Lickiss v. Financial Industry Regulatory Authority
208 Cal. App. 4th 1125
Cal. Ct. App.2012Background
- Lickiss petitioned for expungement of CRD records maintained by FINRA, citing FINRA Rule 2080(a) and the court's equitable powers.
- Trial court sustained FINRA’s demurrer, adopting Rule 2080(b)(1) as the sole test for relief and dismissed the petition.
- Lickiss argued the petition sought equitable relief and that balancing equities supported expungement; the record suggested ancient events and a clean current record.
- FINRA argued Rule 2080(b)(1) provided the exclusive standard and the petition failed under that narrow framework; no equitable analysis was invoked.
- FINRA removed the matter to federal court; federal court remanded, noting Rule 2080 provides procedures, not substantive criteria for expungement.
- On appeal, the court reversed the demurrer ruling, remanding for further proceedings, and held equity could govern expungement despite Rule 2080(b)(1).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equity or Rule 2080 governs | Lickiss argues for equitable weighing of interests. | FINRA argues Rule 2080(b)(1) supplies the sole test. | Equity governs; improper to rely only on 2080(b)(1). |
| Whether the trial court abused by applying only 2080(b)(1) | Petition, with equitable facts, warranted balancing rather than rigid rule. | Court properly applied the demurrer framework under 2080(b)(1). | Trial court erred by exclusive reliance on 2080(b)(1). |
| Whether Lickiss stated a valid equitable claim for expungement | The ancient nature of the conduct, current clean record, and public-interest balance support relief. | No substantive standard in 2080 and no equitable basis stated beyond procedural rule. | Yes; pleaded a valid equitable claim. |
Key Cases Cited
- Arce v. Kaiser Foundation Health Plan, Inc., 181 Cal.App.4th 471 (Cal. Ct. App. 2010) (liberal pleading; equitable considerations supported by justice)
- Hirshfield v. Schwartz, 91 Cal.App.4th 749 (Cal. Ct. App. 2001) (equity aims to do justice beyond rigid rules)
- Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163 (Cal. 2000) (weigh competing equities when exercising equitable powers)
- State v. Ambaye, 616 N.W.2d 256 (Minn. 2000) (expungement proper when benefits outweigh public costs)
- Ho v. Hsieh, 181 Cal.App.4th 337 (Cal. Ct. App. 2010) (abuse of discretion standard when equitable powers invoked)
- Sacks v. S.E.C., 648 F.3d 945 (9th Cir. 2011) (SEC authority and FINRA rulemaking context)
- Cassinos v. Union Oil Co., 14 Cal.App.4th 1770 (Cal. Ct. App. 1993) (equity permits flexible relief; not bound by rigid rules)
- Khoury v. Maly’s of California, Inc., 14 Cal.App.4th 612 (Cal. Ct. App. 1993) (demurrers for uncertainty disfavored; clarity may be achieved by discovery)