United States District Court, D. Nebraska
MEMORANDUM AND ORDER
R. ZWART UNITED STATES MAGISTRATE JUDGE.
matter is before the court on Defendant's Motion to
Compel Arbitration and Stay Proceedings. (Filing No.
10). For the reasons stated below, Defendant's
motion will be granted.
above-captioned case is Plaintiff's second lawsuit
against Charles Schwab Corporation (“Schwab”). On
June 13, 2018, the court ruled that Plaintiff's first
lawsuit, David Pitlor v. Charles Schwab Corporation,
8:18CV196, must be submitted to arbitration. (8:18CV196,
Filing No. 26).
March 11, 2019, David Pitlor (“Pitlor”) had not
filed a Statement of Claim or any other document initiating
arbitration with FINRA. (8:18CV196, Filing No. 36).
Instead, on March 5, 2019, he filed the above-captioned case.
the prior lawsuit, Plaintiff claims that after he opened a
Schwab brokerage account, Schwab unlawfully removed funds
from Plaintiff's accounts and altered records to conceal
any evidence of this misconduct. Plaintiff alleges claims for
breach of contract, fraudulent misrepresentation and/or
concealment, and negligent misrepresentation. Pitlor alleges
Defendant violated the Electronic Funds Transfer Act and
federal usury law, and it erroneously debited his account,
engaged in erroneous accounting methods, wrongfully froze and
closed his account, and committed fraud by concealing or
misrepresenting its conduct in mishandling Plaintiff's
assets. (Filing No. 1). Defendant again moves to
compel arbitration of Plaintiff's claims.
completing the online Schwab One Account Application
(“Application Agreement”) to open his account,
Pitlor agreed to be bound by the Schwab One Account Agreement
(“Account Agreement”). (Filing No. 12-1, at
CM/ECF pp. 3-4). 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 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.” (Filing No. 12-3 at
CM/ECF p. 58).
is favored. This court's role is to engage in a limited
inquiry to “determine whether there is a valid
agreement to arbitrate and whether the specific dispute at
issue falls within the substantive scope of that
agreement.” Larry's United Super, Inc. v.
Werries, 253 F.3d 1083, 1085 (8th Cir. 2001). If the
court so finds, Section 3 of the FAA requires a stay of
proceedings subject to an arbitration agreement, and Section
4 empowers the court to compel the parties to proceed with
arbitration. 9 U.S.C. §§ 3, 4.
“The party resisting arbitration bears the burden of
demonstrating the motion to compel arbitration should be
denied.” Green Tree Financial Corp. -Alabama v.
Randolph, 531 U.S. 79, 91 (2000).
is a matter of contract and a party cannot be required to
submit to arbitration any dispute which [it] has not agreed
so to submit.” AT & T Technologies v.
Communications Workers of Am., 475 U.S. 643, 648 (1986);
Volt Information Sciences v. Board of Trustees, 489
U.S. 468, 479 (1989) (stating Arbitration is “a matter
of consent, not coercion.” Accordingly, if a party has
not “agreed to arbitrate, the courts have no authority
to mandate that they do so.”); see also Churchill
Environmental and Indus. Equity Partners, L.P. v Ernst &
Young, L.L.P., 643 N.W.2d 333, 336
(Minn.Ct.App. 2002) (citing AgGrow Oils, L.L.C. v.
Nat'l Union Fire Ins. Co. of Pittsburg, PA, 242 F.3d
780, 782 (8th Cir. 2001)). When deciding whether to compel
arbitration, a two-part test is applied. USW,
AFL-CIO-CLC v. Duluth Clinic, Ltd., 413 F.3d 786,
788 (8th Cir. 2005). The court must first decide whether a
valid agreement to arbitrate exists. First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995). If
so, the court must then determine if the parties' dispute
falls within the scope of the arbitration agreement. AT
& T Technologies, 475 U.S. at 649. “An order
to arbitrate the particular grievance should not be denied
unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation
that covers the asserted dispute.” USW, 413
F.3d at 788 (citing United Steelworkers of Am. V. Warrior
& Gulf Navigation Co., 363 U.S. 574, 582-83 (1960)).
does not contest “the validity of the arbitration
agreement at the time the contract was incepted” and he
does not disagree with Defendant's “descriptions of
the facts and circumstances relating to the formation of the
original contractual agreement . . . .” Instead, Pitlor
argues the arbitration provisions are unenforceable because
arbitration is contrary to the congressional intent and
resolution procedures of the Electronic Funds Transfer Act;
that an arbitration forum has no authority to decide claims
for recovery under the EFTA. (Filing No. 15, at ...