Cooper v. Ruane Cunniff & Goldfarb Inc.

17-2805
Cooper v. Ruane Cunniff & Goldfarb Inc.
In the
United States Court of Appeals
For the Second Circuit
______________
August Term, 2018
(Argued: February 5, 2019 Decided: March 4, 2021)
Docket No. 17-2805
______________
CLIVE V. COOPER, individually and as a representative of a class of
similarly situated plan participants, on behalf of the DST SYSTEMS, INC.
401(K) PROFIT SHARING PLAN,
Plaintiff-Appellant,
–v.–
RUANE CUNNIFF & GOLDFARB INC.,
Defendant-Appellee,
DST SYSTEMS, INC., THE ADVISORY COMMITTEE OF THE DST SYSTEMS, INC.
401(K) PROFIT SHARING PLAN, THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF DST SYSTEMS, INC., JEROME H. BAILEY, LYNN
DORSEY BLEIL, GARY D. FORSEE, CHARLES E. HALDEMAN, JR., SAMUEL G. LISS,
JOHN DOES, 1-20, LOWELL L. BRYAN, GREGG WM. GIVENS,
Defendants.
______________
B e f o r e:
LOHIER, CARNEY, and SULLIVAN, Circuit Judges.
______________
Plaintiff-Appellant Clive V. Cooper appeals from a district court order
compelling arbitration of his claims for breach of fiduciary duty under § 502(a)(2) of the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(2).
Cooper filed suit in 2016 as representative of an ERISA Plan and its participants. He
alleged that Defendant-Appellee Ruane Cunniff & Goldfarb Inc. (“Ruane”), a third-
party investment manager and plan administrator retained by Cooper’s employer, DST
Systems, Inc. (“DST”), mismanaged the assets of DST’s 401(k) profit-sharing fund,
causing it to lose substantial value. When he joined DST, Cooper agreed with DST to
arbitrate “all legal claims arising out of or relating to employment.” The district court
concluded that Cooper’s ERISA claims against Ruane “relate to” Cooper’s employment
and that Ruane, although not a signatory to the agreement to arbitrate, was entitled to
rely on it to compel arbitration. On review, we conclude that the district court erred.
Cooper’s ERISA claims for breach of fiduciary duty are not properly understood to be
“related to” his employment: none of the facts Cooper would have to prove to prevail
on his claims pertain to his employment; and other individuals and entities that were
never employed by DST could have brought identical claims, including other Plan
beneficiaries, the Secretary of Labor, and DST itself. See ERISA § 502(a)(2), 28 U.S.C.
§ 1132(a)(2). Moreover, Congress explicitly authorized plan beneficiaries and others to
sue individual fiduciaries in federal court for breach of their duties under ERISA: to
interpret the Arbitration Agreement as mandating arbitration of ERISA fiduciary claims
would unacceptably undercut the viability of such actions. See Coan v. Kaufman, 457 F.3d
250 (2d Cir. 2006). That result is neither required by the Arbitration Agreement’s
express language nor acceptable in light of ERISA’s protective purposes.
REVERSED.
Judge Sullivan dissents in a separate opinion.
______________
MONIQUE OLIVIER, Olivier Schreiber & Chao LLP, San
Francisco, CA (James E. Miller, Laurie Rubinow,
Shepherd, Finkelman, Miller & Shah, LLP, Chester,
CT, on the brief), for Plaintiff-Appellant.
ROBERT J. WARD (Frank W. Olander, Minji Reem, on the brief),
Schulte Roth & Zabel LLP, New York, NY, for
Defendant-Appellee.
______________
2
CARNEY, Circuit Judge:
Plaintiff-Appellant Clive V. Cooper appeals from an August 17, 2017 order of the
U.S. District Court for the Southern District of New York (Pauley, J.), granting the
motion of Defendant-Appellee Ruane Cunniff & Goldfarb Inc. (“Ruane”) to compel
arbitration of Cooper’s claims against it. Acting on behalf of a putative class of plan
participants and an employee benefit plan, Cooper sued Ruane under § 502(a)(2) of the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(2),
claiming damages arising from Ruane’s alleged breach of fiduciary duty and
mismanagement of a profit-sharing fund sponsored by Cooper’s employer, DST
Systems, Inc. (“DST”).
When he joined DST as a software development manager, Cooper agreed with
DST to arbitrate “all legal claims arising out of or relating to employment” (the
“Arbitration Agreement” or “Agreement”). App’x 159. Although Ruane is not a
signatory to the Arbitration Agreement, the district court concluded that Ruane can
compel Cooper to arbitrate his ERISA fiduciary claims against Ruane because the claims
“relat[e] to” Cooper’s employment with DST and are therefore covered by the
Agreement’s operative clause.
On de novo review, we conclude that the district court erred. Cooper’s claims for
breach of fiduciary duty in Ruane’s management of the fund are not properly
understood to be “related to” his employment: the record provides an inadequate basis
for finding that the parties intended the Agreement to reach profit-sharing fund related
claims under ERISA. None of the facts Cooper would have to prove to prevail on his
breach of fiduciary duty claims pertain to his own employment with DST; and other
individuals and entities that were never employed by DST—including the Secretary of
Labor and DST itself—could have brought identical claims. See ERISA § 502(a)(2), 29
U.S.C. § 1132(a)(2). Moreover, in § 409 of ERISA, Congress imposed liability on
3
individual fiduciaries for breach of their duties under ERISA: to interpret the generic
employment related language of the Agreement as mandating arbitration of these
claims would unacceptably undercut the viability and public purpose of such actions.
See Coan v. Kaufman, 457 F.3d 250 (2d Cir. 2006). Such a result is not required by the
Agreement’s terms and, in the absence of any such terms, we decline to construe it to
conflict with ERISA’s protective purposes.
We therefore REVERSE the order of the district court compelling arbitration and
remand the cause for further proceedings consistent with this Opinion.
BACKGROUND
The following account is drawn from the record before the district court when it
adjudicated Ruane’s motion. The facts as described here are largely undisputed by the
parties; any disagreements are noted.
I. Factual Background
A. Cooper, the DST 401(k) Plan, and Ruane’s role
In 1999, Cooper, an engineer and former business owner, left early retirement
and began working as a software development manager at DST, an information
processing and software company headquartered in Kansas City, Missouri. As a DST
employee, Cooper participated in a profit-sharing plan provided by DST (the ”Plan”)
and covered by ERISA. The Plan had two elements: a participant-directed 401(k)
component, in which DST matched employee contributions; and a profit-sharing
account (“PSA”) component, to which only DST contributed, doing so based on a
percentage of its employees’ eligible wages. Plan participants (that is, all DST
employees) were enrolled in the PSA when they began working for DST; they were not
allowed to decline participation. Employees were also bound to keep their PSA assets in
4
the fund throughout their employment with DST; they could withdraw from their
account only at the end of their employment.
Ruane, a third-party investment advisor, was engaged by DST in 1973 to manage
the investment of the PSA funds. DST maintained an Advisory Committee to monitor
Ruane’s performance. Ruane reported periodically to the Committee. Ruane was still
managing the PSA funds over two decades later, in 1999, when DST hired Cooper.
The Plan entered into a series of investment management agreements (“IMAs”)
with Ruane, establishing its relationship with Ruane and defining Ruane’s duties and
responsibilities. Subject to some limitations (that is, any investment guidelines that DST
or the Plan chose to set forth in the IMAs), the IMAs provided that Ruane exercised
“full authority and sole discretion” over PSA investments. See, e.g., Conf. App’x 10. The
discretion accorded Ruane in the IMAs made Ruane a Plan fiduciary under ERISA—a
conclusion that Ruane does not dispute. 1 The IMAs contained no arbitration clause. 2
Section 102(a) of ERISA requires covered employee benefit plans to furnish
summary plan descriptions (“SPDs”) of a plan’s terms to participants. 29 U.S.C.
§ 1022(a). SPDs must be “sufficiently accurate and comprehensive to reasonably apprise
such participants and beneficiaries of their rights and obligations under the plan.” Id.Throughout Cooper’s employment at DST, the Plan duly provided SPDs to its
participants, including Cooper. Those SPDs, which from year to year during his
employment were generally identical in relevant part, state:
1An individual is a “fiduciary with respect to a plan, and therefore subject to ERISA fiduciary
duties, to the extent that he or she exercises any discretionary authority or discretionary control
respecting management of the plan, or has any discretionary authority or discretionary
responsibility in the administration of the plan.” Varity Corp. v. Howe, 516 U.S. 489, 498 (1996)
(citation and internal quotation marks omitted); see also infra note 6.
2 DST or Ruane could each terminate the relationship at any time by written notice.
5
The people who operate your Plan, called “fiduciaries” of the Plan,
have a duty to do so prudently and in the interest of you and other
Plan participants and beneficiaries. . . . If it should happen that Plan
fiduciaries misuse the Plan’s money . . . you may seek assistance from
the U.S. Department of Labor, or you may file suit in a federal court.
E.g., App’x 569-70. The SPDs do not mention arbitration.
As a Plan participant, Cooper received notices and communications from or on
behalf of the Plan. Those documents identified Ruane as the manager of the PSA assets.
Among the notices he received were annual reports of DST’s contributions on behalf of
Plan participants and on Ruane’s latest investment performance with Plan assets.
Account statements updated Cooper on the performance of stocks selected by Ruane for
inclusion in the PSA portfolio and disclosed Ruane’s quarterly investment management
fee for managing the PSA.
Cooper alleges that DST did not subject Ruane to any investment limitations
from the inception of its relationship in 1973 until November 2015, when the huge
losses that eventually gave rise to Cooper’s complaint had already substantially
occurred. As of year-end 2014, under Ruane’s management, shares in Valeant
Pharmaceuticals represented almost 30% of the Plan’s total assets of more than $1.4
billion. By November 2015, when DST first imposed any guidance on Ruane, Valeant’s
stock was already in the midst of its steep decline. And by March 4, 2016, Valeant’s
share price had dropped dramatically, purportedly causing the value of the PSA’s
overall holdings to decline from a preceding 52-week high of $414.7 million to $97
million. 3 Cooper alleges that Ruane’s catastrophic over-allocation of Plan assets to
3See Nathan Vardi and Antoine Gara, Valeant Pharmaceuticals’ Prescription for Disaster, FORBES
MAGAZINE, May 10, 2016, available at
https://www.forbes.com/sites/nathanvardi/2016/04/13/valeant-pharmaceuticals-prescription-for-
disaster/#588d61ee206c; James Surowiecki, The Roll Up Racket, THE NEW YORKER, Mar. 28, 2016,
6
Valeant shares breached its fiduciary duty to Plan participants and to the Plan
generally. Accordingly, Cooper charges that Ruane is liable under ERISA for the PSA
participants’ losses.
B. The Arbitration Agreement
In 2008, after he became a DST employee, Cooper received a copy of the
company’s “Associates’ Handbook,” which explains DST’s employment-related
policies, benefits, standards of conduct, and programs. As required, he signed an
acknowledgment that he had received the Handbook. App’x 503.
The Handbook contains a section on arbitration. In relevant part, it states:
For employment-related legal disputes that are not resolved through
our Open Door Policy or Equal Employment Opportunity (EEO)
Policy, the Company has implemented an arbitration program under
the DST Output Arbitration Program and Agreement that is set forth in
the Addendum to this Handbook.
Id. at 99. The Arbitration Program and Agreement, in turn, mandates arbitration of “all
legal claims arising out of or relating to employment, application for employment, or
termination of employment, except for claims specifically excluded under the terms” of
the Agreement. Id. at 159. As claims “specifically excluded,” it names four subject areas:
“[1] workers’ compensation benefits, [2] unemployment compensation benefits,
[3] ERISA-related benefits provided under a Company sponsored benefit plan, [and,]
[4] claims filed with the National Labor Relations Board.” Id. The Agreement provides
further that any arbitration under the Arbitration Program will be “administered by the
available at https://www.newyorker.com/magazine/2016/04/04/inside-the-valeant-scandal;
Stephen Gandel, Valeant: A Timeline of the Big Pharma Scandal, FORTUNE MAGAZINE, Oct. 31, 2015,
available at https://fortune.com/2015/10/31/valeant-scandal/ (describing company’s reliance on
untested novel drug distribution strategy).
7
American Arbitration Association (AAA) and conducted under the AAA’s Employment
Arbitration Rules.” Id. at 156.
Cooper duly signed the Acknowledgment and Agreement Form, which
cautioned that if he did not “opt out in writing within 30 days after [he] receive[d] the
[Arbitration Agreement],” then he and DST “shall be considered to have agreed” to the
Arbitration Agreement “as a binding contract to waive the right to judge or jury trial
and to resolve employment-related legal claims under the terms [of the Agreement].”
Id. at 162. Cooper did not opt out.
II. Procedural History
In March 2016, Cooper filed this lawsuit naming Ruane, DST, and others
(primarily DST employees) as defendants. Not long after, choosing to mediate his
claims with DST and others in a private forum, he voluntarily dismissed his claims
against all Defendants except Ruane.
In November 2016, after a period of discovery related to its motion, Ruane
moved for an order compelling Cooper to arbitrate his claims. The following year, the
district court issued an Opinion and Order compelling arbitration.
The district court’s order rested on two determinations. At the threshold, the
court concluded that Cooper’s claims were covered by the Arbitration Agreement: they
“relat[ed] to” his employment within the meaning of the Agreement, the Court held,
because “the claims concern how poorly DST and Ruane managed the assets which
Cooper considered to be his compensation.” Cooper v. Ruane Cunniff & Goldfarb Inc., No.
16-CV-1900, 2017 WL 3524682, at *4 (S.D.N.Y. Aug. 15, 2017). 4
4Unless otherwise indicated, this Opinion omits from case law quotations any internal
quotation marks, alterations, brackets, citations, and footnotes.
8
Having determined that the Agreement applied to Cooper’s claims, the court
then concluded that Ruane, although a non-signatory, was entitled under principles of
equitable estoppel to enforce the Agreement against Cooper. See, e.g., Ross v. Am.
Express Co., 547 F.3d 137, 143-44 (2d Cir. 2008). 5 Several subsidiary findings undergirded
this conclusion. First, Ruane had a sufficiently “close” relationship with DST to enable it
to assert DST’s arbitration rights: Ruane was DST’s agent appointed as the Plan’s
investment manager and they maintained a longstanding relationship; and Cooper,
through his receipt of regular written communications about Ruane’s role as the Plan’s
sole investment manager, “reasonably would have known” that Ruane was “affiliated
or associated” with DST. Cooper, 2017 WL 3524682, at *6. Second, the claims Cooper
asserted against DST and Ruane substantially overlapped. Id. at 7. Finally, Cooper’s
ERISA claims and the subject matter of the Arbitration Agreement were sufficiently
intertwined, the court ruled, to justify requiring Cooper to arbitrate with Ruane,
reasoning that the “intertwinedness requirement,” see Ross, 547 F.3d at 143, “is satisfied
when a signatory’s claims arise from the subject matter of the underlying agreement.”
Cooper, 2017 WL 3524682, at *7.
Cooper now appeals. He challenges the district court’s ruling on equitable
estoppel as well as its predicate determination that the Arbitration Agreement governs
his claims. In the end, we need not reach the estoppel issue, because we conclude that
the Agreement does not apply to Cooper’s claims in the first place.
5A non-signatory who attempts to compel arbitration under an estoppel theory must
demonstrate that: (1) “the issues the non-signatory is seeking to resolve in arbitration are
intertwined with the agreement that the estopped party has signed,” and (2) the “relationship
among the parties [is] of a nature that justifies a conclusion that the party which agreed to
arbitrate with another entity should be estopped from denying an obligation to arbitrate a
similar dispute with the adversary which is not a party to the arbitration agreement.” Ross, 547
F.3d at 143-44.
9
DISCUSSION
As described above, the Agreement between Cooper and DST provides that its
arbitration requirement “covers all legal claims arising out of or relating to
employment.” App’x 159. On review, we conclude that this language does not
encompass the claims for breach of fiduciary duty brought by Cooper on behalf of the
Plan against Ruane under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2). 6
It is a familiar principle that the Federal Arbitration Act (“FAA”) “embod[ies] [a]
national policy favoring arbitration.” Nicosia v. Amazon.com, Inc., 834 F.3d 220, 228 (2d
Cir. 2016) (alterations in original). Even so, the law is undisputed that “a court may
order arbitration of a particular dispute only where the court is satisfied that the parties
agreed to arbitrate that dispute.” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287,
297 (2010) (emphasis in original); accord Nicosia, 834 F.3d at 229 (“[T]he FAA does not
require parties to arbitrate when they have not agreed to do so.”). Courts consider two
factors when deciding if a dispute is arbitrable: “(1) whether the parties agreed to
arbitrate, and, if so, (2) whether the scope of that agreement encompasses the claims at
issue.” Holick v. Cellular Sales of N.Y., LLC, 802 F.3d 391, 394 (2d Cir. 2015).
In deciding a motion to compel arbitration, courts apply a “standard similar to
that applicable for a motion for summary judgment.” Nicosia, 834 F.3d at 229. Courts
must “consider all relevant, admissible evidence submitted by the parties and contained
6As noted above, among the categories of claims carved out from its coverage, the Arbitration
Agreement expressly disclaims coverage of actions to recover benefits under a company-
sponsored benefit plan under § 502(a)(1), 29 U.S.C. § 1132(a)(1). Those claims are distinct from
claims brought under section 502(a)(2), such as those that we address here. Section 502(a)(2)
authorizes “the Secretary [of Labor] . . . a participant, beneficiary, or fiduciary” to bring a “civil
action” for breach of fiduciary duty. A claim for benefits under § 502(a)(1), in contrast, is
typically an action by an individual Plan participant or beneficiary for wrongful denial of
benefits.
10
in pleadings, depositions, answers to interrogatories, and admissions on file, together
with . . . affidavits,” and must “draw all reasonable inferences in favor of the non-
moving party.” Id.
We review de novo the grant of a motion to compel arbitration. Lawrence v. Sol G.
Atlas Realty Co., 841 F.3d 81, 83 (2d Cir. 2016).
I. The meaning of the Agreement’s phrase “relating to employment”
Section 502(a)(2) of ERISA allows lawsuits “by the Secretary, or by a participant,
beneficiary or fiduciary for appropriate relief” under § 409 of the statute. 29 U.S.C.
§ 1132. Section 409, in turn, imposes liability on fiduciaries who breach their duties “to
make good to such plan any losses to the plan resulting from each such breach, and to
restore to such plan any profits of such fiduciary which have been made through use of
assets of the plan by the fiduciary.” Id. § 1109. The statute further makes fiduciaries that
breach their duties subject to equitable relief, including removal from their position as
fiduciary. Id. Sections 502(a)(2) and 409, read together, mean that a plaintiff suing for
breach of fiduciary duty under § 502(a)(2) may seek recovery only for injury done to the
wronged plan. See LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248, 256 (2008).
The question before us, then, is whether such claims for fiduciary breach—
because none dispute that is what Cooper has alleged—are covered by the phrase “all
legal claims arising out of or relating to employment” used in his Arbitration
Agreement with DST. App’x 159. Ruane does not contend that Cooper’s claim against it
“aris[es] out of” Cooper’s employment at DST, leaving the crux of the dispute located in
the phrase “relating to employment.” 7
7Cooper maintains further that the IMA between DST and Ruane—not the Arbitration
Agreement between DST and Cooper—governs participant lawsuits complaining about
11
The district court concluded, and Ruane urges on appeal, that Cooper’s fiduciary
claims “relate to” Cooper’s employment at DST primarily for two reasons: first, in a
“but for” causation approach, because he would not have those claims but for his
employment at DST; second, because Cooper’s stake in the Plan is part of his overall
compensation from DST, and compensation is, of course, a feature of his employment.
Cooper counters that his claims do not “relate to” his employment at DST in any
meaningful sense. He urges, looking to the text of the Arbitration Agreement, that
ERISA fiduciary claims are distinct from those it identifies as subject to mandatory
arbitration. The distinctness of their substance is emphasized, he contends, by the
simple observation that none of the facts he would have to prove to establish his ERISA
fiduciary claims (that Ruane failed as fiduciary when it overconcentrated the fund’s
assets) have any bearing on his employment at DST—other than the pedestrian fact that
he was employed by DST and thereby became a Plan participant.
We evaluate these arguments next.
A. Additional language in the Agreement
Both parties draw attention to language in the Arbitration Agreement in addition
to the “relating to employment” phrase, arguing that the context in which that
additional language appears leaves no doubt that the pivotal phrase is best read to
support their respective constructions of the Agreement.
Ruane’s management of Plan assets. As discussed, the IMA acknowledges that Ruane is a Plan
fiduciary; defines Ruane’s duties and responsibilities to the Plan; and contains no arbitration
provision. On this basis, too, Cooper reasons that his claims are not subject to arbitration. We
are not persuaded by this alternative gambit: the IMA’s silence as to arbitration would not
preclude DST from agreeing separately with Plan participants that their disputes as to the Plan
would be arbitrated, even if those disputes implicate Ruane’s obligations under the IMA.
12
For his part, Cooper submits that, although the Agreement describes the covered
claims as “not limited to” those listed, it is nonetheless significant that, aside from the
catch-all reference to “other statutory and common law claims,” all the categories that
are listed as covered are personal to the employee. 8 Thus, the text tells the reader that
covered claims include, for example, wrongful discharge, discrimination, harassment,
retaliatory discharge, compensation and leave disputes, defamation, and so on, as set
forth more fully here in the margin. App’x 159. In keeping with the sense that the
Agreement is addressing matters personal to the employee as an individual, Cooper
observes that the listed categories of exclusions are similarly personal: as noted earlier,
the Agreement provides that “[t]he only claims excluded [from the mandatory
arbitration clause]. . . are claims by an Associate for workers’ compensation benefits,
unemployment compensation benefits, ERISA-related benefits provided under a
Company sponsored benefit plan, or claims filed with the National Labor Relations
Board.” Id. 9 Applying the venerable canon of construction known as ejusdem generis—
8 The relevant clause provides in its entirety:
The claims covered by this Arbitration Program and Agreement include, but are
not limited to, the following types of claims: wrongful discharge under
statutory law or common law; employment discrimination, retaliation and
sexual or other harassment based on federal, state or local statute, ordinance or
governmental regulations; retaliatory discharge or other unlawful retaliatory
action; overtime or other compensation disputes; leave of absence disputes;
tortious conduct; defamation; violation of public policy; breach of contract; and
other statutory or common law claims.
App’x 159.
9 The relevant clause provides in its entirety:
The only claims excluded from this Arbitration Program and Agreement are
claims by an Associate for workers’ compensation benefits, unemployment
compensation benefits, ERISA-related benefits provided under a Company
sponsored benefit plan, or claims filed with the National Labor Relations Board.
13
the rule that “general words are construed to embrace only objects similar in nature to
those objects enumerated by the preceding specific words,” Circuit City Stores, Inc. v.
Adams, 532 U.S. 105, 114-15 (2001)—we are inexorably led to the conclusion, Cooper
urges, that the clause should not be read to cover his fiduciary breach claims against
Ruane, which he brings not on his personal account but under ERISA, on behalf of the
Plan and the Plan’s other participants. Cooper draws further (if more peripheral)
support for his position from the Agreement’s directive that any required arbitration be
“conducted under AAA’s Employment Arbitration Rules,” App’x 156, a signal (he
argues) that the Agreement speaks only to disputes between employers and employees
and not to ERISA-based disputes between fiduciaries and Plan members.
Ruane, in turn, points out that the Agreement’s mandatory arbitration clause
covers “statutory” claims in general—a term that, it insists, must include ERISA
fiduciary claims. Appellees’ Br. 23-24. Ruane also reads the Agreement’s express carve-
out of ERISA benefit claims, noted above, in light of its contrasting silence regarding
ERISA fiduciary claims, suggesting that the difference must mean that the latter are not
similarly excluded.
Additionally, either the Associate or the Company may file a court action
seeking provisional equitable remedies available under the law, including but
not limited to temporary or preliminary injunctive relief, either before the
commencement of or during the arbitration process, to preserve the status quo
or otherwise prevent damage or loss pending final resolution of the dispute
pursuant to the terms of this Arbitration Program and Agreement. Also, this
Arbitration Program and Agreement does not prevent or discourage an Associate
from filing and pursuing an administrative proceeding before the Equal
Employment Opportunity Commission or other federal, state or local
administrative agency; however, if an Associate or the Company chooses to
pursue a legal claim in addition to and/or following completion of such
administrative proceedings, or if there is some other legal proceeding related
to the claim following completion of the administrative proceedings, the claim
then shall be subject to the terms of this Arbitration Program and Agreement.
App’x 159-60.
14
Although both parties’ textual interpretations have some force, we think
Cooper’s more persuasive in the end than Ruane’s. Neither is sufficiently conclusive to
resolve the issue, however, and so we proceed to analyze the operative phrase, “relating
to employment.”
B. The limits of the phrase “relating to employment” in the context of an
arbitration agreement
Turning our attention, then, to the phrase “relating to employment,” we focus
first on the limitations that we see as implicit in the phrase “relating to” in the context of
an employment-based arbitration agreement.
Decisions of other circuits provide helpful insight. In particular, in United States
ex rel. Welch v. My Left Foot Children’s Therapy, LLC, 871 F.3d 791 (9th Cir. 2017)
(“Welch”), the Ninth Circuit interpreted an employee arbitration clause that expressed
coverage for “any claims”—similar to that found here—as not covering an employee’s
suit under the False Claims Act (“FCA”). 10 In Welch, a whistleblower sued her former
Although the court there rejected the proposed mandatory arbitration of an FCA claim, the
10
Welch arbitration clause was far broader on its face than DST’s. As relevant here, it provided:
I agree and acknowledge that the Company and I will utilize binding
arbitration to resolve all disputes that may arise out of the employment context.
Both the Company and I agree that any claim, dispute, and/or controversy
that either I may have against the Company . . . or the Company may
have against me, arising from, related to, or having any relationship or
connection whatsoever with my seeking employment by, or employment or other
association with the Company shall be submitted to and determined
exclusively by binding arbitration under the Federal Arbitration Act . . . .
To the extent permitted by applicable law, the arbitration procedures
stated below shall constitute the sole and exclusive method for the
resolution of any claim between the Company and Employee arising out
of ‘or related to’ the employment relationship.
United States ex rel. Welch, 871 F.3d at 794 (final emphasis in original). In addition to the Welch
court’s ruling that FCA claims were not “related to” employment for purposes of this clause, it
15
employer under the FCA, alleging that the employer had presented fraudulent
Medicaid claims to the government. Id. at 795. The Ninth Circuit affirmed the district
court’s denial of the employer’s motion to compel arbitration, ruling that the plaintiff’s
FCA claims were not “related to” her employment for purposes of the relevant
arbitration agreement. Id. at 798. The appellate court rejected the proposition that her
claims must be “related to” her employment simply because she would not have been
in a position to pursue those claims “but for” her employment by the defendants. Id. at
798-99. In support of this conclusion, the court reasoned (as Cooper does here) that the
subject matter of an FCA claim does not implicate any facts particular to the plaintiff’s
employment. Id. at 799. Thus, Welch could have brought an identical FCA claim against
the defendant-employer had she been a non-employee who simply stumbled into
similar potentially inculpatory information about the company.
The Fifth and the Eleventh Circuits have also analyzed the meaning of
employment arbitration clauses with similar “relating to” language, both of them in the
context of suits seeking recovery for alleged sexual assault perpetrated by fellow
employees in employer-provided residential quarters during off-duty hours. See Doe v.
Princess Cruise Lines, Ltd., 657 F.3d 1204, 1208, 1218-20 (11th Cir. 2011); Jones v.
Halliburton Co., 583 F.3d 228, 230 (5th Cir. 2009). These cases also bear on Cooper’s
claims. The Jones and Doe courts both accepted that the sexual assault alleged in each
case would not have occurred “but for” the plaintiff’s employment with the defendant
company, but determined nonetheless that the circumstances giving rise to the claim
were outside the scope of her employment. “Relatedness” could not encompass
everything that touched employment in any way, these courts posited.
concluded in the alternative—based on another clause in the agreement—that an FCA claim is
not one that the plaintiff-employee “may have against [the defendant-employer]” because “the
underlying fraud claims asserted in a FCA case belong to the government and not to the
relator.” Id. at 800.
16
Accordingly, in Jones, the Fifth Circuit observed that “‘[i]f “relate to” were taken
to extend to the furthest stretch of its indeterminacy,’ the phrase would not have much
limiting power because ‘really, universally, relations stop nowhere.’” 583 F.3d at 238-39(quoting N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514
U.S. 645, 655 (1995)). Similarly, in Doe, the Eleventh Circuit held that the phrase “related
to” “marks a boundary by indicating some direct relationship; otherwise, the term
would stretch to the horizon and beyond.” 657 F.3d at 1218 (emphasis added).
To be sure, Cooper’s claims are not perfectly analogous to the sexual assault
cases, nor is the language in the Arbitration Agreement between Cooper and DST
identical to that found in Welch, Jones, or Doe. Unlike those cases, something more than
mere but-for causation connects Cooper’s claims and his employment relationship with
DST: his stake in the Plan is indeed part of his compensation at DST, as Ruane stresses,
and it provides him the standing he needs to sue on behalf of the Plan. These
considerations create a more substantial nexus to his employment at DST than does, as
in the sexual assault cases, criminal conduct by other employees occurring outside of
work hours or duties.
Nevertheless, we weigh heavily the consideration that none of the facts relevant
to the merits of Cooper’s claims against Ruane relates to his employment. Cooper’s
claims hinge entirely on the investment decisions made by Ruane; the substance of his
claims has no connection to his own work performance, his evaluations, his treatment
by supervisors, the amount of his compensation, the condition of his workplace, or any
other fact particular to Cooper’s individual experience at DST. Moreover, as pointed out
in Welch, 871 F.3d at 799, and mentioned above, others who were never DST employees
could have brought claims identical to those stated by Cooper—for example, the
mismanagement claims could have been pursued by other Plan beneficiaries (such as
spouses, heirs, or designees of participants); by other Plan fiduciaries, including DST
17
itself; and by the Secretary of Labor. See ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2)
(authorizing plan participants and beneficiaries and the Secretary of Labor to bring a
civil action for breach of fiduciary duties).
We therefore agree with the approach adopted by the Ninth Circuit in Welch that,
in the context of an employment arbitration agreement, a claim will “relate to”
employment only if the merits of that claim involve facts particular to an individual
plaintiff’s own employment. See Welch, 871 F.3d at 799. Here, the merits of Cooper’s
claims do not involve such facts.
II. Our adequacy-of-representation requirement regarding ERISA fiduciary
claims
Although explicit language to the contrary in the Arbitration Agreement might
create a different legal problem—one of enforceability—absent such plain language we
observe that the reading of the Arbitration Agreement’s “relating to employment”
language that we adopt here would create tension with our case law governing the
prerequisites applicable to plaintiffs pursuing ERISA fiduciary actions. Such a result is
neither required by the Agreement’s language nor desirable in light of ERISA’s
protective purposes. See, e.g., Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 236
(2013) (noting that “an arbitration agreement forbidding the assertion of certain
statutory rights” cannot be enforced).
In Coan v. Kaufman, 457 F.3d 250 (2d Cir. 2006), we construed ERISA § 502(a)(2) to
require parties suing on behalf of a plan to demonstrate their suitability to serve as
representatives of the interests of other plan stakeholders. We explained: “[T]he
representative nature of the section 502(a)(2) right of action implies that plan
participants must employ procedures to protect effectively the interests they purport to
represent.” Id. at 259. Citing, as examples of such procedures, class certification or
joining other plan participants as parties, id. at 261—measures the Coan plaintiff,
18
fatefully, had not undertaken—we stressed that such procedural safeguards are meant
to ensure that any “recovery inures to the benefit of the plan as a whole.” Id. at 261.
The Arbitration Agreement between Cooper and DST, in contrast, requires that
all arbitrated claims “be asserted, heard and resolved on a single Associate basis.”
App’x 158. It prohibits joinder of multiple parties and class or collective actions. Id. at
158-59. It is unclear, then, how, under the terms of the Agreement, an employee can
bring an ERISA fiduciary claim that satisfies Coan’s adequacy requirement, while
concurrently complying with the Agreement. If we read the Agreement to mandate
arbitration for ERISA fiduciary claims such as Cooper’s, a signatory seeking to bring
such a claim is caught in a bind: Either she brings a claim in arbitration in some
representative capacity, as our case law requires, and the claim is dismissed for
violating the Agreement’s prohibition on bringing claim in a representative capacity; or
she brings a claim absent the required procedural safeguards, and courts in this Circuit
decline to enforce any award she secures in arbitration for running afoul of Coan.
Looking at the same facts through a different lens, Ruane’s reading of the
Arbitration Agreement appears to make it impossible to bring an ERISA fiduciary
action that satisfies both the Agreement and the Coan representative adequacy
requirement, potentially rendering at least this part of the Agreement unenforceable.
Am. Express Co., 570 U.S. at 236. It is true that this conundrum would not necessarily
justify, on its own, a countertextual reading of an arbitration agreement that explicitly
19
applied to a given circumstance. But in this case, we have already concluded that the
plain meaning of “relating to” in the Agreement does not encompass Cooper’s claims.
To the extent the Agreement’s text may permit other interpretations, we also decline to
adopt an unnecessary reading that casts its enforceability into doubt, in derogation of
ERISA’s protective purposes. 11
11The dissent would hold that the Agreement between Cooper and his employer covers
Cooper’s ERISA claims against Ruane. It would then rule that Cooper is estopped from denying
that Ruane can require Cooper to arbitrate his claims. We need not reach the dissent’s estoppel
argument because we have determined that the Agreement does not cover these statutory
claims against Ruane. Nonetheless, we note our concern about the dissent’s application of
arbitration-by-estoppel to Cooper.
As the dissent recognizes, consent is the foundation of arbitration: “[T]he FAA imposes
certain rules of fundamental importance, including the basic precept that arbitration is a matter
of consent, not coercion.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 681 (2010).
Allowing a non-party to enforce an arbitration agreement against a party presents an obvious
challenge, then, simply because the party has not expressly consented to arbitrate disputes with
the non-party. Yet, in certain limited circumstances, we have decided to allow it and have
estopped the non-party from objecting to arbitration. We have instructed that, to justify
estoppel, we must find “that the subject matter of the dispute was intertwined with the contract
providing for arbitration.” Sokol Holdings, Inc. v. BMB Munai, Inc., 542 F.3d 354, 361 (2d Cir.
2008). Second, there must be “a relationship among the parties of a nature that justifies [the]
conclusion” that the court should compel arbitration. Id. at 359. A court’s consideration of
whether such a relationship exists calls for a fact-specific, careful review, in which we ask
whether the party “consented to extend its agreement to arbitrate to [the non-party], or,
otherwise put, made it inequitable [for the party] to refuse.” Id. at 361 (emphasis added).
Considered in its totality, we have difficulty seeing the specific “relationship among the
parties” here—between Cooper as an employee of DST, and Ruane as a DST contractor—as one
that makes it “inequitable” for Cooper to refuse to arbitrate his ERISA claims against Ruane. Id.Cooper’s detailed knowledge of Ruane’s role in and management of the Plan, or his initial view
of the relationship between DST and Ruane, do not meaningfully bear on the actual relationship
between Cooper and Ruane under a theory of estoppel.
More generally, we are concerned that a ruling favoring arbitration-by-estoppel in
Cooper’s circumstances would mark an ill-advised step away from looking to consent as the
foundation of arbitration. As this case shows, such a step could have broadly restrictive effects
20
CONCLUSION
We conclude that the breach of fiduciary duty claims that Cooper brought on
behalf of the Plan under ERISA § 502(a)(2) do not “relate to” his employment under the
terms of the Arbitration Agreement. We therefore REVERSE the judgment of the
district court and remand the cause for further proceedings consistent with this
Opinion.
on the rights of employees who are subject to similar agreements with their employers and who
wish to press claims in court against contracting partners of their employers.
But other panels will address those claims and concerns in due course.
21
RICHARD J. SULLIVAN, Circuit Judge, dissenting:
I part ways with the majority because I am not convinced that Cooper’s
arbitration agreement with DST Systems, Inc. (“DST”) (the “Arbitration
Agreement”) clearly and unambiguously excludes Cooper’s breach of fiduciary
duty claims from arbitration. Where, as here, an arbitration agreement uses broad
language that is ambiguous about whether an issue in dispute is arbitrable, we
must resolve that ambiguity in favor of arbitration. See Moses H. Cone Mem’l Hosp.
v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983). I would therefore affirm the
district court’s conclusion that Cooper’s claims “relate to his employment” within
the meaning of the Arbitration Agreement. See Cooper v. Ruane Cunniff & Goldfarb
Inc., No. 16-cv-1900 (WHP), 2017 WL 3524682, at *4 (S.D.N.Y. Aug. 15, 2017).
As a result, I would also reach the issue that the majority does not: whether
Ruane Cooper & Goldfarb, Inc. (“Ruane”), “a non-signatory to the Arbitration
Agreement, may compel Cooper to arbitrate his claims under the doctrine of
equitable estoppel.” Id. at *5. Admittedly, I find this question to be a closer call.
Nevertheless, because of Cooper’s knowledge about Ruane’s role in managing the
profit-sharing account (“PSA”) and his characterization of DST and Ruane as
closely intertwined throughout this litigation, I would also affirm the district
court’s equitable estoppel holding. Accordingly, I respectfully dissent.
I. In light of the presumption in favor of arbitrability, the Arbitration
Agreement’s broad language requires a finding that Cooper’s claims are
arbitrable.
The Supreme Court has repeatedly instructed that “any doubts concerning
the scope of arbitrable issues should be resolved in favor of arbitration,” including
when “the problem at hand is the construction of the contract language itself.”
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)
(quoting Moses H. Cone Mem’l Hosp., 460 U.S. at 24–25); see First Options of Chi., Inc.
v. Kaplan, 514 U.S. 938, 945 (1995); Mastrobuono v. Shearson Lehman Hutton, Inc., 514
U.S. 52, 62 & n.8 (1995); Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ.,
489 U.S. 468, 475 (1989); AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643,
650 (1986); see also Granite Rock Co. v. Int’l Brotherhood of Teamsters, 561 U.S. 287, 314
(2010) (Sotomayor, J., concurring in part) (“In determining the scope of an
arbitration agreement, there is a presumption of arbitrability in the sense that an
order to arbitrate the particular grievance should not be denied unless it may be
said with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute. Doubts should be resolved in favor
of coverage.” (internal quotation marks and brackets omitted)).
2
This Court has recognized that while this interpretive rule departs from
ordinary principles of contract interpretation, see John Hancock Life Ins. Co. v.
Wilson, 254 F.3d 48, 58 (2d Cir. 2001), it does so for good reason: to give effect to
the “liberal federal policy favoring arbitration” established by the Federal
Arbitration Act, In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d 113, 127 (2d Cir.
2011) (quoting Moses H. Cone Mem’l Hosp., 460 U.S. at 24). Accordingly, the Second
Circuit has frequently applied this rule to resolve questions regarding the scope of
an arbitration clause in favor of arbitration, see, e.g., Citigroup, Inc. v. Abu Dhabi Inv.
Auth., 776 F.3d 126, 131 (2d Cir. 2015); JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d
163, 171 (2d Cir. 2004), even going so far as to explain that “federal policy requires
us to construe arbitration clauses as broadly as possible,” In re Am. Express, 672
F.3d at 128 (quoting Collins & Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 19 (2d
Cir. 1995)).
Here, Cooper’s breach of fiduciary duty claims fit comfortably within the
broad language employed by the Arbitration Agreement. That agreement covered
“all legal claims arising out of or relating to [Cooper’s] employment” at DST.
App’x at 159. As the majority recognizes, additional language in the Arbitration
Agreement can be read to support either Cooper’s position or Ruane’s position,
3
depending on whether one relies on the interpretive canon of ejusdem generis or
expressio unius est eclusio alterius. See Maj. Op. at 14–15. I agree with the majority
that neither of these arguments, alone, “is sufficiently conclusive to resolve the
issue” of whether the operative phrase “relating to employment” encompasses
Cooper’s breach of fiduciary duty claims. Id. at 15. But left with this equipoise,
the majority looks to extra-Circuit case law to resolve the meaning of the
agreement, whereas I would apply the binding and well-settled presumption in
favor of arbitrability, which requires courts to consider whether “it may be said
with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute.” Holick v. Cellular Sales of N.Y., LLC,
802 F.3d 391, 395 (2d Cir. 2015) (quoting Smith/Enron Cogeneration Ltd. P’ship, Inc.
v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 99 (2d Cir. 1999)).
I do not think there can be any doubt that the phrase “relating to
employment” is “susceptible of an interpretation that covers” Cooper’s breach of
fiduciary duty claims premised on his employer-funded retirement plan. Id. As
the majority itself acknowledges, Cooper’s claims have a more substantial nexus
to his employment than the cases to which the majority cites dealing with sexual
4
assault. 1 See Maj. Op. 17–18. The district court properly recognized that “[t]he
funds that Cooper claims Ruane mismanaged specifically originate from his
employment from DST” and that Cooper himself “acknowledged that he
considered DST’s contributions to be a part of his compensation.” Cooper, 2017
WL 3524682, at *4. Moreover, the PSA was specifically intended “to encourage
[employees] to stay with [DST] until retirement,” App’x at 83, evidenced by the
fact that any unvested funds in the PSA at the time an employee terminated his
employment “for any reason other than death, disability, or retirement” would
automatically revert back to DST, id. Taken together, these facts indicate that
Cooper’s claims – made possible by and directly pertaining to Ruane’s
management of his employment compensation – can reasonably be interpreted as
“relating to [his] employment” at DST. Id. at 159. At the very least, Cooper has
not presented evidence conclusively demonstrating that the phrase “relating to
employment” excludes his breach of fiduciary duty claims, as is required to
overcome the presumption in favor of arbitration. See, e.g., Holick, 802 F.3d at 398
1They also have a far closer relationship to his employment than the employee’s claims in United States ex
rel. Welch v. My Left Foot Children’s Therapy, LLC, 871 F.3d 791 (9th Cir. 2017), to which the majority also
cites, see Maj. Op. at 15–16. Unlike Welch, in which the Ninth Circuit recognized that the plaintiff need not
have been an employee to bring her claims, see Welch, 871 F.3d at 799, Cooper’s claims here were necessarily
dependent on his employment, as he would not have been in a position to bring his breach of fiduciary
duty claims had he not been employed by DST and had DST not made contributions to the PSA on his
behalf.
5
(finding that the presumption in favor of arbitration was overcome by evidence
showing that the arbitration agreements at issue were not intended to cover claims
that arose before the parties entered into the agreements).
In holding that Cooper’s ERISA claims do not “relat[e] to” his employment,
the majority relies on our decision in Coan v. Kaufman, 457 F.3d 250 (2d Cir. 2006),
which held that to assert the type of ERISA claims Cooper brings here, a plaintiff
must “take adequate steps under the circumstances properly to act in a
representative capacity on behalf of the plan.” Id. at 261 (internal quotation marks
omitted). The majority reasons that, under the district court’s reading of the
Arbitration Agreement, Coan’s procedural requirement – coupled with the
Arbitration Agreement’s separate requirement that all arbitrated claims “be
asserted, heard and resolved on a single Associate basis,” App’x at 158 – appears
to make it impossible for Cooper to arbitrate his ERISA claims. Maj. Op. at 19.
The problem with the majority’s analysis is that the Arbitration Agreement’s
class-arbitration waiver is not at issue in this case. Here, we are confronted only
with the question of whether Cooper’s claims are “relat[ed] to” his employment.
App’x at 159. Indeed, the majority concedes that the “conundrum” of reconciling
the class-arbitration waiver with Coan “would not necessarily justify, on its own,
6
a countertextual reading of an arbitration agreement that explicitly applied to a
given circumstance.” Maj. Op. at 19–20. But the presumption in favor of
arbitrability applies even where an agreement does not “explicitly apply to a given
circumstance,” id. at 20; rather, it acts a thumb on the scales favoring arbitration
whenever an agreement employs language broad enough that it cannot “be said
with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute,” Holick, 802 F.3d at 395 (internal
quotation marks omitted) (emphasis added). Here, because the broad language of
the Arbitration Agreement can reasonably be interpreted to cover such claims, and
because Cooper has pointed to no evidence foreclosing such an interpretation,
Coan should not impact our interpretation of the provision at issue in this case. 2
Accordingly, I would apply the presumption in favor of arbitration and affirm the
district court’s conclusion.
2It is also not at all clear that Coan would require Cooper to join other parties or bring his claims on a class-
wide basis, as the majority seems to suggest. See Maj. Op. at 19. While we did explain in Coan that plaintiffs
who comply with Rule 23 “will likely be proceeding in a ‘representative capacity’ properly for purposes of
section 502(a)(2),” we also explicitly declined to “delineate minimum procedural safeguards that section
502(a)(2) requires in all cases.” Coan, 457 F.3d at 261. The Supreme Court has emphasized that a class-
arbitration waiver will be upheld unless it “eliminates those parties’ right to pursue their statutory
remedy.” Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 236 (2013) (emphasis added). The class-
arbitration waiver here would not necessarily eliminate Cooper’s right to bring a claim under section
502(a)(2). Coan might make it procedurally onerous for him to do so – by requiring him to “notify[] . . .
other plan participants,” Coan, 457 F.3d at 261, or to take other measures to ensure that their rights are
protected – but the Supreme Court has made clear that practical difficulties involved in bringing individual
claims is not a reason for invalidating a class-arbitration waiver, see Italian Colors, 570 U.S. at 236.
7
II. Ruane may bind Cooper to the terms of the Arbitration Agreement under
the doctrine of equitable estoppel.
Having concluded that Cooper’s claims fall within the scope of the
Arbitration Agreement, I would also affirm the district court’s determination that
Ruane, although not a signatory to that agreement, may nevertheless compel
Cooper to arbitrate his claims under the doctrine of equitable estoppel. See Cooper,
2017 WL 3524682, at *5–*8.
“Under principles of estoppel, a non-signatory to an arbitration agreement
may compel a signatory to that agreement to arbitrate a dispute where” (1) the
non-signatory is seeking to arbitrate issues “intertwined with the agreement that
the estopped party has signed” and (2) there is “a relationship among the parties
of a nature that justifies a conclusion that the party which agreed to arbitrate with
another entity should be estopped from denying an obligation to arbitrate a similar
dispute with the adversary which is not a party to the arbitration agreement.”
Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 126–27 (2d Cir. 2010) (internal
quotation marks omitted). This Court has recognized that issues are “intertwined”
with an arbitration agreement when they arise from the “subject matter” of that
agreement, or when those issues are “factually intertwined” with a dispute
between the original parties to the agreement. Id. at 127–28. And while the type
8
of relationship sufficient to give rise to estoppel is fact-specific, this Court has
found such a relationship to exist when a plaintiff alleges that the non-signatory
worked in concert with a signatory to the arbitration agreement to harm the
plaintiff, see Denney v. BDO Stillman, L.L.P., 412 F.3d 58, 70 (2d Cir. 2005), or when
a plaintiff treats the signatory and non-signatory as “as a single unit” for purposes
of the litigation, JLM Indus., 387 F.3d at 177 (internal quotation marks omitted).
Cooper’s claims against Ruane are sufficiently “intertwined” with the
Arbitration Agreement because they plainly relate to the “subject matter” of that
agreement. Ragone, 595 F.3d at 127. As discussed above, the Arbitration
Agreement broadly encompasses “all legal claims arising out of or relating to
employment,” including “statutory” claims like the ERISA claims Cooper asserts
here. App’x at 159. Thus, as the district court recognized, Cooper’s claims relate
to the express subject matter of the Arbitration Agreement. See Cooper, 2017 WL
3524682, at *8; see also Choctaw Generation Ltd. P’ship v. Am. Home Assurance Co., 271
F.3d 403, 407 (2d Cir. 2001) (estopping the signatory where the merits of the
dispute the non-signatory sought to arbitrate were “bound up with” the terms of
the contract that included the arbitration clause).
9
Moreover, Cooper’s claims against Ruane are “factually intertwined with
the dispute” between Cooper and DST. Ragone, 595 F.3d at 128. In his complaint,
Cooper makes no attempt to distinguish between DST and Ruane, and Cooper’s
three causes of action are asserted without any differentiation between them. See
App’x at 42–46. The fact that Cooper has the same dispute with a signatory to the
Arbitration Agreement (DST) and a non-signatory (Ruane) makes clear that his
claims against Ruane are sufficiently “intertwined” with that agreement. See
Ragone, 595 F.3d at 128 (estopping the plaintiff where she had the “same dispute”
with the non-signatory as her counter-signatory to the contract containing the
arbitration clause).
The closer question is whether this case involves the “presence of the further
necessary circumstance of a relationship between [Cooper] and [Ruane]” that
justifies holding Cooper to the terms of the Arbitration Agreement. Id. (emphasis
added). Ordinarily, one might not consider the relationship between an employee
and his employer’s investment manager to be a close one. But as the district court
recognized, “Ruane was no stranger to Cooper.” Cooper, 2017 WL 3524682, at *6.
To the contrary, Cooper was informed about Ruane’s role as exclusive manager of
the PSA, see App’x at 77, 82, 500–01, and DST notified Cooper that he would be
10
responsible for paying Ruane’s fees as of January 1, 2013, id. at 458–59. In fact,
Cooper testified that, in reviewing his account statements online, he was aware
that he was personally paying Ruane his pro rata share of Ruane’s investment
management fees directly from his PSA account. Id. at 410.
Even more compelling is the fact that Cooper has treated Ruane and DST as
“as a single unit” throughout this litigation, JLM Indus., 387 F.3d at 177 (internal
quotation marks omitted), which this Court has found weighs in favor of applying
equitable estoppel. For example, in Denney v. BDO Seidman, L.L.P., we considered
whether certain defendants associated with Deutsche Bank could compel the
plaintiffs to arbitrate their claims, where the plaintiffs had signed consulting
agreements containing arbitration clauses to which the Deutsche Bank defendants
were not parties. 412 F.3d at 70. The Denney court held that the Deutsche Bank
defendants were entitled to compel arbitration under the doctrine of equitable
estoppel, explaining:
Having alleged . . . that the Deutsche Bank and
[signatory] defendants acted in concert to defraud
plaintiffs, . . . and that defendants’ fraud arose in
connection with [the signatory defendants’] tax-strategy
advice, . . . plaintiffs cannot now escape the consequences
of those allegations by arguing that the Deutsche Bank
and [signatory] defendants lack the requisite close
relationship, or that plaintiffs’ claims against the
11
Deutsche Bank defendants are not connected to Deutsche
Bank’s relationship with [the signatory defendants].
Id. (citing Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 527 (5th Cir. 2000)
(holding that application of equitable estoppel is warranted when the plaintiff
“raises allegations of substantially interdependent and concerted misconduct by
both the nonsignatory and one or more of the signatories to the contract” (internal
quotation marks omitted))).
This same rationale applies to Cooper’s claims against Ruane. As the district
court recognized, Cooper’s “claims against DST and Ruane, as co-fiduciaries, are
mutually dependent.” Cooper, 2017 WL 3524682, at *7. In his complaint, Cooper
alleged that the breaches of fiduciary duty that gave rise to his claims “occurred,
at least in part, as a result of severe conflicts of interest between and among the
fiduciaries of the DST Plan,” which primarily included DST and Ruane. App’x at
14. Cooper further alleged that DST had “a longstanding, symbiotic relationship”
with Ruane – which partly explained why DST continued to retain Ruane even
after volatility in the PSA, id. at 29 – and that DST was “legally responsible for
monitoring the investments undertaken by [Ruane] in the PSA,” id. at 30. In his
deposition, Cooper testified that “both DST Systems and Ruane were responsible
12
for investment monitoring” in connection with the PSA. Id. at 412. 3 Thus,
“[h]aving alleged . . . that [Ruane] and [DST] acted in concert” to breach their
fiduciary duties, Cooper “cannot now escape the consequences of those allegations
by arguing that [Ruane] and [DST] lack the requisite close relationship” to give
rise to equitable estoppel. Denney, 412 F.3d at 70. I therefore agree with the district
court that Cooper’s claims against Ruane are sufficiently “intertwined” with the
Arbitration Agreement and that the relationship between Cooper, DST, and Ruane
is sufficiently close to allow Ruane to compel Cooper to arbitrate his claims. See
Cooper, 2017 WL 3524682, at *6, *8.
* * *
Accordingly, because Cooper’s ERISA claims fall within the scope of his
Arbitration Agreement with DST, and because Ruane may invoke the doctrine of
equitable estoppel to compel Cooper to arbitrate those ERISA claims, I would
affirm.
3 Indeed, Cooper’s original complaint “indiscriminately lumps DST and Ruane together as ‘Defendants,’”
Cooper, 2017 WL 3524682, at *7, and Cooper dismissed DST from the lawsuit only after being reminded by
DST’s counsel about the Arbitration Agreement, App’x at 430–31. While Cooper contends that he only
dismissed DST to “focus his efforts and resources on the defendant that is primarily responsible for the
misconduct at issue,” Cooper, 2017 WL 3524682, at *7, n.1 (internal quotation marks omitted), the timeline
of events suggests that this was a tactical dismissal designed to avoid application of the Arbitration
Agreement. Courts in this Circuit have considered this type of tactical maneuvering in finding that non-
signatories may bind plaintiffs to an agreement through equitable estoppel. See, e.g., In re A2p SMS
Antitrust Litig., 972 F. Supp. 2d 465, 478 (S.D.N.Y. 2013); Bimota SPA v. Rousseau, 628 F. Supp. 2d 500, 506
(S.D.N.Y. 2009).
13