To Be Published - Northern District of Iowa
To Be Published - Northern District of Iowa
To Be Published - Northern District of Iowa
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
In lieu <strong>of</strong> answering Baber’s Complaint, the defendants filed on December 27,<br />
2006, the Motion <strong>To</strong> Compel Arbitration And <strong>To</strong> Stay Proceedings (docket no. 7) now<br />
before the court. In their motion and supporting brief, the defendants argue that they are<br />
entitled to compel arbitration <strong>of</strong> Baber’s disputes with them pursuant to an arbitration<br />
clause in an agreement between Baber and BNY Clearing Services, L.L.C. (BNY), a socalled<br />
“clearing broker,” which was actually responsible for administering Baber’s<br />
brokerage account with First Republic, because First Republic and Parks are, as a matter<br />
<strong>of</strong> circuit law, agents <strong>of</strong> BNY and third-party beneficiaries <strong>of</strong> the agreement between Baber<br />
and BNY. In support <strong>of</strong> this contention, the defendants cite Nesslage v. York Securities,<br />
823 F.2d 231 (8th Cir. 1987). They also contend that Baber is obligated to arbitrate his<br />
1<br />
disputes, because BNY is an indispensable party to this dispute. Therefore, they seek an<br />
order compelling arbitration and staying proceedings pending completion <strong>of</strong> arbitration.<br />
Baber resists on the ground that the Nesslage decision upon which the defendants rely<br />
states only certain fact-driven exceptions to the general rule that “introducing brokers” and<br />
their account representatives are not agents <strong>of</strong> “clearing brokers” nor third-party<br />
beneficiaries <strong>of</strong> a customer’s agreement with a “clearing broker.” Baber also contends that<br />
BNY is not an indispensable party, because his claims against First Republic and Parks are<br />
independent <strong>of</strong> any claim he may have against BNY and because complete relief, without<br />
possibility <strong>of</strong> inconsistency, can be granted in this case against the present defendants<br />
alone.<br />
1<br />
The defendants also argue, in passing, that Baber has failed to plead fraud with the<br />
particularity required by Rule 9(b) <strong>of</strong> the Federal Rules <strong>of</strong> Civil Procedure. However, the<br />
defendants did not frame their motion as a Rule 12(b)(6) motion to dismiss for failure to<br />
state a claim upon which relief can be granted, so that the court does not believe that such<br />
a contention is properly before it on a motion to compel arbitration.<br />
2