Janvey v. Alguire
647 F.3d 585
| 5th Cir. | 2010Background
- SEC sued Stanford entities including SGC and SIB for a Ponzi scheme; the district court appointed a Receiver to marshal the Stanford estate.
- Receiver froze assets; Adams v. Adams addressed frozen accounts of investors, guiding thawing and ongoing freezes.
- In the instant case, Receiver sought a preliminary injunction to continue freezes on certain funds after partial releases per an April 6th Order.
- Employee Defendants moved to compel arbitration under Promissory Notes with broad FINRA arbitration clauses, arguing Receiver is bound as SGC's successor.
- District court granted a preliminary injunction, reserving arbitrability; TUFTA relief was pursued, distinguishing injunction from attachment.
- This appeal challenges arbitration issues, the injunction's scope, and whether Receiver’s claims are arbitrable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a district court grant a preliminary injunction before arbitrability is decided? | Receiver argues status quo preservation is proper pending arbitrability. | Employee Defendants contend FAA requires decision on arbitrability before injunctive relief. | District court power to grant injunction before arbitrability decided affirmed. |
| Did the district court abuse its discretion in issuing the injunction? | Receiver contends record supports likelihood of success, irreparable harm, and proper balance of equities. | Defendants argue insufficient basis and overbreadth. | No abuse of discretion; injunction upheld. |
| Is the injunction overbroad or improperly tailored? | Receiver asserts tailoring to prevent dissipation of Ponzi proceeds; assets remain traceable to the scheme. | Defendants challenge breadth and scope as too expansive. | Injunction not overbroad; properly tailored to prevent dissipation. |
| Should TUFTA injunction have been pursued as an injunction or as an attachment? | TUFTA allows both; district court chose an injunction to preserve assets and obtain equitable relief. | Defendants contend attachment equivalence or misuse. | TUFTA injunction appropriate; not an attachment. |
| Are the Receiver's claims subject to arbitration? | Receiver sues on behalf of creditors under TUFTA, not bound by SGC-Defendant arbitration agreements. | Receiver stands in SGC's shoes and thus should be bound by arbitration. | Receiver's claims not subject to arbitration; standing as creditor representative permits suit. |
Key Cases Cited
- Byrum v. Landreth, 566 F.3d 442 (5th Cir.2009) (abuse-of-discretion standard for preliminary injunction; elements alignment)
- Doran v. Salem Inn, Inc., 422 U.S. 922 (U.S. Supreme Court 1975) (preliminary injunction standards; abuse of discretion review)
- Moses H. Cone Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. Supreme Court 1983) (federal arbitration law scope; docket control prerogatives)
- Teradyne, Inc. v. Mostek Corp., 797 F.2d 43 (1st Cir.1986) (status quo preservation pending arbitration)
- Salvano v. Merrill Lynch, P.F.S., Inc., 999 F.2d 211 (7th Cir.1993) (injunctions pending arbitration; panel continuation)
- Re Lease Oil Antitrust Litig., 200 F.3d 317 (5th Cir.2000) (jurisdiction expands to related issues during appeal)
- RGI, Inc. v. Tucker & Associates, Inc., 858 F.2d 227 (5th Cir.1988) (circuit split on injunction pending arbitration; applicability subject-specific)
- Southland Corp. v. Keating, 465 U.S. 1 (U.S. Supreme Court 1984) (federal policy favoring arbitration)
- Warfield v. Byron, 436 F.3d 551 (5th Cir.2006) (ponzi scheme context; intent to defraud in TUFTA analysis)
- Donell v. Kowell, 533 F.3d 762 (9th Cir.2008) (offsets for taxes not recognized in TUFTA context)
- Telephone Equipment Network, Inc. v. TA/Westchase Place, Ltd., 80 S.W.3d 606 (Tex.2002) (TUFTA injunction framework; distinction from attachment)