Vazquez v. Pershing LLC et al

Filing 26

OPINION AND ORDER granting 16 MOTION to dismiss and to Compel, filed by Pershing LLC, Santander Securities Corporation. We DISMISS Plaintiff's claims against Movants without prejudice. The matter shall be placed in arbitration, the court retai ning jurisdiction to enforce any award. In addition, We ORDER Plaintiff to show cause, on or before June 30, 2010, for the failure to identify and serve unknown defendants. Otherwise, the case against said unknown defendants will be dismissed. Show Cause Response due by 6/30/2010. Signed by Chief Judge Jose A Fuste on 6/17/2010.(mrj)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 U R B A N A VÁZQUEZ, Plaintiff, v. P E R S H IN G , LLC, et al., Defendants. U N I T E D STATES DISTRICT COURT D I S T R IC T OF PUERTO RICO C i v il No. 09-2137 (JAF) O P I N I O N AND ORDER P la in tif f , Urbana Vázquez, brings the present action against Defendants, Pershing, LLC (" P e rs h in g " ); Santander Securities Corp. ("Santander"); and various unknown parties, alleging v io latio n s of the Consumer Credit Protection Act, 15 U.S.C. §§ 1601­1693r; the Fair Credit B illin g Act, 15 U.S.C. §§ 1666­1666j; and Article 1802 of the Puerto Rico Civil Code, 31 L .P .R .A . § 5141 (1990). (Docket No. 1.) Defendants Santander and Pershing ("Movants") m o v e to compel arbitration under Plaintiff's contractual obligations and to dismiss under F e d e r a l Rule of Civil Procedure 12(b)(1) and (b)(6). (Docket No. 16.) Plaintiff opposes. (D o c k e t No. 22.) Movants reply in support of the motion to dismiss. (Docket No. 25.) I. F a c tu a l and Procedural Synopsis In April 2000, Plaintiff opened a brokerage account managed by Movants. Account a p p lic a tio n s by Plaintiff for both Santander and Pershing contained broadly-worded arbitration c la u se s. (Docket Nos. 16-2; -3.) Plaintiff alleges that, at some point, a third party opened Civil No. 09-2137 (JAF) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 -2 - v a rio u s credit-card accounts under her name and without her authorization. Movants then a u th o riz e d debits from Plaintiff's account to be paid out to the various fraudulent accounts that h a d been created. Plaintiff alleges that Movants failed to verify the credit-card account holder re q u e stin g payment in her name, resulting in over $54,000 in unauthorized debits from her a c c o u n t. II. S t a n d a r d for Motion to Compel Arbitration T h e Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1­16, governs the enforcement of m o s t arbitration agreements by federal courts and embodies a federal policy strongly favoring th e enforcement of arbitration agreements. See, e.g., Campbell v. Gen. Dynamics Gov't Sys. C o rp ., 407 F.3d 546, 551­52 (1st Cir. 2005) (discussing federal policy). In granting a motion to compel arbitration, we must determine that an arbitration agreement exists; that the claims b e f o re us fall within the scope of said agreement; and that the movant has not waived its arbitral rig h ts. See Combined Energies v. CCI, Inc., 514 F.3d 168, 171 (1st Cir. 2008). "[A]ny doubts c o n c ern in g the scope of arbitrable issues should be resolved in favor of arbitration, whether the p rob lem at hand is the construction of the contract language itself, or an allegation of waiver, d e la y or a like defense to arbitrability." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 4 6 0 U.S. 1, 24­25 (1983); see also Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. U n iv ., 489 U.S. 468, 475­76 (1989) ("[D]ue regard must be given to the federal policy favoring a rb itra tio n , and ambiguities as to the scope of the arbitration clause itself resolved in favor of a r b i tr a t io n . " ) . Civil No. 09-2137 (JAF) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 -3 - If we grant a motion to compel arbitration, we must stay proceedings on all arbitrable c la im s . See 9 U.S.C. § 3. When we exercise jurisdiction under 28 U.S.C. § 1331, a finding that a ll federal claims are arbitrable, such that we have only supplemental jurisdiction over the re m a in in g claims, allows us to dismiss the case in its entirety. See Bercovitch v. Baldwin Sch., In c ., 133 F.3d 141, 156 n.21 (1st Cir. 1998). I I I. A n a ly sis P la in tif f has not challenged Movants' assertion that the FAA governs the interpretation o f this arbitration clause. Plaintiff's sole argument against the enforceability of the arbitration a g re e m e n ts with Movants is that her claims fall outside the scope of those agreements. (Docket N o . 22.) Plaintiff has neither challenged the validity of the arbitration clause under Puerto Rico la w nor argued that Movants waived their contractual right to arbitration. Thus, we turn to the s c o p e of the arbitration agreements. T h e Santander agreement, according to Plaintiff, is for "the purchase and sale of s e c u ritie s " only and does not, "in any way, regulate matters related to debits in said account." (D o c k e t No. 22 at 3.) The arbitration clause, however, is broadly worded: "It is agreed that any c o n tro v e rsy between us arising out of your business or this agreement, shall be submitted to a rb itra tio n . . . ." (Docket No. 16-2 at 2.) A brokerage account, by nature, requires debiting as s e c u ritie s are bought. Such debits obviously arise out of Santander's business as an investment b a n k . And any doubt as to whether this agreement covers fraudulent debits by third parties must b e resolved in favor of arbitration. See Moses H. Cone Mem'l Hosp., 460 U.S. at 24­25. Civil No. 09-2137 (JAF) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 -4 - P lain tiff concedes that her arbitration agreement with Pershing "clearly deals with d e b its ," but argues that it excludes the fraudulent, unauthorized debits at issue here. (Docket N o . 22 at 3.) As with Santander, Pershing's arbitration clause is broadly worded: "It is agreed th a t any controversy between or among the account holder, Pershing, and introducing financial institut io n or any of them arising out of Pershing's or the introducing Financial Institution's b u s in e ss or this agreement shall be submitted to arbitration . . . ." (Docket No. 16-3 at 9.) The S u p r e m e Court has repeatedly held that we must enforce arbitration clauses "unless it may be s a id with positive assurance that the arbitration clause is not susceptible of an interpretation that c o v e rs the asserted dispute." AT&T Techs., Inc. v. Commc'ns Workers, 475 U.S. 643, 650 (1 9 8 6 ) (quoting United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582­83 (1 9 6 0 )). Given the broad language of the clause, Plaintiff's contention that this arbitration c la u se does not cover unauthorized debits to her account by third parties is unavailing. J u ris d ic tio n in this case is premised on federal claims, which we find arbitrable. T h e re f o re , we may dismiss the case, including supplemental claims, against Movants. See B e rc o v itc h , 133 F.3d at 156 n.21. Over 120 days have passed since the filing of this action, d u rin g which time Plaintiff has neither identified nor served unknown defendants. Thus, we m a y also dismiss claims against unknown defendants if Plaintiff fails to show good cause for h e r delay. See Fed. R. Civ. P. 4(m). Civil No. 09-2137 (JAF) 1 2 3 4 5 6 7 8 9 10 11 12 IV . C o n c lu s io n -5 - F o r the reasons stated herein, we hereby DISMISS Plaintiff's claims against Movants w ith o u t prejudice. The matter shall be placed in arbitration, the court retaining jurisdiction to e n f o rc e any award. In addition, We ORDER Plaintiff to show cause, on or before June 30, 2 0 1 0 , for the failure to identify and serve unknown defendants. Otherwise, the case against said u n k n o w n defendants will be dismissed. I T IS SO ORDERED. S a n Juan, Puerto Rico, this 17 th day of June, 2010. s/José Antonio Fusté JOSE ANTONIO FUSTE Chief U.S. District Judge

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