Goldman, Sachs & Co. v. Golden Empire Schools Financing Authority
764 F.3d 210
2d Cir.2014Background
- Two FINRA arbitration disputes were enjoined in district court due to all-inclusive forum selection clauses requiring litigation in the Southern District of New York.
- In Goldman v. Golden Empire, Golden Empire issued about $125 million of ARS with broker-dealer agreements (2004, 2006, 2007) containing NY forum clauses and merger clauses; FINRA arbitration was commenced in 2012.
- In Citigroup v. NCEMPA, NCEMPA issued ARS with a similar broker-dealer agreement containing an all-actions forum clause; FINRA arbitration was commenced in 2012.
- The district court found the NY forum clauses superseded FINRA Rule 12200 arbitration; preliminary injunctions became permanent judgments.
- The parties appealed, arguing, among other things, about arbitration versus court jurisdiction and the reach of the forum clause.
- This court treated the appeals together and held that the forum selection clauses superseded arbitration under FINRA Rule 12200.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the all-inclusive forum clause supersede FINRA arbitration? | Goldman/Citigroup argue clause overrides Rule 12200 and requires court action. | Golden Empire/NCEMPA contend arbitration remains; clause is not intended to preclude arbitration. | Yes; forum clause supersedes arbitration. |
| Whether the district court had authority to enjoin out-of-district arbitration. | Court has authority to enjoin based on equitable power and jurisdiction over parties. | Arbitration could be compelled only where petition is filed, not necessarily outside district. | Yes; court may enjoin out-of-district arbitration. |
| Whether ‘all actions and proceedings’ includes arbitration for purposes of superseding arbitration. | Phrase covers all actions, including arbitrations, to be brought in NY federal court. | Arbitration is not an action or proceeding under CPLR forms of procedure. | Yes; includes arbitrations, and supersedes FINRA Rule 12200. |
| Is the later forum clause sufficiently specific to imply exclusive court litigation of disputes arising under the broker-dealer agreements? | Clause is specific and mandatory enough to preclude arbitration. | Clause lacks explicit arbitration preclusion and must be interpreted narrowly. | Yes; clause is all-inclusive and supersedes arbitration. |
Key Cases Cited
- Bank Julius Baer & Co. v. Waxfield Ltd., 424 F.3d 278 (2d Cir. 2005) (arbitration agreement superseded by later forum clause if clause precludes arbitration)
- Applied Energetics, Inc. v. NewOak Capital Mkts., LLC, 645 F.3d 522 (2d Cir. 2011) (all-inclusive forum clause precludes arbitration; merger clause reinforces entire agreement)
- Goldman v. City of Reno, 747 F.3d 733 (9th Cir. 2014) (forum selection clauses can supersede arbitration)
- In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d 113 (2d Cir. 2011) (equitable power to stay arbitration; interpretive framework for forum clauses)
- UBS Fin. Servs., Inc. v. W. Va. Univ. Hosp., 660 F.3d 643 (4th Cir. 2011) (discusses enforceability of arbitration agreements and forum clauses)