Webb v. Frawley, 16-3336
| Decision Date | 24 May 2017 |
| Docket Number | No. 16-3336,16-3336 |
| Citation | 858 F.3d 459 |
| Parties | Nicholas WEBB and Thad Beversdorf, Plaintiffs–Appellants, v. Michael FRAWLEY, Defendant–Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Cornelius E. McKnight, Attorney, Kevin Q. Butler, Attorney, McKnight, Kitzinger, McCarty & Pravdic, Chicago, IL, for Plaintiffs–Appellants.
Dawn Marie Canty, Attorney, J Matthew W. Haws, Attorney, Katten Muchin Rosenman LLP, Chicago, IL, for Defendant–Appellee.
Before Bauer, Posner, and Hamilton, Circuit Judges.
Jefferies LLC, a securities and investment-banking firm, in 2012 hired Michael Frawley to be the firm's vice chairman and global head of metals and listed products. Nicholas Webb, a sales executive in the global metals group headed by Frawley of a firm they had previously worked for, and Thad Beversdorf, a director of that group, were hired by Jefferies on the same day that Frawley was hired. Webb and Beversdorf signed employment contracts with Jefferies in which they "consent[ed] that any arbitration proceeding brought with respect to matters related to your employment or this Agreement shall be brought before FINRA ... or if the parties are permitted to bring such action in a state or federal court, then you hereby consent to the personal jurisdiction of the state and federal courts ... [in New York City] with respect to matters related to your employment or this Agreement."
FINRA is an acronym for Financial Industry Regulatory Authority, Inc., a "not-for-profit organization authorized by Congress to protect America's investors by making sure the broker-dealer industry operates fairly and honestly ... [by] writing and enforcing rules governing the activities of 3,800 broker-dealers with 633,800 brokers; examining firms for compliance with those rules; fostering market transparency; and educating investors." FINRA, "About FINRA," www.finra.org/about (visited May 23, 2017).
All three of Jefferies' new employees were metals traders, primarily in iron ore. But in 2013 Jefferies decided to get out of the iron ore business, and so ordered Frawley to tell Webb and Beversdorf to stop trading iron ore. Frawley did not tell them, and instead pushed them to do more iron ore trades. Some months later, Jefferies fired Webb and Beversdorf; the record does not indicate whether Frawley was fired, although it's clear that he no longer is employed by Jefferies. Webb and Beversdorf brought this suit against Frawley in an Illinois state court in 2015, charging him with having defrauded them and interfered with their contracts with Jefferies—in short with having cost them their jobs. Frawley sought to remove the case to federal court on the ground that the plaintiffs were citizens of a different state (Illinois) from the defendant (New York) and that "the amount in controversy exceeds $75,000, exclusive of interest and costs." Frawley's notice of removal noted that "Plaintiffs Webb and Beversdorf each seek damages in excess of $100,000 against Defendant, or an amount in excess of $50,000 for each count of their two-count Complaint." The following day Frawley moved the district court to compel Webb and Beversdorf to arbitrate their dispute with him before FINRA; he also asked the district court to stay the litigation pending the arbitration.
Webb and Beversdorf responded by filing a motion to remand the case to the state court on the ground that Frawley had failed to establish that the amount in controversy exceeded $75,000 (as required for a suit based on diversity of citizenship, see 28 U.S.C. § 1332(a) ) because the $100,000 figure had been arrived at by aggregation of duplicative claims—the two counts in their complaints had been nothing more than different theories under which the plaintiffs could recover the single $50,000 loss that each had suffered; therefore Frawley had double-counted. The district judge denied the motion to remand the case to the state court, and shortly afterward Frawley renewed his motion (on which the judge had not ruled) to compel the plaintiffs to arbitrate their dispute with him. Webb and Beversdorf submitted affidavits which stated that they'd never agreed to arbitrate disputes with Frawley and after being fired by Jefferies had not been associated with any member of FINRA. But the...
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Webb v. Frawley, 18-1607
...and Webb appealed both decisions.This Court affirmed the decision not to remand the case to state court. See Webb v. Frawley , 858 F.3d 459, 461 (7th Cir. 2017). As to the decision to compel arbitration and to dismiss the case, the Court affirmed in part, reversed in part, and remanded. Id.......
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