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Ryan Beck & Co., Inc vs. Campbell

Ryan Beck & Co., Inc. v. Campbell, 2002 U.S. Dist. LEXIS 23627 (N.D. Ill., 12/4/02). Agreement to Arbitrate * Arbitrability * Injunctive Relief * FRCP (Rule 65 “Preliminary Injunction”) * Liability Issues (De Facto Merger).

A preliminary injunction barring a customer from proceeding in arbitration will be granted where there is no agreement to arbitrate between the customer and the moving party and the moving party is not a successor-in-interest to an entity bound to arbitrate. Campbell was a customer of Gruntal & Co. After incurring substantial losses, Campbell transferred his account from Gruntal. Two months later, Gruntal entered into an Asset Purchase Agreement and an Assumption Agreement with Ryan Beck.

Although Ryan Beck assumed certain of Gruntal’s liabilities, it expressly did not acquire “liabilities for litigation, arbitrations or other claims relating to operations [of Gruntal] prior to the Closing Date, whether instituted before or after the Closing Date.”

In response to the filing of a statement of claim, Ryan Beck filed this action seeking an injunction barring Campbell from proceeding with his arbitration claim against it. In granting Ryan Beck’s motion for preliminary injunction, the Court holds that Ryan Beck is likely to succeed on the merits. In so doing, the Court finds that there was no agreement between Campbell and Ryan Beck to arbitrate any dispute.

The Court also rejects Campbell’s arguments that there was a de facto merger or that Ryan Beck is a mere continuation of Gruntal. No continuity of ownership or management is evident, Gruntal continues to exist as a separate and distinct legal entity, albeit in “skeletal” form, and Ryan Beck paid consideration for Gruntal’s assets, including assumption of significant obligations.

Finally, the Court concludes that Ryan Beck will suffer irreparable harm, has no adequate remedy at law and the balancing of harms weighs in its favor, noting that any award against Ryan Beck which would be obtained in arbitration would be unenforceable. (SLC Ref. No. 2003-01-01)



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