Christopher Laver v. Credit Suisse Securities (Usa)

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHRISTOPHER M. LAVER, on behalf No. 18-16328

of himself and others similarly

situated, D.C. No.

Plaintiff-Appellant, 3:18-cv-00828-

WHO

v.

CREDIT SUISSE SECURITIES (USA), OPINION

LLC,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of California

William Horsley Orrick, District Judge, Presiding

Argued and Submitted February 13, 2020

San Francisco, California

Filed September 18, 2020

Before: Ronald M. Gould and Mary H. Murguia, Circuit

Judges, and Gary Feinerman, * District Judge.

Opinion by Judge Feinerman

*

The Honorable Gary Feinerman, United States District Judge for

the Northern District of Illinois, sitting by designation.

2 LAVER V. CREDIT SUISSE SECURITIES (USA)

SUMMARY **

Arbitration

The panel affirmed the district court’s dismissal of a

putative class action suit against Credit Suisse Securities,

USA in favor of arbitration.

Plaintiff worked as a financial advisor at Credit Suisse

Securities, USA (“CSSU”), and brought this putative class

action alleging he was owed deferred compensation. CSSU

moved to dismiss based on an arbitration clause and general

class waiver set forth in an Employee Dispute Resolution

Program. The Financial Industry Regulatory Authority

(“FINRA”) is a securities industry self-regulatory

organization that imposes rules regulating the conduct of its

broker-dealer members. CSSU is a FINRA member.

Plaintiff argued that FINRA Rule 13204(a)(4) barred CSSU

from compelling arbitration of his claims.

The panel rejected plaintiff’s contention that Rule 13204

invalidated the Employee Dispute Resolution Program’s

class waiver. Because the class waiver survived, the panel

held that plaintiff relinquished his right to bring class claims

in any forum. Because plaintiff was left with only individual

claims, Rule 13204(a)(4)’s prohibition on enforcing

arbitration agreements directed at putative or certified claims

had no application here. In accord with the Second Circuit’s

decision in Cohen v. UBS Fin. Servs., Inc., 799 F.3d 174 (2d

Cir. 2015), the panel held that the district court correctly

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

LAVER V. CREDIT SUISSE SECURITIES (USA) 3

ordered the parties to arbitrate plaintiff’s remaining

individual claims.

COUNSEL

Roger N. Heller (argued) and Robert J. Nelson, Lieff

Cabraser Heimann & Bernstein LLP, San Francisco,

California; Taras Kick, The Kick Law Firm APC, Los

Angeles, California; Jeffrey K. Riffer and Julie Z. Kimball,

Elkins Walt Weintraub Reuben Gartside LLP, Los Angeles,

California; for Plaintiff-Appellant.

David Jacobs (argued), Edward J. Loya Jr., Deanna L.

Ballesteros, and David M. Prager, Epstein Becker & Green,

Los Angeles, California, for Defendant-Appellee.

OPINION

FEINERMAN, District Judge:

The district court dismissed Christopher Laver’s putative

class action suit against Credit Suisse Securities, USA

(“CSSU”) in favor of arbitration. 2018 WL 3068109 (N.D.

Cal. June 21, 2018). Laver appeals, arguing that Financial

Industry Regulatory Authority (“FINRA”) Rule 13204(a)(4)

bars CSSU from compelling arbitration of his claims. We

affirm.

I

Laver worked as a financial adviser in CSSU’s “Private

Banking Division.” Form contracts governing the

employment of CSSU financial advisers entitled them to

4 LAVER V. CREDIT SUISSE SECURITIES (USA)

“deferred compensation” unless they resigned or were

terminated for cause. A “Change in Control” provision in

the contracts provided that certain corporate acquisitions

would allow the advisers to retain their entitlement to certain

unvested deferred compensation.

In October 2015, CSSU announced that it had entered

into a “recruiting agreement” with Wells Fargo and would

shut down its financial advisory operations. The agreement

stated that Wells Fargo would recruit former CSSU financial

advisers but would not be required to offer them

employment. Laver alleges that CSSU entered into the

agreement to circumvent the “Change in Control” provision

and avoid paying its financial advisers millions of dollars in

deferred compensation. CSSU ultimately paid deferred

compensation only to those advisers hired by Wells Fargo,

and not to advisers—including Laver—whom Wells Fargo

did not hire.

Alleging that he is owed deferred compensation, Laver

filed this putative class action suit, which alleges breach of

contract and other state law claims. CSSU moved to dismiss

the suit in favor of arbitration. CSSU premised its motion

on an arbitration clause and a general class waiver set forth

in an Employee Dispute Resolution Program (“EDRP”)

agreed to by Laver and the other financial advisers. The

arbitration clause states: “The three steps of the [EDRP] are

. . . the only means by which [CSSU] employees located in

the United States are able to seek resolution of employment-

related claims of the type covered by the [EDRP]. They may

not sue in court as to these claims.” The class waiver states:

“An employee’s agreement to abide by the terms of the

[EDRP] includes an agreement not to serve as a class

representative or class member or act as a private attorney

general in any dispute with [CSSU].” (Laver contends that

LAVER V. CREDIT SUISSE SECURITIES (USA) 5

the 2015 version of the EDRP governs, and we assume

without deciding that he is correct.)

Laver argued to the district court that FINRA Rule

13204(a)(4) bars CSSU, a FINRA member, from compelling

arbitration of his claims. The district court disagreed,

reasoning that Rule 13204 does not bar CSSU from

enforcing the EDRP’s class waiver and that, because the

waiver renders Laver unable to pursue a class action in any

forum—including arbitration—the Rule’s prohibition

against the compelled arbitration of putative class actions

does not apply to his claims. 2018 WL 3068109, at *7–10.

II

“We review de novo the district court’s decisions about

the arbitrability of claims.” Brennan v. Opus Bank, 796 F.3d

1125, 1128 (9th Cir. 2015) (internal quotation marks

omitted).

A

FINRA is a securities industry self-regulatory

organization registered with the Securities and Exchange

Commission under Section 15A of the Securities Exchange

Act of 1934, 15 U.S.C. § 78o-3. As a condition of its

registration, FINRA must impose rules regulating the

conduct of its broker-dealer members and other participants.

Id. § 78o-3(b)(6)–(8). “Upon joining FINRA, a member

organization agrees to comply with FINRA’s rules.” UBS

Fin. Servs., Inc. v. W. Va. Univ. Hosps., Inc., 660 F.3d 643,

648 (2d Cir. 2011). A “FINRA member, therefore, . . . is

bound to adhere to FINRA’s rules and regulations, including

its Code and relevant arbitration provisions contained

therein.” Id. at 649; see also Goldman, Sachs & Co. v. City

of Reno, 747 F.3d 733, 737 (9th Cir. 2014) (Battaglia, J.,

6 LAVER V. CREDIT SUISSE SECURITIES (USA)

concurring) (“To exercise [its] oversight, FINRA has

instituted rules with which its members … agree to

comply.”). CSSU is a FINRA member.

FINRA Rule 13204(a) provides in relevant part:

(a) Class Actions

(1) Class action claims may not be

arbitrated under the [FINRA] Code [of

Arbitration Procedure for Industry Disputes].

(2) Any claim that is based upon the same

facts and law, and involves the same

defendants as in a court-certified class action

or a putative class action, or that is ordered by

a court for class-wide arbitration at a forum

not sponsored by a self-regulatory

organization, shall not be arbitrated under the

Code, unless the party bringing the claim

files with FINRA one of the following:

(A) a copy of a notice filed with the

court in which the class action is pending

that the party will not participate in the

class action or in any recovery that may

result from the class action, or has

withdrawn from the class according to

any conditions set by the court; or

(B) a notice that the party will not

participate in the class action or in any

recovery that may result from the class

action.

LAVER V. CREDIT SUISSE SECURITIES (USA) 7

(3) The Director will refer to a panel any

dispute as to whether a claim is part of a class

action, unless a party asks the court hearing

the class action to resolve the dispute within

10 days of receiving notice that the Director

has decided to refer the dispute to a panel.

(4) A member or associated person may

not enforce any arbitration agreement against

a member of a certified or putative class

action with respect to any claim that is the

subject of the certified or putative class action

until:

• The class certification is denied;

• The class is decertified;

• The member of the certified or

putative class is excluded from the

class by the court; or

• The member of the certified or

putative class elects not to participate

in the class or withdraws from the

class according to conditions set by

the court, if any.

***

These subparagraphs do not otherwise affect

the enforceability of any rights under the

Code or any other agreement.

FINRA, Rule 13204 (2012).

8 LAVER V. CREDIT SUISSE SECURITIES (USA)

Section 2 of the Federal Arbitration Act (“FAA”)

provides in relevant part:

A written provision in any maritime

transaction or a contract evidencing a

transaction involving commerce to settle by

arbitration a controversy thereafter arising

out of such contract or transaction . . . shall

be valid, irrevocable, and enforceable, save

upon such grounds as exist at law or in equity

for the revocation of any contract.

9 U.S.C. § 2. A court may compel arbitration of “only those

disputes . . . that the parties have agreed to submit.” Granite

Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 302

(2010) (quoting First Options of Chi., Inc. v. Kaplan,

514 U.S. 938, 943 (1995)). “As with any other contract, the

parties’ ‘intentions control.’” Stolt-Nielsen S.A. v.

AnimalFeeds Int’l Corp., 559 U.S. 662, 664 (2010) (quoting

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,

473 U.S. 614, 626 (1985)).

Although the FAA imposes “a liberal federal policy

favoring arbitration agreements” that “requires courts to

enforce agreements to arbitrate according to their terms,” its

mandate can be “overridden by a contrary congressional

command.” CompuCredit Corp. v. Greenwood, 565 U.S.

95, 98 (2012) (quoting Shearson/Am. Express Inc. v.

McMahon, 482 U.S. 220, 226 (1987)). To defeat arbitration,

Laver must therefore establish that Rule 13204(a)(4) is

“contrary” to the EDRP’s arbitration agreement, such that it

bars CSSU from enforcing it against him, and that the Rule

is a “congressional command” that overrides the FAA.

Cohen v. UBS Fin. Servs., Inc., 799 F.3d 174, 176 (2d Cir.

2015). “We need not consider whether Rule 13204 is a

LAVER V. CREDIT SUISSE SECURITIES (USA) 9

‘congressional’ command because we conclude that it is not

‘contrary’” to the EDRP’s arbitration agreement. Id.

B

At the outset it is important to understand that

“[a]lthough [class action] waivers are often found in

arbitration agreements (and are so incorporated in this case),

the two contract terms are conceptually distinct.” Id.

(emphasis added); see also Rent-A-Center, West, Inc. v.

Jackson, 561 U.S. 63, 70 (2010) (“[A]s a matter of

substantive federal arbitration law, an arbitration provision

is severable from the remainder of the contract.” (quoting

Buckeye Check Cashing Inc. v. Cardegna, 546 U.S. 440, 445

(2006))). A class action waiver is a promise to forgo a

procedural right to pursue class claims. Am. Exp. Co. v.

Italian Colors Restaurant, 570 U.S. 228, 234 (2013). By

contrast, an agreement to arbitrate “is a promise to have a

dispute heard in some forum other than a court.” Cohen,

799 F.3d at 179. Rule 13204 restricts the latter, but not the

former. Id.

CCSU is not seeking to arbitrate Laver’s class action

claims. Rather, it seeks to dismiss Laver’s class action

claims under the EDRP’s class action waiver and then to

compel arbitration of his individual claims under the

EDRP’s arbitration agreement. Laver does not dispute that

if CSSU may enforce the EDRP’s class waiver, then he may

pursue only individual claims. In that case, Rule

13204(a)(4), which prohibits the compelled arbitration only

of claims that are the subject of a certified or putative class

action, would not preclude CSSU from enforcing the

EDRP’s arbitration agreement against his remaining

individual claims. Laver contends, however, that Rule

13204(a)(4) bars CSSU from enforcing the EDRP’s class

waiver in any forum. If Laver is right, he can pursue class

10 LAVER V. CREDIT SUISSE SECURITIES (USA)

claims against CSSU in any forum, which means that Rule

13204(a)(4) could bar CSSU from enforcing the EDRP’s

arbitration agreement against him altogether.

Laver’s contention fails to persuade. If Rule 13204 were

read to bar class waivers, it would, when enforced along with

the Rule’s prohibition against the compelled arbitration of

class claims, entirely bar the enforcement of agreements to

arbitrate claims that could be maintained as part of a putative

or certified class action. Although reading Rule 13204 to bar

class action waivers might not, on its face, expressly

interfere with arbitration, the Supreme Court’s decision in

AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011),

makes clear that a rule not expressly targeting arbitration—

like a rule restricting the availability of class waivers—can

interfere with arbitration in a manner that impermissibly

conflicts with the FAA. Specifically, AT&T Mobility held

that California’s judge-created Discover Bank rule barring

class action waivers “interfere[d] with fundamental

attributes of arbitration and thus create[d] a scheme

inconsistent with the FAA” by “[r]equiring the availability

of classwide arbitration.” Id. at 344.

Laver’s reading of Rule 13204 to bar class waivers

would interfere with arbitration to an even greater extent by

moving the resolution of class claims out of arbitration

entirely. Accordingly, Rule 13204 can bar class waivers in

arbitration only if that bar is a “contrary congressional

command” that “override[s]” the FAA’s “require[ement]

[that] courts … enforce agreements to arbitrate according to

their terms.” CompuCredit, 565 U.S. at 98; see Cohen,

799 F.3d at 176, 178 (explaining that the plaintiff would

have to establish that Rule 13204 “qualifies as a

congressional’ command,” but declining to decide the issue

“because [the Rule] is not ‘contrary’” to a materially

LAVER V. CREDIT SUISSE SECURITIES (USA) 11

identical class waiver)). For the following reasons, even

assuming Rule 13204 qualifies as a “congressional

command,” the Rule does not bar class waivers with the

clarity necessary to displace the FAA’s instruction that

courts enforce arbitration agreements according to their

terms. The Rule therefore does not bar CSSU from

enforcing the EDRP’s class waiver—and then the EDRP’s

arbitration agreement—against Laver.

1

Laver’s first argument—that where, as here, a class

waiver is included in an arbitration agreement, Rule

13204(a)(4)’s prohibition on enforcing the arbitration

agreement also bars enforcement of the class waiver—

requires little discussion. As is clear from its text, the Rule

does not bar enforcement of all contracts containing an

arbitration agreement, or even of all contracts styled as

arbitration agreements. Rather, the Rule bars enforcement

only of an “agreement to arbitrate.” Laver’s agreement not

to pursue class litigation in any forum, including arbitration,

is not an “agreement to arbitrate.” See Cohen, 799 F.3d

at 179 (“Although [class] waivers are often found in

arbitration agreements (and are so incorporated in this case),

the two contract terms are conceptually distinct.”); cf. Rent-

A-Center, 561 U.S. at 71 (holding that “an arbitration

provision is severable from the remainder of the contract,”

even where the contract containing the arbitration provision

is itself an arbitration agreement (quoting Buckeye, 546 U.S.

at 445)). It follows that Rule 13204 does not bar CSSU’s

enforcement of the EDRP’s class waiver simply because it

is included in a document that also contains an agreement to

arbitrate. See Cohen, 799 F.3d at 178 (“Rule [13204] bars

arbitration of a claim so long as [the claim] is embedded in

a class action or collective action[.] . . . [The Rule] does not

12 LAVER V. CREDIT SUISSE SECURITIES (USA)

preserve the right to assert a claim in class or collective form

notwithstanding a contractual waiver.”).

2

Laver’s second argument—that Rule 13204 bars class

waivers regardless of whether they appear in an arbitration

agreement—also fails to persuade. The standard for

determining whether Rule 13204 is “contrary” to the EDRP,

and thereby overrides the FAA, is difficult to meet. In Epic

Systems v. Lewis, the Supreme Court considered whether

Section 7 of the National Labor Relations Act (“NLRA”)—

which guarantees the right of employees to “engage in . . .

concerted activities for the purpose of collective bargaining

or other mutual aid or protection”—protected the right of

employees to pursue a class action in court despite an

otherwise applicable arbitration agreement, thereby

displacing the FAA. 138 S. Ct. 1612, 1624–26 (2018). The

Court observed that a “party seeking to suggest that two

statutes cannot be harmonized, and that one displaces the

other, bears the heavy burden of showing ‘a clearly

expressed congressional intention that such a result should

follow.’” Id. at 1624 (emphasis added) (quoting Vinmar

Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528,

533 (1995)). The Court added that such an “intention must

be ‘clear and manifest,’” id. (quoting Morton v. Mancari,

417 U.S. 535, 551 (1974)), and that “in approaching a

claimed conflict, we come armed with the ‘stron[g]

presum[ption]’ that repeals by implication are

‘disfavored’[.]” Id. (alterations in original) (quoting United

States v. Fausto, 484 U.S. 439, 452 (1988)). The Court

concluded that Section 7 was not contrary to the arbitration

agreement in that case—and therefore did not displace the

FAA—because it “does not express approval or disapproval

LAVER V. CREDIT SUISSE SECURITIES (USA) 13

of arbitration” or “mention class or collective action

procedures.” Id.

Unlike Section 7 of the NLRA, Rule 13204 imposes

explicit limits on arbitration—specifically, a FINRA

member’s ability to enforce an arbitration agreement

directed at claims that are part of a certified or putative class

action. But the Rule does not expressly prohibit, and in fact

does not even mention, class waivers. Under the standard

articulated in Epic Systems, it necessarily follows that the

Rule does not present a sufficiently clear prohibition on class

waivers to be “contrary” to the EDRP, such that it would

displace the FAA’s instruction to enforce arbitration

agreements according to their terms. Therefore, the Rule

does not prohibit CSSU from enforcing the EDRP’s class

action waiver—and, consequently, its arbitration agreement.

See id. at 1632 (holding that where a court can “easily read”

an enactment “to work in harmony” with the FAA, “that is

where [the court’s] duty lies”).

This conclusion is fortified by the final sentence of Rule

13204, which reads: “These subparagraphs do not otherwise

affect the enforceability of any rights under the [FINRA]

Code [of Arbitration Procedure for Industry Disputes] or any

other agreement.” FINRA Rule 13204. Because Rule 13204

specifically bars enforcement of certain arbitration

agreements but does not mention class waivers, that sentence

confirms that the Rule should not be read to prohibit a

FINRA member from enforcing a class waiver—which, as

noted, is an agreement separate from an arbitration

agreement and thereby qualifies as an “other agreement.”

See Cohen, 799 F.3d at 179 (“Although [class] waivers are

often found in arbitration agreements (and are so

incorporated in this case), the two contract terms are

conceptually distinct.”); but cf. Dep’t of Enf’t v. Charles

14 LAVER V. CREDIT SUISSE SECURITIES (USA)

Schwab & Co., 2014 WL 1665738, at *7 n.11 (FINRA Bd.

of Govs. Apr. 24, 2014) (taking the contrary view of the

phrase “any other agreement” in a materially identical

sentence of another FINRA Rule, but erroneously assuming

that a class waiver appearing in the same instrument as an

arbitration agreement is part of, rather than severable from,

the agreement to arbitrate).

Laver offers several other grounds—resting variously on

the Rule’s regulatory history, an SEC order concerning a

predecessor rule, a FINRA letter, a FINRA notice, and a

FINRA Board of Governors decision—to divine a

prohibition on class waivers in Rule 13204. There is no need

to delve into those materials, for the SEC’s or FINRA’s

understanding of a FINRA rule or the rule’s relationship to

the FAA cannot overcome the absence of a “clear and

manifest” prohibition against class waivers in Rule 13204.

Epic Sys., 138 S. Ct. at 1624; see also id. at 1629 (holding

that an agency is owed no deference when it interprets rules

not “in isolation,” but instead “in a way that limits the work

of a second statute, the Arbitration Act,” reasoning that “the

reconciliation of distinct statutory regimes is a matter for the

courts” (quoting Gordon v. N.Y. Stock Exch., Inc., 422 U.S.

659, 685–86 (1975)).

In sum, Laver is wrong to contend that Rule 13204

invalidates the EDRP’s class waiver. Because the class

waiver survives, Laver relinquished his right to bring class

claims in any forum, and because he is left with only

individual claims, Rule 13204(a)(4)’s prohibition on

enforcing arbitration agreements directed at putative or

certified class claims has no application here. It follows that

the district court correctly ordered the parties to arbitrate

Laver’s remaining individual claims. In so holding, we align

ourselves with the Second Circuit’s decision in Cohen v.

LAVER V. CREDIT SUISSE SECURITIES (USA) 15

UBS Financial Services, Inc., supra, the only appeals court

decision to have addressed a materially identical dispute.

AFFIRMED.