Teachers Insurance and Annuity Insurance Association of America v. Adair

Background

TIAA alleged that Jarrett Adair breached a Voluntary Separation Agreement by soliciting TIAA customers while working at Edward Jones. Adair worked as a Wealth Management Advisor in TIAA’s Lewisville, Texas, office from 2013 until 2020. He had signed a Confidentiality and Non-Solicitation Agreement during onboarding in 2013 and the Voluntary Separation Agreement when he left TIAA in 2020.

Adair moved to compel arbitration and to stay the federal case while arbitration proceeded. He relied on language in the onboarding agreement, the separation agreement, and the Financial Industry Regulatory Authority’s (FINRA) arbitration rules. Adair argued that he had been employed by both TIAA and TIAA-CREF Individual & Institutional Services, LLC (TC Services), a wholly owned TIAA subsidiary, and that TIAA therefore had to honor TC Services’ FINRA arbitration obligations. TIAA argued that neither agreement contained an arbitration requirement and that there was no basis for binding TIAA to obligations belonging to its subsidiary.

Court’s analysis

Under the Federal Arbitration Act, a court considering a motion to compel arbitration must determine whether the parties agreed to arbitrate and whether the agreement covers the dispute. The court applied New York contract law, under which the party seeking arbitration must prove that a valid arbitration agreement exists.

The court found that the relevant parties were TIAA and Adair. Although the documents did not make Adair’s employment relationship with TIAA entities perfectly clear, the Voluntary Separation Agreement identified TIAA as his employer, and TIAA alone asserted damages for the alleged breach. The court therefore did not need to definitively decide which TIAA entities employed Adair during every period of his employment.

The court rejected Adair’s argument that TIAA was independently subject to FINRA arbitration. The court stated that TIAA was not a FINRA member or associated person. It also rejected theories that TC Services’ FINRA obligations applied to TIAA through incorporation by reference, agency, alter ego, or direct-benefits estoppel. The court found that Adair had not shown the facts required to treat TIAA and TC Services as legally interchangeable or to establish that TIAA directly accepted benefits from an agreement containing an arbitration clause.

The court then examined the two agreements. It held that the onboarding agreement did not itself require arbitration. Its language recognized that an independent arbitration agreement might exist but did not create one. The separation agreement likewise did not clearly require arbitration. Although it referred once to an “action, arbitration, proceeding, or dispute” and contained a provision submitting disputes to New York courts, it did not clearly agree to arbitrate the claims in this case. The court also rejected Adair’s argument that the separation agreement incorporated a separate FINRA arbitration obligation.

Disposition

The court concluded that TIAA and Adair had not agreed to arbitrate these claims. It denied Adair’s motion to compel arbitration and directed the Clerk to terminate the motion at docket entry 27. The court also ordered the parties to confer and submit a proposed case management plan by March 31, 2023.