UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

WEI WANG and JOHN LINDSTROM, 

Individually and On Behalf of All Others 

Similarly Situated 

Plaintiffs, 

v. 

TD AMERITRADE, INC., and 

TD AMERITRADE FUTURES & 

FOREX, LLC dba THINKORSWIM 

Defendants. 

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Case No. 1:20-cv-04028 

Hon. Virginia M. Kendall 

DEFENDANTS’ REPLY IN SUPPORT OF 

MOTION TO DISMISS AMENDED COMPLAINT 

Michael J. Lohnes 

Peter G. Wilson 

Carrie M. Stickel 

KATTEN MUCHIN ROSENMAN LLP 

525 West Monroe Street, Suite 1900 

Chicago, Illinois 60661-3693 

(312) 902-5600 

michael.lohnes@katten.com 

peter.wilson@katten.com 

carrie.stickel@katten.com 

Counsel for Defendants, TD Ameritrade, Inc. 

and TD Ameritrade Futures & Forex, LLC 

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Defendants TD Ameritrade, Inc. (“TDA”) and TD Ameritrade Futures & Forex, LLC 

(“TDAFF”) dba thinkorswim (collectively, “Defendants”), by and through their undersigned 

counsel, submit this Reply in further support of Defendants’ Motion to Dismiss the Amended 

Complaint (Dkt. No. 24).1 For the reasons set forth herein and in Defendants’ Memorandum of 

Law in Support of their Motion to Dismiss (Dkt. No. 25) (the “Motion” or “Mtn.”), the Amended 

Complaint should be dismissed with prejudice. 

INTRODUCTION 

Plaintiffs2 cannot state a claim to recoup losses suffered as a result of their decision to 

invest in crude oil futures before the historic collapse of the crude oil market on April 20, 2020. It 

is well established that Plaintiffs, as non-discretionary (self-directed) clients, were owed the 

narrowest of duties. Plaintiffs cite no authority that imposed a duty on TDAFF to forward 

(indisputably public) notices from the CME. And well-established law and the agreement between 

the parties make plain that TDAFF had the right, but not the obligation, to liquidate their positions. 

These pleading deficiencies, as well as Plaintiffs’ failure to allege scienter, reliance, loss causation, 

and transaction causation, require dismissal of their fraud claims. 

So too with Plaintiffs’ contract and negligence claims. Nowhere in the Futures Client 

Agreement does TDAFF promise to undertake the obligations asserted, or to insure against every 

potential system issue—just the opposite. Plaintiffs cannot state a claim by ignoring wellestablished law, or waiving away unambiguous contractual terms as “fine print.” Faced with all 

 

1

 Defendants expressly reserve all rights in connection with their currently pending Motion to Compel 

Arbitration of Plaintiff Wang’s claims (Dkt. No. 22). Defendants also note that Plaintiffs’ Response to 

Defendants’ Motion to Dismiss (the “Opposition” or “Opp.”) is twenty-four pages long, nine pages longer 

than permissible under L.R. 7.1. Although Defendants requested, and were granted, an extension of the 

default page limit for their opening Motion before filing (Dkt. Nos. 18, 20), Plaintiffs did not request any 

such relief. 

2

 Capitalized terms used, but not defined, herein shall have the meanings given to them in the Motion. 

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of these pleading deficiencies, Plaintiffs pin their hopes on TDAFF’s FCM-Specific Disclosure 

Document (AC Ex. D, the “FCM Disclosures”), asserting that every duty TDAFF allegedly owed 

them arises “implicitly” from the description of the firm’s “robust risk management” program. 

But these CFTC-mandated disclosures aimed at TDAFF’s structure and enterprise-level financial 

stability say nothing about TDAFF’s obligations with respect to client accounts. Those limited 

duties are set out in the Futures Client Agreement. The FCM Disclosures are a diversion. 

Plaintiffs also fail to meaningfully address Defendants’ arguments as to why the 

declaratory judgment claim must be dismissed, instead arguing that the TDA Client Agreement 

creates a dispute about whether their class action claims can be arbitrated. But that agreement is 

expressly limited to securities brokerage accounts with TDA (and its clearing firm TD Ameritrade 

Clearing, Inc.) and does not apply to Plaintiffs’ claims, which are solely related to futures trading 

and accounts at TDAFF. Plaintiffs’ Opposition confirms that Plaintiffs cannot state a claim against 

Defendants, and the Amended Complaint should be dismissed with prejudice. 

I. PLAINTIFFS’ RULE 180.1 FRAUD CLAIM MUST BE DISMISSED. 

A. Plaintiffs’ Claim Does Not Satisfy Rule 9(b)’s Pleading Requirements. 

Plaintiffs do not dispute that Rule 9(b) applies to their claim under Rule 180.1 and agree 

that Pirelli Armstrong Tire Co. Retiree Medical Benefits Trust v. Walgreen Co., 631 F.3d 436, 443 

(7th Cir. 2011), sets forth the applicable standard to allege fraud based “upon information and 

belief.” (Opp. at 7 (citing Pirelli).) A plaintiff pleading fraud on information and belief must 

allege “the grounds” for his suspicions or that the circumstances constituting the fraud are not 

accessible to him. Pirelli, 631 F.3d at 443; (Mtn. at 8-9). Plaintiffs do neither, despite the fact 

that they plead nearly every allegation on information and belief (AC at 1), and simply declare that 

their allegations are “plausible” and suggest that Defendants must identify “problematic” 

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allegations—a shifting of the pleading burden unsupported by case law. (Opp. at 7-8.) Both 

because Plaintiffs do not properly provide a basis for their widespread pleading on information 

and belief and because allegations made on information and belief “generally cannot satisfy” Rule 

9(b), Plaintiffs’ fraud claim should be dismissed. See Pirelli, 631 F.3d at 442. 

B. Plaintiffs Do Not Allege a Duty to Disclose or Other Actionable Misconduct.

1. TDAFF Had No Duty to Disclose the Allegedly Omitted Information. 

Plaintiffs’ Opposition makes clear that their claims depend only on the alleged omission of 

“the text of the CME’s warnings” that oil futures might go negative, abandoning any argument 

that TDAFF should have informed them that the market was at zero. (Opp. at 9.) But Plaintiffs 

still have not identified any duty requiring TDAFF to forward that information to them, 

information they concede was publicly available. (Id.) And Plaintiffs ignore the disclosures 

regarding the risk of commodities trading that were made to them. (AC Ex. A ¶ 23.) Their Rule 

180.1 claim fails for each of these reasons. 

Plaintiffs do not dispute that to state a fraud claim based on this alleged omission, they 

must first identify a duty requiring TDAFF to disclose such information. See Toulon v. Cont’l 

Cas. Co., 877 F.3d 725, 737 (7th Cir. 2017). But Plaintiffs still have not done so. The Futures 

Client Agreement states that TDAFF has “no fiduciary obligations” to Plaintiffs. (AC Ex. A ¶ 

1(e).) This is consistent with established law, which imposes only limited duties on brokers, with 

respect to non-discretionary accounts, “begin[ning] and end[ing] with each transaction” to execute 

upon a client’s instructions. De Kwiatkowski v. Bear, Stearns & Co., Inc., 306 F.3d 1293, 1306 

(2d Cir. 2002).3 The cases Plaintiffs cite for the general concept that brokers may owe fiduciary 

 

3

 Even setting aside this disclaimer in the Futures Client Agreement and established law, Plaintiffs do not 

allege that a fiduciary duty existed or was breached. In fact, the word “fiduciary” does not even appear in 

the Amended Complaint. (See AC.) Plaintiffs are thus arguing, impermissibly, that TDAFF owed a duty 

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duties to certain clients do not hold otherwise. (See Opp. at 8 (citing Scott v. Dime Sav. Bank of 

New York, 886 F. Supp. 1073, 1079 (S.D.N.Y. 1995) (involving investment advisory relationship 

and citing cases holding that brokers may owe fiduciary duties to discretionary account holders); 

Conway v. Icahn & Co., 16 F.3d 504, 510 (2d Cir. 1994) (broker owed fiduciary duty to warn nondiscretionary account holder of margin calls where customer negotiated a special margin 

requirement)).) None of these cases (or any case for that matter) expands the very narrow duty 

TDAFF owed to Plaintiffs or states that a broker has a continuing duty to inform its clients of 

market events, pricing information, or CME Notices. 

Plaintiffs do not dispute that they were explicitly and repeatedly warned that trading in 

futures contracts is “speculative,” and the risk of loss could be “substantial” and result in “loss in 

excess of [their] margin deposit.” (AC Ex. A ¶ 23; Mtn. at 10.) Rather than addressing these 

warnings, Plaintiffs repeatedly quote the FCM Disclosures discussing TDAFF’s internal, 

enterprise-level “risk management policies and procedures” and “robust risk management 

processes.” (See Opp. at 4, 8-9, 17-18.)4 The FCM Disclosures are not an “advertisement,” as 

Plaintiffs suggest (Opp. at 9), but rather regulatory disclosures required under CFTC Rule 1.55(k)5

that provide organizational level information and financial data to allow clients to assess TDAFF’s 

financial health. (AC Ex. D at 4-7.) The “Risk Management Summary” section containing the 

“robust risk management processes” language that Plaintiffs fixate on (Opp. at 4, 8-9, 17-18), 

 

to disclose based on a fiduciary duty they did not allege. See Knowles v. TD Ameritrade Holding Corp., 

427 F. Supp. 3d 1070 (D. Neb. 2019), appeal docketed, No. 19-3684 (8th Cir. Dec. 16, 2019). 

4

 Plaintiffs’ discussion of puffery in connection with the FCM Disclosures (Opp. at 9) is not relevant, as 

Plaintiffs do not allege that the FCM Disclosures were false or misleading. 

5 See Enhancing Protections Afforded Customers and Customer Funds Held by Futures Comm’n Merchs. 

and Derivatives Clearing Orgs., 78 FR 68505, at 68564 (Nov. 11, 2013) (CFTC adopting release providing 

that these disclosures are designed “to enable customers to make informed judgments regarding the 

appropriateness of selecting an FCM by providing information for the meaningful comparisons of business 

models and risks across FCMs”).

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explains that TDAFF’s risk management policies and procedures are “designed to monitor and 

manage the risks associated with the activities of TD Ameritrade Futures & Forex,” not its clients. 

(AC Ex. D at 8 (emphasis added).) Nor do the FCM Disclosures require TDAFF to “forward” 

CME Notices to its clients, otherwise warn clients of potential changes in market conditions, or 

manage the market risk of Plaintiffs’ futures positions. (Cf. Opp. at 3; AC Ex. D.) Plaintiffs’ 

unsupported argument that these disclosures create other, unwritten obligations and expand those 

explicitly set forth in the Futures Client Agreement fails.6 (See Opp. at 8.) 

The CME Notices were publicly available, in any event. (Opp. at 9.) Plaintiffs assert that 

they were not aware of them, even though they acknowledge that Lindstrom was aware of a 

“situation.” (Id.) Regardless, “[a] plaintiff cannot credibly claim to be misled by a company’s 

attempt to hide negative information when that same information is publicly available via alternate 

channels.” In re Westell Techs. Secs. Litig., Inc., No. 00 C 6735, 2001 WL 1313785, at *8 (N.D. 

Ill. Oct. 26, 2001). Accordingly, the omissions that Plaintiffs allege cannot support their fraud 

claim. 

2. Plaintiffs’ Liquidation Arguments Are Contradictory and Unavailing. 

The Amended Complaint simultaneously alleges that TDAFF “recklessly liquidated” and 

failed to liquidate Plaintiffs’ positions. (AC ¶¶ 2, 4.) Plaintiffs have now abandoned their “reckless 

liquidation” theory (see generally Opp.) in favor of a new argument that Defendants should have, 

but failed to, liquidate Plaintiffs’ positions as a “simple” risk management measure, quoting again 

from the FCM Disclosures. (Opp. at 9.) However, even Plaintiffs admit that the Futures Client 

 

6

 To the extent Plaintiffs argue that the FCM Disclosures are part of the Futures Client Agreement or 

incorporated by reference, they are incorrect. Nebraska law requires direct language expressly 

incorporating the second document, which does not exist in the Futures Client Agreement. See Morrissey 

v. Knippelmeyer, No. A-03-1059, 2006 WL 462429, at *9 (Neb. Ct. App. Feb. 28, 2006); see also Bd. of 

Mgrs. of Chestnut Hills Condo. Ass’n v. Pasquinelli, Inc., 822 N.E.2d 12, 17 (Ill. App. Ct. 2004); (AC Ex. 

A ¶ 17 (containing merger clause)). 

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Agreement allowed TDAFF to liquidate their positions, but did not require TDAFF to do so. (Id.

at 9; AC Ex. A ¶ 6 (authorizing liquidation “without prior notice and in [TDAFF’s] sole 

discretion”).) Plaintiffs can cite no authority for the proposition that general FCM Disclosures, 

which in no way address liquidation of client positions, override specific contractual provisions 

that do. (See Opp. at 9.) Nor do Plaintiffs attempt to reconcile this novel claim with long-standing 

authority giving firms the discretion to liquidate (or not) unsecured accounts. See, e.g., Cap. 

Options Invs., Inc. v. Goldberg Bros. Commodities, Inc., 958 F.2d 186, 190 (7th Cir. 1992); (see 

also Mtn. at 11-12). Plaintiffs’ allegations regarding liquidation do not support their fraud claim.

3. The Alleged System Issue Does Not Support a Fraud Claim. 

Plaintiffs attempt to rewrite the unambiguous language of the Futures Client Agreement by 

arguing that it prohibits claims based on system failures, but not alleged failures to “set up” the 

system as Plaintiffs now retroactively claim TDAFF should have done. (Opp. at 10-11.) However, 

the Futures Client Agreement broadly disclaims all liability for systems failures, defective 

performance, or its clients’ inability “to engage in any futures related activities” whether because 

of “electronic or other mechanical failure” or “any other reason.” (AC Ex. A ¶ 10 (emphasis 

added).) This language squarely forecloses Plaintiffs’ claims. 

Plaintiffs also fail to distinguish case law precluding their claims. Plaintiffs instead argue 

that Zerman v. Jacobs, 510 F. Supp. 132, 134 (S.D.N.Y. 1981), and Alaska Electric Pension Fund 

v. Adecco S.A., 434 F. Supp. 2d 815, 827 (S.D. Cal. 2006), are inapposite because the wrongdoing 

in those cases was allegedly “knowing” or “willful.” (Opp. at 10.) But Plaintiffs here likewise 

allege that TDAFF’s purported system issue was “knowing, not inadvertent.” (Id.) Beyond that, 

Plaintiffs cite no authority holding that an alleged failure to design a trading platform to account 

for an uncertain, specific market event can be fraud. TDAFF’s alleged system issue cannot support 

Plaintiffs’ Rule 180.1 claim. 

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C. Plaintiffs Do Not and Cannot Allege the Scienter Required for Fraud. 

Plaintiffs argue that they have adequately alleged scienter because TDAFF was aware from 

public CME Notices that oil futures prices might go negative.7 (Opp. at 11-12.) But merely 

alleging that a defendant had knowledge of an uncertain future event does not demonstrate the 

scienter required for a fraud claim. See In re Chicago Bd. Options Exchange, 390 F. Supp. 3d 916, 

934 (N.D. Ill. 2019) (plaintiffs’ allegations that defendants had knowledge that the system they 

designed was particularly vulnerable to manipulation did not satisfy scienter requirement). To 

plead scienter, a plaintiff must allege facts showing either (i) that defendants had “both motive and 

opportunity to commit fraud” or (ii) “strong circumstantial evidence of conscious misbehavior or 

recklessness.” Rubinstein v. Gonzalez, 241 F. Supp. 3d 841, 854-55 (N.D. Ill. 2017). Plaintiffs 

do neither. Though Plaintiffs admit that reckless conduct requires “a highly unreasonable 

omission, involving not merely simple, or even inexcusable negligence, but an extreme departure 

from the standards of ordinary care,” (Opp. at 11-12, citing Sundstrand Corp. v. Sun Chem. Corp., 

553 F.2d 1033, 1045 (7th Cir. 1977)), they make no attempt whatsoever to explain how TDAFF’s 

alleged receipt of, and failure to forward, publicly available CME Notices demonstrates such 

recklessness. (Opp. at 12.) Plaintiffs also fail to allege any motive,8 despite acknowledging that 

their failure to do so “is particularly significant” to the evaluation of their claims.9 (Opp. at 12; 

 

7

 Plaintiffs make no attempt to argue that they have adequately alleged scienter with respect to their 

liquidation and system issue claims. (See Opp. at 11-12.) These claims can and should be dismissed for 

this reason alone. 

8

 Plaintiffs’ Opposition quibbles with the idea that TDAFF has to cover any losses Plaintiffs sustained 

through the historic market events on April 20, 2020. (Opp. at 5 n.1.) Plaintiffs ignore that even if TDAFF 

“pass[es]” a customer’s losses through to his account (id.), if the customer cannot or does not satisfy that 

loss, TDAFF remains ultimately responsible for covering the loss. 

9

 For this same reason, Plaintiffs cannot satisfy (and do not even address) Rule 9(b)’s requirement that 

Plaintiffs identify what exactly “the defendants obtained as a consequence of the fraud.” Boltz v. Flagship 

Partners Ltd. P’ship, No. 89 C 9103, 1990 WL 125411, at *3 (N.D. Ill. Aug. 22, 1990). 

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McGee v. Am. Oriental Bioengineering Inc., No. CV 12-5476 FMO (SHX), 2014 WL 12586107, 

at *15 (C.D. Cal. Sept. 23, 2014).) Plaintiffs’ failure to adequately plead scienter requires 

dismissal. 

D. Plaintiffs Do Not Allege Reliance. 

Plaintiffs have never alleged that they wanted, intended, or tried to exit their positions on 

April 20, 2020, but were unable to do so because of TDAFF’s alleged omission or system issue. 

(See Mtn. at 23; see generally AC.) Plaintiffs also blithely ignore that the Futures Client 

Agreement disclaims liability for, and thus discloses the possibility of, defective system 

performance. (Opp. at 13.) Plaintiffs’ attempt to distinguish Wachovia Securities, LLC v. 

Neuhauser thus fails: in that case, the plaintiff could not bring a fraud claim premised on an alleged 

“omission” that the defendant had actually disclosed. No. 04 C 3082, 2004 WL 2526390, at *8 

(N.D. Ill. Nov. 5, 2004). Similarly, in addition to the Futures Client Agreement’s numerous 

warnings regarding the risks associated with commodities trading, Plaintiffs admit that Lindstrom 

“was aware that there was a situation” with the falling prices of oil futures, echoing the Amended 

Complaint’s allegations that he was aware on April 20, 2020, that “the price of the Crude Oil 

contracts w[as] declining.” (Opp. at 9; AC ¶ 45.) Under these circumstances, it is impossible for 

Plaintiffs to allege any reliance on TDAFF’s alleged omissions regarding falling prices and 

allegedly fraudulent conduct. 

Plaintiffs also imply that Defendants’ argument “that Plaintiffs must have known about the 

likelihood of oil going negative” due to widespread public discussion turns on whether Plaintiffs 

were actually aware of such discussion.10 (Opp. at 13-14.) Regardless of whether Plaintiffs 

 

10 Plaintiffs take issue with the substance of the articles Defendants cited in their Motion. (Opp. at 13-14.) 

However, Defendants cited these articles as nonexclusive examples of the widespread coverage the 

possibility of negative oil futures received in the weeks before April 20, 2020. (Mtn. at 15.) 

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actually read articles discussing the possibility, they are charged with reasonable diligence in the 

conduct of their affairs, and where allegedly omitted information is publicly available, it cannot 

support a fraud claim. See In re Westell Techs., 2001 WL 1313785, at *8. Thus, because the CME 

Notices were publicly available, as Plaintiffs admit (Opp. at 9), and the possibility of negative oil 

futures prices was widely reported on, they cannot claim to have relied on any omission about the 

content of those notices. See id.

E. Plaintiffs Do Not Allege Loss or Transaction Causation. 

Plaintiffs fail to adequately plead multiple aspects of the causation requirement, precluding 

their Rule 180.1 claim. As an initial matter, Plaintiffs incorrectly declare that cases discussing § 

10(b) of the Securities Exchange Act have “nothing to do” with Rule 180.1. (Opp. at 14-15.) 

However, Courts routinely look to case law interpreting SEC Rule 10b-5 when analyzing Rule 

180.1 claims, as intended by the CFTC. See Ploss v. Kraft Foods Grp., Inc., 197 F. Supp. 3d 1037, 

1053 (N.D. Ill. 2016). Plaintiffs then muddle transaction and loss causation, stating that the latter 

is “fraudulently causing Plaintiffs to make a purchase or sale.” (Opp. at 14.) But, as explained in 

the Motion, it is the “transaction causation” element that requires Plaintiffs to “demonstrate that 

the defendant’s conduct induced them to enter into the transactions.” (Mtn. at 16 (citing Kayne v. 

PaineWebber, 703 F. Supp. 1334, 1342 (N.D. Ill. 1989)).) Plaintiffs admit they cannot and do not 

allege transaction causation, arguing they “do[] not have to show ‘transaction causation’ here.” 

(Opp. at 14-15.) Again, that is not the law, and Plaintiffs cite no authority suggesting that it is. 

Plaintiffs also wrongfully argue that loss causation is “not part of the § 180.1 analysis,” 

(Opp. at 15), despite listing it as an element of their claim “under 7 U.S.C. § 9, and the 

corresponding section in the C.F.R.” earlier in their Opposition. (Opp. at 7 (citing Cornielsen v. 

Infinium Cap. Mgmt., 916 F.3d 589, 598 (7th Cir. 2019)).) Plaintiffs were correct the first time: 

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loss causation is a required element of their claim. Cornielsen, 916 F.3d at 598. Again, Plaintiffs 

admit that they do not and cannot allege loss causation because nothing TDAFF said or did not 

say affected the price of crude oil (Opp. at 15), which requires dismissal of their Rule 180.1 claim. 

II. PLAINTIFFS’ § 6B(E)(3) CLAIM FAILS FOR THE SAME REASONS AS THEIR RULE 180.1

CLAIM. 

Plaintiffs also must satisfy Rule 9(b)’s pleading requirements and common law elements 

of fraud to state a § 6b(e)(3) claim. U.S. Commodity Futures Trading Comm’n v. Reisinger, No. 

11 C 8567, 2013 WL 3791691, at *10 (N.D. Ill. July 18, 2013). As set out above, each allegation 

about Defendants is inappropriately pled on information and belief, in violation of Rule 9(b). Even 

so, Plaintiffs have not pled with particularity any of the elements required to establish a violation 

of § 6b(e)(3) for the reasons discussed in connection with their Rule 180.1 claim. 

III. PLAINTIFFS FAIL TO STATE A BREACH OF CONTRACT CLAIM. 

The Amended Complaint alleges that TDAFF breached the Futures Client Agreement by: 

(i) failing to contact Plaintiffs before liquidating their positions; and (ii) failing to abide by socalled “customs and usages” of the CME. (AC ¶¶ 101-06.) Plaintiffs’ Opposition abandons both 

of these theories, which are directly contradicted by the express terms of the Futures Client 

Agreement. (Mtn. at 17-18.) Plaintiffs now admit that the Futures Client Agreement: (i) provides 

TDAFF with “discretion to liquidate [a] client’s open positions, without notice”; and (ii) disclaims 

liability “for damages stemming from violations of CME rules.” (Opp. at 3, 17.) Further, Plaintiffs 

fail to respond altogether to Defendants’ arguments that no CME rules were alleged or violated 

and that the provision in the Futures Client Agreement referencing CME, rules, customs, and 

usages does not create a contractual obligation.11 (Mtn. at 17-18.) 

 

11 Plaintiffs incorrectly argue, in their section on good faith and fair dealing, that Defendants cite “Appert 

v. [Morgan Stanley] Dean Witter, Inc., No. 08-CV-7130, 2010 WL 5186765, at *4 (N.D. Ill. Dec. 9, 2010), 

aff’d, 673 F.3d 609 (7th Cir. 2012) for the proposition that client agreements do not create contractual 

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As with their fraud claims, Plaintiffs now seek refuge for their breach of contract claim in 

the FCM Disclosures, asserting for the first time that “[a]nything not disclaimed is . . . implicitly, 

provided under the promise of robust risk management.” (Opp. at 17.) Plaintiffs cannot argue a 

new theory that is not alleged in the Amended Complaint. Car Carriers, Inc. v. Ford Motor Co., 

745 F.2d 1101, 1107 (7th Cir. 1984) (“it is axiomatic that the complaint may not be amended by 

the briefs in opposition to a motion to dismiss”). Regardless, Plaintiffs do not explain how the 

FCM Disclosures are applicable to the conduct alleged or relevant to their breach of contract claim. 

Indeed, these disclosures are not even part of the contract that TDAFF allegedly breached. (See 

supra note 6.) And, as discussed above, the FCM Disclosures discuss TDAFF’s structure and 

organizational-level risks. (AC Ex. D at 8.) Plaintiffs also argue that any contractual ambiguities 

should be resolved in their favor, but there are no ambiguities here. (Opp. at 17.) The Amended 

Complaint does not allege that the Futures Client Agreement is ambiguous because it is not; its 

plain language forecloses Plaintiffs’ breach of contract claim. Accordingly, this claim must be 

dismissed. 

IV. PLAINTIFFS’ GOOD FAITH AND FAIR DEALING CLAIM MUST BE DISMISSED. 

Plaintiffs’ claim that TDAFF breached the implied covenant of good faith and fair dealing 

cannot survive because “[t]he scope of conduct prohibited by the covenant of good faith is 

circumscribed by the purposes and express terms” of the Futures Client Agreement. Spanish Oaks, 

Inc. v. Hy-Vee, Inc., 655 N.W.2d 390, 400 (Neb. 2003); (Mtn. at 19). Plaintiffs admit that “the 

contract which specifically allows Defendants to liquidate Plaintiffs’ positions does not state 

 

agreements.” (Opp. at 18.) Defendants instead relied on a 2009 decision from the Appert case for the 

proposition that the “customs and usages” provision in the Futures Client Agreement “does not create a 

contractual obligation on the part of the firm” and thus cannot support Plaintiffs’ breach of contract claim. 

As such, Plaintiffs’ attempt to distinguish the 2010 case is irrelevant, especially in the context of good faith 

and fair dealing. 

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explicitly that they must do so.” (Opp. at 9.) Likewise, Plaintiffs acknowledge that the Futures 

Client Agreement warns of, and disclaims liability for, “the failure of any system” (see id. at 18; 

Mtn. at 13), but fail to explain why these provisions do not foreclose their claim. 

Plaintiffs’ authority, RSUI Indemnity Co. v. Bacon, 810 N.W.2d 666 (Neb. 2011),12

supports TDAFF’s argument. There, the court held that the defendant insurance company did not 

violate the implied covenant when it sought a workers’ compensation credit because doing so was 

not expressly prohibited by the relevant agreement, even though the agreement stated that the 

defendant “did not believe” it would seek such a credit. RSUI, 810 N.W.2d at 670, 674-75. 

Similarly, here, Plaintiffs’ claim is foreclosed under the terms of the Futures Client Agreement. 

Additionally, Plaintiffs fail to distinguish persuasive Northern District of Illinois authority cited 

by Defendants that weighs heavily in favor of dismissal of this claim. (See Mtn. at 19 (citing 

Ocean Tomo, LLC v. PatentRatings, LLC, 262 F. Supp. 3d 553, 558 (N.D. Ill. 2017); Advantage 

Futures, LLC v. Herm, LLC, No. 18-cv-2005, 2019 WL 7290555, at *3 (N.D. Ill. Dec. 30, 2019)).) 

As with their other claims, Plaintiffs look for salvation in the FCM Disclosures. (Opp. at 

18.) But Plaintiffs’ tack is no more successful with this claim either. Again, TDAFF’s FCM 

Disclosures are “designed to monitor and manage the risks associated with the activities of TD 

Ameritrade Futures & Forex,” not risks associated with Plaintiffs’ trading decisions, and they do 

not alter the express terms of the Futures Client Agreement. (AC Ex. D at 8.) Because Defendants 

acted according to the terms of the Futures Client Agreement, and did not breach any affirmative 

duty, Plaintiffs’ good faith and fair dealing claim must be dismissed. 

 

12 Plaintiffs incorrectly cite this case as “SUI Indem. Co. v. Bacon.” (Opp. at 17-18.) 

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V. PLAINTIFFS CONCEDE THAT THEIR NEGLIGENCE CLAIMS MUST BE DISMISSED. 

Defendants’ Motion identified multiple reasons why Plaintiffs failed to state a negligence 

claim. Plaintiffs address only one—the economic loss doctrine—and do not succeed in that effort. 

For starters, Plaintiffs completely ignore Knowles v. TD Ameritrade Holding Corp., 427 F. Supp. 

3d 1070 (D. Neb. 2019), a case directly on point instructing that Plaintiffs’ negligence claims be 

dismissed. (Mtn. at 22.) Beyond that, Plaintiffs agree that the economic loss doctrine is applicable, 

acknowledging that it precludes tort remedies “where the damages caused were limited to 

economic losses and where . . . the duty which was allegedly breached arose solely from the 

contractual relationship between the parties.” (Opp. at 19; see also Mtn. at 20-22.) But Plaintiffs 

fail to identify a valid extra-contractual duty that was owed to them or otherwise explain why the 

doctrine does not bar their claims,13 conceding that their alleged damages are “based upon the 

contract.” (Opp. at 19.) Plaintiffs do not address causation, which is not adequately alleged, or 

the fact that the liability waiver in the Futures Client Agreement is applicable and precludes their 

negligence claim. Plaintiffs thus have conceded these arguments. See Bonte v. U.S. Bank, N.A., 

624 F.3d 461, 466 (7th Cir. 2010) (“Failure to respond to an argument . . . results in waiver.”). For 

all of these reasons, Plaintiffs’ gross negligence and negligence claims must be dismissed. 

VI. PLAINTIFFS’ DECLARATORY JUDGMENT CLAIM IS NOT JUSTICIABLE. 

Plaintiffs argue there is a justiciable controversy because there are two arbitration 

agreements—one with TDA and one with TDAFF—that are allegedly contradictory.14 (Opp. at 

 

13 Plaintiffs’ attempt to distinguish “brokerage firms and individual brokers” is illogical, as is their point 

about discretionary and non-discretionary accounts. (Opp. at 19-20.) There is no question that Plaintiffs 

had non-discretionary accounts, meaning Plaintiffs made all the trading decisions, and that TDAFF did not 

owe them a fiduciary duty. Supra section I(B)(1); (see also AC Ex. A ¶ 1(d) (TDAFF “is not [] acting as 

[] a fiduciary to Client and has no discretionary authority or control over the Account”)). 

14 Plaintiffs’ declaratory judgment argument is also rife with arguments not alleged in or supported by the 

Amended Complaint. For example, Plaintiffs argue, but do not allege, that funds were transferred from 

their securities accounts to futures accounts to cover their debit balances and that their two accounts shared 

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14 

21.) Plaintiffs’ arguments fall flat. The plain language of the agreements attached to the Amended 

Complaint—the Futures Client Agreement with TDAFF (Exhibit A), and the brokerage Client 

Agreement with TDA (Exhibit B)—leave no doubt that the Futures Client Agreement applies to 

this lawsuit involving trading in Plaintiffs’ futures accounts with TDAFF.15 

Setting aside the allegations that impermissibly lump TDA with TDAFF (see Mtn. at 25) 

and the inapplicable agreement, Plaintiffs’ sole allegation with respect to TDA is that Plaintiffs 

were required to open an account with TDA before opening an account with TDAFF. This is not 

enough. And because the securities account and futures account were distinct accounts, they of 

course did not share the same number; Plaintiffs’ argument in this regard makes no sense (Opp. at 

20). Rather, as set forth in Section 3 of the Futures Client Agreement, the establishment of a 

brokerage account with TDA simply allowed “available cash” held in the TDAFF futures account 

to be “automatically swept” into the securities brokerage account with TDA. (AC Ex. A ¶ 3.) 

This has nothing to do with the conduct alleged in the Amended Complaint: trading in futures and 

options on futures through TDAFF. (See, e.g., AC ¶ 14.) TDAFF, not TDA, allegedly received 

(and failed to “forward”) the CME Notices at issue, allegedly failed to liquidate Plaintiffs’ 

positions, and allegedly suffered a system issue.16 (See, e.g., id. ¶¶ 40; Opp. at 9.) The Arbitration 

provision in the TDA Client Agreement only applies to controversies “arising out of or relating 

 

the same number. (Opp. at 20-21.) Plaintiffs also seem to suggest, without support, that the TDA arbitration 

provision must comply with CFTC regulations. (Id. at 23.) TDA is a registered broker-dealer and is 

regulated by the SEC, not the CFTC. (Mtn. at 4.) 

15 The TDA Client Agreement “governs all brokerage accounts that [Plaintiffs] open with [TDA],” and 

“when applicable, TD Ameritrade Clearing, Inc., TD Ameritrade’s clearing broker-dealer.” (AC Ex. B ¶ 

1.) Its provision on arbitration (Section 12) applies to disputes “arising out of or relating to this [Client 

Agreement].” (Id. ¶ 12.) Plaintiffs’ Futures Client Agreement, on the other hand, is with TD Ameritrade 

Futures & Forex LLC, “a registered Futures Commission Merchant (“FCM”) with the CFTC.” (AC Ex. A 

at 1.) The Futures Arbitration Agreement covers disputes “arising out of or relating to my futures account 

[and] transactions with [TDAFF] pursuant to the Futures Client Agreement.” (Dkt. No. 22-1 at 1.) 

16 As argued in the Motion, TDA should be dismissed from this action for this additional reason.

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15 

to” the agreement, the relationship with TDA, or services provided by TDA. (AC Ex. B ¶ 12.) 

The TDA Client Agreement does not apply to their claims, and Plaintiffs cannot use it to create a 

justiciable controversy. 

Nor have Plaintiffs offered any authority demonstrating that they can assert a private right 

of action for violation of the CFTC recordkeeping regulations. (Mtn. at 24-25.) The one (vacated) 

decision they cite dealt with different regulations. (Opp. at 22-23 (citing Ping He (Hai Nam) Co. 

v. NonFerrous Metals (U.S.A.) Inc., 22 F. Supp. 2d 94, 106 (S.D.N.Y. 1998), opinion vacated in 

part on reconsideration sub nom. Ping He (Hai Nam) Co, Ltd. v. Nonferrous Metals (U.S.A.) Inc., 

187 F.R.D. 121 (S.D.N.Y. 1999)).) And even if Congress intended for the private right of action 

to extend to the CFTC regulations at issue, Section 22 of the CEA requires a private plaintiff to 

allege “actual damages” to assert a private right of action under any provision, as Plaintiffs point 

out. (Opp. at 22.) Plaintiffs do not allege that they suffered any “actual damages” as a result of 

the alleged recordkeeping violations. (See AC ¶¶ 108-17.) Nor have Plaintiffs explained how 

violation of a recordkeeping rule would render the agreement invalid or unenforceable. (Mtn. at 

25; see also Opp. at 24.) Accordingly, Plaintiffs’ declaratory judgment claim must be dismissed. 

CONCLUSION

For the reasons set forth above and in the Motion, Defendants respectfully request that the 

Court dismiss the Amended Complaint with prejudice. 

Dated: October 27, 2020 Respectfully submitted, 

By: /s/ Michael J. Lohnes 

One of the Attorneys for Defendants 

Case: 1:20-cv-04028 Document #: 37 Filed: 10/27/20 Page 16 of 17 PageID #:334
CERTIFICATE OF SERVICE 

The undersigned, an attorney, hereby certifies that, on October 27, 2020, he caused a true 

and correct copy of the foregoing to be served upon all parties by electronically filing the same 

with the Pacer/ECF system. 

/s/ Michael J. Lohnes 

One of the Attorneys for Defendants 

Case: 1:20-cv-04028 Document #: 37 Filed: 10/27/20 Page 17 of 17 PageID #:335