Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Next Level Planning & Wealth Management, LLC v. Prudential Ins. Co. of America

United States District Court, E.D. Wisconsin

February 13, 2019

NEXT LEVEL PLANNING & WEALTH MANAGEMENT, LLC, Plaintiff,
v.
PRUDENTIAL INSURANCE COMPANY OF AMERICA and PRUCO SECURITIES LLC, Defendants.

          ORDER DENYING PETITION TO ENFORCE ARBITRATOR'S SUBPOENA

          WILLIAM E. DUFFIN U.S. MAGISTRATE JUDGE

         1. Facts and Procedural History

         On November 19, 2018, Next Level Planning & Wealth Management, LLC initiated this action by way of a complaint seeking declaratory judgment that a subpoena issued by a Financial Industry Regulatory Authority (FINRA) arbitrator at the request of Prudential Insurance Company of America and Pruco Securities, LLC (referred to collectively as Prudential) is invalid. (ECF No. 1.)

         According to Next Level's complaint, “Daniel Fleming and Patrick Maddox were previously affiliated with Prudential and were Registered Representatives of Pruco, but ended their affiliation with Prudential on or about October 13, 2017.” (ECF No. 1, ¶ 10.)

         “Fleming and Maddox thereafter became affiliated with Next Level and are presently registered representatives of LPL Financial, LLC, the broker-dealer for Next Level.” (ECF No. 1, ¶ 11.) “While Fleming and Maddox were affiliated with Prudential, they entered into agreements with Prudential that included restrictions on their ability, after ending their affiliation with Prudential, to solicit customers of Prudential that they serviced or had contact with during their affiliation with Prudential, or to induce or attempt to induce persons associated with Prudential to terminate their affiliation with Prudential.” (ECF No. 1, ¶ 15.) These agreements included a provision that disputes be settled by arbitration before FINRA. (ECF No. 1, ¶¶ 16-17.)

         “On October 30, 2017, Prudential filed a Statement of Claim initiating an arbitration proceeding before FINRA against Fleming, Maddox and Next Level.” (ECF No. 1, ¶ 20.) However, Next Level is not subject to FINRA and has refused to consent to its jurisdiction. (ECF No. 1, ¶¶ 21-23; see also ECF No. 1-8.)

         “On or about November 2, 2018, Next Level received a non-party Subpoena Duces Tecum, which was issued by an arbitrator in the FINRA Arbitration issued at Prudential's request.” (ECF No. 1, ¶ 24; see also ECF No. 1-1.) Next Level asks the court to quash the subpoena. (ECF No. 2.) It argues that the subpoena is not authorized under Section 7 of the Federal Arbitration Act (FAA). It also argues that the subpoena is overbroad and imposes an undue burden on it. Prudential filed a cross motion to enforce the subpoena. (ECF No. 9.)

         On February 23, 2019, the Honorable Pamela Pepper referred the parties' motions to this court for resolution. (ECF No. 12.)

         2. Subject Matter Jurisdiction

         Ordinarily, an action regarding the enforcement of an arbitrator's subpoena would arise under § 7 of the Federal Arbitration Act, 9 U.S.C. § 7. But an action under § 7 may be filed only by the party seeking to enforce the subpoena and only then in “the district in which such arbitrators, or a majority of them, are sitting ….” 9 U.S.C. § 7. But Next Level, as the respondent to the subpoena, is not seeking to enforce the subpoena. Rather, it seeks a declaration that the subpoena is invalid.

         Noting that the subpoena was issued out of Chicago and that other documents suggested that the underlying arbitration was venued in Chicago (ECF Nos. 1-1 at 1; 14-1 at 1; 14-2 at 1), the court held oral argument in part to address the locale of the arbitration. (ECF No. 16.) At the hearing the court was informed that the arbitration is scheduled to occur in this district. (ECF No. 16.) Therefore, the court is satisfied that venue is proper in this district regardless of whether it is construed as an action for declaratory judgment or to enforce an arbitration subpoena.

         However, neither the Declaratory Judgement Act, DeBartolo v. HealthSouth Corp., 569 F.3d 736, 741 (7th Cir. 2009), nor the Federal Arbitration Act, Amgen, Inc. v. Kidney Ctr., 95 F.3d 562, 567 (7th Cir. 1996), independently confers jurisdiction on a federal court. Thus, notwithstanding the provision in 9 U.S.C. § 7 stating that actions to enforce arbitration subpoenas may be filed “in the United States district court for the district in which such arbitrators, or a majority of them, are sitting, ” a federal court still needs an independent basis for subject matter jurisdiction to enforce such a subpoena. Stolt-Nielsen Transp. Grp., Inc. v. Celanese AG, 430 F.3d 567, 572 (2d Cir. 2005); Amgen, Inc., 95 F.3d at 567; Oberweis Sec., Inc. v. Inv'rs Ins. Corp., 227 F.Supp.3d 972, 973 (N.D. Ill. 2016); cf. America's Money Line, Inc. v. Coleman, 360 F.3d 782, 785 n.1 (7th Cir. 2004).

         Next Level's complaint alleges that jurisdiction is proper under 28 U.S.C. § 1332(a) due to the diversity of the citizenship of the parties. However, the complaint did not identify the citizenship of the members of Next Level, LLC. (ECF No. 1, ¶ 5.) At the hearing the court was informed that Next Level has two members, both of whom are citizens of Wisconsin. Therefore, the court is satisfied that complete diversity of citizenship exists.

         But diversity jurisdiction also requires an amount in controversy of more than $75, 000. “In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation.” Hunt v. Wash. State Apple Advert. Comm'n, 432 U.S. 333, 347 (1977). The Court of Appeals for the Seventh Circuit has said, “We have adhered to the rule that the value of the object of the litigation is the ‘pecuniary result' that would ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.