Christopher Laver v. Credit Suisse Securities (Usa)
976 F.3d 841
9th Cir.2020Background
- Laver was a financial adviser in Credit Suisse Securities USA’s (CSSU) Private Banking Division; his employment agreement entitled him to deferred compensation except on resignation or termination for cause.
- CSSU entered a recruiting agreement with Wells Fargo and shut down its advisory business; deferred compensation was paid only to advisers hired by Wells Fargo, leaving Laver unpaid.
- Laver filed a putative class action alleging breach of contract and related state-law claims; CSSU invoked an Employee Dispute Resolution Program (EDRP) that contains an arbitration clause and a broad class-action waiver.
- CSSU moved to dismiss in favor of arbitration under the EDRP; the district court compelled arbitration, rejecting Laver’s argument under FINRA Rule 13204(a)(4).
- Laver appealed, arguing FINRA Rule 13204(a)(4) prohibits CSSU (a FINRA member) from compelling arbitration of claims that are the subject of a putative class action; the Ninth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FINRA Rule 13204(a)(4) bars enforcement of CSSU’s class-action waiver | Laver: Rule 13204 prohibits a FINRA member from enforcing any arbitration-related term that would remove class claims from a class or putative class action, so the EDRP’s waiver is unenforceable | CSSU: Rule 13204 prohibits only enforcement of agreements to arbitrate class claims, not separate class-waiver promises; the waiver is severable and enforceable | The Rule does not clearly prohibit class waivers; the waiver is distinct from an arbitration agreement and is enforceable |
| Whether Rule 13204 is “contrary” to the FAA such that it displaces the FAA and invalidates class waivers | Laver: The Rule’s restriction on arbitration of class claims effectively prevents class waivers and so should govern over FAA | CSSU: Even if Rule 13204 limits arbitration of class claims, it does not clearly displace the FAA nor mention class waivers, so it cannot invalidate them | The Rule is not sufficiently clear or manifest to override the FAA; it does not bar class waivers |
| Whether the presence of a class waiver inside an arbitration agreement makes it invalid under Rule 13204 | Laver: Because the waiver is included in the EDRP (which contains the arbitration clause), the Rule’s ban on enforcing arbitration agreements covering class claims should extend to the waiver | CSSU: The contractual promise not to pursue class litigation is conceptually distinct and severable from the arbitration clause; Rule 13204 targets agreements to arbitrate, not waivers | Court: Distinctness and severability mean Rule 13204’s text and final sentence confirm it does not invalidate class waivers embedded in arbitration documents |
Key Cases Cited
- Cohen v. UBS Fin. Servs., Inc., 799 F.3d 174 (2d Cir. 2015) (held Rule 13204 does not bar class waivers and treated waiver as distinct from arbitration agreement)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (state rules invalidating class-waivers can conflict with FAA by requiring classwide arbitration)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (displacement of FAA requires a clear and manifest congressional command)
- CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012) (FAA supremacy can be overridden only by clear congressional command)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitration provision is severable from contract)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (arbitration provisions severable from remainder of contract)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (courts may compel arbitration only for disputes the parties agreed to submit)