Broker-Dealer Litigation - Greenberg Traurig LLP

Plaintiff in fact derived a direct benefit from Defendant’s signing of the Form U-4 Agreement.
The court noted that Defendant did not establish that Plaintiff participated in negotiating the
Form U-4 Agreement, is mentioned in that agreement, received fees as a result of the agreement,
or sought to enforce that agreement against him. Therefore, and because each of Defendant’s
remaining arguments failed, the court determined that the parties were not required to arbitrate
the claims.
Sanders v. Forex Capital Mkts., LLC, 2011 U.S. Dist. LEXIS 137961 (S.D.N.Y. Nov. 29, 2011).
Plaintiff brought a putative class action alleging that the Firm engaged in unlawful and
deceptive practices with regard to its online foreign-exchange trading service in violation of state
and federal law. The Firm moved for an order compelling plaintiff to arbitrate the claims
pursuant to a Client Agreement he entered into when he began using the Firm’s service. During
the course of completing the online application, plaintiff checked a box which provided that any
dispute arising out of or relating to the account shall be resolved by arbitration. Further, the
agreement provided that traders who did not elect to be bound by arbitration were not precluded
from opening an account with the Firm. In reaching the conclusion that the parties were
compelled to arbitrate the claims, the court found that the trader’s affirmative assent to the
arbitration clause, as evidenced by his checking of the box, made the dispute arbitrable so long as
the clause was not unenforceable as a matter of law. Because the court found that the electronic
assent to arbitrate was not unconscionable, either procedurally or substantively, the parties were
compelled to arbitrate the dispute.
McCafferty v. A.G. Edwards & Sons, Inc., 2011 U.S. Dist. LEXIS 89437 (D.N.J. Aug. 11, 2011).
Following an adverse award against him, plaintiff, a former branch manager, filed a
complaint in state court seeking to vacate that award on the grounds that the panel lacked
jurisdiction because there was a “non-public” arbitrator on the panel. According to plaintiff, his
claims required an all public panel because his allegations included a statutory employment
discrimination claim. Under FINRA Rule 13802(c)(2), claims involving a statutory employment
discrimination claim require a panel constituted entirely of public arbitrators unless the parties
agree in writing otherwise. Defendant, the manager’s former employer, contended that
plaintiff’s statement of claim did not include such a discrimination claim, or in the alternative,
that plaintiff did in fact agree in writing to permit the panel to proceed with the non-public
member. The court found that although plaintiff was correct in asserting that his New Jersey
Conscientious Employee Protection Act (“CEPA”) was a civil rights claim, it does not
automatically follow that CEPA is a discrimination statute. The court reasoned that CEPA
protects employee conduct, rather than an employee’s “immutable characteristics” like
employment discrimination statutes. As a result, the court held that Rule 13802(c)(2) did not
apply to plaintiff’s claims, and it was proper to confirm the arbitration award entered against
him.
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