Opinion ID: 2765251
Heading Depth: 2
Heading Rank: 1

Heading: Decision to Compel Arbitration

Text: There are two arbitration provisions at issue in this matter. One is contained in the Client Agreement that governs the brokerage account, as quoted above. Plaintiff did not sign this Agreement, but it is the agreement by which his son agreed to be bound in opening a brokerage account with Ameritrade. As plaintiff purports to be his son’s agent for purposes of the trust account through the power of attorney, the plain language of the Client Agreement binds plaintiff as well as his son. The broad language of the arbitration provision (“any controversy between you [Ameritrade] and me [client or his agent] shall be arbitrated . . . ”) covers the dispute between Ameritrade and anyone claiming control over one of its accounts. The other relevant document is the Trading Authorization Agreement, which was signed by plaintiff and sent to Ameritrade on January 3, 2013. That document allows for authorized agents of the account owner to purchase and sell securities in the account owner’s name. It states that “[t]he Client Agreement set forth in the Account Agreement (including arbitration of disputes) . . . shall apply equally to the Authorized Agent(s).” Trading Authorization Agreement at 1. By executing the Trading Authorization Agreement and holding himself out as his son’s agent, plaintiff became bound by the terms of the Client Agreement and the Trading -5- Case No. 14-3466 Andrews v. TD Ameritrade, Inc. Authorization Agreement, both of which contain arbitration requirements. Plaintiff relies on both the power of attorney and the Trading Authorization Agreement as the basis for his control over the account. See Complaint Counts I, IV. Plaintiff cannot seek the powers conveyed by the Trading Authorization Agreement and simply ignore its arbitration clause. See Javitch v. First Union Secs., Inc., 315 F.3d 619, 625-26 (6th Cir. 2003) (receiver’s rights as a plaintiff are subject to the same claims and defenses as the received entity he represents). The Federal Arbitration Act codifies a national policy in favor of arbitrating claims when parties contract to settle disputes by arbitration. A district court should dismiss or stay a suit involving an arbitration clause as follows: If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration. 9 U.S.C. § 3. The threshold question, then, is “whether the dispute is arbitrable, meaning that a valid agreement to arbitrate exists between the parties and that the specific dispute falls within the substantive scope of the agreement.” Landis v. Pinnacle Eye Care, LLC, 537 F.3d 559, 561 (6th Cir. 2008). Any doubts regarding arbitrability should be resolved in favor of arbitration. Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). The Sixth Circuit analyzes the following four factors to determine whether to grant motions to dismiss and compel arbitration: (1) Whether the parties agreed to arbitrate; (2) the scope of the agreement to arbitrate; (3) if federal statutory claims are involved, whether Congress intended those claims to be arbitrable; and (4) if only some of the claims are subject to -6- Case No. 14-3466 Andrews v. TD Ameritrade, Inc. arbitration, whether the nonarbitrable claims should be stayed pending arbitration. Fazio v. Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir. 2003). Plaintiff argues that the only question at issue is the adequacy of the power of attorney under Ohio law, which is a question of law that should be answered in the first instance by the courts, not an arbitrator. But that is not true in this case in the face of the broad arbitration provision included in the Client Agreement and the Trading Authorization Agreement. Even if the power of attorney was adequate under Ohio law to appoint plaintiff his son’s agent for purposes of controlling the account—a point Ameritrade disputes—it was within Ameritrade’s rights to require further confirmation from its account holder to protect itself and to ensure that the account holder’s wishes are followed. What those further requirements are, if any, is within the scope of the arbitration provision. In addition to challenging the scope of the arbitration provision in the Client Agreement, plaintiff makes several other claims of error regarding the district court’s decision to compel arbitration. Plaintiff’s contention that Ameritrade waived reliance on the arbitration provision by removing the complaint to federal court and failing to raise the issue in the Notice of Removal is without merit. Removal to federal court does not waive a party’s otherwise enforceable right to arbitrate. Dantz v. Am. Apple Grp., 123 F. App’x 702, 707 (6th Cir. 2005). No special notice is required. He also argues that the district court erred in considering evidence outside the pleadings submitted by Ameritrade with its motion to compel arbitration and dismiss the complaint. However, Ameritrade filed its motion pursuant to Fed. R. Civ. Pro. 12(b)(1), lack of subject-matter jurisdiction, not Rule 12(b)(6), dismissal for failure to state a claim. The district court must undertake a limited review of evidence to determine whether it has the authority to hear a case or compel arbitration. Javitch, 315 F.3d at 625. The Plummer affidavit and the -7- Case No. 14-3466 Andrews v. TD Ameritrade, Inc. Client Agreement were part of that limited review undertaken by the district court. Plaintiff also argues that the arbitration clause here is not valid because it uses “boilerplate” language that constitutes a contract of adhesion. However, the case on which he relies, Sutton v. Laura Salkin Bridal & Fashions, No. 72107, 1998 WL 45347 (Ohio Ct. App. Feb. 5, 1998), concerns an installment sales contract where the state court found that the seller and the customer had unequal bargaining power. That is not the case here. While the arbitration provision in the agreement is likely a standard form prepared by Ameritrade, this was not a case of unequal bargaining power where a commercial enterprise took advantage of an off-the-street buyer. Plaintiff is a lawyer and he signed the Trading Authorization Agreement containing an arbitration provision, holding himself out as his son’s agent in matters concerning all of his son’s business dealings, including matters concerning the brokerage account. Plaintiff also attacks the arbitration clause as “unconscionable” because he had no “meaningful” choice and was forced to sign a contract with terms that are unreasonably favorable to the drafting party. Plaintiff was the one who affirmatively reached out and sought control over his son’s account and he willingly signed the Trading Authorization Agreement and sent it to Ameritrade. He was not forced to sign the agreement, but agreed to be bound by its provisions when he signed it.