United States District Court, E.D. Wisconsin
Stadtmueller, U.S. District Judge
action, filed on May 5, 2016, arises out an employment
dispute. (Docket #1). On June 21, 2016, however, the
defendants filed a motion to stay the case and compel
arbitration. (Docket #8). They argue that the case is subject
to arbitration because: (1) the dispute is governed by the
Financial Industry Regulatory Authority’s
(“FINRA”) arbitration rules, which generally
mandate the arbitration of disputes between participants in
the securities industry; and (2) that the plaintiff is bound
to arbitrate under a theory of estoppel. (Docket
The plaintiff responds by arguing that: (1) it never
contractually agreed to arbitrate any claims before FINRA;
(2) as a bank who not registered with FINRA, it does not meet
the definition of a “member” or an
“associated person” who may be compelled to
arbitrate; and (3) the doctrine of direct benefits estoppel
does not apply to the facts of this case. (Docket #13).
motion is now fully briefed. (Docket #8, #13, #18). For the
reasons stated herein, the Court agrees that the plaintiff
does not meet the criteria for mandatory arbitration before
FINRA and that compelling arbitration by estoppel is not
appropriate. Accordingly, the defendants’ motion will
plaintiff, BMO Harris Bank, N.A. (“BMO Harris”),
is a national bank organized and existing under the banking
laws of the United States with its headquarters and principal
place of business at 111 West Monroe Street, Chicago,
Illinois 60603. (Docket #1 ¶ 4). According to the
complaint,Elizabeth Lailer (“Ms. Lailer”)
is a former employee of BMO Harris and is a citizen of the
State of Wisconsin. (Docket #1 ¶ 5). Effective March 10,
2016, Ms. Lailer began to work for Robert W. Baird & Co.
(“Baird”) in its Waukesha office. (Docket #1
¶ 2). The instant dispute centers on a non-solicitation
clause embedded in Ms. Lailer’s former employment
contract that was allegedly violated during the course of her
transfer to Baird. (See Docket #1 ¶¶ 2-3).
Lailer allegedly held two different positions while working
for BMO Harris. Ms. Lailer was first employed as a Private
Banker. (Docket #1 ¶ 8). Her responsibilities in that
role were to provide banking services to BMO Harris’s
high net-worth clientele. (Docket #1 ¶ 8). However, on
December 14, 2015, BMO Harris offered Ms. Lailer a new
position as a Private Wealth Advisor Director II –
Grade 8 with the title of “Vice President” of the
bank. (Docket #1 ¶ 9; see also Docket #14 at
8). The terms of the offer were set forth in an electronic
letter provided to Ms. Lailer on that date (the “Offer
Letter”). (Docket #1 ¶ 9). While Ms. Lailer
disputes having been presented with this letter, the
defendants have submitted an electronic, date-stamped message
that purports to confirm Ms. Lailer’s acceptance of the
offer. (Docket #10 ¶ 8; Docket #14 at 5).
Offer Letter to Ms. Lailer is marked as being sent from
Leslie Meisner, Managing Director of BMO Harris. (Docket #14
at 10). It begins, by stating, “Dear Elizabeth, I am
pleased to offer you a transfer to a new role with BMO Harris
Bank N.A., part of BMO Financial Group (Company).”
(Docket #14 at 8). Among other things, the Offer Letter also
provided that Ms. Lailer would “protect the
confidential and proprietary information of the Company, our
clients, suppliers and employees.” (Docket #14 at 9).
Were she to accept the offer, Ms. Lailer would become
obligated to “comply with all laws and Company policies
that restrict the use, disclosure, collection and access of
confidential and proprietary information.” (Docket #14
at 9). Finally, the Offer Letter stated: “When your
employment with the Company ends, you must return all Company
property, and all Company and client information, in all
formats, and you must not keep any copies.” (Docket #14
at 9). Specific to the solicitation of BMO Harris employees
and customers, the Offer Letter provided:
During your employment and for twelve months following the
end of your employment with the Company, you must not,
directly or indirectly solicit: (i) a person who you know is
an employee of the Company to leave his or her employment;
and (ii) any client of the Company that you serviced during
your last twelve months with the Company to offer any product
or service that is the same as or similar to any product or
service that you provided to that client previously.
(Docket #14 at 9). Ms. Lailer does not dispute that she
accepted the role described therein on or about December 15,
2015. (Docket #10 ¶¶ 8-11).
about January 11, 2016, Ms. Lailer gave notice that she was
quitting the Vice President position. (Docket #1 ¶ 16).
Approximately two months later, Ms. Lailer allegedly sent an
email to her customers soliciting them to Defendant Robert W.
Baird & Co. (“Baird”). (Docket #1 ¶ 17).
According to the complaint, Ms. Lailer also wrote that she
was “eager to put Baird’s global resources and
client first culture to work toward your goals” and
that she and her assistant would “contact you shortly
about the transition process….” (Docket #1
result of this conduct, the plaintiff claims that Ms. Lailer:
(1) breached her employment contract with BMO Harris; and (2)
violated the Misappropriation of Trade Secrets in Violation
of the Wisconsin Trade Secrets Act (Wis. Stat. Ann. §
134.90). (Docket #1).
to the Federal Arbitration Act, 9 U.S.C. § 1 et seq.
(“FAA”), “a contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or
transaction…shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C.
§ 2. Under the Act, arbitration may be compelled if the
following three elements are shown: “(1) an agreement
to arbitrate, (2) a dispute within the scope of the
arbitration agreement, and (3) a refusal by the opposing
party to proceed to arbitration.” Zurich Am. Ins.
Co. v. Watts Indus., Inc., 466 F.3d 577, 580 (7th Cir.
2006). “Whether a particular dispute must be arbitrated
is generally a question for judicial determination, unless
the parties ‘clearly and unmistakably’ provided
otherwise in their agreement.” Duthie v. Matria
Healthcare, Inc., 540 F.3d 533, 536 (7th Cir.2008)
(quoting Howsam v. Dean Witter Reynolds Inc., 537
U.S. 79, 82 (2002)).
or not [a] company [is] bound to arbitrate, as well as what
issues it must arbitrate, is a matter to be determined by the
court on the basis of the contract entered into by the
parties.” AT&T Tech., Inc. v. Comm’ns
Workers of Am., 475 U.S. 643, 649 (1986). Thus, because
arbitration is “contractual by nature,” a
“party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit.”
Zurich Am. ...