Court Opinion

ID: 9470917
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:20:24.22343+00
Date Added: 2024-06-11T17:42:10.914637
License: Public Domain

ESCHBACH, Circuit Judge,
dissenting.
While I agree with many of the general principles discussed in my brother Wood’s well written opinion, I part company with *1155the majority on an issue of critical importance — the content of the federal law which is to be compared with the Wisconsin anti-waiver provision in order to determine whether federal law has preempted state law. The majority compares the provisions of the Federal Arbitration Act with the provisions of the Wisconsin Uniform Securities Law and concludes that there is an actual or facial conflict. With this I agree. However, in assessing whether “federal law” has preempted the Wisconsin anti-waiver provision, we must look not only at the Federal Arbitration Act, but also at other federal laws and court decisions that have interpreted, applied, and possibly modified the Arbitration Act. See Jones v. Bath Packing Co., 430 U.S. 519, 526, 97 S.Ct. 1305, 1310, 51 L.Ed.2d 604 (1977) (court must consider relationship between state and federal laws as they are interpreted and applied, not just as they are written). The relevant federal law in this case consists of the Federal Arbitration Act, the federal securities acts of 1933 and 1934, and case law interpreting these statutes.
Section 18 of the Securities Act of 1933, 15 U.S.C. § 77r, and § 28(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78bb(a), specifically provide for concurrent state regulation of securities. Section 14 of the 1933 Act, 15 U.S.C. § 77n, bars waiver of a judicial forum by an arbitration agreement, in spite of the provisions of the Federal Arbitration Act favoring such agreements. Wilko v. Swan, 346 U.S. 427, 438, 74 S.Ct. 182, 188, 98 L.Ed. 168 (1953). While Wilko dealt only with actions under the federal securities laws, much of the court’s analysis applies with equal force to a state’s attempt to preserve a judicial forum for buyers of securities. The Court enumerated possible shortcomings of arbitration in this field and recognized that the advantages the securities laws provided a buyer may be less effective in arbitration than in judicial proceedings. Id. at 434-37, 74 S.Ct. at 186-188. The Court found it reasonable for Congress to put buyers of securities covered by the 1933 Act on a different basis from other purchasers. Id. at 435, 74 S.Ct. at 186-187. From the provisions of the federal securities acts specifically sanctioning state regulation and from the Supreme Court’s interpretation of the acts in Wilko, I conclude that Congress, in enacting the securities acts, impliedly modified the preexisting general provisions of the Arbitration Act as they would apply in the areas of both federal and state securities regulation. Thus, while the bare words of the Arbitration Act are in facial conflict with the Wisconsin Uniform Securities Law, “federal law” is not.
Having answered the threshold question of actual or facial conflict in the negative, I find that the district court was correct in its analysis of the competing federal and state interests and in its conclusion that the Wisconsin anti-waiver provision has not been preempted by federal law. Contrary to the majority’s assertion, the “preemption battlefield” in the instant case is not merely that of policies concerning informal dispute resolution, but rather that of procedural advantages necessary to fully effectuate the substantive provisions of the Wisconsin securities laws. Cf. id. at 434-37, 74 S.Ct. at 186-188 (discussing the advantages of a judicial forum over arbitration in the context of federal securities laws). Wisconsin has chosen to regulate securities in a framework that is complementary to federal law and which furthers a common purpose, i.e., the protection of the investor. In this situation, the case for preemption is not persuasive. See New York State Department of Social Services v. Dublino, 413 U.S. 405, 421, 93 S.Ct. 2507, 2517, 37 L.Ed.2d 688 (1973); cf. Merrill Lynch, Pierce, Fenner & Smith v. Ware, 414 U.S. 117, 137, 94 S.Ct. 383, 395, 38 L.Ed.2d 348 (1973) (where the federal government provides for collaboration, the courts should not find conflict). In support of my conclusion that federal law has not preempted the Wisconsin anti-waiver provision, I concur in the following analysis of the district court:
Proper adherence to the principles of Federalism require that, where there is a conflict between state and federal policies, preemption of the subject area by the federal enactment should take place *1156only when Congress clearly intends it to occur. The case at bar presents a state remedial statute which adopts a uniform scheme of economic regulation, enacted pursuant to the state's inherent police power, containing an “anti-waiver” provision. This state enactment conflicts with a strong federal policy favoring arbitration expressed in the generalized Federal Arbitration Act. However, the conflict occurs in a subject matter area (securities law) in which the federal enactments contain clear and unequivocal language that they are not to be construed so as to preempt state securities regulation. See § 28a, 1934 Act, and § 18, 1933 Act. In this context, it would seem that the Arbitration Act ought not to preempt the Wisconsin Securities law with its anti-waiver provision.
* * * * * *
In summary, because this is a case where the state law involves inherent police power; is remedial in nature; presents a legislatively created cause of action; contains an anti-waiver clause; and deals with an area of the law in which Congress has expressly indicated it has not preempted state regulation, this Court is of the opinion that the statute can withstand the generalized provisions of the Federal Arbitration Act.
Decision and Order at 8, 11. Kroog should not be compelled to arbitrate the two claims she brought under the Wisconsin Uniform Securities Law. Accordingly, I respectfully dissent from the majority’s decision directing that proceedings be stayed pending arbitration of these claims.