could not "satisfy the standard for 'excusable neglect'" to

26 excuse their failure to opt out of the Class Settlement. Id. at

27 3. In arriving at that conclusion, the court stated that "while

28 Miller's advice may have played a role in the Belands' decision

29 not to opt out of the class, the Belands should have known from
11 Ameriprise contends that this argument, and others in the

Belands' Motion for Reconsideration, were made "[f]or the first

time" in that motion. Appellee's Br. at 17. 

20

1 the plain English of the [Class] Notice that Miller's

2 recommendation that they 'do nothing' would lead to no payment

3 from the settlement and the release of future claims." Id. at 5. 

4 The court also found that "not until after Ameriprise moved to

5 enjoin [the Belands'] FINRA claims on March 9, 2010" did the

6 Belands "argue before this Court that they should be excused from

7 failing to opt out of the settlement" -- a delay that was, in the

8 court's view, "inexcusably long." Id. at 6. 

9 After the district court issued the Enforcement Order,

10 the Belands filed a Motion for Reconsideration, making several

11 arguments. First, they contended that the Enforcement Order

12 "simply overlooked material language in the Release which exempts

13 claims like the Belands['] which do not relate to the allegations

14 of the Class Action . . . but instead raise independent

suitability claims."11 15 Second, the Belands argued that the

16 Federal Arbitration Act ("FAA") required that the FINRA

17 Defendants arbitrate the coverage of the Class Settlement before

18 the arbitrators. Third, the Belands further elaborated a theory

19 of "excusable neglect" that would free their claims from the

20 Class Settlement even if those claims were Released Claims. The

21 district court denied the Motion for Reconsideration in a two22 sentence order dated August 20, 2010. 
21

1 The Belands' Appeal

2 The Belands filed a Notice of Appeal on August 23,

3 2010. The same day, the district court granted a stay of its

4 Enforcement Order pending the appeal to this Court. The stay

5 remains in effect.

6 DISCUSSION

7 I. Overview

8 On appeal, the Belands argue that the district court

9 erred in several respects. Principally, they assert that the

10 court "failed to compare" the substance of the claims alleged in

11 their FINRA Complaint -- "which feature unsuitability, lack of

12 asset allocation and speculative 'tech' stock investing" -- with

13 the Released Claims in the Class Settlement. Appellants' Br. at

14 19. In the Belands' view, the Class Settlement only released

15 claims regarding "the sale of fee-based, 'standardized'

16 investment adviser plans which steered customers to 'proprietary'

17 or 'preferred' mutual funds for which Ameriprise received

18 'kickbacks.'" Id. They also point to a "carve[]-out" in the

19 Class Settlement that they contend exempts at least some of their

20 FINRA Claims. Id. For these reasons, the Belands contend that

21 at least some of their arbitration claims are not Released

22 Claims, and that the district court erred in requiring the

23 Belands to dismiss those unreleased claims. 

24 Alternatively, the Belands argue: (1) that Ameriprise

25 chose to defend the Belands' claims before FINRA arbitrators and,
22

1 therefore, the district court erred in "derail[ing]" the pending

2 FINRA arbitration; (2) that questions concerning the scope of the

3 Settlement Agreement were for the FINRA arbitrators to decide,

4 and that the arbitrators indicated their intent to decide them;

5 (3) that the Release contained in the Class Settlement should not

6 be applied against the Belands because their failure to opt out

7 of the class action was the product of "excusable neglect"; and

8 (4) that the district court erroneously denied their motion for

9 reconsideration. Id. at 19–22. 

10 The FINRA Defendants (also collectively "Ameriprise")

11 argue that the Class Settlement's release of "'suitability

12 claims' arising out of the common course of conduct alleged in In

13 re AEFA" precludes the entirety of the Belands' arbitration

14 claims. Appellee's Br. at 18. Ameriprise also responds that the

15 district court properly rejected the Belands' "excusable neglect"

16 argument, and that "the district court ha[d] exclusive

17 jurisdiction to enforce the [Class] Settlement." Id. at 18–19. 

18 The FINRA Defendants therefore contend that the district court

19 acted properly in directing the Belands to dismiss all of their

20 arbitral claims.

21 This appeal presents at least one unresolved legal

22 issue about which the parties are in agreement. Neither the

23 Belands nor Ameriprise appear to dispute the general principle

24 that federal courts are vested with power under the FAA to enjoin

25 a pending arbitration where appropriate. But this question has
12 Recently, in Wachovia Bank, Nat'l Ass'n v. VCG Special

Opportunities Fund, --- F.3d ----, 2011 WL 5110122, 2011 U.S.

App. LEXIS 21885 (2d Cir. Oct. 28, 2011), in a dispute involving

FINRA arbitrability, we remanded for the district court to

"enjoin[ the defendant] from proceeding with its FINRA

arbitration," but we did not address the procedural propriety of

such an order. Id. at *9, 2011 U.S. App. LEXIS 21885, at *25. 

23

never been explicitly resolved by this Court,12 1 and we,

2 therefore, address it in the course of our analysis. We also

3 reiterate this Court's recent holding that FINRA-membership

4 constitutes an agreement to arbitrate disputes under FINRA's

5 rules, see UBS Fin. Servs., Inc. v. W. Va. Univ. Hosps., --- F.3d

6 ----, 2011 WL 4389991, at *5, 2011 U.S. App. LEXIS 19420, at *15

7 (2d Cir. Sept. 22, 2011), a proposition neither of the parties

8 contests.

9 II. Arbitrability of the Belands' Claims

10 A. Background Arbitration Law

11 The FAA creates a "body of federal substantive law of

12 arbitrability, applicable to any arbitration agreement within the

13 coverage of the Act." Moses H. Cone Mem'l Hosp. v. Mercury

14 Constr. Corp., 460 U.S. 1, 24 (1983). The FAA provides that an

15 arbitration provision in "a contract evidencing a transaction

16 involving commerce . . . shall be valid, irrevocable, and

17 enforceable, save upon such grounds as exist at law or in equity

18 for the revocation of any contract." 9 U.S.C. § 2. Further, the

19 FAA "establishes a national policy favoring arbitration when the

20 parties contract for that mode of dispute resolution" and
24

1 "supplies not simply a procedural framework applicable in federal

2 courts" but "also calls for the application, in state as well as

3 federal courts, of federal substantive law regarding

4 arbitration." Preston v. Ferrer, 552 U.S. 346, 349 (2008).

5 "[T]he FAA's primary purpose [is to] ensur[e] that

6 private agreements to arbitrate are enforced according to their

7 terms." Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford

8 Jr. Univ., 489 U.S. 468, 479 (1989). Despite the "liberal

9 federal policy favoring arbitration agreements," Moses H. Cone,

10 460 U.S. at 24, "arbitration is a matter of contract and a party

11 cannot be required to submit to arbitration any dispute which he

12 has not agreed so to submit," Howsam v. Dean Witter Reynolds,

13 Inc., 537 U.S. 79, 83 (2002) (quoting Steelworkers v. Warrior &

14 Gulf Navigation Co., 363 U.S. 574, 582 (1960)) (internal

15 quotation marks omitted); see also Volt, 489 U.S. at 479

16 ("Arbitration under the [FAA] is a matter of consent, not

17 coercion, and parties are generally free to structure their

18 arbitration agreements as they see fit."). "[A]s with any other

19 contract, the parties' intentions control." Stolt-Nielsen S.A.

20 v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758, 1774 (2010)

21 (internal quotation marks omitted).

22 However, "any doubts concerning the scope of arbitrable

23 issues should be resolved in favor of arbitration." Moses H.

24 Cone, 460 U.S. at 24–25. "Accordingly, federal policy requires

25 us to construe arbitration clauses as broadly as possible." 
25

1 Collins & Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 19

2 (2d Cir. 1995) (brackets and internal quotation marks omitted). 

3 Therefore, we will compel arbitration "unless it may be said with

4 positive assurance that the arbitration clause is not susceptible

5 of an interpretation that covers the asserted dispute." AT & T

6 Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650

7 (1986).

8 In this Circuit, courts follow a two-part test to

9 determine the arbitrability of claims. In deciding whether

10 claims are subject to arbitration, a court must consider (1)

11 whether the parties have entered into a valid agreement to

12 arbitrate, and, if so, (2) whether the dispute at issue comes

13 within the scope of the arbitration agreement. ACE Capital Re

14 Overseas Ltd. v. Cent. United Life Ins. Co., 307 F.3d 24, 28 (2d

15 Cir. 2002); accord John Hancock Mut. Life Ins. Co. v. Olick, 151

16 F.3d 132, 137 (3d Cir. 1998). Before addressing the second

17 inquiry, we must also determine who -- the court or the

18 arbitrator -- properly decides the issue. See Republic of

19 Ecuador v. Chevron Corp., 638 F.3d 384, 393 (2d Cir. 2011).

20 B. Existence and Scope of Ameriprise's Consent to Arbitrate

21 Because our review of the district court's Enforcement

22 Order requires that we evaluate not only the existence but also

23 the scope of any such agreement, we must identify first that

24 agreement's form, and then its contours.
13 We note that such consent may not be reciprocal. Though

the FINRA Rules bind Ameriprise to arbitrate disputes with its

customers upon request, it does not appear that Ameriprise can

require its customers to arbitrate disputes with it on the basis

of its FINRA membership alone. Hence, for example, the In re

AEFA litigation, which proceeded in federal court, not in FINRA

arbitration.

26

1 Ameriprise does not dispute that, by virtue of its

2 membership in FINRA, it has consented to arbitrate with its

customers.13 3 See FINRA Code of Arbitration Procedure for

4 Customer Disputes ("FINRA Code") § 12200 ("Parties must arbitrate

5 a dispute under the [FINRA] Code if" arbitration is "[r]equested

6 by the customer; [t]he dispute is between a customer and a

7 [FINRA] member or associated person of a member; and [t]he

8 dispute arises in connection with the business activities of the

9 member or the associated person . . . ."); cf. John Hancock Life

10 Ins. Co. v. Wilson, 254 F.3d 48, 58 (2d Cir. 2001) (explaining

11 that the defendant "concede[d] that it agreed by virtue of its

12 membership in the NASD[, the predecessor to FINRA,] to arbitrate

13 all disputes contemplated under" a rule analogous to FINRA Rule

14 12200). Nor does Ameriprise dispute that all of the Belands'

15 claims constitute claims "aris[ing] in connection with [its]

16 business activities" within the meaning of FINRA Rule 12200. 

17 This Court has recently stated that FINRA membership constitutes

18 an agreement to "adhere to FINRA's rules and regulations,

19 including its Code and relevant arbitration provisions contained

20 therein." UBS Fin. Servs., 2011 WL 438991, at *5; see also
27

1 Wachovia Bank, 2011 WL 5110122, at *6-7, 2011 U.S. App. LEXIS

2 19420, at *15 (stating that "interpretation of arbitration rules

3 of an industry self-regulatory organization. . . such as FINRA is

4 similar to contract interpretation" and concluding, in that case,

5 that the matter was not arbitrable under FINRA's rules). We

6 therefore conclude that all of the Belands' FINRA Claims against

7 Ameriprise are arbitrable in the absence of any subsequent

8 agreement revoking or otherwise limiting the scope of

9 Ameriprise's consent to arbitrate. 

10 III. Binding Nature of the Class Settlement on the

11 Belands

12 We next turn to the parties' relationship to the Class

13 Settlement. Absent a violation of due process or excusable

14 neglect for failure to timely opt out, a class-action settlement

15 agreement binds all class members who did not do so. See, e.g.,

16 Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 115 (2d

17 Cir. 2005) (stating that a class member "was required to opt out

18 at the class notice stage if it did not wish to be bound" by a

19 class settlement agreement), cert. denied, 544 U.S. 1044 (2005);

20 County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295,

21 1302 (2d Cir. 1990) (stating that if a party "could not have

22 properly opted out of the mandatory class, it is bound by the

23 class settlement if it is upheld, as are all other members of the

24 class"); see also Phillips Petroleum Co. v. Shutts, 472 U.S. 797,

25 811–13 (1985); In re: PaineWebber Ltd. P'ships Litig., 147 F.3d
28

1 132, 138–39 (2d Cir. 1998). And a "settlement agreement is a

2 contract that is interpreted according to general principles of

3 contract law." Omega Eng'g, Inc. v. Omega, S.A., 432 F.3d 437,

4 443 (2d Cir. 2005).

5 Rule 6 of the Federal Rules of Civil Procedure permits

6 a court to extend the time during which an act must be done "on

7 motion made after the time has expired if the party failed to act

8 because of excusable neglect." Fed. R. Civ. P. 6(b)(1)(B). In

9 Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507

10 U.S. 380 (1993), the Supreme Court set forth four factors to be

11 considered in connection with an assertion of "excusable neglect"

12 as justification for a missed judicial deadline: (1) "the danger

13 of prejudice" to the party opposing the extension; (2) "the

14 length of the delay and its potential impact on judicial

15 proceedings"; (3) "the reason for the delay, including whether it

16 was within the reasonable control" of the party seeking the

17 extension; and (4) whether the party seeking the extension "acted

18 in good faith." Id. at 395. While those factors are the central

19 focus of the inquiry, the ultimate determination depends upon a

20 careful review of "all relevant circumstances." Id.; accord In

21 re: PaineWebber Ltd. P'ships Litig., 147 F.3d at 135 ("To

22 establish excusable neglect, . . . a movant must show good faith

23 and a reasonable basis for noncompliance.").

24 Because the Belands have not argued that due process

25 was denied them with respect to the Class Settlement, we turn to
29

1 whether the district court erred when it rejected their

2 "excusable neglect" argument. On review of the district court's

3 ruling for abuse of discretion, see id. at 135, we will reverse

4 only if we have "a definite and firm conviction that the court

5 below committed a clear error of judgment in the conclusion that

6 it reached upon a weighing of the relevant factors," Silivanch v.

7 Celebrity Cruises, Inc., 333 F.3d 355, 362 (2d Cir. 2003), cert.

8 denied, 540 U.S. 1105 (2004). Because we have no such clear

9 conviction here, we do not disturb the district court's

10 conclusion that the Belands failed to demonstrate "excusable

11 neglect."

12 In analyzing the issue, the district court relied on

13 admonitions and warnings under boldface, capitalized headings in

14 the Class Notice -- which the Belands received -- about the

15 consequences of taking no action. The court concluded that "the

16 Belands should have known from the plain English of the Notice

17 that Miller's recommendation that they 'do nothing' would lead to

18 no payment from the settlement and the release of future claims." 

19 Enforcement Order at 5. It also determined that if the Belands

20 failed to read the notice, even after Miller's alleged advice,

21 they did so unreasonably. The court further noted a significant

22 delay on the Belands' part in seeking relief under the "excusable

23 neglect" standard, even after they became aware of their possible

24 error in failing to opt out of the Class Settlement. 
30

1 We conclude that the court's decision in this regard

2 did not constitute an abuse of its discretion. The Class Notice

3 is a reasonably straightforward document that contains a list of

4 readable questions and answers discussing the content of the

5 Class Action and the consequences of taking, or not taking,

6 action in response. See Wal-Mart, 396 F.3d at 114 (stating that

7 a class "[n]otice is adequate if it may be understood by the

8 average class member" (internal quotation marks omitted)). And

9 the Class Notice itself offered advice from class counsel,

10 providing lawyers' contact information and instructing class

11 members to contact them should the content of the Class Notice be

12 unclear. There is, moreover, little doubt that Ameriprise would

13 suffer prejudice if the Belands were permitted to opt out of the

14 Class Settlement three years late, as it would be exposed to

15 liability that it had every reason to think had been foreclosed

16 by the entry of the Settlement Agreement in federal court.

17 Neither the length of, nor the reasons for, the

18 Belands' delay counsel otherwise. Even if John Beland's lack of

19 an extended formal education rendered the Class Notice

20 incomprehensible to him, the fact that he brought the document to

21 Miller -- the representative of Ameriprise -- for advice suggests

22 that he had some level of awareness of the Notice's importance. 

23 And while the Belands explain their delay by asserting that they

24 had relied on advice from Miller that the Belands should take no

25 action with respect to the class-action lawsuit against
31

1 Ameriprise, we agree with the district court's implicit

2 conclusion that any such reliance was unreasonable. Applying the

3 reasoning of a district court in another circuit, "[o]nce [the

4 Belands] knew that there was a legal proceeding pending, it was

5 no longer reasonable [for them] to continue taking legal or

6 investment advice from [Ameriprise] or any of its agents." In re

7 VMS Sec. Litig., 156 F.R.D. 635, 640 (N.D. Ill. 1994) (internal

8 quotation marks omitted); see also id. ("[R]elying on one's

9 adversaries rather than one's attorney for advice is an error

10 that is to be laid at the feet of the one who made it; such

11 reliance is not reasonable, particularly when the notice

12 instructed class members to consult with their own counsel or

13 class counsel if they had questions." (internal quotation marks

14 omitted)). Finally, the Belands do not contend that Miller took

15 any action to limit their ability to consult with a lawyer or ask

16 for outside advice. 

17 We therefore reject the Belands' contention that the

18 district court abused its discretion as to its application of the

19 "excusable neglect" standard to their factual circumstances. It

20 follows from that conclusion that the Belands were bound as class

21 members by the In re AEFA Class Settlement.
14 On the other hand, "'"procedural" questions which grow

out of the dispute and bear on its final disposition' are

presumptively not for the judge, but for an arbitrator, to

decide." Howsam, 537 U.S. at 84 (emphasis in original) (quoting

John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964)). 

Likewise, "the presumption is that the arbitrator should decide

'allegation[s] of waiver, delay, or a like defense to

arbitrability.'" Id. (alteration in original) (quoting Moses H.

Cone, 460 U.S. at 24–25).

32

1 IV. Effect of the Class Settlement on the Agreement to

2 Arbitrate

3 A. Question of Arbitrability

4 The Supreme Court has distinguished between

5 "question[s] of arbitrability," which are "issue[s] for judicial

6 determination[, u]nless the parties clearly and unmistakably

7 provide otherwise," AT & T Techs., 475 U.S. at 649; see also

8 First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944–45

9 (1995); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198–99 (2d Cir.

10 1996), and "other gateway matters, which are presumptively

11 reserved for the arbitrator's resolution," Republic of Ecuador,

12 638 F.3d at 393 (internal quotation marks omitted). Among

13 "questions of arbitrability" presumptively reserved for a court,

14 the Supreme Court has identified "dispute[s] about whether the

15 parties are bound by a given arbitration clause" and

16 "disagreement[s] about whether an arbitration clause in a

17 concededly binding contract applies to a particular type of

controversy."14 18 Howsam, 537 U.S. at 84.
33

1 The principal issue in this case is whether any of the

2 Belands' FINRA Claims survived the Class Settlement and are thus

3 still subject to arbitration. As a preliminary matter, however,

4 we must first determine whether the court or the arbitrator

5 should answer that question. We conclude that such an inquiry is

6 a "question of arbitrability" that is reserved to the court.

7 First, the Class Settlement did not merely resolve

8 certain claims that class members might have had, thus estopping

9 these class members from arbitrating these claims at a later

10 date. As discussed further below, the Class Settlement revoked

11 Ameriprise's consent to arbitrate certain claims. The question

12 therefore is not whether those claims had been settled, thus

13 precluding arbitration, but whether there was a surviving

14 agreement, following the settlement, to arbitrate those claims at

15 all. That question, "[u]nless the parties clearly and

16 unmistakably provide otherwise. . . is to be decided by the

17 court, not the arbitrator." AT & T Techs., 475 U.S. at 649. But

18 cf. Republic of Ecuador, 638 F.3d at 393 (observing that "waiver

19 and estoppel generally fall into [the] group of issues

20 presumptively for the arbitrator").

21 Second, Ameriprise's FINRA membership cannot serve as

22 such "clear[] and unmistakabl[e]" evidence of the parties' intent

23 that all future questions of arbitrability be submitted to

24 arbitrators. See Wilson, 254 F.3d at 57 ("[O]ne party's
34

1 membership in an exchange[] is insufficient, in and of itself, to

2 evidence the parties' clear and unmistakable intent to submit the

3 'arbitrability' question to the arbitrators."). 

4 Third, the district court explicitly retained

5 jurisdiction over the In re AEFA class action. See Order and

6 Final Judgment at 10 (providing that "[e]xclusive jurisdiction is

7 hereby retained over the Parties and the Class Members for all

8 matters relating to this Action and the Settlement" (emphasis

9 added)). 

10 For those reasons, we conclude that determining the

11 scope of the Belands' entitlement to arbitrate (by virtue of

12 Ameriprise's consent through its FINRA membership) is a question

13 for judicial resolution. As such, the district court properly
15 The Belands also argue on appeal that Ameriprise

"submitted the question of the Class Action Settlement Release to

the FINRA arbitrators to decide" by filing an answer in the FINRA

arbitration and propounding discovery to the Belands while

proceedings were pending in that venue. Appellants' Br. at 36;

see also Appellants' Reply Br. at 13. They argue that

Ameriprise's participation in the FINRA proceedings definitively

precluded it from later resorting to federal court to seek an

order of dismissal as to the Belands' FINRA arbitration. In

short, the Belands argue waiver.

But the actual conduct of Ameriprise in the FINRA

proceedings fails to support either the Belands' characterization

or their conclusion. In a letter to the Belands' counsel dated

July 28, 2009 -- after the Belands filed their FINRA Complaint

but before the FINRA Defendants took any action before the

arbitrators -- Ameriprise's attorney identified the In re AEFA

Settlement and argued that the Belands, as Class Members, had

"released Ameriprise . . . and its agents and affiliates for

claims relating to the" Belands' Ameriprise investment accounts. 

Letter from Ameriprise Counsel to Belands at 1, Mem. in Sup. of

Mot. for Reconsideration Exh. D, In re AEFA, No. 04 Civ. 1773

(S.D.N.Y. Aug. 17, 2010), ECF No. 209-5. When the Belands

refused to withdraw their FINRA Claims, Ameriprise sought

principally to stay the FINRA proceedings while simultaneously

filing an Answer to the Belands' FINRA Complaint. See Motion to

Stay at 1–4. The Motion to Stay explicitly reserved Ameriprise's

right to seek relief in the federal district court pursuant to

the In re AEFA Settlement, requesting a stay of the FINRA

proceedings in order to avoid "a waste of time and other

resources." Id. at 4. In the same document, Ameriprise warned

that "[u]nless Claimants withdraw their Released Claims in this

action, Respondents will be forced to protect their rights by

filing a Motion to Enforce Class Action Settlement as to the

Released Claims" in federal court. Id. 

By simultaneously filing a motion to stay the FINRA

proceedings with its answer to the Belands' FINRA Complaint,

Ameriprise unambiguously expressed its intention to seek judicial

relief and thereby preserved its right to proceed accordingly,

notwithstanding its filing of a substantive answer in the FINRA

arbitration. See Opals on Ice Lingerie v. Body Lines Inc., 320

F.3d 362, 369 (2d Cir. 2003) (where a party's correspondence with

its adversary demonstrates "that it continuously objected to

35

undertook it on Ameriprise's motion.15 1 The question remains
arbitration," those "objections prevent a finding of waiver"). 

The Belands' waiver argument therefore fails.

36

1 whether its ultimate conclusion was correct.

2 B. Scope of Ameriprise's Agreement to Arbitrate

3 We have said that "there is nothing irrevocable about

4 an agreement to arbitrate." Baker & Taylor, Inc. v.

5 AlphaCraze.com Corp., 602 F.3d 486, 490 (2d Cir. 2010) (per

6 curiam) (brackets, ellipsis, and internal quotation marks

7 omitted). Parties may "limit the issues they choose to

8 arbitrate," Stolt-Nielsen, 130 S. Ct. at 1774, and "[n]othing"

9 prevents parties to an agreement "from excluding . . . claims

10 from the scope of an agreement to arbitrate," Mitsubishi Motors

11 Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). 

12 Such limitations and exclusions need not be specified by the

13 initial agreement to arbitrate. "Both of the parties may abandon

14 this method of settling their differences, and under a variety of

15 circumstances one party may waive or destroy by his conduct his

16 right to insist upon arbitration." Baker & Taylor, 602 F.3d at

17 490 (internal quotation marks omitted). In particular, as

18 relevant here, "different or additional contractual arrangements

19 for arbitration can supersede the rights conferred on [a]

20 customer by virtue of [a] broker's membership in a

21 self-regulating organization such as [FINRA]." Kidder, Peabody &

22 Co. v. Zinsmeyer Trusts P'ship, 41 F.3d 861, 864 (2d Cir. 1994)
37

1 (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v.

2 Georgiadis, 903 F.2d 109, 113 (2d Cir. 1990)).

3 The Class Settlement in this case -- by which, as

4 discussed above, the Belands are bound -- is one such "different

5 or additional contractual arrangement[]." Id. "[A]n arbitrator

6 derives his or her powers from the parties' agreement to forgo

7 the legal process and submit their disputes to private dispute

8 resolution." Stolt-Nielsen, 130 S. Ct. at 1774. It follows that

9 where a party initially consents (in this case, by dint of

10 Ameriprise's FINRA membership) to arbitrate certain types of

11 claims, but later enters into a settlement agreement that

12 releases claims that had been subject to the initial consent to

13 arbitrate, the claims that have been released by such a

14 settlement are no longer subject to arbitration.

15 In the case before us, the Belands failed to opt out of

16 the class, and (as explained above) have not demonstrated

17 "excusable neglect" for that failure. Therefore, bound by the

18 Class Settlement and Release, the Belands may not pursue any

19 Released Claims against Ameriprise and its employees. And the

20 Class Settlement "supersedes all prior understandings,

21 communications, and agreements with respect to the subject of

22 this Settlement," Settlement Agreement at 34, including the

23 parties' implicit agreement that the Belands had a right to

24 arbitrate certain claims against Ameriprise by virtue of the
38

1 latter's FINRA membership. In other words, the Class Settlement

2 extinguished not only the ability of Class Members to bring

3 Released Claims against Ameriprise as a matter of substance, but

4 also the Class Members' right to arbitrate those claims. 

5 We find support for this conclusion in the Tenth

6 Circuit's opinion in Riley Manufacturing Co. v. Anchor Glass

7 Container Corp., 157 F.3d 775 (10th Cir. 1998). There, a "merger

8 clause" in a settlement agreement purported to "cancel[],

9 terminate[] and supersede[] any and all prior representations and

10 agreements relating to the subject matter" of the agreement. Id.

11 at 778. The court concluded that the merger clause "revoked the

12 prior right of the parties to demand arbitration on the[]

13 specific topics" that the court concluded were within the bounds

14 of the settlement agreement. Id. at 784; see id. at 782

15 (concluding that "the specific releases in" the settlement

16 agreement "waive[d the plaintiff's] right to demand arbitration

17 on the five topics explicitly listed" in the agreement); see also

18 Miller v. Runyon, 77 F.3d 189, 194 (7th Cir. 1996) ("Given the

19 contractual nature of arbitration, it can be argued that the

20 preclusive effect of either a judicial judgment or an arbitration

21 award on a subsequent arbitration should depend on what the

22 parties agreed to. And then the court will decide as a matter of

23 interpretation of the parties' [agreement to arbitrate] whether
16 In Bank Julius, we concluded that a forum-selection

clause could "be read, consistent with the [a]rbitration

[a]greement, in such a way that the [parties] are required to

arbitrate their disputes," with limitations as to available

challenges regarding jurisdiction and venue. Bank Julius, 424

F.3d at 285. In short, we found no irremediable conflict between

the clauses under analysis in that case.

39

1 the arbitrators can ignore a prior judicial judgment." (citations

2 omitted)), cert. denied, 519 U.S. 937 (1996).

3 We agree with the Tenth Circuit's approach. We

4 conclude that the Belands' entitlement to arbitrate disputes with

5 Ameriprise, arising out of Ameriprise's FINRA membership and

6 defined by Rule 12200, does not extend to the Released Claims

7 defined by the Settlement Agreement because the Settlement

8 Agreement amended the contours of the parties' agreement to

9 arbitrate all disputes between them before FINRA arbitrators.

10 C. District Court's Retention of Jurisdiction over In re AEFA

11 We do not suggest, however, that in all cases, a

12 settlement agreement revokes a prior agreement or consent to

13 arbitrate by releasing claims that would have been subject to

14 arbitration under the earlier agreement or consent. Indeed,

15 "[u]nder our cases, if there is a reading of the various

16 agreements that permits the [a]rbitration [c]lause to remain in

17 effect, we must choose it." Bank Julius Baer & Co. v. Waxfield

Ltd., 424 F.3d 278, 284 (2d Cir. 2005).16 18 However, no such

19 reading is possible here because the Settlement Agreement
40

1 explicitly vests the district court with exclusive jurisdiction

2 to enforce its terms. 

3 A federal court does not automatically retain

4 jurisdiction to hear a motion to enforce or otherwise apply a

5 settlement in a case that it has previously dismissed. See

6 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380–82

7 (1994). Such motions are essentially state-law contract claims

8 to be litigated in the state courts. See id. at 382. However,

9 where, in a federal court, the court makes "the parties'

10 obligation to comply with the terms of the settlement

11 agreement . . . part of the order of dismissal -- either by

12 separate provision (such as a provision 'retaining jurisdiction'

13 over the settlement agreement) or by incorporating the terms of

14 the settlement agreement in the order" -- the proper forum for

15 litigating a breach is that same federal court. Id. at 381;

16 accord Perez v. Westchester County Dep't of Corr., 587 F.3d 143,

17 151–53 (2d Cir. 2009). In cases over which "the district court

18 retain[s] jurisdiction, it necessarily ma[kes] compliance with

19 the terms of the [settlement] agreement a part of its order so

20 that 'a breach of the agreement would be a violation of the

21 order.'" Roberson v. Giuliani, 346 F.3d 75, 82 (2d Cir. 2003)

22 (quoting Kokkonen, 511 U.S. at 381). Further, this Court has

23 said that where "there is ample evidence. . .that the District

24 Court 'intended to place its "judicial imprimatur" on [a]
41

1 settlement,'" the court retains jurisdiction to oversee the

2 enforcement of the agreement. Perez, 587 F.3d at 152 (quoting

3 Torres v. Walker, 356 F.3d 238, 244 n.6 (2d Cir. 2004) (dicta)).

4 That policy interest takes on particular importance in

5 the context of class actions, which are complicated, expensive

6 proceedings involving a multitude of different parties and

7 potential parties but intended ultimately to make enforcement of

8 the rights of all the parties more efficient and less expensive. 

9 As a general matter, the more loose ends that remain after the

10 litigation has been resolved, the less successful the process has

11 been. A district court therefore "has the power to enforce an

12 ongoing order against relitigation so as to protect the integrity

13 of a complex class settlement over which it retained

14 jurisdiction." In re Prudential Ins. Co. of Am. Sales Practice

15 Litig., 261 F.3d 355, 367–68 (3d Cir. 2001); see also In re Gen.

16 Am. Life Ins. Co. Sales Practices Litig., 357 F.3d 800, 803 (8th

17 Cir. 2004) (recognizing "the authority of district courts to

18 enforce by injunction a final judgment embodying the terms

19 settling a class action").

20 In the Enforcement Order requiring the Belands to

21 dismiss their arbitration complaint in its entirety, the district

22 court did not advert to any specific source of its jurisdiction

23 to issue the Enforcement Order. In approving the Settlement

24 Agreement and dismissing the In re AEFA litigation, though, the
42

1 district court had explicitly stated that "[e]xclusive

2 jurisdiction is hereby retained over the Parties and the Class

3 Members for all matters relating to this Action and the

4 Settlement." Order and Final Judgment at 10. Therefore, despite

5 the fact that the district court did officially "'close[]' and

6 dismiss[] with prejudice" the In re AEFA litigation, Endorsed

7 Letter at 1, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Feb. 2,

8 2009), ECF No. 190, the court properly retained jurisdiction to

9 hear the kind of issues relating to the Settlement Agreement's

10 Released Claims raised by the Belands in this case. See Perez,

11 587 F.3d at 151–52.

12 We have found no "reading of the various agreements" at

13 issue in this case that would permit Ameriprise's preexisting and

14 broad consent to arbitrate "to remain in effect," Bank Julius,

15 424 F.3d at 284, in its entirety. Unlike the integrated reading

16 we afforded the forum-selection clause and anterior arbitration

17 agreement in Bank Julius, an interpretation of the Settlement

18 Agreement that would permit the Belands to arbitrate Released

19 Claims would run afoul of the district court's Order and Final

20 Judgment. We arrive at this conclusion even though we approach

21 it "with a healthy regard for the federal policy favoring

22 arbitration." Moses H. Cone, 460 U.S. at 24. Though we must

23 resolve "any doubts concerning the scope of arbitrable

24 issues . . . in favor of arbitration," including when "the
43

1 problem at hand is the construction of the contract language

2 itself," id. at 24–25; accord WorldCrisa Corp. v. Armstrong, 129

3 F.3d 71, 74 (2d Cir. 1997), we are satisfied that no such doubt

4 exists here. In other words, "it may be said with positive

5 assurance" that Ameriprise's consent to arbitrate as reflected in

6 FINRA Rule 12200 -- subsequent to amendment by the Settlement

7 Agreement -- "is not susceptible of an interpretation that covers

8 the asserted dispute" surrounding the Released Claims. AT & T

9 Techs., 475 U.S. at 650.

10 V. Settlement Agreement & Released Claims

11 A. Standard of Review

12 In reviewing a district court's interpretation of the

13 terms of a settlement agreement, we review conclusions of law de

14 novo and findings of fact for clear error. See Ciaramella v.

15 Reader's Digest Ass'n, Inc., 131 F.3d 320, 322 (2d Cir. 1997).

16 B. Interpreting Class-Action Settlement Agreements

17 It is elementary that a settlement agreement cannot

18 release claims that the parties were not authorized to release. 

19 See Nat'l Super Spuds, Inc. v. N.Y. Mercantile Exch., 660 F.2d 9,

20 19 (2d Cir. 1981). At the same time, "[t]he law is well

21 established in this Circuit and others that class action releases

22 may include claims not presented and even those which could not

23 have been presented as long as the released conduct arises out of

24 the 'identical factual predicate' as the settled conduct." Wal-
44

1 Mart, 396 F.3d at 107 (quoting TBK Partners, Ltd. v. W. Union

2 Corp., 675 F.2d 456, 460 (2d Cir. 1982)); cf. TBK Partners, 675

3 F.2d at 461 ("[W]here there is a realistic identity of issues

4 between the settled class action and the subsequent suit, and

5 where the relationship between the suits is at the time of the

6 class action foreseeably obvious to notified class members, the

7 situation is analogous to the barring of claims that could have

8 been asserted in the class action. Under such circumstances the

9 paramount policy of encouraging settlements takes precedence.").

10 Indeed, "[c]lass actions may release claims, even if

11 not pled, when such claims arise out of the same factual

12 predicate as settled class claims." Wal-Mart, 396 F.3d at 108. 

13 And "in order to achieve a comprehensive settlement that would

14 prevent relitigation of settled questions at the core of a class

15 action, a court may permit the release of a claim based on the

16 identical factual predicate as that underlying the claims in the

17 settled class action even though the claim was not presented and

18 might not have been presentable in the class action." TBK

19 Partners, 675 F.2d at 460. 

20 C. Overlap of Claims

21 We begin by noting that the starting point for

22 interpreting settlement agreements is general contract-law

23 principles. See, e.g., Omega Eng'g, 432 F.3d at 443.

24 Here, the Class Settlement stated that the definition

25 of Released Claims included, inter alia,
17 The SPS ("Strategic Portfolio Service"), SMS ("Separately

Managed Account"), and WMS ("Wealth Management Service") programs

"encompassed all of Ameriprise's managed, fee-for-service

accounts or programs in which clients paid a percentage fee for

services that included financial advice, financial planning, or

other financial advisory services." Appellee's Br. at 21 n.3

(internal quotation marks omitted). 

45

1 any and all claims, debts, demands, rights or

2 causes of action or liabilities

3 whatsoever . . . , whether based on federal,

4 state, local, statutory or common law or any

5 other law, rule or regulation, . . .

6 including both known claims and Unknown

7 Claims . . . that (i) have been asserted in

8 this Action by the Plaintiffs . . . or (ii)

9 could have been asserted in any forum by the

10 Plaintiffs or Class Members . . . against any

11 of the Released Persons; including claims

12 that arise out of or are based upon (a) the

13 allegations, transactions, facts, matters or

14 occurrences, representations or omissions

15 alleged, involved, set forth, or referred to

16 in the [Class Complaint] . . . , [and] (b)

17 the offer and sale of financial advice,

18 financial planning, and/or financial advisory

19 services pursuant to a Financial Advisory

20 Service Agreement, or the SPS, WMS or SMA

programs[17] 21 . . . .

22 Settlement Agreement at 7-8. That definition is expansive, but

23 the Settlement Agreement goes on to exclude certain claims from

24 the definition's purview. The Settlement Agreement states that

25 "'Released Claims' shall not include suitability claims unless

26 such claims are alleged to arise out of the common course of

27 conduct that was alleged, or could have been alleged, in the

28 Action, as more fully described herein." Id. at 8 (emphases

29 added). 
46

1 As we explain above, supra note 3, suitability claims

2 are often brought "as a distinct subset" of section 10(b) claims

3 under the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b).

4 See Dodds, 12 F.3d at 351. Ameriprise argues that the Belands do

5 not advert to any specific federal statute, or even the term

6 "suitability," in their FINRA Complaint. And indeed, before the

7 district court, the Belands explicitly disavowed any reliance on

8 federal securities law. Therefore, says Ameriprise, the Belands

9 did not "actually assert[] suitability claims before FINRA." 

10 Appellee's Br. at 26 (emphasis in original) (internal quotation

11 marks omitted). However, particularly because of the lack of a

12 definition of the term in the Class Settlement, for the purposes

13 of this appeal we consider "suitability" to serve more as a

14 general description of the character of potential common-law

15 claims (such as breach of fiduciary duty, breach of contract,

16 fraud, and negligent misrepresentation -- all of which the

17 Belands did allege in the FINRA proceedings), rather than a

18 technical term denoting a specific type of section 10(b) claim. 

19 See also infra note 17. Furthermore, we note that although the

20 Belands also disclaim reliance on state securities laws,

21 regulations issued by the State of Illinois -- the state where

22 the Belands filed their FINRA Complaint -- define

23 "unsuitab[ility]" with reference to "fraud[], decepti[on,] [and]

24 manipulati[on]." Ill. Admin. Code tit. 14, § 130.853. 
47

1 The Belands point to several aspects of their FINRA

2 Claims that demonstrate that not all of them are Released Claims

3 barred by the Class Settlement. First, they argue that their

4 claims span a time period matching that of the existence of their

5 trusts -- from 1995 to 2009 -- while the Release covers only

6 claims between 1999 and 2006. Second, the Belands argue that

7 while the Class Settlement "plainly relate[s] to [claims

8 involving the] sale and promotion of proprietary and affiliated

9 mutual funds for which [Ameriprise] was receiving kickbacks or

10 promoting in-house," Appellants' Reply Br. at 3, the Settlement

11 Agreement's express exclusion of "suitability claims" covers the

12 substance of many of their FINRA Claims, which allege that "the

13 conservative goal of both the Charitable Remainder and Revocable

14 Trusts was not followed" and "individual speculative 'tech'

15 securities were bought and sold," Appellants' Br. at 27; see also

16 Appellants' Reply Br. at 6 (arguing that the Belands' FINRA

17 Claims include "suitability claims unique to the recommendations

18 of Ameriprise broker Ron Miller -- claims related both to

19 misrepresentation and recommendations having nothing to do with

20 American Express mutual funds and shelf space proprietary

21 products"). 

22 Ameriprise counters that the Belands' FINRA Claims

23 "fall squarely within the definition of 'Released Claims.'" 

24 Appellee's Br. at 20. Regardless of any minor differences,

25 Ameriprise contends, the FINRA Claims "plainly 'arise from the
18 Ameriprise also contends that the Belands' suitabilityclaim argument has been forfeited because they did not raise it

until they filed their Motion for Reconsideration before the

district court. However, though the Belands do not appear to

have specifically referred to the "suitability" carve-out clause

before that time, the Belands consistently contended that their

FINRA Claims went well beyond any issue that was or could have

been raised in the Class Action. We therefore decline to accept

Ameriprise's waiver argument regarding the "suitability" carveout clause in the definition of Released Claims. In any event,

"[w]e retain 'broad discretion' to consider issues not timely

raised below." Official Comm. of Unsecured Creditors of Color

Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 159 (2d Cir.

2003).

48

1 same transactions, facts, matters, occurrences, and

2 representations as the claims of the [Class Complaint].'" Id. at

3 21 (quoting Order and Final Judgment at 2). Ameriprise also

4 rejects the Belands' attempt to rely upon the "suitability

5 claims" carve-out in the Class Settlement, inasmuch as the

6 Belands' FINRA Complaint did not explicitly label or otherwise

characterize any of their claims as being "suitability" claims.18 7

8 We agree with the Belands, however, that their FINRA

9 Claims and the Released Claims do not -- indeed, cannot --

10 entirely overlap. First, the Belands' FINRA Complaint

11 unequivocally alleges that Ameriprise and Miller agreed to invest

12 the Belands' funds "in a conservative fashion, preserving capital

13 and obtaining income from which the life beneficiaries could

14 receive a return," FINRA Complaint ¶ 9, but that "[a]

15 conservative asset allocation approach was not taken," id. ¶ 13. 

16 That seems to us to be a quintessential suitability claim. See

17 Kearney v. Prudential-Bache Sec., Inc., 701 F. Supp. 416, 429
49

1 (S.D.N.Y. 1988) (describing a typical suitability claim as a

2 broker's "invest[ment] in risky transactions contrary either to

3 [an investor's] explicit directions or to her interests").

4 Second, although the definition of Released Claims does

5 include suitability claims "aris[ing] out of the common course of

6 conduct that was alleged, or could have been alleged, in the [In

7 re AEFA litigation]," Settlement Agreement at 8, we read the

8 "common course of conduct" alleged in the In re AEFA litigation

9 to be, as described by the Belands, Ameriprise's routine practice

10 of "steering American Express clients into Proprietary or Shelf

11 Space funds through one or more of the managed programs at

12 American Express," Appellants' Reply Br. at 4. Indeed, the Class

13 consisted only of persons who purchased financial plans that

14 invested in the Proprietary or Shelf Space Funds (as well as

15 others who otherwise invested in those Funds). See Class

16 Complaint ¶ 85. As the Class Notice explains, the class action

17 involved investors who "were sold financial plans and/or advice

18 that, instead of being tailored to their individual

19 circumstances, contained standardized recommendations designed to

20 steer them into investing in Defendants' proprietary mutual funds

21 and other proprietary investment products and certain non22 proprietary 'Preferred' or 'Select' mutual funds." Class Notice

23 at 1. The Class Notice further explained that the basis of the

24 class action was the notion that "conflicts of interest inherent

25 in Defendants' financial plans and/or financial advisory
19 That said, we do have some doubts about the time period

allegedly at issue in the Belands' FINRA Complaint. While they

represent that their claims against Ameriprise span from 1995 to

2009, John and Elaine did not become trustees or beneficiaries of

the accounts until 2004. While claims predating their inherited

interest in the Ameriprise accounts might not be Released Claims,

we note that they still might not be valid if the Belands did not

acquire an interest in the accounts prior to that time. However,

50

1 services, and the compensation arrangements between Defendants

2 and the Preferred Funds, were inadequately disclosed to

3 investors." Id. The Belands' claims that Miller mismanaged

4 their trusts contrary to their instructions and investment goals

5 do not fall within that "common course of conduct."

6 Third, the Belands' FINRA Complaint is also devoted in

7 part to the allegation that once they confronted Miller about the

8 accounts' declining assets, "Miller set a course of cover-up,

9 lies and deceit in order to obscure the mishandling in the"

10 accounts, providing false justifications for investment decisions

11 and shielding the truth about Ameriprise's motives and conflicts

12 of interest. FINRA Complaint ¶ 20; see also id. ¶¶ 25–27. Among

13 those allegedly false reasons were the September 11 terrorist

14 attacks and that the charitable trust was set to diminish "by

15 design." Id. ¶¶ 21–24 (internal quotation marks omitted). 

16 Claims dependent upon allegations of this sort were plainly not

17 Released Claims under the In re AEFA Class Settlement.

18 Fourth, there can be no question that the Belands'

19 claims, to the extent that they involve conduct occurring after

the Class Period, cannot be Released Claims.19 20
that is a determination we leave for further factfinding by the

arbitrators.

51

1 To be sure, some -- if not many -- of the allegations

2 in the Belands' FINRA Complaint constitute Released Claims. For

3 example, they allege that "[a]lmost from the start, rather than

4 invest in conservative large cap stocks, paying good dividends as

5 well as substantial bond portfolios, Miller and Ameriprise

6 invested in many house American Express mutual funds including

7 various high yield junk bond funds." FINRA Complaint ¶ 14

8 (emphasis added). Similarly, they allege that Ameriprise "has

9 managed [the Belands' accounts] in a fashion . . . designed

10 primarily to generate fees and income for Ameriprise. . . [and]

11 to promote in-house mutual funds of American Express." Id. ¶ 13. 

12 To the extent the FINRA Complaint contains similar claims, the

13 claims are conclusively Released Claims and are, as such, barred.

14 However, the Belands also clearly allege in their FINRA

15 Complaint that Ameriprise invested in "risky small cap or start16 up funds" that "exposed" the Belands' accounts "to tremendous

17 market risk which was unsuitable for the[ir] account objectives." 

18 Id. ¶¶ 13–14 (emphasis added). And while the In re AEFA Class

19 Period lasted from March 10, 1999 to April 1, 2006, the Belands'

20 complaint stretches all the way into 2009. Those claims, we

21 conclude, are not Released Claims and therefore are not barred by

22 the In re AEFA Class Settlement.

23 D. Conclusion
52

1 To summarize: Ameriprise consented to arbitrate

2 disputes with the Belands -- its customers -- by virtue of its

3 membership in FINRA. FINRA Rule 12200 is a broad provision that

4 clearly encompasses the Belands' FINRA Claims, as they

5 indisputably "arise[] in connection with the business activities

6 of" Ameriprise and Miller. FINRA Code § 12200. Even if it were

7 a closer question, because the issue would be one of "the

8 construction of the contract language itself," we would "resolve

9 'any doubts concerning the scope of arbitrable issues . . . in

10 favor of arbitration. . . .'" Republic of Ecuador, 638 F.3d at

11 393 (quoting Moses H. Cone, 460 U.S. at 24–25) . 

12 The scope of an agreement to arbitrate is a "question

13 of arbitrability" within the purview of the court, and therefore

14 we can properly undertake the task of determining the breadth of

15 Ameriprise's consent to arbitrate. In our view, the Settlement

16 Agreement "modif[ied]" Ameriprise's "fundamental and broad

17 commitment," through its FINRA membership, "to arbitrate any

18 dispute," Bechtel do Brasil Construções Ltda. v. UEG Araucária

19 Ltda., 638 F.3d 150, 155 (2d Cir. 2011) (emphasis in original),

20 with the Belands. Specifically, the Settlement Agreement altered

21 Ameriprise's prior expansive commitment to arbitrate by removing

22 the Released Claims from the scope of that commitment.

23 We therefore conclude that Ameriprise (1) has not

24 agreed to arbitrate the Released Claims as defined in the
53

1 Settlement Agreement, but (2) that it has agreed to arbitrate any

2 non-Released Claims asserted in the Belands' FINRA Complaint.

3 VI. District Court's Remedial Power

4 A. Power to Enjoin Arbitration

5 The question "of whether federal courts have the power

6 to stay arbitration under the FAA (or any other authority) in an

7 appropriate case" is an open one in this Circuit. Republic of

8 Ecuador, 638 F.3d at 391 (citing Westmoreland Capital Corp. v.

9 Findlay, 100 F.3d 263, 266 n.3 (2d Cir. 1996), abrogated on other

10 grounds by Vaden v. Discover Bank, 556 U.S. 49 (2009)). But see

11 In re U.S. Lines, Inc., 197 F.3d 631, 639 (2d Cir. 1999) ("In the

12 bankruptcy setting, congressional intent to permit a bankruptcy

13 court to enjoin arbitration is sufficiently clear to override

14 even international arbitration agreements."); Video Tutorial

15 Servs., Inc. v. MCI Telecomms. Corp., 79 F.3d 3, 5 (2d Cir. 1996)

16 (per curiam) (failing to reach the issue but noting that "[w]e

17 would be hard-pressed to say that a district court cannot stay

18 arbitration for a short time while familiarizing itself with the

19 issues underlying a proposed motion to stay a suit pending

20 arbitration, or a proposed motion to stay an arbitration"). But

21 we find no indication that this issue was contested in the

22 district court proceedings, and it was left unaddressed in both

23 briefing to and oral argument before us. However, it is not one

24 we think we can ignore simply because the parties have not

25 squarely presented it to the Court. Although it is not a
54

1 question upon the answer to which our jurisdiction depends, we

2 view it as one we ought to address inasmuch as it implicates "the

3 remedial powers of the court," Steel Co. v. Citizens for a Better

4 Env't, 523 U.S. 83, 90 (1998) (emphasis in original), to issue

5 the Enforcement Order. See AEP Energy Servs. Gas Holding Co. v.

6 Bank of Am., N.A., 626 F.3d 699, 719 (2d Cir. 2010). In the

7 words of another court, the issue represents "a high order

8 challenge": 

9 On the one hand, a realistic concern for the

10 finality and integrity of judgments would

11 arise if parties were free to ignore federal

12 court decisions that have conclusively

13 settled claims or issues now sought to be

14 arbitrated. Yet, arbitration is a matter of

15 contract and the FAA only authorizes a

16 limited review of the parties' intent before

17 compelling or enjoining arbitration.

18 Olick, 151 F.3d at 138(internal quotation marks omitted).

19 While the FAA's terms explicitly authorize a district

20 court to stay litigation pending arbitration, see 9 U.S.C. § 3,

21 and to compel arbitration, see id. § 4, nowhere does it

22 explicitly confer on the judiciary the authority to do what the

23 district court's Enforcement Order purported to do here: enjoin a

24 private arbitration.

25 Our decisions do suggest, however, that, at least where

26 the court determines -- pursuant to the first step outlined in

27 ACE Capital, 307 F.3d at 28, discussed above -- that the parties

28 have not entered into a valid and binding arbitration agreement,

29 the court has the authority to enjoin the arbitration
55

1 proceedings. See United States v. Eberhard, No. 03 Cr. 562, 2004

2 WL 616122, at *3, 2004 U.S. Dist. LEXIS 5029, at *10 (S.D.N.Y.

3 Mar. 30, 2004) ("[W]here courts in this Circuit have concluded

4 that § 4 of the FAA permits the issuance of a stay [of a private

5 arbitration], . . . they appear to have done so only in those

6 circumstances where a stay would be incidental to the court's

7 power under the FAA to enforce contractual agreements calling for

8 arbitration . . . ."). In Citigroup Global Mkts., Inc. v. VCG

9 Special Opportunities Master Fund Ltd., 598 F.3d 30 (2d Cir.

10 2010), we affirmed a district court's order preliminarily

11 enjoining a FINRA arbitration from proceeding. Id. at 40. In

12 that case, the district court had "serious questions" as to

13 whether one party was in fact a "customer" of a FINRA member

14 (which status, as we observed above, would bind the other party

15 to arbitrate). Id. at 33–34 (internal quotation marks omitted). 

16 We concurred with that assessment, concluding that the "customer"

17 status of the party was an "issue . . . in sharp dispute." Id.

18 at 39 (internal quotation marks omitted). In other words, we

19 doubted the existence of a binding agreement to arbitrate in that

20 case.

21 We have also affirmed a district court's stay of

22 arbitration after determining that the initiation of judicial

23 proceedings in a foreign country constituted a waiver of a

24 plaintiff's right to arbitration, see Zwitserse Maatschappij van

25 Levensverzekering en Lijfrente v. ABN Int'l Capital Mkts. Corp.,
56

1 996 F.2d 1478, 1480-81 (2d Cir. 1993) (per curiam), as we have a

2 stay of arbitration over various claims that we held were not

3 within the scope of an arbitration agreement, even while

4 affirming an order compelling arbitration of related validly

5 arbitrable claims, see Collins & Aikman, 58 F.3d at 23. Both of

6 those cases, in addition to Citigroup Global Markets, suggest

7 that a federal court may enjoin an arbitration that the court

8 determines is not otherwise valid. See also SATCOM Int'l Grp.

9 PLC v. ORBCOMM Int'l Partners, L.P., 49 F. Supp. 2d 331, 341–42

10 (S.D.N.Y. 1999) (enjoining an arbitration in a case arising under

11 the New York Convention, 9 U.S.C. §§ 201-208, after finding that

12 such arbitration was "inappropriate" because the plaintiff had

13 "waived any right it previously had to arbitrate the issues in

14 th[e] case").

15 The First Circuit's opinion in Societe Generale de

16 Surveillance, S.A. v. Raytheon European Mgmt. & Sys. Co., 643

17 F.2d 863 (1st Cir. 1981), is instructive. There, the court

18 considered a party's argument that the FAA "removes the district

19 court's power to enjoin [an] arbitration." Id. at 867. The

20 court first noted that the FAA "expressly provides federal courts

21 with the power to order parties to a dispute to proceed to

22 arbitration where arbitration is called for by the contract." 

23 Id. at 868 (citing 9 U.S.C. § 3). It inferred that "to enjoin a

24 party from arbitrating where an agreement to arbitrate is absent

25 is the concomitant of the power to compel arbitration where it is
57

1 present." Id. The court concluded that "[t]o allow a federal

2 court to enjoin an arbitration proceeding which is not called for

3 by the contract interferes with neither the letter nor the spirit

4 of" the FAA. Id.; see also PaineWebber Inc. v. Hartmann, 921

5 F.2d 507, 511 (3d Cir. 1990) ("If a court determines that a valid

6 arbitration agreement does not exist or that the matter at issue

7 clearly falls outside of the substantive scope of the agreement,

8 it is obliged to enjoin arbitration."), overruled by implication

9 on other grounds by Howsam, 537 U.S. 79. 

10 We confirm and apply those principles here. If the

11 parties to this appeal have not consented to arbitrate a claim,

12 the district court was not powerless to prevent one party from

13 foisting upon the other an arbitration process to which the first

14 party had no contractual right. As is clear from the Supreme

15 Court's and this Circuit's cases, "[a]rbitration under the [FAA]

16 is a matter of consent, not coercion." Volt, 489 U.S. at 479;

17 see also Howsam, 537 U.S. at 83 ("[A]rbitration is a matter of

18 contract and a party cannot be required to submit to arbitration

19 any dispute which he has not agreed so to submit." (internal

20 quotation marks omitted)). It makes little sense to us to

21 conclude that district courts lack the authority to order the

22 cessation of an arbitration by parties within its jurisdiction

23 where such authority appears necessary in order for a court to
20 We pause to note that we are relying on a reading of the

FAA, FINRA Rule 12200, and the Settlement Agreement. The

particular circumstances presented in this appeal -- with

emphasis on the exclusive nature of the In re AEFA district

court's retention of jurisdiction over the Settlement Agreement -

- persuades us that the district court here could properly enjoin

the private arbitration of claims already settled and released by

class members such as the Belands.

However, the All Writs Act, 28 U.S.C. § 1651(a), authorizes

federal courts to issue "all writs necessary or appropriate in

aid of their respective jurisdictions." See Klay v. United

Healthgroup, Inc., 376 F.3d 1092, 1099 (11th Cir. 2004) ("In

allowing courts to protect their 'respective jurisdictions,' the

[All Writs] Act allows them to safeguard not only ongoing

proceedings, but potential future proceedings, as well as

already-issued orders and judgments." (footnotes omitted)). Some

courts have explicitly relied upon the All Writs Act in enjoining

arbitrations in similar circumstances to those before us in this

appeal. See, e.g., In re Y & A Grp. Sec. Litig., 38 F.3d 380,

382, 382–83 (8th Cir. 1994) (relying in part on the All Writs Act

in concluding that "[n]o matter what, courts have the power to

defend their judgments as res judicata, including the power to

enjoin or stay subsequent arbitrations"); Hartley v. Stamford

Towers Ltd. P'ship, Nos. 92-16802 & 92-56528, 1994 WL 463497, at

*3–*4, 1994 U.S. App. LEXIS 23543, at *12 (9th Cir. Aug. 26,

1994) (unpublished opinion) (noting that the All Writs Act's

"grant of authority includes jurisdiction to enforce a class

action judgment" by enjoining an arbitration, and one party's

"participation in the arbitration process cannot affect the

District Court's authority to enforce its judgments"); see also,

e.g., Eberhard, 2004 WL 616122, at *3 n.6, 2004 U.S. Dist. LEXIS

5029, at *12 n.6 ("If this Court does not choose to exercise

[its] power here, it is not for lack of such power but because

the NASD arbitrations have not been shown to interfere with the

Court's jurisdiction."). But see Klay, 376 F.3d at 1102–03 ("The

simple fact that litigation involving the same issues is

occurring concurrently in another forum does not sufficiently

threaten the court's jurisdiction as to warrant an injunction

under the" All Writs Act.).

We thus do not decide whether the dictates of the All Writs

Act might, in another case without the type of jurisdictional

retention present here, give a district court "the authority to

58

1 enforce the terms of the parties' own agreement, as reflected in

a settlement agreement. We decline to do so here.20 2
enjoin arbitration to prevent re-litigation," Kelly v. Merrill

Lynch, Pierce, Fenner & Smith, Inc., 985 F.2d 1067, 1069 (11th

Cir. 1993), rev'd in part on other grounds by Howsam, 537 U.S.

79.

59

1 B. Application to Enforcement Order

2 The Supreme Court has made clear that "[t]he preeminent

3 concern of Congress in passing the [FAA] was to enforce private

4 agreements into which parties had entered, and that concern

5 requires that we rigorously enforce agreements to arbitrate, even

6 if the result is 'piecemeal' litigation." Dean Witter Reynolds,

7 Inc. v. Byrd, 470 U.S. 213, 221 (1985) (emphasis added); see

8 Moses H. Cone, 460 U.S. at 20 ("[F]ederal law requires piecemeal

9 resolution when necessary to give effect to an arbitration

10 agreement." (emphasis in original)); Collins & Aikman, 58 F.3d at

11 20; see also Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529,

12 532 (3d Cir. 2005) ("When a dispute consists of several claims,

13 the court must determine on an issue-by-issue basis whether a

14 party bears a duty to arbitrate."). It is therefore appropriate

15 for us -- and the district court -- to treat the Belands'

16 Released and non-Released FINRA Claims differently.

17 Because we have concluded that a district court may

18 properly enjoin arbitration proceedings that are not covered by a

19 valid and binding arbitration agreement, and because we have

20 further determined that no such agreement exists in this case as

21 to the Released Claims, we find no error in, and therefore

22 affirm, that portion of the district court's Enforcement Order
60

1 that enjoined the Belands' FINRA Arbitration as to the Released

2 Claims.

3 However, as we have also discussed, the Belands' FINRA

4 Complaint contains various claims not encompassed by -- indeed,

5 in certain cases specifically excluded by -- the Release. Those

6 non-Released Claims include claims based on, inter alia,

7 unsuitable investment in technology stocks, misrepresentations

8 and omissions regarding those investments, and claims involving

9 alleged conduct falling outside the Class Period. Because

10 Ameriprise's consent to arbitrate, even as amended (i.e.,

11 limited) by the Settlement Agreement, continues to embrace the

12 non-Released Claims, the district court -- to that extent only --

13 lacked the authority to enjoin the arbitration of the Belands'

14 FINRA Claims. Therefore, we vacate the portion of the

15 Enforcement Order that purported to enjoin the Belands from

16 presenting those claims to the FINRA arbitrators. We remand this

17 matter to the district court for entry of an appropriately

18 limited order enjoining only the arbitration of the Released

19 Claims.

20 CONCLUSION

21 For the foregoing reasons, we affirm that portion of

22 the district court's judgment enjoining the Belands from

23 arbitrating their Released Claims before FINRA arbitrators, and

24 we vacate that portion of the court's judgment enjoining

25 arbitration of any non-Released Claims. In light of our
61

1 disposition of this appeal, we dismiss as moot the Belands'

2 appeal from the district court's denial of their motion for

3 reconsideration. We remand for further proceedings.

4 Each party shall bear his, her, or its own costs.