Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-05528/USCOURTS-cand-4_07-cv-05528-4/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1001 E.R.I.S.A.

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ALVA GENE THANING,

Plaintiff, No. C 07-5528 PJH

v. ORDER GRANTING MOTION TO 

COMPEL ARBITRATION AND

STAYING CASE

UBS/PAINE WEBBER, et al.,

Defendants.

_______________________________/

On May 7, 2008, the court heard argument on defendants’ motion to compel

arbitration and for a stay pending arbitration. James Bridgman appeared for plaintiff and

Walter Stella appeared for defendants. Having carefully reviewed the papers and the

arguments of counsel, the court GRANTS the motions for the reasons stated at the hearing

and set forth more fully below.

BACKGROUND

From December 1987 until January 19, 2005, plaintiff Alva Gene Thaning (“plaintiff”)

was employed as a financial and investment services advisor for defendant PaineWebber,

Inc. and its successor corporation, UBS Financial Services (“defendants”). See Complaint,

¶ 2. While employed, plaintiff participated in defendants’ retirement plans. He participated

in Paine Webber Incorporated’s retirement plan until July 27, 1999, at which point that plan

was converted to the PaineWebber PartnerPlus plan (“PartnerPlus plan”), in which plaintiff

participated until his termination on January 19, 2005. See id. at ¶¶ 4-5. Plaintiff alleges

that the PartnerPlus plan is an ERISA employee benefit plan. Under the terms of the plan,

plaintiff alleges that a participant is entitled to receive all of his personal contributions to the

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plan (plus interest and dividends), as well as all vested firm contributions to the plan (plus

interest and dividends), upon termination. See id. at ¶ 6. 

On or about April 27, 2005, plaintiff duly received his personal contributions to the

PartnerPlus plan. However, he has not received the vested firm contributions plus interest

and dividends, which plaintiff alleges amount to $304,927.38, plus 10% interest per annum

(from January 19, 2005). Id. at ¶ 8. Plaintiff now seeks to recover these contributions, plus

interest and dividends. In addition, he is also alleging wrongful termination, because he

claims that his discharge was “wholly or partially for the purpose of interfering with

[p]laintiff’s attainment of rights to which [p]laintiff would have become entitled to under the

PartnerPlus plan had [p]laintiff continued to work to the age of seventy, as he had planned.” 

Complaint, ¶ 16. Plaintiff seeks five years of lost commissions and firm contributions that

would have vested, as well as punitive damages and attorneys’ fees and costs. Id.

Specifically, plaintiff’s complaint alleges 6 causes of action: (1) an ERISA claim for

payment of vested firm contributions; (2) an ERISA claim for wrongful termination; (3) a

breach of contract claim; (4) a claim for breach of the covenant of good faith and fair

dealing; (5) a claim for breach of fiduciary duty; and (6) a claim for fraud and deceit. See

Complaint, ¶¶ 17-53. 

Defendant has now moved to compel arbitration, arguing that plaintiff executed an

agreement with defendants in which he voluntarily agreed to arbitrate all the claims covered

by his complaint. 

DISCUSSION

Under § 4 of the Federal Arbitration Act (“FAA”), a district court must issue an order

compelling arbitration if the following two-pronged test is satisfied: (1) a valid agreement to

arbitrate exists; and (2) that agreement encompasses the dispute at issue. See United

Computer Sys., Inc. v. AT&T Corp., 298 F.3d 756, 766 (9th Cir. 2002). Where neither of

these prongs is met, the court must decide the issue. Moreover, it is the court who decides

the issue of arbitrability, rather than the arbitrator. See 9 U.S.C. § 4. 

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1 Plaintiff’s argument that Form U-4 is unclear, is based on his simple mis-reading

of the form, as item 10 is clearly mentioned and executed by plaintiff, on page 1 of the

agreement. 

2 Defendant notes that the entities previously known as the NASD and the NYSE

have now been consolidated, and are collectively called the Financial Industry Regulatory

Authority (“FINRA”). See O’Connell Decl., ¶ 4. 

3

Both requirements are met here. First, as defendants point out, a valid agreement 

to arbitrate exists, by way of Form U-4, which plaintiff executed on December 7, 1987. See

O’Connell Decl., Ex. A. The form clearly contains an arbitration provision which states: “I

agree to arbitrate any dispute, claim or controversy that may arise between me and my

firm, or a customer, or any other person, that is required to be arbitrated under the rules,

constitutions, or by-laws of the organizations with which I register, as indicated in item

10...”. See id. at p.4. While defendants are not mentioned on the form as plaintiff’s

designated “firm,” plaintiff himself filled out item 10 and designated the following

organizations as those with which plaintiff was registering: the NASD and the NYSE. See

id. at p. 1.1

Turning next to the “rules, constitutions, or by-laws” of those organizations, the

NASD Code of Arbitration Procedure for Industry Disputes (the “Code”) provides: “a dispute

must be arbitrated under the Code if the dispute arises out of the business activities of a

member or an associated person and between or among: members; members and

associated persons; or associated persons.” See Defendants’ Appendix of Select

Authorities, Ex. 3. Plaintiff is associated with the NASD, as he reflected on Form U-4, and

defendants are also members of the NASD, as made clear by ¶ 4 of the O’Connell

declaration.2 Accordingly, it is clear that a valid agreement to arbitrate exists between

plaintiff and defendants, as they are both qualifying members and associated persons,

under Form U-4 and the applicable “rules” of NASD, with which plaintiff registered on Form

U-4. 

Second, it is also clear that the agreement encompasses the dispute at issue. The

dispute between the parties centers around plaintiff’s allegedly wrongful termination, as well

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as his claim for benefits under the PartnersPlus plan, upon his termination. And once

again, defendants correctly cite Ninth Circuit authority holding that Form U-4 encompasses

employment termination suits between an NASD member and a former employee who

executed Form U-4. See, e.g., Kuehner v. Dickinson & Co., 84 F.3d 316, 318 (9th Cir.

1996). Additionally, there is non-controlling case law that supports arbitration of both

common law and ERISA claims (as plaintiff asserts here) under the arbitration clause

contained in Form U-4. See, e.g., Spellman v. Securities, Annuities & Ins. Servs., 8 Cal.

App. 4th 452, 456 (1992); Fabian Fin. Servs. v. Kurt H. Volk, Inc. Profit Sharing Plan, 786

F. Supp. 728, 733-34 (C.D. Cal. 1991). Finally, the Ninth Circuit has also noted, though

has not held, that statutory claims are arbitrable under the FAA. See, e.g., Comer v. Micor,

Inc., 436 F.3d 1098, 1100 (9th Cir. 2006). 

Plaintiff’s arguments to the contrary are unavailing. Plaintiff argues that the January

1, 1998 PartnerPlus plan governs plaintiff’s retirement compensation, and that plaintiff’s

vested firm contributions are controlled by the 1998 plan language (since plaintiff began

accumulating vested firm contributions at the inception of the plan in 1995), and not the

language of the 2004 plan. Plaintiff argues that the 1998 PartnersPlus plan controls the

question whether and under what circumstances any dispute is to be arbitrated rather than

Form U-4 because the plan supercedes Form U-4. The essence of plaintiff’s argument

appears to be that the 1998 plan controls, not the 2004 plan nor Form U-4, and that the

1998 plan requires non-binding rather than the binding arbitration required by the 2004 plan

and Form U-4.

The arbitration provisions in both plans are, however, identical and require that “in

the event of any dispute, claim or controversy involving a Participant or any claimant and

the Plan, or PaineWebber or any Sponsor, arising out of the Plan, any such controversy

shall be resolved before a NASD arbitration panel in accordance with the arbitration rules of

the NASD.” Complaint, Ex B, at 11.4 and O’Connell decl., Ex. D at 11.2. Neither plan

specifies whether the arbitration is binding or non-binding. Plaintiff’s reliance on section

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11.5 of the 1998 plan for support is misplaced, as that section simply requires that a

claimant exhaust the remedies set forth in the plan before instituting any “action or

proceeding in any state or federal court of law or equity, or before any administrative

tribunal or arbitrator.” It does not provide that the arbitration referred to in the prior section

is non-binding, nor does it provide that a court action can only be brought after arbitration

has concluded, thereby suggesting that any arbitration is not final. If anything, it suggests

that a claimant can proceed with either a law suit or arbitration after exhaustion. Thus,

whether the 1998 plan or the 2004 plan applies, both provide for arbitration and neither

specifies whether the arbitration is binding or non-binding, a decision that is within the

authority of the arbitrator to make. 

With regard to plaintiff’s argument that the 1998 plan’s arbitration provision

somehow superceded Form U-4's arbitration provision, plaintiff has proffered no evidence

or authority. Moreover, in order to prevail on this theory, the arbitration provision must be

negated expressly or by clear implication – which plaintiff does not establish here. See,

e.g., First Liberty Inv. Group v. Nicholsberg, 145 F.3d 647, 650 (9th Cir. 1998)(rejecting

plaintiff’s contention that subsequent agreement superceded arbitration provision of Form

U-4). Furthermore, plaintiff’s argument that one arbitration provision superceded another

begs the central question whether this dispute must be arbitrated at all. As noted, both

plans as well as Form U-4 require arbitration of this dispute. Thus, the court finds that both

the ERISA and the common law claims are all subject to arbitration before NASD or its

successor pursuant to Form U-4. Even if, however, the statutory claims are for some

reason not covered by Form U-4, they are still subject to arbitration before NASD pursuant

to both the 1998 and 2004 plans. NASD Rule 3080 makes it clear that arbitration is final

and binding. See O’Connell Decl., Ex. B at 2.

Finally, plaintiff’s insistence that defendants’ purported failure to abide by the claims

procedure set forth in the PartnersPlus plan should be construed as a waiver of their right

to arbitration is without authority. 

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In sum, therefore, the court finds that (1) a valid agreement to arbitrate exists; and

(2) the arbitration agreement encompasses the claims asserted by plaintiff in his complaint. 

As such, it is the arbitrator who must decide the merits. The motion to compel arbitration is,

therefore, GRANTED and the case is STAYED pending completion of arbitration. 

Although plaintiff failed to establish good cause for the late filing of his opposition

brief, his motion for administrative relief is GRANTED and defendants’ request to strike the 

late-filed brief is DENIED.

IT IS SO ORDERED.

Dated: May 8, 2008 ______________________________

PHYLLIS J. HAMILTON

United States District Judge

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