Kumaran v. ADM Investor Services, Inc.

Background

The court considered motions filed by Samantha Siva Kumaran, who was proceeding without a lawyer, and joined by Nefertiti Risk Capital Management, LLC (NRCM). The motions sought a preliminary injunction and a temporary restraining order—forms of emergency relief—to stop an arbitration before the National Futures Association involving NRCM and ADM Investor Services, Inc. The arbitration hearing was scheduled to begin on October 23, 2023.

In June 2021, the court had compelled arbitration of NRCM’s claims against ADM Investor Services and stayed Kumaran’s claims while that arbitration proceeded. The arbitration panel later scheduled the hearing and issued orders concerning discovery and related matters, including an October 18 order denying NRCM’s requests for witness subpoenas, orders, and depositions.

Legal standards

The court explained that a preliminary injunction generally requires a showing of likely success on the merits, likely irreparable harm, a favorable balance of hardships, and consistency with the public interest. Irreparable harm means harm that cannot adequately be repaired later. The court described irreparable harm as the most important requirement and stated that failure to establish it can end the preliminary-injunction inquiry without addressing the other requirements.

The court also described the law-of-the-case doctrine. That doctrine generally requires a court to follow its earlier rulings in later stages of the same case unless strong reasons justify changing them.

Discussion

The court stated that the motions did not appear to make a satisfactory showing of irreparable harm because the arbitration hearings had not yet concluded. If the arbitration later produced an adverse award, NRCM could potentially ask the court to vacate that award under the Federal Arbitration Act, if it had a valid legal basis to do so. The court also stated that seeking to stop an arbitration the court had already compelled appeared inconsistent with the law-of-the-case doctrine.

The court further noted that NRCM’s motions had not been signed by its lawyer and therefore did not comply with the federal rule requiring counsel to certify that legal arguments are warranted by existing law or a nonfrivolous argument for changing the law. The court said NRCM’s lawyer could not simply rely on Kumaran, who was proceeding without a lawyer, to make arguments for NRCM. The court was not clear that the lawyer had independently investigated whether NRCM was legally entitled to the emergency relief it sought.

Order

The court did not decide the preliminary-injunction or temporary-restraining-order motions in this order. Instead, Judge Stewart D. Aaron ordered NRCM’s counsel to show cause, in a written filing due by 5:00 p.m. on October 20, 2023, why the plaintiffs’ motions should not be denied for failure to establish irreparable harm and under the law-of-the-case doctrine. Counsel was required to conduct independent legal research and sign the submission under the applicable certification rule.