Janvey v. Alguire
647 F.3d 585
5th Cir.2011Background
- SEC sued Stanford entities for a multi‑billion-dollar Ponzi scheme and the district court appointed a Receiver to marshal the Stanford estate.
- The Receiver sought to preserve assets by freezing accounts; subsequent agreements left freezes on certain funds in place.
- The district court granted a preliminary injunction maintaining freezes while issues, including arbitrability, were resolved.
- Employee Defendants moved to compel arbitration under FINRA-promissory-notes; the court reserved arbitrability for later.
- The district court distinguished TUFTA injunction from a writ of attachment and held it had power to issue the injunction before arbitrability was decided.
- This interlocutory appeal challenges the district court’s power, the injunction’s propriety, and whether the arbitration issue should be decided by the court or remanded for arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| District court’s authority to issue a preliminary injunction before arbitrability | Receiver: court may preserve status quo pending arbitration | Employee Defendants: FAA requires resolution of arbitrability before injunctive relief | District court has power to grant preliminary injunctive relief before arbitrability is decided |
| Whether the injunction was an abuse of discretion | Receiver showed likelihood of success and irreparable harm | Employees: district court abused discretion | No abuse of discretion; injunction proper on record |
| Whether the injunction was overbroad | Injunction appropriately targeted assets tied to the Ponzi scheme | Injunction swept too broadly | Not overbroad; tailored to assets in dispute under TUFTA |
| Whether the remedy was TUFTA injunction vs attachment | TUFTA empowers injunction to preserve assets | Dismissed as mere attachment or improper relief | Injunction properly characterized under TUFTA, not a writ of attachment |
| Whether Receiver’s claims are subject to arbitration and appellate jurisdiction to decide | Arbitration should apply; Receiver bound via shoes theory | Arbitrability unresolved; FAA principles apply | Court lacks jurisdiction to decide arbitration; remands arbitration issue to district court |
Key Cases Cited
- Warfield v. Byron, 436 F.3d 551 (5th Cir. 2006) (Ponzi scheme reasoning and fraudulent transfer context for intent)
- Teradyne v. Mostek Corp., 797 F.2d 43 (1st Cir. 1986) (supports injunctive relief to preserve status quo pending arbitration)
- Salvano, 999 F.2d 211 (7th Cir. 1993) (injunctions pending arbitration unless panel addresses continued relief)
- Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hovey, 726 F.2d 1286 (8th Cir. 1984) (injunctions during arbitration proceedings; status quo preservation)
- Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008) (no offset for taxes paid; evidentiary weighing in TUFTA context)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983) (FAA framework and arbitrability considerations)
- RGI, Inc. v. Tucker & Associates, Inc., 858 F.2d 227 (5th Cir. 1988) (circuit split backdrop on power to grant injunctive relief before arbitrability decision)
- Southland Corp. v. Keating, 465 U.S. 1 (1984) (policy favoring arbitration under FAA)