Monk v. Goldman Sachs & Co. LLC

Background

David Monk sued Goldman Sachs & Co. LLC, its parent company, Goldman Sachs Group, Inc., and an unnamed employee identified as Jane/John Doe. Monk alleged defamation and tortious interference with employment, claiming that statements connected to Goldman Sachs caused BSE Global to terminate his employment. The alleged statements concerned accusations that Monk was a sexual predator and had engaged in inappropriate conduct involving women during a “booze cruise.”

The Goldman Defendants moved to compel arbitration under the Federal Arbitration Act. They relied on at least eight arbitration agreements Monk entered during or after his employment with Goldman Sachs & Co. LLC, including a securities-industry registration agreement, an employment confidentiality agreement, agreements concerning restricted stock units, and a settlement agreement. The Goldman Defendants also moved in the alternative to dismiss the claims, but the court deferred further briefing on that request while deciding arbitration.

Arbitration analysis

The court rejected Monk’s argument that the Federal Arbitration Act did not apply. The Act covers arbitration provisions in contracts involving interstate commerce. The court concluded that the agreements involved commerce because they concerned Monk’s employment, compensation, securities-industry registration, and work managing investors’ wealth across the United States and around the world.

The court then considered whether Monk’s claims were within the agreements’ scope. It focused on the U-4 Agreement, which required arbitration of disputes between Monk and his firm that were required to be arbitrated under Financial Industry Regulatory Authority rules. Those rules require arbitration of disputes arising from the business activities of a FINRA member or associated person. The court found that Goldman Sachs & Co. LLC was a FINRA member and that Monk qualified as an associated person because he had previously been registered and associated with the firm.

The court held that Monk’s claims arose from business activities covered by the FINRA rule. Resolving the claims would require examining Monk’s activities while employed by Goldman Sachs & Co. LLC, including whether he committed sexual harassment. The court also relied on Monk’s allegations that the unnamed employee made the statements while acting within the scope of employment and using information obtained through employment at Goldman Sachs. The court concluded that the claims therefore fell within the broad arbitration requirement even though the alleged conduct affecting Monk’s later employment occurred after his Goldman Sachs employment ended.

The court further held that the claims against Goldman Sachs Group, Inc. and Jane/John Doe were arbitrable. It described those claims as entirely derivative of the claims against Goldman Sachs & Co. LLC. The court also stated that Monk had not distinguished the defendants in his complaint or opposition and had forfeited any contrary argument by not responding to the Goldman Defendants’ position on that issue.

Sealing request and case status

The Goldman Defendants sought to keep most of the settlement agreement under seal. The court held that the settlement amount could remain redacted because it was not relevant to the arbitration motion and confidentiality of settlement amounts can encourage dispute resolution. But the court found that the Goldman Defendants had not shown a sufficiently serious potential injury to justify sealing the other terms. The court therefore granted in part and denied in part the letter-motion to seal and ordered a publicly filed version within two days, with redactions limited to those allowed by the opinion.

Because all of Monk’s claims were referred to arbitration, the court considered whether to dismiss or stay the action. No party had requested a stay. The court determined that a stay was preferable to dismissal but also found no reason to keep the case open. It directed the Clerk to administratively close the case, without prejudice to either side seeking to reopen it by letter-motion within 30 days after the arbitration proceedings conclude.

Disposition

Judge Jesse M. Furman granted the Goldman Defendants’ motion to compel arbitration. The opinion did not decide whether Monk’s defamation and employment-interference allegations were true or whether he ultimately would prevail on those claims. The Goldman Defendants’ sealing motion was granted in part and denied in part, and the case was administratively closed pending arbitration.