Anthony Lee Turbeville v. Financial Industry Regulatory Authority
874 F.3d 1268
| 11th Cir. | 2017Background
- FINRA is a self-regulatory organization (SRO) created under the Securities Exchange Act of 1934; it promulgates SEC‑approved internal rules and disciplines member brokers, and discloses certain investigatory materials via BrokerCheck (including Wells notices).
- In 2009 FINRA disciplined Antony Turbeville for securities violations; Turbeville appealed through FINRA and then to the SEC, later withdrawing his SEC appeal.
- FINRA later issued a Wells notice relating to Turbeville’s filing of a state defamation suit against former customers; the Wells notice briefly appeared on his BrokerCheck but was later removed after Turbeville disputed it.
- Turbeville sued in Florida state court alleging defamation, abuse of process, tortious interference, and conspiracy, asserting FINRA exceeded its authority and violated its own internal rules.
- FINRA removed the suit to federal district court; the district court denied remand and granted FINRA’s motion to dismiss, holding that the suit arose under the Exchange Act and that no private right of action exists to sue an SRO for violating its internal rules.
- The Eleventh Circuit affirmed: federal jurisdiction was proper because the complaint necessarily raised federal questions about FINRA’s SEC‑approved rules, and Congress did not create a private damages remedy against SROs for such claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the case "arises under" the Exchange Act (so removal to federal court was proper) | Turbeville: claims are state torts and belong in state court | FINRA: claims necessarily require interpretation of SEC‑approved FINRA rules and federal law, so federal jurisdiction exists | Held: Removal proper — complaint necessarily raises disputed federal issues tied to Exchange Act and SRO rules |
| Whether a private right of action exists to sue an SRO for violating its internal rules | Turbeville: state tort claims may proceed to remedy FINRA’s alleged rule violations and disclosures | FINRA: Exchange Act and its administrative/appeal processes are the exclusive remedies; Congress did not create a private damages remedy | Held: No private right of action exists; dismissal appropriate |
| Whether state-law remedies can coexist with the Exchange Act’s administrative scheme | Turbeville: state tort remedies should be available and do not implicate federal exclusivity | FINRA: allowing state tort suits would undermine uniform federal securities regulation and the Exchange Act’s remedial scheme | Held: Allowing such suits would disrupt the federal regulatory scheme; Congress did not intend that result |
| Whether supplemental jurisdiction could preserve any state claims | Turbeville: some state claims might not require federal resolution and should remain in court | FINRA: federal question predominates; any related state claims are ancillary | Held: Even if some claims were state-law, district court had supplemental jurisdiction; dismissal stands because no federal cause of action exists |
Key Cases Cited
- Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 578 U.S. _ (2016) (federal jurisdiction under Exchange Act §27(a) mirrors §1331 arising‑under test)
- Grable & Sons Metal Prods. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) (federal‑question jurisdiction exists when state claim necessarily raises a substantial, disputed federal issue)
- Touche Ross & Co. v. Redington, 442 U.S. 560 (1979) (absence of explicit congressional creation of a private right of action is strong evidence no private remedy exists)
- United Mine Workers of Am. v. Gibbs, 383 U.S. 715 (1966) (supplemental jurisdiction and common nucleus of operative fact doctrine)
- Fiero v. Financial Industry Regulatory Auth., Inc., 660 F.3d 569 (2d Cir. 2011) (discussing SEC approval of FINRA procedural rules and SRO disciplinary scheme)
- MM&S Fin., Inc. v. Nat’l Ass’n of Sec. Dealers, Inc., 364 F.3d 908 (8th Cir. 2004) (no private right of action against NASD for violation of internal rules)