Fifth Circuit: Court-Appointed Receiver may Avoid Arbitration

Originally published by Gene Roberts.

In Janvey v. Alguire, et al., the United States Court of Appeals for the Fifth Circuit held that the district court correctly denied motions to compel arbitration filed by employees of an alleged Stanford Ponzi scheme as to the receiver for the entities involved in the scheme.

According to the court, in an effort to unwind the alleged Ponzi scheme, a receiver was appointed for Stanford-related entities to “preserve corporate resources and recover corporate assets that had been transferred in fraudulent conveyances.” The receiver sued individuals employed by the entities to recover funds transferred by the entities to the employees. The employees moved for arbitration, relying upon arbitration agreements between the entities and the former employees.

The receiver argued that (1) he (more specifically, a Stanford-related bank) did not agree to arbitrate; (2) the arbitration agreements should be rejected as part of the alleged fraudulent scheme; and (3) there is a conflict between arbitratio …

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