Luis v. RBC Capital Markets, LLC, No. 19-2706 (8th Cir. 2020)
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Plaintiffs, former clients of RBC, filed a purported class action suit against RBC for breach of contract, alleging that RBC breached its duties to comply with Financial Industry Regulatory Authority (FINRA) rules and to know the clients' investment profiles.
The Eighth Circuit affirmed the district court's grant of summary judgment to RBC, holding that the plain language of the Client Account Agreement did not create either duty. Applying Minnesota law, the court concluded that the Agreement's unambiguous plain language does not create a contractual duty that RBC comply with FINRA rules. In this case, the "subject to" language does not create a contractual duty. Rather, it is an acknowledgement by clients that RBC will comply with FINRA rules. Furthermore, the "I agree" phrase is an acknowledgment of the terms and conditions and does not create a duty. Finally, the court concluded that the RBC did not breach a contractual duty to know its customers.
Court Description: [Benton, Author, with Shepherd and Kelly, Circuit Judges] Civil Case - Diversity. In breach of contract action brought by clients of RBC Capital Markets, LLC, alleging RBC breached its duty to comply with FINRA rules and know the clients' profiles when it invested in reverse convertible notes, the district court properly granted summary judgment to RBC, concluding the Client Account Agreement did not create a duty. Applying Minnesota law, "subject to" language does not create a contractual duty but rather is an acknowledgment by clients that RBC will comply with FINRA rules. The "I agree" phrase is likewise an acknowledgment of the terms and conditions and does not create a duty. The plain language of the Agreement does not create a duty that RBC "know your customer."
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