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Pitlor v. Charles Schwab Corp.

United States District Court, D. Nebraska

June 13, 2018

DAVID PITLOR, Plaintiff,


          Cheryl R. Zwart United States Magistrate Judge

         This matter is before the court on Defendant's Motion to Substitute and Compel Arbitration, (Filing No. 10), Plaintiff's Motion to Strike, (Filing No. 18), and Motion for Sanctions. (Filing No. 22). For the reasons stated below, Plaintiff's motion to strike and motion for sanctions will be denied, and Defendant's motion to compel arbitration and motion to substitute will be granted.


         Plaintiff Pitlor opened a brokerage account with Defendant (“Schwab”) in February of 2018. (Filing No. 1 at CM/ECF p. 6). Pitlor completed a Schwab One Account Application (“Application Agreement”) to open the account and agreed to be bound by the Schwab One Account Agreement (“Account Agreement”). (Filing No. 12-1). The Account Agreement and Application Agreement between Pitlor and Schwab contain an identical arbitration clause which provides, in relevant part:

Any controversy or claim arising out of or relating to (i) this Agreement, any other agreement with Schwab, an instruction or authorization provided by Schwab or the breach of any such agreements, instructions, or authorizations; (ii) the Account, any other Schwab account or Services; (iii) transactions in the Account or any other Schwab account; (iv) or in any way arising from the relationship with Schwab, its parent, subsidiaries, affiliates, officers, directors, employees, agents or service providers (“Related Third Parties”), including any controversy over the arbitrability of a dispute, will be settled by arbitration. . . . Such arbitration will be conducted by, and according to the securities arbitration rules and regulations then in effect of, the Financial Industry Regulatory Authority (FINRA) or any national securities exchange that provides a forum for the arbitration of disputes, provided that Schwab is a member of such national securities exchange at the time the arbitration is initiated. Any party may initiate arbitration by filing a written claim with FINRA or such eligible national securities exchange.

(Filing No. 12-2 at CM/ECF pp. 12-13.; Filing No. 12-3 at CM/ECF p. 58). Under the Account Agreement, the parties further agreed to “giv[e] up [the] right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.” (Filing No. 12-3 at CM/ECF p. 57). Finally, the Account Agreement stated that the “arbitration agreement . . . [would] survive the closure of [the] Account and/or the termination of services rendered under this Agreement.” (Id. at CM/ECF p. 58)

         Disagreements soon arose concerning Pitlor's account funds and the transactions Pitlor made using his account. On April 25, 2018, Schwab terminated Pitlor's account because he was allegedly abusive toward Schwab employees.

         Pitlor filed his complaint against Defendant on May 1, 2018 and has subsequently supplemented and amended his complaint. (Filing Nos. 1 & 6). Pitlor's 60-page pro se Amended Complaint alleges numerous claims including breach of contract, defalcation, fraudulent misrepresentation/concealment, negligent misrepresentations, and privacy/data breach. (Filing No. 6).


         Defendant Schwab's Motion to Substitute the Defendant

         Defendant states that Charles Schwab Corporation has been incorrectly named as defendant in this matter and this court should substitute Charles Schwab & Co., Inc. as the proper defendant. (Filing No. 10). Plaintiff opposes Defendant's motion, arguing that Charles Schwab & Co., Inc. may be added, but not substituted, as a defendant to the above captioned case.

         Based on the information of record, Charles Schwab & Co., Inc. is a registered broker-dealer and provides brokerage services to clients. Charles Schwab Corporation is not a registered broker-dealer and does not engage in the brokerage business. Plaintiff's accounts were all held with Charles Schwab & Co. Inc. The undersigned magistrate judge finds that Charles Schwab & Co., Inc. is the proper Defendant for Plaintiff's claims and will grant the motion to substitute.[1]

         Plaintiff Pitlor's Motion to Strike Defendant's Brief in Support

         Pitlor moves to strike Schwab's brief filed in support of its motion to substitute and to compel arbitration. (Filing No. 18). Pitlor essentially argues Defendant's brief should be stricken because it does not address the claims within his complaint and because it is an attempt to cause delay and “impede justice.” However, not every motion or brief has to address the validity of claims and Pitlor fails to show that Schwab's brief causes him any ...

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