Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01772/USCOURTS-casd-3_08-cv-01772-0/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 09:0010 Petition to Vacate Arbitration Award

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 1 - 08-CV-1772-WQH-BLM

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

WILLIAM R. HOLLAND and MICHAEL

W. HOLLAND,

Petitioners,

CASE NO. 08-CV-1772-WQH-BLM

ORDER

vs.

WACHOVIA SECURITIES, LLC and

EUGENE P. INGARGIOLA,

Respondents.

HAYES, Judge: 

The matter before the Court is Petitioners’ ex parte application for an order temporarily staying

Respondents from further proceeding in San Diego Superior Court pending this Court’s determination

of Petitioners’ petition to vacate an arbitration award (Doc. # 5). 

BACKGROUND

In October and November 2005, Petitioner William Holland and his son, Petitioner Michael

Holland, initiated two Financial Industry Regulatory Authority (FINRA) arbitration actions against

their former employer, Wachovia Securities, and their former Supervisor Eugene Ingargiola. William

Holland asserted claims for: (1) wrongful termination in violation of public policy prohibiting age

discrimination; (2) breach of contract; (3) breach of implied covenant of good faith and fair dealing;

(4) age discrimination in violation of the Age Discrimination Employment Act, 29 U.S.C. § 620, and

the California Fair Employment and Housing Act, Cal. Gov. Code § 12941; (5) intentional

interference with prospective economic advantage; (6) violation of the Racketeer Influenced Corrupt

Case 3:08-cv-01772-WQH-BLM Document 13 Filed 12/03/08 Page 1 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 - 08-CV-1772-WQH-BLM

Organizations Act, 18 U.S.C. § 1961; (7) civil conspiracy; and (8) slander. Michael Holland asserted

claims for: (1) wrongful constructive termination; (2) breach of contract; (3) breach of implied

covenant of good faith and fair dealing; (4) intentional interference with prospective economic

advantage; (5) violation of the Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. § 1961;

and (6) civil conspiracy. Petitioners requested compensatory damages in excess of $1,000,000.00,

unspecified punitive damages, treble damages, and costs, including attorneys’ fees. 

Respondents counterclaimed for the recovery of $72,402.00 from William Holland and

$4,000.00 from Michael Holland pursuant to a Retention Bonus Program. Respondents filed a

supplemental counterclaim alleging that Petitioners violated the Computer Fraud and Abuse Act and

misappropriated trade secrets. Respondents requested unspecified compensatory damages, injunctive

relief preventing Petitioners from utilizing confidential information unlawfully obtained and requiring

the return of all such information, unspecified punitive and treble damages, and costs, including

attorneys’ fees. On May 22, 2006, the arbitration panel consolidated all the claims and counterclaims

under FINRA Case Number 05-5159. On September 4, 2007, Petitioners dismissed the RICO claims

against Respondents with prejudice. On September 11, 2007, William Holland dismissed the slander

claim against Respondents. 

The arbitration panel held a hearing on Petitioners’ claims and Respondents’ counterclaims.

On November 20, 2007, Respondents filed a motion for summary judgment on Petitioners’ claims.

The motion was fully briefed, and the panel heard oral argument on February 6, 2008. On February

12, 2008, the arbitration panel granted Respondents’ motion and dismissed Petitioners’ claims in their

entirety with prejudice. Subsequent hearings were scheduled for May 1 and 2, 2008 on Respondents’

counterclaims against Petitioners.

On April 18, 2008, Petitioners filed a Petition to vacate the Panel’s decision dismissing their

claims in the Superior Court of California for the County of San Diego. Petitioners concurrently filed

an ex parte application for the issuance of a temporary restraining order requesting that the state court

stop the arbitration from going forward on the ground that the Panel had improperly granted

Respondents’ motion for summary judgment. On April 23, 2008, the state court denied Petitioners’

application for a temporary restraining order and stayed the Petition to vacate pending final resolution

Case 3:08-cv-01772-WQH-BLM Document 13 Filed 12/03/08 Page 2 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 - 08-CV-1772-WQH-BLM

of the FINRA arbitration. The state court directed Petitioners to file an amended petition to vacate

once a final arbitration award was issued by the FINRA panel. On April 28, 2008, Petitioners filed

a “Petition for writ of supersedeas” with the California Court of Appeal requesting an immediate

appeal of the state court’s April 23, 2008 decision. On April 29, 2008, the California Court of Appeal

denied the petition. 

On September 4, 2008, the FINRA Panel issued a written final arbitration award. (Doc. # 8-2,

Ex. 13). The Panel concluded that William Holland’s claim for age discrimination was frivolous and

ordered William Holland to pay 80% of the attorney fees and costs incurred by Respondents pursuant

to Cal. Govt. Code § 12965(b). (Doc. # 8-2, Ex. 13 at 218). On September 19, 2008, Petitioners filed

a first amended petition to vacate the FINRA arbitration award in state court. (Doc. # 8-2, Ex. 6). On

September 25, 2008, Respondents filed a cross petition to confirm the arbitration award in state court.

(Doc. # 8-2, Ex. 7). On September 26, 2008, the parties jointly moved to continue the hearing date

to November 6, 2008, “to allow both motions [petitions] to be heard by the [state] Court

simultaneously.” (Doc. # 8-2, Ex. 8). 

On September 26, 2008, Petitioners filed a petition to vacate the FINRA arbitration award in

this Court (Doc. # 1) (hereinafter “federal petition to vacate”). On October 3, 2008, Petitioners filed

a first amended petition to vacate the FINRA arbitration award in this Court (Doc. # 2). On the same

date, Petitioners filed a request for dismissal of the state petition to vacate without prejudice in the

state court (Doc. # 8-2, Ex. 12). On October 31, 2008, Petitioners filed a motion to vacate the

arbitration award (Doc. # 3) in this Court. The motion hearing date for Petitioners’ federal petition

is set for January 26, 2009 in this Court. 

On October 28, 2008, Petitioners removed Respondents’ cross petition to confirm the

arbitration award to federal court. (Case No. 08cv1994-JM-RBB). The removed cross petition was

assigned to United States District Judge Jeffrey Miller. On November 3, 2008, Respondents filed an

ex parte application for immediate remand of the cross petition. On November 5, 2008, Judge Miller

remanded the cross petition to state court, finding that: (1) the federal court lacked original jurisdiction

to entertain the action because there was no federal question presented by the motion to confirm the

arbitration award pursuant to state law; (2) Petitioners commenced the action in state court and could

Case 3:08-cv-01772-WQH-BLM Document 13 Filed 12/03/08 Page 3 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 - 08-CV-1772-WQH-BLM

not remove their own action to federal court; (3) the action appeared to have been improvidently

removed by counsel who was not the attorney of record for Petitioners in the state court action; and

(4) Petitioners did not oppose remanding the action in their response to Respondents’ motion to

remand. (Doc. # 8-2, Ex. 15). The cross petition was remanded to state court and a hearing on the

matter was set in state court for December 17, 2008. (Doc. # 8-2, Ex. 17). 

On November 11, 2008, Petitioners filed an ex parte motion to stay Respondents from further

proceeding in state court pending this Court’s determination of the federal Petition to vacate the

arbitration award. (Doc. # 5). On November 14, 2008, Respondents filed a response in opposition

to the ex parte motion to stay. (Doc. # 8). On November 18, 2008, Petitioners filed a reply in support

of their motion to stay. (Doc. # 12). 

DISCUSSION

Petitioners contend that “there is a very strong likelihood of two inconsistent determinations

affecting the same arbitration award issued by two different courts, and this Court’s ability to hear and

determine the Hollands’ Federal Petition to Vacate will be affected and rendered moot by the state

court proceeding” if Respondents are not temporarily stayed from further proceeding with their state

court petition to confirm pending this Court’s determination of the federal Petition to vacate. (Doc.

# 5 at 3). Petitioners assert that Respondents “will suffer no damages and will have two months to

prepare and submit opposition papers” in this Court if Respondents are temporarily stayed from

proceeding with their state court Petition to confirm. (Id.) Petitioners assert that a stay of the state

court proceedings is “necessary in aid of” the “exclusive jurisdiction” of this Court to review the

petition to vacate the arbitration award for manifest disregard of federal law. (Id. at 8-9). Petitioners

contend that allowing Respondents to proceed in state court “threatens to impair this Court’s ability

to provide the Hollands the full relief they request” because the state court can not vacate an

arbitration award on the basis that it was made in manifest disregard of federal law. 

Respondents contend that the Anti-Injunction Act, 28 U.S.C. § 2283, precludes a stay of

Respondents’ state court petition to confirm the arbitration award. (Doc. # 8-2 at 7). Respondents

assert that “by denying Petitioners’ request for an immediate stay order, this Court will not be

interfering with its own jurisdiction as there is no federal subject matter jurisdiction in this matter.”

Case 3:08-cv-01772-WQH-BLM Document 13 Filed 12/03/08 Page 4 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 - 08-CV-1772-WQH-BLM

(Doc. # 8-2 at 9). 

Respondents filed the cross petition to confirm the arbitration award in state court pursuant to

California Civil Code § 1285. The state court has jurisdiction to resolve Respondents’ petition to

confirm the arbitration award and Respondents are entitled to go forward in state court. To the extent

that Petitioners are requesting a temporary injunction to stay the state court proceedings, this Court

is prohibited from doing so by the Anti-Injunction Act. The Anti-Injunction Act provides that “[a]

court of the United States may not grant an injunction to stay proceedings in a State court except as

expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or

effectuate its judgements.” 28 U.S.C. § 2283. The exceptions to the Anti-Injunction Act are narrowly

construed and “doubts as to the propriety of a federal injunction against a state court proceeding

should be resolved in favor of permitting the state action to proceed.” Lou v. Belzberg, 834 F.2d 730,

739 (9th Cir. 1987). “The general rule under the necessary in aid of its jurisdiction exception is that

where state and federal courts have concurrent jurisdiction over a case, neither court may prevent the

parties from simultaneously pursuing claims in both courts.” Id. at 740 (citing Atlantic Coast Line

R.R. v. Brotherhood of Locomotive Eng’rs, 398 U.S. 281, 295 (1970)). The exception does not apply

unless injunctive relief is “necessary to prevent a state court from so interfering with a federal court’s

consideration or disposition of a case as to seriously impair the federal court’s flexibility and authority

to decide that case.” Atlantic Coastline R.R., 398 U.S. at 295. “The mere existence of a parallel action

in state court does not rise to the level of interference with federal jurisdiction necessary to permit

injunctive relief under the necessary in aid of exception.” Lou, 834 F.2d at 740. 

In this case, Petitioners do not assert that an injunction is expressly authorized by an act of

Congress, or that an injunction is necessary to protect or effectuate the judgment of this Court.

Petitioners contend that this case falls under the “necessary in aid of jurisdiction” exception. Even

assuming that federal jurisdiction over the Petition to vacate is proper, the Court concludes that the

existence of a parallel action in state court addressing the same underlying arbitration award does not

interfere with this Court’s ability to adjudicate Petitioners’ federal claim. See Lou, 834 F.2d at 740.

This Court concludes that the injunctive relief requested by Petitioners is not “necessary in the aid of”

this Court’s jurisdiction and is prohibited by the Anti-Injunction Act. 

Case 3:08-cv-01772-WQH-BLM Document 13 Filed 12/03/08 Page 5 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 - 08-CV-1772-WQH-BLM

CONCLUSION

IT IS HEREBY ORDERED that the Petitioners’ ex parte motion to stay Respondents from

further proceeding in state court is DENIED.

DATED: December 3, 2008

WILLIAM Q. HAYES

United States District Judge

Case 3:08-cv-01772-WQH-BLM Document 13 Filed 12/03/08 Page 6 of 6