Broker-Dealer Litigation - Greenberg Traurig LLP

the legislature did not intend the “civil action or proceeding” language in the statute to include
arbitrations based on its exclusion from the definition and the fact that the Arbitration Code was
enacted prior to the statute at issue. Furthermore, the vast majority of state case law interpreted
“proceeding” in the traditional sense, which did not generally include “arbitration.” Thus, the
court affirmed the trial court’s decision on different grounds and held that the Florida statute of
limitations does not apply to arbitrations when the parties have not expressly included a
provision in the arbitration agreement stating it applies. The appellate court also certified the
question to the Florida Supreme Court.
3. Jurisdiction/Estoppel
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UBS Fin. Servs. v. W. Va. Univ. Hosps., Inc., 660 F.3d 643 (2d Cir. 2011).
The Firm appealed the denial of its motion for a preliminary injunction enjoining the
defendants from proceeding with an arbitration before FINRA, and alternatively requiring that
the arbitration proceed in New York County. The underlying dispute involved defendants’
claims relating to the Firm’s alleged fraud in connection with defendants’ issuances of auction
rate securities. The trial court denied the requested injunction, held that a forum selection clause
in one of the parties’ agreements was unenforceable because it conflicted with FINRA rules, and
ordered that the arbitration proceed in West Virginia. On appeal, the Second Circuit held that
defendants were entitled to arbitration because they became the Firm’s “customers” under
FINRA rules when they undertook to purchase auction rate services from the Firm. Further, the
appellate court concluded that the enforceability of the forum selection clause was a procedural
issue for FINRA arbitrators to address and that the district court lacked jurisdiction over that
issue. In reaching these conclusions, the appellate court declined provide a comprehensive
definition of “customer” under Rule 12200, and found that it includes at least a non-broker or
non-dealer who purchases, or undertakes to purchase, a good or service from a FINRA member.
Sacks v. Dietrich, 663 F.3d 1065 (9th Cir. 2011).
Plaintiff appealed the district court’s dismissal of his claims against two arbitrators who
disqualified him from representing a client in a FINRA arbitration. The Ninth Circuit affirmed
the district court’s decision, finding that the lower court correctly held that Plaintiff’s claims
were barred by arbitral immunity. The defendant arbitrators disqualified Plaintiff from the
representation pursuant to FINRA Rule 13208, which provided that “[p]arties may be
represented in an arbitration by a person who is not an attorney, unless…the person is currently
suspended or barred from the securities industry in any capacity.” As it was undisputed that
plaintiff was not an attorney, and also that he was barred from the securities industry in 1991, the
panel disqualified plaintiff from the representation. In reaching this conclusion, the panel based
its authority on Rule 13413, which provided that a “panel has the authority to interpret and
determine the applicability of all provisions under the Code.” In challenging this determination,
plaintiff contended that the arbitrators exceeded the scope of their authority under the Uniform
Submission Agreement, FINRA rules, and California law because FINRA Rule 13208 does not
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