Mastick v. TD Ameritrade, Inc.
209 Cal. App. 4th 1258
| Cal. Ct. App. | 2012Background
- Mastick sues Safris, Oakwood, and TD Ameritrade for professional negligence based on November 2008 home meeting.
- Oakwood and TD Ameritrade petition to compel arbitration; the petitions are denied by the trial court.
- Oakwood’s agreements: California law governs; disputes arbitration under AAA rules; TD Ameritrade’s agreements: Nebraska law governs; FINRA rules.
- The trial court held the CAA is not preempted by the FAA because the parties agreed to California law.
- The trial court found risk of duplicative proceedings and potential conflicting rulings if all claims were litigated in multiple forums.
- The Court of Appeal partially reverses and partially affirms: Oakwood arbitration denial affirmed; TD Ameritrade arbitration denial reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FAA preempt CAA when California law governs arbitration? | Mastick argues FAA preempts state-law arbitration rules when interstate arbitration is involved. | Oakwood/TD Ameritrade contend California choice-of-law governs and FAA does not preempt under those terms. | FAA not preempted when California law governs arbitration. |
| May court refuse or stay arbitration under §1281.2(c) to avoid conflicting rulings? | Consolidation into a single forum is desirable to prevent conflicts. | Risk of duplicative proceedings justifies applying §1281.2(c) to stay or consolidate. | Section 1281.2(c) applies; court may stay or deny arbitration to avoid conflicting rulings. |
| Did California choice-of-law invoke 1281.2(c) for Oakwood claims? | California law applies; governing arbitration under AAA; seeks to avoid conflicts. | California-law clause authorizes applying 1281.2(c) to prevent conflicts. | California choice-of-law provisions invoke §1281.2(c) for Oakwood. |
| Is Nebraska law applicable to TD Ameritrade arbitration and preclude §1281.2(c)? | Nebraska law governs; arbitration under FINRA; no California choice-of-law. | Nebraska choice-of-law precludes California §1281.2(c) applicability. | Nebraska law governs; §1281.2(c) not applicable to preclude arbitration. |
Key Cases Cited
- Cronus Investments, Inc. v. Concierge Services, 35 Cal.4th 376 (Cal. 2005) (invokes California choice-of-law and arbitration rules to trigger CAA)
- Volt Information Sciences v. Leland Stanford Jr. Univ., 489 U.S. 468 (U.S. 1989) (choice-of-law triggers arbitration rules under FAA when applicable)
- Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (U.S. 1995) (general choice-of-law provisions may invoke arbitration rules)
- Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394 (Cal. 1996) (security brokerage arbitration under FAA governs arbitration provisions)
- Southland Corp. v. Keating, 465 U.S. 1 (U.S. 1984) (FAA preempts conflicting state-law arbitration rules)
- Cronus Investments, Inc. v. Concierge Services, 35 Cal.4th 376 (Cal. 2005) (California law governs arbitration and limits use of CAA via §1281.2)
- Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (U.S. 1996) (state-imposed arbitration notice requirements invalid if FAA-governed)
- Aramark Uniform & Career Apparel, Inc. v. Hunan, Inc., 276 Neb. 700 (Neb. 2008) (Nebraska arbitration act does not defeat FAA arbitration)