Grigsby & Associates, Inc. v. M Securities Investment
2011 U.S. App. LEXIS 25217
| 11th Cir. | 2011Background
- In 1996, Grigsby & Associates and Defendants entered a deal to co-underwrite a $183 million Dade County municipal bond offering.
- GBR Financial Products failed to pay Plaintiffs, and consequently Plaintiffs could not pay Defendants.
- A series of lawsuits followed, including federal and state actions by Defendants against groups involving Plaintiffs.
- In 2005, Plaintiffs settled with GBR financially, reducing disputes with one key counterparty.
- In 2006, Defendants sought damages through NASD arbitration alleging they were owed for their role in the bond offering.
- Plaintiffs moved to enjoin the NASD arbitration; the NASD panel denied dismissal and proceeded to issue a decision awarding Defendants damages and sanctioning Plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of arbitration by litigation conduct | Grigsby argues Defendants waived arbitration by filing multiple lawsuits. | Defendants argue waiver is for the arbitrator or absent contract-based waiver principles. | Waiver issue belongs to the court; district court abused discretion by not deciding it. |
| Res judicata effect on arbitrability | Res judicata bars arbitration. | Res judicata is for arbitrator; not a bar to arbitration per se. | Res judicata is generally for arbitration; no reversal on this issue. |
| Whether district court should decide waiver merits instead of arbitrator | Waiver should be decided by court given conduct-based waiver. | Waiver determination is for arbitrator per Howsam/Klay principles. | Court must decide waiver merits; remand to address waiver balance. |
Key Cases Cited
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (presumptive division of labor between court and arbitrator; waiver as a potential arbitrator issue)
- Klay v. United Healthgroup, Inc., 376 F.3d 1092 (11th Cir. 2004) (res judicata is an arbitrator issue absent agreement otherwise)
- Morewitz v. West of Eng. Ship Owners Mut. Prot. & Indem. Ass'n, 62 F.3d 1356 (11th Cir. 1995) (conduct-based waiver considerations in arbitration context)
- Belize Telecom, Ltd. v. Gov't of Belize, 528 F.3d 1298 (11th Cir. 2008) (abuse of discretion when proper legal standards are not applied)
- Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309 (11th Cir. 2002) (alleged waiver based on litigation activity discussed in waiver decisions)
- JPD, Inc. v. Chronimed Holdings, Inc., 539 F.3d 388 (6th Cir. 2008) (waiver questions where conduct-based waiver central; courts may decide)
- Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207 (3d Cir. 2007) (conduct-based waiver generally for courts, not arbitrators)
- Nat'l Am. Ins. Co. v. Transamerica Occidental Life Ins. Co., 328 F.3d 462 (8th Cir. 2003) (conduct-based waiver issues in arbitration context)
- S & H Contractors, Inc. v. A.J. Taft Coal Co., Inc., 906 F.2d 1507 (11th Cir. 1990) (early treatment of waiver and forum-shopping considerations)
- Hearth Admins., Corp v. City of New York, 394 F.3d 382 (2d Cir. 2012) (public policy arguments rarely factor heavily into injunction outcomes)