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Ameriprise Financial Services Inc. v. Ekweani

United States District Court, D. Arizona

April 16, 2015

Ameriprise Financial Services Incorporated, Plaintiff,
Henry Ekweani, et al., Defendants.


DAVID G. CAMPBELL, District Judge.

Plaintiff Ameriprise Financial Services, Inc. has requested a declaratory judgment that Plaintiff and Defendant Henry Ekweani do not have a binding arbitration agreement. Defendant has counterclaimed that Plaintiff breached its agreement to arbitrate. Both parties have filed motions for summary judgment. Docs. 26, 27. The motions are fully briefed. The Court will grant Plaintiff's motion for summary judgment.[1]

I. Background.

Henry Ekweani and Ameriprise Financial Services, Inc. ("AFSI") have had a long but not loving relationship. Ekweani, a U.S. citizen of Nigerian origin, has a Ph.D. and is an economist. AFSI, a subsidiary of Ameriprise Financial, Inc. ("Ameriprise"), is in the financial planning business. In 2003, Ekweani was hired by a subsidiary of American Express. He signed an acknowledgment that he had read and agreed to American Express' arbitration policy. Doc. 34 at 30. In 2005, American Express announced the spin-off of the company now known as Ameriprise. As part of this spin-off, Ekweani was eventually transferred from the American Express subsidiary to Ameriprise's subsidiary AFSI. See Doc. 25, ¶ 5; Doc. 34, ¶ 5. In 2005, Ameriprise reissued the American Express arbitration policy with Ameriprise's name inserted in the header. Doc. 34 at 42-49. The Ameriprise Arbitration Policy encompassed Ameriprise and its subsidiaries and stated: "The agreement between each individual employee and Ameriprise Financial to be bound by the Policy creates a contract requiring both parties to resolve all employment-related disputes that are based on a legal claim through final and binding arbitration." Id. at 42.

In 2007, AFSI ended its employment relationship with Ekweani. In 2008, Ekweani filed suit against Ameriprise, but not AFSI. Ekweani v. Ameriprise, No. 2:08-cv-01101-PHX-FJM.[2] Ekweani claimed that Ameriprise violated 42 U.S.C. §§ 1981 and 2000e by refusing to promote him and treating him disparately on account of his race and national origin and by firing him in retaliation for his complaints about discrimination. FJMDoc. 11. In response, Ameriprise moved to compel arbitration based on Ekweani's signed acknowledgment of American Express' arbitration policy. Ekweani opposed this motion, stating in a signed declaration that "I have never signed an agreement to arbitrate any employment-related disputes with Ameriprise Financial Inc." FJMDoc. 17-1 at 33. The court agreed with Ekweani, finding that Ameriprise lacked standing to enforce American Express' arbitration policy. FJMDoc. 25. The court did not address, nor did Ameriprise rely on, the separate Ameriprise Arbitration Policy that was attached to Ameriprise's reply brief. FJMDoc. 21-1. The court subsequently granted Ameriprise summary judgment on all of Ekweani's claims. FJMDocs. 124, 146.

In 2012, Ekweani decided to take advantage of arbitration proceedings. He first served a demand for arbitration on American Express, but then voluntarily dismissed the arbitration. In 2013, Ekweani served a demand for arbitration on AFSI, but not Ameriprise. Doc. 1-1. In this demand, Ekweani reasserted many of the claims he had brought in his previous lawsuit against Ameriprise. Compare Doc. 1-1 with FJMDoc. 11. Ekweani stated that jurisdiction for arbitration "is conferred by the American Express Company Employment Arbitration Policy dated on or about June 1, 2003 and the Ameriprise Financial, Inc. Employee Arbitration Policy, dated on or about October 1, 2005." Doc. 1-1, ¶ 4. Both of these policies were in the record of the previous lawsuit in which Ekweani opposed arbitration. FJMDocs. 14, 21-1. The policies contain identical language except for the date and name of the company. Doc. 34 at 21, 42.

AFSI filed this suit for a declaratory judgment that it does not have a binding arbitration agreement with Ekweani. Doc. 1. Ekweani, appearing pro se, answered and counterclaimed for breach of contract. Doc. 9. The dispute in the pending motions for summary judgment centers on whether the Ameriprise Arbitration Policy requires AFSI to submit to arbitration of Ekweani's claims.

II. Declaratory Judgment Jurisdiction.

This case comes in an unusual posture. Normally, a party will file a motion to compel arbitration or to stay court proceedings in favor of arbitration. See 9 U.S.C. §§ 3-4. In this case, however, AFSI has requested a declaratory judgment that arbitration is not required. An examination of whether the Court has jurisdiction over such a claim is in order. Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006) ("[C]ourts... have an independent obligation to determine whether subject-matter jurisdiction exists.").

The Declaratory Judgment Act provides that "[i]n a case of actual controversy within its jurisdiction... any court of the United States... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). "This statute does not create new substantive rights, but merely expands the remedies available in federal courts." Shell Gulf of Mexico Inc. v. Ctr. for Biological Diversity, Inc., 771 F.3d 632, 635 (9th Cir. 2014) (citing Countrywide Home Loans, Inc., v. Mortg. Guar. Ins. Corp., 642 F.3d 849, 853 (9th Cir. 2011)). "Congress created this remedy, in part, to allow potential defendants to file preemptive litigation to determine whether they have any legal obligations to their potential adversaries." Id. (citing Seattle Audubon Soc'y v. Moseley, 80 F.3d 1401, 1405 (9th Cir.1996)). The Court has discretion to grant or deny declaratory relief. Countrywide Home Loans, Inc., 642 F.3d at 852.

The Declaratory Judgment Act "does not provide an independent jurisdictional basis for suits in federal court." Fiedler v. Clark, 714 F.2d 77, 79 (9th Cir. 1983) (citing Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-74 (1950)). Consequently, before issuing a declaratory judgment a "district court must first inquire whether there is an actual case or controversy within its jurisdiction." Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005). AFSI asserts jurisdiction on the basis of an underlying controversy involving a federal question. Doc. 1, ¶¶ 5-6.[3]

Ordinarily, federal-question jurisdiction turns on the face of the plaintiff's well-pleaded complaint. Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 9-10 (1983). But in the context of a declaratory judgment action, courts look not solely to the plaintiff's complaint, but also "to the character of the threatened action'" that is anticipated by plaintiff's declaratory judgment action. Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S.Ct. 843, 848 (2014) (quoting Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 248 (1952)). "That is to say, they ask whether a coercive action' brought by the declaratory judgment defendant... would necessarily present a federal question.'" Id. (quoting Franchise Tax Bd. of State of Cal., 463 U.S. at 19).

The threatened coercive action that AFSI's declaratory judgment action anticipates is an action by Ekweani to compel arbitration under the Federal Arbitration Act. See 9 U.S.C. § 4. Ekweani does not deny that he threatened to seek a court order to compel AFSI to arbitrate (Doc. 25, ¶ 25; Doc. 34, ¶ 25), and this is the action that AFSI's lawsuit is intended to preempt. The question, therefore, is whether an action by Ekweani to compel arbitration would present a federal question. The Federal Arbitration Act is not itself a source of federal-question jurisdiction. Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 26 n.32 (1983). Rather, the Arbitration Act allows a federal court to compel arbitration or stay a case for arbitration only if the underlying suit properly invokes federal jurisdiction. Id. (citing 9 U.S.C. §§ 3-4); see Vaden v. Discover Bank, 556 U.S. 49, 59 (2009).

Here, a hypothetical suit by Ekweani to compel arbitration would invoke federal jurisdiction. The underlying suit involves claims of unlawful discrimination and retaliation in violation of 42 U.S.C. §§ 1981 and 2000e. Doc. 1-1. These claims clearly arise under federal law, and a motion to compel arbitration of these claims would satisfy jurisdictional requirements. For that ...

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