What do you do if you paid a bunch of money to settle a class action but some of the class members who didn't opt out demand that you arbitrate a dispute relating, at least in part, to the subject matter of the claims you settled?
You start by asking the arbitrators to stay their hand, but when they refuse you run to a court — the Southern District of New York, in this case. What do you ask for? An injunction, of course.
Can you get one? Yes, the Second Circuit ruled a day ago in Ameriprise Financial Services, Inc. v. Beland, No. 10-3399, slip op. at 53-58 (2d Cir. Nov. 3, 2011).
The panel also dealt with questions about the scope of the release in the class settlement papers. It held that the Belands had lost most of their claims because they fell within the class release but that the couple didn't forfeit a "suitability" claim, which (in the panel's view) didn't relate to the "common course of conduct" — the key words in the release — at issue in the class case.
Blawgletter notes something the court did not do — it did not speak to the issue of whether making someone arbitrate a claim she didn't agree to arbitrate causes her "irreparable harm", a key element of a request for an injunction pending trial on the merits. Did Their Honors think the question obvious?
A case that we've handled over the last few months suggests that the answer, while not obvious, does seem fairly clear. As the Delaware Court of Chancery ruled (in our clients' favor):
The parties negotiated and agreed to a broad forum selection clause that anticipated that any litigation arising from the Agreements would occur exclusively in Delaware. If Plaintiffs are forced to prosecute an claims falling within that clause in a different forum, they will be deprivated irreparably of the benefit of that bargain, regardless of whether they later prevail on the merits of that action. This Court has consistently held that the processio of a claim in an unwarranted forum poses a threat of irreparable harm warranting a preliminary injunction. To hold otherwise in the cirumstances of this case would render the broad language of the forum selection clause meaningless and deprive Plaintiffs of the benefit of their bargain.
ASDC Holdings, Inc. v. Richard J. Malouf 2008 All Smiles Grantor Retained Annuity Trust, 2011 WL 4552508, at *8 (Del. Ch. Sept. 14, 2011).