As reported in the Securities Litigation Alert, Keesal, Young & Logan successfully handled an appeal on behalf of Wells Fargo Advisors LLC (Wells Fargo) at the California Court of Appeal. The case involved a former Financial Advisor (FA) who resigned and was subsequently sued by Wells Fargo in a FINRA arbitration to collect the unpaid balance of her promissory note. The FA then filed affirmative claims in California Superior Court which were compelled to arbitration based on the arbitration agreement in the Form U-4 and a second arbitration agreement in the promissory note. The Claimant never asserted her affirmative claims in the FINRA arbitration and the promissory note claim proceeded to an award in favor of Wells Fargo.
Following the award, the trial court denied the FA’s petition to vacate the award and granted Wells Fargo’s petition to confirm the award. The FA subsequently appealed. In a 25-page opinion, the Court of Appeal affirmed, holding that the arbitration clause in the Form U-4 was not unconscionable because it was a contract between Ms. Tawfik-Oshana and FINRA, it was imposed on her by law, and that Wells Fargo “had no choice” in requiring her to execute the agreement. The Court further held that the arbitration clause in the promissory note was enforceable and was not signed as a condition of her employment. Finally, the Court rejected the FA’s contention that her claims were not arbitrable because she was purporting to act as a private attorney general on behalf of the general public or because she was asserting California Labor Code claims.
A copy of the Court’s opinion can be found here.