The Clerk of Court is directed to amend the official caption as set forth above.… v. Beland UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT 2 August Term, 2011 3…

* The Clerk of Court is directed to amend the official
caption as set forth above.
10-3399
Ameriprise Financial Services, Inc. v. Beland
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
August Term, 2011 3
(Argued: May 26, 2011 Decided: November 3, 2011) 4
Docket No. 10-3399 5
------------------------------------- 6
IN RE AMERICAN EXPRESS FINANCIAL ADVISORS SECURITIES LITIGATION 7
------------------------------------- 8
CAROL M. ANDERSON, LEONARD D. CALDWELL, DONALD G. DOBBS, KATHIE 9
KERR, SUSAN M. RANGELEY, PATRICK J. WOLLMERING, NARESH CHAND, on 10
behalf of himself and all others similarly situated, JOHN B. 11
PERKINS, ELIZABETH FLENNER, GALE D. CALDWELL, RICHARD T. ALLEN, 12
individually and on behalf of all others similarly situated, 13
Plaintiffs, 14
AMERICAN EXPRESS COMPANY, AMERICAN EXPRESS FINANCIAL CORPORATION, 15
AMERICAN EXPRESS FINANCIAL ADVISORS, INC., JAMES M. CRACCHIOLO, 16
Defendants, 17
AMERIPRISE FINANCIAL SERVICES, INC., 18
Defendant–Appellee, 19
- v - 20
JOHN BELAND, ELAINE BELAND, 21
Class Members–Appellants.*
22
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2
Before: POOLER, SACK, and LYNCH, Circuit Judges. 1
Appeal from a judgment entered by the United States 2
District Court for the Southern District of New York (Deborah A. 3
Batts, Judge) in favor of the defendant–appellee Ameriprise 4
Financial Services, Inc. In an arbitration before the Financial 5
Industry Regulatory Authority, the appellants -- a married couple 6
-- brought claims against the defendant–appellee for, inter alia, 7
breach of fiduciary duty, breach of contract, fraud, and 8
negligent misrepresentation related to the decline in value of 9
various personal financial assets managed by the 10
defendant–appellee. The defendant–appellee then moved before the 11
district court, which had retained exclusive jurisdiction over a 12
2007 class-action settlement, to enforce that settlement 13
agreement against the couple and order them to withdraw their 14
pending arbitration claims. The court, granting the 15
defendant–appellee's motion, determined that the appellants, who 16
had been class members in the prior class action, had expressly 17
released all of their arbitration claims by virtue of their 18
failure to timely opt out of the class-action settlement. But 19
the appellants' arbitration claims include "suitability" claims 20
that are preserved by a carve-out clause in the settlement 21
agreement, in addition to other claims falling outside the bounds 22
of the class settlement and release; therefore, the district 23
court erred in directing the appellants to withdraw their entire 24
arbitration complaint. 25

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3
Accordingly, we AFFIRM in part and VACATE in part the 1
judgment of the district court, and we REMAND in part to the 2
district court for resolution consistent with this opinion. 3
DAVID A. GENELLY, Vanasco Genelly & 4
Miller (James E. Judge, of counsel), 5
Chicago, Illinois, for Appellants. 6
DAVID W. BOWKER, Wilmer Cutler Pickering 7
Hale and Dorr LLP (Sue-Yun Ahn, of 8
counsel), Washington, D.C., for 9
Appellee. 10
SACK, Circuit Judge: 11
This appeal requires us to address several unsettled 12
issues concerning the effect of a class-action settlement on an 13
individual class member's preexisting right to arbitrate certain 14
claims. The appellants, John and Elaine Beland (the "Belands"), 15
brought various claims before Financial Industry Regulatory 16
Authority ("FINRA") arbitrators against Ameriprise Financial 17
Services, Inc. ("Ameriprise"), a financial-services company, for, 18
inter alia, breach of fiduciary duty, breach of contract, fraud, 19
and negligent misrepresentation related to the decline in value 20
of various financial assets owned by the Belands and managed by 21
Ameriprise. The claims are based on Ameriprise's alleged failure 22
to adhere to the Belands' conservative investment strategy and 23
its "steering" of the Belands' assets into mutual funds that 24
allowed Ameriprise to collect excessive fees. 25
Ameriprise answered the Belands' FINRA complaint by 26
asserting, principally, that the Belands released their claims by 27

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4
operation of a settlement agreement in a class-action suit that 1
had proceeded between 2004 and 2007 in the United States District 2
Court for the Southern District of New York. The Belands were 3
class members in the class action, but -- in part, they allege, 4
on the advice an Ameriprise financial advisor -- they took no 5
action at the time of the settlement, failing to either opt out 6
of the class or submit a claim to share in the settlement funds. 7
By the terms of the settlement agreement, the district court 8
(Deborah A. Batts, Judge) had retained exclusive jurisdiction 9
over disputes arising from the class litigation. 10
After FINRA arbitrators denied Ameriprise's motion to 11
stay the Belands' arbitration, Ameriprise moved in the United 12
States District Court for the Southern District of New York, in 13
which the class action had been litigated and settled, for an 14
order to enforce the settlement agreement that would enjoin the 15
Belands from pressing any of their claims before FINRA 16
arbitrators. The district court concluded that the class 17
settlement barred all of the Belands' arbitration claims, and 18
therefore granted Ameriprise's motion and ordered the Belands to 19
dismiss their FINRA complaint with prejudice. 20
We conclude that the district court had the power to 21
enter such an order and that several of the Belands' arbitration 22
claims were barred by the 2007 class-action settlement. We 23
therefore affirm in part. But because we conclude that the 24
Belands' arbitration complaint pleads claims -- including so- 25

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1 On August 1, 2005, American Express Financial Corporation
and American Express Financial Advisors officially changed their
names to, respectively, Ameriprise Financial, Inc. and Ameriprise
Financial Services, Inc. On September 30, 2005, these two
entities became independent from the American Express Company.
5
called "suitability claims" -- that were not, and could not have 1
been, released by the class settlement, we vacate in part the 2
district court's judgment, and we remand the case for the entry 3
of an order permitting the non-Released claims to proceed in 4
FINRA arbitration. In light of our disposition of this appeal, 5
we dismiss as moot the Belands' appeal from the district court's 6
denial of their motion for reconsideration. 7
BACKGROUND 8
The In re AEFA Class-Action Complaint 9
Between March 4, 2004, and May 4, 2004, various persons 10
who had had dealings with Ameriprise 1 (the "Class Plaintiffs") 11
brought a total of five separate class-action lawsuits before the 12
United States District Court for the Southern District of New 13
York against several Ameriprise affiliates. The Class Plaintiffs 14
asserted various federal- and common-law claims based on 15
Ameriprise's alleged conflicts of interest, misrepresentations 16
and omissions, biased and "canned" financial advice and advisory 17
services, failure to disclose financial incentives and fees, and 18
so-called "steering" of clients' money into investments that 19
benefited the defendants without regard to their clients' best 20
interests. On June 25, 2004, the district court consolidated the 21

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2 The Shelf Space Funds were mutual funds sold by companies
who made undisclosed payments to American Express in order to
promote their mutual funds; these payments were "referred to as
buying 'shelf space' at American Express." Class Complaint ¶ 1.
The Proprietary Funds were owned and operated by American Express
itself. Id.
6
five class actions into In re American Express Financial Advisors 1
Securities Litigation ("In re AEFA"), No. 04 Civ. 1773 (S.D.N.Y., 2
consolidated June 25, 2004). 3
The Second Consolidated Amended Class Action Complaint 4
(the "Class Complaint"), dated September 29, 2005, described the 5
class action as "arising out of the failure of American Express 6
to disclose an unlawful and deceitful course of conduct they 7
engaged in that was designed to improperly financially advantage 8
Defendants to the detriment of [Class] Plaintiffs and other 9
members of the Class." Class Complaint ¶ 1, In re AEFA, No. 04 10
Civ. 1773 (S.D.N.Y. Sept. 29, 2005), ECF No. 119. The Class 11
Plaintiffs alleged that "instead of offering fair, honest and 12
unbiased recommendations to Plaintiffs and other investors, 13
American Express 'financial advisors' gave pre-determined 14
recommendations, pushing clients into a pre-selected, limited 15
number of mutual funds in order to reap millions of dollars in 16
secret kickbacks from the Shelf Space Funds and millions more 17
from sales of American Express Proprietary Funds." 2 Id. ¶ 2. 18
They alleged further that the defendants "had an undisclosed, 19
material conflict of interest that made it impossible for them to 20
render impartial advice." Id. ¶ 10. Based on those allegations, 21

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7
the Class Plaintiffs brought claims for violations of the 1
Securities Act of 1933, the Securities Exchange Act of 1934 and 2
various Rules promulgated thereunder, the Investment Advisers Act 3
of 1940, and assorted state-law claims including for breach of 4
fiduciary duty, deceptive trade practices, and unjust enrichment. 5
The Class Period was defined as March 10, 1999, to April 1, 2004, 6
and was later extended to April 1, 2006. 7
In January 2007, the lead plaintiffs in In re AEFA 8
moved for provisional certification of a settlement class and 9
preliminary approval of a settlement agreement pursuant to 10
Federal Rule of Civil Procedure 23. See Stipulation of 11
Settlement ("Class Settlement" or "Settlement Agreement"), Lead 12
Pls.' Notice of Mot. for Prelim. Approval of Settlement Exh. 2, 13
In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Jan. 18, 2007), ECF No. 14
135-3. They simultaneously submitted a draft Notice of Proposed 15
Settlement of Class Action (the "Class Notice") to the court. On 16
February 15, 2007, the district court provisionally certified the 17
class and approved the Class Notice. In February and March 2007, 18
the parties mailed the Class Notice to roughly 2.8 million 19
potential class members. 20
The Class Notice served several functions. First, it 21
described the lawsuit in general terms: 22
In their lawsuits, the investors complain 23
that they were sold financial plans and/or 24
advice that, instead of being tailored to 25
their individual circumstances, contained 26
standardized recommendations designed to 27

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8
steer them into investing in Defendants' 1
proprietary mutual funds and other 2
proprietary investment products [(the 3
Proprietary Funds)] and certain non- 4
proprietary "Preferred" or "Select" mutual 5
funds [(the Shelf Space Funds)]. 6
. . . Plaintiffs claim that the conflicts of 7
interest inherent in Defendants' financial 8
plans and/or financial advisory services, and 9
the compensation arrangements between 10
Defendants and the Preferred Funds, were 11
inadequately disclosed to investors. . . . 12
Class Notice at 1, Decl. of Jennifer M. Keough in Supp. of Final 13
Approval of Settlement Exh. 1, In re AEFA, No. 04 Civ. 1773 14
(S.D.N.Y. May 29, 2007), ECF No. 143-2. 15
Second, the Class Notice explained the options 16
available to potential class members in acting on the Class 17
Settlement. In particular, as relevant here, the Class Notice 18
stated: "Unless you exclude yourself, you will continue to be a 19
member of the class, and that means that if the settlement is 20
approved, you will release all 'Released Claims' against the 21
'Released Persons,' and you will be prohibited from bringing or 22
participating in any other cases concerning the 'Released Claims' 23
against the 'Released Persons.'" Id. at 7. The Class Notice 24
also included a description of "Released Claims" and "Released 25
Persons" taken from the Settlement Agreement. The definition of 26
Released Claims included, inter alia, 27
any and all claims, debts, demands, rights or 28
causes of action or liabilities 29
whatsoever . . . , whether based on federal, 30
state, local, statutory or common law or any 31
other law, rule or regulation, . . . 32
including both known claims and Unknown 33

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3 The phrase "common course of conduct" is not defined in
the Class Settlement; neither is "suitability claim." However, a
suitability claim, generally, is a claim that a "broker knew or
reasonably believed that the securities he recommended to the
customer were unsuitable in light of the customer's investment
objectives but that he recommended them anyway." Murray v.
Dominick Corp. of Can., 117 F.R.D. 512, 516 (S.D.N.Y. 1987).
Suitability claims -- sometimes called "unsuitability claims" --
are often brought "as a distinct subset" of section 10(b) claims
under the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b).
Dodds v. Cigna Sec., Inc., 12 F.3d 346, 351 (2d Cir. 1993), cert.
denied, 511 U.S. 1019 (1994); see Brown v. E.F. Hutton Grp.,
Inc., 991 F.2d 1020, 1031 (2d Cir. 1993) (discussing the elements
of a federal unsuitability claim).
9
Claims . . . that (i) have been asserted in 1
this Action by the Plaintiffs . . . or (ii) 2
could have been asserted in any forum by the 3
Plaintiffs or Class Members . . . against any 4
of the Released Persons; including claims 5
that arise out of or are based upon (a) the 6
allegations, transactions, facts, matters or 7
occurrences, representations or omissions 8
alleged, involved, set forth, or referred to 9
in the [Class Complaint] . . . . 10
Id. at 8. Importantly for present purposes, the Class Notice 11
stated that "'Released Claims' shall not include suitability 12
claims unless such claims are alleged to arise out of the common 13
course of conduct that was alleged, or could have been alleged, 14
in the Action, as more fully described herein." 3 Id. 15
The Class Notice further explains that releasing claims 16
"will prevent you from suing Defendants over claims that arise 17
from or are based on the offer and sale of financial planning 18
services or financial advice provided to you by Defendants, 19
including claims to recover the fees you paid for financial 20
advisory services or advice and claims that you were 'steered' 21

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10
toward particular investments that were more profitable for 1
[Ameriprise]." Id. It also warned potential class members, 2
under the heading "EXCLUDING YOURSELF FROM THE SETTLEMENT," that 3
if "you want to retain any right to sue or continue to assert any 4
of the Released Claims on your own against any Defendant or other 5
Released Person, then you must take steps to get out of the 6
class." Id.; see id. at 8–9, 11 (explaining how to "opt[] out" 7
of the Class Settlement and the consequences of "do[ing] 8
nothing"). 9
On July 18, 2007, the district court issued an Order 10
and Final Judgment in In re AEFA approving the Class Settlement, 11
dismissing all class members' claims with prejudice, and barring 12
and enjoining class members from asserting Related Claims against 13
Released Persons. The court retained "[e]xclusive 14
jurisdiction . . . over the Parties and the Class Members for all 15
matters relating to this Action and the Settlement, 16
including . . . [the] interpretation, effectuation, or 17
enforcement of the [Settlement Agreement] and this Order and 18
Final Judgment." Order and Final Judgment at 10, In re AEFA, No. 19
04 Civ. 1773 (S.D.N.Y. July 18, 2007), ECF No. 170. 20
The Belands 21
John and Elaine Beland are a retired married couple 22
living on a 4.1-acre parcel of farmland in New Lenox, Illinois, 23
that, together with a much larger tract, had been in John's 24
family for more than a century. For many years, John, whose 25

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11
formal education ended in eighth grade, "farmed the family 1
homestead" for the Pesters, his aunt and uncle. Claim in 2
Arbitration Before FINRA ("FINRA Complaint") (filed Feb. 17, 3
2009) ¶ 1, Decl. of David W. Bowker in Supp. of Ameriprise Fin. 4
Servs., Inc.'s Mem. of Law in Supp. of Mot. to Enforce In re AEFA 5
Settlement and Inj. ("Bowker Decl.") Exh. 6, In re AEFA, No. 04 6
Civ. 1773 (S.D.N.Y. Mar. 9, 2010), ECF No. 193-7. After the 7
death of his uncle, John continued to farm the land for his aunt, 8
Hazel Pester. 9
According to the Belands, in 1995, acting on the 10
financial advice of Ronald Miller -- an Ameriprise financial 11
consultant based in Joliet, Illinois -- Hazel sold a large 12
portion of the family farm for approximately $2.6 million. The 13
proceeds of the sale were immediately deposited into two 14
different trusts -- a charitable trust worth $1.757 million and a 15
revocable trust worth $886,000. Hazel was the charitable trust's 16
lifetime beneficiary, and she held a life estate in the revocable 17
trust. In 2004, Hazel died. John Beland took the corpus of the 18
revocable trust, while various local churches and charities, as 19
residuary beneficiaries, received the assets in the charitable 20
trust. John, allegedly on Miller's advice, then converted the 21
revocable trust into an Ameriprise investment account, jointly 22
held by the Belands and managed by Miller. 23
The Belands' FINRA Complaint asserts that Ameriprise 24
and Miller agreed to invest the Belands' funds "in a conservative 25

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4 The Belands allege that "[t]hese 'house' mutual funds were
purchased not because they fit the preservation of capital and
income approach (with growth only a secondary feature), but
because they generated fees for Ameriprise." FINRA Complaint
¶ 14.
5 These "'tech' heavy stock" stocks included: Check Point
Software; Flextronics; Analog Devices; Applied Microcircuits;
Brocade Communications; Ciena Corp.; Enron Corp.; I 2
Technologies, Inc.; Maxim Integrated Products; Selectron Corp.;
and Univision Communications. FINRA Complaint ¶ 16.
12
fashion, preserving capital and obtaining income from which the 1
life beneficiaries could receive a return." Id. ¶ 9. However, 2
the Belands allege, "[a] conservative asset allocation approach 3
was not taken." Id. ¶ 13. In the FINRA Complaint, the Belands 4
express two main grievances: (1) "Miller and Ameriprise invested 5
in many house American Express mutual funds including various 6
high yield junk bond funds, as well as risky small cap or start- 7
up funds"; 4 and (2) "Ameriprise invested in many risky small-cap 8
technology stocks which led to huge, significant losses over 9
time." 5 Id. ¶¶ 14–15. They similarly contend that Ameriprise 10
"allocat[ed] the trust assets inappropriately which left the 11
Trusts exposed to greater than expected losses." Appellants' Br. 12
at 7; see FINRA Complaint ¶ 27. 13
The Belands state that their combined account balances 14
dwindled from more than $2.6 million at inception in 1995 to 15
approximately $800,000 in early 2009. FINRA Complaint ¶ 7. John 16
admits that he did not review the account statements until after 17
Hazel's death, when he noticed the "precipitous[]" drop. Id. 18

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6 The Belands did receive a $25 payment from an SEC
disgorgement and restitution fund related to its investigation
into Ameriprise's investment-advisory activities.
13
¶¶ 18–19. The Belands allege that when they confronted Miller 1
about the accounts' declining assets, "Miller set a course of 2
cover-up, lies and deceit in order to obscure the mishandling" of 3
the accounts, providing false justifications for investment 4
decisions and shielding the truth about Ameriprise's motives and 5
conflicts of interest. Id. ¶ 20. Among the allegedly false 6
reasons for the losses were the September 11 terrorist attacks 7
and that the charitable trust was intended to diminish in value 8
"by design." Id. ¶¶ 21–24 (internal quotation marks omitted). 9
Over time, the Belands received notices of myriad 10
class-action lawsuits against or involving various companies in 11
which Ameriprise and Miller had invested on the Belands' behalf. 12
In addition, John Beland conceded that in early 2007 he received 13
multiple notices relating to the In re AEFA action. Decl. of 14
John Beland ¶ 5, Reply in Supp. of Mot. for Ltd. Disc. Exh. A, In 15
re AEFA (S.D.N.Y. June 22, 2010), ECF No. 204-2. Because he 16
found the notices, including the In re AEFA notices, "complex and 17
confusing," he asked Miller for advice. Id. ¶ 6. According to 18
John, "Miller told [the Belands] to do nothing about these 19
notices and [they] followed his advice." Id. As a result of 20
their failure to take any action with respect to the In re AEFA 21
Class Settlement, the Belands did not share in its proceeds. 6
22

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14
The Belands' FINRA Action 1
In late 2008, the Belands sought legal advice regarding 2
their accounts' declining values, and on February 17, 2009, they 3
filed an arbitration complaint with FINRA. They made claims 4
(collectively, the "FINRA Claims") against Miller and Ameriprise 5
for: (1) breach of fiduciary duty for "failing to manage the 6
trusts according to their investment objectives, and by self- 7
dealing," FINRA Complaint ¶ 31; (2) breach of contract for 8
"mishandling the [Belands'] assets and . . . covering up the 9
mishandling," id. ¶ 35; (3) common-law fraud for "mak[ing] 10
material misstatements of fact" regarding the reasons for the 11
assets' decline in value, among other things, id. ¶ 39; and (4) 12
negligent misrepresentation, id. ¶ 44. See generally id. ¶¶ 29- 13
45. The Belands sought an arbitration award of "not less than 14
$1,500,000 for 'well managed' account damages . . . , for 15
punitive damages[,] and [for] their costs and fees of [the FINRA] 16
action." Id. at 11. 17
In response before the FINRA arbitrators, Miller and 18
Ameriprise (collectively, the "FINRA Defendants") filed a 19
Statement of Answer, Defenses and Affirmative Defenses on 20
September 18, 2009. At the same time, the FINRA Defendants moved 21
before the arbitrators to stay the arbitration proceedings on the 22
basis that, as members of the In re AEFA class, the Belands had 23
"released Ameriprise Financial and its agents and affiliates for" 24
the Released Claims defined in the Class Settlement and Class 25

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7 In a July 28, 2009 letter, the FINRA Defendants requested
that the Belands "withdraw their claims related to" the eighteen
accounts listed. Letter from Ameriprise Counsel to Belands at 2,
Mem. in Supp. of Mot. for Reconsideration ("Mot. for
Reconsideration") Exh. D, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y.
Aug. 17, 2010), ECF No. 209-5. The Belands have identified seven
of their Ameriprise accounts that were not listed in the July 28
letter or the Motion to Stay.
15
Notice. Mot. to Stay Arbitration of Released Claims ("Motion to 1
Stay") at 2, Bowker Decl. Exh. 7, In re AEFA, No. 04 Civ. 1773 2
(S.D.N.Y. Mar. 9, 2010), ECF No. 193-8. In the Motion to Stay, 3
the FINRA Defendants listed eighteen separate Ameriprise account 4
numbers as to which, they contended, the Belands' allegations 5
were barred by the Class Settlement. 7 The FINRA Defendants 6
stated in their motion that "[u]nless Claimants withdraw their 7
Released Claims in this action, Respondents will be forced to 8
protect their rights by filing a Motion to Enforce Class Action 9
Settlement as to the Released Claims," and that, therefore, "a 10
stay of th[e FINRA] action as it pertains to the released claims 11
is appropriate." Id. at 4. On October 27, 2009, the Belands 12
filed an opposition to the FINRA Defendants' Motion to Stay, 13
arguing that the "class action specifically excluded the causes 14
of action the Belands assert" in the FINRA arbitration. 15
Claimants' Opp'n to Resp'ts' Mot. to Stay Arbitration at 2, 16
Bowker Decl. Exh. 4, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Mar. 17
9, 2010), ECF No. 193-5. 18
A three-member FINRA arbitration panel held a 19
telephonic hearing regarding the Motion to Stay on January 5, 20

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8 The Belands represent that the FINRA arbitrators
originally set the arbitration hearing for March 2010; however,
the hearing was eventually rescheduled to take place in August
2010. [Blue 14; A329.] It was thereafter postponed indefinitely
pending the resolution of the parties' litigation before the
district court.
9 In Martens v. Thomann, 273 F.3d 159 (2d Cir. 2001), we
noted that "there is nothing in the Federal Rules of Civil
Procedure styled a 'motion to enforce.' Nor is there approval
for such a motion to be found in this Circuit's case law, except
in situations inapposite to the case before us." Id. at 172. In
Martens, we did "not ourselves define the nature of this motion
because the district court's failure to state its reasons for
denying it [wa]s sufficient to warrant reversal." Id.
From time to time, however, we have reviewed district-
court judgments that ruled on purported motions to enforce. See,
e.g., Vemics, Inc. v. Meade, 371 F. App'x 181 (2d Cir. 2010)
(summary order); Surac v. Cavalry Portfolio Servs., LLC, 357 F.
App'x 344 (2d Cir. 2009) (summary order). Because we conclude
that the district court's judgment in this case presents an
appealable question to this Court, we choose to ignore any
potential error of terminology here.
16
2010. After the hearing, the panel issued an order denying the 1
Motion to Stay "without prejudice." FINRA Order at 1, Mem. in 2
Supp. of Mot. for Reconsideration ("Mot. for Reconsideration") 3
Exh. F, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Aug. 17, 2010), 4
ECF No. 209-5. The panel then scheduled an arbitration hearing 5
for March 2010 8 to try the issues raised in the Belands' FINRA 6
Complaint and the FINRA Defendants' answer. 7
Ameriprise's Motion to Enforce the Class Settlement in 8
the S.D.N.Y. and Belands' Cross-Motion to Clear 9
Technical Defaults and for Limited Discovery 10
Before the scheduled arbitration hearing could be held, 11
however, the FINRA Defendants filed a "Motion to Enforce" 9 the In 12
re AEFA Settlement Agreement before the district court, which had 13

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10 The Belands argue that the FINRA Defendants qualitatively
altered their position in the Motion to Enforce vis-à-vis the In
re AEFA Class Settlement's effect on the Belands' FINRA Complaint
because that document represented "the first time" that
Ameriprise had argued "that all claims and facts alleged in the
Illinois Arbitration were of the same 'course of conduct' alleged
in the New York Class Action." Appellants' Br. at 15 (emphasis
in original). The Belands also characterize the Motion to
Enforce as misleading because it argued that the Belands sought a
"double recovery" despite the fact that they had not received any
payments from the Class Settlement, and because it did not
indicate that the FINRA panel had denied the FINRA Defendants'
Motion to Stay. Id. (internal quotation marks omitted).
17
retained jurisdiction over the In re AEFA class litigation. In 1
their March 9, 2010 Motion to Enforce, the FINRA Defendants 2
requested that the court "order[] the Belands to dismiss with 3
prejudice their pending FINRA action against Ameriprise." 10 Mem. 4
in Supp. of Ameriprise's Mot. to Enforce In re AEFA Settlement 5
and Inj. ("Motion to Enforce") at 2, In re AEFA, No. 04 Civ. 1773 6
(S.D.N.Y. Mar. 9, 2010), ECF No. 192. The Belands did not, in 7
response, file a direct opposition to the motion. Instead, they 8
filed a cross-motion, styled as a "Motion to Clear Technical 9
Defaults [and] for Limited Discovery," seeking to litigate the 10
issue of whether the Class Settlement's definition of Released 11
Claims covered all of the claims that the Belands asserted in 12
their FINRA Complaint. Specifically, the Belands argued that 13
depositions should be taken to determine whether evidence 14
supported their assertion that "Miller's conduct . . . deprived 15
them of any meaningful opportunity to opt out of the class 16
action," as well as to determine which of their investments did 17

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18
"not fall within the ambit of the" Class Settlement. Mot. to 1
Clear Technical Defaults, for Ltd. Disc. and to Set Briefing 2
Schedule at 2, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Mar. 30, 3
2010), ECF No. 196. The Belands proposed a deposition and 4
briefing schedule that would culminate in an evidentiary hearing 5
before the district court. The FINRA Defendants opposed the 6
cross-motion by arguing, principally, that even the facts as 7
alleged by the Belands would not, under the "excusable neglect" 8
standard, justify their failure to opt out of the Class 9
Settlement. 10
The Belands filed a reply, arguing that the district 11
court 12
should allow the arbitration to proceed for 13
two reasons: first, because the issues of 14
Miller's breach of fiduciary duty and 15
misrepresentation go well beyond any issue 16
that was or could have been raised in the 17
Class Action; and second, because the 18
arbitration panel is uniquely positioned to 19
make factual determinations as to which 20
accounts may or may not be encompassed within 21
this Court's Confirmation Order. 22
Reply in Supp. of Mot. for Ltd. Disc. at 1–2, In re AEFA, No. 04 23
Civ. 1773 (S.D.N.Y. June 22, 2010), ECF No. 204. Finally, the 24
FINRA Defendants filed, together, a reply in support of their 25
Motion to Enforce and a sur-reply in opposition to the Belands' 26
cross-motion. 27

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19
The District Court's Order Enforcing the Settlement 1
In a seven-page order dated August 11, 2010 (the 2
"Enforcement Order"), the district court granted the FINRA 3
Defendants' Motion to Enforce and ordered the Belands to dismiss 4
with prejudice their pending FINRA Complaint against Ameriprise 5
and Miller. The court concluded that the Belands' claims "f[ell] 6
within the definition of 'Released Claims' barred by the Court's 7
July 18, 2007 Order." Enforcement Order at 1–2, In re AEFA, No. 8
04 Civ. 1773 (S.D.N.Y. Aug. 11, 2010), ECF No. 206. The court 9
characterized the Belands' FINRA Claims thus: 10
Here, the Belands claim that rather than 11
managing their accounts in a conservative, 12
minimal risk manner as promised, Miller and 13
Ameriprise invested in many house American 14
Express mutual funds including various high 15
yield junk bond funds, as well as risky small 16
cap or start-up funds in order to generate 17
fees for Ameriprise and promote in-house 18
mutual funds of American Express. 19
Id. at 2 (brackets and internal quotation marks omitted). The 20
court concluded that those "allegations arise from the same 21
transactions, facts, matters, occurrences, and representations as 22
the claims of the [Class Complaint]." Id. 23
The district court further determined that the Belands 24
could not "satisfy the standard for 'excusable neglect'" to 25
excuse their failure to opt out of the Class Settlement. Id. at 26
3. In arriving at that conclusion, the court stated that "while 27
Miller's advice may have played a role in the Belands' decision 28
not to opt out of the class, the Belands should have known from 29

-- 19 of 61 --

11 Ameriprise contends that this argument, and others in the
Belands' Motion for Reconsideration, were made "[f]or the first
time" in that motion. Appellee's Br. at 17.
20
the plain English of the [Class] Notice that Miller's 1
recommendation that they 'do nothing' would lead to no payment 2
from the settlement and the release of future claims." Id. at 5. 3
The court also found that "not until after Ameriprise moved to 4
enjoin [the Belands'] FINRA claims on March 9, 2010" did the 5
Belands "argue before this Court that they should be excused from 6
failing to opt out of the settlement" -- a delay that was, in the 7
court's view, "inexcusably long." Id. at 6. 8
After the district court issued the Enforcement Order, 9
the Belands filed a Motion for Reconsideration, making several 10
arguments. First, they contended that the Enforcement Order 11
"simply overlooked material language in the Release which exempts 12
claims like the Belands['] which do not relate to the allegations 13
of the Class Action . . . but instead raise independent 14
suitability claims." 11 Second, the Belands argued that the 15
Federal Arbitration Act ("FAA") required that the FINRA 16
Defendants arbitrate the coverage of the Class Settlement before 17
the arbitrators. Third, the Belands further elaborated a theory 18
of "excusable neglect" that would free their claims from the 19
Class Settlement even if those claims were Released Claims. The 20
district court denied the Motion for Reconsideration in a two- 21
sentence order dated August 20, 2010. 22

-- 20 of 61 --

21
The Belands' Appeal 1
The Belands filed a Notice of Appeal on August 23, 2
2010. The same day, the district court granted a stay of its 3
Enforcement Order pending the appeal to this Court. The stay 4
remains in effect. 5
DISCUSSION 6
I. Overview 7
On appeal, the Belands argue that the district court 8
erred in several respects. Principally, they assert that the 9
court "failed to compare" the substance of the claims alleged in 10
their FINRA Complaint -- "which feature unsuitability, lack of 11
asset allocation and speculative 'tech' stock investing" -- with 12
the Released Claims in the Class Settlement. Appellants' Br. at 13
19. In the Belands' view, the Class Settlement only released 14
claims regarding "the sale of fee-based, 'standardized' 15
investment adviser plans which steered customers to 'proprietary' 16
or 'preferred' mutual funds for which Ameriprise received 17
'kickbacks.'" Id. They also point to a "carve[]-out" in the 18
Class Settlement that they contend exempts at least some of their 19
FINRA Claims. Id. For these reasons, the Belands contend that 20
at least some of their arbitration claims are not Released 21
Claims, and that the district court erred in requiring the 22
Belands to dismiss those unreleased claims. 23
Alternatively, the Belands argue: (1) that Ameriprise 24
chose to defend the Belands' claims before FINRA arbitrators and, 25

-- 21 of 61 --

22
therefore, the district court erred in "derail[ing]" the pending 1
FINRA arbitration; (2) that questions concerning the scope of the 2
Settlement Agreement were for the FINRA arbitrators to decide, 3
and that the arbitrators indicated their intent to decide them; 4
(3) that the Release contained in the Class Settlement should not 5
be applied against the Belands because their failure to opt out 6
of the class action was the product of "excusable neglect"; and 7
(4) that the district court erroneously denied their motion for 8
reconsideration. Id. at 19–22. 9
The FINRA Defendants (also collectively "Ameriprise") 10
argue that the Class Settlement's release of "'suitability 11
claims' arising out of the common course of conduct alleged in In 12
re AEFA" precludes the entirety of the Belands' arbitration 13
claims. Appellee's Br. at 18. Ameriprise also responds that the 14
district court properly rejected the Belands' "excusable neglect" 15
argument, and that "the district court ha[d] exclusive 16
jurisdiction to enforce the [Class] Settlement." Id. at 18–19. 17
The FINRA Defendants therefore contend that the district court 18
acted properly in directing the Belands to dismiss all of their 19
arbitral claims. 20
This appeal presents at least one unresolved legal 21
issue about which the parties are in agreement. Neither the 22
Belands nor Ameriprise appear to dispute the general principle 23
that federal courts are vested with power under the FAA to enjoin 24
a pending arbitration where appropriate. But this question has 25

-- 22 of 61 --

12 Recently, in Wachovia Bank, Nat'l Ass'n v. VCG Special
Opportunities Fund, --- F.3d ----, 2011 WL 5110122, 2011 U.S.
App. LEXIS 21885 (2d Cir. Oct. 28, 2011), in a dispute involving
FINRA arbitrability, we remanded for the district court to
"enjoin[ the defendant] from proceeding with its FINRA
arbitration," but we did not address the procedural propriety of
such an order. Id. at *9, 2011 U.S. App. LEXIS 21885, at *25.
23
never been explicitly resolved by this Court, 12 and we, 1
therefore, address it in the course of our analysis. We also 2
reiterate this Court's recent holding that FINRA-membership 3
constitutes an agreement to arbitrate disputes under FINRA's 4
rules, see UBS Fin. Servs., Inc. v. W. Va. Univ. Hosps., --- F.3d 5
----, 2011 WL 4389991, at *5, 2011 U.S. App. LEXIS 19420, at *15 6
(2d Cir. Sept. 22, 2011), a proposition neither of the parties 7
contests. 8
II. Arbitrability of the Belands' Claims 9
A. Background Arbitration Law 10
The FAA creates a "body of federal substantive law of 11
arbitrability, applicable to any arbitration agreement within the 12
coverage of the Act." Moses H. Cone Mem'l Hosp. v. Mercury 13
Constr. Corp., 460 U.S. 1, 24 (1983). The FAA provides that an 14
arbitration provision in "a contract evidencing a transaction 15
involving commerce . . . shall be valid, irrevocable, and 16
enforceable, save upon such grounds as exist at law or in equity 17
for the revocation of any contract." 9 U.S.C. § 2. Further, the 18
FAA "establishes a national policy favoring arbitration when the 19
parties contract for that mode of dispute resolution" and 20

-- 23 of 61 --

24
"supplies not simply a procedural framework applicable in federal 1
courts" but "also calls for the application, in state as well as 2
federal courts, of federal substantive law regarding 3
arbitration." Preston v. Ferrer, 552 U.S. 346, 349 (2008). 4
"[T]he FAA's primary purpose [is to] ensur[e] that 5
private agreements to arbitrate are enforced according to their 6
terms." Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford 7
Jr. Univ., 489 U.S. 468, 479 (1989). Despite the "liberal 8
federal policy favoring arbitration agreements," Moses H. Cone, 9
460 U.S. at 24, "arbitration is a matter of contract and a party 10
cannot be required to submit to arbitration any dispute which he 11
has not agreed so to submit," Howsam v. Dean Witter Reynolds, 12
Inc., 537 U.S. 79, 83 (2002) (quoting Steelworkers v. Warrior & 13
Gulf Navigation Co., 363 U.S. 574, 582 (1960)) (internal 14
quotation marks omitted); see also Volt, 489 U.S. at 479 15
("Arbitration under the [FAA] is a matter of consent, not 16
coercion, and parties are generally free to structure their 17
arbitration agreements as they see fit."). "[A]s with any other 18
contract, the parties' intentions control." Stolt-Nielsen S.A. 19
v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758, 1774 (2010) 20
(internal quotation marks omitted). 21
However, "any doubts concerning the scope of arbitrable 22
issues should be resolved in favor of arbitration." Moses H. 23
Cone, 460 U.S. at 24–25. "Accordingly, federal policy requires 24
us to construe arbitration clauses as broadly as possible." 25

-- 24 of 61 --

25
Collins & Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 19 1
(2d Cir. 1995) (brackets and internal quotation marks omitted). 2
Therefore, we will compel arbitration "unless it may be said with 3
positive assurance that the arbitration clause is not susceptible 4
of an interpretation that covers the asserted dispute." AT & T 5
Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 6
(1986). 7
In this Circuit, courts follow a two-part test to 8
determine the arbitrability of claims. In deciding whether 9
claims are subject to arbitration, a court must consider (1) 10
whether the parties have entered into a valid agreement to 11
arbitrate, and, if so, (2) whether the dispute at issue comes 12
within the scope of the arbitration agreement. ACE Capital Re 13
Overseas Ltd. v. Cent. United Life Ins. Co., 307 F.3d 24, 28 (2d 14
Cir. 2002); accord John Hancock Mut. Life Ins. Co. v. Olick, 151 15
F.3d 132, 137 (3d Cir. 1998). Before addressing the second 16
inquiry, we must also determine who -- the court or the 17
arbitrator -- properly decides the issue. See Republic of 18
Ecuador v. Chevron Corp., 638 F.3d 384, 393 (2d Cir. 2011). 19
B. Existence and Scope of Ameriprise's Consent to Arbitrate 20
Because our review of the district court's Enforcement 21
Order requires that we evaluate not only the existence but also 22
the scope of any such agreement, we must identify first that 23
agreement's form, and then its contours. 24

-- 25 of 61 --

13 We note that such consent may not be reciprocal. Though
the FINRA Rules bind Ameriprise to arbitrate disputes with its
customers upon request, it does not appear that Ameriprise can
require its customers to arbitrate disputes with it on the basis
of its FINRA membership alone. Hence, for example, the In re
AEFA litigation, which proceeded in federal court, not in FINRA
arbitration.
26
Ameriprise does not dispute that, by virtue of its 1
membership in FINRA, it has consented to arbitrate with its 2
customers. 13 See FINRA Code of Arbitration Procedure for 3
Customer Disputes ("FINRA Code") § 12200 ("Parties must arbitrate 4
a dispute under the [FINRA] Code if" arbitration is "[r]equested 5
by the customer; [t]he dispute is between a customer and a 6
[FINRA] member or associated person of a member; and [t]he 7
dispute arises in connection with the business activities of the 8
member or the associated person . . . ."); cf. John Hancock Life 9
Ins. Co. v. Wilson, 254 F.3d 48, 58 (2d Cir. 2001) (explaining 10
that the defendant "concede[d] that it agreed by virtue of its 11
membership in the NASD[, the predecessor to FINRA,] to arbitrate 12
all disputes contemplated under" a rule analogous to FINRA Rule 13
12200). Nor does Ameriprise dispute that all of the Belands' 14
claims constitute claims "aris[ing] in connection with [its] 15
business activities" within the meaning of FINRA Rule 12200. 16
This Court has recently stated that FINRA membership constitutes 17
an agreement to "adhere to FINRA's rules and regulations, 18
including its Code and relevant arbitration provisions contained 19
therein." UBS Fin. Servs., 2011 WL 438991, at *5; see also 20

-- 26 of 61 --

27
Wachovia Bank, 2011 WL 5110122, at *6-7, 2011 U.S. App. LEXIS 1
19420, at *15 (stating that "interpretation of arbitration rules 2
of an industry self-regulatory organization. . . such as FINRA is 3
similar to contract interpretation" and concluding, in that case, 4
that the matter was not arbitrable under FINRA's rules). We 5
therefore conclude that all of the Belands' FINRA Claims against 6
Ameriprise are arbitrable in the absence of any subsequent 7
agreement revoking or otherwise limiting the scope of 8
Ameriprise's consent to arbitrate. 9
III. Binding Nature of the Class Settlement on the 10
Belands 11
We next turn to the parties' relationship to the Class 12
Settlement. Absent a violation of due process or excusable 13
neglect for failure to timely opt out, a class-action settlement 14
agreement binds all class members who did not do so. See, e.g., 15
Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 115 (2d 16
Cir. 2005) (stating that a class member "was required to opt out 17
at the class notice stage if it did not wish to be bound" by a 18
class settlement agreement), cert. denied, 544 U.S. 1044 (2005); 19
County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 20
1302 (2d Cir. 1990) (stating that if a party "could not have 21
properly opted out of the mandatory class, it is bound by the 22
class settlement if it is upheld, as are all other members of the 23
class"); see also Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 24
811–13 (1985); In re: PaineWebber Ltd. P'ships Litig., 147 F.3d 25

-- 27 of 61 --

28
132, 138–39 (2d Cir. 1998). And a "settlement agreement is a 1
contract that is interpreted according to general principles of 2
contract law." Omega Eng'g, Inc. v. Omega, S.A., 432 F.3d 437, 3
443 (2d Cir. 2005). 4
Rule 6 of the Federal Rules of Civil Procedure permits 5
a court to extend the time during which an act must be done "on 6
motion made after the time has expired if the party failed to act 7
because of excusable neglect." Fed. R. Civ. P. 6(b)(1)(B). In 8
Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 9
U.S. 380 (1993), the Supreme Court set forth four factors to be 10
considered in connection with an assertion of "excusable neglect" 11
as justification for a missed judicial deadline: (1) "the danger 12
of prejudice" to the party opposing the extension; (2) "the 13
length of the delay and its potential impact on judicial 14
proceedings"; (3) "the reason for the delay, including whether it 15
was within the reasonable control" of the party seeking the 16
extension; and (4) whether the party seeking the extension "acted 17
in good faith." Id. at 395. While those factors are the central 18
focus of the inquiry, the ultimate determination depends upon a 19
careful review of "all relevant circumstances." Id.; accord In 20
re: PaineWebber Ltd. P'ships Litig., 147 F.3d at 135 ("To 21
establish excusable neglect, . . . a movant must show good faith 22
and a reasonable basis for noncompliance."). 23
Because the Belands have not argued that due process 24
was denied them with respect to the Class Settlement, we turn to 25

-- 28 of 61 --

29
whether the district court erred when it rejected their 1
"excusable neglect" argument. On review of the district court's 2
ruling for abuse of discretion, see id. at 135, we will reverse 3
only if we have "a definite and firm conviction that the court 4
below committed a clear error of judgment in the conclusion that 5
it reached upon a weighing of the relevant factors," Silivanch v. 6
Celebrity Cruises, Inc., 333 F.3d 355, 362 (2d Cir. 2003), cert. 7
denied, 540 U.S. 1105 (2004). Because we have no such clear 8
conviction here, we do not disturb the district court's 9
conclusion that the Belands failed to demonstrate "excusable 10
neglect." 11
In analyzing the issue, the district court relied on 12
admonitions and warnings under boldface, capitalized headings in 13
the Class Notice -- which the Belands received -- about the 14
consequences of taking no action. The court concluded that "the 15
Belands should have known from the plain English of the Notice 16
that Miller's recommendation that they 'do nothing' would lead to 17
no payment from the settlement and the release of future claims." 18
Enforcement Order at 5. It also determined that if the Belands 19
failed to read the notice, even after Miller's alleged advice, 20
they did so unreasonably. The court further noted a significant 21
delay on the Belands' part in seeking relief under the "excusable 22
neglect" standard, even after they became aware of their possible 23
error in failing to opt out of the Class Settlement. 24

-- 29 of 61 --

30
We conclude that the court's decision in this regard 1
did not constitute an abuse of its discretion. The Class Notice 2
is a reasonably straightforward document that contains a list of 3
readable questions and answers discussing the content of the 4
Class Action and the consequences of taking, or not taking, 5
action in response. See Wal-Mart, 396 F.3d at 114 (stating that 6
a class "[n]otice is adequate if it may be understood by the 7
average class member" (internal quotation marks omitted)). And 8
the Class Notice itself offered advice from class counsel, 9
providing lawyers' contact information and instructing class 10
members to contact them should the content of the Class Notice be 11
unclear. There is, moreover, little doubt that Ameriprise would 12
suffer prejudice if the Belands were permitted to opt out of the 13
Class Settlement three years late, as it would be exposed to 14
liability that it had every reason to think had been foreclosed 15
by the entry of the Settlement Agreement in federal court. 16
Neither the length of, nor the reasons for, the 17
Belands' delay counsel otherwise. Even if John Beland's lack of 18
an extended formal education rendered the Class Notice 19
incomprehensible to him, the fact that he brought the document to 20
Miller -- the representative of Ameriprise -- for advice suggests 21
that he had some level of awareness of the Notice's importance. 22
And while the Belands explain their delay by asserting that they 23
had relied on advice from Miller that the Belands should take no 24
action with respect to the class-action lawsuit against 25

-- 30 of 61 --

31
Ameriprise, we agree with the district court's implicit 1
conclusion that any such reliance was unreasonable. Applying the 2
reasoning of a district court in another circuit, "[o]nce [the 3
Belands] knew that there was a legal proceeding pending, it was 4
no longer reasonable [for them] to continue taking legal or 5
investment advice from [Ameriprise] or any of its agents." In re 6
VMS Sec. Litig., 156 F.R.D. 635, 640 (N.D. Ill. 1994) (internal 7
quotation marks omitted); see also id. ("[R]elying on one's 8
adversaries rather than one's attorney for advice is an error 9
that is to be laid at the feet of the one who made it; such 10
reliance is not reasonable, particularly when the notice 11
instructed class members to consult with their own counsel or 12
class counsel if they had questions." (internal quotation marks 13
omitted)). Finally, the Belands do not contend that Miller took 14
any action to limit their ability to consult with a lawyer or ask 15
for outside advice. 16
We therefore reject the Belands' contention that the 17
district court abused its discretion as to its application of the 18
"excusable neglect" standard to their factual circumstances. It 19
follows from that conclusion that the Belands were bound as class 20
members by the In re AEFA Class Settlement. 21

-- 31 of 61 --

14 On the other hand, "'"procedural" questions which grow
out of the dispute and bear on its final disposition' are
presumptively not for the judge, but for an arbitrator, to
decide." Howsam, 537 U.S. at 84 (emphasis in original) (quoting
John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964)).
Likewise, "the presumption is that the arbitrator should decide
'allegation[s] of waiver, delay, or a like defense to
arbitrability.'" Id. (alteration in original) (quoting Moses H.
Cone, 460 U.S. at 24–25).
32
IV. Effect of the Class Settlement on the Agreement to 1
Arbitrate 2
A. Question of Arbitrability 3
The Supreme Court has distinguished between 4
"question[s] of arbitrability," which are "issue[s] for judicial 5
determination[, u]nless the parties clearly and unmistakably 6
provide otherwise," AT & T Techs., 475 U.S. at 649; see also 7
First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944–45 8
(1995); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1198–99 (2d Cir. 9
1996), and "other gateway matters, which are presumptively 10
reserved for the arbitrator's resolution," Republic of Ecuador, 11
638 F.3d at 393 (internal quotation marks omitted). Among 12
"questions of arbitrability" presumptively reserved for a court, 13
the Supreme Court has identified "dispute[s] about whether the 14
parties are bound by a given arbitration clause" and 15
"disagreement[s] about whether an arbitration clause in a 16
concededly binding contract applies to a particular type of 17
controversy." 14 Howsam, 537 U.S. at 84. 18

-- 32 of 61 --

33
The principal issue in this case is whether any of the 1
Belands' FINRA Claims survived the Class Settlement and are thus 2
still subject to arbitration. As a preliminary matter, however, 3
we must first determine whether the court or the arbitrator 4
should answer that question. We conclude that such an inquiry is 5
a "question of arbitrability" that is reserved to the court. 6
First, the Class Settlement did not merely resolve 7
certain claims that class members might have had, thus estopping 8
these class members from arbitrating these claims at a later 9
date. As discussed further below, the Class Settlement revoked 10
Ameriprise's consent to arbitrate certain claims. The question 11
therefore is not whether those claims had been settled, thus 12
precluding arbitration, but whether there was a surviving 13
agreement, following the settlement, to arbitrate those claims at 14
all. That question, "[u]nless the parties clearly and 15
unmistakably provide otherwise. . . is to be decided by the 16
court, not the arbitrator." AT & T Techs., 475 U.S. at 649. But 17
cf. Republic of Ecuador, 638 F.3d at 393 (observing that "waiver 18
and estoppel generally fall into [the] group of issues 19
presumptively for the arbitrator"). 20
Second, Ameriprise's FINRA membership cannot serve as 21
such "clear[] and unmistakabl[e]" evidence of the parties' intent 22
that all future questions of arbitrability be submitted to 23
arbitrators. See Wilson, 254 F.3d at 57 ("[O]ne party's 24

-- 33 of 61 --

34
membership in an exchange[] is insufficient, in and of itself, to 1
evidence the parties' clear and unmistakable intent to submit the 2
'arbitrability' question to the arbitrators."). 3
Third, the district court explicitly retained 4
jurisdiction over the In re AEFA class action. See Order and 5
Final Judgment at 10 (providing that "[e]xclusive jurisdiction is 6
hereby retained over the Parties and the Class Members for all 7
matters relating to this Action and the Settlement" (emphasis 8
added)). 9
For those reasons, we conclude that determining the 10
scope of the Belands' entitlement to arbitrate (by virtue of 11
Ameriprise's consent through its FINRA membership) is a question 12
for judicial resolution. As such, the district court properly 13

-- 34 of 61 --

15 The Belands also argue on appeal that Ameriprise
"submitted the question of the Class Action Settlement Release to
the FINRA arbitrators to decide" by filing an answer in the FINRA
arbitration and propounding discovery to the Belands while
proceedings were pending in that venue. Appellants' Br. at 36;
see also Appellants' Reply Br. at 13. They argue that
Ameriprise's participation in the FINRA proceedings definitively
precluded it from later resorting to federal court to seek an
order of dismissal as to the Belands' FINRA arbitration. In
short, the Belands argue waiver.
But the actual conduct of Ameriprise in the FINRA
proceedings fails to support either the Belands' characterization
or their conclusion. In a letter to the Belands' counsel dated
July 28, 2009 -- after the Belands filed their FINRA Complaint
but before the FINRA Defendants took any action before the
arbitrators -- Ameriprise's attorney identified the In re AEFA
Settlement and argued that the Belands, as Class Members, had
"released Ameriprise . . . and its agents and affiliates for
claims relating to the" Belands' Ameriprise investment accounts.
Letter from Ameriprise Counsel to Belands at 1, Mem. in Sup. of
Mot. for Reconsideration Exh. D, In re AEFA, No. 04 Civ. 1773
(S.D.N.Y. Aug. 17, 2010), ECF No. 209-5. When the Belands
refused to withdraw their FINRA Claims, Ameriprise sought
principally to stay the FINRA proceedings while simultaneously
filing an Answer to the Belands' FINRA Complaint. See Motion to
Stay at 1–4. The Motion to Stay explicitly reserved Ameriprise's
right to seek relief in the federal district court pursuant to
the In re AEFA Settlement, requesting a stay of the FINRA
proceedings in order to avoid "a waste of time and other
resources." Id. at 4. In the same document, Ameriprise warned
that "[u]nless Claimants withdraw their Released Claims in this
action, Respondents will be forced to protect their rights by
filing a Motion to Enforce Class Action Settlement as to the
Released Claims" in federal court. Id.
By simultaneously filing a motion to stay the FINRA
proceedings with its answer to the Belands' FINRA Complaint,
Ameriprise unambiguously expressed its intention to seek judicial
relief and thereby preserved its right to proceed accordingly,
notwithstanding its filing of a substantive answer in the FINRA
arbitration. See Opals on Ice Lingerie v. Body Lines Inc., 320
F.3d 362, 369 (2d Cir. 2003) (where a party's correspondence with
its adversary demonstrates "that it continuously objected to
35
undertook it on Ameriprise's motion. 15 The question remains 1

-- 35 of 61 --

arbitration," those "objections prevent a finding of waiver").
The Belands' waiver argument therefore fails.
36
whether its ultimate conclusion was correct. 1
B. Scope of Ameriprise's Agreement to Arbitrate 2
We have said that "there is nothing irrevocable about 3
an agreement to arbitrate." Baker & Taylor, Inc. v. 4
AlphaCraze.com Corp., 602 F.3d 486, 490 (2d Cir. 2010) (per 5
curiam) (brackets, ellipsis, and internal quotation marks 6
omitted). Parties may "limit the issues they choose to 7
arbitrate," Stolt-Nielsen, 130 S. Ct. at 1774, and "[n]othing" 8
prevents parties to an agreement "from excluding . . . claims 9
from the scope of an agreement to arbitrate," Mitsubishi Motors 10
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). 11
Such limitations and exclusions need not be specified by the 12
initial agreement to arbitrate. "Both of the parties may abandon 13
this method of settling their differences, and under a variety of 14
circumstances one party may waive or destroy by his conduct his 15
right to insist upon arbitration." Baker & Taylor, 602 F.3d at 16
490 (internal quotation marks omitted). In particular, as 17
relevant here, "different or additional contractual arrangements 18
for arbitration can supersede the rights conferred on [a] 19
customer by virtue of [a] broker's membership in a 20
self-regulating organization such as [FINRA]." Kidder, Peabody & 21
Co. v. Zinsmeyer Trusts P'ship, 41 F.3d 861, 864 (2d Cir. 1994) 22

-- 36 of 61 --

37
(citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. 1
Georgiadis, 903 F.2d 109, 113 (2d Cir. 1990)). 2
The Class Settlement in this case -- by which, as 3
discussed above, the Belands are bound -- is one such "different 4
or additional contractual arrangement[]." Id. "[A]n arbitrator 5
derives his or her powers from the parties' agreement to forgo 6
the legal process and submit their disputes to private dispute 7
resolution." Stolt-Nielsen, 130 S. Ct. at 1774. It follows that 8
where a party initially consents (in this case, by dint of 9
Ameriprise's FINRA membership) to arbitrate certain types of 10
claims, but later enters into a settlement agreement that 11
releases claims that had been subject to the initial consent to 12
arbitrate, the claims that have been released by such a 13
settlement are no longer subject to arbitration. 14
In the case before us, the Belands failed to opt out of 15
the class, and (as explained above) have not demonstrated 16
"excusable neglect" for that failure. Therefore, bound by the 17
Class Settlement and Release, the Belands may not pursue any 18
Released Claims against Ameriprise and its employees. And the 19
Class Settlement "supersedes all prior understandings, 20
communications, and agreements with respect to the subject of 21
this Settlement," Settlement Agreement at 34, including the 22
parties' implicit agreement that the Belands had a right to 23
arbitrate certain claims against Ameriprise by virtue of the 24

-- 37 of 61 --

38
latter's FINRA membership. In other words, the Class Settlement 1
extinguished not only the ability of Class Members to bring 2
Released Claims against Ameriprise as a matter of substance, but 3
also the Class Members' right to arbitrate those claims. 4
We find support for this conclusion in the Tenth 5
Circuit's opinion in Riley Manufacturing Co. v. Anchor Glass 6
Container Corp., 157 F.3d 775 (10th Cir. 1998). There, a "merger 7
clause" in a settlement agreement purported to "cancel[], 8
terminate[] and supersede[] any and all prior representations and 9
agreements relating to the subject matter" of the agreement. Id. 10
at 778. The court concluded that the merger clause "revoked the 11
prior right of the parties to demand arbitration on the[] 12
specific topics" that the court concluded were within the bounds 13
of the settlement agreement. Id. at 784; see id. at 782 14
(concluding that "the specific releases in" the settlement 15
agreement "waive[d the plaintiff's] right to demand arbitration 16
on the five topics explicitly listed" in the agreement); see also 17
Miller v. Runyon, 77 F.3d 189, 194 (7th Cir. 1996) ("Given the 18
contractual nature of arbitration, it can be argued that the 19
preclusive effect of either a judicial judgment or an arbitration 20
award on a subsequent arbitration should depend on what the 21
parties agreed to. And then the court will decide as a matter of 22
interpretation of the parties' [agreement to arbitrate] whether 23

-- 38 of 61 --

16 In Bank Julius, we concluded that a forum-selection
clause could "be read, consistent with the [a]rbitration
[a]greement, in such a way that the [parties] are required to
arbitrate their disputes," with limitations as to available
challenges regarding jurisdiction and venue. Bank Julius, 424
F.3d at 285. In short, we found no irremediable conflict between
the clauses under analysis in that case.
39
the arbitrators can ignore a prior judicial judgment." (citations 1
omitted)), cert. denied, 519 U.S. 937 (1996). 2
We agree with the Tenth Circuit's approach. We 3
conclude that the Belands' entitlement to arbitrate disputes with 4
Ameriprise, arising out of Ameriprise's FINRA membership and 5
defined by Rule 12200, does not extend to the Released Claims 6
defined by the Settlement Agreement because the Settlement 7
Agreement amended the contours of the parties' agreement to 8
arbitrate all disputes between them before FINRA arbitrators. 9
C. District Court's Retention of Jurisdiction over In re AEFA 10
We do not suggest, however, that in all cases, a 11
settlement agreement revokes a prior agreement or consent to 12
arbitrate by releasing claims that would have been subject to 13
arbitration under the earlier agreement or consent. Indeed, 14
"[u]nder our cases, if there is a reading of the various 15
agreements that permits the [a]rbitration [c]lause to remain in 16
effect, we must choose it." Bank Julius Baer & Co. v. Waxfield 17
Ltd., 424 F.3d 278, 284 (2d Cir. 2005). 16 However, no such 18
reading is possible here because the Settlement Agreement 19

-- 39 of 61 --

40
explicitly vests the district court with exclusive jurisdiction 1
to enforce its terms. 2
A federal court does not automatically retain 3
jurisdiction to hear a motion to enforce or otherwise apply a 4
settlement in a case that it has previously dismissed. See 5
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380–82 6
(1994). Such motions are essentially state-law contract claims 7
to be litigated in the state courts. See id. at 382. However, 8
where, in a federal court, the court makes "the parties' 9
obligation to comply with the terms of the settlement 10
agreement . . . part of the order of dismissal -- either by 11
separate provision (such as a provision 'retaining jurisdiction' 12
over the settlement agreement) or by incorporating the terms of 13
the settlement agreement in the order" -- the proper forum for 14
litigating a breach is that same federal court. Id. at 381; 15
accord Perez v. Westchester County Dep't of Corr., 587 F.3d 143, 16
151–53 (2d Cir. 2009). In cases over which "the district court 17
retain[s] jurisdiction, it necessarily ma[kes] compliance with 18
the terms of the [settlement] agreement a part of its order so 19
that 'a breach of the agreement would be a violation of the 20
order.'" Roberson v. Giuliani, 346 F.3d 75, 82 (2d Cir. 2003) 21
(quoting Kokkonen, 511 U.S. at 381). Further, this Court has 22
said that where "there is ample evidence. . .that the District 23
Court 'intended to place its "judicial imprimatur" on [a] 24

-- 40 of 61 --

41
settlement,'" the court retains jurisdiction to oversee the 1
enforcement of the agreement. Perez, 587 F.3d at 152 (quoting 2
Torres v. Walker, 356 F.3d 238, 244 n.6 (2d Cir. 2004) (dicta)). 3
That policy interest takes on particular importance in 4
the context of class actions, which are complicated, expensive 5
proceedings involving a multitude of different parties and 6
potential parties but intended ultimately to make enforcement of 7
the rights of all the parties more efficient and less expensive. 8
As a general matter, the more loose ends that remain after the 9
litigation has been resolved, the less successful the process has 10
been. A district court therefore "has the power to enforce an 11
ongoing order against relitigation so as to protect the integrity 12
of a complex class settlement over which it retained 13
jurisdiction." In re Prudential Ins. Co. of Am. Sales Practice 14
Litig., 261 F.3d 355, 367–68 (3d Cir. 2001); see also In re Gen. 15
Am. Life Ins. Co. Sales Practices Litig., 357 F.3d 800, 803 (8th 16
Cir. 2004) (recognizing "the authority of district courts to 17
enforce by injunction a final judgment embodying the terms 18
settling a class action"). 19
In the Enforcement Order requiring the Belands to 20
dismiss their arbitration complaint in its entirety, the district 21
court did not advert to any specific source of its jurisdiction 22
to issue the Enforcement Order. In approving the Settlement 23
Agreement and dismissing the In re AEFA litigation, though, the 24

-- 41 of 61 --

42
district court had explicitly stated that "[e]xclusive 1
jurisdiction is hereby retained over the Parties and the Class 2
Members for all matters relating to this Action and the 3
Settlement." Order and Final Judgment at 10. Therefore, despite 4
the fact that the district court did officially "'close[]' and 5
dismiss[] with prejudice" the In re AEFA litigation, Endorsed 6
Letter at 1, In re AEFA, No. 04 Civ. 1773 (S.D.N.Y. Feb. 2, 7
2009), ECF No. 190, the court properly retained jurisdiction to 8
hear the kind of issues relating to the Settlement Agreement's 9
Released Claims raised by the Belands in this case. See Perez, 10
587 F.3d at 151–52. 11
We have found no "reading of the various agreements" at 12
issue in this case that would permit Ameriprise's preexisting and 13
broad consent to arbitrate "to remain in effect," Bank Julius, 14
424 F.3d at 284, in its entirety. Unlike the integrated reading 15
we afforded the forum-selection clause and anterior arbitration 16
agreement in Bank Julius, an interpretation of the Settlement 17
Agreement that would permit the Belands to arbitrate Released 18
Claims would run afoul of the district court's Order and Final 19
Judgment. We arrive at this conclusion even though we approach 20
it "with a healthy regard for the federal policy favoring 21
arbitration." Moses H. Cone, 460 U.S. at 24. Though we must 22
resolve "any doubts concerning the scope of arbitrable 23
issues . . . in favor of arbitration," including when "the 24

-- 42 of 61 --

43
problem at hand is the construction of the contract language 1
itself," id. at 24–25; accord WorldCrisa Corp. v. Armstrong, 129 2
F.3d 71, 74 (2d Cir. 1997), we are satisfied that no such doubt 3
exists here. In other words, "it may be said with positive 4
assurance" that Ameriprise's consent to arbitrate as reflected in 5
FINRA Rule 12200 -- subsequent to amendment by the Settlement 6
Agreement -- "is not susceptible of an interpretation that covers 7
the asserted dispute" surrounding the Released Claims. AT & T 8
Techs., 475 U.S. at 650. 9
V. Settlement Agreement & Released Claims 10
A. Standard of Review 11
In reviewing a district court's interpretation of the 12
terms of a settlement agreement, we review conclusions of law de 13
novo and findings of fact for clear error. See Ciaramella v. 14
Reader's Digest Ass'n, Inc., 131 F.3d 320, 322 (2d Cir. 1997). 15
B. Interpreting Class-Action Settlement Agreements 16
It is elementary that a settlement agreement cannot 17
release claims that the parties were not authorized to release. 18
See Nat'l Super Spuds, Inc. v. N.Y. Mercantile Exch., 660 F.2d 9, 19
19 (2d Cir. 1981). At the same time, "[t]he law is well 20
established in this Circuit and others that class action releases 21
may include claims not presented and even those which could not 22
have been presented as long as the released conduct arises out of 23
the 'identical factual predicate' as the settled conduct." Wal- 24

-- 43 of 61 --

44
Mart, 396 F.3d at 107 (quoting TBK Partners, Ltd. v. W. Union 1
Corp., 675 F.2d 456, 460 (2d Cir. 1982)); cf. TBK Partners, 675 2
F.2d at 461 ("[W]here there is a realistic identity of issues 3
between the settled class action and the subsequent suit, and 4
where the relationship between the suits is at the time of the 5
class action foreseeably obvious to notified class members, the 6
situation is analogous to the barring of claims that could have 7
been asserted in the class action. Under such circumstances the 8
paramount policy of encouraging settlements takes precedence."). 9
Indeed, "[c]lass actions may release claims, even if 10
not pled, when such claims arise out of the same factual 11
predicate as settled class claims." Wal-Mart, 396 F.3d at 108. 12
And "in order to achieve a comprehensive settlement that would 13
prevent relitigation of settled questions at the core of a class 14
action, a court may permit the release of a claim based on the 15
identical factual predicate as that underlying the claims in the 16
settled class action even though the claim was not presented and 17
might not have been presentable in the class action." TBK 18
Partners, 675 F.2d at 460. 19
C. Overlap of Claims 20
We begin by noting that the starting point for 21
interpreting settlement agreements is general contract-law 22
principles. See, e.g., Omega Eng'g, 432 F.3d at 443. 23
Here, the Class Settlement stated that the definition 24
of Released Claims included, inter alia, 25

-- 44 of 61 --

17 The SPS ("Strategic Portfolio Service"), SMS ("Separately
Managed Account"), and WMS ("Wealth Management Service") programs
"encompassed all of Ameriprise's managed, fee-for-service
accounts or programs in which clients paid a percentage fee for
services that included financial advice, financial planning, or
other financial advisory services." Appellee's Br. at 21 n.3
(internal quotation marks omitted).
45
any and all claims, debts, demands, rights or 1
causes of action or liabilities 2
whatsoever . . . , whether based on federal, 3
state, local, statutory or common law or any 4
other law, rule or regulation, . . . 5
including both known claims and Unknown 6
Claims . . . that (i) have been asserted in 7
this Action by the Plaintiffs . . . or (ii) 8
could have been asserted in any forum by the 9
Plaintiffs or Class Members . . . against any 10
of the Released Persons; including claims 11
that arise out of or are based upon (a) the 12
allegations, transactions, facts, matters or 13
occurrences, representations or omissions 14
alleged, involved, set forth, or referred to 15
in the [Class Complaint] . . . , [and] (b) 16
the offer and sale of financial advice, 17
financial planning, and/or financial advisory 18
services pursuant to a Financial Advisory 19
Service Agreement, or the SPS, WMS or SMA 20
programs [17] . . . . 21
Settlement Agreement at 7-8. That definition is expansive, but 22
the Settlement Agreement goes on to exclude certain claims from 23
the definition's purview. The Settlement Agreement states that 24
"'Released Claims' shall not include suitability claims unless 25
such claims are alleged to arise out of the common course of 26
conduct that was alleged, or could have been alleged, in the 27
Action, as more fully described herein." Id. at 8 (emphases 28
added). 29

-- 45 of 61 --

46
As we explain above, supra note 3, suitability claims 1
are often brought "as a distinct subset" of section 10(b) claims 2
under the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). 3
See Dodds, 12 F.3d at 351. Ameriprise argues that the Belands do 4
not advert to any specific federal statute, or even the term 5
"suitability," in their FINRA Complaint. And indeed, before the 6
district court, the Belands explicitly disavowed any reliance on 7
federal securities law. Therefore, says Ameriprise, the Belands 8
did not "actually assert[] suitability claims before FINRA." 9
Appellee's Br. at 26 (emphasis in original) (internal quotation 10
marks omitted). However, particularly because of the lack of a 11
definition of the term in the Class Settlement, for the purposes 12
of this appeal we consider "suitability" to serve more as a 13
general description of the character of potential common-law 14
claims (such as breach of fiduciary duty, breach of contract, 15
fraud, and negligent misrepresentation -- all of which the 16
Belands did allege in the FINRA proceedings), rather than a 17
technical term denoting a specific type of section 10(b) claim. 18
See also infra note 17. Furthermore, we note that although the 19
Belands also disclaim reliance on state securities laws, 20
regulations issued by the State of Illinois -- the state where 21
the Belands filed their FINRA Complaint -- define 22
"unsuitab[ility]" with reference to "fraud[], decepti[on,] [and] 23
manipulati[on]." Ill. Admin. Code tit. 14, § 130.853. 24

-- 46 of 61 --

47
The Belands point to several aspects of their FINRA 1
Claims that demonstrate that not all of them are Released Claims 2
barred by the Class Settlement. First, they argue that their 3
claims span a time period matching that of the existence of their 4
trusts -- from 1995 to 2009 -- while the Release covers only 5
claims between 1999 and 2006. Second, the Belands argue that 6
while the Class Settlement "plainly relate[s] to [claims 7
involving the] sale and promotion of proprietary and affiliated 8
mutual funds for which [Ameriprise] was receiving kickbacks or 9
promoting in-house," Appellants' Reply Br. at 3, the Settlement 10
Agreement's express exclusion of "suitability claims" covers the 11
substance of many of their FINRA Claims, which allege that "the 12
conservative goal of both the Charitable Remainder and Revocable 13
Trusts was not followed" and "individual speculative 'tech' 14
securities were bought and sold," Appellants' Br. at 27; see also 15
Appellants' Reply Br. at 6 (arguing that the Belands' FINRA 16
Claims include "suitability claims unique to the recommendations 17
of Ameriprise broker Ron Miller -- claims related both to 18
misrepresentation and recommendations having nothing to do with 19
American Express mutual funds and shelf space proprietary 20
products"). 21
Ameriprise counters that the Belands' FINRA Claims 22
"fall squarely within the definition of 'Released Claims.'" 23
Appellee's Br. at 20. Regardless of any minor differences, 24
Ameriprise contends, the FINRA Claims "plainly 'arise from the 25

-- 47 of 61 --

18 Ameriprise also contends that the Belands' suitability-
claim argument has been forfeited because they did not raise it
until they filed their Motion for Reconsideration before the
district court. However, though the Belands do not appear to
have specifically referred to the "suitability" carve-out clause
before that time, the Belands consistently contended that their
FINRA Claims went well beyond any issue that was or could have
been raised in the Class Action. We therefore decline to accept
Ameriprise's waiver argument regarding the "suitability" carve-
out clause in the definition of Released Claims. In any event,
"[w]e retain 'broad discretion' to consider issues not timely
raised below." Official Comm. of Unsecured Creditors of Color
Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 159 (2d Cir.
2003).
48
same transactions, facts, matters, occurrences, and 1
representations as the claims of the [Class Complaint].'" Id. at 2
21 (quoting Order and Final Judgment at 2). Ameriprise also 3
rejects the Belands' attempt to rely upon the "suitability 4
claims" carve-out in the Class Settlement, inasmuch as the 5
Belands' FINRA Complaint did not explicitly label or otherwise 6
characterize any of their claims as being "suitability" claims. 18
7
We agree with the Belands, however, that their FINRA 8
Claims and the Released Claims do not -- indeed, cannot -- 9
entirely overlap. First, the Belands' FINRA Complaint 10
unequivocally alleges that Ameriprise and Miller agreed to invest 11
the Belands' funds "in a conservative fashion, preserving capital 12
and obtaining income from which the life beneficiaries could 13
receive a return," FINRA Complaint ¶ 9, but that "[a] 14
conservative asset allocation approach was not taken," id. ¶ 13. 15
That seems to us to be a quintessential suitability claim. See 16
Kearney v. Prudential-Bache Sec., Inc., 701 F. Supp. 416, 429 17

-- 48 of 61 --

49
(S.D.N.Y. 1988) (describing a typical suitability claim as a 1
broker's "invest[ment] in risky transactions contrary either to 2
[an investor's] explicit directions or to her interests"). 3
Second, although the definition of Released Claims does 4
include suitability claims "aris[ing] out of the common course of 5
conduct that was alleged, or could have been alleged, in the [In 6
re AEFA litigation]," Settlement Agreement at 8, we read the 7
"common course of conduct" alleged in the In re AEFA litigation 8
to be, as described by the Belands, Ameriprise's routine practice 9
of "steering American Express clients into Proprietary or Shelf 10
Space funds through one or more of the managed programs at 11
American Express," Appellants' Reply Br. at 4. Indeed, the Class 12
consisted only of persons who purchased financial plans that 13
invested in the Proprietary or Shelf Space Funds (as well as 14
others who otherwise invested in those Funds). See Class 15
Complaint ¶ 85. As the Class Notice explains, the class action 16
involved investors who "were sold financial plans and/or advice 17
that, instead of being tailored to their individual 18
circumstances, contained standardized recommendations designed to 19
steer them into investing in Defendants' proprietary mutual funds 20
and other proprietary investment products and certain non- 21
proprietary 'Preferred' or 'Select' mutual funds." Class Notice 22
at 1. The Class Notice further explained that the basis of the 23
class action was the notion that "conflicts of interest inherent 24
in Defendants' financial plans and/or financial advisory 25

-- 49 of 61 --

19 That said, we do have some doubts about the time period
allegedly at issue in the Belands' FINRA Complaint. While they
represent that their claims against Ameriprise span from 1995 to
2009, John and Elaine did not become trustees or beneficiaries of
the accounts until 2004. While claims predating their inherited
interest in the Ameriprise accounts might not be Released Claims,
we note that they still might not be valid if the Belands did not
acquire an interest in the accounts prior to that time. However,
50
services, and the compensation arrangements between Defendants 1
and the Preferred Funds, were inadequately disclosed to 2
investors." Id. The Belands' claims that Miller mismanaged 3
their trusts contrary to their instructions and investment goals 4
do not fall within that "common course of conduct." 5
Third, the Belands' FINRA Complaint is also devoted in 6
part to the allegation that once they confronted Miller about the 7
accounts' declining assets, "Miller set a course of cover-up, 8
lies and deceit in order to obscure the mishandling in the" 9
accounts, providing false justifications for investment decisions 10
and shielding the truth about Ameriprise's motives and conflicts 11
of interest. FINRA Complaint ¶ 20; see also id. ¶¶ 25–27. Among 12
those allegedly false reasons were the September 11 terrorist 13
attacks and that the charitable trust was set to diminish "by 14
design." Id. ¶¶ 21–24 (internal quotation marks omitted). 15
Claims dependent upon allegations of this sort were plainly not 16
Released Claims under the In re AEFA Class Settlement. 17
Fourth, there can be no question that the Belands' 18
claims, to the extent that they involve conduct occurring after 19
the Class Period, cannot be Released Claims. 19
20

-- 50 of 61 --

that is a determination we leave for further factfinding by the
arbitrators.
51
To be sure, some -- if not many -- of the allegations 1
in the Belands' FINRA Complaint constitute Released Claims. For 2
example, they allege that "[a]lmost from the start, rather than 3
invest in conservative large cap stocks, paying good dividends as 4
well as substantial bond portfolios, Miller and Ameriprise 5
invested in many house American Express mutual funds including 6
various high yield junk bond funds." FINRA Complaint ¶ 14 7
(emphasis added). Similarly, they allege that Ameriprise "has 8
managed [the Belands' accounts] in a fashion . . . designed 9
primarily to generate fees and income for Ameriprise. . . [and] 10
to promote in-house mutual funds of American Express." Id. ¶ 13. 11
To the extent the FINRA Complaint contains similar claims, the 12
claims are conclusively Released Claims and are, as such, barred. 13
However, the Belands also clearly allege in their FINRA 14
Complaint that Ameriprise invested in "risky small cap or start- 15
up funds" that "exposed" the Belands' accounts "to tremendous 16
market risk which was unsuitable for the[ir] account objectives." 17
Id. ¶¶ 13–14 (emphasis added). And while the In re AEFA Class 18
Period lasted from March 10, 1999 to April 1, 2006, the Belands' 19
complaint stretches all the way into 2009. Those claims, we 20
conclude, are not Released Claims and therefore are not barred by 21
the In re AEFA Class Settlement. 22
D. Conclusion 23

-- 51 of 61 --

52
To summarize: Ameriprise consented to arbitrate 1
disputes with the Belands -- its customers -- by virtue of its 2
membership in FINRA. FINRA Rule 12200 is a broad provision that 3
clearly encompasses the Belands' FINRA Claims, as they 4
indisputably "arise[] in connection with the business activities 5
of" Ameriprise and Miller. FINRA Code § 12200. Even if it were 6
a closer question, because the issue would be one of "the 7
construction of the contract language itself," we would "resolve 8
'any doubts concerning the scope of arbitrable issues . . . in 9
favor of arbitration. . . .'" Republic of Ecuador, 638 F.3d at 10
393 (quoting Moses H. Cone, 460 U.S. at 24–25) . 11
The scope of an agreement to arbitrate is a "question 12
of arbitrability" within the purview of the court, and therefore 13
we can properly undertake the task of determining the breadth of 14
Ameriprise's consent to arbitrate. In our view, the Settlement 15
Agreement "modif[ied]" Ameriprise's "fundamental and broad 16
commitment," through its FINRA membership, "to arbitrate any 17
dispute," Bechtel do Brasil Construções Ltda. v. UEG Araucária 18
Ltda., 638 F.3d 150, 155 (2d Cir. 2011) (emphasis in original), 19
with the Belands. Specifically, the Settlement Agreement altered 20
Ameriprise's prior expansive commitment to arbitrate by removing 21
the Released Claims from the scope of that commitment. 22
We therefore conclude that Ameriprise (1) has not 23
agreed to arbitrate the Released Claims as defined in the 24

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53
Settlement Agreement, but (2) that it has agreed to arbitrate any 1
non-Released Claims asserted in the Belands' FINRA Complaint. 2
VI. District Court's Remedial Power 3
A. Power to Enjoin Arbitration 4
The question "of whether federal courts have the power 5
to stay arbitration under the FAA (or any other authority) in an 6
appropriate case" is an open one in this Circuit. Republic of 7
Ecuador, 638 F.3d at 391 (citing Westmoreland Capital Corp. v. 8
Findlay, 100 F.3d 263, 266 n.3 (2d Cir. 1996), abrogated on other 9
grounds by Vaden v. Discover Bank, 556 U.S. 49 (2009)). But see 10
In re U.S. Lines, Inc., 197 F.3d 631, 639 (2d Cir. 1999) ("In the 11
bankruptcy setting, congressional intent to permit a bankruptcy 12
court to enjoin arbitration is sufficiently clear to override 13
even international arbitration agreements."); Video Tutorial 14
Servs., Inc. v. MCI Telecomms. Corp., 79 F.3d 3, 5 (2d Cir. 1996) 15
(per curiam) (failing to reach the issue but noting that "[w]e 16
would be hard-pressed to say that a district court cannot stay 17
arbitration for a short time while familiarizing itself with the 18
issues underlying a proposed motion to stay a suit pending 19
arbitration, or a proposed motion to stay an arbitration"). But 20
we find no indication that this issue was contested in the 21
district court proceedings, and it was left unaddressed in both 22
briefing to and oral argument before us. However, it is not one 23
we think we can ignore simply because the parties have not 24
squarely presented it to the Court. Although it is not a 25

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54
question upon the answer to which our jurisdiction depends, we 1
view it as one we ought to address inasmuch as it implicates "the 2
remedial powers of the court," Steel Co. v. Citizens for a Better 3
Env't, 523 U.S. 83, 90 (1998) (emphasis in original), to issue 4
the Enforcement Order. See AEP Energy Servs. Gas Holding Co. v. 5
Bank of Am., N.A., 626 F.3d 699, 719 (2d Cir. 2010). In the 6
words of another court, the issue represents "a high order 7
challenge": 8
On the one hand, a realistic concern for the 9
finality and integrity of judgments would 10
arise if parties were free to ignore federal 11
court decisions that have conclusively 12
settled claims or issues now sought to be 13
arbitrated. Yet, arbitration is a matter of 14
contract and the FAA only authorizes a 15
limited review of the parties' intent before 16
compelling or enjoining arbitration. 17
Olick, 151 F.3d at 138(internal quotation marks omitted). 18
While the FAA's terms explicitly authorize a district 19
court to stay litigation pending arbitration, see 9 U.S.C. § 3, 20
and to compel arbitration, see id. § 4, nowhere does it 21
explicitly confer on the judiciary the authority to do what the 22
district court's Enforcement Order purported to do here: enjoin a 23
private arbitration. 24
Our decisions do suggest, however, that, at least where 25
the court determines -- pursuant to the first step outlined in 26
ACE Capital, 307 F.3d at 28, discussed above -- that the parties 27
have not entered into a valid and binding arbitration agreement, 28
the court has the authority to enjoin the arbitration 29

-- 54 of 61 --

55
proceedings. See United States v. Eberhard, No. 03 Cr. 562, 2004 1
WL 616122, at *3, 2004 U.S. Dist. LEXIS 5029, at *10 (S.D.N.Y. 2
Mar. 30, 2004) ("[W]here courts in this Circuit have concluded 3
that § 4 of the FAA permits the issuance of a stay [of a private 4
arbitration], . . . they appear to have done so only in those 5
circumstances where a stay would be incidental to the court's 6
power under the FAA to enforce contractual agreements calling for 7
arbitration . . . ."). In Citigroup Global Mkts., Inc. v. VCG 8
Special Opportunities Master Fund Ltd., 598 F.3d 30 (2d Cir. 9
2010), we affirmed a district court's order preliminarily 10
enjoining a FINRA arbitration from proceeding. Id. at 40. In 11
that case, the district court had "serious questions" as to 12
whether one party was in fact a "customer" of a FINRA member 13
(which status, as we observed above, would bind the other party 14
to arbitrate). Id. at 33–34 (internal quotation marks omitted). 15
We concurred with that assessment, concluding that the "customer" 16
status of the party was an "issue . . . in sharp dispute." Id. 17
at 39 (internal quotation marks omitted). In other words, we 18
doubted the existence of a binding agreement to arbitrate in that 19
case. 20
We have also affirmed a district court's stay of 21
arbitration after determining that the initiation of judicial 22
proceedings in a foreign country constituted a waiver of a 23
plaintiff's right to arbitration, see Zwitserse Maatschappij van 24
Levensverzekering en Lijfrente v. ABN Int'l Capital Mkts. Corp., 25

-- 55 of 61 --

56
996 F.2d 1478, 1480-81 (2d Cir. 1993) (per curiam), as we have a 1
stay of arbitration over various claims that we held were not 2
within the scope of an arbitration agreement, even while 3
affirming an order compelling arbitration of related validly 4
arbitrable claims, see Collins & Aikman, 58 F.3d at 23. Both of 5
those cases, in addition to Citigroup Global Markets, suggest 6
that a federal court may enjoin an arbitration that the court 7
determines is not otherwise valid. See also SATCOM Int'l Grp. 8
PLC v. ORBCOMM Int'l Partners, L.P., 49 F. Supp. 2d 331, 341–42 9
(S.D.N.Y. 1999) (enjoining an arbitration in a case arising under 10
the New York Convention, 9 U.S.C. §§ 201-208, after finding that 11
such arbitration was "inappropriate" because the plaintiff had 12
"waived any right it previously had to arbitrate the issues in 13
th[e] case"). 14
The First Circuit's opinion in Societe Generale de 15
Surveillance, S.A. v. Raytheon European Mgmt. & Sys. Co., 643 16
F.2d 863 (1st Cir. 1981), is instructive. There, the court 17
considered a party's argument that the FAA "removes the district 18
court's power to enjoin [an] arbitration." Id. at 867. The 19
court first noted that the FAA "expressly provides federal courts 20
with the power to order parties to a dispute to proceed to 21
arbitration where arbitration is called for by the contract." 22
Id. at 868 (citing 9 U.S.C. § 3). It inferred that "to enjoin a 23
party from arbitrating where an agreement to arbitrate is absent 24
is the concomitant of the power to compel arbitration where it is 25

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57
present." Id. The court concluded that "[t]o allow a federal 1
court to enjoin an arbitration proceeding which is not called for 2
by the contract interferes with neither the letter nor the spirit 3
of" the FAA. Id.; see also PaineWebber Inc. v. Hartmann, 921 4
F.2d 507, 511 (3d Cir. 1990) ("If a court determines that a valid 5
arbitration agreement does not exist or that the matter at issue 6
clearly falls outside of the substantive scope of the agreement, 7
it is obliged to enjoin arbitration."), overruled by implication 8
on other grounds by Howsam, 537 U.S. 79. 9
We confirm and apply those principles here. If the 10
parties to this appeal have not consented to arbitrate a claim, 11
the district court was not powerless to prevent one party from 12
foisting upon the other an arbitration process to which the first 13
party had no contractual right. As is clear from the Supreme 14
Court's and this Circuit's cases, "[a]rbitration under the [FAA] 15
is a matter of consent, not coercion." Volt, 489 U.S. at 479; 16
see also Howsam, 537 U.S. at 83 ("[A]rbitration is a matter of 17
contract and a party cannot be required to submit to arbitration 18
any dispute which he has not agreed so to submit." (internal 19
quotation marks omitted)). It makes little sense to us to 20
conclude that district courts lack the authority to order the 21
cessation of an arbitration by parties within its jurisdiction 22
where such authority appears necessary in order for a court to 23

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20 We pause to note that we are relying on a reading of the
FAA, FINRA Rule 12200, and the Settlement Agreement. The
particular circumstances presented in this appeal -- with
emphasis on the exclusive nature of the In re AEFA district
court's retention of jurisdiction over the Settlement Agreement -
- persuades us that the district court here could properly enjoin
the private arbitration of claims already settled and released by
class members such as the Belands.
However, the All Writs Act, 28 U.S.C. § 1651(a), authorizes
federal courts to issue "all writs necessary or appropriate in
aid of their respective jurisdictions." See Klay v. United
Healthgroup, Inc., 376 F.3d 1092, 1099 (11th Cir. 2004) ("In
allowing courts to protect their 'respective jurisdictions,' the
[All Writs] Act allows them to safeguard not only ongoing
proceedings, but potential future proceedings, as well as
already-issued orders and judgments." (footnotes omitted)). Some
courts have explicitly relied upon the All Writs Act in enjoining
arbitrations in similar circumstances to those before us in this
appeal. See, e.g., In re Y & A Grp. Sec. Litig., 38 F.3d 380,
382, 382–83 (8th Cir. 1994) (relying in part on the All Writs Act
in concluding that "[n]o matter what, courts have the power to
defend their judgments as res judicata, including the power to
enjoin or stay subsequent arbitrations"); Hartley v. Stamford
Towers Ltd. P'ship, Nos. 92-16802 & 92-56528, 1994 WL 463497, at
*3–*4, 1994 U.S. App. LEXIS 23543, at *12 (9th Cir. Aug. 26,
1994) (unpublished opinion) (noting that the All Writs Act's
"grant of authority includes jurisdiction to enforce a class
action judgment" by enjoining an arbitration, and one party's
"participation in the arbitration process cannot affect the
District Court's authority to enforce its judgments"); see also,
e.g., Eberhard, 2004 WL 616122, at *3 n.6, 2004 U.S. Dist. LEXIS
5029, at *12 n.6 ("If this Court does not choose to exercise
[its] power here, it is not for lack of such power but because
the NASD arbitrations have not been shown to interfere with the
Court's jurisdiction."). But see Klay, 376 F.3d at 1102–03 ("The
simple fact that litigation involving the same issues is
occurring concurrently in another forum does not sufficiently
threaten the court's jurisdiction as to warrant an injunction
under the" All Writs Act.).
We thus do not decide whether the dictates of the All Writs
Act might, in another case without the type of jurisdictional
retention present here, give a district court "the authority to
58
enforce the terms of the parties' own agreement, as reflected in 1
a settlement agreement. We decline to do so here. 20
2

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enjoin arbitration to prevent re-litigation," Kelly v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 985 F.2d 1067, 1069 (11th
Cir. 1993), rev'd in part on other grounds by Howsam, 537 U.S.
79.
59
B. Application to Enforcement Order 1
The Supreme Court has made clear that "[t]he preeminent 2
concern of Congress in passing the [FAA] was to enforce private 3
agreements into which parties had entered, and that concern 4
requires that we rigorously enforce agreements to arbitrate, even 5
if the result is 'piecemeal' litigation." Dean Witter Reynolds, 6
Inc. v. Byrd, 470 U.S. 213, 221 (1985) (emphasis added); see 7
Moses H. Cone, 460 U.S. at 20 ("[F]ederal law requires piecemeal 8
resolution when necessary to give effect to an arbitration 9
agreement." (emphasis in original)); Collins & Aikman, 58 F.3d at 10
20; see also Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529, 11
532 (3d Cir. 2005) ("When a dispute consists of several claims, 12
the court must determine on an issue-by-issue basis whether a 13
party bears a duty to arbitrate."). It is therefore appropriate 14
for us -- and the district court -- to treat the Belands' 15
Released and non-Released FINRA Claims differently. 16
Because we have concluded that a district court may 17
properly enjoin arbitration proceedings that are not covered by a 18
valid and binding arbitration agreement, and because we have 19
further determined that no such agreement exists in this case as 20
to the Released Claims, we find no error in, and therefore 21
affirm, that portion of the district court's Enforcement Order 22

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60
that enjoined the Belands' FINRA Arbitration as to the Released 1
Claims. 2
However, as we have also discussed, the Belands' FINRA 3
Complaint contains various claims not encompassed by -- indeed, 4
in certain cases specifically excluded by -- the Release. Those 5
non-Released Claims include claims based on, inter alia, 6
unsuitable investment in technology stocks, misrepresentations 7
and omissions regarding those investments, and claims involving 8
alleged conduct falling outside the Class Period. Because 9
Ameriprise's consent to arbitrate, even as amended (i.e., 10
limited) by the Settlement Agreement, continues to embrace the 11
non-Released Claims, the district court -- to that extent only -- 12
lacked the authority to enjoin the arbitration of the Belands' 13
FINRA Claims. Therefore, we vacate the portion of the 14
Enforcement Order that purported to enjoin the Belands from 15
presenting those claims to the FINRA arbitrators. We remand this 16
matter to the district court for entry of an appropriately 17
limited order enjoining only the arbitration of the Released 18
Claims. 19
CONCLUSION 20
For the foregoing reasons, we affirm that portion of 21
the district court's judgment enjoining the Belands from 22
arbitrating their Released Claims before FINRA arbitrators, and 23
we vacate that portion of the court's judgment enjoining 24
arbitration of any non-Released Claims. In light of our 25

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61
disposition of this appeal, we dismiss as moot the Belands' 1
appeal from the district court's denial of their motion for 2
reconsideration. We remand for further proceedings. 3
Each party shall bear his, her, or its own costs. 4

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