Citigroup Inc. v. Seade
- John Cronan
- 1:21-cv-10413
- U.S. District Court · Southern District of New York
- 20
In Citigroup v. Seade, Judge Cronan compelled arbitration, continued an injunction, and stayed the case pending arbitration.
Citigroup, Sayeg, Banamex, and persons acting with Sayeg are affected. Sayeg must arbitrate covered disputes, stop pursuing covered litigation outside the arbitration, and dismiss without prejudice covered claims in the Mexican Action.
What happened
In Citigroup Inc. v. Seade, Citigroup asked the court to require Luis Sebastian Sayeg Seade to arbitrate disputes about incentive and deferred-award plans and to stop pursuing related claims in Mexico. Sayeg had signed agreements containing arbitration clauses, but later brought claims against Citigroup’s subsidiary, Banamex, in Mexico.
The court found that the agreements required arbitration and clearly assigned the arbitrator authority to decide which disputes were covered. Sayeg did not oppose Citigroup’s petition or participate in the arbitration. The court therefore required arbitration, continued the injunction against related litigation, and ordered Sayeg to dismiss without prejudice any covered claims in the Mexican case by February 3, 2022.
Judge John P. Cronan also stayed this federal case while arbitration proceeds, while allowing the court to enforce or modify the injunction and consider sanctions for violations of its orders.
The detailed version
- Citigroup Inc. v. Seade · No. 1:21-cv-10413
- John Cronan
- Jan. 20, 2022
Background
Citigroup asked the court to compel arbitration with Sayeg and to prevent him from pursuing related litigation in Mexico. Sayeg had been employed by Citigroup’s wholly owned indirect subsidiary, Banco Nacional de México, S.A., Integrante del Grupo Financiero Banamex (Banamex). During his employment, he received awards under Citigroup incentive plans, including the Discretionary Incentive and Retention Award Plan, the Stock Incentive Plan, and the Deferred Cash Award Plan and Capital Accumulation Program.
Sayeg and Citigroup entered into award agreements containing arbitration clauses for disputes related to the awards. Sayeg and Banamex later signed a Termination and Release that incorporated and confirmed arbitration of disputes concerning benefits under the plans. The agreement also included a broad release and a commitment not to file suit in Mexico or the United States against Banamex, Citigroup, and certain plan-related persons. The Mexican Labor Board reviewed and approved the agreement as consistent with Mexican law, according to a declaration cited by the court.
In December 2020, Sayeg began the Mexican Action against Banamex. He asserted claims involving the plans and the 2018 and 2019 award agreements, sought additional plan benefits, and sought to invalidate the Termination and Release. He later added a claim concerning medical and pension benefits allegedly owed to his wife. Citigroup began an arbitration before the American Arbitration Association and then filed this federal case. Sayeg did not oppose Citigroup’s requests for injunctive relief or its petition to compel arbitration and did not appear at the court’s hearings.
Arbitration ruling
Under the Federal Arbitration Act, the court examined whether the parties formed a valid arbitration agreement, whether they agreed to let an arbitrator decide questions about the agreement’s scope, and whether Sayeg had refused to arbitrate.
The court held that the Termination and Release and the award agreements created unambiguous agreements to arbitrate disputes concerning the plans and awards. The clauses covered “any dispute” concerning the applicability of benefits or related to the awards. The agreements also incorporated American Arbitration Association rules that authorize an arbitrator to decide questions about the arbitrator’s own jurisdiction, including the scope and validity of the arbitration agreement.
The court held that the broad language, together with the incorporated arbitration rules, provided clear and unmistakable evidence that the parties delegated questions of arbitrability—the question whether a particular dispute must be arbitrated—to the arbitrator. The court therefore did not decide whether every claim in the Mexican Action fell within the arbitration agreements. Instead, it left that scope question for the arbitrator.
The court nevertheless found that Sayeg had refused to arbitrate because he brought the Mexican Action and had not appeared in the arbitration. The court granted Citigroup’s unopposed petition to compel arbitration and ordered Sayeg to participate in the arbitration.
Injunction
The court continued the existing preliminary injunction through the conclusion of the arbitration. The injunction bars Sayeg and specified persons acting with him from commencing or prosecuting, in Mexico or elsewhere, proceedings arising out of or related to the plans except in the arbitration.
The court also expanded the injunction. It ordered Sayeg, by February 3, 2022, to dismiss without prejudice any claims in the Mexican Action arising out of or related to the plans. The arbitrator will decide which claims are within the arbitration agreements. The court noted that if the arbitrator determines that Sayeg dismissed a claim outside those agreements, Sayeg may re-plead that claim.
Stay and disposition
The court stayed this federal case pending arbitration. The stay does not prevent the court from enforcing the injunction, considering requests for additional injunctive relief, or considering sanctions for failure to comply with the court’s orders. Citigroup was directed to update the court on whether Sayeg had withdrawn the required Mexican claims.
Read the full 20-page opinion on CourtListener, the free public archive maintained by the Free Law Project.