Sandru v. TD Ameritrade, Inc.
Filing
53
MEMORANDUM DECISION & ORDER Plaintiff's Motion to Reopen Case (Dkt. 33 ) is DENIED. Defendant's Motion to Confirm the Arbitration Award (Dkt. 35 ) isGRANTED. Defendant's Motion for Leave to File Sur-Reply (Dkt. 47 ) is MOOT. Defendants Motion for Leave to File Sur-Reply (Dkt. 52 ) is MOOT. Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
PATRICK SANDRU,
Plaintiff,
Case No. 1:13-cv-00076-REB
v.
MEMORANDUM DECISION
AND ORDER
TD AMERITRADE, INC.,
Defendant.
Pending before the Court are Plaintiff Patrick Sandru’s Motion to Reopen Case
(Dkt. 33), Defendant TD Ameritrade, Inc.’s Motion to Confirm the Arbitration Award
(Dkt. 35), Defendant’s Motion for Leave to File Sur-Reply (Dkt. 47), and another Motion
for Leave to File Sur-Reply (Dkt. 52), filed by Defendant the day before the Court
entered this Order.
BACKGROUND
On January 17, 2013, Plaintiff Patrick Sandru (“Sandru”), appearing pro se, filed a
Complaint in Idaho state small claims court, seeking to require Defendant TD
Ameritrade, Inc. (“Ameritrade”) to deliver physical certificates of Bancorp International
Group Inc. (“Bancorp”) stock he purchased for $609.95 through his Ameritrade account.
Pl.’s Rebuttal, p. 2 (Dkt. 12). Sandru’s Complaint alleged, in full:
MEMORANDUM DECISION & ORDER - 1
On 08/30/05 I bought 30,000 shares in Bancorp International
Group Inc. through my broker TD Ameritrade Inc. On
09/27/11 I asked for a certificate for purchased shares and this
was refused. I have asked several times since then and all my
requests have been refused. I asked for a refund and that too
was refused on the grounds that my trades were good and
valid. Now I want a physical certificate for my shares.
Daniels Declr., Ex. 1. See also Pl.’s Rebuttal, p. 1 (Dkt. 12). Ameritrade timely sought
removal of Sandru’s Complaint to this Court on February 13, 2013, asserting that
“[a]lthough Plaintiff’s complaint is perfunctory, [he] appears to assert a right to delivery
of physical shares of stock pursuant to SEC Rule 15c3-3 . . .” Notice of Removal, p. 2
(Dkt. 1).
Despite Sandru’s objection (Dkt. 24), the Court found removal proper in its
September 17, 2013 Memorandum Decision and Order (Dkt. 32). Also in that Order, the
Court granted Ameritrade’s Motion to Compel Arbitration (Dkt. 7) and administratively
closed the case, subject to re-opening by either party “if any issues related to the
arbitration arise that can appropriately be brought to the Court for resolution.” (Dkt. 32).
The parties submitted to binding arbitration with the Financial Industry Regulatory
Authority (“FINRA”) in October, 2013. Sandru requested relief for: $1159.90 in
compensatory damages; $48,000 in punitive damages; $600 in arbitration costs; and
specific performance ordering Ameritrade to “[c]ease and desist ownership rights
violation” and “[r]egister and certify 60,000 [Bancorp] shares.” Daniels Dec., Ex. 1, ¶
35., p. 8 (Dkt. 36, Att. 1). On August 5, 2014, the arbitrator denied Sandru’s claims “in
their entirety,” including “all other relief requests.” Id., Ex. 2, p. 1 (Dkt. 35-2, p. 44).
MEMORANDUM DECISION & ORDER - 2
On October 9, 2014, Sandru filed the at-issue Motion to Reopen, claiming “the
arbitrator failed to enforce [Sandru’s] ownership rights.” (Dkt. 33, p.1). Since filing that
Motion, Plaintiff has submitted numerous briefs and documents, many of which are not
allowed for by the Court’s Rules. See, e.g., Dkts. 39, 42, 43. However, the Court has
considered Sandru’s arguments, which focus on his dissatisfaction with the arbitrator’s
decision, his insistence that this Court may provide relief despite the arbitration award,
and his argument that he should prevail on the merits because Ameritrade has deprived
him of a property right guaranteed by the Constitution. The Court also has considered
Ameritrade’s appropriately submitted responses to Sandru’s extra filings. Although less
attention has been paid by the parties, also at issue is Ameritrade’s Motion to Confirm the
Arbitration Award.
The Court has considered the pending disputes consistent with the limited review
permitted to a federal court in reviewing an arbitration award, and with due regard to the
parties’ relative burdens of proof in such a setting. For the reasons described to follow,
the Court will confirm the arbitration award and deny Sandru’s request to reopen the case.
MEMORANDUM DECISION & ORDER - 3
DISCUSSION
A.
Legal Standards
A federal court’s review of an arbitration award under the Federal Arbitration Act
(“FAA”) is “extremely limited.” G.C. & K.B. Invs., Inc. v. Wilson, 326 F.3d 1096, 1105
(9th Cir. 2003). “Neither erroneous legal conclusions nor unsubstantiated factual findings
justify federal court review of an arbitral award . . . . “ Bosack v. Seward, 586 F.3d 1096,
1102 (9th Cir. 2009) (internal quotation marks omitted). Rather, the FAA limits the
vacatur of an award to four circumstances: (1) where the award was procured by
corruption, fraud, or undue means; (2) where there was evident partiality or corruption in
the arbitrators; (3) where the arbitrators were guilty of any misbehavior by which the
rights of the parties have been prejudiced; or (4) where the arbitrators exceeded their
powers. 9 U.S.C. § 10(a). “Section 10(a)’s limited grounds are designed to preserve due
process but not to permit unnecessary public intrusion into private arbitration
procedures.” U.S. Life Ins. Co. v. Superior Nat. Ins. Co., 591 F.3d 1167, 1173 (9th Cir.
2010) (citation and internal quotation marks omitted). “The burden of establishing
grounds for vacating an arbitration award” is on Sandru as “the party seeking it”. Id.
In considering Sandru’s burden, the Court is mindful that he is appearing pro se in
this case. However, that status “does not relieve [Sandru] of the burden of alleging
sufficient facts on which a recognized legal claim could be based.” Shaw v. Lehman
Bros. Bank, FSB, CV09–40–S–BLW, 2009 WL 1521566 *1 (D.Idaho May 28, 2009)
(citing Kerr v. Wanderer & Wanderer, 211 F.R.D. 625, 629 (D.Nev. 2002)). Although
MEMORANDUM DECISION & ORDER - 4
the Court has afforded Sandru “the benefit of any doubt,” Shaw, 2009 WL 1521566 *1
(citing Wanxia LIAO v. Ashcroft, No. C 08–2276 PJH, 2009 WL 636116, *2 (N.D.Cal.
2009)), it also has applied the appropriate legal standards and requirements for vacating
an arbitration award.
B.
Sandru Has Not Identified Any Grounds That Would Allow This Court to
Reopen This Case and Vacate the Arbitration Award
Sandru’s Motion to Reopen and associated briefing primarily focus on the merits
of his claims; his burden initially, however, is to establish a basis for vacating an FAA
arbitration award. He asserts that his “statutorily created property rights” and
Ameritrade’s “statutory obligations remain intact, but unenforced.” Dkt. 33, p. 2. He
relies on the Fifth Amendment1 and the Idaho Constitution to argue that Ameritrade
deprived him of a state created property right by failing to issue certificates for his
Bancorp stock and make Sandru a “directly registered shareholder”. See Dkt. 34, pp. 2-3.
Sandru’s briefing also reiterates his argument that his claims arise under state law and are
not barred by the statute of limitations. Id. at pp. 3-9.
However, this case has gone through binding arbitration and the only relevant
issues under applicable law are whether one of four circumstances exists to allow this
Court to vacate the arbitration award, e.g., whether (1) the award was procured by
1
Even if Sandru’s constitutional claims could properly be considered, the Court
notes that there is no suggestion that his claims have merit in light of the fact that the
Fifth Amendment due process clause applies to conduct of the federal government. See,
e.g., Bingue v. Prunchak, 512 F.3d 1169, 1174 (9th Cir. 2008).
MEMORANDUM DECISION & ORDER - 5
corruption, fraud, or undue means; (2) there was evident partiality or corruption in the
arbitrators; (3) the arbitrators were guilty of any misbehavior by which the rights of the
parties have been prejudiced; or (4) the arbitrators exceeded their powers. 9 U.S.C. §
10(a). None of Sandru’s arguments demonstrates any of these circumstances.
Importantly, the Court may not review an arbitration award for “erroneous legal
conclusions [or to determine if there were] unsubstantiated factual findings.” Bosack, 586
F.3d at 1102 (internal quotation marks omitted). Yet, that is precisely what Sandru is
asking the Court to do – reconsider the merits of his substantive legal arguments – but the
“FAA provides no authorization for a merits review.” Biller v. Toyota Motor Corp., 668
F.3d 655, 664 (9th Cir. 2012).
In a response memorandum, Sandru raises an additional argument that the
arbitration award is “empty” because the arbitrator did not provide a reason for his
decision and because the arbitrator has no authority to deprive plaintiff of “his property
right”.2 Dkt. 37, p. 3. Essentially, Sandru argues that the arbitrator did not have authority
to issue the arbitration decision.3 To the extent Sandru is attempting to argue that the
2
Sandru argues that “he has not asked for the award to be vacated because the
award is empty, there is nothing to vacate.” Pl.’s Mem. (Dkt. 37, p. 2).
3
Sandru also argues that the injunctive relief he requests is not available in
arbitration, but only through the Court, see Dkt. 43, because Ameritrade took this position
in other litigation, see Dkt. 43-2, and because rules from the Securities Exchange
Commission do not allow for an injunction to be issued to enforce certain SEC rules.
First, Ameritrade did not argue that an arbitrator cannot provide for injunctive relief, but
rather that it could not provide the relief ordered in that particular case. Second, Sandru
does not point the Court to binding authority (from a court order or opinion) to support
MEMORANDUM DECISION & ORDER - 6
arbitrator exceeded his powers, that requires the arbitrator to have not “merely
interpret[ed] or appl[ied] the governing law incorrectly,” the award must be “completely
irrational, or exhibit[] a manifest disregard of law.” Schoenduve Corp. v. Lucent
Technologies, Inc., 442 F.3d 727, 731 (9th Cir. 2006) (citation and internal quotation
marks omitted). Additionally, “[a]rbitrators are not required to set forth their reasoning
supporting an award.” Bosack v. Soward, 586 F.3d 1096, 1104 (9th Cir. 2009).4
Moreover, to demonstrate that the arbitrator acted with manifest disregard, Sandru, as
“the moving party must show that the arbitrator underst[oo]d and correctly state[d] the
law, but proceed [ed] to disregard the same.” Bosack v. Soward, 586 F.3d 1096, 1104-05
(9th Cir. 2009) (citations and internal quotation marks omitted; alterations in original).
“[T]here must be some evidence in the record, other than the result, that the arbitrators
were aware of the law and intentionally disregarded it.” Id. (quoting Lincoln Nat’l Life
Ins. Co. v. Payne, 374 F.3d 672, 675 (8th Cir. 2004) (internal quotation marks omitted).
Sandru has failed to point to any evidence of this in the record.
Finally, Sandru relies on other recent cases in which individuals similarly situated
to him have prevailed on similar claims in arbitration. Ameritrade points out that there
this position. See also Dkt. 44, pp. 5-7 (discussing FINRA rules and relevant case law).
4
Indeed, one arbitration award issued in favor of similarly-situated plaintiffs
against Ameritrade, on which Sandru relies to support his argument that the arbitration
award in this case should be overturned, is very similar in format and brevity to the
arbitration award in this case, except that Ameritrade was on the losing end of that
particular award. See, e.g., Dkt. 39-2 (Kelley v. TD Ameritrade, Inc., Case No. 1401410)..
MEMORANDUM DECISION & ORDER - 7
are two cases in which arbitrators have required Ameritrade to deliver stock certificates,
but in over 50 other cases, arbitrators have rejected claims similar to Sandru’s. See Dkt.
50, p. 4. Moreover, the Haviland case, on which Sandru relies, was a case in which the
individual seeking issuance of stock certificates was seeking to confirm an arbitration
award in his favor. See Haviland v. TD Ameritrade, Inc., CV15-00611-PHX-NVW (D.
Az. Aug. 10, 2015); Dkt. 49, Ex. XYZ. The court confirmed the award. Here, however,
Sandru is challenging the arbitration award issued in favor of Ameritrade, and Sandru
bears the burden of demonstrating the award is improper. The fact that another court
upheld an arbitration award against a challenge by Ameritrade does not mean Sandru has
met his burden here to demonstrate the existence of one of the circumstances allowing the
Court to overturn the particular arbitration award in this case.
C.
The Arbitration Award is Confirmed.
The Court “must affirm an order to confirm an arbitration award unless it can be
vacated, modified, or corrected as prescribed by the FAA.” Schoenduve Corp. v. Lucent
Technologies, Inc., 442 F.3d 727, 731 (9th Cir. 2006) (citing Kyocera Corp. v.
Prudential–Bache Trade Servs., Inc., 341 F.3d 987, 1000 (9th Cir.2003) (en banc)
(“hold[ing] that a federal court may only review an arbitral decision on the grounds set
forth in the [FAA]” and that the “parties have no power to alter or expand those
grounds”)). As discussed above, the Court may vacate an award only if the arbitrator
engages in misbehavior that prejudices a party, or if the arbitrator exceeds his powers in
rendering such an award. 9 U.S.C. § 10(a)(3)-(4). Sandru has not met his burden to
MEMORANDUM DECISION & ORDER - 8
satisfy any of the grounds specified in the FAA for a court to vacate or modify the
arbitration award, and the award must be confirmed.
ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1)
Plaintiff’s Motion to Reopen Case (Dkt. 33) is DENIED.
2)
Defendant’s Motion to Confirm the Arbitration Award (Dkt. 35) is
GRANTED.
3)
Defendant’s Motion for Leave to File Sur-Reply (Dkt. 47) is MOOT.
4)
Defendant’s Motion for Leave to File Sur-Reply (Dkt. 52) is MOOT.
DATED: September 22, 2015
Honorable Ronald E. Bush
U. S. Magistrate Judge
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